E PL UR UM IB N U U S Congressional Record United States th of America PROCEEDINGS AND DEBATES OF THE 105 CONGRESS, FIRST SESSION

Vol. 143 WASHINGTON, FRIDAY, JUNE 27, 1997 No. 93 House of Representatives The House was not in session today. Its next meeting will be held on Tuesday, July 8, 1997, at 12:30 p.m. Senate FRIDAY, JUNE 27, 1997

The Senate met at 9 a.m. and was begin the awakening here in the Sen- Mr. MOYNIHAN. Can I simply en- called to order by the President pro ate, in each Senator and in all of us dorse my revered chairman’s judg- tempore [Mr. THURMOND]. who work with them. In the name of ment? We have had a good debate. We our Lord and Saviour. Amen. have a good bill, a bipartisan bill. The PRAYER f prospects of any serious change are not The Chaplain, Dr. Lloyd John large. The prospect of any serious at- Ogilvie, offered the following prayer: RECOGNITION OF THE ACTING tention to new proposals are not Almighty God, Sovereign of this Na- MAJORITY LEADER great—not today. The Senate is a con- tion, Lord of our lives and Author of The PRESIDENT pro tempore. The tinuing body and we will continue to the liberties we enjoy as citizens, may able acting majority leader, the distin- discuss matters, but today is the time this Fourth of July week of recess be a guished Senator from Delaware, is rec- for closing out this legislation so we time of renewal of our commitment to ognized. can go to conference and send a bill to you as leaders of our Nation. May Inde- the President. pendence Day really be a dependence f Mr. ROTH. What is the order of busi- day for us and our fellow Americans as SCHEDULE we express our total dependence on ness? You. We want our observance to be Mr. ROTH. Mr. President, for the in- Mr. KENNEDY. Will the Senator more than picnics, firecrackers, and formation of all Senators, this morning yield for a question? the Senate will resume consideration parades. As we celebrate the birth of Mr. ROTH. I yield. our Nation, we want to reaffirm the vi- of S. 949, the Tax Relief Act of 1997, and sion for America you planted in our begin another lengthy series of rollcall Mr. KENNEDY. After the process Founding Fathers and Mothers, as well votes. As previously ordered, the series amendment, there may be an amend- as the unique role You have given this of stacked rollcall votes will begin on ment offered on the Republican side. Nation as a demonstration of democ- or in relation to the Nickles amend- We are prepared to move ahead to get racy. ment, followed by the Gramm amend- on the list; would that be agreeable? When we say the words, ‘‘One Nation ment and the Kerry amendment. Fol- Can I ask consent, after the sequenc- under God’’ in the Pledge of Allegiance, lowing the disposition of the aforemen- ing, there may be an amendment on may it be a fresh dedication to work tioned stacked votes, the Senate will the Republican side and we could have for righteousness and justice in every proceed to a vote on a number of proc- consideration? aspect of society. We confess what con- ess amendments under the control of Mr. ROTH. I say to the distinguished tradicts our declaration of dependence Senator DOMENICI. After those amend- Senator from Massachusetts, we have on You. We reflect on our secularized ments have been disposed of, Senators you on the list for three separate society that gives little thought to will have the right to offer an amend- amendments. You. Our motto is ‘‘In God We Trust’’ ment to the bill, with 2 minutes of de- Mr. KENNEDY. Just one amendment. and yet, our trust often is placed in bate equally divided on the proposed materialism and scientific humanism. amendment. Mr. MOYNIHAN. That is the spirit. We repent and ask Your forgiveness. However, it is hoped, and I would like Mr. ROTH. I say to the distinguished Dear God, You have answered the to emphasize, that Members will re- Senator and to my colleague, Senator prayers of Your people in the crises of frain from offering amendments so that MOYNIHAN, that we have a list of both our history. Today, we pray for a spir- the Senate may complete action on Republican and Democrat amend- itual awakening to spread across the this bill at a reasonable time. ments. They are set in a particular land. We know that only what has hap- The PRESIDING OFFICER (Mr. order. We do intend to go from one side pened to us can happen through us. So THOMAS). The Senator from New York. to the other side.

∑ This ‘‘bullet’’ symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor.

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VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00001 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6670 CONGRESSIONAL RECORD — SENATE June 27, 1997 Mr. MOYNIHAN. May I just ask in tends the time for filing returns and pay- The question is on agreeing to the terms of who appears and asks for rec- ment of tax (and waives any penalties relat- amendment. ognition, the first three pending ing to the failure to so file or so pay) for The yeas and nays have been ordered. amendments are, in fact, stacked? such taxpayers. The clerk will call the roll. Dorgan Amendment No. 516, to provide tax Mr. ROTH. That is correct. relief for taxpayers located in Presidentially The assistant legislative clerk called Mr. MOYNIHAN. The rest are just declared disaster areas. the roll. amendments that may be offered. Jeffords amendment No. 522, to provide for Mr. NICKLES. I announce that the The PRESIDING OFFICER. Without a trust fund for District of Columbia school Senator from Kansas [Mr. ROBERTS] is objection, the amendment of the Sen- renovations. necessarily absent. ator from Massachusetts will follow Domenici-Lautenberg amendment No. 537, Mr. FORD. I announce that the Sen- the process. to implement the enforcement provisions of ator from Illinois [Ms. MOSELEY- the Bipartisan Budget Agreement, enforce BRAUN] is necessarily absent. Mr. MCCAIN. Reserving the right to the Balanced Budget Act of 1997, extend the object, I ask a question of the Senator Budget Enforcement Act of 1990 through fis- The PRESIDING OFFICER. Are there from Delaware. Will there be a unani- cal year 2002, and make technical and con- any other Senators in the Chamber de- mous-consent agreement propounded of forming changes to the Congressional Budget siring to vote? some list of priority of these amend- and Impoundment Control Act of 1974 and The result was announced—yeas 98, ments so that the Senators will know the Balanced Budget and Emergency Deficit nays 0, as follows: when their amendment will be consid- Control Act of 1985. [Rollcall Vote No. 138 Leg.] Biden amendment No. 539 (to amendment ered? YEAS—98 No. 537), to provide for the transfer of funds Mr. ROTH. I say to my distinguished from the general fund to the Violent Crime Abraham Faircloth Lieberman friend from Arizona we could set such a Reduction Trust Fund. Akaka Feingold Lott list. I thought at the beginning we Nickles modified amendment No. 551, to Allard Feinstein Lugar Ashcroft Ford would move informally, but as time provide for an increase in deduction for Mack Baucus Frist McCain health insurance costs of self-employed indi- proceeds we will try to set a list. Bennett Glenn McConnell Mr. MCCAIN. Further reserving the viduals, and to modify rules for allocating Biden Gorton Mikulski right to object, we all know, as the day interest expense to tax-exempt interest. Bingaman Graham Moynihan Gramm amendment No. 552, to allow fami- Bond Gramm wears on, there will be increasing pres- Murkowski lies to decide for themselves how best to use Boxer Grams Murray sures because of the departure as ar- their child tax credit. Breaux Grassley Nickles Brownback Gregg ticulated by my friend from Nevada Kerry amendment No. 554, to allow payroll Reed Bryan Hagel Reid last night, so it is of some interest as taxes to be included in the calculation of tax Bumpers Harkin Robb to which priority, after the initial liability for receiving the children’s tax Burns Hatch Rockefeller credit. Byrd Helms amendments that were agreed to last Roth AMENDMENT NO. 551, AS MODIFIED Campbell Hollings night, will be considered. Chafee Hutchinson Santorum I ask both the Democrat leader and The PRESIDING OFFICER. The Cleland Hutchison Sarbanes the managers, both managers of the pending business is the Nickles amend- Coats Inhofe Sessions Shelby bill, if we could have some predict- ment No. 551, with 2 minutes equally Cochran Inouye Collins Jeffords Smith (NH) ability associated with that. divided for debate. Conrad Johnson Smith (OR) I remove my objection. Mr. NICKLES. Mr. President, on be- Coverdell Kempthorne Snowe Mr. COVERDELL. Mr. President, re- half of myself, Senator HAGEL, Senator Craig Kennedy Specter Stevens ABRAHAM, Senator DOMENICI, and oth- D’Amato Kerrey serving the right to object, these Daschle Kerry Thomas amendments have been around for ers, the amendment that we proposed DeWine Kohl Thompson some time, and I would think there last night we have modified. We did re- Dodd Kyl Thurmond would have already been a sequence of ceive some requests from Senators to Domenici Landrieu Torricelli Dorgan Lautenberg Warner priorities. This proposal ought not to delete the provision that dealt with Durbin Leahy Wellstone be muscling around here. corporate deductibility of tax exempts. Enzi Levin Wyden That was not a major portion of the Mr. ROTH. I say to the distinguished NOT VOTING—2 Senator we do have a sequence of amendment. We did delete that. Moseley-Braun Roberts amendments and we intend to go down I might mention I think it is a good the sequence of amendments from provision. It is a provision that is in The amendment (No. 551), as modi- Democrat to Republican. the House bill, so it will be in con- fied, was agreed to. Mr. ROTH. Mr. President, I move to f ference. Mr. President, this amendment accel- reconsider the vote by which the RESERVATION OF LEADER TIME erates self-employed deductibility for amendment was agreed to. The PRESIDING OFFICER. Under insurance. It allows self-employed indi- Mr. LOTT. I move to lay that motion the previous order, the leadership time viduals to be able to deduct a greater on the table. is reserved. proportion of their health insurance The motion to lay on the table was agreed to. f needs. It increases it. For example, in 1997, current law is 40 percent; it in- Mr. LOTT addressed the Chair. REVENUE RECONCILIATION ACT creases it to 50 percent. In 1999 it in- The PRESIDING OFFICER. The ma- OF 1997 creases it to 60 percent. And so on. jority leader. The PRESIDING OFFICER. Under Mr. President, I ask for the yeas and Mr. LOTT. Mr. President, I ask unan- the previous order, the Senate will now nays on the amendment. imous consent that the remaining resume consideration of Senate bill 949, The PRESIDING OFFICER. Is there a votes in sequence be limited to 10 min- which the clerk will report. sufficient second? utes in length. The assistant legislative clerk read There is a sufficient second. The PRESIDING OFFICER. Is there as follows: The yeas and nays were ordered. objection? Mr. REID. Mr. President, reserving A bill (S. 949) to provide revenue reconcili- Mr. KERREY. I am not in opposition, ation pursuant to section 104(b) of the con- but with the 2-percent provision strick- the right to object, is this going to be current resolution on the budget for fiscal en, I ask unanimous consent to be a real 10 minutes? year 1998. added as a cosponsor to this amend- Mr. LOTT. Mr. President, I can re- The Senate resumed consideration of ment. spond to that question. I was just fix- the bill. The PRESIDING OFFICER. Without ing to say that the 10 minutes be Pending: objection, it is so ordered. strictly enforced. Please don’t leave Mr. NICKLES. I also ask unanimous the Chamber. We just had a couple of Dorgan amendment No. 515, to authorize the Secretary of the Treasury to abate the consent that Senator THURMOND be Senators that didn’t make that vote accrual of interest on income tax underpay- added as a cosponsor. because it had been beyond the normal ments by taxpayers located in Presidentially The PRESIDING OFFICER. Without time. When the 10 minutes is up we are declared disaster areas if the Secretary ex- objection, it is so ordered. going to turn it in.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00002 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6671 The PRESIDING OFFICER. Without The PRESIDING OFFICER. The Sen- The PRESIDING OFFICER. May we objection, it is so ordered. ator from Louisiana. have order, please. Mr. ROTH. Mr. President, I have a Mr. BREAUX. The problem of bring- Mr. ROTH. Mr. President, what is the further unanimous consent. ing up the amendment is there is no re- pending order? Mr. President, I am asking unani- quirement that the tax credit be used Mr. MOYNIHAN. Mr. President, we mous consent that following the pre- for the child. This is a per-child tax must have order. viously ordered stacked vote that the credit. We think there should be at The PRESIDING OFFICER. We will remainder of the sequence be in an al- least some encouragement that it be not proceed until there is order in the ternating fashion with the two man- used for the child. Chamber. agers determining the order. Mr. KERREY. Mr. President, this AMENDMENT NO. 554 The PRESIDING OFFICER. Is there provision would change American fam- The PRESIDING OFFICER. The objection? ilies with children, and it will generate pending question is on the Kerry of Without objection, it is so ordered. more wealth. It is good for American Massachusetts amendment No. 554. Mr. ROTH. Mr. President, I ask unan- families. We have been talking about Mr. ROTH. Mr. President, I yield the imous consent that following the dis- it. In addition to the child tax credit, floor. position of the Kerry amendment No. there are a number of us—Republicans Mr. KERRY. Mr. President, may we 554 that Senator DOMENICI be recog- and Democrats—talking about ways to have order. The PRESIDING OFFICER. Two nized to offer an amendment No. 537, to make this tax credit a vehicle for gen- minutes equally divided. The Senator be followed by the amendments in the erating wealth for the last few years. It following order: Biden-Gramm, from Massachusetts. is a good provision. Mr. KERRY. May we have order, Mr. Gramm, Bumpers, Craig, Brownback, I hope my colleagues will vote President. Frist, Abraham, and Byrd. against the motion to strike. The PRESIDING OFFICER. May we The PRESIDING OFFICER. Without The PRESIDING OFFICER. The time have order, please. objection, it is so ordered. has expired. Mr. KERRY. Mr. President, we just AMENDMENT NO. 552 Mr. ROTH. I ask for the yeas and heard the Senator from Texas talk Mr. ROTH. Mr. President, what is the nays. about getting a child tax credit for order of business before us? The PRESIDING OFFICER. Is there a children. Under the child tax credit as The PRESIDING OFFICER. The sufficient second? it is written in the Finance Committee pending amendment is the Gramm of There is a sufficient second. bill, 99 percent of the children eligible Texas amendment No. 552. The yeas and nays were ordered. in the lowest 20 percent of income will Mr. ROTH. I yield the floor. The PRESIDING OFFICER. The not get it; 86 percent of the children in The PRESIDING OFFICER. The de- question is on agreeing to the amend- the next quintile will not get it. This is bate is limited to 2 minutes equally di- ment of the Senator from Texas. On because, as we all know, most people in vided. this question, the yeas and nays have America pay their taxes by the payroll The Senator from Texas. been ordered, and the clerk will call tax. Mr. GRAMM. Mr. President, from the the roll. What I do in my amendment is take very beginning of this tax debate we The legislative clerk called the roll. the Contract With America provision The result was announced—yeas 46, have talked about a $500 tax credit per that was supported by Senator GRAMM, nays 54, as follows: child. And the logic has been to let Senator LOTT, and Senator COATS and working families decide how to spend [Rollcall Vote No. 139 Leg.] apply a refundable tax credit so that their money on their children. Then YEAS—46 we expand by 7 million the number of suddenly out of the Finance Committee Abraham Enzi Murkowski children who will be given a tax credit. on a very close vote has come a provi- Akaka Faircloth Nickles If we really want the working people of Allard Frist sion that says we are going to give you Roberts America to get this credit, it is appro- a $500 tax credit but you get it only if Ashcroft Gramm Santorum Bond Grams Sessions priate that a working family that is you use it the way we determine you Brownback Hagel Shelby earning $22,000 with two parents and should use it, which is to have an edu- Burns Helms Smith (NH) two children be able to get the credit. cational IRA. I think educational IRAs Campbell Hutchinson Smith (OR) Coats Hutchison Under the current legislation, they Snowe are wonderful, if you can afford them. Collins Inhofe Thomas would not get the credit. But the whole purpose of the $500 tax Conrad Johnson Thompson The PRESIDING OFFICER. The Sen- credit was to let working families de- Coverdell Kempthorne D’Amato Kyl Thurmond ator’s time has expired. cide. DeWine Lugar Warner Mr. KERRY. Only by the Contract I know the Senate is full of brilliant Domenici McCain Wellstone With America provision can we expand people, and we think we can decide Dorgan McConnell the number of children. things for families better than they NAYS—54 The PRESIDING OFFICER. One can. But that violates the agreement Baucus Ford Levin minute in opposition. The Senator we had with the American people on Bennett Glenn Lieberman from Oklahoma. this bill. We hear every time an issue is Biden Gorton Lott Mr. NICKLES. Mr. President, I urge debated that this violates the commit- Bingaman Graham Mack any colleagues to vote no on the Kerry Boxer Grassley Mikulski ment to the Congress, or it violates the Breaux Gregg Moseley-Braun amendment. This is really an amend- commitment to the President. This Bryan Harkin Moynihan ment to make the credit refundable. provision violates the commitment to Bumpers Hatch Murray Another way of saying that, this is a the American people, and all of us talk Byrd Hollings Reed Chafee Inouye Reid way for the Federal Government to about a $500 tax credit. We talk about Cleland Jeffords Robb spend more money. Costed out, the parents choosing. Let’s let them Cochran Kennedy Rockefeller outlays will increase in this bill under choose. Craig Kerrey Roth this amendment by $22 billion over 5 Daschle Kerry Sarbanes Mr. ROTH addressed the Chair. Dodd Kohl Specter years, by $47 billion over 10 years. The PRESIDING OFFICER. There is Durbin Landrieu Stevens I might mention, refundable credits 1 minute to the opposition. Feingold Lautenberg Torricelli are one of the most fraudulent in gov- Mr. ROTH. Mr. President, I strongly Feinstein Leahy Wyden ernment. The EITC program has ex- oppose this amendment. The amendment (No. 552) was re- ploded. It has an error rate of over 25 We had two goals in this legislation: jected. percent. This is an amendment to re- To provide tax relief to the family, to Mr. ROTH. Mr. President, I move to distribute wealth, and it denies tax provide assistance for higher education reconsider the vote. credits for families that have incomes to the families, and this carefully Mr. SANTORUM. I move to lay that above $60,000. I urge my colleagues to crafted compromise does exactly that. motion on the table. vote no on this amendment. I yield what time is remaining to the The motion to lay on the table was Mr. DOMENICI. Mr. President, I rise Senator from Louisiana. agreed to. to make a point of order against the

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00003 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6672 CONGRESSIONAL RECORD — SENATE June 27, 1997 amendment. It would increase outlays been ordered. The clerk will call the Mr. DOMENICI. Being that everyone by $22 billion over 5 years, $47 billion roll. in the Chamber would want it to hap- over 10 years and it thus violates sec- The assistant legislative clerk called pen, he agrees. tion 302(b) of the Budget Act. the roll. The PRESIDING OFFICER. Is there Mr. KERRY addressed the Chair. Mr. FORD. I announce that the Sen- objection? Hearing none, it is so or- The PRESIDING OFFICER. The Sen- ator from Illinois [Mr. DURBIN] is nec- dered. ator from Massachusetts. essarily absent. The amendment (No. 539) was agreed Mr. KERRY. Mr. President, this is The PRESIDING OFFICER. Are there to. revenue neutral, and I move to waive any other Senators in the Chamber AMENDMENT NO. 537, AS AMENDED the Budget Act to accept a revenue who desire to vote? The PRESIDING OFFICER. There neutral amendment. The yeas and nays resulted—yeas 39, will be 2 minutes equally divided. The PRESIDING OFFICER. Does the nays 60, as follows: Mr. DOMENICI. Mr. President, I am Senator ask for the yeas and nays? [Rollcall Vote No. 140 Leg.] the proponent of the waiver at this Mr. ROTH. Yeas and nays. YEAS—39 point, so I get 1 minute for the waiver. Mr. KERRY. I ask for the yeas and Akaka Feingold Lautenberg All we have done here is taken cur- nays. Biden Feinstein Leahy rent law, with reference to points of The PRESIDING OFFICER. Is there a Bingaman Ford Levin Boxer Glenn Mikulski order and the processes that we have to sufficient second? There is a sufficient Breaux Harkin Murray enforce budgets, the pay-go, and what second. Bumpers Hollings Reed we put in is the 5-year caps which we The PRESIDING OFFICER. The yeas Cleland Inouye Reid Coats Jeffords Robb did on the last 5-year budget. We only and nays were ordered. Collins Johnson Sarbanes did 2 years on the defense wall instead There are 2 minutes equally divided Conrad Kennedy Specter of 5. That exists today. on this vote. Daschle Kerry Torricelli Mr. MOYNIHAN. Mr. President, we The Senator from Massachusetts. Dodd Kohl Wellstone Dorgan Landrieu Wyden must have order. Mr. KERRY. Mr. President, let me The PRESIDING OFFICER (Ms. COL- NAYS—60 just say to my colleagues this does not LINS). The Senate will be in order. cost one penny additional because we Abraham Frist McCain Mr. DOMENICI. So, in order to en- change the phase-in. It is $100,000 plus Allard Gorton McConnell Ashcroft Graham Moseley-Braun force the agreement that we are claim- that you extended to the people in the Baucus Gramm Moynihan ing is a balanced budget, we must Finance Committee. I put the phaseout Bennett Grams Murkowski adopt this amendment or it is unen- at $65,000 to $70,000, and we phase in the Bond Grassley Nickles forceable, in terms of the appropriated children by age. So there is no impact Brownback Gregg Roberts Bryan Hagel Rockefeller accounts. on the budget. It is revenue neutral. Burns Hatch Roth Mr. MOYNIHAN. Madam President, Mr. NICKLES addressed the Chair. Byrd Helms Santorum might I just take a moment to observe The PRESIDING OFFICER. May we Campbell Hutchinson Sessions Chafee Hutchison Shelby that, with no uproar, we are about to have order, please. Cochran Inhofe Smith (NH) do something rather important. In this Mr. KERRY. And it extends it to 7 Coverdell Kempthorne Smith (OR) vote on budget procedures we are going million additional children. You can- Craig Kerrey Snowe to legislate a change in the inflation not say you are covering working chil- D’Amato Kyl Stevens DeWine Lieberman Thomas index used to update official calcula- dren in America if a working family is Domenici Lott Thompson tions of baseline spending. not able to take advantage of the cred- Enzi Lugar Thurmond Under section 257 of the Balanced its. Faircloth Mack Warner Budget and Emergency Deficit Control The PRESIDING OFFICER. The time NOT VOTING—1 Act of 1985 (Gramm-Rudman-Hollings), has expired. Durbin required inflation adjustments are Mr. NICKLES addressed the Chair. The PRESIDING OFFICER. On this made using a ‘‘fixed-weight index’’ pro- The PRESIDING OFFICER. If we can vote the nays are 60, the ayes are 39. duced by the Commerce Department’s all have order, please. Three-fifths of the Senators duly cho- Bureau of Economic Analysis. Section The Senator from Oklahoma has 1 sen and sworn not voting in the affirm- 1559(a)(3), of the changes in budget en- minute. ative, the motion is rejected. The point forcement procedures now before us, Mr. NICKLES. Mr. President, I am of order is sustained and the amend- require that in the future the adjust- advised by the Senator from New Mex- ment falls. ments should be based on the ‘‘domes- ico that the low-income family with Mr. ROTH. Mr. President, I move to tic product chain-type price index’’— two children under the EITC Program, reconsider the vote. also produced by the Bureau of Eco- if they have incomes of about $14,000, Mr. MOYNIHAN. I move to lay that nomic Analysis. Given the improve- receive a refundable tax credit of $3,680, motion on the table. ments in index number theory, this is a a lot more than their total tax liabil- The motion to lay on the table was perfectly appropriate change. ity. The Senator from Massachusetts agreed to. Might I also just remind my col- wants to add to that and increase out- AMENDMENT NO. 537 leagues that the Department of Labor’s lays by $22 billion. The PRESIDING OFFICER. The Bureau of Labor Statistics compiles Mr. DOMENICI addressed the Chair. question now is on the Domenici two other indexes used by the Govern- The PRESIDING OFFICER. The Sen- amendment No. 537, to which the pend- ment—CPI–U which is used to adjust ator from New Mexico. ing business is the second-degree provisions of the Tax Code and CPI–W Mr. DOMENICI. Mr. President, there amendment, No. 539. which is used to adjust benefits such as is a budget point of order, neutrality or The Senator from New Mexico. Social Security. no neutrality. The expenditures in this AMENDMENT NO. 539 TO AMENDMENT NO. 537 For the record I note that none of amendment exceed the expenditures Mr. DOMENICI. I do not see Senator these indexes give the same estimate of that are allocated under the budget BIDEN on the floor but I do see Senator inflation. resolution, and the Budget Act says GRAMM. Do you object if I modify my Here are the numbers for 1996: you cannot spend more than is allo- amendment to include your Biden- [In percent] cated to the committee, regardless of Gramm amendment, so when we vote CPI–U ...... 3.0 whether it is neutral or not. on mine we would be taking yours with CPI–W ...... 2.9 Mr. BYRD. Mr. President, may we us? Fixed Weight Price Index ...... 2.3 have order in the Chamber. Mr. GRAMM. Why don’t we put it on Chain Weight Price Index ...... 2.1 VOTE ON MOTION TO WAIVE THE BUDGET ACT my amendment? Today’s vote on budget procedures The PRESIDING OFFICER. The Sen- Mr. DOMENICI. I will object. Do you should be recalled when we return—as ate will be in order. The question is on object? we must—to the issue of producing an agreeing to the motion to waive the Mr. GRAMM. No, being a sweet, won- accurate cost of living index for the point of order. The yeas and nays have derful person, I will not object. purpose of automatic indexation of

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00004 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6673 Government programs. No one is refer- Biden Glenn Mack et that we are enforcing here, we had $7 ring to today’s legislative actions as Bingaman Gorton McCain billion of net deficit reduction as com- Bond Graham McConnell ‘‘politicizing’’ the calculation of budg- Boxer Gramm Mikulski pared to current policy. Ninety-seven et updates. We are just getting the Breaux Grams Moseley-Braun percent of deficit reduction was simply numbers right. Brownback Grassley Moynihan assumed. That deficit reduction and Bryan Gregg And no one should refer to legislating Murkowski policy changes has now fallen to $1 bil- Burns Hagel Murray a correction in automatic indexation Byrd Harkin Nickles lion because we are short on spectrum. formulas as a ‘‘political’’ fix. Campbell Hatch Reed Everything we are doing in balancing Chafee Helms Reid the budget is based on assumptions. The PRESIDING OFFICER. The Sen- Cleland Hollings Robb ator from Delaware. Coats Hutchinson The only enforcement mechanism we Roberts Cochran Hutchison now have is on discretionary spending, Mr. BIDEN. Madam President, I ask Rockefeller Collins Inhofe unanimous consent that Senators Roth and the first act in considering this Conrad Inouye budget was waiving that discretionary HATCH and GREGG be added as cospon- Coverdell Jeffords Santorum sors to the amendment. Craig Johnson Sarbanes spending cap in the last budget. Sessions The PRESIDING OFFICER. Without D’Amato Kempthorne My amendment sets out the deficit Daschle Kennedy Shelby reduction targets that we have com- objection, it is so ordered. Smith (NH) DeWine Kerrey mitted to and enforces them with an Mr. DOMENICI. Madam President, I Dodd Kerry Smith (OR) ask for the yeas and nays. Domenici Kohl Snowe across-the-board cut if we refuse to Specter The PRESIDING OFFICER. Is there a Dorgan Kyl meet them. Also, my provision says Durbin Landrieu Stevens sufficient second? that in paying for a tax cut, you can Enzi Lautenberg Thomas pay for it by cutting entitlements, by There is a sufficient second. Faircloth Leahy Thompson raising other taxes or by lowering the The yeas and nays were ordered. Feingold Levin Thurmond Feinstein Lieberman Torricelli discretionary spending caps. So it gives The PRESIDING OFFICER. The Sen- Ford Lott Warner us the option in the future, if we ever ator from Texas. Frist Lugar Wyden do another tax cut, to not have to cut Mr. GRAMM. Madam President, I NAYS—2 Medicare in order to pay for tax cuts, would like the 1 minute on the Biden- Bumpers Wellstone so that if we want to reduce discre- Gramm second-degree amendment. The amendment (No. 537), as amend- tionary spending and put a spending The PRESIDING OFFICER. The 1 cap in place, we can do it. minute has expired. ed, was agreed to. Mr. MOYNIHAN. Madam President, I This budget has a lot of assumptions Mr. GRAMM. But we have a second- move to reconsider the vote by which in it. We need as strong as possible an degree amendment that was added to the amendment was agreed to. enforcement. If you want strong en- the Domenici amendment by unani- Mr. DOMENICI. I move to lay that forcement, vote for this amendment. mous consent. We would like it. motion on the table. The PRESIDING OFFICER. The Sen- The PRESIDING OFFICER. The The motion to lay on the table was ator’s time has expired. amendment has been accepted. All agreed to. Mr. LAUTENBERG addressed the time has expired. Mr. DOMENICI addressed the Chair. Chair. Mr. DOMENICI. I ask consent that he The PRESIDING OFFICER. The Sen- The PRESIDING OFFICER. The Sen- gets 1 minute. It is fair. ator from New Mexico. ator from New Jersey. The PRESIDING OFFICER. Without Mr. DOMENICI. Madam President, Mr. LAUTENBERG. Madam Presi- objection, it is so ordered. The Senator what actually happened on that vote, dent, I oppose the Gramm amendment. from Texas. the Parliamentarian misunderstood The amendment would radically The Senate will be in order. and he had us vote up or down on this change current budget rules by allow- Mr. GRAMM. Let me take 30 seconds amendment, and I had asked that it be ing temporary, unspecified cuts in dis- and allow Senator BIDEN to have the a waiver of the Budget Act. In light of cretionary programs to pay for perma- other 30 seconds. Our colleagues will the fact we have—how many votes? nent tax cuts. That would violate the remember that we set up a violent The PRESIDING OFFICER. Ninety- bipartisan budget agreement and could crime trust fund to guarantee adequate eight yeas. explode the deficit in the future. funding for law enforcement, and for Mr. DOMENICI. I would like to clear This amendment also brings back the our antidrug effort. That provision was the amendment and make sure we have discredited Gramm-Rudman system of set to expire and all we are doing in waived the Budget Act for this amend- automatic across-the-board cuts, the this amendment is simply extending ment so it is no longer possible to raise system that led to a proliferation of that trust fund. This is a mightily im- a point of order against it. gimmicks and rosy scenarios, and we portant matter. I am confident no one So I move to waive the Budget Act didn’t significantly reduce the deficit is going to oppose it. I simply wanted for consideration of this amendment to until we got rid of it. to make note of what we are doing. I this bill and any conference report that Madam President, fool me once, yield the remainder of the time. returns with it in. shame on you; fool me twice, shame on Mr. BIDEN. Madam President, there VOTE ON MOTION TO WAIVE THE BUDGET ACT us. I yield the remainder of my time to is nothing to add. This is simply ex- The PRESIDING OFFICER. The my colleague from New Mexico. The PRESIDING OFFICER. The Sen- tending the extent, the life of this question is on agreeing to the motion ator from New Mexico. agreement—the existence of the trust to waive the Budget Act with respect Mr. DOMENICI. Madam President, fund. to amendment No. 539, as amended. The motion was agreed to. Gramm-Rudman-Hollings didn’t work VOTE ON AMENDMENT NO. 537, AS AMENDED Mr. MOYNIHAN. Madam President, I before, and it won’t work the next The PRESIDING OFFICER. All time move to reconsider the vote by which time. The Senator from Texas would has expired. The question is on agree- the motion was agreed to. like to put back into effect Gramm- ing to the amendment. The yeas and Mr. ROTH. I move to lay that motion Rudman-Hollings automatic sequesters nays have been ordered. on the table. if you miss your targets. As a Senator, The clerk will call the roll. The motion to lay on the table was I personally don’t believe you ought to The legislative clerk called the roll. agreed to. offset appropriated accounts, to cut The PRESIDING OFFICER. Are there Mr. ROTH. The next amendment is them to put in permanent tax cuts. I any other Senators in the Chamber Senator GRAMM’s. think that deserves far more consider- who desire to vote? The PRESIDING OFFICER. The Sen- ation than 30 seconds on the floor of The result was announced, yeas 98, ator from Texas is recognized. the Senate. nays 2, as follows: AMENDMENT NO. 566 Mr. LAUTENBERG. Madam Presi- [Rollcall Vote No. 141 Leg.] (Purpose: To guarantee a balanced Federal dent, I raise a point of order that the YEAS—98 budget and expand tax relief options) pending amendment is extraneous and Abraham Allard Baucus Mr. GRAMM. Madam President, let violates section 313(b)(1)(A) of the Con- Akaka Ashcroft Bennett me remind everybody that in the budg- gressional Budget Act.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00005 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6674 CONGRESSIONAL RECORD — SENATE June 27, 1997 The PRESIDING OFFICER. If the cretionary appropriations are reduced that The PRESIDING OFFICER. Under Senator will withhold, the clerk will Congress and the President designate in stat- the previous order, the Senator from first report the amendment. ute as offsets for tax relief, the adjustments Arkansas is recognized to offer an The bill clerk read as follows: shall be the total amount of such reductions amendment on which there will be 2 in appropriations in discretionary accounts The Senator from Texas [Mr. GRAMM] pro- and the outlays flowing in all years from minutes of debate equally divided. poses an amendment numbered 566. such reduction.’’ The Senator from Arkansas. Mr. GRAMM. Madam President, I ask (e) Notwithstanding, any provision of this AMENDMENT NO. 568 unanimous consent that the reading of or any other Act, section 253 of the Balanced (Purpose: To prohibit the scoring, for budget the amendment be dispensed with. Budget and Emergency Deficit Control Act is purposes, of revenues associated with the The PRESIDING OFFICER. Without extended through fiscal year 2002. sale of certain federal lands) objection, it is so ordered. The PRESIDING OFFICER. The Sen- Mr. BUMPERS. Madam President, I The amendment is as follows: ator from Texas. send an amendment to the desk. At the appropriate place, add the fol- Mr. GRAMM. Madam President, The PRESIDING OFFICER. The lowing: under section 904 of the Budget Act, I clerk will report the amendment. SEC. . GUARANTEED BALANCED BUDGET. move to waive the point of order The bill clerk read as follows: (a) MAXIMUM DEFICIT AMOUNT.—Section 253 against the pending amendment, and I The Senator from Arkansas [Mr. BUMPERS] of the Balanced Budget and Emergency Def- ask for the yeas and nays. proposes an amendment numbered 568. icit Control Act of 1985 is amended— The PRESIDING OFFICER. Is there a (1) in subsection (b), in the last sentence by Mr. BUMPERS. Madam President, I sufficient second? ask unanimous consent that further striking the period and inserting ‘‘and There is a sufficient second. reading of the amendment be dispensed $10,000,000,000 for fiscal years 1998 and there- The yeas and nays were ordered. after.’’; and with. (2) by striking subsections (g) and (h) and VOTE ON MOTION TO WAIVE THE BUDGET ACT The PRESIDING OFFICER. Without inserting the following: The PRESIDING OFFICER. The objection, it is so ordered. ‘‘(g) MAXIMUM DEFICIT AMOUNT.—In this question is on agreeing to the motion The amendment is as follows: section— to waive the Budget Act with respect ‘‘(1) Notwithstanding any provision of this At the appropriate place add the following: to amendment No. 566. The yeas and ‘‘(f) BUDGETARY TREATMENT OF SALES OF or the term ‘deficit’ shall have the same nays have been ordered. The clerk will meaning as the term ‘deficit’ in section 3(6) CERTAIN FEDERAL LANDS.—The amounts re- of the Congressional Budget and Impound- call the roll. alized from the sale or lease of lands or in- ment Control Act of 1974 as on the day before The legislative clerk called the roll. terests in lands which are part of the Na- the date of enactment of the Budget Enforce- The PRESIDING OFFICER. Are there tional Park System, the Forest Service Sys- ment Act of 1990; and any other Senators in the Chamber de- tem or the U.S. Fish and Wildlife refuge sys- ‘‘(2) the term ‘maximum deficit amount’ siring to vote? tem shall not be scored with respect to the means— The yeas and nays resulted—yeas 37, level of budget authority, outlays, or reve- ‘‘(A) with respect to fiscal year 1998, nays 63, as follows: nues.’’ $90,500,000,000; [Rollcall Vote No. 142 Leg.] Mr. BUMPERS. Madam President, ‘‘(B) with respect to fiscal year 1999, YEAS—37 this amendment will prohibit the scor- $89,500,000,000; ing of the sale of any lands from a na- ‘‘(C) with respect to fiscal year 2000, Abraham Grams Mack $82,900,000,000; Allard Grassley McCain tional park or a national wildlife ref- ‘‘(D) with respect to fiscal year 2001, Ashcroft Gregg McConnell uge or Forest Service lands. $53,100,000,000; Bond Hagel Nickles To my colleagues, I want to say, I ‘‘(E) with respect to fiscal year 2002 and fis- Brownback Hatch Santorum have witnessed over the past 10 years Coats Helms Sessions cal years thereafter, zero.’’ Collins Hollings an irresistible urge on the part of some (b) LOOK-BACK SEQUESTER.—Section 253 of Shelby Coverdell Hutchinson Smith (NH) of my colleagues to dispose of some of the Balanced Budget and Emergency Deficit Craig Hutchison Thomas the national treasures of this country, Control Act of 1985 is amended by adding at Enzi Inhofe Thompson the end thereof the following new subsection: Faircloth Kempthorne even suggesting a commission to deter- Thurmond ‘‘(h) LOOK-BACK SEQUESTER.— Frist Kyl mine which lands, which national ‘‘(1) IN GENERAL.—On July 1 of each fiscal Gramm Lott parks, we can do without and sell. year, the Director of OMB shall determine if NAYS—63 This amendment is designed to do laws effective during the current fiscal year Akaka Dorgan Lugar two things. No. 1, it is designed to dis- will cause the deficit to exceed the max- Baucus Durbin Mikulski courage that by making it impossible imum deficit amount for such fiscal year. If Bennett Feingold Moseley-Braun to score the proceeds from a sale of na- the limit is exceeded, there shall be a pre- Biden Feinstein Moynihan tional parks, Forest Service lands, or liminary sequester of July 1 to eliminate the Bingaman Ford Murkowski excess. Boxer Glenn Murray wildlife refuges in a reconciliation bill; ‘‘(2) PERMANENT SEQUESTER.—Budget au- Breaux Gorton Reed and, No. 2, I want to say that I think it thority sequestered on July 1 pursuant to Bryan Graham Reid is a terrible practice. When I was Gov- Bumpers Harkin Robb paragraph (1) shall be permanently canceled Burns Inouye Roberts ernor, I never allowed a one-time asset on July 15. Byrd Jeffords Rockefeller to be used in the budget. ‘‘(3) NO MARGIN.—The margin for deter- Campbell Johnson Roth Finally, to those who would say, mining a sequester under this subsection Chafee Kennedy Sarbanes well, this will keep us from leasing shall be zero. Cleland Kerrey Smith (OR) ‘‘(4) SQUESTRATION PROCEDURES.—The pro- Cochran Kerry Snowe ANWR, that is simply not true. You vision of subsections (c), (d), and (e) of this Conrad Kohl Specter can lease ANWR. You can lease any- section shall apply to a sequester under this D’Amato Landrieu Stevens thing, wildlife refuge or otherwise, but Daschle Lautenberg Torricelli subsection.’’ DeWine Leahy Warner you cannot use it as an asset in the (c) OFFSETTING TAX CUTS WITH CUTS IN DIS- Dodd Levin Wellstone reconciliation bill. CRETIONARY SPENDING.—Section 252 of the Domenici Lieberman Wyden I yield back such time as I may have. Balanced Budget and Emergency Deficit The PRESIDING OFFICER. On this The PRESIDING OFFICER. The Sen- Control Act of 1985 is amended by adding at the end the following: vote the yeas are 37, the nays are 63. ator from New Mexico is recognized. ‘‘(f) OFFSETS WITH DISCRETIONARY SPEND- Three-fifths of the Senators duly cho- Mr. DOMENICI. Madam President, ING.—For purposes of subsection (b), revenue sen and sworn not having voted in the fellow Senators, the bipartisan budget reductions increasing the deficit may be off- affirmative, the motion is rejected. agreement and the Domenici-Lauten- set by reductions in discretionary appro- The point of order is sustained, and the berg amendment revised the asset sale priated amounts reducing the deficit.’’. amendment falls. scoring rule. The new rule prohibits (d) ADJUSTMENT OF DISCRETIONARY SPEND- Mr. ROTH. I move to reconsider the scoring asset sales that would lead to a ING LEVELS FOR TAX CUTS.—Section 251(b)(2) financial loss to the Government. of the Balanced Budget and Emergency Def- vote. icit Control Act of 1985 is amended by adding Mr. MOYNIHAN. I move to lay that Much work has gone into this. Demo- at the end the following: motion on the table. crats and Republicans have worked on ‘‘(I) TAX RELIEF ADJUSTMENTS.—If, for any The motion to lay on the table was it. Senator BUMPERS wants to make a fiscal year or years, appropriations for dis- agreed to. special exception for public lands.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00006 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6675 Let me suggest the awesome situa- The motion to lay on the table was creation of a new entitlement program tion that he has talked about never has agreed to. if there is a true need for the program. happened in the U.S. Senate. We have AMENDMENT NO. 569 It simply will require that such a need never tried to sell national parks. We (Purpose: To modify the pay-as-you-go re- be truly demonstrated. have never had any commission to sell quirement of the budget process to pro- My amendment will not prevent a national parks. Somebody in the House hibit the use of tax increases to pay for tax increase that is used for deficit re- had a wild idea, and, frankly, that is mandatory spending increases) duction. never going to happen here. The PRESIDING OFFICER. Under What my amendment will do is put As a matter of fact, this amendment, the previous order, the Senator from an end to the fiction that tax increases what we have already adopted, says Idaho is recognized to offer an amend- are capable of offsetting the cost of ad- that if there is any financial loss to the ment on which there will be 2 minutes ditional mandatory spending. Government, you cannot count an of debate equally divided. Mr. LAUTENBERG addressed the asset sale. Mr. CRAIG. Madam President, I send Chair. I make a point of order against the an amendment to the desk. The PRESIDING OFFICER. The Sen- Bumpers amendment. It violates sec- The PRESIDING OFFICER (Mr. ator from New Jersey is recognized. tion 313 of the Budget Act. ENZI). The clerk will report. Mr. LAUTENBERG. Mr. President, I Mr. BUMPERS. Madam President, I The legislative clerk read as follows: rise to oppose the Craig amendment. move to waive the Budget Act for Sen- The Senator from Idaho [Mr. CRAIG] pro- The amendment would change the pay- ate consideration of my amendment. poses an amendment numbered 569. go system and mean that we could not I ask for the yeas and nays. Mr. CRAIG. I ask unanimous consent provide for health insurance to chil- The PRESIDING OFFICER. Is there a the reading of the amendment be dis- dren by closing unnecessary tax loop- sufficient second? pensed with. holes. You heard it from the Senator There is a sufficient second. The PRESIDING OFFICER. Without directly. The yeas and nays were ordered. objection, it is so ordered. This is outrageous. It would under- VOTE ON MOTION TO WAIVE THE BUDGET ACT The amendment is as follows: mine our efforts to ensure that all of The PRESIDING OFFICER. The At the appropriate place insert the fol- the 10 million children who lack health question occurs on agreeing to the mo- lowing: coverage in this country can have it. tion to waive the Budget Act. The yeas SEC. . RESTRICTION ON THE USE OF TAX IN- There are already budget rules that and nays have been ordered. The clerk CREASES. limit the use of savings that come from will call the roll. (a) IN GENERAL.—In the Senate, for pur- tax loopholes. This amendment would poses of section 202 of House Concurrent Res- The bill clerk called the roll. go much farther and make it tougher The PRESIDING OFFICER. Are there olution 67 (104th Congress), it shall not be in order to consider any bill, joint resolution, to invest in children’s health programs. any other Senators in the Chamber de- amendment, motion, or conference report If you vote for the Craig amendment, siring to vote? that provides an increase in direct spending you are voting to protect tax loop- The yeas and nays resulted—yeas 48, offset by an increase in receipts. holes. If you vote against it, you are nays 52, as follows: (b) WAIVER.—This section may be waived voting to help children obtain health [Rollcall Vote No. 143 Leg.] or suspended in the Senate only by the af- insurance in the future. YEAS—48 firmative vote of three-fifths of the Mem- The PRESIDING OFFICER. All time bers, duly chosen and sworn. Akaka Ford Levin (c) APPEALS.—Appeals in the Senate from is expired. Biden Glenn Lieberman the decisions of the Chair relating to any Mr. LAUTENBERG. Mr. President, I Bingaman Graham Mikulski Boxer Gregg Moseley-Braun provision of this section shall be limited to 1 raise a point of order that the pending Bryan Harkin Moynihan hour, to be equally divided between, and con- amendment is extraneous and violates Bumpers Hollings Murray trolled by, the appellant and the manager of section 313(b)(1)(A) of the Congres- Byrd Inouye Reed the concurrent resolution, bill, or joint reso- sional Budget Act. Chafee Jeffords Reid lution, as the case may be. An affirmative Mr. CRAIG. Mr. President, under sec- Cleland Johnson Robb vote of three-fifths of the Members of the Collins Kennedy Rockefeller Senate, duly chosen and sworn, shall be re- tion 904 of the Budget Act, I move to Conrad Kerrey Sarbanes waive the point of order against the Daschle Kerry Snowe quired in the Senate to sustain an appeal of Dodd Kohl Specter the ruling of the Chair on a point of order pending amendment, and I ask for the Dorgan Landrieu Torricelli raised under this section. yeas and nays. Durbin Lautenberg Wellstone (d) DETERMINATION OF BUDGET LEVELS.— The PRESIDING OFFICER. Is there a Feingold Leahy Wyden For purposes of this section, the levels of di- sufficient second? NAYS—52 rect spending and receipts for a fiscal year There is a such second. shall be determined on the basis of estimates The yeas and nays were ordinary had. Abraham Faircloth McCain made by the Committee on the Budget of the Allard Feinstein McConnell VOTE ON MOTION TO WAIVE THE BUDGET ACT Ashcroft Frist Senate. Murkowski The PRESIDING OFFICER. The Baucus Gorton Nickles Mr. CRAIG. Mr. President, my Bennett Gramm Roberts amendment would change the current question occurs on agreeing to the mo- Bond Grams Roth pay-go procedures by establishing a 60- tion to waive the Budget Act. The yeas Breaux Grassley Santorum and nays have been ordered. The clerk Brownback Hagel Sessions vote point of order against using tax Burns Hatch will call the roll. Shelby increases to pay for new mandatory Campbell Helms Smith (NH) The assistant legislative clerk called Coats Hutchinson spending increases. My amendment is Smith (OR) the roll. Cochran Hutchison the first step toward reining in the un- Coverdell Inhofe Stevens controlled costs of mandatory spending The PRESIDING OFFICER. Are there Thomas Craig Kempthorne programs that I believe threaten our any other Senators in the Chamber de- D’Amato Kyl Thompson siring to vote? DeWine Lott Thurmond fiscal future. This budget should have Domenici Lugar Warner gone further in entitlement reform and The yeas and nays resulted—yeas 42, Enzi Mack it should not have added more entitle- nays 58, as follows: The PRESIDING OFFICER. On this ment spending, but there is one reform [Rollcall Vote No. 144 Leg.] question, the yeas are 47, the nays are that should be made definitely, and YEAS—42 52. Three-fifths of the Senators duly that is to cause no further harm. Abraham Faircloth Inhofe chosen and sworn not having voted in My amendment will not affect a sin- Allard Frist Kempthorne Ashcroft Gramm Kyl the affirmative, the motion is rejected, gle current beneficiary of a single ex- Bennett Grams Lott the point of order is sustained, and the isting entitlement program. My Brownback Grassley Mack amendment falls. amendment will not affect a single per- Campbell Gregg McCain Mr. ROTH. I move to reconsider the son who will qualify to become a bene- Coats Hagel McConnell Coverdell Hatch Murkowski vote. ficiary under the current requirements Craig Helms Nickles Mr. MOYNIHAN. I move to lay it on of any existing entitlement program. D’Amato Hutchinson Roberts the table. My amendment will not prevent the Enzi Hutchison Roth

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00007 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6676 CONGRESSIONAL RECORD — SENATE June 27, 1997 Santorum Smith (NH) Thompson through 2002 shall equal total outlays for all (b)(2)(A) or (B), the special direct spending Sessions Stevens Thurmond direct spending except net interest as deter- message shall include the text of a special Shelby Thomas Warner mined by the Director of the Office of Man- direct spending resolution implementing the NAYS—58 agement and Budget (hereinafter referred to President’s recommendations through rec- Akaka Dorgan Levin in this title as the ‘‘Director’’) under sub- onciliation directives instructing the appro- Baucus Durbin Lieberman section (b). priate committees of the House of Represent- Biden Feingold Lugar (b) INITIAL REPORT BY DIRECTOR.— atives and Senate to determine and rec- Bingaman Feinstein Mikulski (1) IN GENERAL.—Not later than 30 days ommend changes in laws within their juris- Bond Ford Moseley-Braun after the date of enactment of this title, the dictions. If the President recommends no re- Boxer Glenn Moynihan Director shall submit a report to Congress ductions pursuant to (b)(2)(C), the special di- Breaux Gorton Murray setting forth projected direct spending tar- rect spending message shall include the text Bryan Graham Reed Bumpers Harkin gets for each of fiscal years 1998 through 2002. of a special resolution concurring in the Reid Burns Hollings (2) PROJECTIONS AND ASSUMPTIONS.—The President’s recommendation of no legislative Robb Byrd Inouye Director’s projections shall be based on legis- action. Rockefeller Chafee Jeffords lation enacted as of 5 days before the report SEC. . REQUIRED RESPONSE BY CONGRESS. Cleland Johnson Sarbanes is submitted under paragraph (1). The Direc- Smith (OR) (a) IN GENERAL.—It shall not be in order in Cochran Kennedy tor shall use the same economic and tech- the House of Representatives or the Senate Collins Kerrey Snowe Specter nical assumption used in preparing the con- to consider a concurrent resolution on the Conrad Kerry current resolution on the budget for fiscal Daschle Kohl Torricelli budget unless that concurrent resolution DeWine Landrieu Wellstone year 1998 (H.Con.Res. 84). fully addresses the entirety of any overage Dodd Lautenberg Wyden SEC.—03. ANNUAL REVIEW OF DIRECT SPENDING contained in the applicable report of the Domenici Leahy AND RECEIPTS BY PRESIDENT. President under section ll04 through rec- The PRESIDING OFFICER. On this As part of each budget submitted under onciliation directives. vote, the yeas are 42, the nays are 58. section 1105(a) of title 31, United States (b) WAIVER AND SUSPENSION.—This section Code, the President shall provide an annual may be waived or suspended in the Senate Three-fifths of the Senators duly cho- review of direct spending and receipts, which only by the affirmative vote of three-fifths sen and sworn not having voted in the shall include— of the Members, duly chosen and sworn. This affirmative, the motion is rejected. (1) information on total outlays for pro- section shall be subject to the provisions of The point of order is sustained, and grams covered by the direct spending tar- section 258 of the Balanced Budget and the amendment fails. gets, including actual outlays for the prior Emergency Deficit Control Act of 1985. Mr. ROTH. Mr. President, I move to fiscal year and projected outlays for the cur- (c) APPEALS.—Appeals in the Senate from reconsider the vote by which the mo- rent fiscal year and the 5 succeeding fiscal the decisions of the Chair relating to any tion was rejected. years; and provision of this section shall be limited to 1 (2) information on the major categories of hour, to be equally divided between, and con- Mr. MOYNIHAN. I move to lay that Federal receipts, including a comparison be- trolled by, the appellant and the manager of motion on the table. tween the levels of those receipts and the the bill or joint resolution, as the case may The motion to lay on the table was levels projected as of the date of enactment be. An affirmative vote of three-fifths of the agreed to. of this title. Members of the Senate, duly chosen and AMENDMENT NO. 570 SEC.—04. SPECIAL DIRECT SPENDING MESSAGE sworn, shall be required in the Senate to sus- BY PRESIDENT. tain an appeal of the ruling of the Chair on (Purpose: To establish procedures to ensure a a point of order raised under this section. balanced Federal budget by fiscal year 2002) (a) TRIGGER.—If the information submitted by the President under section——03 indi- SEC. 06. RELATIONSHIP TO BALANCED BUDGET The PRESIDING OFFICER. Under cates— AND EMERGENCY DEFICIT CONTROL the previous order, the Senator from (1) that actual outlays for direct spending ACT. Kansas is recognized to offer an amend- in the prior fiscal year exceeded the applica- Reductions in outlays or increases in re- ment on which there are 2 minutes of ble direct spending target; or ceipts resulting from legislation reported debate equally divided. (2) that outlays for direct spending for the pursuant to section ll05 shall not be taken Mr. BROWNBACK. Mr. President, I current or budget year are projected to ex- into account for purposes of any budget en- ceed the applicable direct spending targets, forcement procedures under the Balanced have an amendment at the desk in the Budget and Emergency Deficit Control Act second-degree. the President shall include in his budget a special direct spending message meeting the of 1985. The PRESIDING OFFICER. The SEC. 07. ESTIMATING MARGIN. clerk will report. requirements of subsection (b). (b) CONTENTS.— For any fiscal year for which the overage The legislative clerk read as follows: (1) INCLUSIONS.—The special direct spend- is less than one-half of 1 percent of the direct The Senator from Kansas [Mr. BROWN- ing message shall include— spending target for that year, the procedures BACK], for himself, Mr. KOHL, and Mr. (A) an analysis of the variance in direct set forth in sections ll04 and ll05 shall MCCAIN, proposes an amendment numbered spending over the direct spending targets; not apply. 570. and SEC. 08. EFFECTIVE DATE. Mr. BROWNBACK. Mr. President, I (B) the President’s recommendations for This title shall apply to direct spending ask unanimous consent that reading of addressing the direct spending overages, if targets for fiscal years 1998 through 2002 and any, in the prior, current, or budget year. shall expire at the end of fiscal year 2002. the amendment be dispensed with. (2) ADDITIONAL MATTERS.—The President’s Mr. BROWNBACK. Mr. President, The PRESIDING OFFICER. Without recommendations may consist of any of the Senator KOHL and I have offered this objection, it is so ordered. following: The amendment is as follows: (A) Proposed legislative changes to recoup amendment. It is a very, very simple amendment. It just says if we are going At the end of the bill, add the following: or eliminate the overage for the prior, cur- rent, and budget years in the current year, to break the spending caps on this bill, TITLE —BUDGET CONTROL the budget year, and the 4 outyears. on this budget agreement that we’ve SEC. 01. SHORT TITLE; PURPOSE. (B) Proposed legislative changes to recoup told the American people is going to (a) SHORT TITLE.—This title may be cited or eliminate part of the overage for the balance the budget, if we’re going to as the ‘‘Bipartisan Budget Enforcement Act prior, current, and budget year in the cur- break the spending limits on it, we of 1997’’. rent year, the budget year, and the 4 out- have to vote on it. And we have to vote (b) PURPOSE.—The purpose of this title is— years, accompanied by a finding by the (1) to ensure a balanced Federal budget by President that, because of economic condi- and pass that by a 60-vote margin. fiscal year 2002; tions or for other specified reasons, only That’s it. (2) to ensure that the Bipartisan Budget some of the overage should be recouped or The President has to say how he is Agreement is implemented; and eliminated by outlay reductions or revenue going to get us to a balanced budget. If (3) to create a mechanism to monitor total increases, or both. we’re going to break that cap, he has costs of direct spending programs, and, in (C) A proposal to make no legislative to say how he is going to get us to a the event that actual or projected costs ex- changes to recoup or eliminate any overage, balanced budget; if we’re going to ceed targeted levels, to require the President accompanied by a finding by the President break that spending cap, he has to say and Congress to address adjustments in di- that, because of economic conditions or for where we’re going to make the spend- rect spending. other specified reasons, no legislative SEC.—02. ESTABLISHMENT OF DIRECT SPENDING changes are warranted. ing cuts, and we have to vote if we are TARGETS. (c) PROPOSED SPECIAL DIRECT SPENDING going to break it. (a) IN GENERAL.—The initial direct spend- RESOLUTION.—If the President recommends I think this is the least we can do for ing targets for each of fiscal years 1998 reductions consistent with subsection the American people. It says, ‘‘Folks,

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00008 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6677 we meant it when we said we were [Rollcall Vote No. 145 Leg.] ‘‘ENFORCEMENT OF BALANCED BUDGET IN THE going to balance the budget. We meant YEAS—57 SENATE ‘‘SEC. 315. (a) POINT OF ORDER.—It shall not it when we said we’re going to balance Abraham Frist McCain it by the year 2002.’’ And if we are Allard Gorton McConnell be in order in the Senate to consider any res- going to break it, we’ve got to break it Ashcroft Gramm Murkowski olution or bill (or amendment, motion, or Bennett Grams Nickles conference report on such resolution or bill) by a 60-vote margin. Bond Grassley Robb that provides or would cause a deficit (as de- I yield the remainder of my time to Brownback Gregg Roberts termined for purposes of the Bipartisan Senator KOHL. Burns Hagel Roth Budget Agreement of May 16, 1997) for fiscal Campbell Hatch Santorum year 2002 or any fiscal year thereafter. Mr. KOHL. Thank you. Chafee Helms Sessions ‘‘(b) WAIVER AND SUSPENSION.—This section Mr. President, I also am a supporter Coats Hutchinson Shelby Cochran Hutchison Smith (NH) may be waived or suspended in the Senate of this amendment. What it simply Collins Inhofe Smith (OR) only by the affirmative vote of three-fifths says is that we are going to do what we Coverdell Jeffords Snowe of the Members, duly chosen and sworn. This set out to do, which is to balance the Craig Kempthorne Specter section shall be subject to the provisions of budget, and, if we go over it in any D’Amato Kohl Stevens section 258 of the Balanced Budget and DeWine Kyl Thomas year, then we are going to have to de- Emergency Deficit Control Act of 1985. Domenici Lott Thompson ‘‘(c) APPEALS.—Appeals in the Senate from cide how we are going to reduce that Enzi Lugar Thurmond the decisions of the Chair relating to any spending to be sure we stay on target Faircloth Mack Warner provision of this section shall be limited to 1 to get the budget balanced over the NAYS—43 hour, to be equally divided between, and con- next several years. That is all this Akaka Feingold Levin trolled by, the appellant and the manager of does. It is not a sequester. Nobody Baucus Feinstein Lieberman the bill or joint resolution, as the case may should fear that. But it is simply an Biden Ford Mikulski be. An affirmative vote of three-fifths of the Members of the Senate, duly chosen and enforcement mechanism which is nec- Bingaman Glenn Moseley-Braun Boxer Graham Moynihan sworn, shall be required in the Senate to sus- essary. Breaux Harkin Murray tain an appeal of the ruling of the Chair on Mr. LAUTENBERG. Mr. President, Bryan Hollings Reed a point of order raised under this section. Bumpers Inouye Reid ‘‘(d) DETERMINATION OF BUDGET LEVELS.— this amendment is a fast-track ticket Byrd Johnson Rockefeller For purposes of this section, the levels of to deep cuts in Medicare and Medicaid. Cleland Kennedy Sarbanes new budget authority, outlays, and revenues It would essentially create a cap for Conrad Kerrey Torricelli for a fiscal year shall be determined on the these and other essential mandatory Daschle Kerry Dodd Landrieu Wellstone basis of estimates made by the Committee programs like the Medicare and Med- Dorgan Lautenberg Wyden on the Budget of the Senate.’’. icaid. Durbin Leahy (b) PRESIDENT’S BUDGET.—Section 1105(f) of title 31, United States Code, is amended by Mr. President, we ought not punish The PRESIDING OFFICER. On this the people who are on Medicaid or adding at the end the following: ‘‘The budget vote, the yeas are 57, the nays are 43. shall also be prepared in a manner that does Medicare just because these programs Three-fifths of the Senators duly cho- not cause a deficit for fiscal year 2002 or any grow faster than a particular rate. sen and sworn not having voted in the fiscal year thereafter.’’. Sometimes growth in these programs affirmative, the motion is not agreed Mr. FRIST. Mr. President, this could be good. to. The point of order is sustained and amendment, submitted on behalf of For example, the first reconciliation the amendment falls. Senators CONRAD, SESSIONS, ABRAHAM, bill includes money to recruit 3 million Mr. MOYNIHAN. Mr. President, I and myself evolves from a simple prin- uninsured Medicaid-eligible children to move to reconsider the vote. ciple, that is, once we balance the sign up for the program. If this hap- Mr. LOTT. I move to lay that motion budget, which we will do by 2002, let us pens, obviously Medicaid spending is on the table. keep it in balance thereafter. The going to increase. But the question is, The motion to lay on the table was amendment has two key provisions. What do we want to do? Do we want to agreed to. No. 1, establishes a 60-vote point of take care of those kids or don’t we? AMENDMENT NO. 571 order against any bill or resolution This would not be a good reason to cut (Purpose: To establish an enforcement mech- that will increase the deficit in the the program. This is a dangerous gim- anism in the Senate to ensure a balanced year 2002 or any year thereafter, and, mick. We can balance the budget with- budget beginning with fiscal year 2002 and No. 2, requires the President to submit out it. Furthermore, we ought not ac- to require the President to submit bal- a balanced budget every year in 2002 cept an amendment that could force anced budgets) and thereafter. quick, drastic cuts in Medicare and The PRESIDING OFFICER. Under The amendment does provide excep- Medicaid. the previous order, the Senator from tions in the event of war or recession. I urge my colleagues to oppose this Tennessee is recognized to offer an The amendment is consistent with the amendment to protect Medicare and amendment on which there is 2 min- bipartisan balanced budget agreement. Medicaid. utes of debate equally divided. I reserve the remainder of my time. Mr. LAUTENBERG addressed the Mr. President, I raise a point of order May we have order in the Senate so Chair. that the pending amendment is extra- we may proceed with the business of The PRESIDING OFFICER. The Sen- neous and violates section 313(b)(1)(A) the day. ator from New Jersey. of the Congressional Budget Act. The clerk will report the amendment. Mr. LAUTENBERG. I am strongly Mr. BROWNBACK. Mr. President, I The assistant legislative clerk read opposed to this amendment. It creates make a motion to waive the Budget as follows: a 60-vote point of order against any Act with respect to my amendment, The Senator from Tennessee [Mr. FRIST], budget resolution that shows a unified and I ask for the yeas and nays. for himself, Mr. CONRAD, Mr. ABRAHAM, and deficit after the year 2002. We are all The PRESIDING OFFICER. Is there a Mr. SESSIONS, proposes an amendment num- committed to protecting against the sufficient second question? bered 571. rising deficit. This amendment, how- There is a sufficient second. Mr. FRIST. Mr. President, I ask ever, means that next year even a mod- The yeas and nays were ordered. unanimous consent that reading of the est change in CBO’s long-term eco- amendment be dispensed with. nomic forecast could trigger the need VOTE ON MOTION TO WAIVE THE BUDGET ACT The PRESIDING OFFICER. Without for deep and hurtful cuts. It would be The PRESIDING OFFICER. The objection, it is so ordered. outrageous to cut Medicare or Social question occurs on the motion to waive The amendment is as follows: Security just because CBO changes its the Budget Act. The yeas and nays guess about what the economy will have been ordered. The clerk will call At the appropriate place in the ll, add the following: look like in 5 years. CBO cannot even the roll. SEC. . ENFORCEMENT OF BALANCED BUDGET. predict what the deficit is going to The legislative clerk called the roll. (a) IN THE SENATE.—Title III of the Con- look like in the next 5 months, never The yeas and nays resulted— yeas 57, gressional Budget Act of 1974 is amended by mind 5 years. Their recent record is ab- nays 43, as follows: adding at the end the following: solutely abysmal. This amendment

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00009 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6678 CONGRESSIONAL RECORD — SENATE June 27, 1997 also requires that Social Security sur- Kerry Mikulski Rockefeller Budget and Emergency Deficit Control Act pluses be used in calculating the deficit Landrieu Moseley-Braun Sarbanes of 1985, as added by section , shall be con- Lautenberg Moynihan Torricelli sidered to be in order for purposes of section and could make it impossible to use Leahy Murray Wellstone 202 of House Concurrent Resolution 67 (104th those surpluses in the future to pay for Levin Reed Wyden Congress). Social Security benefits of retiring Lieberman Reid baby boomers. The PRESIDING OFFICER. On this Mr. ABRAHAM. This amendment is The PRESIDING OFFICER. The Sen- vote the yeas are 59, the nays are 41. offered on behalf of myself, Senator ator’s time has expired Three-fifths of the Senators duly cho- BROWNBACK, Senator ENZI, Senator Mr. LAUTENBERG. I urge my col- sen and sworn not having voted in the INHOFE, Senator GRAMS, and Senator leagues to oppose this dangerous and affirmative, the motion is rejected. SESSIONS. radical amendment and I raise a point The point of order is sustained, and the At this time our Nation’s tax rate is of order—— amendment falls. the highest percentage of the national The PRESIDING OFFICER. The Mr. LAUTENBERG. Mr. President, I income it has ever been in history. As point of order cannot be raised until move to reconsider the vote. we all know in this Chamber, our na- the Senator’s time has been used up. Mr. MOYNIHAN. I move to lay that tional debt is too high. Recently it was motion on the table. The Senator from Tennessee. discovered by the Congressional Budget The motion to lay on the table was Mr. FRIST. Mr. President, I yield to Office that they had underestimated agreed to. the revenues coming into our system Senator DOMENICI. AMENDMENT NO. 538 The PRESIDING OFFICER. The Sen- by some $225 billion, and we promptly (Purpose: To ensure that future revenue ator from New Mexico. spent a very substantial amount of windfalls to the federal Treasury are re- those dollars on new Federal programs. Mr. DOMENICI. I think this is a very served for tax or deficit reduction—not ad- This amendment is very simple. It good idea. As a matter of fact, if you ditional spending) says if the revenues which are received look carefully at the agreement we en- The PRESIDING OFFICER. Under by the Treasury in the next 5 years ex- tered into with the White House, it the previous order, the Senator from ceed those that are projected, we ought clearly says we are not supposed to do Michigan is recognized to offer an to have a lockbox and those dollars anything that takes the budget out of amendment on which there is 2 min- ought to either be spent on tax cuts or balance in the year 2002 and beyond. I utes of debate, equally divided. We on reducing the deficit, and not new think perhaps the Senator is just help- need to have order in the Senate. The Federal spending. ing us try to enforce that agreement. Senate will please come to order. Mr. President, a coalition of taxpayer The PRESIDING OFFICER. The Sen- Mr. ABRAHAM. Mr. President, I call groups including the National Tax- ator’s time has expired. up my amendment No. 538. payer’s Union, the National Tax Limi- Mr. LAUTENBERG. I now, Mr. Presi- The OFFICER. The clerk will report. tation Committee, Empower America, dent, raise the point of order that the The legislative clerk read as follows: Americans for Hope, Growth and Op- amendment violates section The Senator from Michigan [Mr. ABRA- portunity, and others have endorsed 313(b)(1)(A) of the Congressional Budget HAM], for himself, Mr. BROWNBACK, Mr. KYL, ESSIONS NZI NHOFE my bill to require that any tax revenue Act. Mr. S , Mr. E , Mr. I , and Mr. GRAMS, proposes an amendment numbered windfall be used for tax cuts or deficit Mr. FRIST. I move to waive the 538. reduction, not new government spend- Budget Act with respect to my amend- Mr. ABRAHAM. Mr. President, I ask ing. I ask unanimous consent that a ment. I ask for the yeas and nays. unanimous consent that reading of the statement by Al Cors, Jr., of the Na- The PRESIDING OFFICER. Is there a amendment be dispensed with. tional Taxpayer’s Union be entered in sufficient second? There is a sufficient The PRESIDING OFFICER. Without the RECORD immediately following my second. objection, it is so ordered. remarks: The yeas and nays were ordered. The amendment is as follows: There being no objection, the mate- VOTE ON MOTION TO WAIVE THE BUDGET ACT SEC. . ECONOMIC GROWTH PROTECTION. rial was ordered to be printed in the The PRESIDING OFFICER. The Section 252 of the Balanced Budget and RECORD, as follows: Emergency Deficit Control Act of 1985 (2 question is on agreeing to the motion NATIONAL TAXPAYERS UNION, U.S.C. 902) is amended by adding at the end to waive the Budget Act. The yeas and Alexandria, VA, June 27, 1997. the following: nays have been ordered. The clerk will Any amendment that would dedicate ‘‘(f) ECONOMIC GROWTH PROTECTION.— call the roll. ‘‘(1) ESTIMATE.—OMB shall, for any ‘‘windfall’’ revenue to new spending, rather The yeas and nays resulted—yeas 59, amount by which revenues for a budget year than to additional tax relief and/or deficit nays 41, as follows: and any out-years through fiscal year 2002 reduction, will be scored heavily as an antitaxpayer amendment on our annual NTU [Rollcall Vote No. 146 Leg.] exceed the revenue target absent growth, es- timate the excess and include such estimate Rating of Congress. YEAS—59 as a separate entry in the report prepared AL CORS, Jr., Abraham Feingold McCain pursuant to subsection (d) at the same time Director, Government Relations, Allard Frist McConnell as the OMB sequestration preview report is National Taxpayers Union. Ashcroft Gorton Murkowski issued. Bennett Gramm Nickles ‘‘(2) INCLUSION IN SCORECARD.—OMB shall THE NATIONAL Bond Grams Robb Brownback Grassley include the amount of any change in reve- TAX-LIMITATION COMMITTEE, Roberts Washington, DC, June 25, 1997. Burns Gregg Roth nues determined pursuant to paragraph (1) as Campbell Hagel Santorum a deficit decrease under this part in the esti- PRO-TAXPAYER GROUPS URGE CONGRESS TO Chafee Hatch Sessions mates and reports required by subsection (b) ACT NOW ON FUTURE TAX CUTS Coats Helms Shelby of section 254 unless such amount is offset by Cochran Hutchinson WASHINGTON, DC.—The National Tax-Limi- Smith (NH) legislation enacted in compliance with para- Collins Hutchison tation Committee joined by Empower Amer- Conrad Inhofe Smith (OR) graph (3). ica, National Taxpayers Union, Americans ‘‘(3) USE OF ADJUSTMENT.—An amount not Coverdell Jeffords Snowe for Hope, Growth, and Opportunity, Citizens Specter to exceed the amount of deficit decrease de- Craig Kempthorne for a Sound Economy, and Citizens for Budg- Stevens termined under paragraph (2) may be offset D’Amato Kohl et Reform sent a letter to Congress urging DeWine Kyl Thomas by legislation decreasing revenues. action in the budget legislation to reserve Domenici Lott Thompson ‘‘(4) REVENUE TARGET ABSENT GROWTH.—For future revenue windfalls for tax cuts for all Enzi Lugar Thurmond purposes of this subsection, the revenue tar- Americans. The text of the letter follows: Faircloth Mack Warner get absent growth is— You have a great opportunity to act right NAYS—41 ‘‘(A) for fiscal year 1998, $1,601,800,000,000; ‘‘(B) for fiscal year 1999, $1,664,200,000,000; now to secure the first down-payment on fur- Akaka Byrd Glenn ‘‘(C) for fiscal year 2000, $1,728,100,000,000; ther tax relief for the American people. You Baucus Cleland Graham ‘‘(D) for fiscal year 2001, $1,805,100,000,000; can do this simply by enacting a firm rule Biden Daschle Harkin and during budget reconciliation that sets aside, Bingaman Dodd Hollings ‘‘(E) for fiscal year 2002, $1,890,400,000,000.’’ Boxer Dorgan Inouye or ‘‘sequesters’’, any revenues above the FY Breaux Durbin Johnson SEC. . CONGRESSIONAL PAY-AS-YOU-GO 1998 budget resolution projections for further Bryan Feinstein Kennedy Legislation decreasing revenues in compli- tax relief for all Americans. While some of Bumpers Ford Kerrey ance with section 252(f)(3) of the Balanced these ‘‘windfall’’ revenues might possibly be

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00010 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6679 applied to faster deficit reduction, it is vi- [From the Journal of Commerce, June 27, tax burden on Americans is the highest tally important that the bulk of them go di- 1997] ever—31.7%. According to the National Tax- rectly to taxpayers, and never get within the AMERICA NEEDS A TAX CUT payer Union, the average American family grasp of the big-government spending ma- (By Spencer Abraham) now pays almost 40% of its income in state, chine. local and federal taxes. And while we address It is always easier to spend other people’s There are a lot of good ideas floating money than to give it back, and that’s the the tax burden in a small, incremental way around on how to do this, but the key is to lesson of the budget agreement between Con- with this budget resolution. I believe we look out for the interests of the taxpayer gress and the Clinton administration. It is need to tilt the playing field away from more first, last, and always. We have plenty of also the major obstacle confronting those of spending and toward more tax reduction. time to think about the best ways to provide us who advocate reducing the record tax bur- How does this proposal work? First, it for future debt repayment, additional tax den shouldered by American taxpayers. locks the expected revenue estimates into cuts, and major tax reform in the next After four months of negotiations, and lit- law. Then it requires the Office of Manage- millenium. But our immediate and urgent erally just hours before a self-imposed dead- ment and Budget to compare its new revenue goal must be to unambiguously lock in any line, the Congressional Budget Office pro- estimates each year to those included in the ‘‘bonus’’ revenues to help the hard-pressed vided budget negotiators with a gift of sorts. agreement. If the budget agreement esti- taxpayer. It found that the federal deficit in 1997 would mates are accurate, nothing happens. But if be much less than previously reported. In- the progrowth tax cuts we adopt later this We are concerned that some proposals stead of $112 billion, the deficit would be year result in higher than expected revenues, being considered merely put the taxpayer a closer to $67 billion. Moreover, the CBO sug- those revenues are reserved for tax cut legis- distant third, delay their effects for many gested that this $45 billion windfall would ex- lation—legislation which is exempt from all years, and create a built-in bias towards tend over the next five years, reducing the the budget points of order and other obsta- higher taxes, not lower (such as requiring total deficit by $245 billion. cles that currently stand between American revenue growth to outstrip spending growth This ‘‘windfall’’ is a mixed blessing. The families and tax cuts. If Congress chooses on a year-to-year basis). The last thing the economy’s continued strong performance not to reduce revenues, then the windfall is Federal government needs is yet another in- means more jobs and opportunities for Amer- reserved for deficit reduction. centive to raise taxes. Furthermore attempt- icans—as well as additional revenues to the The Senate gave this proposal its prelimi- ing to build up special trust funds within the government. But it brought renewed admin- nary approval on May 23 by voting for my government rather than provide tax relief istration demands for even higher levels of Sense of the Senate amendment to the budg- merely gives those ‘‘trust’’ accounts pro- spending in 1998 and beyond. Apparently, all et. We should now put into effect the rules tected status in the fiscal policy debate—not sorts of spending issues that had previously that will help make tax cuts a reality. sound fiscal policy, and certainly not pro- been closed were reopened following the The budget agreement takes a small, $85 taxpayer. CBO’s surprise announcement. billion step down the long road toward re- The pending tax bill represents an honor- One issue that remained closed, however, ducing the tax burden on American families. able and diligent effort to give taxpayers a was that of tax cuts. While spending for nu- This cut should be just the beginning. first installment of tax relief, and start mov- merous programs was increased following The PRESIDING OFFICER. The Sen- ing right now to ratchet down the percent of the CBO’s announcement, the net tax cut re- mained fixed at $85 billion. The result was a ator from New Jersey. family income consumed by taxes. We know Mr. LAUTENBERG. Mr. President, that this budget process has been a difficult budget plan that would increase federal one, and we want to work with you as it con- spending by 17 percent over the next five this amendment says that if revenues tinues to unfold, particularly in what prom- years, yet reduce tax collections by less than exceed current projections, all the sav- ises to be a very tough ‘‘end-game’’ negotia- 1 percent of the total tax burden over that ings can only be plowed into more tax tion. We want the best possible deal for the time. breaks; if you have a surplus, back into American taxpayer, and we want to ensure Along with a number of my colleagues, I the tax breaks, not defense, not edu- have proposed legislation to improve this that this is a true ‘‘taxpayer relief act’’. cation, only more tax breaks. Even if Seizing this unique opportunity to point the deal. It would reserve any unexpected in- crease in tax revenues for tax cuts and/or the deficit were actually going up due way to future tax relief is one of the best to increased spending, we would still be possible ways to do that. deficit reduction. To the extent tax revenues Jack Kemp, Empower America; Lewis K. under this budget agreement exceed projec- able to use all unexpected revenues Uhler, National Tax Limitation Com- tions by the Joint Committee on Taxation, only for more tax breaks. mittee; David Keating, National Tax- those revenues should go to the people, not That is fiscally irresponsible. It re- payers Union; Steve Forbes, Americans additional government spending. moves power and flexibility from the This is not an idle suggestion. For years, for Hope, Growth, and Opportunity; tax cut advocates like me have argued that congressional majority and it is ter- Matt Kibbe, Citizens for a Sound Econ- federal revenue estimates ignore the dy- rible policy. I urge my colleagues to omy; Harrison Fox, Citizens for Budget namic effects that pro-growth tax reforms oppose the amendment. Reform. have on the economy and the budget. Incen- Mr. President, I raise a point of order Mr. ABRAHAM. I yield to the Sen- tives for economic growth and job creation— that the pending amendment is extra- ator from Minnesota to comment fur- such as reduced capital gains taxes and in- neous and violates section 313(b)(1)(A) ther on this legislation. creased allowable IRAs—will bring higher of the Congressional Budget Act. economic growth over the next five years Mr. ABRAHAM. Mr. President, I Mr. GRAMS. Mr. President, I rise to and increase, not decrease, revenues to the move to waive the Budget Act with re- strongly support the amendment of- federal treasury. spect to this amendment. fered by Senator ABRAHAM. After all, if History is on our side in this debate. For the revenues do increase, it is going to example, between 1978 and 1985, while the top Mr. President, I ask for the yeas and marginal rate on capital gains was cut al- come because of the hard work of the nays. most in half—from 35% to 20%—total annual The PRESIDING OFFICER. Is there a American people. While spending levels federal receipts from the tax almost tripled. on Federal programs have already been sufficient second? They rose from $9.1 billion to $26.5 billion an- There is a sufficient second. set, it only makes sense, if the reve- nually. Conversely, when Congress raised the The yeas and nays were ordered. nues increase, they should go either to capital gains rate in 1986, revenues from that tax relief to those hard-working Amer- tax actually fell. VOTE ON MOTION TO WAIVE THE BUDGET ACT ican families or to deficit reduction. Economists across the board predict that The PRESIDING OFFICER. The cutting the capital gains rate will bring a They should not go to enlarge the size question occurs on agreeing to the mo- revenue windfall for the Treasury. Economic tion to waive. of Government. The era of big Govern- expert Larry Kudlow predicts that another ment is far from over. This amendment broad capital gains tax cut could produce a The yeas and nays have been ordered. would help protect future taxpayers. $90 billion tax dividend next year, assuming The clerk will call the roll. The legislative clerk called the roll. Mr. ABRAHAM. Mr. President, I ask only 15% of investors realize their stock market gains from three years ago. These The yeas and nays resulted, yeas 53, unanimous consent that my op-ed arti- windfalls should be given back to the tax- nays 47, as follows: cle in today’s Journal of Commerce on payers. [Rollcall Vote No. 147 Leg.] the economic growth dividend protec- As John F. Kennedy noted, ‘‘It is a para- tion amendment be printed at this doxical truth that tax rates are too high YEAS—53 point in the RECORD. today and tax revenues are too low, and the Abraham Brownback Collins soundest way to raise the revenues in the Allard Burns Coverdell There being no objection, the mate- long run is to cut taxes now.’’ Ashcroft Campbell Craig rial was ordered to be printed in the Why do Americans need a tax cut? The Bennett Coats D’Amato Bond Cochran DeWine RECORD, as follows: President’s own economists report that the

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00011 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6680 CONGRESSIONAL RECORD — SENATE June 27, 1997 Domenici Inhofe Santorum divided in the usual form, except that after what I have just read, without the Enzi Jeffords Sessions the 15th hour of consideration of a bill, time time’s being charged. Faircloth Kempthorne Shelby on all amendments or motions shall be lim- Frist Kyl The PRESIDING OFFICER. Without Smith (NH) ited to 20 minutes; Gramm Lott Smith (OR) objection, it is so ordered. Grams Lugar ‘‘(D) no first degree amendment may be Snowe proposed after the 15th hour of consideration Mr. BYRD. I repeat: Grassley Mack Specter of a bill unless it has been submitted to the After no more than thirty hours of consid- Gregg McCain Stevens Hagel McConnell eration— Thomas Journal Clerk prior to the expiration of the Hatch Murkowski Thompson 15th hour; Helms Nickles I am reading from the present cloture Thurmond ‘‘(E) no second degree amendment may be Hutchinson Roberts rule— Warner proposed after the 20th hour of consideration Hutchison Roth of a bill unless it has been submitted to the After no more than thirty hours of consid- NAYS—47 Journal Clerk prior to the expiration of the eration of the measure, motion, or other matter on which cloture has been invoked, Akaka Feingold Leahy 20th hour; and the Senate shall proceed, without any fur- Baucus Feinstein Levin ‘‘(F) After no more than thirty hours of Biden Ford Lieberman consideration of the measure, the Senate ther debate on any question, to vote on the Bingaman Glenn Mikulski shall proceed, without any further debate on final disposition thereof— Boxer Gorton Moseley-Braun any question, to vote on the final disposition Meaning the final disposition of the Breaux Graham Moynihan thereof to the exclusion of all amendments reconciliation bill— Bryan Harkin Murray not then actually pending before the Senate Bumpers Hollings Reed to the exclusion of all amendments not then Byrd Inouye at that time and to the exclusion of all mo- Reid actually pending before the Senate at that Chafee Johnson tions, except a motion to table, or to recon- Robb time and to the exclusion of all motions, ex- Cleland Kennedy sider and one quorum call on demand to es- Rockefeller Conrad Kerrey tablish the presence of a quorum (and mo- cept a motion to table, or to reconsider and Daschle Kerry Sarbanes tions required to establish a quorum) imme- one quorum call on demand to establish the Torricelli Dodd Kohl diately before the final vote begins.’’. presence of a quorum (and motions required Dorgan Landrieu Wellstone to establish a quorum) immediately before Durbin Lautenberg Wyden The PRESIDING OFFICER. The Sen- the final vote begins. ator from West Virginia. The PRESIDING OFFICER. On this Mr. BYRD. Mr. President, the distin- Therefore, Mr. President, we do away vote, the yeas are 53, the nays are 47. guished Senator from New York, Mr. with this situation in which pandemo- Three-fifths of the Senators duly cho- nium reigns supreme and where scores MOYNIHAN, wrote a book titled ‘‘Pande- sen and sworn not having voted in the monium.’’ Milton, in ‘‘Paradise Lost,’’ of amendments remain to be acted affirmative, the motion is rejected. designated the Palace of Satan as pan- upon after the expiration of the time The point of order is sustained, and the demonium. Mr. President, what we on the reconciliation bill and people amendment falls. have seen going on here is pandemo- want to call those up—and they have a Mr. ROTH. Mr. President, I move to nium, and in light of what I have just right to call them up and get a vote reconsider the vote by which the mo- said, Senators can draw their own con- thereon. tion was rejected. clusion as to what I mean by that This amendment encourages Sen- Mr. MOYNIHAN. I move to lay that word. ators, if they want time to debate their motion on the table. This is a very important amendment amendments, to call them up at the be- The motion to lay on the table was to the reconciliation process. It ex- ginning of the debate, call them up agreed to. tends the overall time from 20 hours to early, when they will have time to ex- AMENDMENT NO. 572 30 hours. It reduces the time on any plain their amendments. But when we (Purpose: To extend the number of hours for amendment in the first degree to 30 reach that final 30th hour, under this debate on a reconciliation bill and make minutes. It reduces the time on any amendment language, which is already other improvements) second-degree amendment to 20 min- tried and true—it is in the cloture The PRESIDING OFFICER. Under utes. May I proceed for an additional 2 rule—we close all debate, all voting on the previous order, the Senator from minutes? amendments to the reconciliation bill West Virginia is recognized to offer an The PRESIDING OFFICER. Without with the exception of any amendment amendment on which there is 2 min- objection, it is so ordered. in the first degree and any amendment utes of debate equally divided. Mr. BYRD. After the first 15 hours in the second degree which may be The Senator from West Virginia. have expired, time on amendments in then pending. That is it. No more of Mr. BYRD. I thank the Chair. I send the first degree and in the second de- this vote-o-rama. to the desk an amendment, and I ask gree will be limited to 20 minutes each. The PRESIDING OFFICER. The Sen- that the amendment be read. I hope The amendment provides for 30 min- ator’s time has expired. that Senators will pay close attention. utes equally divided for debate on a Mr. DOMENICI addressed the Chair. The PRESIDING OFFICER. The motion to reduce the time, which can The PRESIDING OFFICER. The Sen- clerk will report. be done now without any debate. It re- ator from New Mexico. The legislative clerk read as follows: quires unanimous consent for man- Mr. DOMENICI. Mr. President, we The Senator from West Virginia [Mr. agers of a reconciliation measure to have been discussing this proposal with BYRD] proposes an amendment numbered 572. yield back any time. At the present the distinguished Senator from West The amendment is as follows: time, they may yield time back with- Virginia, ‘‘we’’ being Senator LOTT and At the appropriate place, insert the fol- out unanimous consent. others. And I assume Senator LOTT will lowing: Now comes probably the most impor- speak in a moment to it however long SEC. . DEBATE ON A RECONCILIATION BILL. tant provision in the proposal. If Sen- he would like. Section 310(e)(2) of the Congressional ators will turn to page 19 in their rule But I say to the Senate, and as long Budget Act of 1974 is amended to read as fol- books. I will read the language from as Senator BYRD understands that we lows: the cloture rule: take this to conference with the idea ‘‘(2) For purposes of consideration of any that we will have to make sure—and I reconciliation bill reported under subsection After no more than thirty hours of consid- (b)— eration of the measure, motion, or other think he would agree—that it deserves ‘‘(A) debate, and all amendments thereto matter on which cloture has been invoked, some careful consideration. and debatable motions and appeals in con- the Senate shall proceed, without any fur- I had one thought that came to my nection therewith, shall be limited to not ther debate on any question, to vote on the mind, I say to Senator BYRD, as you more than 30 hours; final disposition thereof to the exclusion of proposed it. I was talking to Senator ‘‘(B) time on the bill may only be yielded all amendments not then actually pending before the Senate at that time and to the ex- GRAMM about it. I guess I am con- back by consent and a motion to further cerned that there might be a con- limit debate shall be debatable with debate clusion of all motions, except a motion to table. . . troversial amendment that is well- limited to 1⁄2 hour equally divided; ‘‘(C) time on amendments shall be limited Mr. DOMENICI. May we have order, known that by design could be pre- to 30 minutes to be equally divided in the Mr. President? cluded from ever getting offered. And I usual form and on any second degree amend- Mr. BYRD. Mr. President, I ask unan- think we ought to make sure that can- ment or motion to 20 minutes to be equally imous consent that I may again read not happen. I do not know how to do

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00012 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6681 that. I do not propose that this is not ment. The yeas and nays have been or- ‘‘(1) IN GENERAL.—Gross income shall not a valid and good approach. But I do dered. The clerk will call the roll. include qualified capital gain from the sale think that is an interesting issue. I was The legislative clerk called the roll. or exchange of any DC asset held for more than 5 years. just speaking with Senator GRAMM a The result was announced—yeas 92, ‘‘(2) SPECIAL 10 PERCENT RATE FOR DC AS- moment ago. nays 8, as follows: SETS ACQUIRED IN 1998.— The PRESIDING OFFICER. The Sen- [Rollcall Vote No. 148 Leg.] ‘‘(A) IN GENERAL.—In the case of any DC ator’s time has expired. YEAS—92 asset acquired during calendar year 1998— ‘‘(i) paragraph (1) shall not apply to any Mr. DOMENICI. I ask unanimous Abraham Feinstein Lott qualified capital gain from the sale or ex- consent for one additional minute. Akaka Ford Lugar The PRESIDING OFFICER. Without Baucus Frist Mack change of such asset, and Bennett Glenn McConnell ‘‘(ii) the qualified capital gain described in objection, it is so ordered. clause (i) shall be treated as adjusted net Mr. DOMENICI. I think there would Biden Gorton Mikulski Bingaman Graham Moseley-Braun capital gain described in section 1(h)(1)(D) have to be a lot of getting together of Bond Grams Moynihan for the taxable year of the sale or exchange both sides of the aisle to preclude that Boxer Grassley Murkowski (and the amount under section 1(h)(1)(D)(i) amendment from coming up, but it Breaux Gregg Murray for such taxable year shall be increased by Bryan Hagel Nickles might happen. So from my standpoint, Bumpers Harkin the amount of such gain). Reed Burns Hatch ‘‘(B) SPECIAL RULE.—For purposes of sub- I say to Senators, I think this is a dra- Reid Byrd Helms paragraph (A), any DC asset the basis of matic improvement, provided that the Robb Campbell Hollings which is determined in whole or in part by Roberts Senator understands that we have to Chafee Hutchinson Rockefeller reference to the basis of an asset to which look at it carefully if it is accepted Cleland Hutchison subparagraph (A) applies shall be treated as Coats Inhofe Roth here today. Sarbanes a DC asset acquired during calendar year Mr. BYRD. I do understand. I hope Cochran Inouye Collins Jeffords Sessions 1998. that the Members who go to conference Conrad Johnson Shelby On page 181, between lines 5 and 6, insert with the House will try to make it Coverdell Kempthorne Smith (NH) the following: D’Amato Kennedy Smith (OR) ‘‘SEC. 1400C. TRUST FOR DC SCHOOLS. clear to the House that we Senators ex- Snowe pect to decide on the amendments and Daschle Kerrey ‘‘(a) CREATION OF FUND.—There is estab- DeWine Kerry Specter lished in the Treasury of the United States a the rules of the Senate. Stevens Dodd Kohl trust fund to be known as the ‘Trust Fund Domenici Kyl Thomas Mr. MOYNIHAN. Yes, sir. for DC Schools’, consisting of such amounts Mr. LOTT addressed the Chair. Dorgan Landrieu Thompson Durbin Lautenberg Thurmond as may be appropriated or credited to the The PRESIDING OFFICER. The ma- Enzi Leahy Torricelli Fund as provided in this section. jority leader is recognized. Faircloth Levin Warner ‘‘(b) TRANSFER TO TRUST FUND OF AMOUNTS Mr. LOTT. Mr. President, I yield my- Feingold Lieberman Wyden EQUIVALENT TO CERTAIN TAXES.— self leader time so I may speak briefly NAYS—8 ‘‘(1) IN GENERAL.—There are hereby appro- priated to the Trust Fund for DC Schools on this. It will be briefly. Allard Craig Santorum I have been talking to Senator amounts equivalent to the applicable per- Ashcroft Gramm Wellstone centage of revenues received in the Treasury Brownback McCain DASCHLE about this and working with from income taxes imposed by this chapter Senator BYRD. I think we had a good The amendment (No. 572) was agreed for any taxable year beginning after Decem- start last night on how to address this to. ber 31, 1997, and before January 1, 2008, on in- problem, and it has been improved Mr. ROTH. I move to reconsider the dividual taxpayers who are residents of the today. I think we are close to having vote. District of Columbia as of the last day of something that would really make this Mr. MOYNIHAN. I move to lay it on such taxable year. ‘‘(2) APPLICABLE PERCENTAGE.—For pur- process fairer and better. the table. I suggest that we accept this on a poses of paragraph (1), the term ‘applicable The motion to lay on the table was percentage’ means the percentage which the voice vote, and we go to conference agreed to. Secretary determines necessary to result in with it and continue to make sure we AMENDMENT NO. 522, AS MODIFIED $5,000,000 being appropriated to the Trust have thought through every possible (Purpose: To provide for a trust fund for Fund under paragraph (1) for each of the cal- exigency of this change. I think it is District of Columbia school renovations) endar years 1998 through 2007. ‘‘(3) TRANSFER OF AMOUNTS.—The amounts real progress. And I suggest we accept Mr. ROTH. Mr. President, I ask that it and take it to conference. appropriated by paragraph (1) shall be trans- the Senate resume consideration of ferred at least monthly from the general Mr. DASCHLE addressed the Chair. Jeffords amendment No. 522. On behalf The PRESIDING OFFICER. The mi- fund of the Treasury to the Trust Fund for of the Senator from Vermont, I send a DC Schools on the basis of estimates made nority leader. modification to the desk which we are by the Secretary of the amounts referred to Mr. DASCHLE. Mr. President, I will prepared to accept. in such paragraph. Proper adjustments shall be very brief with my leader time. The PRESIDING OFFICER. The reg- be made in the amounts subsequently trans- I congratulate the Senator from West ular order is the recognition of the ferred to the extent prior estimates were in Virginia. No one knows the process and excess of or less than the amounts required Senator from Massachusetts. Is there to be transferred. the rules better than he does. And he objection? has worked with all of us in an effort ‘‘(c) EXPENDITURES FROM FUND.— Mr. NICKLES. That is not correct. ‘‘(1) IN GENERAL.—Amounts in the Trust to try to accommodate the concerns Parliamentary inquiry. I think the Fund for DC Schools are hereby appro- that we have raised over the last cou- Senator sent an amendment from the priated, and shall be available without fiscal ple of days. He has done that. This may Senator from Vermont. It has not been year limitation, for payment by the Sec- not be the final product, but it puts us disposed of. retary of debt service on qualified DC school bonds. in a position to achieve a final product. Mr. ROTH. The amendment deals I hope that we can take the advice ‘‘(2) QUALIFIED DC SCHOOL BONDS.—The term with the subject of D.C. schools. and recommendation of the majority ‘qualified DC school bonds’ means bonds The PRESIDING OFFICER. Is there leader, pass it on a voice vote, and which— objection? Without objection, it is so ‘‘(A) are issued after March 31, 1998, by the allow this process to continue. ordered. District of Columbia to finance the construc- Mr. McCAIN. I object. The amendment (No. 522), as modi- tion, rehabilitation, and repair of schools The PRESIDING OFFICER. There is fied, is as follows: under the jurisdiction of the government of an objection. On page 164, in the matter between lines 16 the District of Columbia, and ‘‘(B) are certified by the District of Colum- Mr. McCAIN. I ask for the yeas and and 17, insert after the item relating to sec- bia Control Board as meeting the require- nays. tion 1400B the following: ments of subparagraph (A) after giving 60 The PRESIDING OFFICER. Is there a ‘‘Sec. 1400C. Trust Fund for DC schools.’’ sufficient second? days notice of any proposed certification to On page 173, line 10, strike ‘‘$75,000,000’’ and the Subcommittees on the District of Colum- There is a sufficient second. insert ‘‘$60,000,000’’. bia of the Committees on Appropriations of The yeas and nays were ordered. On page 174, strike lines 21 through 23, and the House of Representatives and the Senate. The PRESIDING OFFICER. The insert: ‘‘(d) REPORT.—It shall be the duty of the question is on agreeing to the amend- ‘‘(a) EXCLUSION.— Secretary to hold the Trust Fund for DC

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00013 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6682 CONGRESSIONAL RECORD — SENATE June 27, 1997 Schools and to report to the Congress each (1) in paragraph (1), by striking ‘‘$1.125 I hope that with this amendment we year on the financial condition and the re- cents per thousand (93.75 cents per thousand will be able to complete the job for sults of the operations of such Fund during on cigars removed during 1991 or 1992)’’ and working families in this country that the preceding fiscal year and on its expected inserting ‘‘$3.141 cents per thousand’’, and are unable to afford insurance today. condition and operations during the next fis- (2) by striking ‘‘equal to’’ and all that fol- Mr. NICKLES. Mr. President, I urge cal year. Such report shall be printed as a lows in paragraph (2) and inserting ‘‘equal to House document of the session of the Con- 35.59 percent of the price for which sold but my colleagues to vote no on Senator gress to which the report is made. not more than $83.75 per thousand.’’ KENNEDY’s amendment. I am bothered ‘‘(e) INVESTMENT.— (c) CIGARETTE PAPERS.—Section 5701(c) of by the amendment to some extent. I ‘‘(1) IN GENERAL.—It shall be the duty of the Internal Revenue Code of 1986 is amended heard the Senator say the administra- the Secretary to invest such portion of the by striking ‘‘0.75 cent (0.625 cent on cigarette tion supports the amendment. The ad- Trust Fund for DC Schools as is not, in the papers removed during 1991 or 1992)’’ and in- ministration agreed to $16 billion for Secretary’s judgment, required to meet cur- serting ‘‘2.09 cents’’. the so-called KIDCARE Program. That rent withdrawals. Such investments may be (d) CIGARETTE TUBES.—Section 5701(d) of was the agreement. And then to see a made only in interest-bearing obligations of the Internal Revenue Code of 1986 is amended the United States. For such purpose, such by striking ‘‘1.5 cents (1.25 cents on cigarette letter by the administration that says obligations may be acquired— tubes removed during 1991 or 1992)’’ and in- now they support this amendment, ‘‘(A) on original issue at the issue price, or serting ‘‘4.18 cents’’. that is ridiculous. ‘‘(B) by purchase of outstanding obliga- (e) SMOKELESS TOBACCO.—Section 5701(e) of The Finance Committee increased tions at the market price. the Internal Revenue Code of 1986 is amend- from $16 billion to $24 billion, more ‘‘(2) SALE OF OBLIGATIONS.—Any obligation ed— than I think is necessary for the pro- acquired by the Trust Fund for DC Schools (1) in paragraph (1), by striking ‘‘36 cents gram. The Finance Committee said, may be sold by the Secretary at the market (30 cents on snuff removed during 1991 or ‘‘That is all we will do.’’ Now we see price. 1992)’’ and inserting ‘‘$1.00’’, and the administration say they support ‘‘(3) INTEREST ON CERTAIN PROCEEDS.—The (2) by striking ‘‘12 cents (10 cents on chew- interest on, and the proceeds from the sale ing tobacco removed during 1991 or 1992)’’ in this. When is a deal a deal? We can’t or redemption of, any obligations held in the paragraph (2) and inserting ‘‘33.5 cents’’. trust this administration any more Trust Fund for DC Schools shall be credited (f) PIPE TOBACCO.—Section 5701(f) of the In- than a day. That is beyond belief. to and form a part of the Trust Fund for DC ternal Revenue Code of 1986 is amended by So now we have a program. Senator Schools.’’ striking ‘‘67.5 cents (56.25 cents on pipe to- KENNEDY introduced it as a $20 billion The PRESIDING OFFICER. The bacco removed during 1991 or 1992)’’ and in- program. We are now financing it at $24 question is on agreeing to the amend- serting ‘‘$1.88’’. billion, 120 percent of what he origi- (g) IMPOSITION OF EXCISE TAX ON MANUFAC- ment numbered 522. nally asked for. He should say, ‘‘Hey, TURE OR IMPORTATION OF ROLL-YOUR-OWN TO- we won,’’ and now he comes back and The amendment (No. 522), as modi- BACCO.— says he wants another $12 billion, to fied, was agreed to. (1) IN GENERAL.—Section 5701 (relating to Mr. ROTH. I move to reconsider the rate of tax) is amended by redesignating sub- make it $36 billion. The administration vote. section (g) as subsection (h) and by inserting agreed to $16 billion. Now they are try- Mr. MOYNIHAN. I move to lay it on after subsection (f) the following new sub- ing to make it $36 billion. Taxpayers the table. section: cannot afford it. The motion to lay on the table was ‘‘(g) ROLL-YOUR-OWN TOBACCO.—On roll- Finally, the net tax cut, if this your-own tobacco, manufactured in or im- agreed to. amendment is passed, will be 60, not 85. ported into the United States, there shall be It will be 60. AMENDMENT NO. 573 imposed a tax of $1.74 cents per pound (and a The PRESIDING OFFICER. The Sen- (Purpose: To increase the excise tax on ciga- proportionate tax at the like rate on all frac- tional parts of a pound).’’ ator from New Mexico. rettes by 43 cents per pack and increase Mr. DOMENICI. Did you say the ad- the tax on other tobacco products by a pro- On page 349, between lines 2 and 3, insert portionate amount, and direct the following: ministration favors this? $12,000,000,000 of the resulting revenues be (k) APPROPRIATION OF PORTION OF RESULT- The PRESIDING OFFICER. All time applied to the children’s health initiative) ING REVENUES FROM INCREASE IN TAXES ON has expired. The PRESIDING OFFICER. Under TOBACCO PRODUCTS TO CHILDREN’S HEALTH Mr. DOMENICI. I ask for 30 seconds, the previous order, the Senator from INSURANCE INITIATIVES.—In addition to any and the Senator can have 30 seconds. amounts otherwise appropriated for the pur- The PRESIDING OFFICER. Without Massachusetts is recognized to offer an pose of carrying out title XXI of the Social objection, it is so ordered. amendment on which there are 2 min- Security Act (relating to children’s health Mr. DOMENICI. Let me say to the utes of debate equally divided. insurance initiatives), there is appropriated White House, if there are too many Mr. KENNEDY. Mr. President, I call from the increase in revenues resulting from more like this where you support up my amendment, which is cospon- the amendments made by this section amendments that you did not agree to, sored by Senator DASCHLE. $2,400,000,000 for each of the fiscal years 1998 and you actually agreed we did not The PRESIDING OFFICER. The through 2002. have to do, then I am sending you a clerk will report. Mr. KENNEDY. Mr. President, this signal right now I am going to con- The legislative clerk read as follows: amendment adds $12 billion to the child ference and I don’t know if Senator The Senator from Massachusetts [Mr. KEN- health insurance program. It is fi- DOMENICI is going to be bound by that NEDY], for himself and Mr. DASCHLE, proposes nanced by an additional 23-cents-a- agreement. an amendment numbered 573. pack increase in the tobacco tax. This I make a point of order that this vio- amount is necessary to ensure that all Mr. KENNEDY. I ask unanimous con- lates the Budget Act. sent that the reading of the amend- children not eligible for Medicare, but Mr. KENNEDY. Mr. President, the ment be dispensed with. not able to afford private insurance, Republican leadership has been willing The PRESIDING OFFICER. Without will have access the health coverage. to accept a tobacco tax which the Re- objection, it is so ordered. CBO says that the current bill, a pro- publican leadership said was going to The amendment is as follows: posal that is before the Senate, will not violate the budget agreement which On page 337, beginning with line 14, strike do the job. The administration strong- the President previously supported. all through page 339, line 15, and insert the ly supports the amendment. So do 72 following: Now the President and the Republican percent of the American people. leadership have accepted a 20 cent to- (a) CIGARETTES.—Section 5701(b) of the In- I will just take 15 seconds to read a ternal Revenue Code of 1986 is amended— bacco tax. The only trouble with the (1) in paragraph (1), by striking ‘‘$12 per letter from the American Academy of Senator from Oklahoma’s mathematics thousand ($10 per thousand on cigarettes re- Pediatrics: is he does not include the $14 billion moved during 1991 or 1992)’’ and inserting 53,000 primary care pediatricians, pediatric that they were instructed to reduce ‘‘$33.50 per thousand’’, and medical subspecialists, pediatric surgeons Medicaid. (2) in paragraph (2), by striking ‘‘$25.20 per and specialists dedicated to the health, safe- So, this is necessary, according to thousand ($21 per thousand on cigarettes re- ty, and well-being of infants, children, ado- moved during 1991 or 1992)’’ and inserting lescents and young adults strongly support the Republican’s own CBO. This is nec- ‘‘$70.35 per thousand’’. your amendment to increase the tax by 23 essary to cover insurance. Let’s turn (b) CIGARS.—Section 5701(a) of the Internal cents for use in financing the children’s our backs on big tobacco and put our Revenue Code of 1986 is amended— health care legislation. faith in little children.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00014 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6683 Mr. President, this amendment re- AMENDMENT NO. 574 ‘‘(i) qualified higher education expenses (as duces the deficit, and I move to waive (Purpose: To allow tax-free expenditures defined in section 529(e)(3), and the Budget Act. from an education individual retirement ‘‘(ii) in the case of taxable years beginning account for elementary and secondary after December 31, 2000, qualified elementary Mr. KENNEDY. I ask for the yeas and and secondary education expenses (as defined nays. school expenses and to adjust the modifica- tions to the minimum tax) in paragraph (5)). The PRESIDING OFFICER. Is there a ‘‘(B) QUALIFIED TUITION PROGRAMS.—Such Mr. COVERDELL. Mr. President, I sufficient second? term shall include amounts paid or incurred send an amendment to the desk and There is a sufficient second. to purchase tuition credits or certificates, or ask for its immediate consideration. The yeas and nays were ordered. to make contributions to an account, under The PRESIDING OFFICER. The a qualified tuition program (as defined in VOTE ON MOTION TO WAIVE THE BUDGET ACT clerk will report. section 529(b)) for the benefit of the account The PRESIDING OFFICER. The The assistant legislative clerk read holder. question is on the motion to waive the as follows: ‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— The term ‘eligible education institution’ has Budget Act. The yeas and nays have The Senator from Georgia [Mr. COVER- the meaning given such term by section been ordered. DELL], for himself, Mr. ABRAHAM, Mr. COATS, 529(e)(5). Mr. CRAIG, Mr. SANTORUM, and Mr. The clerk will call the roll. ‘‘(4) ACCOUNT HOLDER.—The term ‘account The bill clerk proceeded to call the ASHCROFT, proposes an amendment num- holder’ means the individual for whose ben- roll. bered 574. efit the education individual retirement ac- The yeas and nays resulted—yeas 30, Mr. COVERDELL. Mr. President, I count is established. nays 70, as follows: ask unanimous consent that reading of ‘‘(5) QUALIFIED ELEMENTARY AND SECONDARY EDUCATION EXPENSES.— [Rollcall Vote No. 149 Leg.] the amendment be dispensed with. The PRESIDING OFFICER. Without ‘‘(A) IN GENERAL.—The term ‘qualified ele- YEAS—30 mentary and secondary education expenses’ objection, it is so ordered. Akaka Feingold Levin means tuition, fees, tutoring, special needs Biden Feinstein Lieberman The amendment is as follows: services, books, supplies, equipment, trans- Bingaman Glenn Mikulski On page 19, between lines 14 and 15, insert: portation, and supplementary expenses re- ‘‘(D) ADJUSTMENT.—The Secretary shall re- Boxer Harkin Murray quired for the enrollment or attendance at a duce the dollar amounts otherwise in effect Bumpers Johnson Reed public, private, or sectarian school of any de- Cleland Kennedy Reid under this paragraph for any calendar year pendent of the taxpayer with respect to Daschle Kerry Sarbanes to the extent necessary to increase Federal whom the taxpayer is allowed a deduction Dodd Kohl Torricelli revenues by the amount the Secretary esti- under section 151. Dorgan Lautenberg Wellstone mates Federal revenues will be reduced by Durbin Leahy Wyden ‘‘(B) SPECIAL RULE FOR HOMESCHOOLING.— reason of allowing distributions from edu- Such term shall include expenses described NAYS—70 cation individual retirement accounts under in subparagraph (A) required for education Abraham Ford McCain section 530 to be used for qualified elemen- provided for homeschooling if the require- Allard Frist McConnell tary and secondary education expenses de- ments of any applicable State or local law Ashcroft Gorton Moseley-Braun scribed in section 530(b)(2)(A)(ii).’’ are met with respect to such education. Baucus Graham Moynihan On page 64, beginning with line 8, strike all ‘‘(C) SCHOOL.—The term ‘school’ means any Bennett Gramm Murkowski through page 67, line 15, and insert: school which provides elementary education Bond Grams Nickles ‘‘(1) EDUCATION INDIVIDUAL RETIREMENT AC- Breaux Grassley or secondary education (through grade 12), as Robb COUNT.—The term ‘education individual re- determined under State law. Brownback Gregg Roberts Bryan Hagel tirement account’ means a trust created or ‘‘(c) TAX TREATMENT OF DISTRIBUTIONS.— Rockefeller Burns Hatch organized in the United States exclusively ‘‘(1) IN GENERAL.—Any amount paid or dis- Roth Byrd Helms for the purpose of paying the qualified edu- tributed shall be includable in gross income Santorum Campbell Hollings cation expenses of the account holder, but to the extent required by section 529(c)(3) Chafee Hutchinson Sessions only if the written governing instrument Shelby (determined as if such account were a quali- Coats Hutchison creating the trust meets the following re- fied tuition program and as if qualified high- Cochran Inhofe Smith (NH) Smith (OR) quirements: er education expenses include qualified edu- Collins Inouye ‘‘(A) No contribution will be accepted— Conrad Jeffords Snowe cation expenses). Coverdell Kempthorne Specter ‘‘(i) unless it is in cash, ‘‘(2) SPECIAL RULES FOR APPLYING ESTATE Craig Kerrey Stevens ‘‘(ii) after the date on which the account AND GIFT TAXES WITH RESPECT TO ACCOUNT.— D’Amato Kyl Thomas holder attains age 18, or Rules similar to the rules of paragraphs (2), DeWine Landrieu Thompson ‘‘(iii) except in the case of rollover con- (4), and (5) of section 529(c) shall apply for Domenici Lott Thurmond tributions, if such contribution would result purposes of this section. Enzi Lugar Warner in aggregate contributions for the taxable ‘‘(3) ADDITIONAL TAX FOR DISTRIBUTIONS NOT Faircloth Mack year exceeding the sum of— USED FOR EDUCATIONAL EXPENSES.— The PRESIDING OFFICER. On this ‘‘(I) $2,000, plus ‘‘(A) IN GENERAL.—The tax imposed by sec- vote, the yeas are 30, the nays are 70. ‘‘(II) the amount of the credit allowable tion 529(f) shall apply to payments and dis- under section 25A for the taxable year for 1 Three-fifths of the Senators duly cho- tributions from an education individual re- qualifying child. tirement account in the same manner as sen and sworn not having voted in the ‘‘(B) The trustee is a bank (as defined in affirmative, the motion is rejected. such tax applies to qualified tuition pro- section 408(n)) or another person who dem- grams (as defined in section 529), except that The point of order is sustained, and the onstrates to the satisfaction of the Secretary section 529(f) shall be applied by reference to amendment falls. that the manner in which that person will qualified education expenses. administer the trust will be consistent with Mr. ROTH. Mr. President, I move to Mr. COVERDELL. Mr. President, I reconsider the vote. the requirements of this section. ‘‘(C) No part of the trust assets will be in- wonder if we could bring the Senate to Mr. MOYNIHAN. I move to lay that vested in life insurance contracts. order. motion on the table. ‘‘(D) The assets of the trust shall not be The PRESIDING OFFICER. The Sen- The motion to lay on the table was commingled with other property except in a ate will please come to order. agreed to. common trust fund or common investment The Senator from Georgia. The PRESIDING OFFICER. The fund. Mr. COVERDELL. Mr. President, the amendment violates section 302(f) of ‘‘(E) Upon the death of the account holder, bill currently provides an education the Budget Act by causing the Finance any balance in the account will be distrib- uted as required under section 529(b)(8) (as if IRA for college expenses only. But, of Committee to exceed its outlay alloca- such account were a qualified tuition pro- course, not every child goes to college. tion. The point of order is sustained. gram). Every child does, however, attend ele- Mr. COVERDELL addressed the ‘‘(F) The account becomes an IRA Plus as mentary and secondary school. Chair. of the date the account holder attains age 30 This amendment expands the edu- Mr. ROTH. Senator COVERDELL is (and meets all requirements for an IRA Plus cation IRA to allow parents to use it next in the line of amendments. on and after such date), unless the account for any education expenses, including The PRESIDING OFFICER. Under holder elects to have sections 529(b)(8) apply tuition from kindergarten through the previous order, the Senator from as of such date (as if such account were a high school. I am pleased to be joined qualified tuition program). Georgia is recognized to offer an ‘‘(2) QUALIFIED EDUCATION EXPENSES.— on this amendment by Senators ABRA- amendment on which there are 2 min- ‘‘(A) IN GENERAL.—The term ‘qualified edu- HAM, COATS, CRAIG, SANTORUM, and utes of debate equally divided. cation expenses’ means— ASHCROFT.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00015 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6684 CONGRESSIONAL RECORD — SENATE June 27, 1997 Mr. President, it is important to help my intention to vote ‘‘aye.’’ Since it Senator BINGAMAN’s chart is mis- parents cope with the cost of college, will in no way change the outcome of leading because the taxpayer must be but that is not where the crisis is. The the vote, I ask unanimous consent that at least 591⁄2 years old before with- crisis in our schools is in elementary I be recorded as an ‘‘aye.’’ drawals are tax free. It is particularly and secondary schools that are riddled The PRESIDING OFFICER. Without important for the self-employed like with drugs and violence. Let’s do some- objection, it is so ordered. farmers and young families who hope- thing to help those parents, too. Mr. ROTH. Mr. President, I move to fully will be successful and grow out of I reserve the remainder of my time. reconsider the vote by which the the tax-deductible IRA into the IRA The PRESIDING OFFICER. Who amendment was agreed to. Plus. With all these advantages, the yields time on the opposite side? Mr. MOYNIHAN. I move to lay that backloaded IRA must be included in Mr. COVERDELL. Mr. President, I motion on the table. the budget bill. Fifty-one Senators ask for the yeas and nays. The motion to lay on the table was have cosponsored my super-IRA legis- The PRESIDING OFFICER. Is there a agreed to. lation and agree with me. sufficient second? Mr. BINGAMAN addressed the Chair. The PRESIDING OFFICER. The time There is a sufficient second. The PRESIDING OFFICER. The Sen- of the Senator has expired. The yeas and nays were ordered. ator from New Mexico. The PRESIDING OFFICER. Is all Mr. ROTH. I ask for the yeas and AMENDMENT NO. 541 nays. time yielded back? Mr. BINGAMAN. Mr. President, I call Mr. DASCHLE. Mr. President, this is The PRESIDING OFFICER. Is there a up amendment No. 541 which is at the tantamount to providing vouchers for sufficient second? There is a sufficient desk. second. private education. That is in essence The PRESIDING OFFICER. The what this amendment does. For that The yeas and nays were ordered. clerk will report. The PRESIDING OFFICER. The reason, we oppose it. The legislative clerk read as follows: Mr. COVERDELL. Mr. President, question is on agreeing to the amend- how much of my time remains? The Senator from New Mexico [Mr. BINGA- ment. The yeas and nays have been or- MAN], for himself, and Mr. CONRAD, proposes dered. The clerk will call the roll. The PRESIDING OFFICER. The Sen- an amendment numbered legislative 541. ator has 13 seconds. The legislative clerk called the roll. Mr. COVERDELL. Mr. President, this (The amendment is printed in the The result was announced—yeas 33, is their own money. This involves no RECORD of Thursday, June 26, 1997.) nays 67, as follows: tax money. This belongs to the tax- Mr. BINGAMAN. Mr. President, this amendment is being offered on behalf [Rollcall Vote No. 151 Leg.] payer. They ought to be able to use it YEAS—33 wherever they decide. of myself and Senator CONRAD. Akaka Durbin Kerry The PRESIDING OFFICER. The Mr. President, we all understand what regular IRA’s are about and how Bingaman Feingold Lautenberg question is on agreeing to the amend- Boxer Feinstein Leahy ment. those work where a person can put up Bumpers Ford Levin The clerk will call the roll. to $2,000 into an IRA. It accumulates Byrd Glenn Murray earnings over a career, and then when Cleland Harkin Reed The assistant legislative clerk called Collins Hollings Reid the roll. you retire you go ahead and pay tax on Conrad Inouye Robb The PRESIDING OFFICER (Mr. it. Daschle Jeffords Sarbanes COATS). Are there any other Senators What we have in this bill is some- Dodd Johnson Snowe Dorgan Kennedy in the Chamber desiring to vote? thing different than a regular IRA. We Wellstone The result was announced—yeas 59, have an IRA Plus. The IRA Plus differs NAYS—67 nays 41, as follows: in a very important way. What this Abraham Gorton Mikulski [Rollcall Vote No. 150 Leg.] chart shows is it essentially says if you Allard Graham Moseley-Braun agree to pay the tax that is due on Ashcroft Gramm Moynihan YEAS—59 Baucus Grams your existing IRA up through the end Murkowski Abraham Gorton Mack Bennett Grassley Nickles Allard Gramm McCain of next year, the 1st of January 1998, it Biden Gregg Roberts Ashcroft Grams McConnell will give you the time that this budget Bond Hagel Rockefeller Bennett Grassley Murkowski Breaux Hatch Roth agreement covers to pay all of that tax Brownback Helms Biden Gregg Nickles Santorum Bond Hagel in. And then the earnings from that Bryan Hutchinson Roberts Sessions Breaux Harkin Burns Hutchison Roth money in that IRA Plus account are Shelby Campbell Inhofe Brownback Hatch Santorum never going to be taxed the rest of your Burns Helms Chafee Kempthorne Smith (NH) Sessions Campbell Hutchinson life. Coats Kerrey Smith (OR) Shelby Coats Hutchison That is what the provision is. It is a Cochran Kohl Specter Smith (NH) Cochran Inhofe Coverdell Kyl Stevens Smith (OR) back-loaded IRA which means it is spe- Coverdell Kempthorne cifically for people who are not eligible Craig Landrieu Thomas Craig Kohl Specter D’Amato Lieberman Thompson D’Amato Kyl Stevens for the other types of IRA’s. So if you DeWine Lott Thurmond DeWine Landrieu Thomas have over $100,000 and you already have Domenici Lugar Torricelli Domenici Leahy Thompson a retirement account, then you can Enzi Mack Warner Enzi Lieberman Thurmond Faircloth McCain Wyden Faircloth Lott Torricelli have an IRA Plus. The earnings from Frist McConnell Frist Lugar Warner the funds in that IRA Plus will never The amendment (No. 541) was re- NAYS—41 be taxed. I urge the Senate to adopt our jected. Akaka Durbin Levin amendment. Mr. ROTH. Mr. President, I move to Baucus Feingold Mikulski reconsider the vote. Bingaman Feinstein Moseley-Braun Mr. ROTH. Mr. President, we need to Boxer Ford Moynihan do something about our savings rates. Mr. MOYNIHAN. I move to lay that Bryan Glenn Murray Americans are saving less now than motion on the table. Bumpers Graham Reed The motion to lay on the table was Byrd Hollings they did than at almost any time since Reid agreed to. Chafee Inouye Robb World War II. The universal IRA Plus Cleland Jeffords Mr. DORGAN addressed the Chair. Rockefeller is our best bet to bolster our fledgling Collins Johnson Sarbanes The PRESIDING OFFICER. If we Conrad Kennedy savings rate. In fact, expanding IRA’s Snowe Daschle Kerrey is the only prosaving provision in the could get attention of Senators and if Dodd Kerry Wellstone budget. The universal IRA Plus ac- conversations could be taken to the Wyden Dorgan Lautenberg count compliments the tax deductible cloakroom. The amendment (No. 574) was agreed IRA because it offers a long-term pre- The Senator from North Dakota. to. dictable savings program for millions AMENDMENTS NOS. 515 AND 516 WITHDRAWN CHANGE OF VOTE of families with fluctuating incomes, Mr. DORGAN. I ask unanimous con- Mr. BOND. Mr. President, on rollcall and who do not have employer retire- sent to withdraw amendments Nos. 515 No. 150, on which I voted ‘‘no,’’ it was ment plans. and 516 at the desk.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00016 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6685 The PRESIDING OFFICER. Is there already contains meaningful child care The PRESIDING OFFICER. The Sen- objection? Without objection, it is so tax relief for families. This proposal ator from Delaware. ordered. would give that tax relief to employers. Mr. ROTH. Mr. President, Senator The amendments (Nos. 515 and 516) For this reason I must oppose this JEFFORDS is next on the list to offer an were withdrawn. amendment. I point out the amend- amendment. The PRESIDING OFFICER. The Sen- ment is not germane and, with all time The PRESIDING OFFICER (Mr. ator from Delaware. yielded back, I make a point of order of HAGEL). The Senator from Vermont. Mr. ROTH. Mr. President, I think the germaneness. I therefore raise a point AMENDMENT NO. 555 next one is Mr. KOHL. of order against the amendment under (Purpose: To encourage improvements in The PRESIDING OFFICER. The Sen- section 305(b)(2) of the Budget Act. child care services and options for meeting ator from Wisconsin will suspend until The PRESIDING OFFICER. The Sen- employment-related child care needs) we can get the attention of the Cham- ator from Wisconsin. Mr. JEFFORDS. Mr. President, I ber. Mr. KOHL. I move to waive the Budg- have a child care amendment at the Mr. ROTH. It is my understanding et Act for my amendment. desk. the next one on the list is an amend- Mr. President, I ask for the yeas and The PRESIDING OFFICER. The ment by Senator KOHL. nays. clerk will report. The PRESIDING OFFICER. The Sen- The PRESIDING OFFICER. Is there a The legislative clerk read as follows: ator from Wisconsin is recognized. sufficient second? The Senator from Vermont [Mr. JEF- AMENDMENT NO. 575 There is a sufficient second. FORDS], for himself, Mr. DODD, Mr. ROBERTS, (Purpose: To provide a credit against tax for The yeas and nays were ordered. Mr. JOHNSON, Mr. KOHL, Ms. SNOWE, Ms. LAN- employers who provide child care assist- VOTE ON MOTION TO WAIVE THE BUDGET ACT DRIEU, Mr. CHAFEE, Mr. D’AMATO, Ms. COL- ance for dependents of their employees) The PRESIDING OFFICER. The LINS, Mr. SMITH of Oregon, Mr. CAMPBELL, Mr. KOHL. Mr. President, I send an question is on agreeing to the motion. Mr. KENNEDY, Mr. ENZI, Mr. ALLARD, Mr. amendment to the desk. The yeas and nays are ordered. The STEVENS, Mr. GRASSLEY, Ms. MIKULSKI, Mr. The PRESIDING OFFICER (Mr. clerk will call the roll. KERRY, and Mr. GRAHAM, proposes an amend- ment numbered 555. COATS). The clerk will report. The legislative clerk called the roll. The assistant legislative clerk read The PRESIDING OFFICER. Are there Mr. JEFFORDS. Mr. President, I ask as follows: any other Senators in the Chamber unanimous consent that the reading of the amendment be dispensed with. The Senator from Wisconsin [Mr. KOHL], who desire to vote? for himself, Mr. HATCH, Mr. DASCHLE, Mr. The yeas and nays resulted, yeas 72, The PRESIDING OFFICER. Without D’AMATO, Ms. MOSELEY-BRAUN, Mr. ABRA- nays 28, as follows: objection, it is so ordered. HAM, Mr. SPECTER, Ms. SNOWE, Mrs. BOXER, [Rollcall Vote No. 152 Leg.] (The text of the amendment is print- Mr. DEWINE, Mrs. MURRAY, and Mr. JOHNSON, ed in the June 26, 1997, edition of the YEAS—72 proposes an amendment numbered 575. RECORD.) Abraham Feingold Lieberman Mr. KOHL. Mr. President, I ask unan- Akaka Feinstein Lugar Mr. JEFFORDS. Mr. President, this imous consent that reading of the Allard Ford McCain is a natural follow-on to the previous amendment be dispensed with. Ashcroft Frist McConnell amendment. We are all aware of the Baucus Glenn Mikulski need for good child care. There are The PRESIDING OFFICER. Without Biden Graham Murray objection, it is so ordered. Bingaman Grams Reed more than 12 million children who are (The text of the amendment is print- Boxer Grassley Reid in child care. At least 15 percent are in ed in today’s RECORD under ‘‘Amend- Brownback Gregg Robb care that is so bad that their health Bryan Harkin Roberts ments Submitted.’’) Bumpers Hatch Rockefeller and safety are threatened; 40 percent of Mr. KOHL. This amendment provides Campbell Hollings Santorum the infants in child care are in very a tax incentive for companies that pro- Cleland Hutchison Sarbanes risky situations. vide quality child care for the children Coats Inouye Smith (NH) For the many parents who would Collins Jeffords Smith (OR) of their employees. The amendment is Conrad Johnson Snowe change their child care if they could cosponsored by Senators HATCH, Coverdell Kempthorne Specter find and afford better, this amendment DASCHLE, DEWINE, BOXER, D’AMATO, D’Amato Kennedy Stevens provides tax relief through the child Daschle Kerry Thompson SPECTER, SNOWE, JOHNSON, ABRAHAM, DeWine Kohl Thurmond care tax credits, and it helps business MOSELEY-BRAUN, and MURRAY. This Dodd Landrieu Torricelli meet the child care needs of their em- amendment creates a tax credit lim- Domenici Lautenberg Warner ployees through the business tax cred- ited to 50 percent of $150,000 per com- Dorgan Leahy Wellstone its and deductions. Durbin Levin Wyden pany per year for 3 years for those We expand choices for parents, be- companies that invest in quality child NAYS—28 cause if you can’t afford the child care care on or near site. The credit is offset Bennett Gorton Moseley-Braun you find, you don’t have much choice. by authorizing the antifraud program Bond Gramm Moynihan Representatives of the religious and Breaux Hagel Murkowski that will keep parents who do not have Burns Helms Nickles for-profit child care providers worked custody of their children from unlaw- Byrd Hutchinson Roth with us on the language related to ac- fully claiming child-related tax bene- Chafee Inhofe Sessions creditation and credentialing. Cochran Kerrey fits. Shelby I ask unanimous consent that the fol- Craig Kyl Thomas We know child care is an investment Enzi Lott lowing Members be added as cospon- that is good for children, good for busi- Faircloth Mack sors: Senators DODD, ROBERTS, KOHL, ness, good for States and good for our The PRESIDING OFFICER. On this LANDRIEU, SNOWE, JOHNSON, CHAFEE, Nation. We need to involve every level vote the yeas are 72, the nays are 28. D’AMATO, COLLINS, GORDON SMITH, of government and private commu- Three-fifths of the Senators duly cho- CAMPBELL, KENNEDY, ENZI, ALLARD, nities and private businesses in build- sen and sworn having voted in the af- STEVENS, GRASSLEY, MIKULSKI, KERRY, ing a quality child care system for our firmative, the motion is agreed to. and GRAHAM. youngest that is the best in the world. The question is now on agreeing to The PRESIDING OFFICER. Without This amendment is the first essential the underlying amendment. objection, it is so ordered. and deficit-neutral step toward that The amendment (No. 575) was agreed Mr. JEFFORDS. I reserve the re- end. to. mainder of my time, if I have any left. I urge my colleagues to support it. Mr. MOYNIHAN. Mr. President, I The PRESIDING OFFICER. The Sen- The PRESIDING OFFICER. The Sen- move to reconsider the vote by which ator’s time has expired. There is 1 ator from Delaware. the amendment was agreed to. minute in opposition. The Senator Mr. ROTH. Mr. President, while I am Mr. FORD. I move to lay that motion from Indiana. sympathetic to my colleague’s effort to on the table. Mr. COATS. Mr. President, we all provide quality child care, I regret I The motion to lay on the table was want to improve quality care for child must oppose his amendment. This bill agreed to. care. We spend nearly $1 billion now

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00017 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6686 CONGRESSIONAL RECORD — SENATE June 27, 1997 doing that. As chairman of the Chil- Robb Smith (OR) Torricelli ‘‘(1) IN GENERAL.—The term ‘qualified sev- Roberts Snowe Warner erance payment’ means any payment re- dren and Family Subcommittee I am Rockefeller Specter Wellstone committed to that. I commend Senator ceived by an individual if— Sarbanes Stevens Wyden ‘‘(A) such payment was paid by such indi- JEFFORDS, Senator DODD, and others NAYS—42 vidual’s employer on account of such individ- for work in that area. Abraham Frist Lugar ual’s separation from employment, The reason I oppose this particular Ashcroft Gorton McCain ‘‘(B) such separation was in connection amendment is, first of all, because it is Bennett Gramm McConnell with a reduction in the work force of the em- an amorphous amendment. It brings a Bond Grams Moynihan ployer, and number of things together. There is Brownback Grassley Murkowski ‘‘(C) such individual does not attain em- Burns Gregg Nickles ployment within 6 months of the date of one in here we tried to work out. I Byrd Hagel Roth such separation in which the amount of com- think we ought to oppose it, take it Coats Hatch Santorum pensation is equal to or greater than 95 per- back to committee, bring it through, Cochran Helms Sessions Collins Hutchinson Shelby cent of the amount of compensation for the and bring a true quality child care Craig Inhofe Smith (NH) employment that is related to such payment. amendment forward. DeWine Kempthorne Thomas ‘‘(2) LIMITATION.—Such term shall not in- This forces grandparents, neighbors, Domenici Kyl Thompson clude any payment received by an individual and family day-care providers who al- Faircloth Lott Thurmond if the aggregate payments received with re- ready comply with State child care NOT VOTING—1 spect to the separation from employment ex- ceed $125,000.’’ laws to meet now an additional stand- Hollings (b) TIME PERIODS FOR CARRYBACK AND ard, certified by a State-recognized The PRESIDING OFFICER. On this CARRYFORWARD OF UNUSED CREDITS.—Section agency or entity to submit to addi- vote the yeas are 57, the nays are 42. 39(a) (relating to unused credits) is amend- tional monitoring in order to have the Three-fifths of the Senators duly cho- ed— (1) in paragraph (1), by striking ‘‘3’’ each care that they provide qualify for this sen and sworn not having voted in the additional tax credit. place it appears and inserting ‘‘1’’ and by affirmative, the motion is rejected. striking ‘‘15’’ each place it appears and in- We should not provide a preference The point of order is sustained, and the serting ‘‘20’’; and tax credit for those who provide care amendment falls. (2) in paragraph (2), by striking ‘‘18’’ each outside the State certification. There Mr. ROTH. I move to reconsider the place it appears and inserting ‘‘22’’ and by are mothers and neighbors and rel- vote. striking ‘‘17’’ each place it appears and in- atives who do that who provide what Mr. MOYNIHAN. I move to lay that serting ‘‘21’’. they think is quality care and, more motion on the table. (c) CLERICAL AMENDMENT.—The table of important, what the mothers and par- The motion to lay on the table was sections for part III of subchapter B of chap- ter 1 is amended by striking the time relat- ents of children think is quality care. agreed to. ing to section 138 and inserting the following I yield whatever time I have left to Mr. TORRICELLI addressed the new items: the Senator from Oklahoma. Chair. ‘‘Sec. 138. Severance payments. The PRESIDING OFFICER. All time The PRESIDING OFFICER (Mr. ‘‘Sec. 139. Cross references to other Acts.’’ has expired. ENZI). The Chair recognizes the Sen- (d) EFFECTIVE DATES.— Mr. ROTH. Mr. President, the pend- ator from New Jersey. (1) IN GENERAL.—The amendments made by ing amendment is not germane to the AMENDMENT NO. 578 subsections (a) and (c) shall apply to taxable provisions of the reconciliation meas- (Purpose: To exclude certain severance pay- years beginning after December 31, 1997, and ment amounts from income and to modify before July 1, 2002. ure. I, therefore, raise a point of order (2) SUBSECTION (b).—The amendments made against the amendment under section the time periods for carryback and carryforward of unused credits) by subsection (b) shall apply to the 305(b)(2) of the Budget Act. carryback and carryforward of credits aris- Mr. JEFFORDS. Mr. President, I un- Mr. TORRICELLI. Mr. President, I ing in taxable years beginning after Decem- derstand this is a germaneness objec- have an amendment, and I ask for its ber 31, 1997. tion. I move to waive the Budget Act immediate consideration. Mr. TORRICELLI. Mr. President, as The PRESIDING OFFICER. The and ask for the yeas and nays. the Senate has considered tax relief for clerk will report. The PRESIDING OFFICER. Is there a people of means to encourage them to The legislative clerk read as follows: sufficient second? invest in a growing economy and peo- There is a sufficient second. The Senator from New Jersey [Mr. ple of more modest means to help with TORRICELLI], for himself and Ms. LANDRIEU, The yeas and nays were ordered. proposes an amendment numbered 578. their education, I offer an amendment to deal with a different group of Ameri- VOTE ON MOTION TO WAIVE THE BUDGET ACT Mr. TORRICELLI. Mr. President, I cans, people not of high or medium in- The PRESIDING OFFICER. The ask unanimous consent that further come, but people of no income. question is on agreeing to the motion reading of the amendment be dispensed Even in good economic times, to waive the Budget Act. The yeas and with. through no fault of their own, through nays have been ordered. The clerk will The PRESIDING OFFICER. Without mergers, acquisitions, downsizing, or call the roll. objection, it is so ordered. Mr. FORD. I announce that the Sen- The amendment is as follows: foreign competition, companies need to sometimes reduce their work force. ator from South Carolina [Mr. HOL- On page 267, between lines 15 and 16, insert LINGS] is necessarily absent. the following: And corporate America is responding The PRESIDING OFFICER. Are there SEC. . EXCLUSION FROM INCOME OF SEVER- responsibly by offering severance pay. any other Senators in the Chamber de- ANCE PAYMENT AMOUNTS; TIME PE- My amendment simply takes the RIODS FOR CARRYBACK AND first $3,000 of severance pay offered to siring to vote? CARRYFORWARD OF UNUSED CRED- The yeas and nays resulted—yeas 57, any American who loses their job ITS. through downsizing and makes that nays 42, as follows: (a) EXCLUSION FROM INCOME OF SEVERANCE $3,000 tax free. It is offset. It is respon- [Rollcall Vote No. 153 Leg.] PAYMENT AMOUNTS.—Part III of subchapter B of chapter 1 (relating to items specifically sible. It is an appropriate Government YEAS—57 excluded from gross income) is amended by response to a corporate policy which is Akaka Daschle Kennedy redesignating section 138 as section 139 and the right way to help Americans to ad- Allard Dodd Kerrey by inserting after section 137 the following Baucus Dorgan Kerry just to start their own businesses or re- Biden Durbin Kohl new section: tirement. Bingaman Enzi Landrieu ‘‘SEC. 138. SEVERANCE PAYMENTS. I urge the adoption of the amend- Boxer Feingold Lautenberg ‘‘(a) IN GENERAL.—In the case of an indi- ment. Breaux Feinstein Leahy vidual, gross income shall not include any Bryan Ford Levin The PRESIDING OFFICER. The Sen- qualified severance payment. ator’s time has expired. Bumpers Glenn Lieberman ‘‘(b) LIMITATION.—The amount to which the Campbell Graham Mack exclusion under subsection (a) applies shall There is 1 minute in opposition. Chafee Harkin Mikulski not exceed $2,000 with respect to any separa- Who seeks recognition? Cleland Hutchison Moseley-Braun Mr. MOYNIHAN. Mr. President, I do Conrad Inouye Murray tion from employment. Coverdell Jeffords Reed ‘‘(c) QUALIFIED SEVERANCE PAYMENT.—For not believe there is any opposition. It D’Amato Johnson Reid purposes of this section— is an excellent proposal.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00018 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6687 Mr. ROTH. We are ready and willing research has demonstrated that delaying the (B) 2 percent of such amounts for transfer to accept it by voice vote. onset of debilitating and costly conditions to the National Center for Research Re- Mr. TORRICELLI. Mr. President, I like Alzheimer’s disease could reduce general sources to carry out section 1502 of the Na- health care and medicare costs by billions of thank the Chairman. tional Institutes of Health Revitalization dollars annually. Act of 1993 concerning Biomedical and Be- The PRESIDING OFFICER. Without (7) The state of our Nation’s research fa- havioral Research Facilities; objection, the amendment is agreed to. cilities at the National Institutes of Health (C) 1 percent of such amounts during any The amendment (No. 578) was agreed and at universities is deteriorating signifi- fiscal year for carrying out section 301 and to. cantly. Renovation and repair of these facili- part D of title IV of the Public Health Serv- Mr. MOYNIHAN. I move to recon- ties are badly needed to maintain and im- ice Act with respect to health information sider the vote. prove the quality of research. communications; and (8) Because discretionary spending is likely (D) the remainder of such amounts during Mr. ROTH. I move to lay that motion to decline in real terms over the next 5 on the table. any fiscal year to member institutes and years, the Nation’s investment in health re- centers, including the Office of AIDS Re- The motion to lay on the table was search through the National Institutes of search, of the National Institutes of Health agreed to. Health is likely to decline in real terms un- in the same proportion to the total amount Mr. HARKIN addressed the Chair. less corrective legislative action is taken. received under this section, as the amount of The PRESIDING OFFICER. The Sen- (9) A health research fund is needed to annual appropriations under appropriations maintain our Nation’s commitment to ator from Iowa. Acts for each member institute and Centers health research and to increase the percent- for the fiscal year bears to the total amount AMENDMENT NO. 579 age of approved projects which receive fund- of appropriations under appropriations Acts (Purpose: To improve health care quality ing at the National Institutes of Health. for all member institutes and Centers of the and reduce health care costs by estab- SEC. 5997. ESTABLISHMENT OF FUND. National Institutes of Health for the fiscal lishing a National Fund for Health Re- (a) ESTABLISHMENT.—There is established year. search that would significantly expand the in the Treasury of the United States a fund, (2) PLANS OF ALLOCATION.—The amounts Nation’s investment in medical research) to be known as the ‘‘National Fund for transferred under paragraph (1)(D) shall be Mr. HARKIN. I send my amendment Health Research’’ (hereafter in this section allocated by the Director of the National In- to the desk. referred to as the ‘‘Fund’’), consisting of stitutes of Health or the various directors of such amounts as are transferred to the Fund the institutes and centers, as the case may The PRESIDING OFFICER. The under subsection (b), any sums specifically clerk will report. be, pursuant to allocation plans developed by designated for such purpose by future acts of the various advisory councils to such direc- The legislative clerk read as follows: Congress, and any interest earned on invest- tors, after consultation with such directors. The Senator from Iowa [Mr. HARKIN], for ment of amounts in the Fund. (3) GRANTS AND CONTRACTS FULLY FUNDED (b) TRANSFERS TO FUND.— himself, Mr. D’AMATO, Mr. MACK, and Mr. IN FIRST YEAR.—With respect to any grant or SPECTER, proposes an amendment numbered (1) IN GENERAL.—The Secretary of the contract funded by amounts distributed 579. Treasury shall transfer to the Fund amounts under paragraph (1), the full amount of the equivalent to one half the amounts for each total obligation of such grant or contract Mr. HARKIN. I ask unanimous con- of the fiscal years 1998 through 2002 derived sent reading of the amendment be dis- shall be funded in the first year of such grant for each such fiscal year under Section 311 or contract, and shall remain available until pensed with. through Section 314 of this act that exceeds expended. The PRESIDING OFFICER. Without the amount of Federal revenues estimated by (4) TRIGGER AND RELEASE OF MONIES. objection, it is so ordered. the Joint Tax Committee as of the date of (A) TRIGGER AND RELEASE.—No expenditure The amendment is as follows: enactment of this act, to be gained from en- shall be made under paragraph (1) during any actment of Section 311 through Section 314 On page 1027, between lines 7 and 8, insert fiscal year in which the annual amount ap- for each such fiscal year. propriated for the National Institutes of the following: (B) DETERMINATION BY SECRETARY.—Not Health is less than the amount so appro- Subtitle N—National Fund for Health later than 6 months after the end of each of priated for the prior fiscal year. Research the fiscal years described in subparagraph (d) REQUIRED APPROPRIATION.—No transfer SEC. 5995. SHORT TITLE. (A), the Secretary of the Treasury shall— may be made for a fiscal year under sub- This subtitle may be cited as the ‘‘Na- (i) make a determination as to the amount section (b) unless an appropriations Act pro- to be transferred to the Fund for the fiscal tional Fund for Health Research Act’’. viding for such a transfer has been enacted year involved under this subsection; and SEC. 5996. FINDINGS. with respect to such fiscal year. (ii) subject to subsection (d), transfer such Mr. HARKIN. Mr. President, in this Congress makes the following findings: amount to the Fund. (1) Nearly 4 of 5 peer reviewed research morning’s paper, researchers were able (C) FUND ADMINISTERED BY HEALTH AND to identify a gene that plays a role in projects deemed worthy of funding by the HUMAN SERVICES.—The Secretary of Health National Institutes of Health are not funded. and Human Services shall administer funds Parkinson’s disease. We need more (2) Less than 3 percent of the nearly one transferred into the Fund. funds for biomedical research. trillion dollars our Nation spends on health (D) CAP ON TRANSFER.—Amounts trans- What this amendment says, on behalf care is devoted to health research, while the ferred to the Fund under this subsection for of Senators D’AMATO, SPECTER, MACK, defense industry spends 15 percent of its any year in the 5-fiscal year period beginning and myself, is that we take the excess budget on research and development. on October 1, 1997, shall not in combination savings that will come in because of (3) Public opinion surveys have shown that with the appropriated sum exceed an amount Americans want more Federal resources put the capital gains tax cut. Half of that equal to the amount appropriated for the Na- will go for deficit reduction; the other into health research and are willing to pay tional Institutes of Health for fiscal year for it. 1997 multiplied by 2. half will go to NIH for biomedical re- (4) Ample evidence exists to demonstrate (c) OBLIGATIONS FROM FUND.— search. that health research has improved the qual- (1) IN GENERAL.—Subject to the provisions I yield the remainder of my time first ity of health care in the United States. Ad- of paragraph (4), with respect to the amounts to Senator D’AMATO and then Senator vances such as the development of vaccines, made available in the Fund in a fiscal year, SPECTER. the cure of many childhood cancers, drugs the Secretary of Health and Human Services Mr. D’AMATO. Mr. President, a num- that effectively treat a host of diseases and shall distribute— ber of recent studies have dem- disorders, a process to protect our Nation’s (A) 2 percent of such amounts during any onstrated that investments in medical blood supply from the HIV virus, progress fiscal year to the Office of the Director of research can lower health care costs against cardiovascular disease including the National Institutes of Health to be allo- heart attack and stroke, and new strategies cated for the following activities: through the development of more cost- for the early detection and treatment of dis- (i) for carrying out the responsibilities of effective treatments. Greater funding eases such as colon, breast, and prostate can- the Office of the Director, including the Of- for research will also increase our abil- cer clearly demonstrates the benefits of fice of Research on Women’s Health and the ity to combat diseases which are very health research. Office of Research on Minority Health, the costly to our Nation’s health care sys- (5) Health research which holds the prom- Office of Alternative Medicine, the Office of tem. We voted on May 21, 1997, 98 to 0, ise of prevention of intentional and uninten- Rare Disease Research, the Office of Behav- to double the amount of funding for tional injury and cure and prevention of dis- ioral and Social Sciences Research (for use NIH so we can advance our biomedical for efforts to reduce tobacco use), the Office ease and disability, is critical to holding research capabilities. This impressive down health care costs in the long term. of Dietary Supplements, and the Office for (6) Expanded medical research is also crit- Disease Prevention; and show of support from this body will ical to holding down the long-term costs of (ii) for construction and acquisition of help reduce health care costs and in- the medicare program under title XVIII of equipment for or facilities of or used by the crease the quality of health for all of the Social Security Act. For example, recent National Institutes of Health; our citizens.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00019 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6688 CONGRESSIONAL RECORD — SENATE June 27, 1997 Voting to increase funding was easy. No. 1, my understanding is that this AMENDMENT NO. 581 Now comes the hard part. Where do we violates the Budget Act and is subject (Purpose: To provide for a tax credit for pub- get the money? We must not take to a point of order. lic elementary and secondary school con- money from other vital programs such Mr. NICKLES. I make the point of struction, and for other purposes) as food stamps or senior citizen bene- order that the amendment is not rel- Ms. MOSELEY-BRAUN. Mr. Presi- fits. Can we afford to give more money evant under the Budget Act, subject to dent, I send an amendment to the desk for breast cancer research and take germaneness. and ask for its immediate consider- away money from programs for chil- Mr. HARKIN. I move to waive the ation. The PRESIDING OFFICER. The dren? There would be no end to the de- point of order and ask for the yeas and bate on which is more worthy of our clerk will report. nays. The legislative clerk read as follows: priorities. The PRESIDING OFFICER. Is there a There is a better way to get funds for The Senator from Illinois [Ms. MOSELEY- sufficient second? BRAUN], for herself, Mr. KENNEDY, and Mr. biomedical research without cutting There is a sufficient second. WELLSTONE, proposes an amendment num- from other programs. I suggest that The yeas and nays were ordered. bered 581. each year the Secretary of the Treas- VOTE ON MOTION TO WAIVE THE BUDGET ACT Ms. MOSELEY-BRAUN. Mr. Presi- ury determine whether the actual rev- The PRESIDING OFFICER. The dent, I ask unanimous consent that enue impact of the capital gains provi- question is on agreeing to the motion reading of the amendment be dispensed sions of this bill are more positive— to waive the Budget Act. The yeas and with. more revenues gained or less lost—than nays have been ordered. The PRESIDING OFFICER. Without levels called for in revenue scoring of The clerk will call the roll. objection, it is so ordered. this provision. If the impact is more The bill clerk called the roll. (The text of the amendment is print- positive, half of the revenues will be ed in today’s RECORD under ‘‘Amend- Mr. FORD. I announce that the Sen- put toward deficit reduction. We could ments Submitted.’’) then take the other half and deposit it ator from South Carolina. [Mr. HOL- Ms. MOSELEY-BRAUN. Mr. Presi- into a National Fund for Health Re- LINGS] is necessarily absent. dent, this amendment says that if our search. This fund will expand support The yeas and nays resulted—yeas 51, economy does better than we today ex- for medical research through the Na- nays 48, as follows: pect that it will, we will devote some of tional Institutes of Health [NIH]. [Rollcall Vote No. 154 Leg.] that increased revenue to help rebuild I believe that if we acquire the YEAS—51 our Nation’s crumbling schools. money for the fund in this way we can Akaka Glenn McCain The General Accounting Office avoid hurting other programs. Using Biden Graham Mikulski makes it very clear that we have at money when there is a more positive Boxer Grassley Moseley-Braun least 112 billion dollars’ worth of Bryan Harkin Moynihan revenue will keep us within the bounds Bumpers Hutchison Murray unmet needs with school facilities of the balanced budget agreement. I Burns Inouye Reed around the country. State and local don’t believe there is a better place to Cleland Jeffords Reid governments cannot go to the property Collins Johnson Robb put this excess money than in the re- Conrad Kennedy Rockefeller tax to meet that 112 billion dollars’ search fund. D’Amato Kerrey Sarbanes worth of need. So, I say to my col- Mr. President, every one of us, the Daschle Kerry Snowe leagues, in the interest of the 14 mil- entire Senate called for an increase in DeWine Kohl Specter lion American children who, every day, Dodd Lautenberg Stevens funding for biomedical research. Again, Dorgan Leahy Thompson go to schools that are unfit for human I suggest that there is no better place Durbin Levin Torricelli habitation and which are not suitable to put the more positive revenue than Feinstein Lieberman Wellstone environments for learning, I ask sup- in this fund. I believe that the estab- Frist Mack Wyden port for this amendment. The funds lishment of this trust fund should be NAYS—48 from the tax credit would only be made made in the same cooperative spirit Abraham Domenici Landrieu available if actual revenue in the Fed- that brought the entire Senate to agree Allard Enzi Lott eral Treasury exceeded CBO’s annual to increase funding on May 21. We can Ashcroft Faircloth Lugar Baucus Feingold McConnell revenue projections, and up to $1 bil- then go home feeling proud that we did Bennett Ford Murkowski lion above and beyond CBO revenue es- all we could to further advance our Bingaman Gorton Nickles timates will be deposited into a school country’s medical capabilities and in Bond Gramm Roberts infrastructure trust fund. It would be Breaux Grams Roth time reduce the costs of our entire Brownback Gregg Santorum distributed to the States in allocable health care system. Byrd Hagel Sessions tax credits. This is a problem that will Mr. President, we voted 98 to 0 to do Campbell Hatch Shelby not go away. It will only get worse if this. This is a matter which we can Chafee Helms Smith (NH) Coats Hutchinson Smith (OR) we don’t address it now. Thank you. prove that we meant it. Any additional Cochran Inhofe Thomas Mr. NICKLES addressed the Chair. moneys will go to deficit reduction and Coverdell Kempthorne Thurmond The PRESIDING OFFICER. The Sen- to NIH. Craig Kyl Warner ator from Oklahoma is recognized. Mr. SPECTER. Mr. President, the NOT VOTING—1 Mr. NICKLES. Mr. President, I urge my colleagues to vote no on this Senate voted 98 to 0 in a sense of the Hollings Senate, but turned down $1.1 billion of amendment. I understand there will be real money, 67 to 37. The PRESIDING OFFICER. On this a voice vote. Mr. President, this pro- This is a chance for those 63 Senators vote, the yeas are 51, the nays are 48. posal is, in essence, converting an edu- to redeem themselves, to redeem their Three-fifths of the Senators duly cho- cation infrastructure grant program promise for NIH funding. sen and sworn not having voted in the into a tax credit. In my opinion, that is The PRESIDING OFFICER. There is affirmative, the motion is rejected. not a good idea. The administration, 1 minute in opposition. The point of order is sustained, and the while they originally proposed having Mr. ROTH. I yield to the Senator amendment falls. the $5 billion for schools, during the from Pennsylvania. Mr. ROTH. Mr. President, I move to negotiation they dropped that. That Mr. SANTORUM. If this amendment reconsider the vote. wasn’t part of the agreed-upon pack- is adopted, there is no money for tax Mr. MOYNIHAN. I move to lay that age. I might also mention that the De- cuts, if that money was available from motion on the table. partment of Education said, ‘‘The De- extra funds. The motion to lay on the table was partment recommends that Congress I do not think that is a good idea. I agreed to. rescind the 1995 appropriations for this think it hamstrings Congress. If there Mr. ROTH. Mr. President, Senator program and provide no funding for is extra money, we should give it back MOSELEY-BRAUN is the next Senator on 1996.’’ That was the infrastructure pro- to the people who paid it here. We the list to offer an amendment. gram. should not be putting it into more Gov- The PRESIDING OFFICER. The Sen- So, Mr. President, I urge colleagues ernment spending. ator from Illinois is recognized. to vote no on this amendment.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00020 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6689 The PRESIDING OFFICER. The unfortunately, ethanol has never lived projected prices of oil nor the ability of eth- question is on agreeing to the amend- up to the claims of any of its diverse anol to be a viable fuel without Federal sub- ment. proponents. sidies has been realized. The Committee de- The amendment (No. 581) was re- In the late 1970’s, during the energy termined, therefore, that enactment of an orderly termination of this Federal subsidy jected. crisis, ethanol was supposed to help the program is appropriate at this time. Mr. MOYNIHAN. Mr. President, I U.S. lessen its reliance on oil. But eth- And what does the Senate Finance move to reconsider the vote. anol use never took off, even when gas- Committee say to support its decision Mr. FORD. I move to lay that motion oline prices were highest and lines were to extend the ethanol subsidies beyond on the table. longest. their current expiration date? Listen The motion to lay on the table was Then, in the early 1980’s, ethanol sub- to this: agreed to. sidies were used to prop up America’s Mr. ROTH. Mr. President, I next struggling corn farmers. Unfortu- The Committee believes that continued as- surance of tax benefits for ethanol are [sic] yield to Senator MCCAIN to offer an nately, the usual trickle down effect of an important signal to encourage the use of amendment. agricultural subsidies is clearly evi- alternative fuels. dent. Beef and dairy farmers, for exam- AMENDMENT NO. 548 I commend Chairman BILL ARCHER (Purpose: To strike the provision relating to ple, have to pay a higher price for feed for his decision to try to phase out eth- the extension and modification of subsidies corn, which is then passed on in the anol subsidies. The provision in the for alcohol fuels) form of higher prices for meat and House bill would have saved almost Mr. MCCAIN. Mr. President, I send an milk. The average consumer ends up $250 million in the next three years. amendment to the desk and ask for its paying the cost of ethanol subsidies in Unfortunately, I understand the provi- immediate consideration. the grocery store. sion will be removed from the House By the late 1980’s, ethanol became The PRESIDING OFFICER. The bill because of opposition in the eth- the environmentally correct alter- clerk will report. anol industry. I am very disappointed native fuel. Unfortunately, the Depart- The legislative clerk read as follows: that the House is taking this step back ment of Energy has provided statistics The Senator from Arizona [Mr. MCCAIN] from ending ethanol subsidies. proposes an amendment numbered 548. showing that it takes more energy to Mr. President, we should end these produce a gallon of ethanol than the Mr. MCCAIN. Mr. President, I ask subsidies. We cannot afford to subsidize unanimous consent that reading of the amount of energy that gallon of eth- the ethanol industry at a time when we amendment be dispensed with. anol contains. In addition, the Congres- are struggling with the dilemma of bal- The PRESIDING OFFICER. Without sional Research Service, the Congres- ancing the budget while maintaining objection, it is so ordered. sional Budget Office, and the Depart- our commitments to our senior citi- The amendment is as follows: ment of Energy all acknowledge that zens, taking care of our poor and dis- the environmental benefits of ethanol Strike section 707 of the bill. advantaged citizens, and ensuring a use, at least in terms of smog reduc- healthy and secure future for our chil- Mr. MCCAIN. Mr. President, I offer tion, are yet unproven. an amendment today to strike the lan- dren. In addition, ethanol is an inefficient, Current law terminates ethanol sub- guage in the bill that provides an addi- expensive fuel. Just look at the 3- to 5- sidies after the year 2000. This amend- tional $3.8 billion in subsidies for the cent-per-gallon increase in gasoline ment would avoid the $3.8 billion cost ethanol industry. prices during the winter months in the of extending the ethanol subsidies. I The amendment is very simple. It Washington, D.C. area when ethanol is urge my colleagues to oppose changing strikes in its entirety Section 707 of required to be added to the fuel. current law and adopt my amendment the bill, which would extend for an ad- Finally, let me quote Stephen Moore, to strike Section 707 from the bill. ditional 7 years the tax credits for eth- of the CATO Institute, who puts it very The PRESIDING OFFICER. Who anol and methanol producers. The succinctly in a recent paper: seeks recognition? value of these ethanol subsidies is esti- * * * [V]irtually every independent assess- Mr. KERREY. Mr. President, I will mated by the Congressional Budget Of- ment—by the U.S. Department of Agri- take 30 seconds and then yield to the fice at $3.8 billion in lost revenues. culture, the General Accounting Office, the Senator from Iowa. This provision has Mr. President, enough is enough. The Congressional Budget Office, NBC News and several academic journals—has concluded worked and is creating jobs— American taxpayers have subsidized Mr. MOYNIHAN. Mr. President, we the ethanol industry, with guaranteed that ethanol subsidies have been a costly boondoggle with almost no public benefit. must have order. loans and tax credits, for more than 20 Mr. KERREY. This provision has So why do we continue to subsidize years. Since 1980, government subsidies worked. I urge my colleagues to vote the ethanol industry? I think James for ethanol have totaled more than $10 against the motion to strike. It has Bovard of the CATO Institute put it billion. Section 707 of the bill, if not created jobs and has been good for the best in a 1995 policy paper: stricken, would give another $3.8 bil- environment and promoted alternative * * * [O]ne would be hard-pressed to find lion in tax breaks to ethanol producers. fuel in the agriculture community, and Current law provides tax credits for another industry as artificially sustained as the ethanol industry. The economics of eth- we have long-term contracts that indi- ethanol producers which are estimated anol are such that, for the industry to sur- viduals have taken out to build the to cost the Treasury $770 million a year vive at all, massive trade protection, tax plants. I hope my colleagues vote in lost revenue, and the Congressional loopholes, contrived mandates for use, and against this provision. Research Service estimates that loss production subsidies are vitally necessary. The PRESIDING OFFICER. The Sen- may increase to $1 billion by the year Only by spooking the public with bogey-men ator from Iowa is recognized. 2000. These huge tax credits effectively such as foreign oil sheiks, toxic air pollu- Mr. GRASSLEY. Mr. President, look increase the tax burden on other busi- tion, and the threatened disappearance of at how wrong the argument of the Sen- nesses and individual taxpayers. the American farmer can attention be de- ator from Arizona is, that when a con- flected from the real costs of the ethanol The current tax subsidies for ethanol house of cards that consumes over a billion sumer doesn’t pay a gasoline tax, it are scheduled to expire in the year 2000. dollars annually. turns out to be a subsidy to an indus- This amendment does not change cur- Mr. President, the House Ways and try. How wrong that argument can be. rent law; it allows the existing gen- Means Committee took a bold step and This is not a subsidy to any industry. If erous subsidies to continue through the included in its revenue reconciliation this amendment passes, after the year year 2000. The amendment merely en- bill a phase-out of ethanol subsidies. In 2000 the consumers of America are sures that the subsidies do expire and the report accompanying the bill, the going to pay more gas tax on that por- are not extended for another 7 years. Committee stated: tion of their gasoline that is ethanol. Mr. President, let me just take a mo- This is good for the environment and [Ethanol tax subsidies] were assumed to be ment and try to explain why we have temporary measures that would allow these good for agriculture. It is good for jobs such generous ethanol subsidies in law fuels to become economical without perma- in the cities—195,000 jobs. It is good for today. The rationale for ethanol sub- nent Federal subsidies. Nearly 20 years have energy independence and everything. It sidies has changed over the years, but passed since that enactment, and neither the is good, good, good.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00021 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6690 CONGRESSIONAL RECORD — SENATE June 27, 1997 Mr. JOHNSON. Mr. President, I rise gallons last year, or about 25 percent of NAYS—69 in opposition to Senator MCCAIN’s domestic consumption. By displacing Abraham DeWine Kerrey amendment to the Revenue Reconcili- the demand for MTBE that would be Akaka Dodd Kerry ation Act that would eliminate the tax Allard Domenici Kohl necessary without ethanol, the U.S. Ashcroft Dorgan Landrieu exemption for ethanol in the year 2000. trade imbalance is reduced by approxi- Baucus Durbin Levin Mr. President, I am proud to stand in mately $1.3 billion annually. But the Bennett Enzi Lott opposition of this amendment. Over the trade implications of ethanol do not Biden Faircloth Lugar Bingaman Feinstein Mack past 3 years, we have been deluged with end there. The majority of the coprod- Bond Ford McConnell a deliberate misinformation campaign ucts of ethanol production—corn glu- Boxer Glenn Mikulski regarding the impact of the domestic ten feed and corn gluten meal—are ex- Breaux Graham Moseley-Braun ethanol industry. The partial excise Brownback Gramm Moynihan ported, further reducing the trade def- Bryan Grams Murkowski tax exemption gasoline marketers re- icit by earning over $800 million annu- Bumpers Grassley Reed ceive for blending their fuel with eth- ally. The net effect is a benefit to the Burns Hagel Reid anol has been disparagingly labeled U.S. trade imbalance of over $2 billion Campbell Harkin Roberts Chafee Hatch Roth corporate welfare. This label patently each year. Cleland Helms Sarbanes ignores the important public benefits Ethanol helps reduce air pollution. Cochran Hutchinson Smith (OR) that result from the production and Ethanol adds oxygen to gasoline which Conrad Inouye Thomas use of fuel ethanol. I thought I would Craig Jeffords Thurmond reduces exhaust emissions of ozone- D’Amato Johnson Torricelli share some of the relevant facts. forming VOC’s and carbon monoxide. It Daschle Kempthorne Wellstone Ethanol production stimulates the is widely used in reformulated gaso- economy in rural America. As a result NOT VOTING—1 lines currently being sold in ozone non- Hollings of progressive policymakers, ethanol is attainment areas across the country. now produced in 53 plants in 19 States. Because ethanol adds octane to gaso- So the amendment (No. 548) was re- The production of fuel ethanol results line, it also reduces the use of other jected. Mr. ROTH. Mr. President, I move to in more than 55,000 high-wage jobs, highly toxic petroleum-derived reconsider the vote by which the generates greater than $2.1 billion in octanes, such as benzene, toluene and amendment was rejected. household income, and adds more than xylene. $7.2 billion to the economy every year. Mr. MOYNIHAN. I move to lay that Ethanol enhances our national secu- Farmers will receive an additional $2.2 motion on the table. rity. This Nation spends billions of dol- billion each year because of ethanol The motion to lay on the table was lars to protect our oil interests around production. Moreover, nearly all new agreed to. the world. It is considerably less costly expansion in the ethanol industry has Mr. ROTH. Senator LANDRIEU is next to defend the corn fields of the Dakotas been completed by farmer-owned co- on the list of offering amendments. than it is to defend foreign oil fields. operatives. The Department of Agri- The PRESIDING OFFICER. The Sen- culture estimates that a 100 million Ethanol is good for agriculture. It is ator from Louisiana is recognized. gallon ethanol plant will add 2,250 jobs good for rural America. It is good for AMENDMENT NO. 532 to a community—enhancing rural de- the environment. It reduces our (Purpose: To allow taxpayers with income velopment and expansion. In short, the dependance on foreign oil. The bottom tax liability to take the child tax credit line is that the Federal tax structure before the earned income tax credit, and ethanol industry is an economic engine for other purposes) driving investment and opportunities for ethanol deserves our continued sup- port. I strongly oppose this amend- Ms. LANDRIEU. Mr. President, I across rural America. have an amendment at the desk. Ethanol promotes competition and ment. The PRESIDING OFFICER. The reduces consumer gasoline costs. Eth- Mr. President, I ask unanimous con- clerk will report. sent that my remarks be inserted in anol extends gasoline supplies, pro- The bill clerk read as follows: vides a valuable source of octane for the appropriate place in the CONGRES- The Senator from Louisiana [Ms. LAN- SIONAL RECORD. independent gasoline marketers, DRIEU] proposes an amendment numbered assures competition in the oxygenate The PRESIDING OFFICER. The 532. market for refiners trying to meet question is on agreeing to the amend- Ms. LANDRIEU. Mr. President, I ask Clean Air Act standards, and reduces ment. unanimous consent that reading of the consumer costs of gasoline. As noted Mr. McCAIN. Mr. President, I ask for amendment be dispensed with. by the Society of Independent Gasoline the yeas and nays. The PRESIDING OFFICER. Without Marketers of America: The PRESIDING OFFICER. Is there a objection, it is so ordered. The federal benefits afforded ethanol- sufficient second? The amendment is as follows: blended fuels have been an important, pro- On page 13, beginning on line 9, strike all competitive influence on the nation’s gaso- There is a sufficient second. through page 17, line 23, and insert the fol- line markets. By enhancing the ability of The yeas and nays are ordered and lowing: independent marketers to price-compete the clerk will call the roll. ‘‘(2) LIMITATION BASED ON ADJUSTED GROSS with their integrated oil company competi- The assistant legislative clerk called INCOME.— tors, this program has increased independent the roll. ‘‘(A) IN GENERAL.—The $500 amount in sub- marketers’ economic viability and reduced Mr. FORD. I announce that the Sen- section (a) shall be reduced (but not below consumers’ costs of gasoline. zero) by $25 for each $1,000 (or fraction there- Recognizing the competitive benefits ator from South Carolina [Mr. HOL- of) by which the taxpayer’s modified ad- of fuel ethanol in the market, Citizen LINGS] is necessarily absent. justed gross income exceeds the threshold Action, the Nation’s largest consumer The PRESIDING OFFICER. Are there amount. For purposes of the preceding sen- organization and strong supporter of any other Senators in the Chamber de- tence, the term ‘modified adjusted gross in- the ethanol tax incentive, recently siring to vote? come’ means adjusted gross income in- creased by any amount excluded from gross stated: The result was announced—yeas 30, income under section 911, 931, or 933. The use of ethanol, a domestically pro- nays 69, as follows: ‘‘(B) THRESHOLD AMOUNT.—For purposes of duced, cleaner-burning renewable fuel helps [Rollcall Vote No. 155 Leg.] subparagraph (A), the term ‘threshold American consumers use less polluting oil amount’ means— and reduces dependence on costly oil im- YEAS—30 ‘‘(i) $90,000 in the case of a joint return, ports, which are in part subsidized by huge Byrd Kennedy Santorum ‘‘(ii) $60,000 in the case of an individual foreign tax credits. Coats Kyl Sessions who is not married, and Collins Lautenberg Shelby ‘‘(iii) $45,000 in the case of a married indi- Ethanol improves the U.S. trade bal- Coverdell Leahy Smith (NH) ance. Ethanol competes with MTBE, a vidual filing a separate return. Feingold Lieberman Snowe For purposes of this subparagraph, marital Frist McCain Specter methanol-derived oxygenate, as an oc- status shall be determined under section tane—oxygenate—additive. Imports of Gorton Murray Stevens Gregg Nickles Thompson 7703. MTBE have risen from just 30 million Hutchison Robb Warner ‘‘(c) QUALIFYING CHILD.—For purposes of gallons in 1992 to more than 700 million Inhofe Rockefeller Wyden this section—

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00022 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6691 ‘‘(1) IN GENERAL.—The term ‘qualifying Mr. President, under the current Mr. FORD. I announce that the Sen- child’ means any individual if— draft of the bill, these working families ator from South Carolina [Mr. HOL- ‘‘(A) the taxpayer is allowed a deduction only get to keep about half of this LINGS] and the Senator from Hawaii under section 151 with respect to such indi- credit. In my State that means 27 per- [Mr. INOUYE], are necessarily absent. vidual for the taxable year, ‘‘(B) such individual has not attained the cent of the families in my State who The PRESIDING OFFICER. Are there age of 17 (age of 18 in the case of taxable are working very hard will not be able any other Senators in the Chamber years beginning after 2002) as of the close of to keep the full amount of this credit. who desire to vote? the calendar year in which the taxable year I know this has been considered care- The yeas and nays resulted—yeas 39, of the taxpayer begins, and fully. But I feel compelled to offer this nays 59, as follows: ‘‘(C) such individual bears a relationship to amendment today. I know that in this [Rollcall Vote No. 156 Leg.] the taxpayer described in section 32(c)(3)(B). bill we are giving tax relief to many ‘‘(2) EXCEPTION FOR CERTAIN NONCITIZENS.— YEAS—39 The term ‘qualifying child’ shall not in- Americans. I believe that these Ameri- Akaka Durbin Levin clude any individual who would not be a de- cans should have the opportunity to Biden Feingold Lieberman pendent if the first sentence of section keep the full $500 tax credit. I ask my Bingaman Feinstein Mikulski 152(b)(3) were applied without regard to all colleagues to give favorable consider- Boxer Ford Murray Breaux Glenn Reed that follows ‘resident of the United States’. ation. It is budget neutral. Bumpers Harkin Reid ‘‘(d) TAXABLE YEAR MUST BE FULL TAX- Mr. MOYNIHAN. Mr. President, I Cleland Johnson Robb ABLE YEAR.—Except in the case of a taxable would hope that there would be no op- Collins Kennedy Sarbanes year closed by reason of the death of the tax- position to this. D’Amato Kerry Snowe payer, no credit shall be allowable under this Daschle Kohl Specter section in the case of a taxable year covering Mr. NICKLES addressed the Chair. Dodd Landrieu Torricelli a period of less than 12 months. The PRESIDING OFFICER. The Sen- Domenici Lautenberg Wellstone Dorgan Leahy Wyden ‘‘(e) RECAPTURE OF CREDIT.— ator’s time has expired. ‘‘(1) IN GENERAL.—If— The Senator from Oklahoma. NAYS—59 ‘‘(A) during any taxable year any amount Mr. NICKLES. Mr. President, much Abraham Frist McCain is withdrawn from a qualified tuition pro- to my colleague’s surprise, there is Allard Gorton McConnell gram or an education individual retirement very serious opposition. Ashcroft Graham Moseley-Braun account maintained for the benefit of a bene- Baucus Gramm Moynihan I hope we can vote this down by a Bennett Grams ficiary and such amount is subject to tax voice vote. Murkowski under section 529(f) or 530(c)(3), and Bond Grassley Nickles ‘‘(B) the amount of the credit allowed This amendment would add outlays Brownback Gregg Roberts and increase Uncle Sam’s writing of Bryan Hagel Rockefeller under this section for the prior taxable year Burns Hatch Roth was contingent on a contribution being made checks for the first 5 years of $9 billion Byrd Helms Santorum to such a program or account for the benefit and over 10 years of $19 billion. And Campbell Hutchinson of such beneficiary, Chafee Hutchison Sessions this amendment would say that we Shelby the taxpayer’s tax imposed by this chapter stack these in order that people get the Coats Inhofe Cochran Jeffords Smith (NH) for the taxable year shall be increased by the income education credit, the wage Conrad Kempthorne Smith (OR) lesser of the amount described in subpara- credit, and the tax credit that we are Coverdell Kerrey Stevens graph (A) or the credit described in subpara- adding to the bill and the EIC. And on Craig Kyl Thomas Thompson graph (B). top of that, for a family with two chil- DeWine Lott ‘‘(2) NO CREDITS AGAINST TAX, ETC.—Any in- Enzi Lugar Thurmond crease in tax under this subsection shall not dren already gets $3,680. Uncle Sam Faircloth Mack Warner be treated as a tax imposed by this chapter will write the check. We would also NOT VOTING—2 for purposes of determining— give $1,000 on top of it. Hollings Inouye ‘‘(A) the amount of any credit under this I want to raise a point of order. subpart or subpart B or D of this part, and Mr. MOYNIHAN. Mr. President, I was The PRESIDING OFFICER. On this ‘‘(B) the amount of the minimum tax im- simply going to say that this matter vote the yeas are 39, the nays are 59. posed by section 55. will surely arise in conference, and Three-fifths of the Senators duly cho- ‘‘(f) OTHER DEFINITIONS.—For purposes of there will be support for it. The White sen and sworn not having voted in the this section, the terms ‘qualified tuition pro- affirmative, the motion is not agreed gram’ and ‘education individual retirement House is very much in favor. I hope we account’ have the meanings given such can resolve it. to. The point of order is sustained, and terms by section 529 and 530, respectively. The PRESIDING OFFICER. The Sen- the amendment falls. ‘‘(g) PHASE IN OF CREDIT.—In the case of ator’s time has expired. Mr. ROTH. Mr. President, I move to taxable years beginning in 1997— Mr. NICKLES. Mr. President, I raise reconsider the vote. ‘‘(1) subsection (a)(1) shall be applied by a point of order under section 302(f) of Mr. MOYNIHAN. I move to lay that substituting ‘$250’ for ‘$500’, and the Budget Act that the amendment motion on the table. ‘‘(2) subsection (c)(1)(B) shall be applied by results in the Finance Committee ex- The motion to lay on the table was substituting ‘age of 13’ for ‘age of 17’.’’ agreed to. (b) CONFORMING AMENDMENT.—The table of ceeding its spending allocation under sections for subpart A of part IV of sub- section 602 of the Budget Act. Mr. ROTH. Senator MCCAIN is next chapter A of chapter 1 is amended by insert- Ms. LANDRIEU addressed the Chair. on the list. ing after the item relating to section 23 the The PRESIDING OFFICER. The Sen- POINT OF ORDER—SECTION 702(D) following new item: ator from Louisiana. Mr. MCCAIN. Mr. President, I yield 30 ‘‘Sec. 24. Child tax credit.’’ Ms. LANDRIEU. Mr. President, I seconds of my 1 minute to raise a point (c) EFFECTIVE DATE.—The amendments want to make a point that this is budg- of order to the Senator from Missouri. made by this section shall apply to taxable et neutral. Technically a point of order The PRESIDING OFFICER. The Sen- years beginning after December 31, 1996. could be raised that this is budget neu- ator from Missouri. Ms. LANDRIEU. Mr. President, I tral in the amendment that I am offer- Mr. BOND. Mr. President, in this want to begin by thanking my col- ing. I would like to, if I could, move to budget agreement some of us thought leagues for their great patience. It has waive and ask for the yeas and nays. there was too much spending and not been a long day. I thank our ranking The PRESIDING OFFICER. Is there a enough tax relief. We find that there member for his great attention to this sufficient second? are even more spending proposals and matter. There is a sufficient second. less tax relief than we thought. This I also want to thank Senators KERRY, The yeas and nays were ordered. point of order is directed at spending JOHNSON, and DURBIN for joining me in VOTE ON MOTION TO WAIVE THE BUDGET ACT on Amtrak in addition to other things. cosponsoring this amendment. The PRESIDING OFFICER. The There is $2.3 billion being spent out of Mr. President, this amendment would question occurs on agreeing to the mo- the tax cut section going to Amtrak. I allow the $500 child tax credit that we tion to waive the Budget Act in rela- join my colleague from Arizona in ask- have talked so much about in the last tion to the Landrieu amendment No. ing that these matters be referred to few days to be available to 20 million 532. The yeas and nays have been or- the authorization for Amtrak and urge families in America that are working dered, and the clerk will call the roll. that the point of order be sustained. very hard. The bill clerk called the roll. Mr. MCCAIN addressed the Chair.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00023 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6692 CONGRESSIONAL RECORD — SENATE June 27, 1997 The PRESIDING OFFICER. The Sen- nancial viability and effectively serve on the path to financial stability and ator from Arizona. millions of Americans. end the annual financial roller coaster Mr. MCCAIN. Mr. President, as chair- It is certainly no secret that Amtrak to which Amtrak is subjected. It would man of the oversight committee, I is in serious financial trouble. Earlier also avoid a catastrophic shutdown of want my colleagues to be clear about this year, the GAO continued a regular Amtrak, which has recently been esti- what is happening. This bill takes $2.3 series of warnings in testifying to the mated to cost upwards of $5 billion dol- billion out of the tax relief promised Finance Committee on the precarious lars. the American people and places it into financial condition of the railroad. Am- Mr. President, Amtrak has presented a trust fund to further subsidize Am- trak President Tom Downs also con- to Congress a responsible 6-year stra- trak. These funds would be appro- firmed to us that his railroad is in dif- tegic business plan which outlines how priated outside of the existing budget ficult shape. A number of States and financial viability will be restored to caps ensuring that Amtrak would not communities have already felt the the railroad. Amtrak’s President Tom have to compete with other transpor- brunt of the railroad’s financial predic- Downs deserves our praise for the mon- tation priorities such as highways or ament as often vital rail service has umental efforts he has undertaken to aviation. been discontinued. turn things around at his company. Mr. President, I raise the point of There are several factors contrib- Congress should do its part and join order that section 702(d) of the bill vio- uting to Amtrak’s condition, but pri- him by providing a relatively modest lates section 313(b)(1)(A) of the Budget marily it is a result of outdated laws Federal investment in passenger rail. I Act, and I ask for the yeas and nays. governing Amtrak’s operation, as well urge my colleagues to support this mo- The PRESIDING OFFICER. There is as inadequate and inconsistent support tion to waive the Budget Act. nothing to ask for them on yet. from the Federal Government. What- Mr. ROTH. I move this point of order Mr. ROTH. Mr. President, at the ever the cause, I think we can all agree be waived, both for now and for the completion of my remarks I yield 10 that Amtrak simply cannot continue conference. seconds to the distinguished Senator to operate under the status quo. The PRESIDING OFFICER. The from New Mexico. Amtrak’s financial predicament has question is on the motion. There is no truth that this has any resulted in calls to end all Federal sup- Mr. ROTH. Mr. President, I ask for impact on tax cuts. The important port for intercity passenger rail—there the yeas and nays. point to understand is that this point are those who would just throw up our The PRESIDING OFFICER. Is there a of order is to kill Amtrak. hands in frustration and walk away. sufficient second? This is very important, both to Sen- Mr. President, I am one who does not There is a sufficient second. ator MOYNIHAN and to myself. Pas- question the need for a Federal invest- The yeas and nays were ordered. senger rail is extremely important to ment in passenger rail. The absence of the entire country. What we have done passenger rail would clog our highways VOTE ON MOTION TO WAIVE THE BUDGET ACT is fully paid for. We do not ask for any and airports—an additional 7,500 fully- The PRESIDING OFFICER. The special treatment. The rail fund is con- booked 757’s, or hundreds of thousands question is on the motion to waive the sistent with the budget resolution of cars, would be needed between Wash- Budget Act. The yeas and nays have agreed to by both Chambers. It has the ington, DC, and New York every year. been ordered. support of Senator DOMENICI and Sen- All major industrialized nations pro- The clerk will call the roll. ator LAUTENBERG. GAO has testified vide subsidies to passenger rail, usually The assistant legislative clerk called that Amtrak will not survive past 1998 to a greater extent than our Govern- the roll. without this crucial funding. ment’s support for Amtrak. In fact, Mr. FORD. I announce that the Sen- We could not wait any longer. I first Amtrak covers more of its operating ator from Hawaii [Mr. INOUYE] and the wanted to say, I therefore ask for your costs—an estimated 84 percent—than Senator from South Carolina [Mr. HOL- votes to this point of order. any other passenger railroad in the LINGS] are necessarily absent. The PRESIDING OFFICER. The world. Nonetheless, Amtrak operates The PRESIDING OFFICER. Are there question is on the motion to waive. the only mode of transportation in the any other Senators in the Chamber Mr. DOMENICI. I was going to an- United States which does not have a who desire to vote? swer the McCain question, but he did dedicated source of funding. The yeas and nays resulted, yeas 77, not have one. Let me just say this is So the question before the Senate nays 21, as follows: provided for in the budget resolution. today is how best to provide needed [Rollcall Vote No. 157 Leg.] The way it is handled, it is totally def- Federal support for Amtrak’s critical YEAS—77 icit-neutral. If the money is not used capital investment needs. After years for Amtrak, we are ahead of the game. of congressional hearings, GAO reports Akaka Faircloth Mack Baucus Feingold McConnell If it is used, it is totally neutral. We and strategic plans, I and many of my Bennett Feinstein Mikulski have done this about 10 times here- colleagues have concluded that dedi- Biden Ford Moseley-Braun tofore in budget reconciliation and cating a portion of the Federal gas tax Bingaman Graham Moynihan budget resolutions. to a Rail Trust Fund is the most appro- Boxer Grassley Murkowski Breaux Hagel Murray The PRESIDING OFFICER. The time priate and reliable means of ensuring Bryan Harkin Nickles of the Senator has expired. that passenger rail can continue to Bumpers Hatch Reed Mr. CHAFEE. Mr. President, I meet America’s transportation needs. Burns Helms Reid Byrd Hutchinson Robb strongly support the provisions within Such a solution provides passenger rail Campbell Hutchison Roberts this bill establishing a Rail Trust Chafee Inhofe with the same type of Federal support Rockefeller Cleland Jeffords Fund, and oppose this point of order. for capital improvements that other Roth Let me first state my view that these Coats Johnson modes of transportation have enjoyed Cochran Kennedy Santorum provisions do not violate the spirit of for years. Collins Kerrey Sarbanes the Byrd rule, which is intended to pre- This bill’s creation of an Intercity Conrad Kerry Smith (OR) Snowe vent unrelated authorization bills from Passenger Rail Fund financed by one- D’Amato Kohl Daschle Landrieu Specter being brought into the reconciliation half cent of the gas tax, coupled with DeWine Lautenberg Stevens process. Section 702 of this bill, which the needed operating reforms con- Dodd Leahy Thomas establishes an Intercity Passenger Rail tained within the Amtrak authoriza- Domenici Levin Thurmond Fund, is primarily tax legislation, Dorgan Lieberman Torricelli tion bill introduced by the Senator Durbin Lott Wellstone which most certainly belongs on legis- from Texas, will allow Amtrak to oper- Enzi Lugar Wyden lation entitled ‘‘The Tax Fairness ate more like a business, end its reli- NAYS—21 Bill’’. ance on Federal operating subsidies, Establishment of a trust fund is a and thus better serve America’s trans- Abraham Coverdell Gramm Allard Craig Grams critical element in providing passenger portation needs. Ashcroft Frist Gregg rail with a stable, predictable source of At least for the 31⁄2 years that this Bond Glenn Kempthorne revenue so that Amtrak can achieve fi- Trust Fund is financed, we will start Brownback Gorton Kyl

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00024 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6693 McCain Shelby Thompson stances, we spend even more on their [Rollcall Vote No. 158 Leg.] Sessions Smith (NH) Warner downstream public health and environ- YEAS—37 NOT VOTING—2 mental consequences. Akaka Gregg Moseley-Braun Hollings Inouye So, as the senior Senator from Ar- Biden Harkin Murray kansas says, this subsidy gives cor- Boxer Jeffords Reed Bumpers Johnson Robb The PRESIDING OFFICER. On this porate welfare a bad name. Coats Kennedy Mr. President, I urge my colleagues Rockefeller vote, the yeas are 77, the nays are 21. Collins Kerrey Sarbanes Three-fifths of the Senators duly cho- to support this provision, and I yield Daschle Kerry Snowe the remainder of my time in deference Dodd Kohl Specter sen and sworn having voted in the af- Durbin Lautenberg Torricelli firmative, the motion is agreed to. to the Senator from Nevada. Feingold Leahy Wellstone The PRESIDING OFFICER. Who Feinstein Levin Mr. ROTH. Mr. President, I move to Wyden reconsider the vote by which the mo- seeks recognition in opposition? The Glenn Lieberman Graham Mikulski tion was agreed to. Senator from Texas. Mr. MOYNIHAN. I move to lay that Mr. GRAMM. Mr. President, it seems NAYS—61 motion on the table. to me we have had enough fun now. I Abraham Domenici Mack The motion to lay on the table was think we ought to reject this amend- Allard Dorgan McCain ment and get on with final passage of Ashcroft Enzi McConnell agreed to. Baucus Faircloth Moynihan Mr. ROTH. The next to be recognized this bill. Bennett Ford This is a tax cut. This is not a place Murkowski is Senator FEINGOLD. Bingaman Frist Nickles to change the way we do accounting for Bond Gorton AMENDMENT NO. 582 Reid mining. If you go out and find a body of Breaux Gramm Roberts Brownback Grams (Purpose: To eliminate the percentage Roth ore, you don’t have an investment you Bryan Grassley depletion allowance for certain minerals) Santorum made in a piece of equipment. You Burns Hagel The PRESIDING OFFICER. The Byrd Hatch Sessions have the asset that you are depleting Shelby clerk will report the amendment. as you produce it. Campbell Helms The legislative clerk read as follows: Chafee Hutchinson Smith (NH) Every developed nation in the world Cleland Hutchison Smith (OR) The Senator from Wisconsin [Mr. FEIN- has depletion allowance, because they Cochran Inhofe Stevens GOLD], for himself and Mr. BUMPERS, pro- want to produce the riches of their Conrad Kempthorne Thomas poses an amendment numbered 582. Thompson lands. This is a bad amendment and Coverdell Kyl Mr. FEINGOLD. Mr. President, I ask Craig Landrieu Thurmond ought to be rejected. D’Amato Lott Warner unanimous consent that the reading of Mr. ROTH. Mr. President, the pend- DeWine Lugar the amendment be dispensed with. ing amendment is not germane to the NOT VOTING—2 The PRESIDING OFFICER. Without provisions of the reconciliation meas- Hollings Inouye objection, it is so ordered. ure. I, therefore, raise a point of order The amendment is as follows: against the amendment under section The PRESIDING OFFICER. On this On page 400, between lines 14 and 15, insert 305(b)(2) of the Budget Act. vote the yeas are 37, the nays are 61. the following: Mr. FEINGOLD. Mr. President, I Three-fifths of the Senators duly cho- SEC. . CERTAIN MINERALS NOT ELIGIBLE FOR move to waive the Budget Act and ask sen and sworn not having voted in the PERCENTAGE DEPLETION. for the yeas and nays. affirmative, the motion is rejected. (a) IN GENERAL.—Section 613(b)(1) (relating The PRESIDING OFFICER. Is there a The point of order is sustained, and the to percentage depletion rates) is amended— amendment falls. (A) in subparagraph (A), by striking ‘‘and sufficient second? uranium’’; and There is a sufficient second. Mr. ROTH. I move to reconsider the (B) in subparagraph (B), by striking ‘‘as- The PRESIDING OFFICER. The vote. bestos,’’, ‘‘lead,’’, and ‘‘mercury,’’. question is on agreeing to the motion Mr. MOYNIHAN. I move to lay that (b) CONFORMING AMENDMENTS.— to waive the Budget Act. motion on the table. (1) Section 613(b)(3)(A) is amended by in- Mr. NICKLES. There wasn’t a second. The motion to lay on the table was serting ‘‘other than lead, mercury, or ura- The PRESIDING OFFICER. Is there a agreed to. nium’’ after ‘‘metal mines’’. sufficient second? Mr. BOND addressed the Chair. (2) Section 613(b)(4) is amended by striking There is not a sufficient second. The PRESIDING OFFICER. The Sen- ‘‘asbestos (if paragraph (1)(B) does not Mr. FEINGOLD. Mr. President, I sug- apply),’’. ator from Missouri. gest the absence of a quorum. Mr. BOND. I want to get a unanimous (3) Section 613(b)(7) is amended by striking The PRESIDING OFFICER. The ‘‘or’’ at the end of subparagraph (B), by consent. striking the period at the end of subpara- clerk will call the roll. Mr. ROTH addressed the Chair. graph (C) and inserting ‘‘, or’’, and by insert- The assistant legislative clerk pro- The PRESIDING OFFICER. The Sen- ing after subparagraph (C) the following: ceeded to call the roll. ator from Delaware. ‘‘(D) mercury, uranium, lead, and asbes- Mr. NICKLES. Mr. President, I ask tos.’’ unanimous consent that the order for AMENDMENTS NOS. 583, 584, 585, 586, 587, 588, AND 589 (4) Section 613(c)(4)(D) is amended by strik- the quorum call be rescinded. ing ‘‘lead,’’ and ‘‘uranium,’’. The PRESIDING OFFICER. Without Mr. ROTH. Mr. President, I ask unan- (c) EFFECTIVE DATE.—The amendments objection, it is so ordered. imous consent to send the following made by this section shall apply to taxable Mr. FEINGOLD. I ask for the yeas amendments to the desk, and I ask years beginning after December 31, 1996. and nays. unanimous consent that they be con- The PRESIDING OFFICER. The Sen- The PRESIDING OFFICER. Is there a sidered en bloc: Senator GRAHAM, pen- ator from Wisconsin. sufficient second? sion technicals; the second one is Sen- Mr. FEINGOLD. Mr. President, this There is a sufficient second. ators NICKLES and BOND, sense of the amendment eliminates percentage de- The yeas and nays were ordered. Senate regarding self-employment tax; pletion allowances for four mined sub- VOTE ON MOTION TO WAIVE THE BUDGET ACT the third is Senator SPECTER, penalty- stances—asbestos, lead, mercury, and The PRESIDING OFFICER. The free withdrawal on adoption; the fourth uranium—and it saves an estimated $83 question is on agreeing to the motion is Senator FAIRCLOTH, tax-exempt bond million over 5 years. to waive the Budget Act. The yeas and refunding; the fifth is Senator GORTON, Unlike depreciation or cost deple- nays have been ordered. The clerk will bad debt reserve recapture; the sixth is tion, percentage depletion allows com- call the roll. Senator SANTORUM, sense of the Senate panies to deduct far more than their The legislative clerk called the roll. on tax cuts; and the final one is BURNS, actual costs. This results in a generous Mr. FORD. I announce that the Sen- income averaging for farmers. loophole for the company and an ex- ator from Hawaii [Mr. INOUYE] and the The PRESIDING OFFICER. Without pensive subsidy for the taxpayer. But it Senator from South Carolina [Mr. HOL- objection, it is so ordered. gets worse, Mr. President. LINGS] are necessarily absent. The clerk will report the amend- While we spend millions subsidizing The yeas and nays resulted—yeas 37, ments. corporations to mine these toxic sub- nays 61, as follows: The legislative clerk read as follows:

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The Senator from Delaware [Mr. ROTH] ‘‘(A) CERTAIN MINISTERS MAY PARTICI- who are limited partners under applicable proposes amendments numbered 583, 584, 585, PATE.—For purposes of this part— State law exceeds the regulatory authority 586, 587, 588, and 589. ‘‘(i) IN GENERAL.—A duly ordained, com- of the Treasury Department and would effec- The amendments are as follows: missioned, or licensed minister of a church is tively change the law administratively with- described in paragraph (3)(B) if, in connec- out congressional action; and AMENDMENT NO. 583 tion with the exercise of their ministry, the (6) the proposed regulations address and (Purpose: To provide for various minister— raise significant policy issues and the pro- amendments) ‘‘(I) is a self-employed individual (within posed definition of a limited partner may the meaning of section 401(c)(1)(B), or On page 93, strike lines 13 through 25, and have a substantial impact on the tax liabil- ‘‘(II) is employed by an organization other insert: ity of certain individuals and may also affect than an organization which is described in ‘‘(ii) a silver coin described in section individuals’ entitlement to social security section 501(c)(3) and with respect to which 5112(e) of title 31. United States Code, benefits. the minister shares common religious bonds. ‘‘(iii) a platinum coin described in section (b) SENSE OF SENATE.—It is the sense of the ‘‘(ii) TREATMENT AS EMPLOYER AND EM- 5112(k) of title 31. United States Code, or Senate that— PLOYEE.—For purposes of sections (1) the Department of the Treasury and the ‘‘(iv) a coin issued under the laws of any 403(b)(1)(A) and 404(a)(10), a minister de- Internal Revenue Service should withdraw State, or scribed in clause (i)(I) shall be treated as em- Proposed Regulation 1.1402(a)–2 which im- ‘‘(B) any gold, silver, platinum, or palla- ployed by the minister’s own employer which poses a tax on limited partners; and dium bullion of a fineness equal to or exceed- is an organization described in section (2) Congress, not the Department of the ing the minimum fineness required for met- 501(c)(3) and exempt from tax under section Treasury or the Internal Revenue Service, als which may be delivered in satisfaction of 501(a).’’ should determine the tax law governing self- a regulated futures contract subject to regu- (B) Section 403(b)(1)(A) is amended by employment income for limited partners. lation by the Commodity Futures Trading striking ‘‘or’’ at the end of clause (i), by in- Commission under the Commodity Exchange serting ‘‘or’’ at the end of clause (ii), and by AMENDMENT NO. 585 Act, adding at the end the following new clause: (Purpose: To allow penalty-free IRA On page 205, before line 12, insert the fol- ‘‘(iii) for the minister described in section lowing: withdrawals for adoption expenses) 415(e)(5)(A) by the minister or by an em- On page 20, between lines 5 and 6, insert (c) SPECIAL AMORTIZATION RULE.— ployer,’’. (1) CODE AMENDMENT.—Section 412(b)(2) is the following: SEC. 105. ADOPTION EXPENSES. amended by striking ‘‘and’’ at the end of sub- AMENDMENT NO. 584 paragraph (C), by striking the period at the (a) DISTRIBUTIONS FROM CERTAIN PLANS (Purpose: To express the sense of the Senate end of subparagraph (D) and inserting ‘‘, MAY BE USED WITHOUT PENALTY TO PAY with respect to the proposed regulations of and’’, and by inserting after subparagraph ADOPTION EXPENSES.— the Internal Revenue Service with respect (D) the following: (1) IN GENERAL.—Section 72(t)(2) (relating to self-employment income for limited ‘‘(E) the amount necessary to amortize in to exceptions to 10-percent additional tax on partners) equal annual installments (until fully amor- early distributions from qualified retirement tized) over a period of 20 years the contribu- On page 212, between lines 11 and 12, insert plans) is amended by adding at the end the tions which would be required to be made the following: following: under the plan but for the provisions of sub- SEC. . SENSE OF THE SENATE WITH RESPECT TO ‘‘(E) DISTRIBUTIONS FROM CERTAIN PLANS section (c)(7)(A)(i)(I).’’. SELF-EMPLOYMENT TAX OF LIMITED FOR ADOPTION EXPENSES.—Distributions to an PARTNERS. (2) ERISA AMENDMENT.—Section 302(b)(2) of individual from an individual retirement the Employee Retirement Income Security (a) FINDINGS.—The Senate finds that— plan of so much of the qualified adoption ex- (1) the Department of the Treasury issued Act of 1974 (29 U.S.C. 1082(b)(2)) is amended penses (as defined in section 23(d)(1)) of the Proposed Regulation 1.1402(a)–2 in January by striking ‘‘and’’ at the end of subparagraph individual as does not exceed $2,000.’’. 1997 relating to the definition of a limited (C), by striking the period at the end of sub- (2) CONFORMING AMENDMENT.—Section partner for self-employment tax purposes paragraph (D) and inserting ‘‘, and’’, and by 72(t)(2)(B) is amended by striking ‘‘or (D)’’ under section 1402(a)(13) of the Internal Rev- inserting after subparagraph (D) the fol- and inserting ‘‘, (D) or (E)’’. enue Code; lowing: (3) EFFECTIVE DATE.—The amendments (2) since 1977, section 1402(a)(13) of such ‘‘(E) the amount necessary to amortize in made by this subsection shall apply to pay- Code has provided that— equal annual installments (until fully amor- ments and distributions after December 31, (A) a limited partner’s net earnings from tized) over a period of 20 years the contribu- 1996. self-employment include only guaranteed tions which would be required to be made payments made to the individual for services under the plan but for the provisions of sub- AMENDMENT NO. 586 actually rendered and do not include a lim- section (c)(7)(A)(i)(I).’’. (Purpose: To permit the current refunding of ited partner’s distributive share of the in- (3) CONFORMING AMENDMENTS.— certain tax-exempt bonds) come or loss of the partnership, and (A) Section 412(c)(7)(D) is amended by add- (B) a general partner’s net earnings from On page 267, between lines 15 and 16, insert ing ‘‘and’’ at the end of clause (i), by striking self-employment include the partner’s dis- the following: ‘‘, and’’ at the end of clause (ii) and inserting tributive share; SECTION . CURRENT REFUNDINGS OF CERTAIN a period, and by striking clause (iii). (3) the proposed regulations provide gen- TAX-EXEMPT BONDS. (B) Section 302(c)(7)(D) of the Employee erally— (a) IN GENERAL.—Subsection (c) of section Retirement Income Security Act of 1974 (29 (A) that a partner will not be treated as a 10632 of the Revenue Act of 1987 (relating to U.S.C. 1082(c)(7)(D)) is amended by adding limited partner if the individual— bonds issued by Indian tribal governments) ‘‘and’’ at the end of clause (i), by striking ‘‘, (i) has personal liability for partnership is amended by adding at the end the fol- and’’ at the end of clause (ii) and inserting a debts, lowing new sentence: ‘‘The amendments period, and by striking clause (iii). (ii) has authority to contract on behalf of made by this section shall not apply to any (4) EFFECTIVE DATES.— the partnership, or obligation issued after such date if— (A) IN GENERAL.—The amendments made (iii) participates in the partnership’s trade ‘‘(1) such obligation is issued (or is part of by this subsection shall apply to plan years or business for more than 500 hours during a series of obligations issued) to refund an beginning after December 31, 1998. the taxable year; obligation issued on or before such date, (B) SPECIAL RULE FOR 1999.—In the case of a (B) that an individual meeting any one of ‘‘(2) the average maturity date of the issue plan’s first year beginning in 1999, there these three criteria will be treated as a gen- of which the refunding obligation is a part is shall be added to the amount required to be eral partner, and net earnings from self-em- not later than the average maturity date of amortized under section 412(b)(2)(E) of the ployment will include the partner’s distribu- the obligations to be refunded by such issue, Internal Revenue Code of 1986 and section tive share of partnership income and loss, re- ‘‘(3) the amount of the refunding obligation 302(b)(2)(E) of the Employee Retirement In- sulting in substantial tax liability because does not exceed the outstanding amount of come Security Act of 1974 (as added by para- there is a 15.3 percent tax on self-employ- the refunded obligation, and graphs (1) and (2)) over the 20-year period be- ment income below $65,400 in 1997 and a 2.9 ‘‘(4) the net proceeds of the refunding obli- ginning with such year, the unamortized bal- percent hospital insurance tax on self-em- gation are used to redeem the refunded obli- ance (as of the close of the preceding plan ployment income above that amount; gation not later than 90 days after the date year) of any amount required to be amor- (4) certain types of entities, such as lim- of the issuance of the refunding obligation. tized under section 412(c)(7)(D)(iii) of such ited liability companies and limited liability For purposes of paragraph (2), average matu- Code and section 302(c)(7)(D)(iii) of such Act partnerships, were not widely used at the rity shall be determined in accordance with (as repealed by paragraph (3)) for plan years time the present rule relating to limited section 147(b)(2)(A) of the Internal Revenue beginning before 1999. partners was enacted, and that the proposed Code of 1986.’’ On page 639, between lines 11 and 12, insert: regulations attempt to address owners of (b) EFFECTIVE DATE.—The amendment (4) AMENDMENTS RELATED TO SECTION 1461.— such entities; made by subsection (a) shall apply to refund- (A) Section 415(e)(5)(A) is amended to read (5) the Senate is concerned that the pro- ing obligations issued after the date of the as follows: posed change in the treatment of individuals enactment of this Act.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00026 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6695 CAROLINA MIRROR CO. to the suburbs. The outside world is ir- ‘‘(ii) APPLICATION OF CUT-OFF METHOD; Mr. FAIRCLOTH. Mr. President, I relevant. The real jobs of real people ETC.—In the case of a taxpayer to which this rise to offer this amendment on behalf are irrelevant. subparagraph applies— of the Eastern Band of Cherokee Indi- The amendment that I offer today is ‘‘(I) paragraph (5)(B) shall apply, and ‘‘(II) this subparagraph shall not apply in ans in my home state of North Caro- a technical bill to allow Indian tribes determining the amount taken into account lina. to refinance tax-exempt bonds issued by the taxpayer under subparagraph (A)(ii) In 1982, the Congress passed legisla- on or before October 13, 1997. This bill for purposes of paragraph (5) and (6) or sub- tion to allow Indian tribes to issue tax has a very narrow application. In fact, section (e)(1).’’ exempt bonds, just like other units of I introduced this bill last year as S. (b) EFFECTIVE DATE.—The amendment government. The legislation recognized 1676. The Joint Committee on Taxation made by this section shall take effect as if the rights of the tribes and confirmed said last year—and again this year— included in the amendments made by section their parallel rights to States, coun- that this bill will have a ‘‘negligible ef- 1616 of the Small Business Job Protection Act of 1996. ties, and cities. fect on budget receipts.’’ The 1982 act thus acknowledged just Let’s do the right thing for the AMENDMENT NO. 588 what most of us knew: that Indian Cherokees. Let’s tell the IRS that (Purpose: To express the sense of the Senate tribes are legitimate units of govern- American jobs matter and the Congress that America’s middle-class taxpayers shoulder the biggest tax burden and that ment with wide-ranging responsibil- stands behind the working men and only those who pay Federal income taxes ities. women of this country. should benefit from the Federal income tax Using the act, the Cherokee Indians I urge my colleagues to support the cuts contained in the Revenue Reconcili- in my State issued $31 million in tax- amendment. ation Act of 1997) exempt bonds to purchase the Carolina Mr. HELMS. Mr. President, this On page 267, between lines 15 and 16, insert Mirror Co. The tribal leadership viewed amendment corrects a serious problem the following: the purchase of Carolina Mirror Co. as Congress created in 1987 when the defi- SEC. . SENSE OF THE SENATE. a means to promote jobs and economic nition for ‘‘essential government func- (a) FINDINGS.—The Senate finds that— development for their tribe and its tions’’ was inadvertently changed re- (1) Congress has not provided a genuine tax members. The Cherokee have faced lating to native American tribes, cut for America’s middle-class families since some tough times over the years. The thereby inhibiting the tribes’ use of 1981; (2) President Clinton promised middle- Carolina Mirror Co. purchase was a tax-exempt bonds. Prior to 1987, the class tax cuts in 1992; way to invest in the future of their Cherokee Tribe and other tribes used (3) President Clinton raised taxes by tribe and their people. tax-exempt bonds to finance ‘‘essential $240,000,000,000 in 1993; Carolina Mirror today is the largest government functions.’’ In 1986, the (4) President Clinton vetoed middle-class manufacturer of mirrors in the Nation. Eastern Band of Cherokee Indians, in tax cuts in 1995; It employees over 500 people. It is an western North Carolina, used this pro- (5) the middle-class American worker had economic engine. It produces jobs and vision to purchase the Carolina Mirror to work until May 9 in order to earn enough hope for a people that have seen little Co. to ensure the Cherokee Tribe’s money to pay all Federal, State, and local taxes in 1997; of both over the years. long-term economic development. The (6) the Joint Economic Committee reports In 1986, however, the Congress passed Cherokees worked hard and built Caro- that real total Government taxes per house- new legislation that narrowed the in- lina Mirror into the largest producer of hold in 1994 totaled $18,600; terpretation of the original 1982 act. It mirrors in the United States. (7) more than 70 percent of the tax cuts in changed the act so that tax-exempt Then, Congress changed the rules in both the House of Representatives and the bonds could only be used to finance the Omnibus Budget Reconciliation Senate tax relief bills will go to Americans ‘‘essential government functions.’’ Act of 1987, and narrowed the definition earning less than $75,000 annually; Mr. President, as you know, interest of ‘‘essential government functions’’, (8) the Joint Economic Committee esti- mates that a family of 4 earning $30,000 will rates are at historically low levels. I and today Carolina Mirror is in default receive 53 percent of the tax relief under the know that not enough of us have ever and may be forced to close its Texas reconciliation bill; been in business and met a payroll, as operation because of a staggering (9) the earned income tax credit was al- I have for the past 50 years. Well, inter- monthly obligation of $300,000. This ready expanded in President Clinton’s 1993 est rates are the difference between amendment would allow these hard- tax bill; profitability and bankruptcy, between working native Americans to refinance (10) the fiscal year 1998 budget resolution jobs for the community and a lock on their current bonds at more competi- does not make the $500-per-child tax credit the factory gate. Needless to say, the refundable; and tive rates. The Joint Committee on (11) those who receive the earned income Cherokees are eager to take advantage Taxation asserts that this purely tech- tax credit do not pay Federal income taxes of lower interest rates and to refinance nical amendment will have a ‘‘neg- but receive a substantial cash transfer from these bonds. ligible effect on the Federal fiscal year the Federal Government in the form of re- The interest rate on these bonds is so budget receipts.’’ fund checks above and beyond income tax re- high that the Carolina Mirror Co. lit- AMENDMENT NO. 587 bates. (b) SENSE OF THE SENATE.—It is the sense erally spends almost all of its profits (Purpose: Relating to repeal of bad debt re- of the Senate that America’s middle-class on interest payments. This is dev- serve method for thrift savings associa- taxpayers shoulder the biggest tax burden astating for the company. tions) and that only those who pay Federal income When the company attempted to re- At the end of title VII, insert: taxes should benefit from the Federal in- issue the bonds, however, some IRS bu- SEC. . SPECIAL RULE FOR THRIFTS WHICH BE- come tax cuts contained in the Revenue Rec- reaucrat stepped away from the water COME LARGE BANKS onciliation Act of 1997. cooler long enough to say ‘‘no.’’ The (a) IN GENERAL.—Section 593(g)(2) (defining great minds at the IRS ruled that a re- applicable excess reserves) is amended by AMENDMENT NO. 589 financing constituted a reissuance and adding at the end the following new subpara- (Purpose: To allow farmers to income stopped the tribe from its plans to refi- graph: average over 3 years) ‘‘(C) SPECIAL RULE FOR THRIFTS WHICH BE- nance these high interest bonds. CAME LARGE BANKS IN 1995.— On page 267, between lines 15 and 16, insert By reissuing bonds at a lower rate, ‘‘(i) IN GENERAL.—In the case of a bank (as the following: the company could save nearly a mil- defined in section 581) which became a large SEC. 780. AVERAGING OF FARM INCOME OVER 3 lion dollars a year, but the IRS does bank (as defined in section 585(c)(2)) for its YEARS. not look at the situation. The 500 jobs first taxable year beginning after December (a) IN GENERAL.—Subpart B of part II of do not matter. The investment of the 31, 1994, the balance taken into account subchapter E of chapter 1 of the Internal under subparagraph (A)(ii) shall not be less Revenue Code of 1986 (relating to taxable Cherokees in the company does not year for which items of gross income in- matter. No, all that matters is that we than the amount which would be the balance of such reserves as of the close of its last cluded) is amended by adding the following follow the mindless dictate of an taxable year beginning before January 1, new section: unelected, unaccountable bureaucrat 1995, if the additions to such reserves for all ‘‘SEC. 460A. AVERAGING OF FARM INCOME. holed up in a Federal office building taxable years had been determined under ‘‘(a) IN GENERAL.—At the election of a tax- waiting for the 4 o’clock vanpool back section 585(b)(2)(A). payer engaged in a farming business, the tax

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00027 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6696 CONGRESSIONAL RECORD — SENATE June 27, 1997 imposed by section 1 for such taxable year and the average American out there Sessions Specter Torricelli shall be equal to the sum of— who owns a capital asset. Shelby Thomas Warner ‘‘(1) a tax computed under such section on Smith (NH) Thompson Wyden Specifically, what the amendment Smith (OR) Thurmond taxable income reduced by elected farm in- does is—it is pretty much the same in- come, plus NAYS—57 dexing provision that was reported out ‘‘(2) the increase in tax which would result Akaka Dorgan Lautenberg if taxable income for the 3 prior taxable of the House except that it delays the Baucus Durbin Leahy years were increased by the elected farm in- implementation of it to 2002. The hold- Bennett Feingold Levin come. ing period of the property would Biden Feinstein Lieberman ‘‘(b) DEFINITIONS.—In this section— change from 3 to 5 years. Bingaman Ford Lugar Boxer Glenn Moseley-Braun ‘‘(1) ELECTED FARM INCOME.— Just briefly, there are two other very Breaux Gorton Moynihan ‘‘(A) IN GENERAL.—The term ‘elected farm important points that I would like to Bryan Graham Murkowski income’ means so much of the taxable in- make about this particular amend- Bumpers Grassley Murray come for the taxable year— Byrd Hagel Nickles ‘‘(i) which is attributable to any farming ment. Chafee Harkin Reed business; and It is revenue neutral over 10 years, as Cleland Hatch Reid ‘‘(ii) which is specified in the election scored by the Joint Committee on Tax- Cochran Jeffords Robb under subsection (a). ation; and, No. 2, it is germane, and in Collins Johnson Rockefeller Conrad Kennedy Roth ‘‘(B) TREATMENT OF GAINS.—For purposes of fact it does blend within the current D’Amato Kerrey Sarbanes subparagraph (A), gain from the sale or other language of the bill. Daschle Kerry Snowe disposition of property (other than land) reg- I yield back the remainder of my Dodd Kohl Stevens ularly used by the taxpayer in a farming Domenici Landrieu Wellstone business for a substantial period shall be time. NOT VOTING—2 treated as attributable to a farming busi- The PRESIDING OFFICER. Who ness. seeks recognition in opposition? Hollings Inouye ‘‘(2) FARMING BUSINESS.—The term ‘farm- Mr. ROTH. Mr. President, I commend The amendment (No. 577) was re- ing business’ has the meaning given such my friend from Colorado on offering jected. term by section 263A(e)(4).’’ this amendment. It is unfortunate that Mr. ROTH. I move to reconsider the (b) CLERICAL AMENDMENT.—The table of I must vote against it. sections for such subpart B is amended by vote. adding at the end the following new item: The Senator may not be aware of Mr. MOYNIHAN. I move to lay it on this, but in 1993 I introduced a bill that the table. ‘‘Sec. 460A. Averaging of farm income.’’ called for the indexing of capital as- The motion to lay on the table was (c) EFFECTIVE DATE.—The amendments sets. But today, we are not only deal- agreed to. made by this section shall apply to taxable years beginning after the date of the enact- ing with economic issues, President AMENDMENT NO. 590 ment of this Act and before January 1, 2001. Clinton has said he will veto any tax (Purpose: To make the HOPE credit Section 503 of the bill is amended on page bill that includes indexing of capital refundable, and for other purposes) 161, line 4 by striking ‘‘July 31, 1999’’ and in- gains. Mr. WELLSTONE. Mr. President, I serting ‘‘May 31, 1999.’’ I have an article from last Thurs- send an amendment to the desk. Mr. ROTH. Mr. President, I move day’s Wall Street Journal. The title of The PRESIDING OFFICER. The their adoption. the article is ‘‘Clinton Rules Out Index- clerk will report. The PRESIDING OFFICER. Without ing of Capital Gains in Tax Bill.’’ The The legislative clerk read as follows: objection, the amendments are agreed first paragraph says the President The Senator from Minnesota [Mr. to en bloc. ‘‘will not sign a tax bill that includes WELLSTONE], for himself, Mr. BINGAMAN, Mr. The amendments en bloc, were indexing of capital gains for inflation.’’ KERRY, Mr. KENNEDY, Mr. REED, Mr. DODD, agreed to. We have a historic opportunity today and Mr. DASCHLE, proposes an amendment Mr. ALLARD addressed the Chair. to deliver badly needed tax cuts to numbered 590. The PRESIDING OFFICER. The Sen- Americans. I would like to provide Mr. WELLSTONE. I ask unanimous ator from Colorado. greater tax relief, but we cannot, and consent the reading of the amendment be dispensed with. AMENDMENT NO. 577 ‘‘half a loaf’’ is better than ‘‘no loaf.’’ So I urge my colleagues to vote The PRESIDING OFFICER. Without [Purpose: To provide for the indexing of objection, it is so ordered. assets to determine capital gain] against this amendment. (The text of the amendment is print- Mr. ALLARD. I have at the desk I ask for the yeas and nays. The PRESIDING OFFICER. All time ed in today’s RECORD under ‘‘Amend- amendment No. 577. I ask that the ments Submitted.’’) clerk call it up. has expired. Is there a sufficient second? Mr. WELLSTONE. This is about the The PRESIDING OFFICER. The HOPE scholarship program. If the tax clerk will report. There appears to be a sufficient sec- ond. credits will work for working families, The assistant legislative clerk read these should be refundable credits. I as follows: The yeas and nays were ordered. The PRESIDING OFFICER. The ask for full support. The offset is re- The Senator from Colorado [Mr. ALLARD], question is on agreeing to the amend- sponsible. for himself, Mr. BROWNBACK, and Mr. ABRA- Everybody is under all this pressure. HAM, proposes an amendment numbered 577. ment. The yeas and nays have been or- I ask for a voice vote. Mr. ALLARD. Mr. President, I ask dered. The Clerk will call the roll. The assistant legislative clerk called The PRESIDING OFFICER. The unanimous consent that further read- question is on agreeing to the amend- ing of the amendment be dispensed the roll. Mr. FORD. I announce that the Sen- ment. with. The amendment (No. 590) was re- ator from South Carolina [Mr. HOL- The PRESIDING OFFICER. Without jected. LINGS] and the Senator from Hawaii objection, it is so ordered. AMENDMENT NO. 591 [Mr. INOUYE] are necessarily absent. (The text of the amendment is print- (Purpose: To allow non-Amtrak states to ed in today’s RECORD under ‘‘Amend- The result was announced—yeas 41, nays 57, as follows: provide alternative intercity transport as- ments Submitted.’’) sistance) [Rollcall Vote No. 159 Leg.] Mr. ALLARD. Mr. President, let me Mr. ROTH. On behalf of Senator ENZI, briefly explain what this amendment is YEAS—41 I ask unanimous consent to send the all about. This is an amendment in Abraham DeWine Inhofe following amendment to the desk, and which we address the indexing of cap- Allard Enzi Kempthorne Ashcroft Faircloth Kyl I ask it be considered and agreed to. ital gains. When we index capital gains, Bond Frist Lott The PRESIDING OFFICER. The what we are talking about is pro- Brownback Gramm Mack clerk will report. tecting long-term investors from tax- Burns Grams McCain The legislative clerk read as follows: ation on inflationary gains. This helps Campbell Gregg McConnell Coats Helms Mikulski The Senator from Delaware [Mr. ROTH], for the family business, the family farm, Coverdell Hutchinson Roberts Mr. ENZI, proposes an amendment numbered and the family ranch. It is the family Craig Hutchison Santorum 591.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00028 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6697 Mr. ROTH. I ask unanimous consent During this same period, median children’s education. I am confident that reading of the amendment be dis- household income rose 84 percent and with passage of this language these pensed with. the consumer price index rose a mere programs will grow dramatically. The PRESIDING OFFICER. Without 74 percent. The College Board reports Many Kentuckians are drawn to this objection, it is so ordered. that tuition costs for the 1996–97 school program because it offers a low-cost, The amendment is as follows: year will rise 5 percent while average disciplined approach to savings. In On page 190, line 1, strike ‘‘(III)’’ and insert room and board costs will rise between fact, the average monthly contribution ‘‘(IV)’’ and insert a new subparagraph 4 to 6 percent. While education costs in Kentucky is just $49. This proposal (A)(ii)(III)— have moderated throughout the 1990’s, rewards those who are serious about ‘‘(VI) the upgrading and maintenance of they continue to outstrip the gains in their future and are committed over intercity primary and rural air service facili- the long-term to the education of their ties, and the purchase of intercity air service income. Tuition has now become the between primary and rural airports and re- greatest barrier to attendance. children by exempting all interest gional hubs; and’’. Due to the rising cost of education, earnings from State taxes. It is also Mr. ROTH. This has been cleared on more and more families have come to important to note that 58 percent of both sides of the aisle. The amendment rely on financial aid to meet tuition the participants earn under $60,000 per year. Clearly, this benefits middle- corrects a minor drafting error in the costs. In fact, a majority of all college students accept some amount of finan- class families. bill. Mr. President, the Finance Com- The PRESIDING OFFICER. The cial assistance. In 1995, $50 billion in fi- mittee has expanded the language to question is on agreeing to the amend- nancial aid was available to students permit private nonprofit colleges to es- ment. from Federal, State, and institutional tablish their own tuition savings plans The amendment (No. 591) was agreed sources. This was $3 billion higher than as well as establishing education IRA’s. to. the previous year. A majority of this increase has come in the form of loans, This will ensure that all families have QUALIFIED TUITION SAVINGS ACCOUNTS an opportunity to save. This legisla- which now make up the largest portion Mr. MCCONNELL. Mr. President, I tion also allows individuals who in- of the total Federal-aid package at 57 have come to the floor today in support vested in Savings Bonds to roll them percent. Grants, which a decade ago of the tuition savings provision in- over into the qualified State plan. This made up 49 percent of assistance, have cluded in this bill. I believe the Fi- is a commonsense provision that will been reduced to 42 percent. This shift nance Committee has done a thorough give those who are already saving the toward loans further burden students job providing broad incentives to help flexibility to invest in prepaid plans if and families with additional interest families save and provide for the edu- available. cation of their children. costs. It is important that we not for- It is in our best interest as a nation I commend Senator ROTH and the Fi- get that compound interest cuts both to maintain a quality and affordable nance Committee for their efforts to ways. By saving, participants can keep education system for everyone. We include many of the provisions in S. pace with tuition increases while put- need to decide on how we will spend 594, the College Savings Act. The Fi- ting a little away at a time. By bor- our limited Federal resources to ensure nance Committee has included lan- rowing, students must bear added in- that both access and quality are main- guage to make earnings in qualified terest costs that add thousands to the tained. It is unrealistic to assume that tuition savings plans exempt from tax- total cost of tuition. the Government can afford to provide ation as well as expanding the defini- State-sponsored tuition savings plans Federal assistance for everyone. How- tion of qualified education costs to in- have pioneered efforts to provide fami- ever, at a modest cost, we can help clude room and board. Once imple- lies with opportunities to save as a families help themselves by rewarding mented this legislation will reward all hedge against tuition inflation. States savings. This reduces the cost of edu- families who plan ahead and save for a have established affordable tuition in- cation and will not unnecessarily bur- child’s education. vestment plans that guarantee parents den future generations with thousands For the past several years, I have a minimum level of investment return of dollars in loans. worked hard to make college more af- or guarantee a future education at to- Let me close by saying that I com- fordable by helping families who save. day’s prices. Such guarantees offer mend the work of Senator GRAHAM and In both the 103d and 104th Congresses, I middle-class families the piece of mind his staff on the issue of tuition savings. introduced legislation to make earn- that their children will be able to meet His cooperation and hard work have ings invested in State-sponsored tui- the tuition obligation and reduce the ensured that this issue enjoys bipar- tion savings plans exempt from Federal need to take on thousands of dollars in tisan support. I would also like to taxation. States have also recognized loans. thank the chairman of the Finance the needs of families and have provided States like Michigan, Florida, Ohio, Committee for all his efforts in making incentives for them to save or prepay and Kentucky were the first programs education savings the cornerstone of their children’s education. State sav- to be started in order to help families this package. ings plans provide families a safe, af- save for college. Today, there are 15 EXTENDING THE SMALL BLENDERS ETHANOL TAX fordable, and disciplined means of pay- States with programs in operation. An CREDIT TO FARMER-OWNED COOPERATIVES ing for their children’s education. additional 4 States will implement Mr. WELLSTONE. Mr. President, the Last year, Congress took the first their programs this year. Also, I am in- tax bill before us includes important step in providing tax relief to families formed by the college savings network tax incentives for the use of ethanol. investing in these programs. The provi- that every other State, except Georgia, These tax incentives have been critical sions contained in the Small Business which has implemented the HOPE to the growth of the ethanol industry, Job Protection Act of 1996 clarified the Scholarship Program, is preparing leg- which in my State is monopolized by tax treatment of both the State-spon- islation or is studying a proposal to farmer-owned cooperatives. Farmer- sored tuition savings plans and the par- help their residents save for college. owned coops are now the leading pro- ticipants’ investment. This measure Today, there are 730,000 participants ducers of ethanol. They make up 60 put an end to the tax uncertainty that contributing over $3.23 billion to edu- percent of the ethanol facilities around has hampered the effectiveness of these cation savings nationwide. By year the country. By year’s end, nine plants State-sponsored programs and helped end, the college savings plan network will be in operation in Minnesota, pro- families who are trying to save for estimates that they will have 1 million ducing 126 million gallons annually and their children’s education. participants. By 2006, they estimate creating 500 new jobs. Overall, ethanol Mr. President, this action is long that over $6 billion will be invested in contributes between $109 and $260 mil- overdue. We have ignored the needs of State-sponsored programs. lion yearly to the State’s economy. middle-class families who have seen Kentucky established its plan in 1988 Currently, 71 percent of the gas sold in their income hold steady, while tuition to provide residents with an affordable Minnesota contains ethanol. By the costs go through the roof. According to means of saving for college. Today, end of the year, 100 percent of the gas the GAO, tuition at a 4-year university 2,602 Kentucky participants have con- sold in Minnesota will be blended with rose 234 percent between 1980–94. tributed over $5 million toward their ethanol.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00029 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6698 CONGRESSIONAL RECORD — SENATE June 27, 1997 My concern today is with the small ducing the Federal budget deficit is an ican groups and the entire Puerto blenders tax credit. This income credit important goal, if the transportation Rican political community, have is available to ethanol producers who industry is to be singled out, the bur- united forces in seeking a sensible Fed- produce no more than 30 million gal- den of achieving a balanced budget eral economic development tool in sec- lons annually; and, it is applied to the should be shared equally among all tion 30A. This would provide viable pro first 15 million gallons. That’s great. modes of transportation. growth tax incentives which will keep Targeting the credit is what we should I am particularly concerned because the Puerto Rican economy on a path of do. Unfortunately, the credit works in S. 949 would transfer the deficit reduc- sustained growth. We should expand such a way that cooperatives fail to get tion taxes paid by highway users, in- and extend this economic activity any advantage from it. cluding truckers which compete with credit which is wage-based and pro- I would like to ask that when the the railroads, into the Highway Trust moted jobs and investment. We would Senate Finance Committee and the Fund. Placing additional highway def- urge my colleagues to correct this un- House Ways and Means Committee con- icit reduction fuel taxes into the High- fairness in Conference. If this is not ference on the two tax bills, that they way Trust Fund for highway improve- possible, we will work to include this give serious consideration to changing ments would exacerbate the already in- measure in legislation that comes be- the way the credit is structured so that equitable situation, placing the rail- fore us at the next possible oppor- cooperatives, like all other ethanol road industry at an even more unfair tunity. producers, receive the intended bene- competitive disadvantage. In essence, PROVIDE TAX INCENTIVES TO ENCOURAGE PROP- fits of the small blenders tax credit. I the railroads would continue to con- ERTY OWNERS TO PRESERVE HABITAT FOR appreciate the good efforts of my col- tribute to deficit reduction, while their SPECIES leagues on this matter and hope they competitors would instead contribute Mr. KEMPTHORNE. Mr. President, it will work with me to address this tech- to their own infrastructure. was my intention to introduce today nical change in the small blenders tax The House has similarly proposed an amendment to provide three new credit when the committees conference putting the aviation fuel taxes into the tax incentives for private property on the tax bills. Airport and Aviation Trust Fund for owners who want to conserve land for I see my colleague from Illinois and airport infrastructure improvements as the preservation of endangered, threat- know her commitment to the role of part of its tax reconciliation legisla- ened, and other species. But the ethanol as an alternative fuel. I under- tion. amendments were subject to points of stand you have two farmer-owned co- This injustice against America’s rail- order because they did not have accom- operatives proposed for construction in roads must be remedied at our earliest panying offsets. Rather than have the Illinois? opportunity. I would ask the distin- amendments lose on a parliamentary Ms. MOSELEY-BRAUN. The Senator guished chairman of the Finance Com- procedure, I have accepted Chairman is correct. The total investment is $92 mittee if he would be willing to seek a ROTH’s offer to work on these issues in million for both facilities with an ex- solution to this railroad deficit reduc- conference. For too long, the Federal pected capacity of 42 million gallons of tion fuel tax problem during the con- Government has relied almost exclu- ethanol annually. This is good for ference with the House on tax rec- sively on regulatory mandates and en- farmers and good for our rural commu- onciliation legislation. forcement to preserve habitat for en- nities. I fully support extending the Mr. ROTH. I appreciate the distin- dangered species. That approach has small blender’s tax credit to these co- guished Senator from Rhode Island failed to produce the kind of results we operatives, and I will urge conferees to bringing this matter to the attention want. If we’re serious about preserving support this. of the Senate, and yes I am aware of our rare and unique species, and their Mr. KERREY. Mr. President, I would this clear inequity to the railroads. habitat, we must make it easier for like to join my colleagues in high- This certainly should be remedied at people to purchase and set aside land lighting the importance of farmer- our earliest opportunity, and I will for species. owned coops in the production of eth- seek an appropriate solution as we con- The amendment would have con- anol, and thank the Senator from Min- sider the treatment of deficit reduction sisted of three provisions. The first nesota for his continued leadership on fuel taxes during the conference with provision would have provided an addi- this issue. In Nebraska, two of the six the House on this tax legislation. If we tional 25 percent exclusion from cap- ethanol production facilities are owned are unable to craft a solution to this ital gains associated with the sale of by farmer-owned cooperatives. These problem on this bill, I will certainly property so long as the property is plants account for approximately one- strive for a solution as part of the up- transferred to a qualified organization third of the total amount of ethanol coming ISTEA reauthorization legisla- for conservation purposes. produced in my State and directly em- tion. Mr. ROTH. I agree with Senator ploy over 300 Nebraskans. By restruc- Mr. CHAFEE. I want to thank Sen- KEMPTHORNE’s philosophy that con- turing the small blenders credit, I am ator ROTH for his commitment to expe- servation benefits us all as a nation. In hopeful that not only would we help ditiously find a solution to this prob- fact, I included a conservation ease- the existing ethanol plants in Ne- lem. ment provision in my chairman’s braska, but that we would encourage LET US NOT FORGET ABOUT THE U.S. CITIZENS mark. other farmer-owned cooperatives to ex- OF PUERTO RICO Mr. KEMPTHORNE. The second in- amine the opportunities for rural eco- Mr. MOYNIHAN. Mr. President, I am centive would have provided property nomic development provided by eth- pleased to state, on behalf of Senators owners an exclusion from estate taxes anol production. BREAUX, GRAHAM, KERREY, CHAFEE, and for property that is set aside in a con- Mr. WELLSTONE. I thank my col- myself, that none of the tax relief servation easement. leagues for their words of support and measures and growth incentives con- Over the past few years, as I’ve been look forward to working with them in tained in this tax bill will have a posi- working on legislation to reauthorize the coming days to make this change tive impact on the 3.8 million Amer- the Endangered Species Act, I’ve met happen. ican citizens of Puerto Rico. This re- with a number of farmers and ranchers RAILROAD DEFICIT REDUCTION FUEL TAXES sult is unfair and should be corrected. and other property owners, many of Mr. CHAFEE. Senator ROTH, as I The Island’s economy has paid dearly whom own large tracts of land that know you are aware, because of the as a result of provisions in the tax bills they are willing to set aside in con- 1990 and 1993 Reconciliation Acts, our of 1993 and 1996, as revenue offsets from servation easements to benefit species. important freight railroads are forced Puerto Rico in those bills exceed $14 But they are worried about the tax bur- to pay a 5.55 cents per gallon fuel tax billion in the next few years. Yet those den that they will leave behind for into the General Treasury for deficit bills provided no benefits to our Puerto their children if they do that. reduction. All other modes of transpor- Rican citizens. Mr. ROTH. My chairman’s mark in- tation—highway, air, water—only pay Members from both sides of the aisle, cludes a provision consistent with my 4.3 cents per gallon for this purpose. Governors, national organizations, colleague’s goals. The mark would This is an obvious inequity. While re- business associations, Hispanic-Amer- allow a portion of the value of land

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00030 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6699 subject to a qualified conservation public transportation. This bill facili- tiations, we remain committed to pre- easement to be excluded from the gross tates environmental cleanup efforts in serving the integrity of the balanced estate. This conservation easement is a many urban and rural areas, helping to budget agreement. The American peo- step in the right direction. make our country a healthier place to ple will not be served by a budget that Mr. KEMPTHORNE. My amendment live. achieves balance briefly in 2002 and would have allowed property owners While I appreciate the efforts of my then veers back out of balance after- who grant conservation easements to colleagues who worked so hard to craft ward. exclude the value of property from es- a bipartisan tax relief bill, I am con- Mr. President, I am pleased to join a tate tax. That would make it easier for cerned that this measure misses oppor- bipartisan group of Senators today in families to keep their property intact tunities to provide meaningful tax re- supporting the Revenue Reconciliation and at the same time will benefit en- lief for American families. During Sen- Act of 1997. It brings us much closer to dangered and other species by pre- ate consideration, I voted for a number enacting legislation easing the tax bur- serving habitat for them. of amendments to make this bill more den which weighs heavily on too many My third incentive would have al- equitable. Some of these amendments Americans. lowed property owners to donate land succeeded. Many did not. PENSION PROVISIONS for conservation purposes to take an In particular, I was pleased when my Mr. GRAHAM. Mr. President, today I enhanced deduction based on the full colleagues accepted my amendment rise to offer my support for the pension market value of their property. This concerning student loan forgiveness for provisions which are contained in the will provide an important incentive for people who choose a career in commu- tax bill we are considering today. As a property owners who have land or nity service and public sector work. result of the bipartisan cooperation water that provide habitat for endan- This amendment will help us to deal which has been demonstrated through- gered and other species to preserve with the growing problem of student out this process, many American work- that habitat. indebtedness. ers will move closer to a secure retire- Over the past 3 years, I’ve met with I also supported the Nickles amend- ment. These provisions help a broad many property owners who have said, ment to extend self-employment health spectrum of workers and employers, ‘‘we would be happy to step forward insurance deductibility to 100 percent. and will contribute toward making and preserve habitat for species and we This measure will prove extremely pensions more available, equitable, would grant a conservation easement if helpful to self-employed business men portable and simpler. there was an incentive.’’ Well, this will and women. First, the provisions will expand cov- provide that incentive. I was also pleased to support the Mr. ROTH. Under our current tax Kohl amendment which creates a tax erage among workers at small busi- law, a deduction is allowed for con- incentive for businesses to provide nesses. tributions of a qualified conservation child care for employees. The statistics concerning the lack of easement to a qualified organization. Each of these amendments make this retirement coverage among small busi- The goal of my colleagues’ amend- bill better for American families. Re- ness workers are astounding. Accord- ments are well taken and deserve this grettably, other amendments that ing to the Small Business Administra- Nation’s serious consideration. would have strengthened this bill did tion, only 13 percent of workers in I will work with you in conference on not succeed. businesses with less than 20 employees these worthy goals because I share Most notably, I, along with my col- have pension plans and only 38 percent your commitment to saving endan- league from Vermont Senator JEF- of workers in businesses employing be- gered species, and using incentives to FORDS, offered an amendment that tween 21 and 100 employees currently accomplish this goal. would have increased the child tax have plans. Mr. KEMPTHORNE. I thank the credit for most families by making it Two provisions in this bill will ad- chairman. I appreciate his willingness refundable for the many low-income dress this problem. This bill will en- to work with me on these important families with little or no tax liability. courage even the smallest of small amendments to include them in the It is a fair and equitable measure, one businesses to help their employees save final bill. that would have tremendously helped for retirement through IRA payroll de- Mr. DODD. Mr. President, I rise our working families, and I am dis- ductions. These payroll deductions are today to express my support for the appointed that this amendment failed. the easiest way for workers to save for Revenue Reconciliation Act of 1997. In addition, the Daschle amendment their retirement. This bill clarifies First, I would like to commend the Fi- would have invested an additional $10 that if a small business man or woman nance Committee on the job it has billion in education and more in the permits IRA payroll deductions, they done. Chairman ROTH and Senator child tax credit. Unfortunately, this will not be threatened with liability MOYNIHAN should be praised for their amendment was defeated. under ERISA. efforts to craft a bipartisan bill, some- Finally, my colleague from Massa- Small businesses will also be encour- thing that the House clearly failed to chusetts Senator KERRY offered his aged to establish pension plans by al- achieve in its tax-writing committee. own amendment to make the $500-per- lowing partners and self-employed indi- The Finance bill contains many good child tax credit refundable against pay- viduals to receive matching contribu- measures, including a $500-per-child tax roll taxes, a measure that would have tions under the same rules applicable credit, which brings much needed relief brought much needed relief to many to incorporated businesses. More small to working Americans. This bill pro- working Americans struggling to raise business owners will establish retire- vides tax relief for higher education, a family. Once again, an opportunity to ment plans because of this change. making college more accessible to mil- make tax relief more equitable was de- Second, this bill will help women. Al- lions of Americans. The underlying bill feated. though women are entering the work also expands Individual Retirement Ac- Despite my reservations about this force at a larger rate than ever before, counts helping many Americans to bill, and my disappointment in the fail- 25 million working women still do not meet the financial demands of raising a ure of several amendments, I am en- have pension plans—this represents family and planning for retirement. couraged by the fact that today, on the nearly 3 out of every 5 women who The bill before us today also recognizes floor of the United States Senate, we work in the private sector. Of these 25 the importance providing tax relief for came together in a bipartisan manner million women, 12 million are em- businesses by extending the research to enact tax relief to millions of Amer- ployed by small businesses. tax credit for 31 months, encouraging ican families. I hope that the con- Unfortunately, many of these work- more investments in research and de- ference committee will report a bill ing women have no pension plan. Many velopment. that is both fair and equitable, benefit- of these women would like to make In addition, the Finance bill provides ting working families, small businesses contributions to an IRA, but cannot be- funding for Amtrak, and creates an and family farms. cause their husband participates in an inner-city passenger rail fund that Finally, Mr. President, it is impera- employee-sponsored retirement plan would help finance improvements in tive that during the conference nego- and tax law says that she cannot make

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00031 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6700 CONGRESSIONAL RECORD — SENATE June 27, 1997 a deductible contribution to an IRA be- issue guidance on the use of new forms Commission should be given every op- cause his participation is attributed to of electronic pension notification, and portunity to do so. The reconciliation her. provides for the review of current rules bill should not make substantive The Finance Committee bill elimi- to accommodate new technology. changes to the tax formula without the nates a spouse’s participation from the With the help of this new Internet benefit of the Commission s work. considerations relevant to contributing and telecommunication technology, Mr. LOTT. Mr. President, I would to a deductible IRA. With this provi- pension information will be more read- like to agree with the distinguished sion, all Americans—working women, ily available to workers and less costly chairman of the Commerce Committee, working men, and homemakers—will for employers to produce. of which I am a member. The work of now have the opportunity to save, re- Finally, this bill enhances pension the National Civil Aviation Review gardless of their spouse’s participation security. Both businesses and workers Commission could result in a unique in a retirement plan. will be helped by a provision phasing opportunity for an often divided avia- Because of our bipartisan work on up the 150 percent of current liability tion industry to reach a consensus on this issue, Susan Stratton of Tallahas- limit. Under current law, companies important funding issues. Congress see, FL, will be able to begin contrib- are limited in the amount they can should not force its will on the indus- uting to her retirement while her hus- contribute to their employees’ defined try prematurely. band Charles continues contributing to benefit plan. I believe companies The Commission is in the process of his corporate plan. should be able to increase funding of developing legislative recommenda- Susan is the owner of Care Packages, their pension plans in order to fully tions, and plans to complete its work Inc., and will be able to save $2,000 per meet the needs of their future retirees. soon. Unfortunately, the reconciliation process is moving faster than the abil- year in an IRA. Companies can better budget if they Similarly, John Pollack of Orange have greater flexibility in what they ity of the Commission to reach a com- prehensive solution. The Commission County, FL, will be able to begin sav- put in their plan—and workers are bet- recently wrote to the leadership of ing for his retirement because of this ter off, because the more companies both the Senate and House on this bill. As the owner of Allrite-Foto, John contribute, the more secure their re- issue. We should ensure that the rec- has not made any IRA contributions tirement. This bill gives companies onciliation bill, or budget rules, do not due to his wife Lorraine’s corporate that flexibility. Each of these provisions, as well as foreclose the ability to consider the plan involvement. If this bill is en- commission recommendations in the others I have not mentioned, will im- acted, John will be able to save for re- future. At that time, we will have a prove our private pension system. It is tirement along with his wife. full and fair debate on the rec- not all we should do to prepare for re- As you can see by these two exam- ommendations themselves. ples, this provision—championed by tirement in the 21st century, but it is a Mr. McCAIN. I thank the distin- Senator ROTH and Senator BREAUX for good start. guished majority leader for his insight. many years—will be beneficial for both I have been honored to work closely I plan to continue to work with him spouses. with many of my colleagues in bring- and other members of the Commerce Third, the pension provisions in this ing about these bipartisan pension Committee to see that the budget rec- bill begin to address a significant need changes. Senators HATCH, GRASSLEY, onciliation bill does not foreclose the in the pension area—portability. Amer- JEFFORDS, BREAUX and MOSELEY-BRAUN opportunity for Congress to implement ican workers are changing jobs much have been instrumental in bringing the Commission recommendations in more frequently than ever before. Over about these reforms, and I would like the future. We must continue our ef- the course of a 40-year career, the aver- to commend them, and others, on their forts to ensure an adequate and stable age worker will hold seven different efforts. funding source for the FAA and the jobs. Yet only 50 percent of current By finding this common ground on safety programs it oversees. 401k plans accept rollovers from other both sides of the political aisle, we are Mr. DASCHLE. Mr. President, I plans. working to ensure that the American would like to join my distinguished As a result, it has become imperative workers of today will have a more se- colleagues, the majority leader, the that these workers be able to transport cure and prosperous retirement for to- chairman and ranking member of the their retirement plans when they morrow. Commerce Committee, and the chair- change jobs. AVIATION EXCISE TAX man and ranking member of the sub- This bill makes it more attractive for Mr. McCAIN. Mr. President, I rise to committee, in expressing concern businesses to accept rollovers. The bill express my concern about actions about the reconciliation bill pre- provides that a plan will not be dis- taken in the reconciliation bills by the empting the work of the National Civil qualified just because funds rolled over Senate Finance and the House Ways Aviation Review Commission. I ap- from a new employee’s previous job and Means Committees to modify the pointed two of its members, and I come from a fund which has become current aviation excise tax structure. would not like to see its important disqualified. Although somewhat different from work undermined before it has had an Although this is a good step, I will in each other, both of the proposed modi- opportunity to achieve a consensus to coming days be pushing for more pen- fications would increase taxes on air- a very important issue. I believe that sion portability. Similar defined con- line passengers, and represent signifi- after the recommendations of the Com- tribution plans should also be able to cant changes in aviation policy. mission have been submitted to Con- roll into each other. Money in a retire- Last year, Commerce Committee gress, we must give them every consid- ment stream should be kept there until members worked closely with members eration. retirement. Government plans should of the Ways and Means and Finance Mr. HOLLINGS. Mr. President, I, too, be able to roll into private-sector Committees, during consideration of would like to join my distinguished plans. Private sector plans should be the Federal Aviation Reauthorization colleagues in this discussion. The lead- able to roll into nonprofit plans and Act of 1996, to establish the National ership of the Commerce Committee nonprofit plans should be able to roll Civil Aviation Review Commission. worked very hard in the Senate and into Government plans. The members of this Commission have during the Senate-House conference to Fourth, this bill will make pensions dedicated themselves to developing a create this Commission. Congress even simpler to administer. One of the main consensus within the aviation industry provided a substantial appropriation to reasons employers cite for not estab- regarding the appropriate financing fund its activities. The work of the lishing or expanding pension coverage mechanism for the Federal Aviation Commission is extremely important. I is red tape. The Finance Committee Administration [FAA], and the impor- know that my colleagues share my bill eliminates some of the paperwork tant safety programs it oversees. To- concern that aviation monies are not burden it now takes to administer a gether, the committees empaneled the being used for aviation purposes, and pension. Commission to consider substantive we need to work to correct that. Dur- This bill asks that the Treasury De- policy changes to the aviation excise ing our Commerce Committee markup partment and Department of Labor tax formula, and I believe that the recently, I expressed my desire to treat

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00032 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6701 the Airport and Airways Trust Fund offered last night which was adopted by Mrs. BOXER. As you know, the differently, and many members indi- voice vote. House-passed Tax Reconciliation Bill cated that we needed to do something Mr. NICKLES. I would be pleased to included a provision which would pro- different for aviation. The GAO report answer any questions that the Senator vide an enhanced tax deduction for cor- on airport funding suggests that the from California may have. porate contributions of computer tech- airports are in need of $10 billion, ac- Mrs. BOXER. As the Senators are nology and equipment. This provision, cording to the airports, and $6.5 billion, aware, the 401(k) has emerged as many authored by Congressman RANDY according to the FAA, depending upon baby boomers primary pension plan. CUNNINGHAM, is very similar to a bill the type of projects included. The Air- 401(k)s now cover more than 22 million Senator CHAFEE and I introduced ear- port Improvement Program is an im- employees and invest more than $675 lier this year. Our bill, the Computer portant component of the work of the billion in pension assets. Many Amer- Donation Incentive Act of 1977, pro- FAA. We cannot meet future growth ican workers now have more equity in vides an incentive for companies to do- needs without expanding our airports their 401(k) plans than in their homes. nate new and nearly new computers and modernizing the air traffic control Unfortunately, Federal law is cur- and software to elementary and sec- system. The Commission work and rec- rently less protective of 401(k)s than ondary schools. ommendations will help us in the de- traditional defined-benefit pension The successful education of Amer- bate in finding ways to meet our future plans. A company sponsoring a tradi- ica’s children is closely linked to the aviation system needs. tional plan is currently prohibited use of innovative educational tech- Mr. GORTON. Mr. President, as from investing more than 10 percent of nologies, particularly computer-based chairman of the Aviation Sub- its assets in company holdings, such as instruction and research. Unfortu- committee, I would like to associate real property or company stock. This nately, however, far too many elemen- myself with the remarks of the distin- reasonable limitation, however, does tary and secondary school classrooms guished chairman and ranking member not apply to 401(k) plans. lack the computers they need to take of the Commerce Committee, as well as The amendment I offered last night advantage of these new educational with those of the majority and minor- would extend this 10 percent limitation technologies. I believe this provision ity leaders. An efficient FAA will be to 401(k) plans, enhancing pension se- will provide America’s schools with the crucial if our country is to maintain curity for millions of workers nation- technological resources necessary to its role as the world leader in the aero- wide. prepare both students and teachers for nautical and aerospace industries. The I want to thank both the chairman the technologically advanced society FAA must have adequate resources to and the ranking member of the Fi- in which we now live. transform itself into an efficient and nance Committee for their assistance I know that the chairman and rank- productive agency. The anticipated in clearing this important amendment. ing member on the Committee on Fi- The amendment included a small work of the Commission should provide nance would like to have included the change at the request of the Senator the Congress with valuable guidance in House provision in the Senate tax rec- from Oklahoma. The provision re- that respect. The proposed changes to onciliation bill, but due to revenue quested by the Senator from Oklahoma the aviation excise taxes in the rec- considerations were unable to do so. I would allow companies sponsoring onciliation bill should not be a signal hope, however, that my friend from 401(k) plans to require that 1 percent of to the commission that its ongoing Delaware and my friend from New an employee’s contribution be invested work is meaningless. I intend to work York would urge the adoption of this in qualified employer securities. with the leadership of the Commerce very important provision in con- Mr. NICKLES. The Senator has accu- Committee and Senate to ensure that ference. the future recommendations of the rately described the change to her Mr. ROTH. I agree that this is a very Commission are not prejudiced by any amendment that I suggested. I believe important provision and I will urge my actions taken in this reconciliation that employers should be allowed to re- colleagues to consider this proposal in bill. quire employees to contribute 1 per- Mr. FORD. Mr. President, I would cent of their 401(k) contributions to conference. like to add to the thoughtful remarks company assets. However, as a member Mr. MOYNIHAN. I agree with my of my distinguished colleagues. We of the Finance Committee and possible friend from California and my friend started the debate over how to fund the conferee on this bill, I will urge my from Delaware, that this provision FAA last Congress when we first pro- colleagues not to increase the 1-percent should be carefully considered and I too will work to urge my colleagues to posed a fee system. Senator MCCAIN cap. and I worked very hard on the bill and Mrs. BOXER. I certainly appreciate give this proposal careful consider- the entire committee agreed that we the support of the Senator from Okla- ation. needed a Commission to provide a blue- homa. I would ask the Senator from Mrs. BOXER. I thank the distin- print for how to fund the FAA. The Delaware if he, too, will work to retain guished chairman and ranking member FAA bill last year restructured the the Boxer amendment in conference. of the Committee on Finance for their agency and gave the FAA the ability to I thank the distinguished chairman support of my bill and of the House do some creative things. Now the Com- of the Finance Committee, the assist- provision. mission must give us their best advice ant majority leader, and the ranking SUPPLEMENTAL ENTERPRISE ZONES AND on how to meet the needs of the FAA, member of the committee for all their ELIGIBILITY FOR BROWNFIELDS BENEFITS or how to cut spending. Those are the hard work to guarantee pension secu- Mrs. FEINSTEIN. Mr. President, I dilemmas facing the Commission. I rity for America’s working men and rise to ask if the chairman can clarify know all of us share a desire to ensure women. for me whether this bill includes a pro- that the work of the Commission is de- COMPUTER TECHNOLOGY AND EQUIPMENT vision that provides the ‘‘brownfields’’ bated and fully aired. Mrs. BOXER. I ask my colleagues benefits for supplemental empower- Mr. MCCAIN. I would like to thank from Delaware, Mr. ROTH, and New ment zones. the distinguished gentlemen for their York, Mr. MOYNIHAN, if they would be As a former mayor, I am very com- remarks. The safety of the flying pub- willing to enter into a colloquy with mitted to promoting economic growth lic and the health of an essential, vital me regarding providing an enhanced in our urban area. The ‘‘brownfields’’ industry are at stake. We must give deduction for corporate contributions provision will be significant in the City the Commission a chance to fulfill its of computer technology and equip- of Los Angeles’ effort to turn aban- statutory mandate. ment. doned, vacant or underutilized indus- 401(K) PLANS Mr. ROTH. I would be pleased to an- trial or commercial properties back Mrs. BOXER. Mr. President, I ask my swer any questions the Senator from into productive use. Can the chairman colleagues from Oklahoma, Mr. NICK- California may have. confirm that, under the Senate tax bill, LES, and Delaware, Mr. ROTH, if they Mr. MOYNIHAN. I would be pleased brownfields remediation incentives are would be willing to enter into a col- to enter into a colloquy with my friend also extended to supplemental em- loquy with me about an amendment I from California. powerment zones?

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00033 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6702 CONGRESSIONAL RECORD — SENATE June 27, 1997 Mr. ROTH. Yes, the committee bill ex- Under the proposal approved by the lower the cost of building new schools. tends the brownfields benefits to sup- Finance Committee, distributions from I hope that this legislation is just the plemental zones as well. Section prepaid college tuition plans will be 100 beginning of much more which this 768(c)(2) of the bill, entitled ‘‘Expensing percent tax-free. In addition, the defi- Congress will do to make a significant of Environmental Remediation Costs,’’ nition of qualified higher education ex- and substantial dent in the problem of extends the brownfields benefits to sup- penses will be expanded from current school construction and rehabilitation plemental zones designated after De- law. Under this legislation, tax-exempt needs. cember 21, 1994, which confers the bene- benefits will now include room and On behalf of all of our Nation’s fami- fits to the supplemental zones of Los board, as well as tuition, fees, and re- lies, I would like to thank Chairman Angeles and Cleveland, OH. lated expenses. Thus, families who plan ROTH for his efforts regarding these Mrs. FEINSTEIN. I thank the chair- ahead can lock in today’s rates for al- education initiatives. I think Barbara man for clarifying the provision and most all expenses incurred in their Alfonso says it best: ‘‘We can’t cut cor- thank the committee for its work on children’s education. ners when it comes to education.’’ Bar- this issues. The legislation will have immeas- bara is right. This legislation will COMPUTER ACCESS INCENTIVE urable benefits for our Nation’s fami- allow us to invest in our most precious Mr. BAUCUS. Mr. President, I want lies. For example, Barbara and Jack resource—our children—who are, of to take this opportunity to repeat my Alfonso, who live in Miami, FL, have a course, ultimately our future. interest in including funding in the 10-year-old son, Adrian. Back when RAIL FUEL TAX reconciliation bill which would facili- Barbara finished high school, her par- Mr. BURNS. Would the esteemed tate our schools’ efforts to acquire ents could not afford to send her to col- chairman of the Finance Committee be computers and become connected to lege. She decided to take out loans to willing to enter a colloquy on the rail the Internet. attend secretarial school. It took her 7 deficit reduction fuel tax? If our students are going to be fully years to pay off those loans, so Barbara Mr. ROTH. I would be happy to dis- prepared to face the next millennium knows what it’s like to be burdened cuss this matter with my colleague with computer skills adequate to the with debt. from Montana. task of competing in a global economy, Barbara and Jack decided that they Mr. BURNS. As the chairman is I believe we in the Federal Government didn’t want their son to be faced with aware, the 1990 and 1993 Budget Rec- have a responsibility to ensure that the same obstacles. So, when Adrian onciliation Acts imposed a 2.5-cent-per- our schools have every opportunity to was 5, they invested in the Florida Pre- gallon and a 4.3-cent-per-gallon diesel acquire computer equipment. paid College Tuition Program. They fuel tax for deficit reduction on rail- The House Ways and Means Com- will make their last payment in Octo- roads and highway users. Beginning mittee reported a bill which includes October 1995, 2.5 cents of the trucking funds for an enhanced charitable de- ber of this year. Adrian is a good student, and he de- industry’s deficit reduction tax was di- duction for those who donate computer serves the opportunity to further his rected to the Highway Trust Fund. The equipment to the schools. As you education. And because his parents remaining highway 4.3 cents remained know, based on the experience I have chose to put aside money for his future in place for deficit reduction purposes, had helping schools in Montana acquire by participating in the State’s tuition while the rail rate was set at 5.55 cents computer equipment, I have been work- per gallon, also effective October 1995. ing on a somewhat different approach program, Adrian will have this oppor- which provides a tax credit for compa- tunity. Now Adrian can become one of As a result of these acts, the freight nies that give a price discount to the first college graduates in the Al- rail industry currently pays 1.25 cents schools purchasing new equipment. fonso family. He can rest assured that per gallon more for deficit reduction I ask the chairman to work with me his hard work will not have been in than its primary competitors. during conference to evaluate the vain—that college is not a dream for Mr. ROTH. The Senator is correct. Mr. BURNS. While the Highway House Ways and Means proposals and him but a reality. Trust Fund provides the financing for my proposals to increase schools’ ac- As Barbara tells it: ‘‘The best thing cess to the Internet. about this plan is that it gives me construction and maintenance of pub- Mr. ROTH. I look forward to working peace of mind.’’ Thanks to a prepaid lic roads and bridges used by trucks with the Senator. college tuition plan, Barbara knows and automobiles, the railroad industry realizes no similar return on its tax EDUCATION INITIATIVES that her son will be able to go to col- Mr. GRAHAM. Mr. President, I would lege. And thanks to this program, two payments. Railroads currently expend like to take this opportunity to thank hard-working parents are able to give more than $7 billion annually in cap- Chairman ROTH for working on this tax their child what they never had. Their ital to build and maintain their own legislation in a fair, bipartisan manner. son will be better off than they were. ‘‘roads.’’ These private rights-of-ways In particular, this bill includes several With this legislation, families are subject to more than $400 million educational initiatives that will have a throughout our Nation will be better annually in local property taxes. While positive impact not only on the people able to plan and save for their chil- few Senators are more dedicated to the of my home State of Florida but on the dren’s education. First, parents can goal of deficit reduction than I, it citizens—of every income—in our Na- save for their children’s education seems that the burden of reducing the tion as a whole. without paying taxes. Second, parents Federal deficit must be shared equally First, I applaud the chairman’s provi- can purchase tuition at today’s rates among competing modes of transpor- sions with respect to prepaid college and then withdraw this money when tation. tuition plans. Currently, 16 States offer their children begin school. Tomor- The Senate Finance Committee and manage college savings programs, row’s education can be secured at to- adopted an amendment to the chair- 5 States are in the process of imple- day’s prices. man’s Mark which would transfer the menting such programs, and the other I would also like to thank Chairman 4.3-cent-per-gallon deficit reduction 29 States have legislation pending or ROTH for including a portion of my tax paid by highway users to the High- are studying the feasibility of creating school construction tax proposal, way Trust Fund—minus the new half- these programs. which would assist small and rural cent tax for the Intercity Rail Trust Last year, Congress clarified the tax school districts. The provision that was Fund—Amtrak. Additionally, the treatment of participation in prepaid included in this bill will positively im- House Ways and Means Committee college tuition plans. The 1996 Small pact issuers of small school construc- transferred the 4.3-cent-per-gallon tax Business Protection Act provided that tion bonds. These issuers will be ex- paid by aviation users to the Aviation any prepaid or savings State entity is empt from arbitrage rebate require- Trust Fund. Assuming that these tax-exempt. The act also clarified that ments up to $10 million. Currently, amendments remain in the bills, the earnings under prepaid programs are there is a $5-million limit which ap- rail industry will be paying 5.05 cents not taxed until distribution, and—when plies to all bonds. per gallon for deficit reduction while distributed—earnings would be taxed With this provision, we are specifi- those in competing industries will be to the student beneficiary. cally helping small school districts to paying nothing for deficit reduction.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00034 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6703 Mr. ROTH. Again the Senator is cor- Mr. ROTH. The Senator is correct. could engage the chairman of the Fi- rect in his assessment. The committee thought it was appro- nance Committee in a colloquy regard- Mr. BURNS. Understanding the de- priate to provide prospective applica- ing the proposed tax on the domestic mands on the chairman, I would mere- tion for the codification of standards portion of international journeys ly like to encourage him to address which must be met for tax exemption. [DPIJ]. As I understand the new tax, it this situation in conference. If a solu- However, the committee expressly ac- will impose a new 10-percent tax on do- tion can not be reached in this bill, I knowledged the fact that a number of mestic legs of international flights. would encourage the chairman to give States had established entities that This tax hurts domestic carriers be- careful consideration to and to work were operating as tax exempt organiza- cause they typically have domestic toward a remedy of this situation in tions. The motivation for codifying the stopovers on their international the tax title to the upcoming ISTEA standards as part of the Internal Rev- flights, whereas international carriers reauthorization. enue Code was to help these entities have more direct flights without stop- Mr. ROTH. Rest assured that the and the Internal Revenue Service more overs in the United States. Since committee will give every consider- easily apply the law. However, our re- flights without stopovers are not sub- ation to the addressing the transpor- port expressly states that tax exemp- ject to the new 10-percent tax, the net tation excise tax equity matters raised tion may be available to many such result is a competitive disadvantage by my colleague from Montana. State-sponsored entities under present for domestic carriers. Mr. BURNS. I greatly appreciate the law and no interference was intended Mr. NICKLES. If the Senator from time and consideration given to me by to be drawn from our action that the Michigan would yield, I want to echo the chairman of the Finance Com- income of those entities was not al- the concerns of my friend from Michi- mittee. ready tax-exempt. gan. In fact we were prepared to offer PUBLIC SAFETY OFFICER SURVIVOR PENSIONS Mrs. HUTCHISON. Mr. President, I an amendment along with several Mr. BIDEN. Mr. President, I am strongly support the provision in the other colleagues but out of deference to pleased that the Senate has passed my bill that deals with tax-exempt status the desire of the chairman to complete amendment to make a modest change of State workers’ compensation funds. action on the bill, we agreed to work in current law. A modest change, but Senator GRAMM and I ask unanimous with the chairman. It is my under- one which will make an enormous dif- consent to have printed in the RECORD standing that the chairman of the Fi- ference in the lives of some very spe- the text of a letter we received earlier nance Committee is aware of these cial Americans—the families of public this month from the Governor of the concerns and has expressed his inten- safety officers—police officers and fire- State of Texas urging us to clarify the tion to resolve this controversy in con- fighters—who have given their lives in Federal tax statutes to maintain the ference. Would the chairman confirm the line of duty. tax-exempt status of this fund in light his intentions regarding the proposed This amendment would forgive Fed- of the important role it plays in stabi- tax on the domestic portion of inter- eral tax liability on the annuities re- lizing the market for workers’ com- ceived by the families of these fallen national journeys? pensation insurance in Texas. Mr. ROTH. I would like to assure my heroes. The cost is modest—about $25 There being no objection, the text of colleagues from Michigan and Okla- million over the next 10 years. the letter was ordered to be printed in I would also add that this tax treat- homa that it is my intention to work the RECORD, as follows: with House and Senate conferees to ment would be the same as that for the STATE OF TEXAS, families of fallen soldiers. In other eliminate any competitive advantages OFFICE OF THE GOVERNOR, that foreign carriers may enjoy and re- words, my amendment gives to those June 5, 1997. solve this controversy. who fight and die in domestic battles Hon. PHIL GRAMM, to keep us safe the same treatment we U.S. Senate, Washington, DC. NET OPERATING LOSSES give to those who fight and die in keep- DEAR SENATOR GRAMM: I understand that Mr. SPECTER. Mr. President, on be- ing us safe from foreign battles. the Internal Revenue Service is questioning half of Senator SANTORUM, I would like Mr. President, again, I welcome my the source of the Texas Workers’ Compensa- to discuss an issue with the chairman tion Insurance Fund’s tax exemption. and the ranking member of the Fi- colleagues support for my amend- The Texas Legislature created the Fund in ment—we have stood with the cops, 1991 to resolve a crisis in our workers’ com- nance Committee relating to operating stood with the firefighters, and stood pensation insurance market. The Fund car- losses of a business. with the paramedics who have given ries out its statutory responsibility to en- The tax bill extends the carry for- their lives in service to all of us. sure that workers’ compensation insurance ward period for businesses with oper- STATE-SPONSORED WORKERS’ COMPENSATION is available for Texas employers in even the ating losses for an additional 5 years. FUNDS smallest or riskiest of businesses. But the provision only applies to oper- Mr. BREAUX. I would like to ask a Workers’ compensation insurance is not ating losses incurred in future years. mandatory for Texas employers. Those busi- We are less concerned about the tax question of the distinguished chairman nesses that choose to carry workers’ com- of the Finance Committee concerning a pensation coverage for their employees now impact of allowing existing losses to provision in the tax bill. have access to a much broader variety of car- expire than about the impact on com- Mr. ROTH. I would be pleased to re- riers, competitive premiums and enhanced panies for financial accounting pur- spond to the Senator from Louisiana. employee benefits. poses. Under the accounting standards, Mr. BREAUX. Section 761 of the bill I encourage you to consider clarification of if the operating losses expire, some provides standards that a State-spon- the federal tax statutes to resolve this issue. companies will see a major reduction sored workers’ compensation company Arbitrarily and retroactively changing the in asset value. must meet in order to be exempt from tax status of the Fund would directly affect We would like for the chairman and the small businesses that depend on the Federal income tax for future years. As Fund for workers’ compensation coverage, the ranking member to consider this the chairman is aware, a large number and would needlessly inject instability into issue in conference. of the States, including Louisiana, what is now a healthy segment of the Texas Mr. SANTORUM. I would like to as- have State-sponsored workers’ com- insurance market. sociate myself with the comments of pensation companies that have been Sincerely, my colleague, the senior Senator from operating as tax-exempt agencies for GEORGE W. BUSH. Pennsylvania. several years. It is my understanding Mr. GRAMM. Is it also the chair- Mr. ROCKEFELLER. I understand that the standards that we have pro- man’s understanding that this provi- the issue raised by the Senators from posed for the future are intended to sion clarifies the tax-exempt status of Pennsylvania. I will be pleased to look codify the standards that exist under these funds under current law by codi- at the issue in conference. present law and that a company, such fying the existing standards? Mr. MOYNIHAN. I understand the as the one established by the State of Mr. ROTH. That is correct. issue raised by the two Senators from Louisiana, that met these standards in Mr. GRAMM. I thank the chairman. Pennsylvania. I will be pleased to look prior years should be confident that it AVIATION TAXES at the issue in conference. is, in fact, tax exempt under current Mr. ABRAHAM. Mr. President, I was Mr. ROTH. I will also be pleased to law. Is my understanding correct? wondering if Senator NICKLES and I look at the issue in conference.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00035 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6704 CONGRESSIONAL RECORD — SENATE June 27, 1997 FOR AN ADDITIONAL TOBACCO TAX INCREASE TAX RELIEF IS FINALLY AT HAND the amount of tax relief that we will Mr. SPECTER. Mr. President, I have Mr. KYL. Mr. President, hard-work- continue to seek next year and the sought recognition to explain my vote ing American families have not seen years after that. against waiving the Budget Act on the significant net tax relief since Ronald Mr. President, I opposed the budget Kennedy amendment for an additional Reagan’s first year in office as Presi- agreement a few weeks ago, in large tobacco tax increase. I have long been dent. That was 16 years ago, in 1981. part because it so severely restricted a leading supporter of providing ade- Since then, their tax burden has gone the amount of tax relief that we could quate health coverage to our Nation’s in just one direction—up. Higher pay- provide this year. I believed that we children. On the first day of the 105th roll taxes, higher taxes on gasoline and should have held out for a better deal Congress, I introduced legislation that Social Security, higher taxes on cap- for the taxpayers, but a majority of would provide coverage to the 4.2 mil- ital gains and air travel. If you manage both Houses disagreed, and therefore lion children of the working poor, who to save something for your child’s edu- we have to find a way to live within are not eligible for Medicaid but whose cation, the earnings are even taxed. the constraints the deal imposed. I parents cannot afford private health It is no wonder, then, that the typ- must say, however, that I believe the insurance. During consideration of the ical American family feels over- Finance Committee has done a good budget for fiscal year 1998, the Presi- whelmed: it now pays more in taxes job with the limited resources it had to dent and Congress reached an agree- than it does for food, clothing, and work with. ment to provide $16 billion for health shelter combined. That is wrong, and it The bill includes a $500-per-child tax care insurance to protect our Nation’s has got to change. It is about to credit for families with children under uninsured children. The Senate Fi- change. the age of 17. The credit would become nance Committee has added an addi- Mr. President, there has really been a fully effective next year; it would be tional $8 billion for children’s health sea of change in Washington’s approach limited this year to $250 for every child insurance from funds derived from a to taxing in recent years. Remember under the age of 13. new tax on tobacco. As a result, the that it was not so long ago, in 1993 to The bill also provides important help budget reconciliation bill now contains be exact, that President Clinton pushed to parents who are struggling to find a $24 billion for the vital purpose of pro- through the largest tax increase in the way to pay for their children’s college viding health insurance to America’s Nation’s history. Everyone in the coun- education. It offers a new $1,500 HOPE uninsured children. try felt the bite of the Clinton gas-tax tax credit, new tax-preferred Education The Kennedy amendment would fur- ther increase the tobacco tax by an ad- increase. Retirees even saw their So- Savings Accounts, and something that ditional 23 cents per pack. The amend- cial Security benefits taxed more. The the budget agreement did not con- ment, however, did not specify how debate back then was not whether to template, a new deduction for student- this additional tax revenue would be raise taxes, but how much to raise loan interest payments. spent. As a consequence, the Senate them. These provisions alone—the edu- could be given no assurance that any of Two years ago, after Republicans cation-related and child tax credits— the money generated by this new tax gained control of both Houses of Con- make up 82 percent of the tax relief would provide health insurance. I be- gress, the debate changed dramati- provided by this bill—82 percent. An lieve the American taxpayer is willing cally. The question no longer was analysis by the accounting firm of to accept a reasonable level of taxation whether to raise taxes, or even whether Deloitte & Touche estimates that a in order to provide health insurance to to cut taxes. The question was how married couple with two children and a our Nation’s children. However, with much to cut them. The debate has household income of $35,000 a year the money provided under the budget changed so much that President Clin- would see its tax bill slashed by 40 per- agreement and the additional funds ton, who initiated that record-setting cent—to $1,573 a year, down from $2,625 provided by the Senate Finance Com- tax increase 4 years ago, and who ve- now. If one child were in college, the mittee, Congress is fairly addressing toed tax relief just 2 years ago, now tax relief would rise to 78 percent. this need. tries to claim the tax-cutting mantra The bill does some other good things IRA WITHDRAWALS FOR K–12 as his own. as well. It reduces the capital-gains tax Mr. SPECTER. Mr. President, I sup- We began last year to make some in- rate to 10 percent for individuals in the ported Senator COVERDELL’s amend- cremental progress in offering tax re- 15 percent income-tax bracket, and 20 ment to expand the bill’s provisions to lief. The adoption tax credit, for exam- percent for other taxpayers. It provides allow penalty-free withdrawals from ple, was enacted, as was an increase in a capital-gains exclusion for home- Individual Retirement Accounts for the Social Security earnings limitation owners—up to $250,000 for single tax- education expenses for children in and new tax incentives for the pur- payers, $500,000 for married couples. grades K–12 because I believe that par- chase of long-term health insurance. Given that more than half of all tax- ents should have the maximum flexi- That was after President Clinton ve- payers reporting capital gains have in- bility to spend their own money on toed a far more substantial tax-cut comes under $50,000—including many their children’s education. package in December 1995. seniors who depend upon income from I have consistently opposed the use The bill before us today takes yet an- their life-long investments to support of public funds to subsidize private other step in the right direction. When them in their golden years—we can be school tuition for K–12 educational ex- signed into law, it will provide more sure that the benefits of these capital- penses because I have grave concerns tax relief than any other bill in 16 gains reductions will flow to middle about the constitutional issues of sepa- years. And three-quarters of the total America. ration of church and State raised in relief provided by the bill will go to And with history as a guide, we know such policy and because I am an advo- families with annual income of less that the Treasury will benefit from a cate of public schools. As chairman of than $75,000. Again, that is families capital-gains tax cut as well. Between the Appropriations Subcommittee with income under $75,000 a year that 1978 and 1985, for example, the top mar- which funds the Education Depart- would benefit most. ginal tax rate on capital gains was cut ment, it is among my top priorities to Make no mistake, it provides no- by almost 45 percent—from 35 percent continue to provide increases in Fed- where near the level of relief that to 20 percent—but total individual cap- eral support to the Nation’s public American families need. The net tax ital-gains tax receipts nearly tripled— schools. However, there are many par- cut of between $77 billion and $85 bil- from $9.1 to $26.5 billion annually. ents who feel that it is in the best in- lion over 5 years represents just 1 per- When capital-gains tax rates are too terest of their children to attend non- cent of the amount that the Treasury high, people need only hold onto their public elementary and secondary would otherwise collect over that pe- assets to avoid the tax indefinitely. No schools for a variety of reasons and in riod. But given the constraints on tax sale, no tax. But that means less in- a variety of settings. I believe they relief that President Clinton imposed vestment, fewer new businesses, and should be free to spend their own re- in this year’s budget agreement, it is new jobs, and—as historical records sources on such expenses as they see probably the most we can do. It is, in show—far less revenue to the Treasury fit. my view, merely a downpayment on than if capital-gains taxes were set at

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00036 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6705 a lower level. Just as the Target store to engage in costly estate-tax plan- cigarette-tax revenues. The proposal down the street does not lose money on ning. They provide little in the way of thus creates an expensive new pro- weekend sales—because volume more substantive relief. And they likely do gram, the costs of which are likely to than makes up for lower prices—lower little to promote stronger economic increase rapidly, and yet the intended capital-gains tax rates can encourage growth. revenue stream is by its very nature more economic activity, and in turn, I know that we are not going to be designed to dry up. This method of fi- produce more revenue for the Govern- able to do enough this year given the nancing the children’s health initiative ment. constraints of the budget agreement, will simply not work over time. With that in mind, many of us be- so further progress with respect to My hope is that the financing mecha- lieve that the capital-gains tax rate death-tax relief will have to wait until nism will be modified in conference. I should have been cut deeper—some next year. But we should commit now am not prepared, however, to vote wanted an earlier effective date, too— to seeking that relief when the next op- against the bill as reported by the Fi- but the die was cast against more cap- portunity arises. nance Committee on account of that ital-gains relief when the budget agree- DEPRECIATION RECAPTURE flaw and deny millions of Americans ment passed earlier this month. Still, There are two other parts of the bill the first significant tax relief they even the modest reduction in this bill that I hope we can correct this year, have seen in 16 years. will begin to unlock the sizable amount hopefully before the bill emerges from Mr. President, this bill includes of assets currently locked up in the the House-Senate conference com- many good provisions: Education tax economy because of high tax rates. The mittee in a few weeks. The first deals credits, the family tax credit, IRA in- American Council for Capital Forma- with the tax treatment of capital gains centives, capital-gains, and modest tion estimates that it will lead to the earned from the sale or exchange of de- death-tax relief. It extends the work creation of as many as 150,000 new jobs preciable real property. Such gains opportunity credit, the research tax a year. would be taxed at a maximum rate of credit, and the exclusion for employer- The bill also enhances the ability of 24 percent, compared to the lower tax provided educational assistance. Al- individuals to save for retirement in rates that would be applied to gains though there are some flaws in the cur- IRA accounts. More Americans would earned from nondepreciable real estate rent version, we ought to seize the op- be allowed to save in traditional IRA’s, and other assets. portunity to enact these provisions as including homemakers who have been Most of us are well aware of the sig- a downpayment toward the ideal tax precluded from participating merely nificant unlocking effect that a cap- package. because their spouses are active par- ital-gains tax cut would have: Not only I support the bill as it came out of ticipants in employer-sponsored plans. would it stimulate savings, invest- the Finance Committee. Mr. ROBB. Mr. President, I rise to Non-deductible contributions of up to ment, and job creation, but, as I indi- oppose the tax bill before the Senate. $2,000 to new IRA plus accounts would cated before, historical evidence shows Although I supported the budget reso- be allowed for anyone; distributions that it would result in increased reve- lution which allowed for this bill to from the accounts would occur on a nues to the Treasury to assist with def- proceed, I did so to advance the spend- tax-free basis. icit reduction. The capital-gains relief recommended in the tax bill mark is a ing cuts that I voted for and the Senate DEATH TAX RELIEF passed earlier this week. I have con- step in the right direction. But unless The legislation includes modest sistently stood for the proposition that the reach of that relief is extended to death-tax relief—a phased increase in we shouldn’t be reducing revenues depreciable real property, we cannot the unified credit from $600,000 today until we balance the budget, and I will ensure that the full benefit of a cap- to $1 million by 2006. An additional $1 keep that commitment today. million exclusion is allowed for quali- ital-gains tax cut is realized through- While I have supported a number of fied family owned businesses and out the economy. amendments that I felt would make Establishing disparate tax treatment farms. this bill a better package, even if all for investment and business real estate Mr. President, although the death- those amendments had passed, I’d still would provide little incentive for indi- tax provisions represent steps in the be opposed to cutting taxes while we viduals to sell investment properties, right direction, they are totally inad- still have a budget deficit. Nonetheless, equate to solve the problems associated or to recapitalize and modernize multi- I understand that it is difficult for with the tax. The unified credit has not family housing, industrial properties, elected legislators to resist the temp- been adjusted since 1987, when it was office buildings, retail properties, or tation of tax cuts, and I do not dis- set at $192,800, for an effective exemp- single-family rental homes. It would count the popular appeal of a number tion of $600,000. Had it merely kept provide little, if any, stimulation in of the measures before us, nor do I pace with inflation, the exemption what amounts to a substantial sector quarrel with the public demand for would now amount to about $840,000. of the Nation’s economy. Moreover, them. However, sound fiscal policy By the time the $1 million exemption is taxing such property at rates higher compels me to oppose even the tax fully phased in in 2006, inflation will than for other assets would establish a changes I might otherwise support have further eroded its value. The fam- bias in the Tax Code that must be until such time as the Federal budget ily business exclusion is so complex avoided. actually reaches balance. and establishes so many hurdles for I would note that the Finance Com- By passing and enacting this tax bill, families to meet before they could mittee modified the bill to reduce the or any other, we singlehandedly undo qualify for relief that few families will tax rate, from the 26 percent originally the hard work we did in 1993 to finally likely see any relief at all. recommended, to 24 percent. But we bring annual budget deficits under con- And it is family owned businesses, ought to make sure that by the time trol. We’ve made dramatic progress, particularly those owned by women the bill reaches the President’s desk, bringing down annual deficits from $290 and minorities, that are in the greatest depreciable real estate is on par with billion in 1992 to an expected $60 billion need of relief from death taxes. Instead other types of investments. this year. Now, on the precipice of bal- of being able to pass a hard-earned and CHILDREN’S HEALTH INITIATIVE ancing the budget, we are going to pass successful business on to the next gen- Mr. President, I am also concerned a tax cut bill which takes us in pre- eration, many families have to sell the about the tobacco-tax provisions of cisely the opposite direction. While I company in order to pay the death tax. this bill. I realize that the tax is in- understand that these tax cuts are pro- The upward mobility of such families is tended in large part to raise additional vided for in the context of a balanced stopped in its tracks. Proponents of revenue for the children’s health-insur- budget plan, no one can argue that this tax say they want to hinder con- ance initiative. Yet, most people recog- they will increase the deficit and the centrations of wealth. What the death nize that an increased cigarette tax debt between now and the year we ex- tax really hinders is new American suc- would lead to lower cigarette consump- pect to get to a balanced budget, if we cess stories. tion—in fact, discouraging smoking is get there at all. Yet, the death-tax provisions in the one of the prime objectives of a tax in- Not only will this bill increase the bill do not save Americans from having crease. But if smoking declines, so do current deficit and the long-term debt,

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00037 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6706 CONGRESSIONAL RECORD — SENATE June 27, 1997 the out-year costs will come due at a tax relief provisions in this bill. I un- The Republican plan takes each of time when the costs of our entitlement derstand the burden these taxes cause these legitimate points and misuses programs begin to swell due to the re- for some families, particularly those them as excuses to give enormous tax tirement of the baby boom generation. with family owned farms and busi- cuts to the well-heeled and the power- From now until 2030, the number of in- nesses, but the slow phase-in of in- ful and it does so as far as the eye can dividuals who will qualify for these creases in the current $600,000 exemp- see. This plan violates the fundamental programs will double, going from 35 tion amount guarantee that the true principles that any tax bill must meet: million to 70 million. Even if we didn’t cost of the tax change won’t show up tax fairness and fiscal responsibility. enact this tax cut, all revenues we col- until after 2007. The Republican bill claims that it lect would be needed just to fund enti- Mr. President, the most difficult part will give fair tax relief to families, but tlement programs and interest on the of opposing this tax bill for me has to the Republican child credit is designed debt by 2012, leaving only borrowing to do with the education incentives in- to exclude large numbers of low- and cover defense and discretionary invest- cluded in this bill. From my days as middle-income working families. ments in human and physical capital. governor of the Commonwealth of Vir- Forty-seven percent of all American Enacting a tax cut which doubles in ginia, I’ve made education my top pri- children would not be eligible for the cost every 5 years hardly seems an ap- ority, pumping over $1 billion of new child credit under the Republican pro- propriate course to follow given the de- funds into education during my tenure posal. An additional 8 million children mographic challenges we confront as governor without a tax increase. I would be eligible for only a partial ben- early in the next century. simply believe that the education of efit. Clearly, the Republicans have ger- This tax cut would not have been as our children is the most important rymandered their credit to save money damaging in the future were we likely function of government at any level. by denying it to as many working fam- to make some of the long-term struc- Because of this commitment, I applaud ilies as possible. Yet these are the fam- tural changes in our entitlement pro- the President’s effort to increase ac- ilies who need help the most. Our grams that would have sufficiently re- cess to education. Democratic proposal offers all of these strained the growth of these expendi- I am not opposed to commiting addi- families an honest tax break. The Re- tures in the future. By abandoning a tional resources to education, but my publican proposal is a let them eat legislative change for a more accurate concern about these tax provisions is cake tax break. measure of the cost-of-living adjust- that they are not likely to encourage I also oppose the education provi- ments and the likely elimination of students to get a higher education. For sions of the Republican bill because any eligibility changes in Medicare by the most part, they would simply sub- they are skewed toward the highest in- the time the spending measure be- sidize those who would have attended come taxpayers. These Republican pro- comes law, we compound our long-term anyway. In addition, most education visions clearly violate the firm com- fiscal problems with this tax cut. experts believe these tax provisions mitment made under the budget agree- Mr. President, the truth is that even could result in an increase in tuition ment on tax benefits for higher edu- if we were in budget balance today and costs as institutions use the tax sav- cation. The letter signed by NEWT for the forseeable future, I couldn’t ings to increase their costs, potentially GINGRICH and TRENT LOTT specifically support this particular tax bill. The making education expenses even higher states that tax relief of ‘‘roughly $35 fact of the matter is that the tax bill for students who can’t qualify for these billion’’ will be provided over 5 years before us does little or nothing to sim- new tax benefits. It also seems to me for post-secondary education, and that plify the tax code, fails to adequately that those who benefit from these edu- the education tax package ‘‘should be encourage new savings and investment, cation incentives ought to have some consistent with the objectives put for- and is structured in a way that masks obligation of community service, a ward in the HOPE scholarship and tui- its long-term costs. Instead, it is large- cause I have long championed. tion tax proposals contained in the ad- ly driven more by political payoffs to In summary, Mr. President, I voted ministration’s fiscal year 1998 budget special interest groups and polling earlier this week for the spending cuts to assist middle-class parents.’’ data, rather than rational tax policy. in the first Reconciliation bill because The administration’s proposal had The child tax credit has been roundly I believe that deficit reduction should two goals: to help middle-class families denounced by economists as doing lit- be our No. 1 priority. It is for this same during the critical years while students tle more than encouraging additional reason that I oppose this legislation on are in college, and to encourage life- consumption, something we clearly principle and for the substantive policy long learning. Students and families ought not to be encouraging at this reasons I have outlined. I understand across the Nation are concerned about point given our robust economy. At that it is politically difficult in our day escalating tuition, and this bill does least the Senate retained the provision and age to resist the siren song of tax not do enough to help them. that required that the tax savings be cuts. But I hope that those who intend The Republican bill is flawed in an- saved for education expenses for those to support this tax package will be pre- other major respect in this area—it ut- with children between 13 and 16, and I pared to answer for their vote when the terly fails to address the need to help commend my colleagues, including revenue losses begin to mount and pre- workers expand their skills and edu- Senators BREAUX, KERREY, and LIEBER- vent our budget from staying in bal- cation. We need to give a real benefit MAN, who have fought so hard to ensure ance over the long term. to teachers, nurses, auto mechanics, that the child tax credit provides some With that, Mr. President, I yield the and all others in jobs that need con- economic value by requiring that it floor. tinual upgrading of skills. The work- goes to savings and investment. Mr. KENNEDY. Mr. President, I op- place depends more and more on highly Many have claimed that both the pose this bill, and I hope that it will be trained workers. To sustain a strong capital gains provisions and new indi- vetoed by the President if it emerges economy, we must invest in ongoing vidual retirement accounts will en- from the House-Senate conference in education throughout life. courage additional savings and invest- this unacceptable form. The last thing The bill also provides a dispropor- ment, and I would like to believe that the American people need is a trickle- tionate education benefit to high in- is the case. However, the capital gains down tax relief bill that offers plums to come families. It contains three sepa- benefits fail to differentiate between the wealthiest individuals and corpora- rate provisions to encourage savings those gains from long-term investment tions in our society, and crumbs for ev- for college, at a total cost of over $7 and those from stock speculation, and eryone else. billion over the next 5 years. Lower in- the new backloaded IRA’s will likely Clearly, we need to give tax relief to come families do not have the luxury result in simply a shift of existing sav- families, we need to encourage invest- to save as much as higher income fami- ings to a tax deferred vehicle, resulting ment in education, we need to encour- lies do, and will not be able to take ad- in compounding revenue losses over age investment in small businesses, we vantage of these provisions. time. need to grant relief from the hardships I also strongly support funding for Compounding revenue loss will also that are sometimes caused by the es- crumbling schools. The deterioration of result from the structure of the estate tate tax. hundreds of schools across the United

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00038 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6707 States is a disgrace. But the Repub- Arguments for certain types of edu- $265 billion tax increase that President lican bill provides only token help. It cation tax cuts and child tax credits Clinton pushed through in 1993? offers only Band-Aids to put over leak- are not as persuasive. And they become It is a proud day for this body and for ing roofs. less so when they are not available to the American people to finally witness Similarly, the massive capital gains those families who might most need a Congress with the courage to enact a tax breaks and massive estate tax such relief. If we are going to provide plan to restrain Federal spending and breaks are also tilted heavily to the tax cuts to families with children, then balance the budget. Also very impor- wealthy. Largely because of these pro- we shouldn’t exclude millions of work- tant is the savings that will be passed visions, more of the benefits of the Re- ing families with lower and moderate on to the American people in the form publican plan go to the top 1 percent of incomes. Over 565,000 kids in Wis- of tax relief. One thing we easily forget taxpayers than go to the bottom 60 per- consin, nearly 40 percent, live in fami- is that tax revenues belong to the tax- cent of the taxpayers. Under the Re- lies that will not receive the tax credit. payers. This historic bill will simply publican plan those who are already Altogether, as desirable as tax cuts return the taxpayers’ own money back well-off are given tens of billions of might be, we need to keep our focus on to them. dollars in unwarranted tax breaks, balancing the budget first, then con- Mr. President, important to this de- while those who are struggling are ig- sider tax cuts. American families will bate is how this tax package is being nored. benefit enormously by the Federal received and the work that has gone Finally, the amount of the Repub- Government bringing down the deficit into making this bill a good piece of lican tax cuts will explode in the years and achieving a balanced budget. Any- legislation. This bill was reported out after 2002, and the deficit will increase thing that diverts us from that course of the Finance Committee with over- enormously. The Center on Budget and should be resisted until we have fin- whelming bipartisan support, and I hope that there is overwhelming bipar- Policy Priorities has estimated that ished the job. the cost of the Republican proposal Finally, if we must have tax cut leg- tisan support for its final passage. I will increase by between $500 and $600 islation as part of the budget agree- want to commend my colleague and chairman of the Senate Finance Com- billion in the 10 years following the ment, it ought to be both fiscally re- mittee for the balanced, bipartisan bill current budget period. It will be nearly sponsible and fair. This bill fails on both counts. The tax cut bill is heavily he spearheaded. impossible to balance the budget in Mr. President, working families in back-loaded. While costing $85 billion those years if this Republican tax give- this country do not take the paying of over the first 5 years, the plan will cost away is enacted into law. taxes lightly. How could they? They The Republican plan is a Trojan close to $60 billion annually once it is pay payroll taxes, income taxes, prop- horse for giving tax breaks to the fully in place. That kind of exploding erty taxes, and other taxes. In addition wealthy. If we had no tax bill, it would cost moves us away from a balanced to the amount of taxes taken out of be better than this trickle-down bill. budget, and puts us back on the track every paycheck, families reconcile Mr. FEINGOLD. Mr. President, I in- to rising deficits. It is ironic that those what income taxes they owe to Uncle tend to vote against this tax bill. who shout the loudest about the need Sam every April 15, and millions must Although I voted for the budget reso- for a balanced budget amendment to send a check to the government for ad- lution which was designed to bring us our Constitution are among the biggest ditional taxes. The American taxpayers to a balanced budget within the next 5 supporters of a tax bill that is nothing understand and realize that their tax years, I have consistently said that we less than a budget buster. payments go to providing needed Gov- should actually achieve a balanced The tax plan also fails the test of ernment benefits and to support the budget, before enacting any sweeping fairness. A package of tax cuts, even freedoms we enjoy. However, enough is new tax cuts. As attractive as new tax one targeted toward economic develop- enough. It is time to cut the fat out of cuts may be, I think our first fiscal ob- ment, need not be skewed to the Government and lower the Federal tax ligation is to eliminate the deficit. We wealthiest. Unfortunately, this meas- burden. And, it is time to reduce the shouldn’t ask our children and grand- ure is. According to the tax watchdog burden of budget deficits on taxpayers, children to foot the bill for our pro- group Citizens for Tax Justice, over mortgage holders, small businessmen, gram spending or our tax cuts. half the proposed tax cuts in the bill go students, and all others having or need- Having said that, let me address sev- to the top 5 percent of all taxpayers. ing loans. It is time to stop passing off eral other issues. If we are going to And while the 40 percent of families the burden of current spending onto have tax cuts before the budget is actu- with the lowest income receive no tax our children and grandchildren. ally balanced, then we should focus on benefit, the top 1 percent receive an av- Mr. President, this tax relief plan the kinds of cuts that at least have erage benefit of nearly $16,000. contains significant tax cuts in a vari- some potential to help enhance eco- Mr. President, let me emphasize my ety of areas. I will not take the time to nomic productivity and increase reve- firm belief that our highest priority comment on every provision and nues—tax changes that arguably will must be to balance our Federal budget change in the bill. However, I would increase income and resulting revenues before we cut taxes. We have come too like to comment on a few of the main will help move us toward a balanced far and worked too hard to bring our areas of tax relief which I have long ad- budget. deficit down to jeopardize that effort vocated. For these reasons, I have indicated with a fiscally irresponsible tax cut First, families with children will re- that if we are to have tax cuts before bill. I support the bipartisan balanced ceive a $500 per child tax credit. Rais- the budget is in balance, we should budget agreement negotiated by the ing children in today’s world becomes limit them to changes that will stimu- congressional leadership and the White more expensive each year. This $500 late economic growth. A number of my House, but this tax package is not con- credit will put more money in the constituents have presented me with sistent with the spirit of that agree- hands of parents to help them better strong arguments that some reductions ment, and needlessly risks the progress afford the high cost of raising children. in the capital gains and estate taxes we made in the reconciliation package It’s real money back into the bank ac- will enhance economic productivity we just passed. counts of American families. and growth, and I have been willing to Mr. HATCH. Mr. President, I rise Second, this bill would provide a support capital gains and estate tax today to speak in strong support of the number of proposals to ease the burden changes if crafted in ways that target historic tax relief plan, the Revenue of paying for college. I hear again and the benefits so as to stimulate growth Reconciliation Act of 1997, that is be- again about the high cost of colleges and economic activity. For Wisconsin, fore the Senate today. Change has fi- and universities. And, I have some per- this means, in particular, that capital nally come to Washington and the sonal knowledge on this point, Mr. gains and estate tax changes should be fruits of that change are beginning to President. I not only put myself targeted to help family farms and be realized. Who would have thought through both college and law school, I other smaller family businesses that that 3 years ago that the American have also, as a father, put my six chil- are passed down from one generation to people would be receiving a $85 billion dren through college. I know the sac- the next. tax cut today, especially after the huge rifices that are necessary.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00039 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6708 CONGRESSIONAL RECORD — SENATE June 27, 1997 This tax bill would provide a tax manner. I applaud my colleagues for these accounts, in contrast to just 70 credit for tuition expenses, a deduction their support of this important pro- percent today. Also, this bill provides for student loan interest, and an expan- gram. both capital gains and estate tax relief, sion of the current pre-paid tuition Mr. President, there are a number of phased in in incremental steps, but programs. And, important to elemen- other tax relief provisions in this bill nonetheless important to the overall tary and secondary school teachers, and also many other tax simplification investment climate of the Nation. I the bill contains a provision to remove provisions that are very important. I hope that a great portion of that in- from the 2-percent itemized deduction personally wish we could have done vestment and economic activity gets limitation educational expenses re- more in many of these areas. directed toward and takes place in New lated to furthering the skills of the But, the fact that we are passing this Mexico. teacher. Teachers have great influence legislation today, and the promise of This bill contains about $32 billion in over our children. Well trained teach- the President that he will sign it into education provisions which will be of ers are critical to preparing our chil- law, means that the bill has been a bi- benefit to many New Mexicans, par- dren for the challenges of the future. partisan effort. As such, it is a com- ticularly those who need support for Third, this bill contains important promise and is not perfect from any college tuition. In addition, over 45 per- tax cuts to stimulate economic growth one Senator’s point of view. If you cent of New Mexico’s families paying and to further the creation of jobs. I polled all 100 Senators, I am sure each taxes of $1,500 or more will be eligible have long been an advocate of reducing of us would mention provisions we to take advantage of the HOPE schol- the tax on capital gains. During debate would like to have written differently. arship. And while I would have pre- this week, we have heard a great deal There were a number of amendments ferred that this figure be far higher, ap- of discussion about the rich versus the offered to this bill that I support and proximately 51 percent of dependent poor and who gets what out of this tax would have liked to vote for. However, children in New Mexico will be eligible bill. Let me make it clear that every- when anyone participates in a negotia- for some portion of the per child tax body benefits when jobs are created tion and becomes a party to an agree- credit. Another important accomplish- through economic growth. A capital ment, he or she cannot willy-nilly sup- ment in this bill is that it provides re- gains tax cut creates jobs and eco- port changes to that agreement just sources to help cover child health in- nomic growth. Government investment because you happened to like someone surance for the 10.5 million uninsured is limited in what it can do to help peo- else’s idea better. It stands to reason kids in America by raising the tobacco ple economically. Encouraging private that you cannot persuade others to tax by 20 cents per pack. sector investment will foster the most compromise if they cannot expect your There are other provisions in S. 949 efficient and effective ways to better adherence to whatever agreement is that are worthy of support including the economy. I firmly believe that the reached. I gave my word to Chairman permanent extension of the tax credit capital gains tax relief in this bill is ROTH and to my colleagues on the Fi- for employer provided educational as- the most important thing we can do for nance Committee to maintain the in- sistance which many New Mexican economic growth in this country. tegrity of the compromise bill that we workers and firms have very much Expanding an existing business, passed out of the Finance Committee wanted. This bill also provides for an starting a new venture, or bringing a on a strong bipartisan basis. I am also exemption from the 2 percent miscella- new invention to market requires cap- constrained from voting to further in- neous work provision of the Tax Code ital investment to make happen. Tax crease the cigarette tax even though it for hard-working, dedicated teachers policy has a tremendous impact on the could be used to finance laudable objec- who spend their own money on edu- amount of capital investment. Under tives in childrens health or to increase cation technology materials and who the current law, gains from capital in- the deduction for health insurance pre- should be able to fully expense these vestments are taxed twice, once when miums paid by those who are self-em- costs on their tax returns. the income is earned and again when ployed. However, this bill is far from perfect. that income is distributed to the share- Of course, there are also some provi- S. 949, which provides for an $85 billion holders. Cutting the capital gains tax sions in this bill that I am not enthusi- net tax decrease, does not provide for rate will encourage more investment astic about and would cheerfully drop the kind of distribution of benefits which will translate into the creation were they not part of the agreement. across our society that I would have of more jobs. This change is absolutely But, taken as a whole, this tax pack- preferred. Although the Finance Com- critical to maintaining a strong econ- age is a good mix of tax relief provi- mittee did a far better job of making omy well into the future. sions that will go a long way to lower the tax cuts fairer than did the House I am also pleased to see relief from the average American families’ tax Ways and Means Committee, I would the death tax in this bill. Nowhere is burden. This is an historic piece of leg- have preferred the Democratic alter- the damage of onerous taxation more islation, and I am proud to support its native which was offered yesterday by evident than our current estate tax. It passage. Senator DASCHLE. is an inefficient tax that really should Mr. BINGAMAN. Mr. President, I rise The bill we are passing today—and be abolished. Families should not have today to comment on the tax bill we which I plan to support on final pas- to face a tax bill that forces the invol- are debating, S. 949, the Revenue Rec- sage—still hands the lion’s share of tax untary sale of assets shortly after put- onciliation Act of 1997. This bill is not relief to the wealthiest 1 percent of ting a loved one to rest. I hope that we the bill I would have preferred if I had Americans, more than the combined can increase exemption from this oner- written all of the details, but it has lower 60 percent will receive. By con- ous tax as quickly as possible. many redeeming sections which I think trast, if we had passed the Daschle bill, Mr. President, another critically im- do benefit New Mexico and the Nation working families would have received portant provision in this bill is the $8 as a whole. almost twice the tax relief provided in billion in additional money for chil- I want very much for New Mexicans the Finance Committee plan. dren’s health insurance. This is impor- to get needed tax relief. We have a Furthermore, the Democratic pro- tant for the most vulnerable of our strong economy and are within reach posal had many targeted tax relief citizens—low-income children. The fu- of a balanced budget. It does seem to measures which would have done much ture of this country lies with our chil- me that the tax burden of many New more for small businesses and small dren. We cannot ignore the gap in our Mexicans and others is higher than it farms than the Republican bill health care system that does not cur- needs to be—and while this is not achieves. In education, the Democratic rently provide vision or auditory structured the way I would have pre- amendment would have provided work- screening, or other preventive health ferred it—I will support final passage of ing families more opportunities to help care. The provisions adopted by the Fi- S. 949 because it does move us further educate their children, rebuild schools nance Committee, and ratified by the in a positive direction, than it does and send their children to college. full Senate by an overwhelming vote, negative. This bill expands IRA’s in a Perhaps most importantly, the are significant and will help address way in which nearly 90 percent of our Democratic bill was the more fiscally these yet unmet needs in a responsible working population will be eligible for responsible of the two alternatives.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00040 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6709 One of my major concerns about S. 949 who actually have employer-sponsored wish we had done better and hope that is that the backloading of estate tax plans benefit from IRA Plus. the conferees will struggle to produce provisions, capital gains provisions, Because all distributions from these an even better bill than this, rather and particularly IRA provisions will IRA Plus accounts are tax free, they than dumbing this down to many of the balloon the budget deficit enormously provide a certain group of wealthy sav- worst provisions in the House com- just after we finally achieve the dis- ers a home grown version of a Swiss panion bill. I yield the floor. cipline to bring the Nation’s spending bank tax haven. If these IRA Plus ac- Mr. REED. Mr. President, I rise to and income into balance. counts are established, there is no express my concerns with the tax bill Let me explain a bit about my con- doubt that they will be a terrific deal passed by the Finance Committee, and cern about the IRA provisions. I com- for those who participate. But it’s not to express my support for the Demo- pletely support the notion that the Na- fair and not good policy to provide a cratic alternative. I believe the Fi- tion needs more savings. This will help tax windfall to the rich and do nothing nance Committee bill is seriously generate more capital for long-term in- for those who are struggling to save flawed, and will put us on a path to ex- vestment and growth. But I object to smaller sums; those less wealthy tax- ploding deficits, rising inflation, and allowing only the wealthiest in our so- payers will continue to pay tax on any future economic hardship. In a time ciety to have the tax incentives and distributions. when we are asking our seniors to ab- tax havens to save. We should provide Furthermore, IRA Plus accounts cre- sorb $115 billion in Medicare cuts, I incentives across the board—and make ate a troublesome benchmark vis a vis think it is irresponsible to enact the sure that all sectors of our society are other savings vehicles. It is reasonable large, across-the-board tax cuts that getting some degree of retirement sav- to ask that if IRA Plus accounts are are contemplated in this legislation— ings in place. This bill does not do this. tax free, then why not 401(k)’s or reg- tax cuts that will add to the pain of In fact, this legislation is a radical de- ular IRA’s or the Simple Plan or cor- balancing the budget by the year 2002. parture from our current retirement porate defined benefit programs? It Of particular concern is the fact that savings policy which at least purports would be terrific if all savings vehicles these tax cuts will disproportionately to establish a level playing field for were tax free, but the fact is that the benefit the wealthiest Americans who both high income and low income IRA Plus program alone—given the tre- have already benefited from the un- workers. mendous backloading in it—will blow a precedented performance of our econ- Unfortunately, the Finance Com- huge hole in the budget deficit in fu- omy and stock market over the last mittee tax proposal contains two IRA ture years. several years. Specifically, 42.8 percent provisions which are at fundamental While the IRA provisions in the Fi- of the tax cuts will go to the top 10 per- odds with each other and represent the nance Committee tax bill start out cent of income earners, those who earn Cain and Abel of retirement savings costing just $3.3 billion in the first five more than $120,000. Meanwhile, only 2.7 policy. On one hand, the bill makes an years, the cost surges to $20.5 billion in percent of the benefits will go to the important contribution to strength- the next five years and then to an esti- bottom 40 percent of hard-working ening the national savings system by mated $88.5 billion in the following ten Americans. To continue this gravy doubling the income eligibility for de- years. Most of this backloading comes train for the well-to-do, while ignoring ductible IRA’s. The proposal makes de- from the establishment of IRA Plus the economic anxieties faced by middle ductible IRA eligibility available for 90 accounts. Furthermore, the and lower income Americans, is unfair. percent of the population instead of the irreversibility of this backloading will Nevertheless, the Finance Committee 70 percent now eligible. tie the Nation’s hands just as the crush tax bill is loaded with breaks for the Under this better side of the S. 949, of retiring baby boomers forces very wealthiest Americans, leaving the av- deductible IRA’s will be available to real costs on the Federal Government. erage taxpayer holding the bag. everyone with less than $100,000, joint We should think very carefully about Perhaps most illustrative of this filers, of income. And as is the case the consequences of setting up these point are three of the plan’s largest tax with current law, even those with in- IRA Plus accounts. I very much hope cuts—the capital gains, individual re- comes above $100,000 can still make de- that when this bill goes to conference, tirement accounts [IRA’s], and estate ductible IRA contributions, as long as the conferees will tread carefully and tax provisions. The Joint Tax Com- they have no other employer-sponsored will reconsider this very troublesome mittee has estimated that three-quar- pension plan. provision. ters of Americans receiving capital It is also important to understand I have other concerns including the gains income have household incomes that under current law, people who signals that I think are being sent to over $100,000. Similarly, only 1.6 per- have employer-sponsored retirement hard-working New Mexican families cent of estates are valued high enough plans can still make nondeductible that you have to have a high level of to qualify for estate taxes. Finally, in- contributions to IRA accounts. These income and children to fully qualify for creases in the IRA income limitations people can put an extra $2,000 a year the child tax credit we are providing in will benefit only the top 30 percent of away so that this money can accrue this bill; 70 percent of New Mexico tax taxpayers. As laudable as some of these and compound tax-free until retire- filers report less than $30,000 in annual items are, their combination, without ment. This tax-advantaged savings op- income, 45 percent have less than targeting, skews this bill to favor the portunity provides significant benefits $15,000 income. It is obvious that many, affluent over middle-income Ameri- to those who make after tax IRA con- many New Mexico children will not be cans. tributions. So far so good. able to benefit significantly from the Beyond favoring the wealthy, the But Senator ROTH’s IRA Plus pro- child tax credit. cost of these tax cuts will ultimately posal, in contrast to the IRA expansion Many here attempted to offer amend- threaten the progress we have made on provisions, is a bad step for us to take. ments which I supported and which reducing the deficit, which is at its A radical departure from past retire- would have made the $500 per child tax lowest point as a percentage of gross ment savings policy, IRA Plus over- credit refundable against payroll taxes; domestic product [GDP] since 1974. whelmingly benefits the rich. It also or in a different approach, would have This is because the costs of the tax creates a slippery slope towards tax- allowed tax filers to get their full EITC cuts, which are relatively low in the free havens for other retirement pro- credit and then figure the per child early years, will explode in later years grams and blows a very large hole in credit. Either of these would have en- outside of the budget window. For ex- the Federal budget deficit in future sured that millions more children ample, from 1997 to 2002, the combined years. The fact is that because tax ad- around the Nation and more than revenue loss of the capital gains, estate vantages in the other Roth provisions 250,000 New Mexico children would have tax, and IRA provisions is $4.3 billion. are available to both those under benefited from this provision. However, the revenue loss from these $100,000 income levels as well as those Overall, S. 949 delivers a better pack- provisions rises dramatically between at any income level who don’t have an age of education, health, and child care 2003 and 2007 to $68.7 billion. In 2007, the employer-sponsored pension plan, only spending initiatives and various tax re- combined costs of the capital gains, those above $100,000 income levels and lief provisions than the House bill. I IRA, and estate tax provisions grow to

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00041 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6710 CONGRESSIONAL RECORD — SENATE June 27, 1997 $18.2 billion. This is 25 times the aver- strong supporter of the HOPE scholar- amendment will eliminate the fiscal age annual cost of these provisions of ship tax credit proposed by the Presi- time bombs in the Finance Committee $720 million, as indicated in the Joint dent. While I applaud the committee bill that will explode after 2002 and Tax Committee distribution tables for for including education tax credits in threaten our progress toward a bal- 1997 through 2002 for the Republican their bill, I am concerned about reduc- anced budget. Finally, the amendment tax bill. tions the committee has made in the rightly focuses on the targeted invest- In addition, cuts in the capital gains size of the credit, which will limit its ments necessary to keep our country tax rate will likely generate a flurry of usefulness to many students. For this moving forward into the 21st century. unproductive economic activity that reason, I believe we should look to the Mr. LIEBERMAN. Mr. President, I may produce an unwelcome side ef- Democratic alternative which allows rise to discuss three provisions of the fect—inflation. Because there are no for the full HOPE credit to be used by Revenue Reconciliation Act of 1997. I requirements for reinvestment, a sig- students for the first $1,000 in tuition begin by congratulating my colleagues nificant share of the capital gains real- expenses. Additionally, the Democratic on the Senate Finance Committee for ized will likely be consumed. This in- alternative establishes a 20 percent tui- their efforts on this bill. They have creased consumption will put upward tion deduction that can be used after a worked hard to craft legislation that is pressure on prices and fuel the fires of student ceases to be eligible for the forward looking and sensitive to the inflation that we have fought so hard HOPE credit. Together, these tax cred- needs of our economy, working Ameri- to extinguish. its provide the type of meaningful as- cans, and our children. For the next I am supportive of the Democratic al- sistance that many middle-class stu- few minutes, I would like to highlight ternative because it contains targeted dents will need in order to meet the fi- several provisions of the bill that I be- capital gains tax cuts aimed at produc- nancial demands of postsecondary edu- lieve are particularly important to our tive, long-term investment and savings cation. national economy and my State of in areas that will best-serve our econ- Also, the Democratic alternative ad- Connecticut and are issues that I have omy. For example, the bill provides a dresses the problem of crumbling supported and worked on over the capital gains reduction for owners of schools that threatens our education years. small and startup businesses, which system at the most fundamental ECONOMIC GROWTH AND U.S. COMPETITIVENESS IN A GLOBAL ECONOMY represent the most dynamic sector of level—elementary and secondary The Revenue Reconciliation Act of the American economy. In addition, grades. It has been reported that in 1997 is a timely piece of tax legislation. the Democratic alternative eliminates order to repair the costs of this coun- It comes at a moment when our econ- IRA provisions in the Finance Com- try’s aging schools, we will have to omy is in the midst of a transition to mittee bill that will lead to dramatic spend at least $4.8 billion. The Demo- one that is more global and outward cost increases over time. Moreover, the cratic alternative takes a step toward looking, more competitive, and more Democratic bill provides estate tax re- addressing this problem by establishing innovative. American companies and lief in a manner that will benefit true a program to allocate tax credits workers, whether they are in manufac- family-owned businesses and farms among the states for the purpose of re- turing, high-technology, or service in- that continue to be operated by family pairing and constructing school facili- dustries, are more dependent on the members. ties. We cannot hope to improve access world economy than ever before. It is The child tax credit is yet another and opportunity to higher education, with this assumption that we must example of the distributional unfair- without first ensuring that our elemen- consider our economic future. ness of the Finance Committee legisla- tary and secondary schools provide a Today in this new global economy, tion. Because the credit is nonrefund- physical environment that is conducive more Americans are taking part in em- able, many middle- and low-income to learning. ployee ownership programs than ever Americans will be unable to take ad- Although hailed as the biggest tax before. Employees increasingly have a vantage of the child tax credits. It has cut since the Reagan era, the Finance stake in the performance of their com- been estimated that nationwide, 47 per- Committee bill is perhaps a prelude to pany and are sharing in its growth. As cent of all dependent children will be the biggest tax increase in our history. a result, our workers are directly bene- completely ineligible for the $500 tax This is because the bill is loaded with fiting from the dynamic economic ex- credit because their incomes are too gimmicks that reduce its costs in the pansion that is sweeping across our low. In my State of Rhode Island, al- early years, and will result in an expo- land. Our economy is once again being most 141,000 children, or 46 percent of nential rise in costs beyond the 5 year driven by aspirations for a better liv- the dependent children in the State budget window. Assuming that we ing. will be ineligible for the credit accord- reach a balanced budget by 2002, this This bill represents an understanding ing to Citizens for Tax Justice. bill will make it virtually impossible of our new economy and the aspira- The fact that almost half of this Na- to keep our budget in balance, without tions of working Americans. It under- tion’s children will be denied the tax raising taxes. In addition, the bill as- stands that education is the key to so- credit is of great concern, and further sumes that the U.S. economy will re- cial mobility and economic security; it reinforces my support for the Demo- main strong in the future—an assump- understands that small businesses are cratic tax alternative, which goes a tion that flies in the face of the busi- the backbone of our economy; it under- long way toward solving this problem. ness cycle. An economic downturn stands that increased savings and in- The Democratic alternative improves would dramatically increase the costs vestment means greater independence the overall distribution of the tax cut and eliminate the hope of a balanced and growth; and it understands that by making the child credit refundable budget. urban renovation means enlarged op- against federal payroll taxes. This is The Finance Committee bill will also portunity. It is a bill that sets our significant because most of the fami- help those Americans who are least in economy on a sound footing for the lies that would otherwise be ineligible need of help. The capital gains tax next millennium. for the credit pay far more in payroll cuts, estate tax cuts, and many of the KIDSAVE taxes than they do in income taxes. changes to IRA’s will benefit those Let me now turn to some of the spe- The Democratic alternative would also Americans who have shared most in cific provisions that I believe are at the establish an income limitation on the the economic growth of recent years. I heart of this tax legislation and the tax credit to target the benefits to low- question how we can afford to offer reasons why I will support this bill. and middle-income families that truly these tax cuts, while asking seniors to First, I am pleased that my colleagues need the assistance. pay more for Medicare. have included in the Revenue Rec- Mr. President, in these times of eco- Mr. President, as we debate this bill, onciliation Act of 1997 a child tax cred- nomic prosperity, we can afford to, and I ask my colleagues to consider the it for children under age 17. This provi- indeed we have an obligation to invest Democratic tax alternative. This sion is a modified version of a proposal in priorities such as education that amendment will provide for a fair dis- Senator KERREY of Nebraska and I first will have a positive impact on Amer- tribution of the tax cuts and benefit a discussed in the 104th Congress. The in- ica’s future. That is why I have been a greater number of Americans. The clusion of Kidsave reflects forward

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00042 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6711 thinking and, according to a recent wealthy, but include all working Amer- Reconciliation Act of 1997. It is a fair New York Times editorial, ‘‘a clever icans. As a result, the benefits of this and sensible bill that is pro economic way to convert a pro-consumption tax capital gains cut will not flow just to growth and pro-job creation. At a time cut * * * into a pro-savings tax cut.’’ I people of wealth. Anyone who has when we are facing many economic congratulate Senators KERREY and stock, who has money invested in a challenges, this bill helps our compa- BREAUX and their colleagues from both mutual fund, who owns a home, who nies and workers more effectively com- sides of the aisle on the Finance Com- has a stock option plan at work, has a pete on the global economic stage. But mittee for their work on this proposal. stake in capital gains tax relief. Ac- more importantly, it is a bill that will The key word here is pro-savings. At cording to the provisions included in broaden educational opportunities for a time when one of our greatest chal- this bill, homeowners will now be able our children and promote economic se- lenges is how to create economic op- to exempt up to $500,000 in gains from curity for their retirement. portunity and wealth for the working the sale of their principal residence. In Mr. BRYAN. Mr. President, I sup- families of this country, I believe addition, $1.5 million in assets of a ported this compromise legislation in Kidsave helps us meet that challenge family business will be exempt from es- the Senate Finance Committee, and I in an affordable, responsible way. If tate taxes. All of this means that mil- intend to support its passage on the there is going to be a tax credit to help lions and millions of middle-class floor as well. While there are many as- families with children, I believe there American families stand to benefit pects of this legislation which I believe is no better way to provide that help from this bill. could be improved, I applaud Chairman than to offer parents the opportunity Small businesses will also particu- ROTH for his efforts to produce a bipar- to ensure a sound financial future for larly benefit from the provision in this tisan, consensus bill that the great ma- their children. bill. In a country where small busi- jority of the members of the com- One additional advantage of Kidsave nesses comprise a growing percentage mittee could support. should be noted, although it is harder of GDP, it is critical that their eco- One of the areas where I believe the to quantify at this time. This is the ef- nomic growth is not stifled by limited bill does not go far enough in cor- fect of encouraging Americans to save. capital, but encouraged through great- recting flaws in the House Ways and The ethic of thriftiness seems to have er investment. The Revenue Reconcili- Means bill, however, relates to the been lost in recent decades, replaced by ation Act of 1997 increases the size of treatment of investment in real estate. a credit card mentality. We would com- an eligible corporation for additional Since 1963, so-called real estate depre- pound our problems if we pass such bad favorable capital gains treatment. It ciation recapture resulting from habits on to future generations. also cleans up some of the implementa- straight line depreciation has been pro- Kidsave can help us turn the tide of in- tion problems from the 1993 capital vided the same tax rate as other forms debtedness into a groundswell of sav- gains legislation for smaller firms of capital gains. Under current law, ings and can transform our whole atti- which I strongly supported at that this rate is 28 percent. Under the House tude toward money and how to use it time. This means that the thousands of Ways and Means bill, however, an un- to best advantage. That will yield in- smaller companies and start-ups will fair differential is created between the calculable dividends for our nation attract more investors and capital. general capital gains rate, which is down the road. This will be especially helpful in the capped under the bill at 20 percent, and Kidsave will help our economy today capital intensive high-technology and the tax rate applied to depreciation re- by creating a pool of savings available biotechnology industries where much capture, which is set at 26 percent. for investment. As you know, savings of the growth in our economy is today. Many members of the Senate Finance and investment rates in the United BROWNFIELDS Committee expressed serious concerns States are at historic lows: our house- I am also pleased to see that there is with this inequitable treatment of real hold savings rate is 4.6 percent of dis- a tax relief provision for restoring estate investment, and significant ef- posable income, compared to Japan’s brownfields, abandoned commercial forts were made during the commit- 14.8 percent and Germany’s 12.3 per- and industrial properties believed to be tee’s consideration of this bill to pro- cent. Under the provisions of the bill, environmentally contaminated. The vide equal treatment for depreciation parents will have the option of depos- Revenue Reconciliation Act will pro- recapture. Unfortunately, revenue con- iting $500 into an IRA-like account for vide clear and consistent rules regard- cerns limited our ability to provide the children from birth to age 13, and be re- ing the Federal tax treatment of cer- 20 percent rate for depreciation recap- quired to direct $500 into an IRA from tain environmental remediation ex- ture, and, in the end, the committee age 13 to 16. This money will serve as penses. This too is an issue that I have agreed to lower the rate for deprecia- an education fund for individual chil- supported for some time. In fact, ear- tion recapture to 24 percent. dren, as well as a long-term retirement lier this year, I advocated the restora- While a better result than the House account; it will also provide invest- tion of brownfields with Senators Ways and Means Committee’s 26-per- ment capital for our economy. Most ABRAHAM and MOSELEY-BRAUN. cent rate, the 24-percent rate in the importantly, unlike any other proposal In a perfect world, I would like the Senate Finance bill still does not place that has come before, Kidsave gives our clean-up of all brownfield sites to begin real estate investments on an equal children a tangible, financial head tomorrow. However, revenue con- footing with other types of investment. start on the rest of their lives. straints preclude us from doing so. But I urge the leadership of both the Sen- CAPITAL GAINS we do have to start somewhere and ate Finance Committee and the House I am also encouraged that the draft- what better place to start than Em- Ways and Means Committee to recon- ers of the Revenue Reconciliation Act powerment Zones and Enterprise Com- sider this issue, and, during conference, of 1997 decided to include broad-based munities, areas that have been des- to restore equal treatment for real es- capital gains cuts and targeted cuts di- ignated as economically distressed. tate investment. At a minimum, I urge rected toward small businesses. The These are arguably the areas of this the conference committee to resist any bill calls for reducing the top rate from country that are most in need of eco- effort to increase the tax rate for de- 28 percent to 20 percent for the highest nomic development. And that is pre- preciation recapture any higher than earners and down to 10 percent for cisely what this brownfields tax incen- the 24 percent included in the Senate more modest household incomes. This tive is designed to do—bring economic bill. decision too reflects a forward-looking development to the places that need it Mr. BAUCUS. Mr. President, I rise in perspective on our economy. I was most. If this incentive works in our support of the tax relief legislation be- pleased to cosponsor similar legislation most economically distressed areas, I fore the Senate. with Senator HATCH earlier this year. hope this Chamber will work to have This is a complex bill. Chairman In today’s global economy, small this incentive cover a broader range of ROTH has done a superb job in working businesses and start-ups must rely on areas in the future. with a vast range of issues and many investors willing to take a risk on CONCLUSION different groups of taxpayers to their venture. And in today’s financial In closing, I would like to encourage produce a generally good bill. And to markets, investors are not only the my colleagues to vote for the Revenue explain why, I will start by putting

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00043 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6712 CONGRESSIONAL RECORD — SENATE June 27, 1997 numbers aside and reviewing the broad Third, with respect to simplicity, And we will directly increase our es- principles our tax policy should reflect. this bill will mean a much improved sential public investment in infrastruc- First, our tax policy should pay the Tax Code in one very important area. ture by moving the 4.3 cents per gallon bills. That is international taxation. in Federal gas tax revenues from gen- Second, it should be simple and pre- Today, businesses are international. eral revenues to the Highway Trust dictable. Agriculture is international. Compa- Fund. Third, it should be fair. nies in air services, entertainment, And most important of all, we will Fourth, it should promote growth. high technology and basic manufac- help educate our children. Give them And fifth, it should be as low as pos- turing are international. They comply the chance for college. Help them work sible. with Tax Codes in other countries. with new technologies. Make sure the Let’s begin with the first. We need to They hire people all over the world. next generation of Americans has the pay the bills. To take Alexander Ham- They work with suppliers and cus- highest level of skills and education in ilton’s words from Federalist 30, govern- tomers in different countries. And our the world. ment must: international tax laws, mostly drafted With this bill, we create a $20 billion raise troops, build and equip fleets * * * [and in the 1970’s, don’t recognize this. pay] for support of the national civil list; for HOPE scholarship. We create a new de- At that time, trade made up only duction for interest paid on student * * * debts contracted, or that may be con- about 12 percent of the American econ- tracted; and, in general, for all those matters loans. Promote life-time learning by which will call for disbursements out of the omy. Today it is over 30 percent and making the exclusion for employer- national treasury. growing all the time. And tax provi- provided educational assistance perma- These latter disbursements now in- sions which assume that international nent. clude health insurance for seniors and businesses are a rarity don’t make Our legislation is not perfect on edu- the poor. Social Security checks. High- sense any longer. They often make cation. I believe we can and should go ways, education, veterans benefits, sci- American companies less competitive, further on college opportunity. But it entific research, clean air, clean water, and sometimes even create perverse in- is much better than the status quo. and more. Essential services the people centives that push firms to avoid hir- And let me make a related point. want and should have. ing American citizens in foreign oper- That is, with this bill we help make But we also need to pay for them. ations. sure children are ready to learn. We do And in the past the government hasn’t This bill will help bring our Tax Code this by providing $24 billion in this bill entirely paid for them. In 1992, our into the 21st century. Not all the way, and the accompanying entitlement bill budget deficit stood at $290 billion. But but part of the way. It changes the pas- for children’s health. Today in Mon- in the past five years we’ve done much sive foreign investment company pro- tana, about 27,000 have no health insur- better. This year, the deficit will be visions to eliminate overlaps with ance at all. Millions more around the under $65 billion—a fall of nearly 80 other tax provisions. And it ensures country. that Foreign Sales Corporation treat- percent. That is a moral scandal and a threat And this bill will take us the rest of ment applies to software as well as to our future. Today in Montana, a typ- the way. By the year 2002, it will bal- other copyright works. ical health insurance plan for a family But I must say with some regret that ance the federal budget. It will pay the of four, with a $500 deductible and a on the general principle of simplicity, bills. partial dental benefit—costs $5,580 a Second, it will help make our Tax this bill is not an advance. Our Tax Code today relies on several year. That is simply out of reach for Code fairer. One very important exam- dozen different income taxes, payroll many working families. ple is our large cut in the estate and taxes, excise taxes, Federal Reserve de- And we have put together a package gift tax. with a lot of money for States to in- This tax is one of the prime causes of posit interest receipts, tariffs and Cus- toms fees, corporate taxes and user fees sure more kids. Through Medicaid, misery for farmers and small busi- to make up its $1.5 trillion in revenue. through assistance for private insur- nesses today. These businesses hold That is confusing and complicated ance, or other options that fit a State’s small Montana towns and rural coun- enough. Then add in the 135 major tax circumstances. This is will make our ties together across the generations. credits, deductions, exemptions, exclu- country stronger and healthier in the And by imposing very high-tax rates sions and deferrals, totaling over $500 future, and it is the right thing to do and equating land or asset values with billion in tax expenditures last year. for our kids today. large cash inheritances, the estate and And it gets even worse. Finally, the last principle. Taxes gift tax often force families to sell And this bill will not improve the sit- should be low. them when an owner dies. uation. In fact, in some respects it will And this bill will make taxes lower. To cite one particular example, let worsen the problem by adding to the Over the next 5 years, it will reduce me quote from a letter I received just diversity of tax provisions. That’s a overall taxes by $85 billion. last week from a veterinarian who runs drawback—not serious enough to de- Small businesses will get some more a small clinic in Kalispell. He fears value the bill as a whole—but one we capital to help them invest and grow. that: must frankly admit and return to in Farmers and ranchers will find it if I grow my business any more my heirs coming years. easier to pass their land on to their will have to sell it to pay estate taxes. Fourth, the bill will help promote sons and daughters. That fear runs from Kalispell clinics growth. Families with young children will to ranches in the Judith Basin to small How can we do that? First, by pro- have some more money to spend at the businesses in every Montana town. And moting investment for the future. movies, or in bookstores, or in contrib- it extends much further. When small Helping companies create new tech- uting to charities. businesses, farms, and ranches leave nologies, new products and new manu- Parents will find it a bit easier to the family, their entire neighborhoods facturing processes. Providing some in- send the kids to college. lose something very special. It is not centives to start firms and create jobs. That’s a good thing for everyone. right, and it is not fair. And improving our basic infrastruc- In conclusion, Mr. President, this bill And this bill will help us put a stop ture. lives up to the principles we should ex- to it. It will let Montana’s family- With this legislation, we do all those pect of our tax policy. owned farms and businesses exclude up things. It will pay the bills and balance the to $1 million in farm and business as- We extend the research and develop- budget. sets from the estate tax, allow 20-year ment tax credit for two and a half It will make taxation fairer. installment payments for businesses years. In some ways, although it could be with majority family ownership, and We use targeted capital gains tax better, it will make taxation simpler. make other reforms that help make cuts as an incentive for investment in It will promote growth. sure that young men and women can small businesses—the sector which pre- And it will make taxes lower. keep their family businesses in the sents the greatest risks and rewards, On the whole, it is a solid, careful, bi- family. and which creates the most new jobs. partisan bill. And we should be proud

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00044 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6713 of it. I congratulate the chairman for large part as a result of the deficit re- House and the congressional leader- his work, and I hope this bill will get duction package which President Clin- ship, again and again I was brought the Senate’s support. ton presented in 1993, and which this back to two stark conclusions. Mr. LEVIN. Mr. President, it is with Senate passed, without a single Repub- First, I was terribly disappointed disappointment that I oppose the rec- lican vote, by a margin of one vote, the that, once again, the Congress seemed onciliation bill before the Senate Vice President’s. We should not now, to lose sight of the original objective. today. I supported the budget agree- by passing a tax bill like the one before We started out on this budget track ment entered into by the congressional us, head back down the road toward a with the objective of putting in place a leadership and the President and I sup- new large future deficits. That is why, fiscal plan that would take us to a bal- ported the budget resolution passed by I supported the Dorgan amendment to anced budget in 5 years. We knew that, the Congress last month. Both of them sunset elements of the tax cut, if def- in order to do that, we would have to provided the broad parameters for a icit reduction targets were not being obtain economies in many important tax reduction package. I was hopeful at met, and that is another important Government services and programs on that time that the package of tax re- reason I cannot support this bill. which Americans in all walks of life de- ductions worked out by the Finance I know that the Senate is about to pend. Incongruously, somewhere along Committee would be targeted to assist pass this bill. I hope that the conferees, the way, the urge to take the easy way working families, particularly those the House and Senate leadership, and to political popularity took over, and with children. The package before us, the President will engage in future ne- the effort to develop the budget deal however, is too regressive. It does too gotiations which will result in a final and then the legislation to implement little to assist working families with product which is more equitable, which the budget deal was consumed by the education expenses, and it provides too does more to invest in our children passion of making huge tax cuts. At a large a tax break to those who need it through their education, and which time when we have agreed that the least, at the expense of those who need does not risk large deficits in the years route to a balanced budget is so painful it most. For that reason, I supported after the turn of the century. that we cannot accomplish that objec- the Democratic alternative offered by Mr. KERRY. Mr. President, if one tive in less than 5 years, those who de- Senator DASCHLE which would have looks back in our Nation’s history, one veloped the plan and the legislation in- provided a much larger proportion of cannot help but see numerous examples sisted that we cut taxes by $135 billion its benefits, more than half of the tax of both the great strengths and weak- in gross and $85 billion in net over that cut, to middle-income families, the nesses of representative democratic period. lowest 60 percent of wage earners. Un- government. Compared to other na- Mr. President, a student will not fortunately, that substitute for the tions and societies in the world, it is even be out of elementary school math- committee’s bill was defeated. more difficult for us to hide or camou- ematics before he or she has the capac- The legislation before us is out of flage our mistakes to a considerable ity to know that tax cuts of that mag- balance. More than 42 percent of the degree. If we look closely, we can iden- nitude represent movement in pre- benefits of its tax cut provisions go to tify indicators for which we in public cisely the opposite direction to the the top 10 percent of income earners. service should be watchful, lest we re- goal of obtaining a balanced budget By contrast the lowest 60 percent, mid- peat our errors. while not hurting our nation’s ability dle-income families and below, receive I fear we are repeating errors we have to meet its national needs. less than 14 percent of the benefits. In made in the past as the Senate passes I want to emphasize immediately my view this is not equitable. the Revenue Reconciliation Act of 1997, that I am not categorically opposed to The broad based capital gains tax and the intimately related budget rec- tax reductions. To the contrary, I favor cuts and the reductions in the estate onciliation Bill that passed earlier this targeted tax cuts of reasonable dimen- tax largely benefit those among us that week. sions designed not just to slash federal need it least. In contrast, I support the For all of us who are politicians and revenues but to achieve purposes that education tax cuts which the President who hold or seek elective office, it is are in the Nation’s interest. I was a has proposed, a $500 per child tax credit often difficult, Mr. President, to resist leader in Democratic efforts here on adequate to provide tax relief to mid- the temptation to play to the gallery— the Senate floor to pass a tax reduction dle-income families with children, and to do the popular thing. And there are package—a much fairer package than capital gains relief for homeowners. few things that get political juices the one presented to the Senate by the Also, I believe that, if consistent with flowing more readily than cutting Finance Committee and a package that deficit reduction goals arriving at a taxes. If one looks only skin deep, a tax identified clear national interest objec- balanced budget, that targeted capital cut of almost any kind looks appealing. tives and devoted its resources to gains relief for long-term investments After all, those who benefit will be meeting those objectives. I will have and an incremental approach to estate pleased to accept the benefit. And a tax more to say about that in a moment. tax relief should be used. cut does not directly take anything Second, I was terribly disappointed Mr. President, I am also deeply con- away from others. when I examined the specifics of the cerned that this bill may result in As is not infrequently the case, how- budget proposals to see the extent to large deficits in the years beyond this ever, an honest analysis must look be- which its benefits were skewed to those decade. In 1981, I opposed the Reagan yond that kind of ‘‘quick-and-dirty’’ in the highest income brackets. The tax cut because I was convinced that it first appearance. Tax policy has two past several years have been extremely would lead to huge deficits. We have dramatic effects on the Nation and its kind to the well-off in our Nation. paid dearly for the debt which resulted people. It inescapably is the deter- Those who already possessed a dis- from that legislation. Only now, 16 minant of the resources the Federal proportionate share of capability, cap- years later, do we finally have a real- Government will have to meet national ital, and opportunity have prospered istic opportunity to balance the budget needs, ranging from defending our na- mightily. Those who crafted this budg- once again. In 1992, the deficit in the tional security to preserving the envi- et package provided the greatest share Federal budget was $290 billion which ronment to ensuring health care is of its benefits to this privileged portion represented 4.7 percent of the gross do- available to those who need it to man- of our population. Those at the other mestic product. The most recent esti- aging our national parks and forests to end of the economic spectrum—those mate of the deficit for fiscal year 1997 deterring criminal acts and identi- who struggle the hardest to make ends is $67 billion, approximately eight- fying, pursuing, arresting, convicting, meet, and for whom life is far more of tenths of 1 percent of the gross domes- and incarcerating those who commit a challenge—would receive virtually tic product. crimes against society. nothing, or nothing at all, of its bene- Over the 5 years from 1993 to 1998, the Mr. President, when the Senate took fits. The word ‘‘unfair’’ is not suffi- deficit has been reduced by about $1 up the package of two bills produced by ciently stark to adequately describe trillion from the deficit for those 5 the Senate Finance Committee to im- the overall effect of this package. years projected at the time. This re- plement the so-called budget deal that For those of us who, over time, have markable progress has come about in had been negotiated by the White made the hard judicious, moderate,

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00045 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6714 CONGRESSIONAL RECORD — SENATE June 27, 1997 measured choices to bring the Federal core set of beliefs, is, in fact, Mr. Presi- ing member. They produced a tax bill budget into balance, there is tremen- dent, the essence of the American that is improved considerably from the dous disappointment in this outcome. dream and the foundation of what has gravely flawed piece of legislation When this budget process began this become the greatest contribution this passed by the House of Representa- year, I enthusiastically wanted to par- Nation has provided to the world’s so- tives. But, Mr. President, without addi- ticipate in the process and support its cial economic history—the growth of a tional improvements I cannot support outcome. I have long called for our po- vibrant middle class. it or its companion spending programs litical structure to demonstrate the Universal economic opportunity, reconciliation bill. fiscal discipline to balance the Federal sound fiscal policy based on equitable During the course of debate this budget, and have insisted that we do so distribution of benefits and assistance week, we attempted to shape the legis- in a way that is fair, and in a way that to those most in need—those are the lation so it would address more of the recognizes the Nation’s fundamental fundamentals of Democratic economic problems of more Americans, and needs and does not emasculate our policy. That is the goal of the program thereby become a fairer piece of legis- Government’s ability to address them. we put in place in 1993, and that is the lation, but time and again we were I and many others have worked ardu- end to which our fiscal policies are di- rebuffed by the Republican majority. ously to break the spiraling deficits rected. Franklin Roosevelt reminded us Some of my colleagues, who share which plagued our Nation for a decade of our commitment to expanding op- many of my concerns about the bill and to provide a solid economic foun- portunity when he said: ‘‘the spirit of and my judgment that, in its current dation for our Nation as we move into opportunity is the kind of spirit that form, it neither is fair nor will in the the 21st century. has led us as a nation—not as a small long run prove beneficial to our Na- We made a very important install- group but as a nation—to meet very tion, chose today to vote for the tax ment payment toward this goal in 1993, great problems.’’ bill, hoping devoutly that with the when Democrats in the Congress, with Mr. President, as Democrats, we be- President’s active involvement in the the leadership of President Clinton— lieve that deficit reduction is a means conference committee that will con- and without a single Republican vote to an end. We believe that tax breaks vene to resolve differences between the in either House—passed legislation are a means to an end. But, unlike the Senate-passed bill and the bill the that dramatically cut the deficit and Republicans, we do not subscribe to the House passed earlier, a better, fairer put us in striking range of where we callow notion that deficit reduction is bill will emerge and will come back to find ourselves today. I have long wait- an economic policy in and of itself or the Senate for its approval. But I be- ed for the day when the benefits of our that tax breaks are an end which jus- lieve that the product before us today hard work would be as obvious as they tify any means. We do not believe that is so flawed in such critical respects are today. In the four years since that cutting vital programs is a courageous that I could not vote for it in its cur- action in 1993, we have witnessed pros- or visionary act. We believe that cour- rent form. I join my colleagues who perity unprecedented in recent years. age lies in advancing economic oppor- hope for it to be improved in con- In five years, we cut the deficit from tunity: this requires wisdom, innova- ference committee. I want to be able to $290 billion to $67 billion. Interest rates tion, and conscience. It is chilling that vote for a bill that provides tax reduc- are subdued. We are seeing the lowest this dichotomy of political and eco- tions that will benefit Americans fair- unemployment and inflation rates and nomic philosophy remains as obviously ly, and will not concentrate its benefits the largest drop in poverty rates in a demarcated today as it was 100 years on those who least need them while to- generation. Consumer confidence has ago. Yesterday I re-read the cogent de- tally excluding those hard-working, shown the greatest improvement since scription by William Jennings Bryan of tax-paying Americans who most need the Eisenhower administation and the the two opposing ideas of government. the additional assistance. value of the stock market has doubled He separated the parties into those The Democratic alternative to the since 1993—the fastest growth since the who ‘‘legislate to make the well-to-do Finance Committee’s bill which I Second World War. prosperous and wait for their pros- joined the Democratic leader and other By enactment of the 1993 budget leg- perity to leak through on those below, Democratic Senators in offering yes- islation, Democrats proved that it is or those who legislate to make the terday was designed so that our edu- possible to take a fiscally responsible masses prosperous and ensuring that cation tax breaks, our capital gains course toward a balanced budget and their prosperity will find its way up and estate tax reductions and our child extend health care to children, provide through every class which rests upon credit corrected the basic inequity broader educational opportunities, en- them.’’ found in the Finance Committee pro- sure the future for our senior citizens, Mr. President, as a U.S. Senator, I posal: the flow of benefits chiefly to and safeguard our environment. This have an obligation to the constituents the wealthiest Americans. certainly is not a picture which is who elected me to represent their in- In the committee’s package, nearly without its problems, and we must ad- terests, to act on their behalf and to 43 percent of the breaks go to the dress those problems. But the overall present their views to this body. I can- wealthiest 10 percent of Americans— picture is a very appealing one, indeed. not turn away from the long history those who earn more than $120,000. In Even the possibility of the legislation which has shaped my core sense of fair- its plan, Mr. President, 60 percent of before us now—a conceptually balanced ness, my overarching insistence on hard-working poor and middle class budget with tax breaks—is testament making Government work for the com- Americans get only 12.7 percent of the to the application of Democratic ideals mon good and the needs of my con- tax breaks, while the richest 1 percent to fiscal policy. We have been success- stituents—all in order to satisfy the of Americans get 13 percent of the ben- ful because, since the Great Depres- parameters of a political deal. Mr. efits. Mr. President, in the Finance sion, our party has stuck by the funda- President, for that reason, I voted Committee proposal, the poorest 60 mental belief that sound economic and against the tax portion of the rec- percent get only as much in aggregate social policy go hand-in-glove, that our onciliation bill as I voted against the as the richest 1 percent. This is a new Nation is stronger when all Americans spending portion. standard of unfairness. This is anath- have equivalent economic opportunity. The problem, when distilled to its es- ema to the party of Jefferson and Jack- Thomas Jefferson taught us that ours sence, Mr. President, is that this legis- son and Truman and Roosevelt. is a n ation of the common man and en- lation, which has been called by some During the course of the debate, I shrined this belief in one of our most the Tax Fairness Act, would be better heard some of my colleagues on the treasured documents when he wrote of called the Tax Unfairness Act. other side of the aisle justify this the self-evident truth that all men are Mr. President, I have great admira- counterintuitive distribution by argu- created equal. Andrew Jackson echoed tion for the work of the Senator from ing that since the rich make the most this creed when he restated the party’s Delaware, Senator ROTH, who chairs money, the rich will necessarily ben- commitment to the ‘‘humble members the Finance Committee and my friend efit the most from a tax cut. But this of our society—the farmers, mechanics from New York, Senator MOYNIHAN, skewed distribution is not necessary. and laborers.’’ That commitment, that who serves as that committee’s rank- In our alternative, Democrats showed

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00046 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6715 that it is indeed possible to craft a tax governmental services. It is a looming Our plan would have cost $10 billion— package which is targeted to those who problem universally acknowledged. Yet it did not break the budget in the fu- need help and not lavish more on the instead of doing everything in our ture like the capital gains provision in rich. We designed tax breaks which are power to reduce its severity and to the Finance Committee plan. Mr. affordable and which meet a common- take gradual steps to resolve it, we are President, more than 90 percent of the sense and economic test of basic fair- considering and passing legislation cost of the Republican capital gains ness. that will dramatically increase its di- plan comes after 2002. To use computer In the Democratic alternative, the mensions, narrow the range of solu- terminology, Mr. President, this is a poorest 60 percent of Americans would tions, and complicate the task of ad- latent virus—it will emerge full blown have received 46 percent of the tax dressing it. That is not leadership, Mr. in later years to exact a terrible toll on cuts. These are the same Americans President. That is folly. those who at that point will have the who receive only 13 percent of the In the Democratic alternative tax responsbility for delivering essential breaks in the Finance Committee’s proposal, we attempted to reduce the services to Americans while operating plan. In the Finance Committee pro- capital gains taxes in a measured way. a balanced Federal budget. posal, middle class Americans—those In the past, broad capital gains tax Mr. President, while the Finance earning between $30,000 and $85,000—re- cuts have been used to spur economic Committee plan does a great deal to ceive a scant 30 percent of the benefits. growth when the economy was lagging. help wealthy Americans in its capital Under our plan, these middle class In the past, across-the-board capital gains and estate tax cuts, it does not Americans would have done twice as gains cuts have been used to encourage extend the same broad-based cuts to well: 57 percent of the benefits in our the movement of capital into invest- help hard-working middle class fami- plan go to hard-working, middle class ment that would create jobs because lies raising children. Our alternative Americans. unemployment was high. In the past, would have done more for precisely The Democratic alternative would broad capital gains tax cuts have those families who can use the help the have helped those who actually need a served as a shot of adrenaline for an most. And those are the families— tax break to raise a child, to go to col- ailing economic system. But today, young families with young children— lege, to start a business, to generate such emergency measures are neither who will be doing the most for our needed nor appropriate. high-wage 21st century jobs and to country in the future. Mr. President, as a question of funda- grow our economy. Our alternative was Today, Mr. President, I attempted to mental economics, there is no jus- based on principles which have guided correct this basic inequity by offering tification for broad capital gains tax our party for two centuries, and fol- an amendment which would have im- cuts at this time. There is no need to lowed the basic economic philosophy proved the bill by transforming the expend precious budget resources to re- which has served our Nation so well child tax credit so that it would be re- ward the wealthiest American families since 1993. fundable against payroll taxes paid by for the sale of art work or Persian rugs Another feature of the Finance Com- all working families. Most Americans or luxury goods they have held for a mittee’s plan troubles me immensely, pay more in payroll taxes than income and I believe it should trouble all generation. Again, Mr. President, I am not say- taxes. Income taxes have remained sta- Americans. According to the computa- ing that we cannot afford a capital ble for most Americans in the past 10 tions of the Joint Tax Committee and gains tax cut. For years, I have be- years while payroll taxes have in- other reputable projections, the cost of lieved that a targeted tax break can creased 17 percent. Allowing Americans the tax cut explodes in future years—it shape economic policy and can display to offset the credit against these pay- is a fiscal timebomb. In the first 5 economic vision. But, I ask, what is the roll taxes would have broadened its ap- years, the cost of these inequitable benefit to our economy if a wealthy plication to many additional American cuts is $85 billion. I believe we can af- American only has to pay 20 percent families—hard-working families at the ford a cut of that size and have stated instead of 28 percent on the gains he lower end of the economic spectrum. so publicly—if it is carefully struc- accrues from selling his yacht? Where This is in distinct contrast with the Fi- tured, usefully targeted to need and so- is the economic vision in that kind of nance Committee plan under which cial benefit, and fairly distributed. But, a Tax Code change? nearly 40 percent of America’s children Mr. President, in the second 5 years of Mr. President, there are ways to aim are excluded from the tax credit. Those the Finance Committee’s plan, the cost a capital gains tax cut—targeted, sen- 40 percent are the children of the poor- of these cuts will escalate to $250 bil- sible ways—to use taxation of capital est families in the Nation. lion. And, in the 10 years after that— to leverage growth and job creation in The judgment I reached on Wednes- when baby boomers will be retiring and those areas. That is a tax policy with day about the reconciliation bill that straining Medicare and Social Security vision, with a goal, with an economic applies to mandatory spending pro- coffers—the cost will be between $650 priority. The economic priority, Mr. grams was similar and related, Mr. to $700 billion. That is exactly the type President, is not an across-the-board President. It is painfully apparent that of fiscal irresponsibility we avoided in capital gains cut such as the one pre- we must take prudent, fair steps to re- our alternative. sented by the Finance Committee. strain the growth of some of our so- I was not here in 1981 when the Con- The priority is a targeted tax cut in called entitlement programs so that gress passed a large tax reduction bill, areas which could use the added eco- they do not rage out of control and Mr. President. But the entire time I nomic stimulus, such as emerging threaten our ability not only to meet have served here—since 1984—the Con- small businesses, or start-up compa- the needs they are designed to meet gress has struggled to deal with the nies, or parts of the inner cities and but the host of other critical national history-making deficits and resulting rural areas which could use the jobs. needs to which discretionary programs all-time-high national debt that re- That is what we Democrats included in are addressed. But the objective was sulted from that irresponsible tax cut. our tax proposal. And that is a policy lost in the stampede to provide a huge I cannot support legislation that, even which I have fought for—along with tax cut to upper-income Americans. if of a lesser magnitude as this bill the senior Senator from Arkansas, Sen- The spending programs reconciliation surely is, will have an out-years explo- ator BUMPERS and other Senators—for bill cut far more deeply into critical sive effect that will saddle Americans nearly a decade. Mr. President, our programs like Medicare and Medicaid in future years, and their elected rep- plan would have improved on a provi- than was required to achieve necessary resentatives, with a recurrence of the sion we passed in 1993 by allowing a 50- savings. And for what purpose? To pro- deficit and debt problems that have percent exclusion for capital gains on vide the cushion enabling Republicans beset us for nearly two decades. Most qualified small business stock held for to increase the size of the tax cut to destructively, this explosion will occur at least 5 years. Qualified small busi- the wealthy by scores of billions of dol- just as the baby boomers are reaching nesses under this proposal would be de- lars. retirement age and beginning to place fined as having $100 million in assets The worst part of this spending bill is an unprecedented demand on retire- and would be start-up, small, high- the increase in the Medicare eligibility ment and medical programs and other technology ventures. age from 65 to 67. This will cause the

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00047 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6716 CONGRESSIONAL RECORD — SENATE June 27, 1997 number of uninsured older Americans hospitals across this country that pro- if neither the taxpayer nor the tax- to increase substantially, moving the vide health care to our poorest citi- payer’s spouse has previously bene- United States even further away from zens. Although it may be necessary to fitted from the exclusion. the goal of universal health coverage. more effectively target these funds, Unfortunately, the very provisions For many seniors age 65 to 67, this will this funding has enabled hospitals to which are supposed to relieve home- make purchasing private health insur- continue their role as an institutional owners from taxation often prevent ance unaffordable—especially those safety net for those with no other ac- them from making the soundest finan- who have pre-existing conditions. Pri- cess to health care. cial decisions. Under current law, to vate policies cost seniors approxi- Mr. President, there unquestionably avoid being taxed, most people wait mately $6,000 a year, and more than are some sound provisions in these two until they are eligible for the one-time $10,000 if they have any pre-existing bills. There are provisions I strongly exclusion, or they make what may be conditions—if they are able to get in- support. But my job as the Senator imprudent decisions regarding the sale surance coverage at all. elected by the people of Massachusetts of their homes. Mr. President, raising the eligibility is to examine the overall effects of the For example, many families, after age is bad policy because most seniors legislation the Senate considers and to their children have moved out, would do not have access to employer-pro- determine if, on balance, it serves the like to sell their home and buy a less vided private health insurance now and interests of the Commonwealth and its expensive one. However, the rollover the problem is getting worse: according citizens, and the people across our provision means that they will have to to a recent Commonwealth Fund study, United States and their interests. pay taxes on the difference between the the number of retirees with health in- I would like to support a budget profit gained on the sale of their old surance from a previous employer de- package that will reach balance in 2002 home and the cost of their new home. creased from 44 percent in 1988 to 30 since I have long advocated such a As a result, these families often choose percent in 1994. step. I would like to support a bill that to buy more expensive homes or not to Although some argue that this in- achieves economies in mandatory sell their home at all. Mr. President, crease in the eligibility age is similar spending programs to put us on a path- that is not right. People should be able to the increase in the age for Social Se- way toward balance. I would like to to move when and where they want to, curity eligibility that is being phased support a tax bill that targets tax re- not when the tax code makes it finan- in, Social Security still provides early ductions to Americans who need them cially possible. retirement benefits at age 62. Medi- and that will help create jobs and ex- Under the legislation passed by the care, on the other hand, will not pro- tend our current situation of economic Finance Committee, taxpayers of any vide an option for health care coverage strength. I still hold out hope that I age could exclude gain on the sale of a for early retirees, many of whom have will be able to do so when these bills principal residence of up to $500,000 for not retired voluntarily. Finally, busi- return from conference committee. married couples filing a joint return, nesses correctly oppose this provision But, sadly, they did not pass that and up to $250,000 for single taxpayers. because they realize the huge cost it test as they came before the Senate for To be eligible, the taxpayer must have will impose upon them. Eighty major final passage, and I was constrained to owned and used the home as the prin- corporations and the National Associa- vote against them. cipal residence for at least two of the tion of Manufacturers recently wrote CAPITAL GAINS last 5 years prior to the sale. The ex- to the Senate to ask it not to raise the Mr. GRAHAM. Mr. President, this clusion will generally be available once eligibility age. tax legislation, as passed by the Senate every 2 years. I am also opposed to the $5 home Finance Committee, goes a long way This legislation will give our Na- health visit co-payment which was not toward assisting our Nation’s families. tion’s families more freedom in decid- part of the balanced budget agreement For example, reducing the capital ing where to live. This decision can be with the President. This co-payment gains tax rate from 28 percent to 20 based on family circumstances rather will primarily hurt elderly women who percent will stimulate savings and in- than on the Tax Code. The bill would need this help the most: over half of vestment. This increased investment also relieve nearly all families of the the group who would no longer be able will, in turn, foster economic growth. burdensome record-keeping require- to afford home health services are In particular, I would like to draw ments and constraints on decision women age 75 and older who have in- your attention to a provision that will making under current law. The impact comes below $15,000. I am also con- have considerable impact on our Na- on our Nation’s families will be tre- cerned that increasing the cost of home tion’s families: the capital gains exclu- mendous, and I look forward to the en- health visits is not cost-effective be- sion for homeowners who sell their pri- actment of this legislation. cause many poor seniors will be forced mary residence. Under current law, This bill will significantly impact into institutions at much greater pub- capital gains from the sale of principal our Nation’s families. It will promote lic cost than continuing to stay at residences is subject to taxation, with investment and boost long-term eco- home. two limited exceptions. First, under nomic growth. And a healthy economy I also oppose the Medical Savings Ac- the rollover provision, taxpayers can translates to increased opportunities counts [MSAs] provisions in the bill. rollover gains from the sale of a prin- for American families to secure their Although the number of MSA enrollees cipal residence into a new residence. future. Our Nation’s taxpayers work would be limited to 100,000, there is no They can then defer any capital gains hard to provide for their families. This reason to test MSAs beyond the study tax—but only if the purchase price of legislation is a chance for us to lend begun in the Kassebaum-Kennedy bill. the new home exceeds the adjusted them a helping hand in that task. We are spending $1.5 billion through sales price of the old one. And to re- I thank the Chair. that bill and at the very least we strict this even more, the new resi- Mr. BYRD. Mr. President, the halls should wait to see the results from dence must be purchased within 2 years of the Capitol have been filled recently that study before we authorize more of the sale of the first home. with cheers and rejoicings for the bal- demonstrations. A second exemption ties the capital anced-budget agreement reached be- I am also deeply concerned about the gains tax to age. At age 55, a taxpayer tween President Clinton and the Con- cuts in the Medicaid Program which is can exclude up to $125,000 of any accu- gressional leadership in May of this the bedrock health program for chil- mulated gain from the sale of a prin- year. We have been told time and time dren, disabled people, and poor seniors. cipal residence. And this is a one-time- again that balancing the budget is cru- The spending bill would cut $13.6 bil- only opportunity. Worse yet, even this cial to the future of our Nation and lion from the program, the bulk of is restricted. To qualify for the exclu- that enacting this budget agreement which comes from cutting payments to sion, the taxpayer must have owned will eliminate the Federal deficit. Well, hospitals that treat a large number of the residence and used it as a principal Mr. President, I find it interesting that uninsured patients. These payments, residence for at least 3 years during the the reconciliation legislation before called Disproportionate Share Hospital five years before the sale. Also, a tax- the Senate today has nothing to do [DSH] payments, are essential to many payer is eligible for the exclusion only with balancing the budget. Rather, S.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00048 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6717 949, the Revenue Reconciliation Act of Mr. President, as I stated in my re- about reducing the deficit. These mar- 1997, will bring us farther away from marks on the Budget Resolution ap- kets drove interest rates downward and our collective goal of balancing the proved last month, by including these consequently rewarded American tax- budget by reducing revenues some $76 tax cuts in this balanced-budget plan, payers with lower interest payments billion below what they would other- we are with one hand digging deeper on the federal debt, as well as lower in- wise be over the next five years. the very hole our other hand is trying terest payments for the purchase of a Mr. President, the Senate has al- so hard to fill. We should not rely on home, car, or an education. ready approved legislation this week to such ambidexterity to balance the Mr. President, even if I were con- balance the Federal budget. On budget. We should shelve all tax cuts vinced that we must cut taxes before Wednesday, June 25, the Senate ap- until after we firmly erase the budget balancing the budget, I would also hope proved S. 947, the Balanced Budget deficits that have so plagued our na- that any such proposal would not ex- Reconciliation Act of 1997. Despite its tion in recent years. Tax cuts were, plode revenue losses in the long term. deficiencies, that legislation provides after all, the primary culprit for the Unfortunately, S. 949 is flawed when for some $127 billion in deficit reduc- rapid escalation in the federal budget judged by this standard. As reported, tion over the next five years. These deficit in the 1980’s. It is all too easy to this legislation includes a significant savings, coupled with the $96 billion in enact tax cuts and save the pain for backloading of many of its tax cuts to discretionary savings provided in the later. We have done it before, and the mask their true cost. As such, while Budget Resolution, will likely produce lessons learned from that exercise the bill purports to reduce taxes by no a balanced budget in the next five should instruct us not to do it again. more than $85 billion over the next five years. While I had intended to support Mr. President, traditionally, one of years, I suspect that these tax cuts will passage of the first reconciliation bill, the most powerful arguments in favor cost considerably more in the out years I became deeply concerned about a pro- of tax cuts has been that they spur eco- than we are being led to believe. The vision in the bill emanating from the nomic growth. I do recognize that prop- Joint Committee on Taxation’s esti- Finance Committee that would raise erly constructed tax cuts can produce mates reveal that the annual cost of the eligibility age for Medicare from some positive economic results in cer- these tax cuts would more than double sixty-five to sixty-seven years. As re- tain circumstances. However, no mat- between the years 2002 and 2007—thus ported, the bill already included a pro- ter how strongly one believes that tax reducing federal revenues at the same vision to create a National Bipartisan cuts stimulate economic growth—and time our nation is preparing to face the Commission on the Future of Medicare there are some in this body who un- rising entitlement costs that will stem to study ways to preserve and protect equivocally adhere to the supply-side from the retirement of the so-called the Medicare program for future gen- dogma—there can be no sound argu- ‘‘Baby Boomers.’’ I defy anyone to ex- erations. If the bill thus created a com- ment made now that tax cuts are nec- plain to me the flawed logic inherent mission to study and propose rec- essary to boost the economy at this in this proposal. ommendations to protect Medicare in time. We are currently in our sixth Finally, Mr. President, let me ex- the future, why was the aforemen- consecutive year of economic growth, plain my views on the Democratic al- tioned increase in the eligibility age the stock market continues to reach ternative amendment that was offered included in this bill? Is that not why record high after record high, unem- by the distinguished Minority Leader. we are creating the commission in the first place? Mr. President, the impor- ployment has just dipped below five In looking at the Senator’s proposal, I tant and controversial issue of raising percent, and inflation has remained in saw that he had made a considerable the eligibility age for Medicare bene- check. Mr. President, such a perform- effort to ensure that these tax cuts are ficiaries should be decided by a na- ance hardly bolsters the case that tax more fairly distributed and that the tional debate—not in the opaque cloak- relief is necessary to inject new life cuts do not explode in the long term. ing of a reconciliation bill. Thus, be- into our economy. For this improvement, I applaud Sen- cause of my deep concerns about this If anything, Mr. President, our cur- ator DASCHLE and the other Members provision on both substantive and pro- rent economic situation should rein- who have worked on this proposal, cedural grounds—and my general frus- force the notion that reducing the def- which is, in this Senator’s opinion, an tration with the haste and confusion icit is more conducive to economic improvement over the pending legisla- with which the Senate was considering growth than cutting taxes. To illus- tion. However, I was unable to support the overall measure—I decided not to trate this point, let me remind all Sen- his amendment to this legislation be- support passage of the first reconcili- ators what actions have led to four cause it also provided for tax cuts prior ation bill. However, let me affirm that straight years of declining deficits and to balancing the budget—a notion that my vote against this measure in no to one of the healthiest American I cannot philosophically accept. I hope way reflects any unwillingness on my economies in the last thirty years. Ac- that my vote against this proposal is part to pass spending cuts to balance cording to the Congressional Budget not misconstrued as anything else but the budget. Office, the FY 1997 budget deficit will a determined, unyielding opposition to Mr. President, let me now turn back be approximately $67 billion, or less tax cuts at this time. to the pending matter, the Revenue than one percent of Gross Domestic In conclusion, Mr. President, despite Reconciliation Act of 1997. All Senators Product (GDP). Just five years ago, we my unequivocal opposition to this should be aware that, on the heels of were facing a budget deficit of $290 bil- pending reconciliation bill, I would approving a deficit-reduction plan to lion, or about 4.7 percent of GDP. This like to commend the members of the balance the budget, we are about to ap- considerable improvement in the fiscal majority and minority leadership, and prove subsequent legislation to weak- order of our nation did not occur by ac- the Budget and Finance Committees, en—and possibly undermine—that very cident. Rather, it can be traced di- who have been able to bridge the gap balanced-budget plan. I have not kept rectly to the passage in 1993 of the Om- between the White House and both par- secret my fervent opposition to this nibus Budget and Reconciliation Act ties in Congress to forge the budget foolish idea of cutting taxes while si- (OBRA–93) by the 103rd Congress and compromise that we have considered multaneously trying to balance the its subsequent signing by President this week. I know how difficult such budget. Doing so is simply so illogical Clinton. That legislation combined re- compromise can be to reach, and, more that a third-grade student, with just a sponsible spending cuts and revenue in- importantly, to sustain. Nevertheless, I pencil, paper, and a modest knowledge creases to begin the painful—but nec- would much prefer not to have seen of the fundamentals of mathematics, essary—process of eliminating the def- these tax cuts being debated at this would be sufficiently equipped to reach icit. There can be no doubt of the suc- time on the Senate floor. Such a debate the same conclusion that tax cuts and cess of OBRA–93 in bringing down the is akin to arguing with your mother on deficit reduction do not mix. I am con- deficit and stimulating economic whether or not you can eat dessert be- fident that such a student would growth. OBRA–93 achieved such posi- fore finishing your broccoli. We may choose, like this Senator chooses, not tive economic results not by cutting all want to eat the sweet and leave the to include such tax cuts in a plan to taxes, but rather by convincing finan- vegetable, but we should know better— balance the budget. cial markets that we were serious and our mothers would surely remind

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00049 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6718 CONGRESSIONAL RECORD — SENATE June 27, 1997 us so. I fear that the Senate will come But we had to craft both pieces of FINANCE—REVENUES—Continued to regret the action it takes on this legislation through compromise and legislation, though only the passage of consensus. If the American people un- Provision Comments/Violation time can be the final arbiter in this de- derstood everything we were up against Following provisions are from the Simplification section of S. 949 these last few weeks, they would be Sec. 1023 ...... Due date for furnishing information to partners of bate. large partnerships. Byrd rule (b)(1)(A): Produces no Mr. President, I yield the floor. amazed that we were able to do for change in outlays or revenues. Mr. LOTT. Mr. President, the vote them as much as we did. Sec. 1025 ...... Treatment of partnership items of individual retirement accounts. Byrd rule (b)(1)(A): Produces no change in we’re about to take will be one of the This is not the end of the story. We outlays or revenues. most important any of us will ever have one hurdle left, and that is the Sec. 1083 ...... Repeal of authority to disclose whether prospective juror has been audited. Byrd rule (b)(1)(A): Produces cast. highest of them all. no change in outlays or revenues. The decision before us is as impor- After passing this bill, we will go to Sec. 1084...... Clarification of statute of limitations. Byrd rule (b)(1)(A): Produces no change in outlays or reve- tant as our families and as large as the conference with the House. I will do all nues. American future. I can to make that conference quick Sec. 1109 ...... Adjustments for certain gifts made within three years and productive. of decedent’s death. Byrd rule (b)(1)(A): Produces no If this is not an historic moment, change in outlays or revenues. then it is as close to it as most of us Our hurdle—our challenge—will be to Sec. 1113 ...... Authority to waive requirement of United States trustee preserve the historic work of the Sen- for qualified domestic trusts. Byrd rule (b)(1)(A): will ever come. Produces no change in outlays or revenues. Several weeks ago, when we first ate and the House in the face of opposi- Sec. 1212 ...... Authority to cancel or credit export bonds without sub- reached the broad outlines of an agree- tion, and perhaps veto threats, from mission of records. Byrd rule (b)(1)(A): Produces no change in outlays or revenues. ment with the President, I called it a the administration. Sec. 1213 ...... Repeal of required maintenance of records on premises victory, not for a party or a person, but On behalf of our entire Republican of distilled spirits plant. Byrd rule (b)(1)(A): Pro- duces no change in outlays or revenues. for the American people. leadership, and all Senators who will Sec. 1215 ...... Repeal of requirement for wholesale dealers in liquor We can reaffirm that today. We lis- be our conferees, I want to give this to post sign. Byrd rule (b)(1)(A): Produces no pledge to the American people: change in outlays or revenues. tened to the American people. We knew Sec. 1217 ...... Use of additional ameliorating material in certain what they wanted us to do. We will go the extra mile to advance wines. Byrd rule (b)(1)(A): Produces no change in this legislation that is so vital to you. outlays or revenues. And somehow, by the grace of God Sec. 1220 ...... Authority to allow drawback on exported beer without and the endurance of PETE DOMENICI We will do our utmost to work out dis- submission of records. Byrd rule (b)(1)(A): Produces agreements with the President. no change in outlays or revenues. and BILL ROTH, we did it. Sec. 1231 ...... Authority for IRS to grant exemptions from excise tax We set out to lower the tax burden on But by the same token, we will not registration requirements. Byrd rule (b)(1)(A): Pro- agree to any settlement that denies duces no change in outlays or revenues. the American people. We did so. In this Sec. 1232 ...... Repeal of expired provisions. Byrd rule (b)(1)(A): Pro- bill, more than 75 percent of the tax your tax cuts or turns them into the duces no change in outlays or revenues. breaks go to people with incomes under kind of tax fiddling that does nothing Sec. 1244 ...... Repeal of expired provisions. Byrd rule (b)(1)(A): Pro- to advance opportunity and job cre- duces no change in outlays or revenues. $75,000. Sec. 1252 ...... Redetermination of interest pursuant to motion. Byrd We set out to make the Tax Code ation. rule (b)(1)(A): Produces no change in outlays or rev- So as we prepare the conference re- enues. family-friendly. We did so. After far Sec. 1305 ...... Elimination of paperwork burdens on plans. Byrd rule too many years of talking about a tax port on these two bills, we will listen (b)(1)(A): Produces no change in outlays or reve- nues. credit for children, we’re finally ap- in good faith to anyone who speaks in good faith. Sec. 1307...... New technologies in retirement plans. Byrd rule proving one. In addition, we’re making (b)(1)(A): Produces no change in outlays or reve- We will share credit, take blame, and nues. it easier for families to save for the let others have the spotlight. But we costs of education. are not going to yield on matters of Mr. LOTT. Mr. President, the next On top of that, we’re expanding the principle. vote will be final passage. It will be the availability of IRA’s to virtually all With that in mind, Mr. President, I last vote of the week before the Senate homemakers in the country. And we’re urge the passage of the Taxpayers Re- adjourns today. I will file cloture on easing the death tax on family farms lief Act as the Senate’s Independence the motion on the DOD authorization and businesses. Day salute to the taxpayers of Amer- bill. That cloture vote will occur on This bill rides in tandem with the ica. Tuesday, July 8, at 2:15. That will be Balanced Budget Act the Senate passed BYRD RULE LIST the next vote. Senators that have 2 days ago. amendments to submit are urged to do That marks a turning point in the Mr. DOMENICI. Mr. President, pursu- so by Monday, July 7. way Congress deals with the entitle- ant to section 313(b)(1)(C) of the Con- gressional Budget Act, I submit a list Once again, I want to thank all the ment programs that have driven our on behalf of the Committee on the Senators for their cooperation. I think country to the depths of indebtedness. this has been a historic week. I appre- Even more important, it fulfills our Budget of the extraneous material in S. ciate the leadership from the chairman commitment to strengthen and pre- 949, the Revenue Reconciliation Act of of the committee and the ranking serve Medicare, not only for today’s 1997, as reported. There being no objection, the list was member. Thank you all very much. beneficiaries but for those who will de- ordered to be printed in the RECORD, as Mr. ROTH. Third reading. pend on that program in the years follows: The PRESIDING OFFICER. The ahead. question is on the engrossment and Taken together, what the Senate and FINANCE—REVENUES third reading of the bill. House have done this week gives the The bill was ordered to be engrossed American people the assurance of Provision Comments/Violation for a third reading and was read the something they have not had in three Senate third time. decades: a long-term balanced budget. Sec. 702 ...... Establishment of Intercity Passenger Rail Fund. Byrd Mr. ROTH. I ask unanimous consent That, of course, is more than an end rule (b)(1)(A): Produces no change in outlays or rev- enues. that the Senate proceed to the House in itself. It is the surest way to touch Sec. 704 ...... Deposit general revenue portion of highway motor fuels companion bill, H.R. 2014, and all after off a dynamic economic expansion that taxes into highway trust fund. Byrd rule (b)(1)(A): Produces no change in outlays or revenues. the enacting clause be stricken, the will make the first years of the new Sec. 706 ...... Require study of feasibility of moving collection point text of the Senate amendment be in- century an opportunity decade. for distilled spirits excise tax. Byrd rule (b)(1)(A): Produces no change in outlays or revenues. serted, which includes amendment 449 What we have done this week, and Sec. 708 ...... Codify BATF regulations on wine labeling. Byrd rule which was inadvertently dropped, the what we do today, is more than an ex- (b)(1)(A): Produces no change in outlays or reve- nues. bill be advanced to third reading, and ercise in bookkeeping. It is a commit- Sec. 731 ...... Delay penalties for failure to make payments through the Senate proceed to passage of H.R. ment of the heart to an America where EFTPS until after 6/30/98. Byrd rule (b)(1)(A): Pro- duces no change in outlays or revenues. 2014, as amended. every willing worker can find a good Sec. 769 ...... Combined employment tax reporting five-year dem- The PRESIDING OFFICER. Without job, where industry and thrift are re- onstration project for Montana. Byrd rule (b)(1)(A): Produces no change in outlays or revenues. objection, it is so ordered. warded, and where every family can as- Sec. 772 ...... Safety net for marginal oil and gas production when Mr. ROTH. I ask for the yeas and pire to a better life. crude oil reference price is below $14. Byrd rule nays. (b)(1)(A): Produces no change in outlays or reve- And yet, this is not a perfect bill. I nues. The PRESIDING OFFICER. Is there a wish we could have reduced taxes more, Sec. 777 ...... Modification to eligibility criteria for designation of fu- sufficient second? ture enterprise zones in Alaska or Hawaii. Byrd rule just as I wanted to reduce spending (b)(1)(A): Produces no change in outlays or reve- There is a sufficient second. more in the Balanced Budget Act. nues. The yeas and nays were ordered.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00050 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6719 The PRESIDING OFFICER. The The PRESIDING OFFICER. Without Particularly, Mr. President, among question is, Shall the bill pass? objection, it is so ordered. our professional staff, I would like to The yeas and nays have been ordered. Mr. ROTH. Mr. President, I would thank: Lindy Paull, Frank Polk, Mark The clerk will call the roll. like to express my sincere gratitude to Prater, Rosemary Becchi, Doug Fisher, The legislative clerk called the roll. my colleagues and good friends who Brig Gulya, Sam Olyck, Tom Roesser, Mr. FORD. I announce that the Sen- have been instrumental to the success- Joan Woodward, Ashley Miller, Mark ator from Hawaii [Mr. INOUYE] and the ful culmination of this important budg- Patterson, Nick Giordano, Patricia Senator from South Carolina [Mr. HOL- et reconciliation process. I am grati- McClanahan, Maury Passman, Bill LINGS] are necessarily absent. fied by the results. I think we have in- Fant, David Podoff, and also Ken Kies I further announce that, if present deed made history. We have passed a and his capable staff at Joint Tax. and voting, the Senator from Hawaii reconciliation package that balances These men and women, along with [Mr. INOUYE] would vote ‘‘aye.’’ the budget, while offering American the leadership of the members on the I further announce that, if present families their first real tax cut in 16 Finance Committee, share in the tre- and voting, the Senator from South years. mendous success, a success for which I Carolina [Mr. HOLLINGS] would vote I am happy to say that we have done give them my most sincere thanks and ‘‘no.’’ it in a bipartisan way. It never could a success, Mr. President, that will bless The result was announced—yeas 80, have happened, in my humble judg- the lives of all Americans. nays 18, as follows: ment, without the good will, coopera- Mr. MOYNIHAN addressed the Chair. [Rollcall Vote No. 160 Leg.] tion, and intelligence of the many The PRESIDING OFFICER. The Sen- YEAS—80 Members who have contributed to this ator from New York is recognized. Abraham Domenici McCain important piece of legislation. Mr. MOYNIHAN. Mr. President, it is Akaka Dorgan McConnell In the process, Mr. President, we characteristic of our revered chairman Allard Enzi Mikulski have made significant progress in our that he would spend this precious mo- Ashcroft Feinstein Moseley-Braun ongoing efforts to preserve and Baucus Frist Moynihan ment at the end of a triumphant legis- Bennett Gorton Murkowski strengthen the Medicare Program, a lative process thanking others. It is Biden Graham Murray program of critical importance to our the part of him that brings us together Bingaman Grassley Nickles senior citizens, and to give State gov- and brought us together to an extraor- Bond Gregg Reid ernments greater voice and authority Boxer Hagel Roberts dinary 80 to 18 vote. I would presume to Breaux Hatch in the administration of Medicaid. We Rockefeller speak for every member of the com- Brownback Hutchinson Roth have increased the ability of families Bryan Hutchison mittee, and certainly for the Demo- Santorum and individuals to save their money, to Burns Inhofe cratic members who have been unani- Sessions Campbell Jeffords become more self-reliant, and to invest Shelby mous on both of these measures in Chafee Johnson in the future of America. We have committee, and on the floor today, in Cleland Kempthorne Smith (NH) passed significant proposals to help our Smith (OR) expressing our profound appreciation Coats Kerrey youth and their families with their Cochran Kohl Snowe to him, our profound admiration, and Collins Kyl Specter education. And we have saved who our conviction that we will now go on Conrad Landrieu Stevens knows how many family small busi- to a successful conference and write Coverdell Lautenberg Thomas nesses and farms from extinction Thompson some history in our Nation this year. Craig Leahy wrought by death taxes. D’Amato Lieberman Thurmond We shall have a balanced budget. We We can go home during this Inde- Daschle Lott Torricelli shall have a health care program for DeWine Lugar Warner pendent Day recess with our heads held adults and children. And not least, we Dodd Mack Wyden high. We have done what our constitu- have had in fact 77 votes in favor of a NAYS—18 ents sent us here to do. As I said, we have accomplished these important ob- successful and permanent Amtrak pro- Bumpers Glenn Kerry gram in this country, a matter of par- Byrd Gramm Levin jectives in a bipartisan spirit. Durbin Grams Reed Mr. President, the Senate’s success of ticular concern to him, but both attrib- Faircloth Harkin Robb the last few days would not have been utable to him. And I thank him. Feingold Helms Sarbanes Again, I thank the Chair, and I yield Ford Kennedy Wellstone possible without the leadership and ex- ample of my distinguished colleague the floor. NOT VOTING—2 (At the request of Mr. DASCHLE, the and close friend, Senator MOYNIHAN. He Hollings Inouye is a scholar, a statesman and—perhaps, following statement was ordered to be The bill (H.R. 2014), as amended, was most important—a gentleman and printed in the RECORD.) ∑ passed, as follows: trusted friend. Mr. HOLLINGS. Mr. President, I rise [H.R. 2014, as amended and passed, I appreciate the other Members of today in opposition of S. 949, the Rev- can be found at the end of the Senate the Senate Finance Committee. It was enue Reconciliation Act of 1997. I was proceedings for today.] interesting to watch the process as the necessarily absent and unable to vote Mr. MOYNIHAN. Mr. President, I cooperative spirit on that committee on the final passage of the bill, but I move to reconsider the vote. worked to refine and build rather than would like my statement to be re- Mr. ROTH. I move to lay that motion denigrate and destroy. The cream in- corded in the RECORD. on the table. deed rose to the top through our days, There has been a great deal of con- The motion to lay on the table was weeks, even months of hearings, con- gratulations about how this is the first agreed to. ferences, meetings, and debates. I am major tax cut since the Kemp-Roth tax Mr. LOTT addressed the Chair. proud of every member and, if time cuts in 1981. I would like to remind ev- The PRESIDING OFFICER. The ma- permitted, I would give specific exam- eryone of the consequences of that par- jority leader is recognized. ples of how each one of them rose to ticular measure. Since 1981, our deficits ORDER FOR MORNING BUSINESS the challenge that has resulted in the have exploded, growing to as high as Mr. LOTT. Mr. President, I ask unan- success we produced today. $403 billion. Our national debt has imous consent that following the wrap- Mr. President, I would like to thank, soared from under $1 trillion in 1980 to up of the chairman and ranking mem- again, the many professional staff $5.4 trillion this year. The interest ber, there be a period for the trans- members whose work and expertise costs on this debt have skyrocketed action of morning business with Sen- made this possible. No one appreciates during that period from $74.8 billion to ators permitted to speak therein for up these men and women more than those $360 billion, representing spending of $1 to 5 minutes each. I know there are of us who watch their tireless efforts billion a day. This money does not go some Senators here wishing to speak. I and depend on their support. Our grati- to purchase any new bridges, roads, don’t know if the Senators have any tude to them as individuals, and for airports, or any other public good. In- wrap-up that they need to do from the their work, is perhaps best dem- stead, it is wasted on servicing this Finance Committee. But once that is onstrated by the incredible trust we debt. These interest payments, in es- done, we can continue on to the 5- place in their judgment and by the way sence, represent a mammoth tax on the minute order for morning business. we depend on their advice and support. American people which will continue

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00051 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6720 CONGRESSIONAL RECORD — SENATE June 27, 1997 to rise until we can get our fiscal house eration. In fact, fewer than one-third of this plan, families can contribute up to in order. all family-owned businesses survive the $2,000 a year to a special savings ac- Since 1993, we have made substantial transition from the first generation to count and not have to pay taxes on the progress toward reducing our deficit. the second. account’s earnings if they use the Despite the opposition of every Repub- Our tax policy should produce the money for qualified educational ex- lican in the Senate, we passed a tough very opposite result, and I am gratified panses, such as room, board, and tui- deficit reduction bill which included that a strong, bipartisan majority of tion. Along similar lines, the Finance unpopular tax increases and spending the Senate Finance Committee recog- Committee approved a proposal that cuts. The results have been clear. Our nized this problem and supported ac- allows families who have created Indi- deficit has fallen for 5 years in a row, tion to put us on the right track. Spe- vidual Retirement Accounts [IRA’s] to unemployment is at a 24 year low, in- cifically, S. 949 establishes a $1 million withdraw funds for post-secondary and flation is minimal, interest rates are exemption from Federal estate taxes graduate education without penalty. down, 12.1 million new jobs have been for closely-held family businesses, Second, the Committee’s bill allows created, and business investment is at thereby making it easier for parents to annual dedications of up to $2,500 for a post-war high. Yet, instead of build- pass their business along to their chil- interest paid on student loans. This ing on this progress, we have chosen to dren. My estate tax relief bill, S. 482, will help to soften the financial burden abandon ship and engage in the polit- contained the very same provision, and on students like the young woman in ical temptation of tax cuts. I commend the Finance Committee for my State who recently graduated from Mr. President, our Nation is experi- including it in their legislation which college with $18,000 in debt and who re- encing a period of prosperity, partially we just passed. turned to her home town in rural because we were courageous enough to The Finance Committee’s proposal Maine where high-paying jobs are sim- make the right choice in 1993 and begin will help to make real the dreams of ply not available. to reduce our deficit. We should stay those Americans who work long hours Finally, the Committee adopted a on this course until we truly balance to build a business so they can turn it permanent extension of the section 127 our books. Instead, this year’s budget over to their children. It will help indi- program, which allows employees who deal engages in the same old trickery viduals like the potato bag manufac- receive up to $5,250 in employer-pro- of back loaded tax cuts, borrowed trust turer in northern Maine who would ex- vided tuition assistance to exclude this funds, and unrealistic economic as- pand his business and hire more new assistance from their taxable income. sumptions. Rather than doing what is employees were it not for the money he We live in times of rapid change when right for the American people, we have has to invest in estate planning and in- workers may often need new skills to chosen to do what is right to get us surance. And it will help the small remain employable, and the section 127 past the next election. I fear, however, businesswoman in Portland, ME, who program can be the key to making this that the results of this measure will be wishes to leave her restaurant to her possible. felt long after then. ∑ son and avoid the problem she faced Taken together, these proposals rep- f when her father died and the family resent a major step forward in our ef- had to sell 24 of their 25 restaurants to forts to help lower-income and middle- MORNING BUSINESS pay the estate tax bill. income families finance higher edu- The PRESIDING OFFICER. Under Mr. President, by preserving family- cation for themselves and their chil- the previous order, the Speaker will owned enterprises, we not only dren. These changes will benefit not now be in a period for morning busi- strengthen American businesses, we only our students but also our Nation, ness. also strengthen American families. for a better educated population will be The Senator from Maine. Mr. President, I also want to com- better able to compete in our global f mend the Finance Committee for in- economy. By making education more cluding several very important provi- affordable for all, we also reaffirm that THE TAXPAYER RELIEF ACT OF sions that will help lower- and middle- America is the country of opportunity, 1997 income families finance college edu- where success is there for all who are Ms. COLLINS. Mr. President, I rise cations for their children. Many of the willing to work for it. today to commend the members of the provisions are similar to those in my Mr. President, let me conclude my Senate Finance Committee, ably led by legislation, the College Access and Af- remarks with the observation that S. chairman ROTH and ranking member fordability Act of 1997. 949 is notable not only for what it pro- MOYNIHAN, for their willingness to For the last 30 years, the Federal vides but also for how it was produced. work in a bipartisan fashion to bring Government has helped make post-sec- Led by their Chair, the members of the meaningful and much-needed tax relief ondary education available to millions Taxation Committee put aside partisan to the American people. of high school students, thereby giving concerns and crafted a bill which can The Taxpayer Relief Act of 1997 is ex- them a chance to fulfill their potential command widespread support both in tremely important legislation. While it to the greatest extent possible. The Congress and in the country. Despite makes many significant changes, I primary vehicles for this invaluable the rhetoric of those bent on sowing want to focus my remarks on the pro- Federal assistance to lower-income and the seeds of division, the legislation visions that will provide long-overdue middle-income families have been the benefits all Americans, as reflected in estate tax relief for family-owned busi- Pell grant and student loan programs, the fact that a family of four earning nesses and farms and on those that will both of which I wholeheartedly sup- $30,000 will receive a 53 percent tax cut help lower- and moderate-income fami- port. under the plan. lies put their children through college. But our student aid programs have Mr. President, the people of my State The first bill I sponsored as a U.S. had the unintended consequence of want results and not rhetoric, coopera- Senator was targeted death tax relief punishing those families who struggle tion and not confrontation. The Fam- for family-owned businesses and farms. to save for their children’s education ily Tax Relief Act of 1997 shows what This was no accident, for I firmly be- and then become ineligible for Federal we can accomplish when we honor the lieve that small, family-owned enter- assistance because of their savings. To wishes of those who sent us here. prises hold the key to our economic fu- its credit, the Finance Committee rec- Mr. BUMPERS addressed the Chair. ture. It is these family businesses that ognized that with the greatly increased The PRESIDING OFFICER. The Sen- will create two-thirds of all new jobs cost of a college education, these fami- ator from Arkansas. for the people of the United States in lies also are deserving of help, and it f the 21st century. took several important steps in that Regrettably, our current tax code pe- direction. TAX CUTS FOR COLLEGE nalizes family-owned businesses by First, the bill that we just passed EDUCATION making it difficult, if not impossible in also establishes education investment Mr. BUMPERS. Mr. President, let me some cases, for families to pass the accounts to help families save for their say first of all that in the Senate in business down from generation to gen- children’s college education. Under 1981 there were only 11 votes cast

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00052 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6721 against the proposal to cut taxes and youngsters who cannot go to college ren in the U.S. Senate and the people increase defense spending to balance otherwise. of America to ask yourself this one the budget—11 Senators. President Mr. President, the greatness of this question: Do you think we are better Reagan’s popularity was unbelievable, country has occurred when Members of off spending this $135 billion on a tax and there was a herd instinct that the U.S. Senate and the House of Rep- cut which goes to me, upper-income swept across this body. It was abso- resentatives had strong convictions people, and $12 a year to the stiff out lutely unstoppable. And in 1994 when about what we need to do as a matter there making $15,000 a year—$12 a year we were going to balance the budget of social, educational, and cultural pol- for him? The guy making $15,000 a year the deficit was up to $200 billion. icy—the GI bill, for example. It takes a gets $12 a year out of this tax bill. I hate to say this. But, in my opin- giant leap of faith to believe that we The guy making over $200,000 a year ion, Mr. President, 18 people who voted can do this—educate every youngster gets $3,500 to $3,700. It is ironic; it does ‘‘no’’ today will be more than justly in the country with a college degree. not mean anything to either one of and aptly vindicated when the year We found that the average cost of an them. To the man making $15,000, $12 2002 rolls around and we will not have education in a State-supported univer- does not mean anything in his life; to a balanced budget or anything even sity is $7,000 a year. So we simply in- a man making $200,000, $3,000, or $3,500 close to it. creased the Pell grant to $7,000. The in- does not mean much either. That is I am chagrined and dismayed that come criteria would remain as it is what we are doing instead of meeting today we are looking at a $67 billion now. If you were wealthy or partially our obligation. Ask yourself which is deficit on October 1, and next year, by wealthy, you wouldn’t get the full more important, that tax cut or edu- our own admission and our own ac- $7,000. But if you had an income of cating the children of this country so tions, the deficit will go to $94 billion below a certain amount, you would get we can live in a civilized society. —almost $30 billion higher than it is in the $7,000. We left the two tax provi- I thank the Chair. 1997. To me that is shameful and unfor- sions that are in this bill that we just Mr. BURNS addressed the Chair. givable. passed intact. The PRESIDING OFFICER. The The American people have demanded Mr. President, I want you to look at Chair recognizes the Senator from a balanced budget as long as anybody this chart so that you can see what I Montana. can remember, and today we just am talking about and where we are forsook the opportunity to meet that headed. f Here are the percentages of people in nonnegotiable demand of the American INCOME AVERAGING people which they have laid on us for certain income categories. This is the years. highest level of income in the country Mr. BURNS. Mr. President, I will not Mr. President, I forsook offering an —86 percent of those people go to col- take long. There are some folks I would amendment that I felt very strongly lege. In the next quintile down here, 60 like to extend my appreciation to. In about this afternoon. I did it to accom- percent, a little less than 60 percent, in the Senate today, when we passed the modate our own majority leader who 1983 and today, almost 68 percent of income averaging for our farmers and had a plane to catch, and there were a those kids go to college. And you get ranchers in Montana, we fulfilled a lot of other Senators. I had no disillu- down here in the low-income, and look commitment that we made to those sions about whether my amendment what happens. It started up—down and farmers and ranchers when we passed would pass or not. But I wanted to de- up. And now it is down again. If you Freedom to Farm. We are in a transi- bate it for 1 minute, and I am perhaps look at the New York Times article of tion; subsidies are going away, and now better off taking 5 minutes now to say this past week, you will see that this we are providing a vehicle, a tool with to whoever may be watching and the figure is going to head down. which we can maybe ride out the good Members of this body, ask yourself this Mr. President, I am not going to take years and prepare for the bad years question. It goes right to the heart of up a lot of time to say something that without too much trouble. my amendment. everybody knows that we ought to be I express my appreciation to the Do you think the Nation is better off doing. But I do want to say this. Mr. chairman and the ranking member of providing a $135 billion tax cut, over 50 President, the high school graduates in the Finance Committee for their help, percent of which goes to the wealthiest this country in the past 20 years have also the efforts made by Senator ROB- 5 percent of the people in America? Do lost 18 percent more of their income. ERTS of Kansas and Senator BUMPERS you think we are better off doing that, When you hear people say the income of Arkansas, Senator CONRAD of North or do you think we would be better off gap in this country is widening, there Dakota and Senator BOND of Missouri providing a college education for the 5 it is. High school students lost 18 per- and Senator HAGEL of Nebraska and million youngsters whom the New cent in the last 20 years. Dropouts have my friend and colleague, Senator BAU- York Times says over the next few lost 25 percent. And, if it continues at CUS from Montana. years will be excluded from a college the present rate, by the year 2015 high Without help from those Senators on education because of skyrocketing school students will have lost 38 per- this issue, I am afraid we would not costs? cent of their income because they have been as successful as we were in I speak from experience. I spent 3 didn’t go to college. justifying and trying to pass income years in the Marine Corps in World War If you want to live in a civilized soci- averaging. It is very important. Who is II. I came home where there was a com- ety, it is this simple. If you want to it important to? It is important to the passionate, caring, understanding Gov- live in a civilized society, one that is young farmers and ranchers just start- ernment which provided the GI bill to relatively drug free and crime free, if ing. We know they will have good years my brother and me. I wouldn’t be you want to live in a society and in a and we know they will have bad years standing on the floor of the Senate technological age, we don’t have any right behind them due to the elements today as a U.S. Senator if it had not choice about it. This has to come. of Mother Nature, to prices of commod- been for that help from the U.S. Gov- It is one of those things that we need ities raised on our farms and ranches. ernment. Some people think the Gov- to debate and debate now, and we need This allows a way to hang on and ernment has no obligation to help any- to do it. We need to make sure that no spread that income out and survive in body. child in this country is denied a college agriculture. After all, we produce the What I am saying is if I had my first education anymore than today we best food, the most of it, the cheapest choice it would be to put the $135 bil- would deny somebody a high school of any country in the world. So this is lion in savings on the deficit, and bal- education. a winner for all of America, not just ance the budget by the year 2000, and So I forsook offering that amend- American agriculture. no later than 2001. But if we are not ment even though my staff and I had I thank you and I yield the floor. going to do that, if we are going to spent untold hours gathering statistics Mr. DODD addressed the Chair. take the $115 billion we cut out of and information. The PRESIDING OFFICER. The Medicare and spend it on something, I I want to conclude as I opened a mo- Chair recognizes the Senator from Con- say spend it on college education for ment ago. Once again, I ask my breth- necticut.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00053 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6722 CONGRESSIONAL RECORD — SENATE June 27, 1997 CHRISTOPHER F. PATTEN, On Monday, June 30, Governor Pat- on Earth has ever truly shared—our GOVERNOR OF HONG KONG ten and his wife, Lavender, and his American freedom and the remarkable Mr. DODD. Mr. President, I rise this daughters, Kate, Laura, and Alice, will form of government that keeps Ameri- afternoon to say a thank you on behalf depart Hong Kong. I am confident that cans free. of myself and I feel a thank you as well the people of that place will hold Chris Next Friday, on the Fourth of July, on behalf of my 99 colleagues to his Ex- Patten in their hearts for years and we in the United States will celebrate cellency, Christopher F. Patten, the years to come. As one who considers the declaration of our freedom and the outgoing Governor of Hong Kong. Gov- him a personal friend, I would like to announcement of our intent to form a ernor Patten has the particular dis- add my personal congratulations and new government, not bound by happen- tinction of being the last of 28 British thanks to him for all that he has en- stance of birth or caste, but one that Governors to preside over Hong Kong deavored to do, and I know that his gives each man an equal opportunity to rise above the circumstances of his own before this territory reverts back to many, many friends here in this body beginning and to make of his life what- the People’s Republic of China on July and the other and across this country, ever his ability and ambition would 1—in just a few days. and particularly in Hong Kong, will not Chris Patten, as those of us in this forget the challenges he has placed be- allow. The government that was pains- body have come to know him over the fore the Government of the People’s takingly crafted in the years following years, is a truly remarkable individual. Republic of China. this turning point in history combines He has been a superb administrator and (The remarks of Mr. DODD pertaining the best of many forms of government, an inspiration to the people who he has to the introduction of S. 983 and Senate while avoiding their excesses. I never cease to wonder at our great and last- sought to govern in Hong Kong. Joint Resolution 34 are located in to- During his 5 years there, Chris Pat- day’s RECORD under ‘‘Statements on In- ing fortune in having been blessed with ten has watched the economy flourish troduced Bills and Joint Resolutions.’’) a collection of Founding Fathers who under his stewardship. It grew by more Mr. DODD. Mr. President, I thank were able to blend so many differing than 30 percent in real terms over that the indulgence of my colleagues, Sen- viewpoints and draft a Constitution period—a truly impressive perform- ator BYRD of West Virginia, Senator that is so well thought out, and so fine- ance. He has presided over a capable GRAHAM of Florida, and Senator BAU- ly balanced, that it has survived over and honest civil service. Crime has fall- CUS of Montana, for their time here the last two centuries with remarkably en. The political situation has been this afternoon. I yield the floor. little change—remarkably little stable and further democratized. The PRESIDING OFFICER. The change. It demonstrates an ability to These are all important achieve- Chair recognizes the distinguished Sen- cooperate that has been in rather short ments, but, in my view, the most im- ator from West Virginia. supply around here in recent years. portant legacy of the Patten adminis- Mr. BYRD. Mr. President, I note two The drafting of the American Con- tration is that it leaves behind the other Senators on the floor who will be stitution was the work of many minds. seeds of democracy firmly planted in seeking recognition. May I ask, does ei- The Declaration of Independence, the minds and hearts of the people of ther of them have to catch a plane? though conceived by a committee of Hong Kong. Mr. BAUCUS. Yes. five, was penned by a single versatile, Thanks to Governor Patten and the Mr. BYRD. How soon? very remarkable man. The group people of Hong Kong, they were able to Mr. BAUCUS. Tomorrow. formed for this work was comprised of experience democracy firsthand by Mr. BYRD. I have to go somewhere notables including John Adams, Ben- electing members of their local legisla- tomorrow, too. I thought if the Senator jamin Franklin, Roger Sherman, ture, thereby making good on the Brit- wanted to catch a plane today, I would Thomas Jefferson, and Robert Living- ish commitment to put in place a sol- take my chair again. ston—whose namesake graces our Gov- idly based democratic administration. Mr. BAUCUS. Thank you. ernment today with his presence in the Sadly, Mr. President, the Chinese Mr. BYRD. Mr. President, I ask unan- other body, Representative and chair- have already made the decision to dis- imous consent that I may use as much man of the Committee on Appropria- mantle the elected legislature and to time as I may consume. I can assure tions in the House of Representatives, replace it with an appointed council, my colleagues it will not be long, but I BOB LIVINGSTON. These were brave men hand-picked by Beijing. That may do not want to be interrupted in the to undertake what was then an act of work for the moment. In time we will midst of this speech. treason against the British monarch, know whether the ‘‘provisional legisla- The PRESIDING OFFICER. Without King George III. They decided unani- ture’’ installed by Beijing is only a objection, it is so ordered. mously to select Thomas Jefferson for temporary setback to democracy or the f the delicate job of putting into words first step down a very dark, dark road, the message they wanted to send to CELEBRATING THE 4TH OF JULY indeed. I hope it is not the latter. George III, and to the world. And of all Hopefully, Beijing will come to ap- Mr. BYRD. Mr. President, last week I the powerful and lyrical speeches that preciate that it is virtually impossible was proud to celebrate West Virginia have ever been captured on the page, to totally destroy democratic aspira- Day, marking the 134th anniversary of surely the grace, courage, and idealism tions. As Governor Patten recently so the birth of my great State. Born in of the Declaration of Independence eloquently put it, ‘‘You can dismantle the midst of a terrible war, the moun- ranks high. Thomas Jefferson’s legacy institutions but you can’t dismantle tain State still bears witness to that to this Nation is a rich one, including benchmarks. People now know what a difficult four years of struggle, from the nucleus of our Library of Congress fair election is like, and they will sure- Harper’s Ferry to battle sites across formed from his own collection after ly know what an unfair election is like her hills and farmlands. But she also the destruction of the War of 1812, his if one takes place.’’ still stands fast, and holds onto the contributions to the Continental Con- Many political leaders leave office, traces of earlier history in her sturdy gress, and his service as President. But Mr. President, less than popular with log barns and cabins and the winding the soaring majesty of his words—be- those that they have governed, some rows of moss-covered stones bounding ginning with ‘‘When in the course of deservedly so and others unfairly so, fields and cemeteries. Crumbling now, human events * * *’’—would stand because they have had to make hard these long stone walls are losing their alone as a monument to the man. Even choices that only history will record battles to the honeysuckle vines and as he lay dying at his mountaintop kindly. the frosty upheavals of the centuries, home in Monticello in 1826, Jefferson Not in the case of Chris Patten, in but they remind us still of our fore- struggled to last until the fourth of my view. Although few have had to bears who settled this rugged and beau- July before succumbing to the call of make tougher decisions than he has, he tiful country and who bequeathed to us the angels. John Adams, who died that leaves Hong Kong enormously popular, a legacy both tangible and intangible. same day—what a coincidence, what a with 79 percent of the people of Hong For just as these early settlers left us coincidence—50 years after the Dec- Kong viewing him as having done a these stacked stones, they also left us laration of Independence was adopted, very good job, indeed. an even greater gift, a gift no one else observed with his last breath that the

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00054 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6723 young Nation was safe, because ‘‘Jef- on everyone, everyone who is a part of Mr. GRAHAM. I wish the same for ferson still lives.’’ He did not know the U.S. Senate, everyone who is part Senator BYRD and his family. that his friend had already died a few of the family of the Senate, we will (The remarks of Mr. GRAHAM per- hours earlier. come together again after we have taining to the introduction of S. 984 are The birth of our Nation, like the celebrated the invisible yet lasting leg- located in today’s RECORD under birth of my beloved State of West Vir- acy of the men who gave us the Fourth ‘‘Statements on Introduced Bills and ginia, was marked by conflict ignited of July. Henry Van Dyke captured this Joint Resolutions.’’) by the Declaration of Independence, deep seated pride and kinship we all Mr. GRAHAM. Thank you, Mr. Presi- and the fireworks that we will watch feel for our country, and never more so dent. next Friday serve as a vivid reminder than on this holiday, in his poem, Mr. BAUCUS addressed the Chair. of the price of our freedom. But many ‘‘America for Me:’’ The PRESIDING OFFICER. The of us will watch those fireworks amid ’Tis fine to see the Old World, and travel Chair recognizes the Senator from gatherings of friends and family, and up and down Montana. the sting of battle will be but a distant Among the famous palaces and cities of re- f memory. In West Virginia, the Fourth nown, of July is marked in traditional ways, To admire the crumbly castles and the TOBACCO PENALTY statues of the kings,— DEDUCTIBILITY with parades and large family re- But now I think I’ve had enough of anti- unions, gatherings of kin from around quated things. Mr. BAUCUS. Mr. President, earlier today, Senator HARKIN introduced leg- the State and around the country. In So it’s home again, and home again, Amer- cities like Weirton and Ripley, high ica for me! islation dealing with the recent agree- school bands and volunteer firemen My heart is turning home again, and there ment between States and the U.S. to- will step out smartly behind banners I long to be, bacco industry. Senator HARKIN’s pro- carried by majorettes in sequins that In the land of youth and freedom beyond vision says simply that the payments glint in the bright afternoon Sun. the ocean bars, from tobacco companies to States Where the air is full of sunlight and the should not be tax deductible. Local politicians and beauty queens flag is full of stars. will decorate the open tops of mirror- I applaud this effort, and I want to Oh, London is a man’s town, there’s power polished convertibles. And families will in the air; speak for a few moments on the subject cheer as the Stars and Stripes goes And Paris is a woman’s town, with flowers and how we might proceed from here. past, carried proudly by an Eagle in her hair; Last week, a number of State attor- Scout. The very sight of Old Glory stirs And it’s sweet to dream in Venice, and it’s neys general reached an agreement the pride in even the most jaded or un- great to study Rome with several American tobacco compa- patriotic among us, when it is sur- But when it comes to living there is just no nies. The agreement will compensate rounded by such homespun and heart- place like home. the States for their Medicaid spending felt pageantry. I like the German fir-woods, in green bat- on people who suffer from smoking-re- After the parades, long tables will be talions drilled; lated illnesses, like lung cancer and laid under the old trees shading the I like the gardens of Versailles with flash- emphysema, with $368 billion in pay- ing fountains filled; yard—it may be a churchyard; There But, oh, to take your hand, my dear, and ments over the next 30 years. It is also may be a cemetery nearby. Many hands ramble for a day supposed to include measures to pro- will share in the labor of cooking, and In friendly West Virginia hills where Na- tect the public health and provide to- the fragrance of meat grilling will ture has her way! bacco companies with protections blend with the sweet aroma of home- I know that Europe’s wonderful, yet some- against future losses. made pies and cakes. Children with wa- thing seems to lack: Congress must soon be asked to pass termelon juice dripping down their The Past is too much with her, and the a law implementing this agreement. people looking back. chins will run past grandparents in But the glory of the Present is to make the Because the agreement is very large lawn chairs, waving their sparklers at Future free, and very ambitious, we will need a lot the darkening sky as the dogs bark and We love our land for what she is and what of time and study and consultation be- give chase. When finally the fireflies she is to be. fore we can reach a final judgment. But give way to the stars, fathers will set Oh, it’s home again, and home again, let me start with a basic principle. up the roman candles, fountains, and America for me! I think we all would agree that a fair noisemakers in a spectacular reprise of I want a ship that’s westward bound to negotiated agreement is much better plough the rolling sea, than litigation. But the key word is the ‘‘rocket’s red glare, the bombs To the blessed Land of Room Enough be- bursting in air,’’ penned by Francis yond the ocean bars, ‘‘fair.’’ The agreement must be fair to Scott Key as he witnessed the battle Where the air is full of sunlight and the States as they pay Medicaid expenses, over Fort McHenry. flag is full of stars. fair to the Federal Government as it And after the glories of the Fourth of Mr. President, I yield the floor. pays for Medicaid and Medicare, fair to July, after the sleepy children are put Mr. GRAHAM addressed the Chair. kids, fair to the public, and fair to the to bed and the dishes are washed, the The PRESIDING OFFICER. The taxpayers. gathered kinfolk will scatter like the Chair recognizes the Senator from Initially, my reaction to the first fallen rocks of the old stone wall, back Florida. point is that we should give the attor- to their homes, to be gathered again Mr. GRAHAM. Mr. President, it is in- neys general a lot of deference on fair- for next year’s reunion. The strength of timidating to speak after such poetic ness to States. After all, they nego- their families goes with them, and the eloquence. One of the joys of serving in tiated the agreement. With respect to love and pride they have in their union the U.S. Senate is to be part of a per- the Federal contributions to Medicare and their country will be renewed. manent class with Senator BYRD. Some and Medicaid, though, I am concerned There is no better Nation on Earth, no students have left for their homes and that the agreement may not be fair. On Nation more blessed, than this one. So, Fourth of July activities and some of public health, it seems they have come for this happy Fourth, I wish my fellow us were able to share in his just con- to some very good provisions on adver- Senators Godspeed as they go to their cluded statements on behalf of his won- tising, but perhaps weaker provisions many homes throughout the several derful State. I thank the Senator. on regulation of nicotine. States of the Union. I wish them all a Mr. BYRD. Mr. President, I thank my All this will take some more study. safe journey in their weekend travels. I honorable friend, the senior Senator But I see one thing right away which also wish God’s blessings to all Ameri- from Florida, for his overly gracious seems to me grossly unfair to tax- cans traveling or residing abroad, who and very charitable and kind remarks, payers. That is, under the terms of this will gather at U.S. Embassies to cele- and I hope that he and his lovely wife agreement, tobacco companies will ap- brate with their fellow Americans on will have a joyous Fourth of July and parently be able to deduct their com- the Fourth of July in reunions of a safe journey to the great State of pensation payment from their tax bill strangers that are still, intangibly, our Florida and back to Washington when as ordinary and necessary business ex- kin as citizens. So with God’s blessings the holiday week is done. penses.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00055 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6724 CONGRESSIONAL RECORD — SENATE June 27, 1997 Thus, the tobacco companies could problems under the act. But I did not the Advisory Committee on the deduct $368 billion from their taxable push for the amendment in committee Records of Congress. income and reduce their tax payments because we were not quite ready for the f by about $123 billion, assuming we provisions of the amendment and did ENCRYPTION POLICY REFORM maintain a corporate tax rate of about not have an appropriate way to pay for 33 percent during the course of this it which is called for under the Rec- Mr. LOTT. Mr. President, I rise today agreement. In effect, this would reduce onciliation Act. to thank the junior Senator from Mon- the tobacco companies’ payment by Senator KEMPTHORNE has introduced tana for his leadership on the impor- $123 billion and force the taxpayers to a statement today basically calling tant issue. Senator BURNS has led a pick it up instead. That is a full third this matter to the attention of the full valiant effort to address an area that I of the compensation payment to Senate, and most particularly to the believe is in great need of reform. He States. attention of the conferees. has championed the cause of allowing I believe that is wrong. I believe it is I say to Senator KEMPTHORNE and citizens to protect their information unfair. The basis of this whole agree- others that are interested that I will through readily available strong infor- ment is the idea that tobacco compa- work diligently, in cooperation with mation security technology. In the nies bear some responsibility for the the Senator from Idaho, to see if we 104th Congress, he introduced legisla- illnesses caused by tobacco and nico- can find a way to get that provision tion that set the stage for our reform tine and should help pick up the tab. passed. efforts in this Congress. Again, last I agree with that. I also feel strongly Essentially, Mr. President, we will week, Senator BURNS offered a com- that ordinary taxpayers are not re- very soon have a bipartisan Endan- promise version of his original bill be- sponsible for the illnesses caused by to- gered Species Act reauthorization re- fore the Commerce Committee, but un- bacco, and they should not have to put ported out of the Environment and fortunately this measure did not pass. up $123 billion to pay for the treat- Public Works Committee. I think Sen- I hope that now we can go through a ment. ators will be happy in the main with process to bring all parties together, Is there a solution to the problem? the provisions of this agreement. I industry and Government, to try to re- Yes, there probably is. We should look compliment, again, Senator KEMP- lieve some of the problems created by into the issue, and I believe that the THORNE, Senator REID, and others who current law. We did not accomplish ev- Senate Finance Committee should hold are working, on a very bipartisan basis, erything that I wanted in Committee, hearings on the tax implications of this to reach this result. but I am confident that there is still settlement. Again, I thank my colleagues for time to improve this legislation. I want But already it seems clear that these their interest in the tax incentive por- to congratulate Senator BURNS and payments are not necessary business tion of it because I think that is an im- others on the committee like Senator expenses. They are, rather, belated portant, integral part of this solution. ASHCROFT and Senator DORGAN who compensation for the health effects of f have taken the time to understand the tobacco. I do not think they should be technology and to attempt to effec- tax deductible. I will explore every COMPLIMENTING SENATOR ROTH tively guide us through these difficult means, including legislation if nec- Mr. BAUCUS. Mr. President, I very issues. essary, to make sure this agreement is much thank again publicly my chair- Mr. President, the demand for strong fair to taxpayers. man of the committee, Senator ROTH, information security will not abate. In- f who has heard many, many com- dividuals, industry, and governments pliments on his leadership of the com- need the best information security REFORM OF THE ENDANGERED mittee. I have complimented him many technology to protect their informa- SPECIES ACT AND CONSERVA- times already. Other Senators have tion. The Administration’s policy and TION EASEMENTS complimented him many, many times. the McCain-Kerrey bill allow export of Mr. BAUCUS. Mr. President, on an- But one cannot compliment him too 56-bit encryption, with key recovery other matter, I wish to inform the Sen- often because he did a terrific job in requirements. How secure is 56-bit ate that we in the Environment and coming up with a bipartisan bill, as we encryption? That question was an- Public Works Committee are working know, that passed the Senate not too swered the day before the Senate Com- very diligently to come up with a good long ago by a vote of 80 to 18—quite an merce Committee acted. Responding to solid reform of the Endangered Species accomplishment. a challenge, a secret message encoded Act. Mr. ROTH. If the distinguished Sen- with 56-bit encryption was decoded in a In this respect, I say that Senator ator from Montana would just yield for brute force supercomputing effort KEMPTHORNE, the chairman of the rel- a comment. You do not have to stop known as the ‘‘Deschall Effort.’’ The evant subcommittee, is working very complimenting. As far as I am con- message that was decoded said ‘‘Strong hard with Senator REID, the ranking cerned, I could sit here all day and lis- cryptography makes the world a safer member of the relevant subcommittee, ten to it. place.’’ along with myself and Senator CHAFEE Mr. BAUCUS. It may be deserved. Now that 56-bit encryption has been to reform the current Endangered Spe- Mr. ROTH. You are very kind. I must cracked by individuals working to- cies Act, including many provisions, say, I think we have all had a great ex- gether over the Internet, information such as involving the States much perience of working together. I feel protected by that technology is vulner- more deeply than they are now, mak- very strongly that this spirit of bipar- able. The need to allow stronger secu- ing sure there is peer review by sci- tisanship should continue. I know the rity to protect information is more entific communities, and a host of Senator from Montana is of the same acute than ever. other changes. school as I am. Mr. BURNS. Mr. President, I appre- But one change I would like to men- Mr. BAUCUS. Absolutely. Abso- ciate the comments of the majority tion at the moment is an idea in the lutely. leader. I too was opposed to the legisla- bill introduced by the Senator from Mr. ROTH. So have a good recess. tion approved by the committee last Idaho which very simply states that Mr. BAUCUS. You too, Mr. Chair- week, but know that we still have the conservation easements that protect man. opportunity to pass a meaningful bill habitat for endangered species should f that will allow American industry to be tax deductible. compete with the rest of the world in I raised this issue in the Finance APPOINTMENT BY THE the global information marketplace. I Committee markup a week ago ex- SECRETARY OF THE SENATE believe that we can pass a bill that will plaining to members of the committee The PRESIDING OFFICER. The not compromise our national security that this was a new idea, a good idea Chair announces, on behalf of the Sec- or law enforcement interests. As I sat which would give landowners incen- retary of the Senate, pursuant to Pub- through the markup last week, it oc- tives so that they themselves can pro- lic Law 101–509, his appointment of curred to me that we had allowed the tect their own land in a way to avoid James F. Blumstein, of Tennessee, to issue of encryption to be framed as the

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00056 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6725 issue of child pornography or gambling. this area. In fact, it may be a perfect Mr. President, it appears to me that I want to be sure that all parties un- bill from their standpoint. It allows at the most fundamental level, this de- derstand that the reform of encryption them to begin the process of domestic bate is about the relationship of our security standards is not related to control while actually freezing exports citizens to our Government. We all these issues. to a weak enough level of encryption must take steps to insure that the I have often said that encryption is technology that was actually decoded rights of our citizens are not violated. simply like putting a stamp on an en- by amateurs the very day before. And Our citizens should be able to commu- velope rather than sending a postcard it is very unclear to me exactly where nicate privately, without the Govern- because you don’t want others to read the McCain-Kerrey reaches a com- ment listening in—that is one of our your mail. Encryption is simply about promise position. most basic rights. people protecting their private infor- The Burns’ bill however, merely al- We have to be careful to ensure our mation, about companies and govern- lows that we would allow export of 56- law enforcement can have just the nec- ments protecting their information, bit encryption immediately, but we essary amount of access and then only from medical records to tax returns to would establish a process for under- in a manner consistent with our Con- intellectual property from unauthor- standing the level of encryption that is stitution. ized access. Hackers, espionage agents, generally available throughout the I am persuaded that a number of the and those just wanting to cause mis- world. That review process would in- new provisions in the McCain-Kerrey chief must be restrained from access to clude panels and advisory boards con- bill are not necessary. private information over the Internet. sisting of government and industry I believe that many of the provisions When used correctly, encryption can representatives equipped to determine will not even succeed at achieving the enable citizens in remote locations to the security strength of particular end they seek. For example, a false have access to the same information, software that is available in the world choice has been offered indicating that the same technology, the same quality market. Our belief was that it was in if the U.S. continues to enforce the ex- of health care, that citizens of our larg- the national interest for American port policy on encryption that is cur- est cities have. Perhaps most impor- software companies to maintain lead- rently in place, 40 bit and with special tantly, it is about ensuring that Amer- ership in this area. The very notion permission up to 56-bit, then law en- ican companies have the tools they that we would let foreign companies forcement could apprehend terrorists, need to continue to develop and pro- get a head start on new technology stop illegal gamblers and arrest por- vide the leading technology in the while forcing American companies to nographers. However, this argument global marketplace. Without this lead- come to a government entity to plead assumes that these criminals cannot ership, our national security and sov- for the right to catch up was troubling find stronger encryption elsewhere ereignty will surely be threatened. enough to both Senator BURNS and my- than in the United States. As has been Mr. DORGAN. Mr President, I would self. But, we agreed to this compromise shown several times, this assumption like to make a few comments to asso- because we thought it represented the is false. Robust encryption is available. ciate myself with the comments of the appropriate middle ground. majority leader and the Senator from As the majority leader reminded us, Germany, Japan, and the United King- Montana. These two gentlemen have we did not accomplish what many of us dom all have companies, such as Sie- demonstrated great leadership on this had hoped that we would while in Com- mens, Nippon and Brokat, that have issue, and I especially admire their mittee, but we will continue to work developed and promote 128 bit dedication to educate our colleagues within the process to improve the leg- encryption. Last week even the sup- about this important issue. I believe islation. I remain committed to porters of the administration’s ap- that at the bottom line, if we allow encryption reform and will do every- proach, as expressed in the current leg- this critical technology to be stifled in thing possible to try to educate my col- islation, admitted that criminals who the United States I believe our na- leagues about this issue. want the robust encryption can find ac- tional interests will be severely under- Mr. ASHCROFT. Mr. President, I cess and use strong encryption in their mined. We must do our best to allow would like to add my comments on this current dealings. This issue is a red U.S. companies to compete in the important issue. For over 2 years, I herring. world marketplace, and do so without have participated in Commerce Com- Moreover, the administration an- in any way undercutting our national mittee hearings to learn more about on nounced Wednesday that they will security interests. encryption and the technology issues allow the export of 128-bit encryption I believe that the bill that was re- that it encompasses. Last week, I voted for bank transaction use involving ported last week out of the Commerce for Senator BURNS’ substitute and was bank software in an apparent admis- Committee does not achieve those ob- disappointed when it was not approved sion of the vulnerability of the 56-bit jectives. In fact, I fear that bill may be by the committee. strength. Also, the administration has nothing more than an attempt to en- I am concerned about the tone of the continued to tell us during the hear- sure that no bill passes in Congress discussion at last week’s markup. It ings on encryption and in private meet- this year. This would be a victory for appeared to me that many on the com- ings with the FBI and NSA, that 128-bit the administration, which has rigor- mittee are seeking ways to outlaw the use outside the United States would ously resisted changes to their out- Internet. We are all troubled by any end in terrible consequences, and now dated and obsolete policies. I must say type of child pornography or gambling 128-bit use outside the U.S. is being ad- that I try to support the administra- on the Internet. These are not areas vocated. We should remember that the tion on many issues, but on this issue, where any member of Congress, any Burns compromise only wanted to ex- I have found that their arguments and software or hardware vendor, or any port 128-bit with key recovery for policies simply do not withstand scru- member of the general public I know, trusted parties. The administration tiny. argues for anything less than the now advocates 128-bit length And, Mr. President, I was an original strictest legal provisions. These mat- encryption without any key recovery sponsor of the Burns bill and I worked ters are distasteful and wrong, but device, a position that goes beyond the very hard with the Senator to help even if we eliminated the Internet, we Burn’s compromise, which they op- shape the consensus position that was would not eliminate these offensive posed. My point, Mr. President is that rejected by the committee. I would like concerns. this debate must change. We cannot to take a few moments to set the As I said during the markup, we all continue to focus on the key length record straight about the true dif- know that cameras are used in child since these standards become obsolete ferences between the McCain-Kerrey pornography, but we don’t talk of out- on a daily basis. We need to focus on bill and the Burns’ approach. lawing photography. And, we also allowing trustworthy parties to use ro- The bill that passed the committee know that rental vehicles are often bust encryption, not necessarily to sell certainly represents a victory for those used in terrorist activities, but we as encryption but to use in their trans- within the administration opposed to don’t make it illegal to rent a car or actions and in the development of soft- any relaxation of export controls in truck. ware and hardware.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00057 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6726 CONGRESSIONAL RECORD — SENATE June 27, 1997 No nationwide key recovery system, $5,338,210,524,473.68. (Five trillion, three Our copyright industries are still or a new licensing requirement for cer- hundred thirty-eight billion, two hun- threatened. tificate authorities should be brought dred ten million, five hundred twenty- In 1994, copyright-related industries to the floor without thorough examina- four thousand, four hundred seventy- contributed more than $385 billion to tion, analysis and understanding. We three dollars and sixty-eight cents) the American economy, or more than 5 must further study the impact of these One year ago, June 26, 1996, the Fed- percent of the total gross domestic provisions well before this bill is eral debt, stood at $5,118,104,000,000. product. This represents more than $50 brought to the Senate floor. (Five trillion, one hundred eighteen billion in foreign sales, which exceeds Mr. LOTT. Mr. President, I too would billion, one hundred four million) every other leading industry sector ex- like to work with my colleagues to im- Five years ago, June 26, 1992, the Fed- cept automotive and agriculture in prove the McCain-Kerrey bill before it eral debt, stood at $3,946,126,000,000. contributions to a favorable trade bal- is brought to the floor. I would like to (Three trillion, nine hundred forty-six ance. From 1977 to 1994, these same in- ask my good friend from Missouri to billion, one hundred twenty-six mil- dustries grew at a rate that was twice pay special attention to this bill while lion) the rate of growth of the national econ- it is under consideration by the Judici- Ten years ago, June 26, 1987, the Fed- omy, and the rate of job growth in ary Committee. I know that I can eral debt, stood at $2,292,475,000,000. these industries since 1987 has outpaced count on him to work hard to improve (Two trillion, two hundred ninety-two that of the overall economy by more this important legislation. billion, four hundred seventy-five mil- than 100 percent. Mr. ASHCROFT. Mr President: I lion) Yet these same industries lost an es- want to indicate my willingness to con- Twenty-five years ago, June 25, 1972, timated $18 to $22 billion to foreign pi- tinue to work on this issue. As the ma- the Federal debt, stood at racy in 1995. The film industry alone jority leader well knows, I am privi- $425,367,000,000 (Four hundred twenty- estimates that its losses due to coun- leged to serve on the Senate Judiciary five billion, three hundred sixty-seven terfeiting were in excess of $2.3 billion Committee where we will address this million) which reflects a debt increase for that year, even though full-length issue after the July recess. I pledge to of nearly $5 trillion—$4,912,843,524,473.68 motion pictures are not yet available work with members on that Committee (Four trillion, nine hundred twelve bil- on the Internet. The recording industry and with other interested Senators and lion, eight hundred forty-three million, estimates its annual piracy losses in the leader to try to move a bill in that five hundred twenty-four thousand, excess of $1.2 billion, with seizures of committee that will capture the es- four hundred seventy-three dollars and bootleg CDS up some 1,300 percent in sence of Burns substitute. sixty-eight cents) during the past 25 1995. These figures promise to grow ex- Mr. LOTT. It remains my hope that years. ponentially as technology provides for we can work with Chairman MCCAIN f quicker, more perfect digital reproduc- and other members of the Committee WHERE ARE THE WIPO TREATIES tion, which is exactly why timely rati- to produce a bill that more of us can fication of the WIPO treaties is so im- support. We need to recognize that Mr. HATCH. Mr. President, for some portant.. American industry will have increased time now the Judiciary Committee has I urge the administration to com- difficulty of competing in the inter- been working on issues dealing with plete its work and to send the treaties national marketplace unless we pro- copyright protection on the Internet to the Senate. I would like to get the vide some real reform. It is as if we and the copyright rights of performers treaties ratified and implementation erected a 30-foot wall between the and sound recordings. The Digital Per- legislation passed during this session of United States and the rest of the formance Right in Sound Recordings Congress. That goal may already be world. The problem is that in today Act that I introduced was passed in unachievable because of administra- marketplace, American industry only 1995, and my National Information In- tion delay. I hope not. I’ll try my best. has a 10-foot ladder while their foreign frastructure Copyright Protection Act competition has a 35-foot ladder. For- was the subject of two hearings in the f last Congress. The NII Copyright Pro- eign firms are able to climb the wall MESSAGES FROM THE PRESIDENT while our American industry faces an tection Act was superseded by the Clin- insurmountable obstacle. This is both ton administration’s effort to deal with Messages from the President of the short-sighted and wrong. many of the same issues in the context United States were communicated to If we follow our current path, we will of two new treaties, the World Intellec- the Senate by Mr. Thomas, one of his rue the day when we allowed our poli- tual Property Organization [WIPO] secretaries. cies drive world leadership of the im- Copyright Treaty and the WIPO Per- EXECUTIVE MESSAGES REFERRED portant information security business formances and Phonograms Treaty. As in executive session the Presiding to shift to Germany, Russia, Japan or These treaties were concluded suc- Officer laid before the Senate messages China. I fully intend to work toward a cessfully in Geneva in December 1996. from the President of the United legislative solution that will help solve Since then, I have been eagerly await- States submitting sundry nominations the problem while protecting American ing the administration’s draft of imple- which were referred to the appropriate security interests. We need to create mentation legislation. To date, I have committees. the mechanisms that will allow Amer- not received such legislation, and the (The nominations received today are ican companies to have the same sized Foreign Relations Committee has not printed at the end of the Senate pro- ladders that the rest of the world can received the treaties. I know that the ceedings.) use. administration shares the respect that f Mr. President, we all appreciate the I have for copyright, and I commend legitimate law enforcement and na- Bruce Lehman, the Commissioner of EXECUTIVE AND OTHER tional security issues involved in this Patents and Trademarks, for the splen- COMMUNICATIONS debate. Our national security and law did work that he did on negotiating the The following communications were enforcement agencies need to work treaties, but I am concerned that 6 laid before the Senate, together with with industry to ensure that our inter- months have passed without draft leg- accompanying papers, reports, and doc- ests are protected. I remain convinced islation for the committee to work on. uments, which were referred as indi- that we can do this in a way that in- Both WIPO treaties were completed cated: sures that our national security and in record time, because there was a sovereignty remains protected. sense of urgency about the vulner- EC–2382. A communication from the Gen- eral Counsel, Office of the Secretary, Depart- f ability of U.S. copyrighted works to massive infringement by means of ment of Transportation, transmitting, pur- THE VERY BAD DEBT BOXSCORE suant to law, thirteen rules relative to the Internet access and about insufficient establishment of class E airspace (RIN2120– Mr. HELMS. Mr. President, at the international copyright protection for AA66), received on June 26, 1997; to the Com- close of business yesterday, Thursday, sound recordings. Where is this sense of mittee on Commerce, Science, and Transpor- June 26, 1997, the Federal debt, stood at urgency now? Nothing has changed. tation.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00058 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6727 EC–2383. A communication from the Gen- to the Committee on Environment and Pub- for a portion of the expenses of providing de- eral Counsel, Office of the Secretary, Depart- lic Works. pendent care services to employees, and for ment of Transportation, transmitting, pur- POM–155. A resolution adopted by the other purposes; to the Committee on Fi- suant to law, a report of twenty-two rules in- Township Council of Ocean, Monmouth nance. cluding a rule relative to safety and security County, New Jersey relative to the Mud S. 979. A bill to provide a tax credit to fam- regulations (RIN2115–AA97), received on June Dump Site; to the Committee on Environ- ilies with elderly family members living in 26, 1997; to the Committee on Commerce, ment and Public Works. the family home; to the Committee on Fi- Science, and Transportation. POM–156. A resolution adopted by the Bor- nance. EC–2384. A communication from the Direc- ough Council of Avalon, Cape May County, By Mr. DURBIN (for himself, Mr. tor, Office of Regulatory Management and New Jersey relative to the Mud Dump Site; KERRY, Mr. FEINGOLD, Mrs. FEIN- Information, Environmental Protection to the Committee on Environment and Pub- STEIN, and Mr. WELLSTONE): Agency, transmitting, pursuant to law, a re- lic Works. S. 980. A bill to require the Secretary of port of four rules including a rule entitled POM–157. A resolution adopted by the Gov- the Army to close the United States Army ‘‘Acid Rain Program’’ received on June 26, erning Body of the Town of Hammonton, School of the Americas; to the Committee on 1997; to the Committee on Environment and New Jersey relative to the Mud Dump Site; Armed Services. Public Works. to the Committee on Environment and Pub- By Mr. LEVIN (for himself, Mr. THOMP- EC–2385. A communication from the Chief lic Works. SON, Mr. GLENN, Mr. ABRAHAM, Mr. of the Regulations Unit, Internal Revenue POM–158. A resolution adopted by the ROBB, Mr. ROTH, Mr. ROCKEFELLER, Service, Department of the Treasury, trans- Township Committee of Neptune, New Jer- and Mr. STEVENS): mitting, pursuant to law, the report of No- sey relative to the Mud Dump Site; to the S. 981. A bill to provide for analysis of tice 97–40 received on June 26, 1997; to the Committee on Environment and Public major rules; to the Committee on Govern- Committee on Finance. Works. mental Affairs. EC–2386. A communication from the Assist- POM–159. A resolution adopted by the Gov- By Mr. MCCONNELL (for himself and ant General Counsel for Regulations, Depart- erning Body of the City of Margate City, Mr. BENNETT): ment of Education, transmitting, pursuant New Jersey relative to the Mud Dump Site; S. 982. A bill to provide for the protection to law, the report of a rule relative to ‘‘The to the Committee on Environment and Pub- of the flag of the United States and free William D. Ford Federal Direct Loan Pro- lic Works. speech, and for other purposes; to the Com- gram’’ (RIN1840–AC43) received on June 26, POM–160. A resolution adopted by the mittee on the Judiciary. 1997; to the Committee on Labor and Human Commissioners of Osborne County, Kansas By Mr. DODD (for himself and Mr. Resources. relative to the English language; to the Com- BIDEN): EC–2387. A communication from the Assist- mittee on Governmental Affairs. S. 983. A bill to prohibit the sale or other ant General Counsel for Regulations, Depart- POM–161. A resolution adopted by City transfer of highly advanced weapons to any ment of Education, transmitting, pursuant Commissioners of Boyne City, Charlevoix country in Latin America; to the Committee to law, the report of a rule relative to the County, Michigan relative to the English on Foreign Relations. notice of final funding priorities for fiscal language; to the Committee on Govern- By Mr. GRAHAM (for himself, Mr. years 1997–1998; to the Committee on Labor mental Affairs. DEWINE, Mr. MACK, Mr. MCCAIN, and and Human Resources. POM–162. A resolution adopted by Board of Ms. MOSELEY-BRAUN) (by request): EC–2388. A communication from the Assist- Commissioners of Lapeer County, Michigan S. 984. A bill to promote the growth of free ant General Counsel for Regulations, Depart- relative to the English language; to the Com- enterprise and economic opportunity in the ment of Education, transmitting, pursuant mittee on Governmental Affairs. Caribbean Basin region, increase trade and to law, the report of a rule relative to the f investment between the Caribbean Basin re- Impact Aid Program (RIN1810–AA84) received gion and the United States, and encourage on June 26, 1997; to the Committee on Labor REPORTS OF COMMITTEES the adoption by Caribbean Basin countries of and Human Resources. The following reports of committees policies necessary for participation in the were submitted: free trade area of the Americas; to the Com- f mittee on Finance. By Mr. D’AMATO, from the Committee on PETITIONS AND MEMORIALS By Mr. TORRICELLI (for himself, Mr. Banking, Housing, and Urban Affairs, with LAUTENBERG, and Mr. HOLLINGS): The following petitions and memo- amendments: S. 985. A bill to designate the post office lo- rials were laid before the Senate and S. 621. A bill to repeal the Public Utility cated at 194 Ward Street in Paterson, New Holding Company Act of 1935, to enact the Jersey, as the ‘‘Larry Coby Post Office’’; to were referred or ordered to lie on the Public Utility Holding Company Act of 1997, table as indicated: the Committee on Governmental Affairs. and for other purposes (Rept. No. 105–41). By Mr. SHELBY (for himself, Mr. SES- POM–147. A resolution adopted by Regional f SIONS, Mr. COVERDELL, Mr. MACK, Mr. School Board relative to Federal funding CLELAND, and Mr. GRAHAM): under the Individuals With Disabilities Edu- INTRODUCTION OF BILLS AND S.J. Res. 32. Joint resolution granting the cation Act; to the Committee on Appropria- JOINT RESOLUTIONS consent of Congress to the Apalachiocola- tions. The following bills and joint resolu- Chattahoochee-Flint River Basin Compact; POM–148. A petition from citizens of the to the Committee on the Judiciary. United States relative to missile testing; to tions were introduced, read the first and second time by unanimous con- By Mr. SHELBY (for himself, Mr. SES- the Committee on Armed Services. SIONS, Mr. CLELAND, and Mr. COVER- POM–149. A resolution adopted by City sent, and referred as indicated: DELL): Council and Mayor of the City of Youngs- By Mr. BOND: S.J. Res. 33. Joint resolution granting the town, Ohio relative to the national ambient S. 975. A bill to amend title 23, United consent of Congress to the Alabama-Coosa- air quality standards; to the Committee on States Code, to extend the bridge discre- Tallapoosa River Basin Compact; to the Environment and Public Works. tionary program, and for other purposes; to Committee on the Judiciary. POM–150. A resolution adopted by the the Committee on Environment and Public By Mr. DODD (for himself and Mr. Board of Supervisors of the County of Los Works. MCCAIN): Angeles, California relative to the Inter- By Mr. BROWNBACK: S.J. Res. 34. Joint resolution suspending modal Surface Transportation Efficiency S. 976. A bill to reform the financing of the certification procedures under section Act; to the Committee on Environment and Federal elections; to the Committee on 490(b) of the Foreign Assistance Act of 1991 Public Works. Rules and Administration. in order to foster greater multilateral co- POM–151. A resolution adopted by the City By Mr. TORRICELLI (for himself and operation in international counternarcotics Council of Clarksville, Tennessee relative to Mr. KERRY): programs; to the Committee on Foreign Re- the Land Between the Lakes; to the Com- S. 977. A bill to amend the Forest and lations. mittee on Environment and Public Works. Rangeland Renewable Resources Planning f POM–152. A resolution adopted by the As- Act of 1974 and related laws to strengthen sociation of Tennessee Valley Governments the protection of native biodiversity and ban SUBMISSION OF CONCURRENT AND relative to TVA region; to the Committee on clearcutting on Federal lands, and to des- SENATE RESOLUTIONS Environment and Public Works. ignate certain Federal lands as Ancient For- The following concurrent resolutions POM–153. A resolution adopted by the ests, Roadless Areas, Watershed Protection Mayor and Council of the Borough of Little Areas, Special Areas, and Federal Boundary and Senate resolutions were read, and Silver, New Jersey relative to the Mud Dump Areas where logging and other intrusive ac- referred (or acted upon), as indicated: Site; to the Committee on Environment and tivities are prohibited; to the Committee on By Mr. HARKIN (for himself, Mr. LAU- Public Works. Energy and Natural Resources. TENBERG, and Mr. KENNEDY): POM–154. A resolution adopted by the Gov- By Mr. SPECTER: S. Res. 104. Resolution to state the sense of erning Body of the Township of Millstone, S. 978. A bill to amend the Internal Rev- the Senate regarding the tax status of pay- New Jersey relative to the Mud Dump Site; enue Code of 1986 to allow employers a credit ments made as a result of the recent tobacco

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00059 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6728 CONGRESSIONAL RECORD — SENATE June 27, 1997 liability settlement; to the Committee on value of our investment decline, but (b) HIGHWAY TIMBER BRIDGE RESEARCH AND Finance. lives are lost and our economic pros- CONSTRUCTION PROGRAM.— By Mr. LOTT (for himself, Mr. LIEBER- perity is jeopardized. (1) TRANSFER TO TITLE 23.—Section 1039 of MAN, Mr. MURKOWSKI, Mr. HELMS, Mr. I am pleased to work with my dear the Intermodal Surface Transportation Effi- ciency Act of 1991 (23 U.S.C. 144 note; 105 COVERDELL, Mr. MCCONNELL, Mr. friend and House colleague, Congress- ROBB, Mr. THURMOND, Mr. MCCAIN, Stat. 1990) is— Mr. NICKLES, Mr. ROTH, Mrs. FEIN- woman EMERSON to introduce this bill (A) transferred to title 23, United States STEIN, and Mr. CRAIG): in both Houses—the Safe Bridges Act Code; S. Res. 105. Resolution expressing the sense of 1997. (B) redesignated as section 144A of that of the Senate that the people of the United The Safe Bridges Act of 1997 is our title; and States wish the people of Hong Kong good marker to stress to our colleagues from (C) inserted after section 144 of that title. fortune as they embark on their historic around the country that bridges are an (2) CONFORMING AMENDMENTS.— transition of sovereignty from Great Britain important and necessary component to (A) Section 144A of title 23, United States to the People’s Republic of China; considered this country’s transportation system. Code (as added by paragraph (1)), is amend- and agreed to. Properly maintained and constructed ed— By Mr. MOYNIHAN (for himself and (i) by striking the section heading and in- Mr. D’AMATO): bridges help save lives and provide for serting the following: S. Con. Res. 35. Concurrent resolution urg- the efficient movement of people and ‘‘§ 144A. Highway timber bridge research and ing the United States Postal Service to issue goods in this country. construction program’’; If we want to secure our foundation— a commemorative postage stamp to cele- (ii) in subsection (e)— brate the 150th anniversary of the First we must renew our investment. (I) by striking ‘‘of title 23, United States Women’s Rights Convention held in Seneca Mr. President, I ask unanimous con- Code, for each of fiscal years 1992, 1993, 1994, Falls, NY; to the Committee on Govern- sent that the text of the bill be printed 1995, 1996, and 1997’’ and inserting ‘‘for each mental Affairs. in the RECORD. of fiscal years 1998 through 2003’’; and f There being no objection, the bill was (II) in paragraph (2), by striking STATEMENTS ON INTRODUCED ordered to be printed in the RECORD, as ‘‘($7,000,000 in the case of fiscal year 1992)’’; and BILLS AND JOINT RESOLUTIONS follows: S. 975 (iii) by striking subsection (f). By Mr. BOND: (B) The analysis for chapter 1 of title 23, Be it enacted by the Senate and House of Rep- S. 975. A bill to amend title 23, United States Code, is amended by inserting resentatives of the United States of America in after the item relating to section 144 the fol- United States Code, to extend the Congress assembled, lowing: bridge discretionary program, and for SECTION 1. SHORT TITLE. ‘‘144A. Highway timber bridge research and This Act may be cited as the ‘‘Safe Bridges other purposes; to the Committee on construction program.’’. Act of 1997’’. Environment and Public Works. SEC. 4. INNOVATIVE HIGHWAY STEEL BRIDGE RE- SEC. 2. FINDINGS. THE SAFE BRIDGES ACT OF 1997 SEARCH AND CONSTRUCTION PRO- Congress finds that— Mr. BOND. Mr. President, this bill I GRAM. (1) bridges are important and necessary (a) IN GENERAL.—Chapter 1 of title 23, am introducing today is a bridge dis- components of the surface transportation United States Code, is amended by inserting cretionary bill. We cannot forget in our system of the United States; after section 144A (as added by section reauthorization of the Nation’s trans- (2) bridges are an important factor in the 3(b)(1)) the following: portation policy the importance of efficient movement of people and goods; ‘‘§ 144B. Innovative highway steel bridge re- maintaining our bridges. (3) properly maintained and constructed search and construction program bridges help save lives; Missouri has approximately 23,000 ‘‘(a) RESEARCH GRANTS.—The Secretary bridges in total. (4) more than 25 percent of the bridges on shall make grants to other Federal agencies, the Interstate System are classified as defi- Unfortunately, the State of Missouri, universities, private businesses, nonprofit or- cient or in poor condition; and ganizations, and research or engineering en- according to Department of Transpor- (5) an investment of more than tation statistics ranks sixth from the tities to carry out research concerning— $5,000,000,000 annually is needed to maintain ‘‘(1) the development of new, cost-effective bottom on conditions of bridges in this the bridges that are in existence as of the highway steel bridge applications; country. This is a deplorable place for date of enactment of this Act. ‘‘(2) the development of engineering design the State of Missouri to be. SEC. 3. BRIDGE DISCRETIONARY PROGRAM. criteria for steel products and materials for We must start taking better care of (a) EXTENSION OF PROGRAM.—Section 144(g) use in highway bridges and structures to im- our roads and bridges and begin build- of title 23, United States Code, is amended by prove steel design properties; ing roads for the 21st century—with striking paragraph (1) and inserting the fol- ‘‘(3) the development of highway steel lowing: bridges and structures that will withstand new technologies, new materials, and ‘‘(1) DISCRETIONARY BRIDGE PROGRAM.— better designs. natural disasters; ‘‘(A) SET ASIDE.—For each fiscal year, be- ‘‘(4) the development of products, mate- According to the American Associa- fore any apportionment is made under sub- rials, and systems for use in highway steel tion of State Highway and Transpor- section (e), the Secretary shall set aside bridges that demonstrate new alternatives to tation Officials America must address $500,000,000 from the funds authorized to current processes and procedures with re- the deficiencies of over 11,000 bridges carry out this section. spect to performance in various environ- per year just to maintain current lev- ‘‘(B) USE OF SET ASIDE.—The amount set ments; and els of condition. aside under subparagraph (A) shall be avail- ‘‘(5) rehabilitation measures that dem- able for obligation in the same manner and onstrate effective, safe, and reliable methods According to the Department of to the same extent as the sums apportioned Transportation, the cost to improve for the use of steel in rehabilitating highway under subsection (e), except that— bridges and structures. bridge conditions would require an an- ‘‘(i) the amount shall be available for obli- ‘‘(b) TECHNOLOGY AND INFORMATION TRANS- nual investment of $8.9 billion. gation at the discretion of the Secretary; FER.—The Secretary shall take such action Let us not lose the hard-won gains in ‘‘(ii) for each fiscal year, $8,500,000 of the as is necessary to ensure that the informa- our transportation infrastructure. amount shall be available to carry out sec- tion and technology resulting from research Let’s not squander our investment. tion 144A; conducted under subsection (a) is made Postponing taking care of our bridge ‘‘(iii) for each fiscal year, $12,500,000 of the available to State and local transportation amount shall be available to carry out sec- needs only means that our investment departments and other interests as specified tion 144B; by the Secretary. declines and to make repairs later will ‘‘(iv) for each fiscal year, $15,000,000 of the ‘‘(c) CONSTRUCTION GRANTS.— cost more. The cliche does say ‘‘Pay amount shall be available to carry out sec- ‘‘(1) AUTHORITY.—The Secretary shall now or pay More later.’’ tion 144C; and make grants to States for projects for the Taking care of our transportation in- ‘‘(v) the remainder of the amount shall be construction of steel bridges and structures frastructure can be compared to taking available in accordance with paragraph (2). on Federal-aid highways. care of your home. If you fail to fix the ‘‘(C) OTHER STATE FUNDS.—Funds made ‘‘(2) APPLICATIONS.— leaky roof, fail to re-paint, fail to ade- available to a State under subparagraph (B) ‘‘(A) SUBMISSION.—A State that desires to shall not be considered in determining the receive a grant under this subsection shall quately insulate, your costs increase apportionments and allocations that the submit an application to the Secretary. and the value of your home declines. State shall be entitled to receive, under the ‘‘(B) CONTENTS.—The application shall be If we fail to maintain and reinvest in other provisions of this title and other law, in such form and contain such information our Nation’s bridges not only does the of amounts in the Highway Trust Fund.’’. as the Secretary may require by regulation.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00060 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6729 ‘‘(3) APPROVAL CRITERIA.—The Secretary construction or seismic retrofit of bridges on watersheds provide high-quality water shall select and approve applications for the National Highway System. supplies for drinking, agriculture, in- grants under this subsection based on wheth- ‘‘(2) APPLICATIONS.— dustry, as well as habitat for rec- er the project that is the subject of the ‘‘(A) SUBMISSION.—A State that desires to reational and commercial fisheries and grant— receive a grant under this subsection shall ‘‘(A) has a design that has both initial and submit an application to the Secretary. other wildlife. The large-scale destruc- long-term structural integrity; ‘‘(B) CONTENTS.—The application shall be tion of natural forests threatens other ‘‘(B) has an innovative design, product, in such form and contain such information industries such as tourism and fishing material, or system that has the potential as the Secretary may require by regulation. with job loss. As a legacy for the enjoy- for increasing knowledge, cost effectiveness, ‘‘(3) APPROVAL CRITERIA.—The Secretary ment, knowledge, and well-being of fu- durability, and future use of the innovation; shall select and approve applications for ture generations, provisions must be and grants under this subsection based on wheth- made for the protection and perpetua- ‘‘(C) uses practices and construction tech- er the project that is the subject of the tion of America’s forests. We must also grant— niques that comply with all environmental set an example to poorer developing regulations. ‘‘(A) has a design that has both initial and ‘‘(d) FEDERAL SHARE.—The Federal share of long-term structural and environmental in- countries to preserve their vast forests the cost of a research or construction project tegrity; so they do not make the same mistakes under this section shall be 80 percent. ‘‘(B) has a design that uses carbon com- we did. We cannot call upon these ‘‘(e) FUNDING.— posite materials; countries to preserve large portions of ‘‘(1) IN GENERAL.—From the funds reserved ‘‘(C) has an innovative design that has the their rain forests when we do not pre- from apportionment under section 144(g)(1) potential for increasing knowledge, cost ef- serve the last fraction of our own an- for each of fiscal years 1998 through 2003— fectiveness, and future use of the design; ‘‘(D) will ensure the structural integrity of cient forests. ‘‘(A) $2,500,000 shall be available to the Sec- Clear cutting, even aged logging retary to carry out subsections (a) and (b); a major river crossing in the New Madrid re- and gion during a seismic event; practices, and timber road construc- ‘‘(B) $10,000,000 shall be available to the ‘‘(E) will extend the service life of a struc- tion have been the preferred manage- Secretary to carry out subsection (c). turally deficient bridge by at least 15 years; ment practices used on our Federal for- ‘‘(2) AVAILABILITY.—Sums made available and ests in recent years. These practices under paragraph (1) shall remain available ‘‘(F) uses bridge retrofit technology and have caused widespread forest eco- until expended.’’. material that are produced in the United system fragmentation and degradation. (b) CONFORMING AMENDMENT.—The analysis States. The result is species extinction, soil ‘‘(d) FEDERAL SHARE.—The Federal share of for chapter 1 of title 23, United States Code, erosion, flooding, declining water qual- is amended by inserting after the item relat- the cost of a research or construction project ing to section 144A (as added by section under this section shall be 80 percent. ity, diminishing commercial and sport 3(b)(2)(B)) the following: ‘‘(e) FUNDING.— fisheries—that is, salmon—and ‘‘(1) IN GENERAL.—From the funds reserved mudslides. Mudslides in Western forest ‘‘144B. Innovative highway steel bridge re- from apportionment under section 144(g)(1) search and construction pro- regions during recent winter flooding for each of fiscal years 1998 through 2003— have caused millions of dollars of envi- gram.’’. ‘‘(A) $1,000,000 shall be available to the Sec- SEC. 5. CARBON COMPOSITE BRIDGE RETROFIT retary to carry out subsections (a) and (b); ronmental and property damage, and RESEARCH AND DEMONSTRATION and resulted in several deaths. An environ- PROGRAM. ‘‘(B) $14,000,000 shall be available to the mentally sustainable alternative to (a) IN GENERAL.—Chapter 1 of title 23, Secretary to carry out subsection (c). these practices is selection manage- United States Code, is amended by inserting ‘‘(2) AVAILABILITY.—Sums made available after section 144B (as added by section 4(a)) ment: the selection system involves under paragraph (1) shall remain available the following: the removal of trees of different ages until expended.’’. either singly or in small groups in ‘‘§ 144C. Carbon composite bridge retrofit re- (b) CONFORMING AMENDMENT.—The analysis search and demonstration program for chapter 1 of title 23, United States Code, order to preserve the biodiversity of ‘‘(a) RESEARCH GRANTS.—The Secretary is amended by inserting after the item relat- the forest. shall make grants to other Federal agencies ing to section 144B (as added by section 4(b)) Destructive forestry practices such and to universities, private businesses, non- the following: as clearcutting on Federal lands was profit organizations, and research or engi- ‘‘144C. Carbon composite bridge retrofit re- legalized by the passage of the Na- neering entities, in the United States, to search and demonstration pro- tional Forest Management Act of 1976. carry out research concerning— gram.’’. From 1984 to 1991, an average of 243,000 ‘‘(1) the development of new, economical acres were clearcut annually on Fed- carbon composite highway bridge retrofit By Mr. TORRICELLI (for himself eral lands. During the same time pe- systems; and Mr. KERRY): riod an average of only 33,000 acres ‘‘(2) the development of engineering design S. 977. A bill to amend the Forest and were harvested using the protective se- criteria for carbon composite products for Rangeland Renewable Resources Plan- use in highway bridges in order to improve ning Act of 1974 and related laws to lection management practices. Inter- methods for characterizing carbon composite strengthen the protection of native pretations of forestry laws have also design properties; biodiversity and ban clearcutting on been used by Federal managers to in- ‘‘(3) deployment systems for the incorpora- clude the promotion of even age log- tion of carbon composites that demonstrate Federal lands, and to designate certain Federal lands as Ancient Forests, ging and road construction. In addi- alternative processes for the seismic retrofit tion, the laws are not effective in pre- of bridges and the rehabilitation of struc- Roadless Areas, Watershed Protection turally deficient bridge structures; Areas, Special Areas, and Federal serving our forests because in many ‘‘(4) alternative carbon composite trans- Boundary Areas where logging and cases judges do not allow citizens portation system structures that dem- other intrusive activities are prohib- standing in court to ensure that the onstrate the development of applications for ited; to the Committee on Energy and Forest Service or other agencies follow lighting support, sound barriers, culverts, Natural Resources. the environmental protections of the and retaining walls in highway infrastruc- THE SAVE AMERICA’S FORESTS ACT law. ture; and I am introducing this legislation to ‘‘(5) additional rehabilitation measures Mr. TORRICELLI. Mr. President, today, Senator KERRY and I are intro- halt and reverse the effects of deforest- that demonstrate effective, safe, and reliable ation on Federal lands by ending the methods for rehabilitating highway infra- ducing the Save America’s Forests Act. structure with carbon composites. I rise to draw this country’s attention practice of clearcutting, while pro- ‘‘(b) TECHNOLOGY AND INFORMATION TRANS- to the management practices that moting environmentally compatible FER.—The Secretary shall take such action threaten the health of our Nation’s for- and economically sustainable selection as is necessary to ensure that the informa- est lands. When this country was management logging. It is important tion and technology resulting from research founded over 200 years ago, it is esti- to note this legislation would only conducted under subsection (a) is made mated that there was 1 billion acres of apply to Federal forests which con- available to State and local transportation stitute 20 percent of the country’s har- departments and other interests as specified forest land across this Nation. Today, by the Secretary. 95 percent of those original virgin for- vestable timber supply, the vast major- ‘‘(c) CONSTRUCTION GRANTS.— ests have been cut down. ity of the 490 million acres of harvest- ‘‘(1) AUTHORITY.—The Secretary shall Forests are unique and valuable pub- able timber are privately owned and make grants to States for projects for the re- lic assets. Large, unfragmented forest unaffected by the bill. This legislation

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00061 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6730 CONGRESSIONAL RECORD — SENATE June 27, 1997 puts forward positive alternatives that SEC. 2. PURPOSES AND FINDINGS. shelter, and other important products, and will achieve two principle policies for (a) PURPOSES.—The purposes of this Act as a source of intellectual and scientific our Federal forests. First, the act are, on all Federal public lands, to conserve knowledge, recreation, and aesthetic pleas- native biodiversity and to protect all native would ban logging and road building in ure. ecosystems against losses that result from— (11) Alteration of native biodiversity has remaining core areas of biodiversity (1) clearcutting and other forms of even- serious consequences for human welfare as throughout the Federal forest system age logging; and America irretrievably loses resources for re- including roadless areas, specially des- (2) logging in Ancient Forests, Roadless search and agricultural, medicinal, and in- ignated areas and 13 million acres of Areas, Watershed Protection Areas, Special dustrial development. Ancient Forests. Second, in noncore Areas, and Federal Boundary Areas. (12) Alteration of biodiversity in Federal areas it would abolish environmentally (b) FINDINGS.—Congress finds the fol- forests adversely affects the functions of eco- lowing: systems and critical ecosystem processes dangerous forms of logging such as (1) Federal agencies of the United States clearcutting and even aged logging. that moderate climate, govern nutrient cy- that engage in even-age logging practices in- cles and soil conservation and production, The act requires selection manage- clude the Forest Service of the Department control pests and diseases, and degrade ment logging practices to be used of Agriculture, the United States Fish and wastes and pollutants. whereby timber companies would only Wildlife Service, Bureau of Land Manage- (13) The harm of even-age logging to the be allowed to log a certain percentage ment, and Bureau of Indian Affairs of the De- natural resources of this Nation and the of the forests over specified periods of partment of the Interior, and the Army, quality of life of its people are substantial, time. Further it takes extra steps to Navy, and Air Force of the Department of severe, and avoidable. Defense. (14) By substituting selection management, protect watersheds and fisheries by (2) Even-age logging causes substantial al- prohibiting logging in buffer areas as prescribed in this Act, for the even-age terations in native biodiversity by empha- system, the Federal agencies now engaged in along streams, lakes, and wetlands. sizing the production of a limited number of even-age logging would substantially reduce The act would also call for an inde- commercial species of trees on each site, devastation to the environment and would pendent panel of scientists to develop a generally only one; by manipulating the improve the quality of life of the American plan to restore and rejuvenate those vegetation toward greater relative density of people. forests and their ecosystems that are such commercial species, by suppressing (15) By protecting native biodiversity, as damaged from decades of these logging competing species, and by planting, on nu- prescribed in this Act, Federal agencies merous sites, a commercial strain that was would maintain vital native ecosystems and practices. And finally, the legislation developed to reduce the relative diversity of would empower citizen involvement in would improve the quality of life of the genetic strains that previously occurred American people. insuring compliance with environ- within the species on the same sites. (16) Selection logging is more job inten- mental protections of forest manage- (3) Even-age logging kills immobile species sive, and therefore provides more employ- ment laws by making certain that all and the very young of mobile species of wild- ment than even-age logging to manage the citizens have standing to pursue ac- life and depletes the habitat of deep-forest same amount of timber production, and pro- tions in court. species of animals, including endangered spe- duces higher quality sawlogs. Mr. President, I ask unanimous con- cies. (17) The court remedies now available to (4) Even-age logging exposes the soil to di- sent that the text of the bill be printed enforce Federal forest laws are inadequate, rect sunlight and the impact of rains, dis- and should be strengthened by providing for in the RECORD. rupts the surface, and compacts organic lay- There being no objection, the bill was injunctions, declaratory judgments, statu- ers. It disrupts the run-off restraining capa- tory damages, and reasonable costs of suit. ordered to be printed in the RECORD, as bilities of roots and low-lying vegetation, SEC. 3. EFFECTIVE DATE. follows: which results in soil erosion, the leaching our of nutrients, a reduction in the biologi- (1) IN GENERAL.—This Act and the amend- S. 977 ments made by this Act shall take effect on Be it enacted by the Senate and House of Rep- cal content of the soil, and the impoverish- ment of the soil. All these consequences have the date of the enactment of this Act. resentatives of the United States of America in (b) EFFECT ON EXISTING CONTRACTS.—The Congress assembled, a long-range deleterious effect on all land re- sources, including timber production. amendments made by this Act shall not SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (5) Even-age logging decreases the capa- apply with respect to any contract to sell (a) SHORT TITLE.—This Act may be cited as bility of the soil to retain carbon and, during timber which was awarded on or before the the ‘‘Act to Save America’s Forests’’. the critical periods of felling and site prepa- date of the enactment of this Act. (b) TABLE OF CONTENTS.—The table of con- ration, reduces the capacity of the biomass TITLE I—AMENDMENTS TO EXISTING tents of this Act is as follows: to process and to store carbon, with a result- LAND MANAGEMENT LAWS Sec. 1. Short title; table of contents. ant of loss of such carbon to the atmosphere, SEC. 101. AMENDMENT OF FOREST AND RANGE- Sec. 2. Purposes and findings. thereby aggravating global warming. Sec. 3. Effective date. LAND RENEWABLE RESOURCES (6) Even-age logging renders the soil in- PLANNING ACT OF 1974 RELATING TITLE I—AMENDMENTS TO EXISTING creasingly sensitive to acid deposits by caus- TO NATIONAL FOREST SYSTEM LAND MANAGEMENT LAWS ing a decline of soil wood and coarse woody LANDS. Sec. 101. Amendment of Forest and Range- debris, thereby reducing the capacity of the (a) CONSERVATION OF NATIVE BIODIVER- land Renewable Resources soil to retain water and nutrients, which in- SITY.—Section 6(g)(3)(B) of the Forest and Planning Act of 1974 relating to creases soil heat and impairs the soil’s abil- Rangeland Renewable Resources Planning National Forest System lands. ity to maintain protective carbon com- Act of 1974 (16 U.S.C. 1604(g)(3)(B)) is amend- Sec. 102. Amendment of Federal Land Policy pounds on its surface. ed to read as follows: and Management Act of 1976 re- (7) Even-age logging results in increased ‘‘(B) In each stand and each watershed lating to the public lands. stream sedimentation, the silting of stream throughout each forested area, the Secretary Sec. 103. Amendment of National Wildlife bottoms, a decline in water quality, and the shall provide for the conservation or restora- Refuge System Administration impairment of life cycles and spawning proc- tion of native biodiversity except during the Act of 1966 relating to the Na- esses of aquatic life from benthic organisms extraction stage of authorized mineral devel- tional Wildlife Refuge System. to large fish, thereby depleting the sports opment or during authorized construction Sec. 104. Amendment of National Indian For- and commercial fisheries of the United projects, in which events the Secretary shall est Resources Management Act States. conserve native biodiversity to the extent relating to Indian lands. (8) Even-age logging increases harmful possible;’’. Sec. 105. Amendment of title 10, United edge effects, including blowdowns, invasions (b) COMMITTEE OF SCIENTISTS.—Section States Code, relating to forest by weed species, and heavier losses to preda- 6(h)(1) of the Forest and Rangeland Renew- management on military lands. tors and competitors. able Resources Planning Act of 1974 (16 TITLE II—PROTECTION FOR ANCIENT (9) Even-age logging decreases the land’s U.S.C. 1604(h)(1)) is amended to read as fol- FORESTS, ROADLESS AREAS, WATER- recreational values, reducing deep, canopied, lows: SHED PROTECTION AREAS, SPECIAL variegated, permanent forests, thereby lim- ‘‘(h) COMMITTEE OF SCIENTISTS.—(1) In car- AREAS, AND FEDERAL BOUNDARY iting areas where the public can fulfill an ex- rying out the purposes of subsection (g) of AREAS pending need for recreation. Even-age log- this section, the Secretary shall appoint a Sec. 201. Definitions and findings. ging replaces such forests with a surplus of committee of scientists who are not officers Sec. 202. Designation of Special Areas. clearings that grow into relatively impen- or employees of the Forest Service nor of Sec. 203. Restrictions on management activi- etrable thickets of saplings, and then into any other public entity, nor of any entity en- ties in Ancient Forests, monoculture tree plantations. gaged in whole or in part in the production Roadless Areas, Watershed Pro- (10) Human beings depend on native bio- of wood or wood products, and have not con- tection Areas, Special Areas, logical resources, including plants, animals, tracted with or represented any such entities and Federal Boundary Areas. and micro-organisms, for food, medicine, within a period of 5 years prior to serving on

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00062 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6731 such committee. The committee shall pro- are selected and logged in a generally uni- pose a damage award of not less than $5,000, vide scientific and technical advice and form pattern throughout a stand, and shall issue one or more injunctions and other counsel on proposed guidelines and proce- ‘‘(b) Group selection, in which small groups equitable relief, and shall award to the plain- dures and all other issues involving forestry of trees are selected and logged. tiffs reasonable costs of litigation including and native biodiversity to assure that an ef- ‘‘(iii) The application of individual-tree se- attorney’s fees, witness fees and other nec- fective interdisciplinary approach is pro- lection, group selection, or any other method essary expenses. posed and adopted. The committee shall ter- consistent with selection management shall ‘‘(iii) The standard of proof in all actions minate after the expiration of 10 years from under no event: brought under this subparagraph shall be the the date of the enactment of this para- ‘‘(a) create a clearing or opening that ex- preponderance of the evidence and the trial graph.’’. ceeds in width in any direction the height of shall be de novo. (c) RESTRICTION ON USE OF CERTAIN LOG- the tallest tree standing within 10 feet out- ‘‘(D) The damage award authorized by sub- GING PRACTICES.—Section 6 of the Forest and side the edge of the clearing or opening, or paragraph (C)(ii) shall be paid by the viola- Rangeland Renewable Resources Planning ‘‘(b) create a stand where the majority of tor or violators designated by the court to Act of 1974 (16 U.S.C. 1604) is amended by add- trees are within 10 years of the same age, or the U.S. Treasury. ing at the end the following: ‘‘(c) cut or remove more than 10 percent of ‘‘(E) The damage award shall be paid from ‘‘(n) RESTRICTION ON USE OF CERTAIN LOG- the basal area of a stand within 15 years. The the U.S. Treasury, as provided by Congress GING PRACTICES.—(1) In each stand and wa- foregoing limitation shall not be deemed to under section 1304 of title 31, United States tershed throughout each forested area, the establish a 150-year projected felling age as Code, within 40 days after judgment to the Secretary shall prohibit any even-age log- the standard at which individual trees in a person or persons designated to receive it, to ging and any even-age management after the stand are to be cut, nor shall native biodiver- be applied in protecting or restoring native date of the enactment of this subsection. sity be limited to that which occurs within biodiversity in or adjoining Federal land. ‘‘(2) On each stand already under even-age the context of a 150-year projected felling Any award of costs of litigation and any management, the Secretary shall (A) pre- age. award of attorney fees shall be paid within 40 scribe a shift to selection management, or ‘‘(H) The term ‘stand’ means a biological days after judgment. ‘‘(F) The United States, including its (B) cease managing for timber purposes and community with enough identity by loca- agents and employees waives its sovereign actively restore the native biodiversity, or tion, topography, or dominant species to be immunity in all respects in all actions under permit each stand to regain its native bio- managed as a unit, not to exceed 100 acres. ‘‘(I) EVEN-AGE LOGGING AND EVEN-AGE MAN- subsection (g)(3)(B) and this subsection. No diversity. notice is required to enforce this sub- ‘‘(3) For the purposes of this Act: AGEMENT.—(i) The terms ‘even-age logging’ ‘‘(A) The term ‘native biodiversity’ means and ‘even-age management’ mean any log- section.’’. (d) REPEAL.—Section 6(g)(3)(F) of the For- the full range of variety and variability ging activity which: ‘‘(a) creates a clearing or opening that ex- est and Rangeland Renewable Resource Plan- within and among living organisms and the ceeds in width in any direction the height of ning Act of 1974 (16 U.S.C. 1604(g)(3)(F)) is ecological complexes in which they would the tallest tree standing within 10 feet out- hereby repealed. have occurred in the absence of significant side the edge of the clearing or opening, or SEC. 102. AMENDMENT OF FEDERAL LAND POL- human impact, and encompasses diversity ‘‘(b) creates a stand where the majority of ICY AND MANAGEMENT ACT OF 1976 within a species (genetic diversity, species trees are within 10 years of the same age, or RELATING TO THE PUBLIC LANDS. diversity, or age diversity), within a commu- ‘‘(c) cuts or removes more than 10 percent (a) CONSERVATION OF NATIVE BIODIVER- nity of species (within-community diver- of the basal area of a stand within 15 years. SITY.—Section 202(c) of the Federal Land sity), between communities of species (be- ‘‘(ii) Even-age logging and even-age man- Policy and Management Act of 1976 (43 tween-communities), within a total area agement include the application of U.S.C. 1712(c)) is amended— such as a watershed (total area), along a clearcutting, seed-tree cutting, shelterwood (1) by redesignating paragraphs (8) and (9) plane from ground to sky (vertical), and cutting, or any other logging method in a as paragraphs (9) and (10), respectively; and along the plane of the earth-surface (hori- manner inconsistent with selection manage- (2) by inserting after paragraph (7) the fol- zontal). Vertical and horizontal diversity ment. lowing new paragraph (8): apply to all the other aspects of diversity. ‘‘(J) The term ‘clearcutting’ means an ‘‘(8) In each stand and each watershed ‘‘(B) The terms ‘conserve’ and ‘conserva- even-age logging operation that removes all throughout each forested area, the Secretary tion’ refer to protective measures for main- of the trees over a considerable area of a shall provide for the conservation or restora- taining existing native biodiversity and ac- stand at one time. tion of native biodiversity except during the tive and passive measures for restoring di- ‘‘(K) The term ‘seed-tree’ means an even- extraction stage of authorized mineral devel- versity through management efforts, in age logging operation that leaves a small mi- opment or during authorized construction order to protect, restore, and enhance as nority of seed trees in a stand for any period projects, in which events the Secretary shall much of the variety of species and commu- of time. conserve native biodiversity to the extent nities as possible in abundances and distribu- ‘‘(L) The term ‘shelterwood cut’ means an possible;’’. tions that provide for their continued exist- even-age logging operation that leaves a mi- (b) RESTRICTION ON USE OF CERTAIN LOG- ence and normal functioning, including the nority (larger than in a seed-tree cut) of the GING PRACTICES.—Section 202 of the Federal viability of populations throughout their stand as a seed source or protection cover re- Land Policy and Management Act of 1976 (43 natural geographic distributions. maining standing for any period of time. U.S.C. 1712) is amended by adding at the end ‘‘(C) The term ‘within-community diver- ‘‘(M) The term ‘timber purposes’ shall in- the following: sity’ means the distinctive assemblages of clude the use, sale, lease, or distribution of ‘‘(g) RESTRICTION ON USE OF CERTAIN LOG- species and ecological processes that occur trees, or the felling of trees or portions of GING PRACTICES.—(1) In each stand and wa- in different physical settings of the bio- trees except to create land space for a struc- tershed throughout each forested area, the sphere and distinct parts of the world. ture or other use. Secretary shall prohibit any even-age log- ‘‘(D) The term ‘genetic diversity’ means ‘‘(N) The term ‘basal area’ means the area ging and any even-age management after the the differences in genetic composition within of the cross section of a tree stem, including date of the enactment of this subsection. and among populations of a given species. the bark, at 4.5 feet above the ground. ‘‘(2) On each stand already under even-age ‘‘(E) The term ‘species diversity’ means the ‘‘(4)(A)(i) The purpose of this paragraph is management, the Secretary shall (A) pre- richness and variety of native species in a to foster the widest possible enforcement of scribe a shift to selection management, or particular location of the world. subsection (g)(3)(B) and this subsection. (B) cease managing for timber purposes and ‘‘(F) The term ‘age diversity’ means the ‘‘(ii) Congress finds that all people of the actively restore the native biodiversity, or naturally occurring range and distribution of United States are injured by actions on lands permit each stand to regain its native bio- age classes within a given species. to which subsection (g)(3)(B) and this sub- diversity. ‘‘(G) SELECTION MANAGEMENT.—(i) The term section apply. ‘‘(3) For the purposes of this Act: ‘selection management’ means a method of ‘‘(B) The provisions of subsection (g)(3)(B) ‘‘(A) The term ‘native biodiversity’ means logging that emphasizes the periodic re- and this subsection shall be enforced by the the full range of variety and variability moval of trees, including mature, undesir- Secretary of Agriculture and the Attorney within and among living organisms and the able, and cull trees in a manner that insures: General of the United States against any ecological complexes in which they would ‘‘(a) the maintenance of continuous high person who violates either of them. have occurred in the absence of significant forest cover where such cover naturally oc- ‘‘(C)(i) Any citizen harmed by a violation human impact, and encompasses diversity curs, of this Act may enforce any provision of sub- within a species (genetic diversity, species ‘‘(b) the maintenance or natural regenera- section (g)(3)(B) and this subsection by diversity, or age diversity), within a commu- tion of all native species in a stand, and bringing an action for declaratory judgment, nity of species (within-community diver- ‘‘(c) the growth and development of trees temporary restraining order, injunction, sity), between communities of species (be- through a range of diameter or age classes to statutory damages, and other remedies tween-communities), within a total area provide a sustained yield of forest products. against any alleged violator including the such as a watershed (total area), along a ‘‘(ii) Cutting methods that develop and United States, in any district court of the plane from ground to sky (vertical), and maintain selection stands are: United States. along the plane of the earth-surface (hori- ‘‘(a) Individual-tree selection, in which in- ‘‘(ii) The court, after determining a viola- zontal). Vertical and horizontal diversity dividual trees of varying size and age classes tion of either of such subsections, shall im- apply to all the other aspects of diversity.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00063 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6732 CONGRESSIONAL RECORD — SENATE June 27, 1997 ‘‘(B) The terms ‘conserve’ and ‘conserva- ‘‘(J) The term ‘clearcutting’ means an System, the Secretary shall provide for the tion’ refer to protective measures for main- even-age logging operation that removes all conservation or restoration of native bio- taining existing native biodiversity and ac- of the trees over a considerable area of a diversity, except during the extraction stage tive and passive measures for restoring di- stand at one time. of authorized mineral development or during versity through management efforts, in ‘‘(K) The term ‘seed-tree cut’ means an authorized construction projects, in which order to protect, restore, and enhance as even-age logging operation that leaves a events the Secretary shall conserve native much of the variety of species and commu- small minority of seed trees in a stand for biodiversity to the extent possible. nities as possible in abundances and distribu- any period of time. ‘‘(k) RESTRICTION ON USE OF CERTAIN LOG- tions that provide for their continued exist- ‘‘(L) The term ‘shelterwood cut’ means an GING PRACTICES.—(1) In each stand and wa- ence and normal functioning, including the even-age logging operation that leaves a mi- tershed throughout each forested area, the viability of populations throughout their nority (larger than in a seed-tree cut) of the Secretary shall prohibit any even-age log- natural geographic distributions. stand as a seed source or protection cover re- ging and any even-age management after the ‘‘(C) The term ‘within-community diver- maining standing for any period of time. date of the enactment of this subsection. sity’ means the distinctive assemblages of ‘‘(M) The term ‘timber purposes’ shall in- ‘‘(2) On each stand already under even-age species and ecological processes that occur clude the use, sale, or lease, or distribution management, the Secretary shall (A) pre- in different physical settings of the bio- of trees, or the felling of trees or portions of scribe a shift to selection management, or sphere and distinct parts of the world. trees except to create land space for a struc- (B) cease managing for timber purposes and ‘‘(D) The term ‘genetic diversity’ means ture or other use. actively restore the native biodiversity, or the differences in genetic composition within ‘‘(N) The term ‘basal area’ means the area permit each stand to regain its native bio- and among populations of a given species. of the cross section of a tree stem, including diversity. ‘‘(E) The term ‘species diversity’ means the the bark, at 4.5 feet above the ground. ‘‘(3) For the purposes of this subsection: richness and variety of native species in a ‘‘(4)(A)(i) The purpose of this paragraph is ‘‘(A) The term ‘native biodiversity’ means particular location of the world. to foster the widest possible enforcement of the full range of variety and variability ‘‘(F) The term ‘age diversity’ means the subsection (c)(8) and this subsection. within and among living organisms and the naturally occurring range and distribution of ‘‘(ii) Congress finds that all people of the ecological complexes in which they would age classes within a given species. United States are injured by actions on lands have occurred in the absence of significant ‘‘(G) SELECTION MANAGEMENT.—(i) The term to which subsection (c)(8) and this subsection human impact, and encompasses diversity ‘selection management’ means a method of apply. within a species (genetic diversity, species logging that emphasizes the periodic re- ‘‘(B) The provisions of subsection (c)(8) and diversity, or age diversity), within a commu- moval of trees, including mature, undesir- this subsection shall be enforced by the Sec- nity of species (within-community diver- able, and cull trees in a manner that insures: retary of the Interior and the Attorney Gen- sity), between communities of species (be- ‘‘(a) the maintenance of continuous high eral of the United States against any person tween-communities), within a total area forest cover where such cover naturally oc- who violates either of them. such as a watershed (total area), along a curs, ‘‘(C)(i) Any citizen harmed by a violation plane from ground to sky (vertical), and ‘‘(b) the maintenance or natural regenera- of this Act may enforce any provision of sub- along the plane of the earth-surface (hori- tion of all native species in a stand, and section (c)(8) and this subsection by bringing zontal). Vertical and horizontal diversity ‘‘(c) the growth and development of trees an action for declaratory judgment, tem- apply to all the other aspects of diversity. through a range of diameter or age classes to porary restraining order, injunction, statu- ‘‘(B) The term ‘conserve’ and ‘conserva- provide a sustained yield of forest products. tory damages, and other remedies against tion’ refer to protective measures for main- ‘‘(ii) Cutting methods that develop and any alleged violator including the United taining existing native biodiversity and ac- maintain selection stands are: States, in any district court of the United tive and passive measures for restoring di- ‘‘(a) Individual-tree selection, in which in- States. versity through management efforts, in dividual trees of varying size and age classes ‘‘(ii) The court, after determining a viola- order to protect, restore, and enhance as are selected and logged in a generally uni- tion of either of such subsections, shall im- much of the variety of species and commu- form pattern throughout a stand, and pose a damage award of not less than $5,000, nities as possible in abundances and distribu- ‘‘(b) Group selection, in which small groups shall issue one or more injunctions and other tions that provide for their continued exist- of trees are selected and logged. equitable relief, and shall award to the plain- ence and normal functioning, including the ‘‘(iii) The application of individual-tree se- tiffs reasonable costs of litigation including viability of populations throughout their lection, group selection, or any other method attorney’s fees, witness fees and other nec- natural geographic distributions. consistent with selection management shall essary expenses. ‘‘(C) The term ‘within-community diver- under no event: ‘‘(iii) The standard of proof in all actions sity’ means the distinctive assemblages of ‘‘(a) create a clearing or opening that ex- brought under this subparagraph shall be the species and ecological processes that occur ceeds in width in any direction the height of preponderance of the evidence and the trial in different physical settings of the bio- the tallest tree standing within 10 feet out- shall be de novo. sphere and distinct parts of the world. side the edge of the clearing or opening, or ‘‘(D) The damage award authorized by sub- ‘‘(D) The term genetic diversity means the ‘‘(b) create a stand where the majority of paragraph (C)(ii) shall be paid by the viola- differences in genetic composition within trees are within 10 years of the same age, or tor or violators designated by the court to and among populations of a given species. ‘‘(c) cut or remove more than 10 percent of the U.S. Treasury. ‘‘(E) The term ‘species diversity’ means the the basal area of a stand within 15 years. The ‘‘(E) The damage award shall be paid from richness and variety of native species in a foregoing imitation shall not be deemed to the U.S. Treasury, as provided by Congress particular location of the world. establish a 150-year projected felling age as under section 1304 of title 31, United States ‘‘(F) The term ‘age diversity’ means the the standard at which individual trees in a Code, within 40 days after judgment to the naturally occurring range and distribution of stand are to be cut, nor shall native biodiver- person or persons designated to receive it, to age classes within a given species. sity be limited to that which occurs within be applied in protecting or restoring native ‘‘(G) SELECTION MANAGEMENT.—(i) The term the context of a 150-year projected felling biodiversity in or adjoining Federal land. ‘‘selection management’’ means a method of age. Any award of costs of litigation and any logging that emphasizes the periodic re- ‘‘(H) The term, ‘stand’ means a biological award of attorney fees shall be paid within 40 moval of trees, including mature, undesir- community with enough identify by loca- days after judgment. able, and cull trees in a manner that insures: tion, topography, or dominant species to be ‘‘(F) The United States, including its (a) the maintenance of continuous high managed as a unit, not to exceed 100 acres. agents and employees waives its sovereign forest cover where such cover naturally oc- ‘‘(I) EVEN-AGE LOGGING AND EVEN-AGE MAN- immunity in all respects in all actions under curs, AGEMENT.—(i) The term ‘even-age logging’ subsection (c)(8) and this subsection. No no- (b) the maintenance or natural regenera- and ‘even-age management’ mean any log- tice is required to enforce this subsection.’’. tion of all native species in a stand, and ging activity which: ‘‘(c) REPEAL.—Subsection (b) of section 701 (c) the growth and development of trees ‘‘(a) creates a clearing or opening that ex- of the Federal Land Policy and Management through a range of diameter or age classes to ceeds in width in any direction the height of Act of 1976 (43 U.S.C. 1701 note) is hereby re- provide a sustained yield of forest products. the tallest tree standing within 10 feet out- pealed. (ii) Cutting methods that develop and side the edge of the clearing or opening, or SEC. 103. AMENDMENT OF NATIONAL WILDLIFE maintain selection stands are: ‘‘(b) creates a stand where the majority of REFUGE SYSTEM ADMINISTRATION (a) Individual-tree selection, in which indi- trees are within 10 years of the same age, or ACT OF 1966 RELATING TO THE NA- vidual trees of varying size and age classes ‘‘(c) cuts or removes more than 10 percent TIONAL WILDLIFE REFUGE SYSTEM. are selected and logged in a generally uni- of the basal area of a stand within 15 years. Section 4 of the National Wildlife Refuge form pattern throughout a stand, and ‘‘(ii) Even-age logging and even-age man- System Administration Act of 1966 (16 U.S.C. (b) Group selection, in which small groups agement include the application of 668dd) is amended by adding at the end the of trees are selected and logged. clearcutting, seed-tree cutting, shelterwood following: (iii) The application of individual-tree se- cutting, or any other logging method in a ‘‘(j) CONSERVATION OF NATIVE BIODIVER- lection, group selection, or any other method manner inconsistent with selection manage- SITY.—In each stand and each watershed consistent with selection management shall ment. throughout each forested area within the under no event:

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00064 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6733 (a) create a clearing or opening that ex- ‘‘(D) The damage award authorized by sub- ‘‘(F) The term ‘‘age diversity’’ means the ceeds in width in any direction the height of paragraph (C)(ii) shall be paid by the viola- naturally occurring range and distribution of the tallest tree standing within 10 feet out- tor or violators designed by the court to the age classes within a given species. side the edge of the clearing or opening, or U.S. Treasury. ‘‘(G) SELECTION MANAGEMENT.—(i) The term (b) create a stand where the majority of ‘‘(E) The damage award shall be paid from ‘‘selection management’’ means a method of trees are within 10 years of the same age, or the U.S. Treasury, as provided by Congress logging that emphasizes the periodic re- (c) cut or remove more than 10 percent of under section 1304 of title 31, United States moval of trees, including mature, undesir- the basal area of a stand within 15 years. The Code, within 40 days after judgment to the able, and cull trees in a manner that insures: foregoing limitation shall not be deemed to person or persons designated to receive it, to ‘‘(a) the maintenance of continuous high establish a 150-year projected felling age as be applied in protecting or restoring native forest cover where such cover naturally oc- the standard at which individual trees in a biodiversity in or adjoining Federal land. curs. stand are to be cut, nor shall native biodiver- Any award of costs of litigation and any ‘‘(b) the maintenance or natural regenera- sity be limited to that which occurs within award of attorney fees shall be paid within 40 tion of all native species in a stand, and the context of a 150-year projected felling days after judgment. ‘‘(c) the growth and development of trees age. ‘‘(F) The United States, including its through a range of diameter or age classes to ‘‘(H) The term ‘‘stand’’ means a biological agents and employees waives its sovereign provide a sustained yield of forest products. community with enough identity by loca- immunity in all respects in all actions under ‘‘(ii) Cutting methods that develop and tion, topography, or dominant species to be subsection (j) and this subsection. No notice maintain selection stands are:. managed as a unit, not to exceed 100 acres. is required to enforce this subsection.’’. ‘‘(a) Individual-tree selection, in which in- ‘‘(I) EVEN-AGE LOGGING AND EVEN-AGE MAN- SEC. 104. AMENDMENT OF NATIONAL INDIAN dividual trees of varying size and age classes AGEMENT.—(i) The terms ‘‘even-age logging’’ FOREST RESOURCES MANAGEMENT are selected and logged in a generally uni- and ‘‘even-age management’’ mean any log- ACT RELATING TO INDIAN LANDS. form pattern throughout a stand, and ging activity which: Section 305 of the National Indian Forest ‘‘(b) Group selection, in which small groups (a) creates a clearing or opening that ex- Resources Management Act (25 U.S.C. 4535) is of trees are selected and logged. ceeds in width in any direction the height of amended by adding at the end the following ‘‘(iii) The application of individual-tree se- the tallest tree standing within 10 feet out- new subsections: lection, group selection, or any other method ‘‘(c) CONSERVATION OF NATIVE BIODIVER- side the edge of the clearing or opening, or consistent with selection management shall SITY.—In each stand and each watershed (b) creates a stand where the majority of under no event: trees are within 10 years of the same age, or throughout each forested area on Indian ‘‘(a) create a clearing or opening that ex- lands, the Secretary shall provide for the (c) cuts or removes more than 10 percent of ceeds in width in any direction the height of conservation or restoration of native bio- the basal area of a stand within 15 years. the tallest tree standing within 10 feet out- (ii) Even-age logging and even-age manage- diversity except during the extraction stage side the edge of the clearing or opening, or of authorized mineral development or during ment include the application of clearcutting, ‘‘(b) create a stand where the majority of authorized construction projects, in which seed-tree cutting, shelterwood cutting, or trees are within 10 years of the same age, or any other logging method in a manner incon- events the Secretary shall conserve native ‘‘(c) cut or remove more than 10 percent of biodiversity to the extent possible;’’. sistent with selection management. the basal area or a stand within 15 years. The ‘‘(J) The term ‘‘clearcutting’’ means an ‘‘(d) RESTRICTION ON USE OF CERTAIN LOG- foregoing limitation shall not be. deemed to even-age logging operation that removes all GING PRACTICES.—(1) In each stand and wa- establish a 150-year projected felling age as of the trees over a considerable area of a tershed throughout each forested area, the the standard at which individual tress in a stand at one time. Secretary shall prohibit any even-age log- stand are to be cut, nor shall native biodiver- ‘‘(K) The term ‘‘seed-tree cut’’ means an ging and any even-age management after the sity be limited to that which occurs within even-age logging operation that leaves a date of the enactment of this subsection. the context of a 150-year projected felling small minority of seed trees in a stand for ‘‘(2) On each stand already under even-age age. any period of time. management, the Secretary shall (A) pre- ‘‘(L) The term ‘‘shelterwood cut’’ means an scribe a shift to selection management, or ‘‘(H) The term ‘‘stand’’ means a biological even-age logging operation that leaves a mi- (B) cease managing for timber purposes and community with enough identity by loca- nority (larger than in a seed-tree cut) of the actively restore the native biodiversity, or tion, topography, or dominant species to be stand as a source or protection cover remain- permit each stand to regain its native bio- managed as a unit, not to exceed 100 acres ‘‘(I) EVEN-AGE LOGGING AND EVEN-AGE MAN- ing standing for any period of time. diversity. ‘‘(M) The term ‘‘timber purposes’’ shall in- ‘‘(3) For the purposes of this section:. AGEMENT.—(i) The terms ‘‘even-age logging’’ clude the use, sale, lease, or distribution of ‘‘(A) The term ‘‘native biodiversity’’ means and ‘‘even-age management’’ mean any log- trees, or the felling of trees or portions of the full range of variety and variability ging activity which: trees except to create land space for a struc- within and among living organisms and the (a) creates a clearing or opening that ex- ture or other use. ecological complexes in which they would ceeds in width in any direction the height of ‘‘(N) The term ‘‘basal area’’ means the area have occurred in the absence of significant the tallest tree standing within 10 feet out- of the cross section of a tree stem, including human impact, and encompasses diversity side the edge of the clearing or opening, or the bark, at 4.5 feet above the ground. within a specie (genetic diversity, species di- (b) creates a stand where the majority of ‘‘(4)(A)(i) The purpose of this paragraph is versity, or age diversity), within a commu- trees are within 10 years of the same age, or to foster the widest possible enforcement of nity of species (within-community diver- (c) cuts or removes more than 10 percent of subsection (j) and this subsection. sity), between communities of species (be- the basal area of a stand within 15 years. ‘‘(ii) Congress finds that all people of the tween-communities), within a total area ‘‘Even-age logging and even-age manage- United States are injured by actions on lands such as a watershed (total area), along a ment include the application of clearcutting, to which subsection (j) and this subsection plane from ground to sky (vertical), and seed-tree cutting, shelterwood cutting, or apply. along the plane of the earth-surface (hori- any other logging method in a manner incon- ‘‘(B) The provisions of subsection (j) and zontal). Vertical and horizontal diversity sistent with selection management. this subsection shall be enforced by the Sec- apply to all the other aspects of diversity. ‘‘(J) The term ‘‘clearcutting’’ means an retary of the Interior and the Attorney Gen- ‘‘(B) The terms ‘‘conserve’’ and ‘‘conserva- even-age logging operation that removes all eral of the United States against any person tion’’ refer to protective measures for main- of the trees over a considerable area of a who violates either of them. taining existing native biodiversity and ac- stand at one time. ‘‘(C)(i) Any citizen harmed by a violation tive and passive measures for restoring di- ‘‘(K) The term ‘‘seed-tree cut’’ means an of this Act may enforce any provisions of versity through management efforts, in even-age logging operation that leaves a this subsection by bringing an action for de- order to protect, restore, and enhance as small minority of seed trees in a stand for claratory judgment, temporary restraining much of the variety of species and commu- any period of time. order, injunction, statutory damages, and nities as possible in abundances and distribu- ‘‘(L) The term ‘‘shelterwood cut’’ means an other remedies against any alleged violator tions that provide for their continued exist- even-age logging operation that leaves a mi- including the United States, in any district ence and normal functioning, including the nority (larger than in a seed-tree cut) of the court of the United States. viability of populations throughout their stand as a seed source or protection cover re- ‘‘(ii) The court, after determining a viola- natural geographic distributions. maining standing for any period of time. tion of either of such subsections, shall im- ‘‘(C) The term ‘‘within-community diver- ‘‘(M) The term ‘‘timber purposes’’ shall in- pose a damage award of not less than $5,000, sity’’ means the distinctive assemblages of clude the use, sale, lease, or distribution of shall issue one or more injunctions and other species and ecological processes that occur trees, or the felling of trees or portions of equitable relief, and shall award to the plain- in different physical settings of the bio- trees except to create land space for a struc- tiffs reasonable costs of litigation including sphere and distinct parts of the world. ture or other use. attorney’s fees, witness fees and other nec- ‘‘(D) The term ‘‘genetic diversity’’ means ‘‘(N) The term ‘‘basal area’’ means the area essary expenses. the differences in genetic composition within of the cross section of a tree stem, including ‘‘(iii) The standard of proof in all actions and among populations of a given species. the bark, at 4.5 beet above the ground. brought under this subparagraph shall be the ‘‘(E) The term ‘‘species diversity’’ means ‘‘(4)(A)(i) The purpose of this paragraph is preponderance of the evidence and the trial the richness and variety of native species in to foster the widest possible enforcement of shall be de novo. a particular location of the world. subsection (c) and this subsection.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00065 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6734 CONGRESSIONAL RECORD — SENATE June 27, 1997 ‘‘(ii) Congress finds that all people of the within a species (genetic diversity, species (b) create a stand where the majority of United States are injured by actions on lands diversity, or age diversity), within a commu- trees are within 10 years of the same age, or to which subsection (c) and this subsection nity of species (within-community diver- (c) cuts or removes more than 10 percent of apply. sity), between communities of species (be- the basal area of a stand within 15 years. ‘‘(B) The provisions of subsection (c) and tween-communities), within a total area (ii) Even-age logging and even-age manage- this subsection shall be enforced by the Sec- such as a watershed (total area), along a ment include the application of clearcutting, retary of the Interior and the Attorney Gen- plane from ground to sky (vertical), and seed-tree cutting, shelterwood cutting, or eral of the United States against any person along the plane of the earth-surface (hori- any other logging method in a manner incon- who violates either of them. zontal). Vertical and horizontal diversity sistent with selection management. ‘‘(C)(i) Any citizen harmed by a violation apply to all the other aspects of diversity. of this Act may enforce any provision of sub- ‘‘(B) The terms ‘‘conserve’’ and ‘‘conserva- ‘‘(J) The term ‘‘clearcutting’’ means an section (c) and this subsection by bringing tion’’ refer to protective measures for main- even-age logging operation that removes all an action for declaratory judgment, tem- taining existing native biodiversity and ac- of the trees over a considerable area of a porary restraining order, injunction, statu- tive and passive measures for restoring di- stand at one time. tory damages, and other remedies against versity through management efforts, in ‘‘(K) The term ‘‘seed-tree cut’’ means an any alleged violator including the United order to protect, restore, and enhance as even-age logging operation that leaves a States, in any district court of the United much of the variety of species and commu- small minority of seed trees in a stand for States. nities as possible in abundances and distribu- any period of time. ‘‘(ii) The court, after determining a viola- tions that provide for their continued exist- ‘‘(L) The term ‘‘shelterwood cut’’ means an tion of either of such subsections shall im- ence and normal functioning, including the even-age logging operation that leaves a mi- pose a damage award of not less than $5,000, viability of populations throughout their nority (larger than in a seed-tree cut) of the shall issue one or more injunctions and other natural geographic distributions. stand as a seed source or protection cover re- equitable relief, and shall award to the plain- ‘‘(C) The term ‘‘within-community diver- maining standing for any period of time. tiffs reasonable costs of litigation including sity’’ means the distinctive assemblages of ‘‘(M) The term ‘‘timber purposes’’ shall in- attorney’s fees, witness fees and other nec- species and ecological processes that occur clude the use, sale, lease, or distribution of essary expenses. in different physical settings of the bio- trees, or the felling of trees or portions of ‘‘(iii) The standard of proof in all actions sphere and distinct parts of the world. trees except to create land space for a struc- brought under this subparagraph shall be the ‘‘(D) The term ‘‘genetic diversity’’ means ture or other use. preponderance of the evidence and the trial the differences in genetic composition within ‘‘(N) The term ‘‘basal area’’ means the area shall be de novo. and among populations of a given species. of the cross section of a tree stem, including ‘‘(D) The damage award authorized by sub- ‘‘(E) The term ‘‘species diversity’’ means the bark, at 4.5 feet above the ground. paragraph (C)(ii) shall be paid by the viola- the richness and variety of native species in tor or violators designated by the court to a particular location of the world. ‘‘(4)(A)(i) The purpose of this paragraph is the U.S. Treasury. (F) The term ‘‘age diversity’’ means the to foster the widest possible enforcement of ‘‘(E) The damage award shall be paid from naturally occurring range and distribution of this section. the U.S. Treasury, as provided by Congress age classes within a given ‘‘species.’’ ‘‘(ii) Congress finds that all people of the under section 1304 of title 31, United States (G) SELECTION MANAGEMENT.—(i) The term United States are injured by actions on lands Code, within 40 days after judgment to the ‘‘selection management’’ means a method of to which this section applies. person or persons designated to receive it, to logging that emphasizes the periodic re- ‘‘(B) The provisions of this section shall be be applied in protecting or restoring native moval of trees, including mature, undesir- enforced by the Secretary of Defense and the biodiversity in or adjoining Federal land. able, and cull trees in a manner that insures: Attorney General of the United States Any award of costs of litigation and any (a) the maintenance of continuous high against any person who violates this section. award of attorney fees shall be paid within 40 forest cover where such cover naturally oc- ‘‘(C)(i) Any citizen harmed by a violation days after judgment. curs. of this Act may enforce any provision of this ‘‘(F) The United States, including its (b) the maintenance or natural regenera- section by bringing an action for declaratory agents and employees waives it sovereign tion of all native species in a stand, and judgment, temporary restraining order, in- immunity in all respects in all actions under (c) the growth and development of trees junction, statutory damages, and other rem- subsection (c) and this subsection. No notice through a range of diameter or age classes to edies against any alleged violator including is required to enforce this subsection.’’. provide a sustained yield of forest products. the United States, in any district court of (ii) Cutting methods that develop and SEC. 105. AMENDMENT OF TITLE 10, UNITED the United States. STATES CODE, RELATING TO FOR- maintain selection stands are: EST MANAGEMENT ON MILITARY (a) Individual-tree selection, in which indi- ‘‘(ii) The court, after determining a viola- LANDS. vidual trees of varying size and age classes tion of this section, shall impose a damage (a) IN GENERAL.—chapter 159 of title 10, are selected and logged in a generally uni- award of not less than $5,000, shall issue one United States Code, is amended by adding at form pattern throughout a stand, and or more injunctions and other equitable re- the end the following new section: (b) Group selection, in which small groups lief, and shall award to the plaintiffs reason- ‘‘SEC. 2694. CONSERVATION OF NATIVE BIO- of trees are selected and logged. able costs of litigation including attorney’s DIVERSITY. (iii) The application of individual-tree se- fees, witness fees and other necessary ex- ‘‘(a) CONSERVATION OF NATIVE BIODIVER- lection, group selection, or any other method penses. SITY.—In each stand and each watershed consistent with selection management shall ‘‘(iii) The standard of proof in all actions throughout each forested area on a military under no event: brought under this subparagraph shall be the installation or projects administered by the (a) create a clearing or opening that ex- preponderance of the evidence and the trial Army Corps of Engineers, the Secretary ceeds in width in any direction the height of shall be de novo. shall provide for the conservation or restora- the tallest tree standing within 10 feet out- ‘‘(D) The damage award authorized by sub- tion of native biodiversity, except during au- side the edge of the clearing or opening, or paragraph (C)(ii) shall be paid by the viola- thorized construction projects in which (b) create a stand where the majority of tor or violators designated by the court to events the Secretary shall conserve native trees are within 10 years of the same age, or the U.S. Treasury. (c) cut or remove more than 10 percent of biodiversity to the extent possible. ‘‘(E) The damage award shall be paid from ‘‘(b) RESTRICTION ON USE OF CERTAIN LOG- the basal area of a stand within 15 years. The the U.S. Treasury, as provided by Congress GING PRACTICES.—(1) In each stand and wa- foregoing limitation shall not be deemed to under section 1304 of title 31, United States tershed throughout each forested area, the establish a 150-year projected felling age as Code, within 40 days after judgment to the Secretary shall prohibit any even-age log- the standard at which individual trees in a person or persons designated to receive it, to ging and any even-age management after the stand are to be cut, nor shall native biodiver- be applied in protecting or restoring native date of the enactment of this subsection. sity be limited to that which occurs within biodiversity in or adjoining Federal land. ‘‘(2) On each stand already under even-age the context of a 150-year projected felling Any award of costs of litigation and any management, the Secretary shall (A) pre- age. award of attorney fees shall be paid within 40 scribe a shift to selection management, or ‘‘(H) The term ‘‘stand’’ means a biological days after judgment. (B) cease managing for timber purposes and community with enough identity by loca- actively restore the native biodiversity, or tion, topography, or dominant species to be ‘‘(F) The United States, including its permit each stand to regain its native bio- managed as a unit, not to exceed 100 acres. agents and employees waives its sovereign diversity. ‘‘(I) EVEN-AGE, LOGGING, AND EVEN-AGE immunity in all respects in all actions under ‘‘(3) In this section: MANAGEMENT.—(i) The terms ‘‘even-age log- this section. No notice is required to enforce ‘‘(A) The term ‘‘native biodiversity’’ means ging’’ and ‘‘even-age management’’ mean this section.’’. the full range of variety and variability any logging activity which: (b) CONFORMING AMENDMENT.—The table of within and among living organisms and the (a) creates a clearing or opening that ex- sections for chapter 159 of title 10, United ecological complexes in which they would ceeds in width in any direction the height of States Code, is amended by adding at the end have occurred in the absence of significant the tallest tree standing within 10 feet out- the following new item: ‘‘2694. Conservation human impact, and encompasses diversity side the edge of the clearing or opening, or of native biodiversity.’’.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00066 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6735 TITLE II—PROTECTION FOR ANCIENT roads, except as permitted by subparagraph (10) Prohibiting extractive logging in the FORESTS, ROADLESS AREAS, WATER- (B), and— Ancient Forests would create the best condi- SHED PROTECTION AREAS, SPECIAL (A) are greater than or equal to 5,000 acres tions for ensuring stable, well distributed, AREAS, AND FEDERAL BOUNDARY west of the 100th meridian; or and viable populations of the northern spot- AREAS (B) are greater than or equal to 1,500 acres ted owl, marbled murrelet, American east of the 100th meridian, but possibly con- SEC. 201. DEFINITIONS AND FINDINGS. marten, and other vertebrates, inverte- taining up to 1⁄2 mile of improved roads per (a) DEFINITIONS.—For purposes of this title: brates, vascular plants, and nonvascular 1,000 acres; or (1) EXTRACTIVE LOGGING.—The term ‘‘ex- plants associated with those forests. (C) are less than 5,000 acres, but share a (11) Prohibiting extractive logging in the tractive logging’’ means the cutting or re- border that is not an improved road with an moval of any trees from Federal forest lands Ancient Forests would create the best condi- existing Wilderness Area, Primitive Area, or tions for ensuring stable, well distributed, for any purpose. Wilderness Study Area. (2) ANCIENT FORESTS.—The term ‘‘Ancient and viable populations of anadromous (5) WATERSHED PROTECTION AREAS.—The salmonids, resident salmonids, and bull Forests’’ refers to ‘‘Northwest Ancient For- term ‘‘Watershed Protection Areas’’ refers to ests’’, ‘‘East Side Cascade Ancient Forests’’, trout. Federal lands (12) Roadless areas are de facto wilderness and ‘‘Sierra Nevada Ancient Forests’’ as de- (A) extending 300 feet from both sides of that provide wildlife habitat and recreation. fined below: the active stream channel of any perma- (13) Roadless areas contain many of the (A) The term ‘‘Northwest Ancient Forests’’ nently flowing stream or river, or largest unfragmented forests on Federal refers to— (B) extending 100 feet from both sides of lands. Large unfragmented forests are among (i) Federal lands identified as Late-Succes- the active channel of any intermittent, the last refuges for native animal and plant sional Reserves, Riparian Reserves, and Key ephemeral or seasonal stream, or any other biodiversity, and are vital to maintaining Watersheds under the heading ‘‘Alternative non-permanently flowing drainage feature viable populations of threatened, endangers, 1’’ of the report ‘‘Final Supplemental Envi- having a definable channel and evidence of sensitive, and rare species. ronmental Impact Statement on Manage- annual scour or deposition of flow-related (14) Roads cause soil erosion, disrupt wild- ment of Habitat for Late-Successional and debris, or Old-Growth Forest Related Species Within (C) extending 300 feet from the edge of the life migration, and allow nonnative species the Range of the Northern Spotted Owl, Vol. maximum level of any natural lake or pond, of plants and animals to invade native for- I.’’, dated February 1994; and or ests. (ii) Federal lands identified by the term (D) extending 150 feet from the edge of the (15) The morality and reproduction pat- ‘‘Medium and Large Conifer Multi-Storied, maximum level of constructed lakes, ponds, terns of forest dwelling animal populations Canopied Forests’’ as defined in ‘‘Final Sup- or reservoirs and natural or constructed wet- are adversely affected by traffic-related fa- plemental Environmental Impact Statement lands including. talities that accompany roads. on Management of Habitat for Late-Succes- (6) SPECIAL AREAS.—The term ‘‘Special (16) The exceptional recreational, biologi- sional and Old-Growth Forest Related Spe- Areas’’ means certain area of Federal land cal, scientific, or economic assets of certain cies Within the Range of the Northern Spot- designated in section 202. special forested areas on Federal lands are ted Owl, Vol. I.’’, dated February 1994. (7) FEDERAL BOUNDARY AREAS.—The term valuable to the American public and are (B) The term ‘‘Eastside Cascade Ancient ‘‘Federal Boundary Areas’’ means lands man- damaged by extractive logging in these Forests’’ refers to— aged by the Forest Service, Bureau of Land areas. (i) Federal lands identified as ‘‘Late-Suc- Management, or Fish & Wildlife Service, (17) In order to gauge the effectiveness and cession/Old-growth Forest (LS/OG)’’ depicted within 200 feet of a property line. appropriateness of current and future re- on maps for the Colville, Fremont, Malheur, (8) SECRETARY CONCERNED.—The term ‘‘Sec- source management activities, and to con- Ochoco, Umatilla, Wallowa-Whitman and retary concerned’’ means the head of the tinue to broaden and develop our under- Winema National Forests in the document Federal agency having jurisdiction over Fed- standing of silvicultural practices, many entitled ‘‘Interim Protection for Late-Suc- eral lands included within an Ancient For- special forested areas need to remain in a cessional Forests, Fisheries, and Watersheds: est, Roadless Area, Watershed Protection natural, unmanaged state to serve as sci- National Forests East of the Cascade Crest, Area, Special Area, or Federal Boundary entifically established baseline control for- Oregon, and Washington’’, prepared by the Area. ests. Eastside Forests Scientific Society Panel (b) FINDINGS.—Congress finds the fol- (18) Certain special forested areas provide (The Wildlife Society, Technical Review 94–2, lowing: habitat for the survival and recovery of en- August 1994); (1) Unfragmented forests on Federal lands dangered and threatened plant and wildlife (ii) Federal lands, east of the Cascade crest are unique an valuable assets to the general species such as grizzly bears, spotted owls, in Oregon and Washington defined as ‘‘late public which are damaged by extractive log- Pacific salmon, and Pacific yew that are successional and old-growth forests’’ in the ging. harmed by extractive logging. (2) Less than 10 percent of the original general definition on page 28 of the report (19) Many special forested areas on Federal unlogged forests of the Untied States re- entitled ‘‘Interim Protection for Late-Suc- lands are considered sacred sites by native main. The vast majority of the remnants of cessional Forests, Fisheries, and Watersheds: peoples. America’s original forests are located on National Forests East of the Cascade Crest, (20) Ecological, economic, and aesthetic Federal lands. Oregon, and Washington’’; and values on private property are damaged by (3) Large, unfragmented forest watersheds (iii) Federal lands classified as ‘‘Oregon logging and roadbuilding in Federal Bound- provide high-quality water supplies for Aquatic Diversity Areas’’ as defined in the ary Areas. drinking, agriculture, industry, and fisheries report entitled ‘‘Interim Protection for Late- (21) As a legacy for the enjoyment, knowl- across the United States. edge, and well-being of future generations, Successional Forests, Fisheries, and Water- (4) The most recent scientific studies indi- sheds: National Forests East of the Cascade provisions must be made for the protection cate that several thousand species of plants and perpetuation of America’s Ancient For- Crest, Oregon, and Washington’’. and animals are dependent on large, (C) The term ‘‘Sierra Nevada Ancient for- ests, Roadless Areas, Watershed Protection unfragmented forest areas. Areas, Special Areas, and Federal Boundary ests’’ refers to (5) Many neotropical migratory songbird Areas. (i) Federal lands identified as ‘‘Areas of species are currently experiencing docu- Late-Successional Emphasis (ALSE)’’ in the mented broad-scale population declines and SEC. 202. DESIGNATION OF SPECIAL AREAS. document entitled ‘‘Final Report to Con- require large, unfragmented forests to ensure (a) DESCRIPTION OF SPECIAL AREAS.— gress: Status of the Sierra Nevada’’, prepared their survival. (1) IN GENERAL.—Special areas are parcels by the Sierra Nevada Ecosystem Project (6) Destruction of large-scale natural for- of Federal forest land that posses out- (Wildland Resources Center Report #40, Uni- ests has resulted in a tremendous loss of jobs standing biological, scenic, recreational, or versity of California, David, 1996/97); in the fishing, hunting, tourism, recreation, cultural values, exemplary on a regional, na- (ii) Federal lands identified as ‘‘Late-Suc- and guiding industries, and has adversely af- tional, or international level, yet may not cessional/Old-Growth Forests Rank, 3, 4 or 5’’ fected sustainable nontimber forest products meet the definitions of Ancient Forests, in the document entitled ‘‘Final Report to industries such as the collection of mush- Roadless Areas, Watershed Protection Areas, Congress: Status of the Sierra Nevada’’; and rooms and herbs. or Federal Boundary Areas. (iii) Federal lands identified as ‘‘Potential (7) Extractive logging programs on Federal (2) BIOLOGICAL VALUES.—Biological values Aquatic Diversity Management Areas’’ in lands are carried out at enormous financial include— the map on page 1497 of the document enti- costs to the United States Treasury and (A) the presence of threatened or endan- tled ‘‘Final Report to Congress: Status of the American taxpayers. gered species of plants or animals; Sierra Nevada, Volume II’’. (8) The Ancient Forests continue to be (B) rare or endangered ecosystems; (3) IMPROVED ROADS.—The term ‘‘improved threatened by logging and deforestation and (C) key habitats necessary for the recovery roads’’ means any roads maintained for trav- are rapidly disappearing. of endangered or threatened species; el by standard passenger type vehicles. (9) Ancient Forests help regulate atmos- (D) recovery or restoration areas of rare or (4) ROADLESS AREAS.—The term ‘‘Roadless pheric balance, maintain biodiversity, and underrepresented forest ecosystems; Areas’’ means those contiguous parcels of provide valuable scientific opportunity for (E) migration corridors; Federal land that are devoid of improved monitoring the health of the planet. (F) areas of outstanding biodiversity;

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00067 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6736 CONGRESSIONAL RECORD — SENATE June 27, 1997 (G) old growth forests; Montgomery and Polk Counties, Arkansas, the town of Dahlonega, Union and Lumpkin (H) commercial fisheries; and known as ‘‘Leader and Brush Mountains’’, Counties, Georgia. (I) sources of clean water such as key wa- which comprise approximately 120,000 acres (C) CHATTOOGA WATERSHED CLUSTER, GEOR- tersheds. located in the vicinity of the Blaylock Creek GIA AREAS.—Certain lands in the Chattahoo- (3) SCENIC VALUES.—Scenic values in- Watershed between Long Creek and the chee National Forest, Tallulah Ranger Dis- clude— South Fork of the Saline River. trict, comprising 63,500 acres known as the (A) unusual geological formations; (C) POLK CREEK AREA.—Certain lands in the ‘‘Chattooga Watershed Cluster, Georgia (B) designated wild and scenic rivers; Ouachita National Forest, Mena Ranger Dis- Areas’’. This cluster is comprised of 7 areas, (C) unique biota; and trict, Arkansas, comprising approximately located in Rabun County, Georgia, known as (D) vistas. 20,000 acres bounded by Arkansas Highway 4 the following: Rabun Bald, Three Forks, (4) RECREATIONAL VALUES.—Recreational and Forest Roads 73 and 43 known as the Ellicott Rock Extension, Rock Gorge, Big values include— ‘‘Polk Creek Area’’. Shoals, Thrift’s Ferry, and Five Falls. The (A) designated National Recreational (D) LOWER BUFFALO RIVER WATERSHED.— towns of Clayton, Georgia, and Dillard, Trails or Recreational Areas; Certain lands in the Ozark National Forest, South Carolina are situated nearby. (B) popular areas for recreation and sports Sylamore Ranger District, totaling approxi- (D) COHUTTA CLUSTER.—Certain lands in including— mately 60,000 acres, known as ‘‘The Lower the Chattahoochee National Forest, Cohutta (i) hunting; Buffalo River Watershed’’. The area is com- Ranger District, totaling approximately (ii) fishing; prised of those Forest Service lands, not al- 28,000 acres, known as the ‘‘Cohutta Clus- (iii) camping; ready designated as Wilderness, located in ter’’. The cluster is comprised of four parcels (iv) hiking; the watershed of Big Creek, southwest of the known as Cohutta Extensions, Grassy Moun- (v) aquatic recreation; and Leatherwood Wilderness Area in Searcy and tain, Emery Creek, and Mountaintown. The (vi) winter recreation; Marion Counties, Arkansas. cluster is located near the towns of (C) Federal lands in regions that are under- (E) UPPER BUFFALO RIVER WATERSHED.— Chatsworth and Ellijay, Murray, Fannin, and served in terms of recreation; Certain lands in the Ozark National Forest, Gilmer Counties, Georgia. (D) lands adjacent to designated Wilder- Buffalo Ranger District, totaling approxi- (E) DUNCAN RIDGE CLUSTER.—Certain lands ness Areas; and mately 220,000 acres known as the ‘‘Upper in the Chattahoochee National Forest, (E) solitude. Buffalo River Watershed’’. This area is lo- Brasstown and Toccoa Ranger Districts, (5) CULTURAL VALUES.—Cultural values in- cated approximately 35 miles from the town comprising approximately 17,000 acres known clude— of Harrison, in Madison, Newton and Searcy as the ‘‘Duncan Ridge Cluster’’. The cluster (A) sites with Native American religious Counties, Arkansas. The Upper Buffalo River is comprised of the following four parcels: significance; and Watershed is comprised of those Forest Serv- Licklog Mountain, Duncan Ridge, Board (B) historic or prehistoric archaeological ice lands, not already designated as Wilder- Camp, and Cooper Creek Scenic Area Exten- sites eligible for national historic register. ness Areas, upstream of the confluence of the sion. The cluster is located approximately 10 (b) SIZE VARIATION.—Special areas may Buffalo River and Richland Creek and lo- to 15 miles south of the town of Blairsville in Union and Fannin Counties, Georgia. vary in size to encompass the outstanding bi- cated in the following watersheds: Buffalo (F) ED JENKINS NATIONAL RECREATION AREA ological, scenic, recreational, or cultural River, the various streams comprising the value or values to be protected. CLUSTER.—Certain lands in the Chattahoo- Headwaters of the Buffalo River, Richland chee National Forest, Toccoa and Chestatee (c) DESIGNATION OF SPECIAL AREAS.—For Creek, Little Buffalo Headwaters, Edgmon purposes of this title, there are hereby des- Ranger Districts, totaling approximately Creek, Big Creek and Cane Creek. 19,300 acres, known as the ‘‘Ed Jenkins Na- ignated the following Special Areas, which (5) CALIFORNIA: GIANT SEQUOIA PRESERVE.— tional Recreation Area Cluster’’. The cluster shall be subject to the management restric- Certain lands in the Sequoia and Sierra Na- is comprised of the Springer Mountain, Mill tions specified in section 203(c): tional Forests in California comprised of 3 Creek, and Toonowee parcels. The cluster is (1) ALABAMA: SIPSEY WILDERNESS.—Certain discontinuous parcels, totaling approxi- located 30 miles north of the town of lands in the Bankhead National Forest in mately 442,425 acres known as the ‘‘Giant Se- Dahlonega, Fannin, Dawson, and Lumpkin Alabama, which comprise approximately quoia Preserve’’ located in Fresno, Tulare, 20,000 acres, located directly west of Highway Counties, Georgia. and Kern Counties. All 3 parcels are located AINESVILLE RIDGES CLUSTER.—Certain 33 and directly north of County Road 60, in- (G) G in the Southern Sierra Nevada mountain lands in the Chattahoochee National Forest, cluding all of the Sipsey River Watershed range; the Kings River Unit (145,600 acres) Chattooga Ranger District, totaling approxi- north of Cranal Road, known as the ‘‘Sipsey and nearby Redwood Mountain Unit (11,730 mately 14,200 acres, known as the ‘‘Gaines- Wilderness’’. acres) are located approximately 25 miles ville Ridges Cluster’’. The cluster is com- (2) ALASKA.— east of the city of Fresno. The South Unit prised of the following three parcels: Panther (A) TURNAGAIN ARM.—Certain lands in the (285,095 acres) is approximately 15 miles east Creek, Tugaloo Uplands, and Middle Fork Chugach National Forest, Kenai Peninsula, of the city of Porterville. Broad River. The cluster is located approxi- Alaska, which comprise approximately (6) COLORADO: COCHETOPA HILLS.—Certain mately 10 miles from the town of Toccoa, 100,000 acres, known as ‘‘Turnagain Arm’’, lands in the Gunnison Basin area adminis- Habersham and Stephens Counties, Georgia. extending from sea level to ridgetop sur- tered by the Gunnison, Grand Mesa, (H) NORTHERN BLUE RIDGE CLUSTER, GEOR- rounding the inlet of Turnagain Arm. Uncompahgre, and Rio Grand National for- GIA AREAS.—Certain lands in the Chattahoo- (B) HONKER DIVIDE.—Certain lands in the ests, comprising approximately 500,000 acres, chee National Forest, Brasstown and Tongass National Forest in Alaska, which known as the ‘‘Cochetopa Hills’’. This area Tallulah Ranger Districts, totaling approxi- comprise approximately 75,000 acres, located spans the continental divide south and east mately 46,000 acres, known as the ‘‘Northern on north central Prince of Wales Island, of Gunnison in Saguache County, Colorado Blue Ridge Cluster, Georgia Areas’’. The comprising the Thorne River and Hatchery and includes the Elk and West Elk Moun- cluster is comprised of the following eight Creek watersheds, stretching approximately tains, Grand Mesa, the Uncompahgre Pla- areas: Andrews Cove, Anna Ruby Falls Sce- 40 miles northwest from the vicinity of the teau, the northern San Juan Mountains, the nic Area Extension, High Shoals, Tray town of Thorne Bay to the vicinity of the La Garitas Mountains and the Cochetopa Mountain Extension, Kelly Ridge-Moccasin town of Coffman Cove, generally known as Hills. Creek, Buzzard Knob, Southern Nantahala the ‘‘Honker Divide’’. (7) GEORGIA.— Extension, and Patterson Gap. The cluster is (3) ARIZONA: NORTH RIM OF THE GRAND CAN- (A) ARMUCHEE CLUSTER.—Certain lands in located approximately 5 to 15 miles north of YON.—Certain lands in the Kaibab National the Chattahoochee National Forest, Helen, 5 to 15 miles southeast of Hiawassee, Forest, Arizona, included in the Grand Can- Armuchee Ranger District, totaling approxi- north of Clayton and west of Dillard, White, yon Game Preserve, which comprise approxi- mately 19,700 acres, known as the Towns and Rabun Counties, Georgia. mately 500,000 acres, abutting the northern ‘‘Armuchee Cluster’’. The cluster is com- (I) RICH MOUNTAIN CLUSTER.—Certain lands side of the Grand Canyon in the area gen- prised of three parcels known as Rocky Face, in the Chattahoochee National Forest, erally known as the ‘‘North Rim of the Johns Mountain and Hidden Creek. The clus- Toccoa Ranger District, totaling approxi- Grand Canyon’’. ter is located approximately 10 miles south- mately 9,500 acres known as the ‘‘Rich Moun- (4) ARKANSAS.— west of Dalton and 14 miles north of Rome, tain Cluster’’. The cluster is comprised of (A) COW CREEK DRAINAGE, ARKANSAS.—Cer- Whitfield, Walker, Chattooga, Floyd, and the parcels known as Rich Mountain Exten- tain lands in the Ouachita National Forest, Gordon Counties, Georgia. sion and Rocky Mountain. The cluster is lo- Mena Ranger District, Polk County, Arkan- (B) BLUE RIDGE CORRIDOR CLUSTER, GEORGIA cated 10 to 15 miles northeast of the town of sas, comprising approximately 7,000 acres, AREAS.—Certain lands in the Chattahoochee Ellijay, Gilmer and Fannin Counties, Geor- bounded approximately by the following National Forest, Chestatee Ranger District, gia. landmarks: on the north by County Road 95; totaling approximately 15,000 acres, known (J) WILDERNESS HEARTLANDS CLUSTER, on the south by County Road 157; on the east as the ‘‘Blue Ridge Corridor Cluster, Georgia GEORGIA AREAS.—Certain lands in the Chat- by County Road 48 and on the west by the Areas’’. The cluster is comprised of the fol- tahoochee National Forest, Chestatee, Arkansas-Oklahoma border, known as ‘‘Cow lowing 5 parcels: Horse Gap, Hogback Moun- Brasstown and Chattooga Ranger Districts, Creek Drainage, Arkansas’’. tain, Blackwell Creek, Little Cedar Moun- comprising approximately 16,500 acres, (B) LEADER AND BRUSH MOUNTAINS.—Cer- tain, and Black Mountain. The cluster is lo- known as the ‘‘Wilderness Heartlands Clus- tain lands in the Ouachita National Forest of cated approximately 15 to 20 miles north of ter, Georgia Areas’’. The cluster is comprised

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00068 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6737 of four parcels known as the following: Blood boundary consists of the Angostura Creek mately 62,000 acres, known as the ‘‘Black Mountain Extensions, Raven Cliffs Exten- watershed boundary, the southern boundary Mountains Cluster, North Carolina Areas’’. sions, Mark Trail Extensions, and Brasstown is Trail 19 and the Pecos Wilderness, and on The cluster is comprised of the following five Extensions. The cluster is located near the the west, the boundary is formed by the parcels: Craggy Mountains, Black Moun- towns of Dahlonega, Cleveland, Helen, and Agua Piedra Creek watershed. tains, Jarrett Creek, Mackey Mountain, and Blairsville, Lumpkin, Union, White, and (B) LA MANGA.—Certain lands in the west- Woods Mountain. The cluster is located near Towns Counties, Georgia. ern half of the Carson National Forest, El the towns of Burnsville, Montreat and Mar- (8) IDAHO.— Rito Ranger District, New Mexico, Vallecitos ion, Buncombe, Yancey and McDowell Coun- (A) COVE/MALLARD.—Certain lands in the Sustained Yield Unit, comprising approxi- ties, North Carolina. Nez Perce National Forest in Idaho, which mately 5,400 acres, known as ‘‘La Manga’’. (G) LINVILLE CLUSTER.—Certain lands in comprise approximately 94,000 acres, located The parcel is in Township 27, Range 6 and the Pisgah National Forest, Grandfather approximately 30 miles southwest of the bounded on the north by the Tierra Amarilla Ranger District, totaling approximately town of Elk City, west of the town of Dixie, Land Grant, on the south by Canada 42,000 acres known as the ‘‘Linville Cluster’’. in the area generally known as ‘‘Cove/Mal- Escondida, on the west by the Sustained The cluster is comprised of the following lard’’. Yield Unit boundary and the Tierra Amarilla seven parcels: Dobson Knob, Linville Gorge (B) MEADOW CREEK.—Certain lands in the Land Grant, and on the east by the Rio Extension, Steels Creek, Sugar Knob, Harper Nez Perce National Forest in Idaho, which Vallecitos. Creek, Lost Cove and Upper Wilson Creek. comprise approximately 180,000 acres, lo- (C) ELK MOUNTAIN.—Certain lands in the The cluster is located near the towns of Mar- cated approximately 8 miles east of the town Santa Fe National Forest, New Mexico, com- ion, Morgantown, Spruce Pine, Linville, and of Elk City in the area generally known as prising approximately 7,220 acres, known as Blowing Rock, Burke, McDowell, Avery and ‘‘Meadow Creek’’. ‘‘Elk Mountain’’ and located in Townships 17 Caldwell Counties, North Carolina. (C) FRENCH CREEK/PATRICK BUTTE.—Certain and 18 and Ranges 12 and 13. The area is H) NOLICHUCKY, NORTH CAROLINA AREA.— lands in the Payette National Forest in bounded on the north by the Pecos Wilder- Certain lands in the Pisgah National Forest, Idaho, which comprise approximately 141,000 ness, the Cow Creek Watershed forms the Toecane Ranger District, totaling approxi- acres, located approximately 20 miles north eastern boundary and the Cow Creek, itself, mately 4,000 acres, known as the of the town of McCall in the area generally forms the western boundary. The southern ‘‘Nolichucky, North Carolina Area’’, located known as ‘‘French Creek/Patrick Butte’’. boundary is formed by Rito de la Osha. 25 miles northwest of Burnsville, Mitchell (9) ILLINOIS.— (D) JEMEZ HIGHLANDS.—Certain lands in and Yancy Counties, North Carolina. (A) CRIPPS BEND.—Certain lands in the the Jemez Ranger District of the Santa Fe (I) PISGAH CLUSTER, NORTH CAROLINA Shawnee National Forest in Illinois, which National Forest, totaling approximately AREAS.—Certain lands in the Pisgah National comprise approximately 39 acres in Jackson 54,400 acres, known as the ‘‘Jemez High- Forest, Pisgah Ranger District, totaling ap- County in the Big Muddy River watershed, in lands’’, located primarily in Sandoval Coun- proximately 52,000 areas, known as the ‘‘Pis- the area generally known as ‘‘Cripps Bend’’. ty, New Mexico. gah Cluster, North Carolina Areas’’. The (B) OPPORTUNITY AREA 6.—Certain lands in (15) NORTH CAROLINA.— cluster is comprised of the following 5 par- the Shawnee National Forest in Illinois, (A) CENTRAL NANTAHALA CLUSTER, NORTH cels: Shining rock and Middle Prong Exten- which comprise approximately 50,000 acres CAROLINA AREAS.—Certain lands in the sions, Daniel Ridge, Cedar Rock Mountain, located in northern Pope County, sur- Nantahala National Forest, Tusquitee, South Mills River, and Laurel Mountain. The rounding Bell Smith Springs Natural Area, Cheoah, and Wayah Ranger Districts, total- cluster is located 5 to 12 miles north of the in the area generally known as ‘‘Opportunity ing approximately 107,000 acres, known as town of Brevard and southwest of the city of Area 6’’. the ‘‘Central Nantahala Cluster, North Caro- Asheville, Haywood, Transylvania, and Hen- (C) QUARREL CREEK.—Certain lands in the lina Areas’’. The cluster is comprised of the derson Counties, North Carolina. Shawnee National Forest in Illinois, which following nine parcels: Tusquitee Bald, (J) WILDCAT.—Certain lands in the Pisgah comprise approximately 490 acres located in Shooting Creek Bald, Cheoah Bald, Piercy National Forest, French Broad Ranger Dis- northern Pope County, in the Quarrel Creek Bald, Wesser Bald, Tellico Bald, Split White trict, totaling approximately 6,500 acres, watershed, in the area generally known as Oak, Siler Bald, and Southern Nantahala Ex- known as ‘‘Wildcat’’, located 20 miles north- ‘‘Quarrel Creek’’. tensions. The cluster is located near the west of the town of Canton, Haywood Coun- (10) MICHIGAN: TRAP HILLS.—Certain lands towns of Murphy, Franklin, Bryson City, An- ty, North Carolina. in the Ottawa National Forest, Bergland drews, and Beechertown, Cherokee, Macon, (16) OHIO.— Ranger District, totaling approximately Clay and Swain Counties, North Carolina. (A) ARCHERS FORK COMPLEX.—Certain lands 37,120 acres, known as the ‘‘Trap Hills’’, lo- (B) CHATTOOGA WATERSHED CLUSTER, NORTH in the Marietta Unit of the Athens Ranger cated approximately 5 miles from the town CAROLINA AREAS.—Certain lands in the District, in the Wayne National Forest, of Bergland, Ontonagon County, Michigan. Nantahala National Forest, Highlands Rang- Washington County, Ohio, known as ‘‘Ar- (11) MINNESOTA.— er District, totaling approximately 8,000 chers Fork Complex’’, comprising approxi- (A) TROUT LAKE AND SUOMI HILLS.—Certain acres, known as the ‘‘Chattooga Watershed mately 18,350 acres, located northeast of lands in the Chippewa National Forest, com- Cluster, North Carolina Areas’’. The cluster Newport and bounded by State Highway 26 to prising approximately 12,000 acres, known as is comprised of the Overflow (Blue Valley) the northwest, State Highway 260 to the ‘‘Trout Lake/Suomi Hills’’ in Itasca County, and Terrapin Mountain parcels. The cluster northeast, the Ohio River to the southeast Minnesota. is located five miles from the town of High- and Bear Run and Danas Creek to the south- (B) LULLABY WHITE PINE RESERVE.—Certain lands, Macon and Jackson Counties, North west. lands in the Superior National Forest in Carolina. (B) BLUEGRASS RIDGE.—Certain lands in the Minnesota, Gunflint Ranger District, which (C) TENNESSEE BORDER CLUSTER, NORTH Ironton Ranger District of the Wayne Na- comprise approximately 2,518 acres, in the CAROLINA AREAS.—Certain lands in the tional Forest, Lawrence County, Ohio, South Brule Opportunity Area, northwest of Nantahala National Forest, Tusquitee and known as ‘‘Bluegrass Ridge’’, comprising ap- Grand Marais in Cook County, Minnesota, Cheoah Ranger Districts, totaling approxi- proximately 4,000 acres, located three miles known as the ‘‘Lullaby White Pine Reserve’’. mately 28,000 acres, known as the ‘‘Ten- east of Etna in Township 4 North, Range 17 (12) MISSOURI: ELEVEN POINT-BIG SPRINGS nessee Border Cluster, North Carolina West, sections 19–23, 27–30. AREA.—Certain lands in the Mark Twain Na- Areas’’. The cluster is comprised of the four (C) BUFFALO CREEK.—Certain lands in the tional Forest in Missouri, Eleven Point following parcels: Unicoi Mountains, Deaden Ironton Ranger District of the Wayne Na- Ranger District, totaling approximately Tree, Snowbird, and Joyce Kilmer-Slickrock tional Forest, Lawrence County, Ohio, 200,000 acres, comprised of the administra- Extension. The cluster is located near the known as ‘‘Buffalo Creek’’, comprising ap- tive area of the Eleven Point Ranger Dis- towns of Murphy and Robbinsville, Cherokee proximately 6,500 acres, located four miles trict, known as the ‘‘Eleven Point-Big and Graham Counties, North Carolina. northwest of Waterloo in Township 5 North, Springs Area’’. (D) BALD MOUNTAINS.—Certain lands in the Range 17 West, sections 3–10, 15–18. (13) MONTANA: MOUNT BUSHNELL.—Certain Pisgah National Forest, French Broad Rang- (D) LAKE VESUVIUS.—Certain lands in the lands in the Lolo National Forest in Mon- er District, totaling approximately 13,000 Ironton Ranger District of the Wayne Na- tana, which comprise approximately 41,000 acres known as the ‘‘Bald Mountains’’, lo- tional Forest, Lawrence County, Ohio, com- acres located approximately 5 miles south- cated 12 miles northeast of Hot Springs, prising approximately 4,900 acres, generally west of the town of Thompson Falls in the Madison County, North Carolina. known as ‘‘Lake Vesuvius’’, located to the area generally known as ‘‘Mount Bushnell’’. (E) BIG IVY TRACT.—Certain lands in the east of Etna and bounded by State Highway (14) NEW MEXICO.— Pisgah National Forest in North Carolina, 93 to the southwest and State Highway 4 to (A) ANGOSTURA.—Certain lands in the east which comprise approximately 14,000 acres, the northwest in Township 2 North, Range 18 half of the Carson National Forest in New located approximately 15 miles west of West. Mexico, Camino Real Ranger District, total- Mount Mitchell in the area generally known (E) MORGAN SISTERS.—Certain lands in the ing approximately 10,000 acres located in as the ‘‘Big Ivy Tract’’. Ironton Ranger District of the Wayne Na- Township 21, Ranges 12 and 13, known as (F) BLACK MOUNTAINS CLUSTER, NORTH tional Forest, Lawrence County, Ohio, ‘‘Angostura’’. The area’s approximate bound- CAROLINA AREAS.—Certain lands in the Pis- known as ‘‘Morgan Sisters’’, comprising ap- aries are as follows: the northeast boundary gah National Forest, Toecane and Grand- proximately 2,500 acres, located one mile is formed by Highway 518, the southeast father Ranger Districts, totaling approxi- east of Gallia and bounded by State Highway

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00069 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6738 CONGRESSIONAL RECORD — SENATE June 27, 1997 233 in Township 6 North, Range 17 West, sec- South Carolina, comprising approximately Backbone, Laurel Mountain, Walnut Moun- tions 13, 14, 23, 24 and Township 5 North, 7,000 acres known as ‘‘Persimmon Moun- tain, Wolf Creek, Meadow Creek Mountain, Range 16 West, sections 18, 19. tain’’. This area is located approximately 12 Brush Creek Mountain, Paint Creek, Bald (F) UTAH RIDGE.—Certain lands in the Ath- miles south of Cashiers, North Carolina. Mountain and Sampson Mountain Extension. ens Ranger District of the Wayne National (H) ROCK GORGE, SOUTH CAROLINA AREA.— These parcels are located near the towns of Forest, Athens County, Ohio, known as Certain lands in the Sumter National Forest, Newport, Hot Springs, Greeneville and ‘‘Utah Ridge’’, comprising approximately Andrew Pickens Ranger District, Oconee Erwin, Tennessee. 9,000 acres, located one mile northwest of County, South Carolina, comprising approxi- (B) BIG FROG/COHUTTA CLUSTER.—Certain Chauncey and bounded by State Highway 682 mately 2,000 acres known as ‘‘Rock Gorge, lands in the Cherokee National Forest, Polk and State Highway 13 to the southeast, US South Carolina Area’’. This area is located 12 County, Tennessee, Ocoee, Hiwassee, and Highway 33 to the southwest and State High- miles southeast of Highlands, North Caro- Tennessee Ranger Districts, comprising ap- way 216 and State Highway 665 to the north. lina. proximately 28,800 acres known as the ‘‘Big (G) WILDCAT HOLLOW.—Certain lands in the (I) TAMASSEE.—Certain lands in the Sum- Frog/Cohutta Cluster’’. This Cluster is com- Athens Ranger District of the Wayne Na- ter National Forest, Andrew Pickens Ranger prised of the following parcels: Big Frog Ex- tional Forest, Perry and Morgan Counties, District, Oconee County, South Carolina, tensions, Little Frog Extensions, Smith Ohio, known as ‘‘Wildcat Hollow’’, com- comprising approximately 5,500 acres known Mountain and Rock Creek. These parcels are prising approximately 4,500 acres, located as ‘‘Tamassee’’. This area is located 10 miles located near the towns of Copperhill, one mile east of Corning in Township 12 north of Walhalla, South Carolina. Ducktown, Turtletown and Benton, Ten- North, Range 14 West, sections 1, 2, 11–14, 23, (J) THRIFT’S FERRY, SOUTH CAROLINA nessee. 24, and Township 8 North, Range 13 West, AREA.—Certain lands in the Sumter National (C) CITICO CREEK WATERSHED CLUSTER TEN- sections 7, 18, 19. Forest, Andrew Pickens Ranger District, NESSEE AREAS.—Certain lands in the Tellico (17) OKLAHOMA: COW CREEK DRAINAGE, OKLA- Oconee County, South Carolina, comprising Ranger District of the Cherokee National HOMA.—Certain lands in the Ouachita Na- approximately 5,000 acres known as ‘‘Thrift’s Forest, Monroe County, Tennessee, com- tional Forest, Mena Ranger District, Le Ferry, South Carolina Area’’. This area is lo- prising approximately 14,256 acres known as Flore County, Oklahoma, comprising ap- cated 10 miles east of Clayton, Georgia. the ‘‘Citico Creek Watershed Cluster, Ten- proximately 3,000 acres, bounded approxi- (20) SOUTH DAKOTA.— nessee Areas’’. This Cluster is comprised of mately by the Beech Creek National Scenic (A) BLACK FOX AREA.—Certain lands in the the following parcels known as: Flats Moun- Area on the west, State Highway 63 on the Black Hills National Forest of South Da- tain, Miller Ridge, Cowcamp Ridge and north and the Arkansas-Oklahoma border on kota, totaling approximately 12,400 acres, lo- Joyce Kilmer-Slickrock Extension. These the east, and County Road 9038 on the south, cated in the upper reaches of the Rapid parcels are located near the town of Tellico known as ‘‘Cow Creek Drainage, Oklahoma’’. Creek watershed known as the ‘‘Black Fox Plains, Tennessee. (18) OREGON: APPLEGATE WILDERNESS.—Cer- Area’’. The area is roughly bounded by FDR (D) IRON MOUNTAINS CLUSTER.—Certain tain lands in the Siskiyou National Forest 206 in the north, the steep slopes north of lands in the Cherokee National Forest, and Rouge River National Forest in Oregon, Forest Road 231 form the southern boundary Watauga Ranger District, totaling approxi- which comprise approximately 20,000 acres, and a fork of Rapid Creek forms the western mately 58,090 acres known as the ‘‘Iron located approximately 20 miles southwest of boundary. Mountains Cluster’’. The cluster is com- the town of Grants Pass and 10 miles south (B) BREAKNECK AREA.—Certain lands in the prised of the following 8 parcels: Big Laurel of Williams, in the area generally known as Black Hills National Forest, South Dakota, Branch Addition, Hickory Flat Branch, Flint the ‘‘Applegate Wilderness’’. totaling 6,700 acres along the northeast edge Mill, Lower Iron Mountain, Upper Iron (19) SOUTH CAROLINA.— of the Black Hills in the vicinity of the Mountain, London Bridge, Beaverdam Creek, (A) BIG SHOALS, SOUTH CAROLINA AREA.— Black Hills National Cemetery and the Bu- and Rodgers Ridge. The cluster is located Certain lands in the Sumter National Forest, reau of Land Management’s Fort Meade near the towns of Briston and Elizabethton, Andrew Pickens Ranger District, Oconee Recreation Area known as the ‘‘Breakneck Sullivan and Johnson Counties, Tennessee. County, South Carolina, comprising approxi- Area’’. The area is generally bounded by For- (E) NORTHERN UNICOI MOUNTAINS CLUSTER.— mately 2,000 acres known as ‘‘Big Shoals, est Roads 139 and 169 on the north, west and Certain lands in the Tellico Ranger District South Carolina Area’’. This area is located 15 south. The eastern and western boundaries of the Cherokee National Forest, Monroe miles south of Highlands, North Carolina. are also demarcated by the ridge-crests di- County, Tennessee, comprising approxi- (B) BRASSTOWN CREEK, SOUTH CAROLINA viding the watershed. mately 30,453 acres known as the ‘‘Northern AREA.—Certain lands in the Sumter National (C) NORBECK PRESERVE.—Certain lands in Unicoi Mountains Cluster’’. This Cluster is Forest, Andrew Pickens Ranger District, the Black Hills National Forest of South Da- comprised of the following parcels known as: Oconee County, South Carolina, comprising kota, totaling approximately 27,766 acres Bald River Gorge Extension, Upper Bald approximately 3,500 acres known as known as the ‘‘Norbeck Preserve’’ encom- River, Sycamore Creek and Brushy Ridge. ‘‘Brasstown Creek, South Carolina Area’’. passed approximately by the following tra- These parcels are located near the town of This area is located approximately 15 miles verse. Starting at the southeast corner, the Tellico Plains, Tennessee. west of Westminster, South Carolina. area boundary runs north along FDR 753 and (F) ROAN MOUNTAINS CLUSTER.—Certain (C) CHAUGA.—Certain lands in the Sumter U.S. Highway Alt. 16, then along SD 244 to lands in the Cherokee National Forest, National Forest, Andrew Pickens Ranger the junction of Palmer Creek Road, which Unaka and Watauga Ranger Districts, total- District, Oconee County, South Carolina, serves generally as a northwest limit. It then ing approximately 23,725 acres known as the comprising approximately 16,000 acres known heads south from the junction of Highways ‘‘Roan Mountain Cluster’’. The cluster is as ‘‘Chauga’’. This area is located approxi- 87–89, southeast along Highway 87, and east comprised of the following seven parcels: mately 10 miles west of Walhalla, South back to FDR 753. A corridor of private land Strawberry Mountain, Highlands of Roan, Carolina. along FDR 345 is excluded. Ripshin Ridge, Doe River Gorge Scenic Area, (D) DARK BOTTOMS.—Certain lands in the (D) PIGER MOUNTAIN AREA.—Certain lands White Rocks Mountain, Slide Hollow and Sumter National Forest, Andrew Pickens in the Black Hills National Forest of South Watauga Reserve. The cluster is located ap- Ranger District, Oconee County, South Caro- Dakota, comprising approximately 12,600 proximately eight to twenty miles south of lina, comprising approximately 4,000 acres acres, known as the ‘‘Pilger Mountain Area’’ the town of Elizabethton, Unicoi, Carter and known as ‘‘Dark Bottoms’’. This area is lo- and located in the Elk Mountains on the Johnson Counties, Tennessee. cated approximately 10 miles northwest of southwest edge of the Black Hills. This area (G) SOUTHERN UNICOI MOUNTAINS CLUSTER.— Westminister, South Carolina. is roughly bounded by Forest Roads 318 and Certain lands in the Hiwassee Ranger Dis- (E) ELLICOTT ROCK EXTENSION, SOUTH CARO- 319 on the east and northeast, Road 312 on trict of the Cherokee National Forest, Polk, LINA AREA.—Certain lands in the Sumter Na- the north and northwest, and private land to Monroe and McMinn Counties, Tennessee, tional Forest, Andrew Pickens Ranger Dis- the southwest. comprising approximately 11,251 acres known trict, Oconee County, South Carolina, com- (E) STAGEBARN CANYONS.—Certain lands in as the ‘‘Southern Unicoi Mountains Clus- prising approximately 2,000 acres known as the Black Hills National Forest, South Da- ter’’. This Cluster is comprised of the fol- ‘‘Ellioctt Rock Extension, South Carolina kota, known as ‘‘Stagebarn Canyons’’, which lowing parcels known as: Gee Creek Exten- Area’’. This area is located approximately 10 comprise approximately 7,300 acres located sion, Coker Creek and Buck Bald. These par- miles south of Cashiers, North Carolina. approximately 10 miles west of Rapid City, cels are located near the towns Etowah, Ben- (F) FIVE FALLS, SOUTH CAROLINA AREA.— South Dakota. ton and Turtletown, Tennessee. Certain lands in the Sumter National Forest, (21) TENNESSEE.— (H) UNAKA MOUNTAINS CLUSTER, TENNESSEE Andrew Pickens Ranger District, Oconee (A) BALD MOUNTAINS CLUSTER, TENNESSEE AREAS.—Certain lands in the Cherokee Na- County, South Carolina, comprising approxi- AREAS.—Certain lands in the Nolichucky and tional Forest, Unaka Ranger District, total- mately 3,500 acres known as ‘‘Five Falls, Unaka Ranger Districts of the Cherokee Na- ing approximately 15,669 acres known as the South Carolina Area’’. This area is located tional Forest, Cooke, Green, Washington and ‘‘Unaka Mountains Cluster, Tennessee approximately 10 miles southeast of Clayton, Unicoi Counties, Tennessee, comprising ap- areas’’. The cluster is comprised of the Georgia. proximately 46,133 acres known as the ‘‘Bald Nolichucky, Unaka Mountain Extension and (G) PERSIMMON MOUNTAIN.—Certain lands Mountains Cluster, Tennessee Areas’’. This Stone Mountain parcels. The cluster is lo- in the Sumter National Forest, Andrew Cluster is comprised of the following parcels cated approximately eight miles from Erwin, Pickens Ranger District, Oconee County, known as: Laurel Hollow Mountain, Devil’s Unicoi and Carter Counties, Tennessee.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00070 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6739

(22) TEXAS: LONGLEAF RIDGE.—Certain lands Lake.’’ The site is located in Bayfield Coun- Ranger District, totaling approximately 1,200 in the Angelina National Forest, Jasper and ty, Wisconsin. acres, known as ‘‘Bonita Grade’’, and includ- Angelina Counties, Texas, comprising ap- (B) GHOST LAKE CLUSTER.—Certain lands in ing parcels near Mountain Lakes, Temple proximately 30,000 acres bounded on the west the Chequamegon National Forest, Great Di- Lake, and Second South Branch, First South by Upland Island Wilderness Area, on the vide Ranger District, totaling approximately Branch, and South Branch Oconto River. The south by the Neches River, and on the north- 6,000 acres, known as ‘‘Ghost Lake Cluster’’ cluster is located in Langlade County, Wis- east by Sam Rayburn Reservoir, generally and including parcels known as Chost Lake, consin. known as ‘‘Longleaf Ridge’’. Perch Lake, Lower Teal River, Foo Lake, (K) FRANKLIN AND BUTTERNUT LAKES CLUS- (23) VERMONT.— and Bulldog Springs. The cluster is located TER.—Certain lands in the Nicolet National (A) GLASTENBURY AREA.—Certain lands in in Sawyer County, Wisconsin. Forest, Eagle River-Florence Ranger Dis- the Green Mountain National Forest in (C) LAKE OWENS CLUSTER.—Certain lands in trict, totaling approximately 12,000 acres, Vermont, which comprise approximately the Chequamegon National Forest, Great Di- known as ‘‘Franklin and Butternut Lakes 35,000 acres, located 3 miles northeast of vide and Washburn Ranger Districts, total- Cluster’’, and including parcels known as Bennington, bounded by Kelly Stand Road to ing approximately 3,600 acres, known as Bose Lake Hemlocks, Luna White Deer, Echo the North, Forest Road 71 to the east, Route ‘‘Lake Owens Cluster’’ and including parcels Lake, Franklin and Butternut Lakes, Wolf 9 to the south and Route 7 to the west, gen- known as or near Lake Owens, Sage, Hidden, Lake, Upper Ninemile, Meadow, and Bailey erally known as the ‘‘Glastenbury Area’’. and Deer Lick Lakes, Eighteenmile Creek, Creeks. The cluster is located in Forest and (B) LAMB BROOK.—Certain lands in the and Northeast and Sugarbush Lakes. The Onieda Counties, Wisconsin. Green Mountain National Forest in cluster is in Bayfield County, Wisconsin. (L) LAUTERMAN LAKE AND KIEPER CREEK.— Vermont, which comprise approximately (D) MEDFORD CLUSTER.—Certain lands in Certain lands in the Nicolet National Forest, 5,500 acres, located 3 miles southwest of Wil- the Chequamegon National Forest, Medford- Eagle River-Florence Ranger District, total- mington, bounded on the west and south by Park Falls Ranger District, totaling approxi- ing approximately 2,500 acres, known as Routes 8 and 100, on the north by Route 9, mately 23,000 acres, known as the ‘‘Medford ‘‘Lauterman Lake and Kieper Creek’’, lo- and on the east by New England Power Com- Cluster,’’ and including parcels known as cated in Florence County, Wisconsin. County E. Hardwoods, Silver Creek/ pany lands, generally known as ‘‘Lamb (26) WYOMING: SAND CREEK AREA.—Certain Brook’’. Mondeaux River Bottoms, Lost Lake Esker, lands in the Black Hills National Forest, to- North and South Fork Yellow Rivers, Bear (C) ROBERT FROST MOUNTAIN AREA.—Certain taling approximately 8,300 acres known as lands in the Green Mountain National For- Creek, Brush Creek, Chequamegon Waters, the ‘‘Sand Creek Area’’, located in Crook est, Vermont, comprising approximately John’s and Joseph Creeks, Hay Creek Pine- County, Wyoming. This area is situated in 8,500 acres, known as ‘‘Robert Frost Moun- Flatwoods, 558 Hardwoods, Richter Lake, and the far northwest corner of the Black Hills. tain Area’’, northeast by Middlebury, con- Lower Yellow River. The cluster is located in Beginning in the northwest corner and pro- Taylor County, Wisconsin. sisting of the Forest Service lands bounded ceeding counterclockwise, the boundary for (E) PARK FALLS CLUSTER.—Certain lands in the Sand Creek Area roughly follows Forest on the west by Route 116, on the north by the Chequamegon National Forest, Medford- Road 863, 866, 866.1B, a line linking 866.1B to Bristol Notch Road, on the east by Lincoln/ Park Falls Ranger District, totaling approxi- Ripton Road and on the south by Route 125. mately 23,000 acres, known as ‘‘Park Falls 802.1B, 802.1B, 802.1, an unnamed road, Spot- (24) VIRGINIA.— Cluster,’’ and including parcels known as ted Tail Creek (excluding all private lands), (A) BEAR CREEK.—Certain lands known as Sixteen Lakes, Chippewa Trail, Tucker and 8219.1, a line connecting 829.1 with 864, 852.1 ‘‘Bear Creek’’, in the Jefferson National For- Amik Lakes, Lower Rice Creek, Doering and a line connecting 852.1 with 863. est, Wythe Ranger District, north of Rural (d) COMMITTEE OF SCIENTISTS.— Tract, Foulds Creek, Bootjack Conifers, Retreat, Smyth and Wythe Counties, Vir- (1) ESTABLISHMENT.—The Secretaries con- Pond, Mud and Riley Lake Peatlands, Little ginia. cerned shall appoint a committee consisting Willow Drumlin, and Elk River. The cluster (B) CAVE SPRINGS.—Certain lands known as of scientists who— is located in Price and Vilas Counties, Wis- ‘‘Cave Springs’’, in the Jefferson National (A) are not officers or employees of the consin. Federal Government; Forest, Clinch Ranger District, comprising (F) PENOKEE MOUNTAIN CLUSTER.—Certain (B) are not officers or employees of any en- approximately 3,000 acres located between lands in the Chequamegon National Forest, tity engaged in whole or in part in the pro- State Route 621 and the North Fork of the Great Divide Ranger District, totaling ap- duction of wood or wood products; and Powell River, Lee County, Virginia. proximately 23,000 acres, known as ‘‘Penokee (C) have not contracted with or rep- (C) DISMAL CREEK.—Certain lands known as Mountain Cluster’’, and including parcels resented any such entities within a 5-year ‘‘Dismal Creek’’ totaling approximately 6,000 known as or near St. Peters Dome, period prior to serving on the committee. acres in the Jefferson National Forest, Brunsweiler River Gorge, Lake Three, (2) RECOMMENDATIONS FOR ADDITIONAL SPE- Blacksburg Ranger District, north of State Marengo River and Brunsweiler River Semi- CIAL AREAS.—Within 2 years of the date of Route 42, Giles and Bland Counties, Virginia. primitive Non-motorized Areas, Hell Hole the enactment of this Act, the committee (D) STONE COAL CREEK.—Certain lands Creek, and the North County Trail Hard- shall provide Congress with recommenda- known as ‘‘Stone Coal Creek’’, totaling ap- woods. The cluster is located in Ashland and tions for additional Special Areas. proximately 2,000 acres in the Jefferson Na- Bayfield Counties, Wisconsin. (3) CANDIDATE AREAS.—Candidate areas for tional Forest, New Castle Ranger District, (G) SOUTHEAST GREAT DIVIDE CLUSTER.— recommendation as additional Special Area Craig and Botentourt Counties, Virginia. Certain lands in the Chequamegon National (E) WHITE OAK RIDGE: TERRAPIN MOUN- Forest, Medford Park Falls Ranger District, shall have outstanding biological values that TAIN.—Certain lands known as ‘‘White Oak totaling approximately 25,000 acres, known are exemplary on a regional, national, or Ridge—Terrapin Mountain’’, totaling ap- as the ‘‘Southeast Great Divide Cluster’’, international level. Biological values in- proximately 8,000 acres, Glenwood Ranger and including parcels known as or near clude— (A) the presence of threatened or endan- District of the Jefferson National Forest, Snoose Lake, Cub Lake, Springbrook Hard- east of the Blue Ridge Parkway, Botetourt woods, upper Moose River, East Fork Chip- gered species of plants or animals; (B) rare or endangered ecosystems; and Rockbridge Counties, Virginia. pewa River, upper Torch River, Venison (C) key habitats necessary for the recovery (F) WHITETOP MOUNTAIN.—Certain lands in Creek, upper Brunet River, Bear Lake the Jefferson National Forest, Mt. Rodgers or endangered or threatened species; Slough, and No-name Lake. The Cluster is (D) recovery or restoration areas of rare or Recreation Area, comprising 3,500 acres in located in Ashland and Sawyer Counties, Washington, Smyth and Grayson Counties, underrepresented forest ecosystems; Wisconsin. (E) migration corridors; Virginia, known as ‘‘Whitetop Mountain’’. (H) DIAMOND ROOF CLUSTER.—Certain lands (F) areas of outstanding biodiversity; (G) WILSON MOUNTAIN.—Certain lands in the Nicolet National Forest, Lakewood- (G) old growth forests; known as ‘‘Wilson Mountain,’’ comprising Laona Ranger District, totaling approxi- (H) commercial fisheries; and approximately 5,100 acres in the Jefferson mately 6,000 acres, known as ‘‘Diamond Roof (I) sources of clean water such as key wa- National Forest, Glenwood Ranger District, Cluster’’, including parcels known as tersheds. east of Interstate 81, Botetourt and McCaslin Creek, Ada Lake, Section 10 Lake, (4) GOVERNING PRINCIPLE.—The committee Rockbridge Counties, Virginia. and Diamond Roof. The cluster is located in shall adhere to the principles of conservation (H) FEATHERCAMP.—Certain lands located Forest, Langlade, and Oconto Counties, Wis- biology in identifying Special Areas based on in the Mt. Rodgers Recreation Area of the consin. biological values. Jefferson National Forest, comprising 4,974 (I) ARGONNE FOREST CLUSTER.—Certain SEC. 203. RESTRICTIONS ON MANAGEMENT AC- acres, known as ‘‘Feathercamp,’’ in Wash- lands in the Nicolet National Forest, Eagle TIVITIES IN ANCIENT FORESTS, ington County, Virginia, located northeast River-Florence Ranger District, totaling ap- ROADLESS AREAS, WATERSHED PRO- of the town of Damascus and north of State proximately 12,000 acres, known as ‘‘Argonne TECTION AREAS, SPECIAL AREAS, Route 58 on the Feathercamp ridge. Forest Cluster’’ and including parcels known AND FEDERAL BOUNDARY AREAS. (25) WISCONSIN.— as Argonne Experimental Forest, Scott (a) RESTRICTION OF MANAGEMENT ACTIVI- (A) FLYNN LAKE.—Certain lands in the Creek, Atkins Lake, and Island Swamp. The TIES IN ANCIENT FORESTS.—With respect to Chequamegon National Forest, Washburn cluster is located in Forest County, Wis- Ancient Forests on Federal lands, the fol- Ranger District, totaling approximately 5,700 consin. lowing prohibitions shall apply: acres within the Flynn Lake Semi-primitive (J) BONITA GRADE.—Certain lands in the (1) No roads shall be constructed or recon- Non-motorized Area, known as ‘‘Flynn Nicolet National Forest, Lakewood-Laona structed.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00071 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6740 CONGRESSIONAL RECORD — SENATE June 27, 1997 (2) No extractive logging shall be per- attorney’s fees, witness fees and other nec- Boston, a company that advises firms mitted. essary expenses. The damage award shall be on how to improve work and family (3) No improvements for the purpose of ex- paid by the violator of violators designated programs. A 1991 estimate by the Child tractive logging shall be permitted. by the court to the U.S. Treasury. The dam- Care Action Committee, a national (b) RESTRICTION OF MANAGEMENT ACTIVI- age award shall be paid from the U.S. Treas- TIES IN ROADLESS AREAS.—With respect to ury, as provided by Congress under section child care advocacy group, found that Roadless Areas on Federal lands except mili- 1304 of title 31, United States Code, within 40 U.S. businesses lose $3 billion a year tary installations, the following prohibitions days after judgment to the person or persons because of child care related absences. shall apply: designated to receive it, to be applied in pro- The cost of child care for families is (1) No roads shall be constructed or recon- tecting or restoring native biodiversity in or also significant. A 1995 report by the structed. adjoining Federal land. Any award of costs of Census Bureau showed that in 1993, the (2) No extractive logging shall be per- litigation and any award of attorney fees average weekly child care cost per ar- mitted. shall be paid within 40 days after judgment. rangement paid by families with em- (3) No improvements for the purpose of ex- (6) WAIVER.—The United States, including tractive logging shall be permitted. its agents and employees waives its sov- ployed mothers was $57. Parents using (c) RESTRICTION OF MANAGEMENT ACTIVI- ereign immunity in all respects in all ac- organized child care facilities paid the TIES IN WATERSHED PROTECTION AREAS.— tions under this subsection. No notice is re- most per arrangement at around $65 With respect to Watershed Protection Areas quired to enforce this subsection. per week. Child care is even more ex- on Federal lands except military installa- pensive in metropolitan areas than tions, the following prohibitions shall apply: By Mr. SPECTER: nonmetropolitan areas, averaging $80 (1) No roads shall be constructed or recon- S. 978. A bill to amend the Internal per week versus $55 per week. I know structed. Revenue Code of 1986 to allow employ- that licensed day care centers in some (2) No extractive logging shall be per- ers a credit for a portion of the ex- mitted. urban areas cost as much as $200 per (3) No improvements for the purpose of ex- penses of providing dependent care week, which is quite a burden on fami- tractive logging shall be permitted. services to employees, and for other lies which need the second income. (d) RESTRICTION OF MANAGEMENT ACTIVI- purposes; to the Committee on Fi- These figures serve to underscore the TIES IN SPECIAL AREAS.—With respect to Spe- nance. need for action on the part of the Fed- cial Areas on Federal lands, the following THE AFFORDABLE CHILD CARE ACT eral Government to provide the nec- prohibitions shall apply: Mr. SPECTER. Mr. President, I have (1) No roads shall be constructed or recon- essary assistance to our Nation’s work- structed. sought recognition to introduce the Af- ing families. (2) No extractive logging shall be per- fordable Child Care Act, which will Accordingly, the legislation I am pro- mitted, and ease the financial burden of child care posing today would provide a tax credit (3) No improvements for the purpose of ex- for working families by reducing the to businesses that provide licensed, on- tractive logging shall be permitted. cost of day care. I would like to com- site or site-adjacent child care for their (e) RESTRICTION OF MANAGEMENT ACTIVI- mend Congressman JON FOX from employees. Employers would be eligi- TIES IN FEDERAL BOUNDARY AREAS.—With re- Pennsylvania’s 13th District, who has spect to Federal Boundary Areas on Federal ble for a tax credit equal to 50 percent lands, the following prohibitions shall apply: sponsored this legislation in the House. of the net cost of providing dependent (1) No roads shall be constructed or recon- Our bill would provide a tax credit for care services at a child day care facil- structed. employers who provide on-site or site- ity for employees. This bill also pro- (2) No extractive logging shall be per- adjacent child care to their employees vides, however, that no credit shall be mitted, and in order to reduce the child care ex- allocated unless the employer certifies (3) No improvements for the purpose of ex- penses of the employee. that the amount of such a credit is tractive logging shall be permitted. Many employees have expressed sup- passed on to the employees using the (f) MAINTENANCE OF EXISTING ROADS.—The port for on-site day care facilities, above restrictions on the reconstruction of provider day care in the form of re- roads on Federal lands in Ancient Forests, which allow parents to spend more duced child care costs. Roadless, Areas, Watershed Protection time with their children during the The Affordable Child Care Act com- Areas, Special Areas, and Federal Boundary day, such as over the lunch hour. On- plements my recent efforts to assist Areas does not prohibit the maintenance of site child care may not be the best op- working families in a number of areas. an improved road, or any road accessing pri- tion for all families. Many families When Congress debated welfare reform vate inholdings, with the exception that any rely on relatives, centers operated by in 1995 and 1996, I worked to ensure roads which the Secretary concerned deter- churches and other religious organiza- that adequate funds were provided for mines to have been abandoned before the en- tions, or make other arrangements to actment of this act shall not be maintained child care, a critical component for or reconstructed. provide care for their children while welfare mothers who would be required (g) ENFORCEMENT.— they work. However, it is my view that to work to receive new limited welfare (1) PURPOSE AND FINDING.—The purpose of this bill represents a good start toward benefits. I am pleased that the welfare this subsection is to foster the widest pos- reducing the cost of child care for reform bill that became law provides sible enforcement of this section. Congress many Americans. $20 billion in child care funding over a finds that all people of the United States are The need for affordable and acces- 6-year period. injured by actions on lands to which this sec- sible day care is critical given the in- Providing health insurance for chil- tion applies. creasing numbers of working parents dren is also a top priority of mine, and (2) FEDERAL ENFORCEMENT.—The provisions of this section shall be enforced by the Sec- and dual-income families in the United I have sponsored legislation to estab- retary concerned and the Attorney General States. According to the Bureau of the lish a discretionary pilot program to of the United States against any person who Census, in 1975, 31 percent of married cover the 4.2 million children of the violates this section. mothers with a child younger than age working poor, who are not eligible for (3) CITIZEN SUITS.—Any citizen harmed by a 1 participated in the labor force. By Medicaid but whose parents cannot af- violation of this Act may enforce any provi- 1995, that figure had risen to 59 percent. ford private insurance. I am also a co- sion of this section by bringing an action for Almost 64 percent of married mothers sponsor of legislation introduced by my declaratory judgment, temporary restraining and 53 percent of single mothers with order, injunction, statutory damages, and colleagues, Senators CHAFEE and other remedies against any alleged violator children younger than age six partici- ROCKEFELLER, to expand the Medicaid including the United States, in any district pated in the labor force in 1995. Program to cover children whose fami- court of the United States. Yet, as reported by the Pittsburgh lies earn up to 150 percent of the Fed- (4) STANDARD OF PROOF.—The standard of Post-Gazette on June 5, 1996, only 13 eral poverty level. proof in all actions brought under this sub- percent of all major U.S. companies To encourage the adoption of chil- section shall be the preponderance of the evi- provide some form of on-site day care. dren into healthy and stable families, dence and the trial shall be de novo. Further, it costs at least $1 million to last April I introduced the Adoption (5) DAMAGE AWARD.—The court, after deter- start up such a day care center. About Promotion Act of 1996 (S. 1715) with 13 mining a violation of this section, shall im- pose a damage award of not less than $5,000, 70 percent of working parents missed at other Senators to provide tax credits shall issue one or more injunctions and other least 1 work day in the past year be- for families that adopt. Subsequently, equitable relief, and shall award to the plain- cause of child-related problems, ac- a broader piece of tax legislation, the tiffs reasonable costs of litigation including cording to Work Family Directions of Small Business Job Protection Act of

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00072 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6741 1996, was passed by Congress and signed medications, and helping with trans- THE SCHOOL OF THE AMERICAS CLOSURE ACT OF into law on August 20, 1996. This act in- portation and personal care. Many peo- 1997 cluded a $5,000 adoption tax credit for ple needing care are chronically ill. Mr. DURBIN. Mr. President, I rise qualified adoption expenses and a $6,000 More than one in five caregivers, or today to call upon my colleagues to tax credit for special needs adoptions, about 5 million households nationwide, support a bill to close the School of the and was much like our legislation. I re- take care of someone with Alzheimer’s Americas. cently reintroduced legislation to in- disease, confusion, dementia or forget- The School of the Americas is an in- crease the tax credit for special needs fulness. stitute that has outlived its usefulness adoptions for $7,500, and permit pen- Today, millions of American families and its purpose. SOA was established alty-free withdrawals from Individual face a no-win situation when an elderly over 50 years ago. Its mission is to pro- Retirement Accounts up to $2,000 for family member is no longer able to live vide military education and training to adoption expenses. independently. Taking a loved one into military personnel of Central America, In conclusion, Mr. President, encour- the family home may be much desired South America, and Caribbean coun- aging businesses to provide affordable instead of having to see a person im- tries. The training provided at the child care for their employees will help poverished by the Medicaid eligibility school in tactical intelligence, infantry provide peace of mind to those in our rules and left a ward of the State, liv- tactics, combat skills, and battle plan- Nation struggling to balance career ing in a nursing home. Obviously, on ning was designed in accordance with and family. I urge my colleagues to the other hand, very few families can U.S. strategy of a bygone era: to create join me in cosponsoring this important afford to pay for private nursing home a Latin and South American staging legislation, and I urge its swift adop- care themselves. But, bringing an el- area to thwart the Communist threat. tion. derly relative into the family home is But times have changed and there is no costly. Our public policy should recog- longer a Soviet bloc threatening to at- By Mr. SPECTER: nize this dilemma and support those tack the United States. Unfortunately, S. 979. A bill to provide a tax credit loving families seeking to care for the SOA has not successfully adapted to to families with elderly family mem- elderly with their own resources in the great changes in the world since bers living in the family home; to the their own homes. the 1992 breakup of the Soviet Union. Committee on Finance. Despite attempts made over the past Currently, there are more than 33.5 TAX CREDIT LEGISLATION couple of years to update the cur- million Americans who are 65 years of Mr. SPECTER. Mr. President, I have riculum and improve the selection age and older. In my own State of sought recognition to introduce legis- process for students and the quality of Pennsylvania, there are 2 million indi- lation that would provide a $2,500 tax the teaching staff, SOA remains an viduals 65 years of age and older. Many credit for individuals or families with anachronism. elderly family members living in the of these seniors live independent lives. In the post-cold-war era, we need to family home. As we all know, our Na- However, nationwide approximately 3.9 strengthen civilian institutions in tion’s population is living longer. With million of our elderly citizens live with Latin America and help these countries advances in medical treatment, im- relatives other than their spouse and continue to reform their militaries. provements in the Nation’s nutrition, an additional 1.7 million seniors live in This region contains some of the most and the development of drugs to com- nursing homes. My amendment would fragile democracies which need our bat infectious diseases, our Nation’s el- provide a $2,500 tax credit to individ- support in encouraging democratically derly population is expected to more uals or families who care for an elderly elected governments, the role of civil- than double by the year 2050. This de- family member in the family home. In ian institutions and economic sta- mographic change presents a unique order to qualify for this tax credit, the bility. Our focus should be on sup- challenge to America, and it is our elderly family member would have to porting these nascent civilian govern- duty to work together to ensure that be at least 65 years old, would have to ments and helping them shift author- our Nation’s elderly and every genera- reside with their family at least half of ity away from their militaries. tion of American families maintain a the taxable year, and must have been I also believe the school should be high quality of life. eligible under current law to be closed because of its past links to nu- Since the Great Depression, our Gov- claimed as a dependent on the family’s merous military personnel who have ernment has instituted several ex- tax return. committed some of the most heinous tremely successful social insurance With this amendment, families will crimes of recent memory. SOA grad- programs to protect the elderly. The be given the vital assistance necessary uates include: Panamanian dictator Social Security Program has provided to provide care to seniors in their and drug dealer, Manuel Noriega; 19 an income security net, and the Medi- homes. It will also provide flexibility Salvadoran soldiers linked to the 1989 care Program has insured that senior to families who would like to provide murder of 6 Jesuit priests, their house- citizens are afforded access to medical care to family members in their home keeper and her daughter; El Salvador care. Many families, however, are faced rather than place these seniors in insti- death squad leader, Roberto with difficult decisions when elderly tutionalized care facilities, but are D’Aubuisson; Argentinian dictator, family members are no longer able to otherwise unable to afford this finan- Leopoldo Galtieri; three of the five of- live alone. Many of these seniors are cial commitment. In Congress, we have ficers involved in the 1980 rape and brought into the family home. Others made many speeches about strength- murder of four United States church- are placed in institutional nursing fa- ening the American family and about women in El Salvador; and 10 of the 12 cilities. providing support for our Nations sen- officers responsible for the murder of While multigenerational families are ior citizens. This bill would accomplish 900 civilians in the El Salvadoran vil- not a new phenomenon in America, a both of these important goals. I urge lage, El Mozote. These criminals, mul- new survey released by the National my colleagues to join with me in sup- tiple murderers, and rapists are former Alliance for Caregiving illustrates how port of this bill to find real solutions to students and graduates of the School of contemporary multigenerational fami- the real problems faced by the growing the Americas where they received their lies are faced with extraordinary pres- numbers of caregivers and senior citi- military and counterinsurgency train- sures. Nearly two of three individuals zens in America. ing. who provide care to elderly family The U.S. military has readily admit- members are employed full or part By Mr. DURBIN (for himself, Mr. ted that these SOA graduates were time, and about half have reported that KERRY, Mr. FEINGOLD, Mrs. guilty of these atrocities. These admis- their caretaking duties have made FEINSTEIN, and Mr. sions are an embarrassment to the them late for work, forced them to WELLSTONE): United States and to our reputation as come home early or to take time off. S. 980. A bill to require the Secretary a leader in promoting human rights These caregivers spend an average of 18 of the Army to close the U.S. Army throughout the world. hours a week taking care of loved ones, School of the Americas; to the Com- In addition, recently the Pentagon grocery shopping, managing their mittee on Armed Services. released the training manuals used at

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00073 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6742 CONGRESSIONAL RECORD — SENATE June 27, 1997 SOA from 1982 to 1991. These manuals times to request additional disclosure This bill would require agencies, contained instruction in torture and of SOA policies, curriculums, training when issuing rules that have a major extortion techniques. These manuals manuals and other materials so that impact on the economy or a sector of are inconsistent with U.S. policy and the history of the school can be fully the economy, to do a cost-benefit anal- democratic ideals. I am concerned that understood. ysis to determine whether the benefits there might be other former students, The horrendous record of the SOA of the rule justify its costs and to de- trained with these manuals and guilty has inspired hundreds of Wisconsin termine whether the regulatory option of human rights abuses but who have residents to contact my office to ex- chosen by the agency is more cost ef- not as yet come to public attention. press their support for closing this fective or provides greater net benefits Some have suggested that if SOA is school. Numerous organizations, in- than other regulatory options consid- revamped and reorganized that it could cluding Public Citizen, the Washington ered by the agency. If the rule involves still serve a useful purpose. I disagree. Office on Latin America and Human a risk to health, safety or the environ- SOA cannot be salvaged. Its reputation Rights Watch also support the elimi- ment, the bill requires the agency to do is too tarnished and its name is too nation of SOA. a risk assessment as part of the anal- As a member of the Senate Com- closely linked to the assassins and rap- ysis of the benefits of the rule. ists who were trained there. The mittee on Foreign Relations, I am com- The bill also requires agencies that United States cannot deny the human mitted to promoting human rights issue major rules to establish advisory rights violations inflicted by the grad- throughout the world. In my view, our committees to identify existing rules uates of SOA. But, we still need to find Government cannot continue to sup- that the agency should consider for re- a resolution for these terrible events. I port the existence of a school that view because they have the potential, believe that closing SOA is the only counts so many murderers among its if modified, to achieve significantly alumni. While I do not doubt that it way to finally break with this chapter greater net benefits. It would also cod- can be in our national interest to con- in U.S. history. ify the review procedure now conducted duct military training with our friends Our South American neighbors need by the Office of Information and Regu- and partners, it is unexcusable that to know that human rights and demo- latory Affairs [OIRA] and require pub- such military training should take cratic values are held in high esteem in lic disclosure of OIRA’s review process. the United States. We are hampered in place at an institution with the reputa- The bill is significantly different making this claim as long as the tion of the School of the Americas. from S. 343, the Dole-Johnston bill This bill gives Members of the Senate School of the Americas remains open. which I strongly opposed and which an opportunity to separate the legiti- The continued funding of SOA does not was rejected by the Senate in the 104th mate training exercises conducted by fit into the United States long-term Congress. the U.S. military from the sordid acts strategy for the Latin American region It does not create a supermandate of many individuals who have been and undermines our credibility on that would amend existing laws nor trained at SOA. We must lift the cloud human rights issues in this hemi- does it contain mandatory decisional of suspicion that has fallen on these sphere. I call upon my colleagues to co- criteria that would establish new programs by closing SOA once and for sponsor this legislation and support standards for an agency to meet. It all. does require agencies to conduct cost- the closure of the School of the Amer- Not only are the human costs of this icas. training program unjustifiable, but so benefit analyses for major rules and ex- Mr. FEINGOLD. Mr. President, I am are its monetary costs. With a national plain whether the benefits of the rules pleased to rise as an original cosponsor debt in excess of $5 trillion, every Fed- justify the costs and whether the rule of the legislation being introduced eral program needs to be carefully is cost-effective than the other alter- today by the Senator from Illinois [Mr. scrutinized to ensure that Federal tax natives considered by the agency. It DURBIN] to close the U.S. Army School dollars are wisely spent. Given the end does not mandate the outcome of the of the Americas [SOA] located at Fort of the cold war, and in light of docu- process, only the process itself. Benning, GA. ments indicating the SOA training pro- It does not provide for judicial review SOA was created in 1946 to train gram provided instruction in tech- of the process for, or the contents of, Latin American military officers in niques which violate human rights the cost-benefit analysis or risk assess- combat and counterinsurgency skills, standards, I feel that the School of ment. The cost-benefit analysis and with the goal of professionalizing Latin Americas is an unwise expenditure, and risk assessment are made part of the American armies and strengthening de- I support eliminating it as soon as pos- rulemaking record for judicial review mocracies. Originally located in Pan- sible. of whether the final rule is reasonable. ama, the SOA moved to Fort Benning It does not provide for a petition in 1948. There has been a great deal of By Mr. LEVIN (for himself, Mr. process for challenging existing rules. controversy surrounding the types of THOMPSON, Mr. GLENN, Mr. It provides for advisory committees to leaders that have graduated from the ABRAHAM, Mr. ROBB, Mr. ROTH, identify rules for possible review, gives SOA, leading it to be called the School Mr. ROCKEFELLER and Mr. STE- the agency head the discretion to se- for Dictators. Some of SOA’s graduates VENS): lect rules for review especially taking include Manuel Noriega, at least 19 S. 981. A bill to provide for analysis into account the resources of the agen- Salvadorean officers implicated by El of major rules; to the Committee on cy, and requires the agency to review Salvador’s Truth Commission in the Governmental Affairs. the rules scheduled for review in 5 murder of 6 Jesuit priests, and officers THE REGULATORY IMPROVEMENT ACT OF 1997 years. who participated in the coup against Mr. LEVIN. Mr. President, today Mr. President, many people think former Haitian president Jean- Senator THOMPSON and I are joined by that when many of us fought hard Bertrand Aristide. Senators GLENN, ABRAHAM, ROBB, against the Dole-Johnston bill that we In 1991, following an internal inves- ROCKEFELLER, ROTH, and STEVENS in didn’t really want to reform the regu- tigation, the Pentagon removed certain introducing the Regulatory Improve- latory process. Well they are wrong. SOA training manuals from circula- ment Act of 1997. The bill would put Many of us were disappointed that we tion. On September 22, 1996, the Pen- into law—first, basic requirements for were unable to pass a comprehensive tagon released the full text of those cost-benefit analysis and risk assess- regulatory reform bill in the last Con- training manuals and acknowledged ment of major rules; second, a process gress. We weren’t going to support bad that some of those manuals provided for the review of existing rules where reform, but that doesn’t mean we instruction in techniques that, in the there is a possibility of achieving sig- didn’t want to see good reform. Those Pentagon’s words, were ‘‘clearly objec- nificantly greater net benefits; and of us who believe in the benefits of reg- tionable and possibly illegal.’’ The third, executive oversight of the rule- ulation to protect health and safety techniques in question included tor- making process. It builds on the bipar- have a particular responsibility to ture, extortion, false arrest, and execu- tisan Roth-Glenn bill that was unani- make sure that regulations are sensible tion. I and other Senators have written mously reported out of the Govern- and cost-effective. When they aren’t, the Department of Defense several mental Affairs Committee in 1995. the regulatory process—which is so

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00074 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6743 vital to our health and well being We define benefits very broadly—ex- not in any way a decisional criteria —comes under constant attack . By pressly taking into account nonquan- that the agency must meet. This only providing a common sense, moderate tifiable benefits. There is nothing in requires the agency to make its assess- and open regulatory process, we are this bill that suggests that the assess- ment. And, if, as the agency is free to contributing to the well being of that ment of benefits by an agency should do, it chooses a regulatory option process and immunizing it from the at- be only quantifiable. On the contrary, where the benefits do not justify the tacks on excesses. this bill explicitly recognizes that costs or that is not more cost effective Mr. President, I’ve fought for regu- many important benefits may be non- or does not provide greater net benefits latory reform since 1979, the year I quantifiable, and that agencies have than the other options, the agency is came to the Senate. I even had as part the right and authority to fully con- required to explain why it did what it of my platform back in 1978, the legis- sider such benefits when doing the did and list the factors that caused it lative veto—which would give Congress cost-benefit analysis and when deter- to so. Those factors could be a statute, the chance to block excessively costly mining whether the benefits justify the a policy judgment, uncertainties in the and burdensome regulations before costs. We emphatically do not intend data and the like. There is no added ju- they take effect. That was my battle for the benefits part of the equation in dicial scrutiny of a rule provided for or cry for years. I worked with former the cost-benefit analysis to be limited intended by this section. The final rule Senator Boren, for instance, trying to to merely those benefits that are quan- must still stand or fall based on wheth- get an across-the-board legislative veto tifiable. er the court finds that the rule is arbi- bill enacted into law. Last Congress we We direct the agencies to consider trary or capricious in light of the were finally able to get a version of regulatory options that provide flexi- whole rulemaking record. That is the that adopted. bility, where possible, to the regulated current standard of judicial review. I was also the author of the Regu- parties. I have been a longtime pro- The bill says that if an agency can- latory Negotiation Act which was ponent of performance standards in not make the determinations required passed in 1990 and reauthorized in 1995 regulations and not the so-called com- by the bill, it has to say why it can’t. to encourage agencies to use the colle- mand and control approach. This bill Use of the word cannot does not mean gial process of negotiation in devel- urges the agencies to include in its that an agency rule can be overturned oping certain rules in order to avoid identification of possible regulatory by a court for its failure to pick an op- the delays and costs inherent in the approaches that permit flexibility in tion that would permit the agency to otherwise adversarial process. achieving the required goal, either make the determinations required by As for an overall regulatory reform through performance standards or mar- the bill. The agency is free to use its bill, I’ve supported such legislation ket type mechanisms. discretion to regulate under the sub- since 1980, when the Senate first passed The definition of major rule, to stantive statute, and there is no impli- S. 1080, the Laxalt-Leahy bill only to which the provisions of this bill apply, cation that such rule must meet the have it die later that year in the is limited to those with a $100 million standards described in the determina- House. impact on the economy and those oth- tions subsection. It does mean, though, At the same time, I took a strong erwise designated by the Administrator that the agency is required to make stand against several damaging regu- of the Office of Information and Regu- such determinations and let the public latory reform proposals from the House latory Affairs [OIRA]. know why it picked the regulatory op- including an overall moratorium of The bill requires an agency issuing a tion that it did, and if it can’t say, or regulations and against the Dole-John- major rule to evaluate the benefits and determine, that the regulatory option ston bill in the Senate. I will not sup- costs of a ‘‘reasonable number of rea- it chose is the most cost effective or port any regulatory reform proposal sonable alternatives reflecting the provides greatest net benefits, it must that I believe would roll back impor- range of regulatory options that would say why it chose it. This legislation re- tant environmental, public health and achieve the objective of the statute as quires only that the agency be up front safety protections. Nor will I support addressed by the rulemaking.’’ I am with the public as to just how cost ben- any regulatory reform proposal that I quoting these words, because they are eficial and cost effective its regulatory believe will lead to gridlock in the significant. The bill doesn’t require an proposal is. agencies or the courts. We certainly agency to look at all the possible alter- The risk assessment requirement in don’t need that. natives, just a reasonable number; but this bill, unlike previous bills, is not We do need—better cost-benefit anal- it does require the agency to pick a se- unduly proscriptive. It establishes ysis and risk assessment, more flexi- lection of options that are available to basic elements for performing risk as- bility for the regulated industries to it within the range of the rulemaking sessments, many of which, again, will reach legislative goals in a variety of objective. provide transparency for an agency’s ways, more cooperative efforts between This cost-benefit analysis, of which development of a rule, and it requires government and industry and less ‘‘us any risk assessment would be a part, is guidelines for such assessments to be versus them’’ attitudes. intended to be transparent to the pub- issued by OIRA in consultation with Based on these common principles, lic; that is, those of us outside the the Office of Science and Technology Senator THOMPSON and I have been agency—Congress, the regulated com- Policy. working for months on this legislative munity, the beneficiaries of the regula- Peer review, Mr. President, is re- proposal that I hope will yield a more tion, the general public—should be able quired by this bill for both cost-benefit rational and fair regulatory process to see and understand the thinking the analyses and risk assessments, but and better, more flexible, more cost-ef- agency used to select the regulatory only once per rule. Peer review is not fective and more enforceable regula- option it did, as well as the underlying required at both the proposed and final tions. scientific and/or economic data. Agen- rule stages. There is great concern in Let me highlight some important cies should not hide the important in- the public interest community, that features of this legislation. formation that forms the basis of their there will not be sufficient personnel First, we say right from the begin- regulatory actions. available with appropriate expertise ning, in the section on findings, that Another important provision of this and independence to serve on each of cost-benefit analysis and risk assess- bill is the one that requires the agency these peer review bodies. I am hoping ment are useful tools to help agencies to make a reasonable determination to pursue that issue at greater length issue reasonable regulations. But they whether the benefits of the rule justify during our committee hearings. are only tools; they are not the sole the costs and whether the regulatory There is a similar concern by the basis upon which regulations should be option selected by the agency is sub- public interest sector as to the avail- developed or issued. They do not, we stantially likely to achieve the objec- ability of a balanced cross-section of explicitly state, they do not replace tive of the rulemaking in a more cost individuals to serve on the advisory the need for good judgment and the effective manner or with greater net committees required for the review of agencies’ consideration of social values benefits than the other regulatory op- rules. Service on such bodies obviously in deciding when and how to regulate. tions considered by the agency. This is takes time and expertise and both of

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Everybody will be cial, health, safety, environmental, eco- address the concerns about the possi- given an opportunity to comment and nomic, and distributional effects that are ex- bility of inadequate levels of participa- identify potential problems and pos- pected to result directly or indirectly from tion by groups and interests which sible improvements. implementation of, or compliance with, a I believe this bill will improve the rule; have fiscal constraints that could pre- ‘‘(3) the term ‘cost-benefit analysis’ means clude their full participation. regulatory process, will build con- an evaluation of the costs and benefits of a Mr. President, the review of rules fidence in the regulatory programs rule, quantified to the extent feasible and ap- provision in this bill is also a reason- that are so important to this society’s propriate and otherwise qualitatively de- able approach. Unlike past proposals, it well-being, and will result in a better— scribed, that is prepared in accordance with does not provide for an automatic sun- and I believe—a less contentious regu- the requirements of this subchapter at the set of a rule that is not reviewed pursu- latory process. level of detail appropriate and practicable ant to the schedule. Rather it provides Mr. President, I ask unanimous con- for reasoned decisionmaking on the matter for the agency to determine during the sent that additional material be print- involved, taking into consideration uncer- tainties, the significance and complexity of review period of rules it chooses to re- ed in the RECORD. There being no objection, the mate- the decision, and the need to adequately in- view whether it is going to continue, form the public; modify, or repeal the rule under re- rial was ordered to be printed in the ‘‘(4) the term ‘Director’ means the Director view. If it fails to make that deter- RECORD, as follows: of the Office of Management and Budget, act- mination and take the appropriate ac- S. 981 ing through the Administrator of the Office tion, the agency can be sued under the Be it enacted by the Senate and House of Rep- of Information and Regulatory Affairs; existing provision of the Administra- resentatives of the United States of America in ‘‘(5) the term ‘flexible regulatory options’ tive Procedure Act to force agency ac- Congress assembled, means regulatory options that permit flexi- tion unlawfully withheld. SECTION 1. SHORT TITLE. bility to regulated persons in achieving the Rules would be scheduled for review This Act may be cited as the ‘‘Regulatory objective of the statute as addressed by the rule making, including regulatory options under the provisions of this bill, only Improvement Act of 1997’’. SEC. 2. FINDINGS. that use market-based mechanisms, outcome at the discretion of the agency head. oriented performance-based standards, or However, the public would know the Congress finds the following: (1) Current regulatory programs can be im- other options that promote flexibility; list of rules recommended for review by proved by being more firmly rooted in sound (6) the term ‘major rule’ means a rule or a the advisory committee. The advisory economic and scientific analysis. group of closely related rules that— committee would recommend those (2) Cost-benefit analysis and risk assess- ‘‘(A) the agency proposing the rule or the rules for review that, if modified, could ment are useful tools to better inform agen- Director reasonably determines is likely to result in substantially greater net ben- cies in developing regulations, although they have an annual effect on the economy of $100,000,000 or more in reasonably quantifi- efits to society. That is the standard do not replace the need for good judgment and consideration of values. able costs; or the committees are supposed to apply. ‘‘(B) is otherwise designated a major rule The agency must review the rec- (3) Cost and risk need to be considered in evaluating regulatory proposals which ad- by the Director on the ground that the rule ommendations of the advisory com- dress health, safety, or the environment. is likely to adversely affect, in a material mittee and develop a schedule for re- Other factors such as social values, distribu- way, the economy, a sector of the economy, view of rules taking into account the tional effects, and equity, must also be con- including small business, productivity, com- resources available to the agency to sidered. petition, jobs, the environment, public conduct such reviews. (4) Cost-benefit analysis and risk assess- health or safety, or State, local or tribal Judicial review has been of great con- ment should be presented with a clear state- governments, or communities; ‘‘(7) the term ‘reasonable alternative’ cern to those of us who want real regu- ment of the analytical assumptions and un- certainties including an explanation of what means a reasonable regulatory option that latory reform without bottling up im- would achieve the objective of the statute as portant regulations in the courts. is known and not known and what the impli- cations of alternative assumptions might be. addressed by the rule making and that the There is no judicial review permitted (5) The public has a right to know about agency has authority to adopt under the of the cost-benefit analysis or risk as- the costs and benefits of regulations, the statute granting rule making authority, in- sessment required by this bill outside risks addressed, the amount of risk reduced, cluding flexible regulatory options; of judicial review of the final rule. The and the quality of scientific and economic ‘‘(8) the term ‘risk assessment’ means the analysis and assessment are included analysis used to support decisions. Such systematic process of organizing hazard and exposure assessments to estimate the poten- in the rulemaking record, but there is knowledge will promote the quality, integ- rity and responsiveness of agency actions. tial for specific harm to exposed individuals, no judicial review of the content of populations, or natural resources; those items or the procedural steps fol- (6) The Administrator of the Office of In- formation and Regulatory Affairs should ‘‘(9) the term ‘risk characterization’ means lowed or not followed by the agency in oversee regulatory activities to ensure con- the presentation of risk assessment results the development of the analysis or as- sistent and valid use of cost-benefit analysis including, to the extent feasible, a charac- sessment. Only the total failure to ac- and risk assessment among all agencies. terization of the distribution of risk as well tually do the cost-benefit analysis or (7) The Federal Government should develop as an analysis of uncertainties, variabilities, risk assessment would allow the court a better understanding of the strengths, conflicting information, and inferences and assumptions in the assessment; to remand the rule to the agency. weaknesses, and uncertainties of cost-benefit analysis and risk assessment and conduct ‘‘(10) the term ‘rule’ has the same meaning Finally, Mr. President, the bill puts as in section 551(4), and shall not include— into law the requirement that the the research needed to improve these analyt- ical tools. ‘‘(A) a rule exempt from notice and public President establish a process for re- comment procedure under section 553; SEC. 3. REGULATORY ANALYSIS. viewing rules and coordinating Federal ‘‘(B) a rule that involves the internal rev- (a) IN GENERAL.—Chapter 6 of title 5, agency regulatory actions. Despite United States Code, is amended by adding at enue laws of the United States, or the assess- over 15 years of Executive orders that the end the following: ment and collection of taxes, duties, or other revenue or receipts; impose such a requirement, Congress ‘‘SUBCHAPTER II—REGULATORY has yet to put such a responsibility of ‘‘(C) a rule of particular applicability that ANALYSIS approves or prescribes for the future rates, the President into law. This bill would ‘‘§ 621. Definitions wages, prices, services, corporate or finan- do that. And with that responsibility ‘‘For purposes of this subchapter the defi- cial structures, reorganizations, mergers, ac- goes the obligation of the President, nitions under section 551 shall apply and— quisitions, accounting practices, or disclo- acting through OIRA, to make public ‘‘(1) the term ‘benefit’ means the reason- sures bearing on any of the foregoing; the process and results of its review of ably identifiable significant favorable ef- ‘‘(D) a rule relating to monetary policy agency rules. This is an important ele- fects, quantifiable and nonquantifiable, in- proposed or promulgated by the Board of ment of accountability, and such dis- cluding social, health, safety, environ- Governors of the Federal Reserve System or closure should not depend upon the mental, economic, and distributional effects, by the Federal Open Market Committee; that are expected to result directly or indi- ‘‘(E) a rule relating to the safety or sound- whim of the President but rather on rectly from implementation of, or compli- ness of federally insured depository institu- the requirements imposed by perma- ance with, a rule; tions or any affiliate of such an institution nent law. ‘‘(2) the term ‘cost’ means the reasonably (as defined in section 2(k) of the Bank Hold- So those are some highlights. Sen- identifiable significant adverse effects, quan- ing Company Act of 1956 (12 U.S.C. 1841(k)); ator THOMPSON has committed to hear- tifiable and nonquantifiable, including so- credit unions; the Federal Home Loan

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00076 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6745 Banks; government-sponsored housing enter- portunity to comment under section 553 in ‘‘(i) explain why such determinations can- prises; a Farm Credit System Institution; the same manner as if the initial regulatory not be made; foreign banks, and their branches, agencies, analysis had been issued with the notice of ‘‘(ii) identify any statutory provision or commercial lending companies or represent- proposed rule making. other factor that prevents such determina- ative offices that operate in the United ‘‘(2) Each initial regulatory analysis shall tions; and States and any affiliate of such foreign contain— ‘‘(iii) describe a reasonable alternative banks (as those terms are defined in the ‘‘(A) a cost-benefit analysis of the proposed considered by the agency, if feasible, that International Banking Act of 1978 (12 U.S.C. rule that shall contain— would allow the agency to determine that 3101)); or a rule relating to the payments sys- ‘‘(i) an analysis of the benefits of the pro- the benefits justify the costs and that the tem or the protection of deposit insurance posed rule, including any benefits that can- rule making objective would be achieved in a funds or Farm Credit Insurance Fund; not be quantified, and an explanation of how more cost-effective manner or with greater ‘‘(F) a rule or order relating to the finan- the agency anticipates that such benefits net benefits than the other reasonable alter- cial responsibility, recordkeeping, or report- will be achieved by the proposed rule, includ- natives considered by the agency. ing of brokers and dealers (including Govern- ing a description of the persons or classes of ‘‘(d) Each agency shall include an execu- ment securities brokers and dealers) or fu- persons likely to receive such benefits; tive summary of the regulatory analysis, in- tures commission merchants, the safe- ‘‘(ii) an analysis of the costs of the pro- cluding any risk assessment, in the regu- guarding of investor securities and funds or posed rule, including any costs that cannot latory analysis and in the statement of basis commodity future or options customer secu- be quantified, and an explanation of how the and purpose for the rule. Such executive rities and funds, the clearance and settle- agency anticipates that such costs will re- summary shall include a succinct presen- ment of securities, futures, or options trans- sult from the proposed rule, including a de- tation of— actions, or the suspension of trading under scription of the persons or classes of persons ‘‘(1) the benefits and costs expected to re- the Securities Exchange Act of 1934 (15 likely to bear such costs; and sult from the rule and any determinations U.S.C. 78a et seq.) or emergency action taken ‘‘(iii) an evaluation of the relationship of required under subsection (c)(3); under the Commodity Exchange Act (7 the benefits of the proposed rule to its costs, ‘‘(2) if applicable, the risk addressed by the U.S.C. 1 et seq.), or a rule relating to the pro- including the determinations required under rule, including the most plausible estimate subsection (c)(3), taking into account the re- tection of the Securities Investor Protection of the risk and the results of any risk assess- sults of any risk assessment; Corporation, that is promulgated under the ment; ‘‘(iv) an evaluation of the benefits and Securities Investor Protection Act of 1970 (15 ‘‘(3) the benefits and costs of reasonable al- costs of a reasonable number of reasonable U.S.C. 78aaa et seq.), or a rule relating to the ternatives considered by the agency; and alternatives reflecting the range of regu- custody of Government securities by deposi- ‘‘(4) the key assumptions and scientific or latory options that would achieve the objec- tory institutions under section 3121 or 9110 of economic information upon which the agen- tive of the statute as addressed by the rule title 31; cy relied. making, including, where feasible, alter- ‘‘(G) a rule issued by the Federal Election ‘‘(e)(1) A major rule may be adopted with- natives that— Commission or a rule issued by the Federal out prior compliance with this subchapter ‘‘(I) require no government action; if— Communications Commission under sections ‘‘(II) accommodate differences among geo- ‘‘(A) the agency for good cause finds that 312(a)(7) and 315 of the Communications Act graphic regions and among persons with dif- conducting the regulatory analysis under of 1934 (47 U.S.C. 312(a)(7) and 315); fering levels of resources with which to com- this subchapter is contrary to the public in- ‘‘(H) a rule required to be promulgated at ply; or terest due to an emergency, or an imminent least annually pursuant to statute; or ‘‘(III) employ flexible regulatory options; ‘‘(I) a rule or agency action relating to the ‘‘(v) a description of the scientific or eco- threat to health or safety that is likely to public debt; nomic evaluations or information upon result in significant harm to the public or ‘‘(11) the term ‘screening analysis’ means which the agency substantially relied in the the environment; and an analysis using simple assumptions to ar- cost-benefit analysis and risk assessment re- ‘‘(B) the agency publishes in the Federal rive at an estimate of upper and lower quired under this subchapter, and an expla- Register, together with such finding, a suc- bounds of risk as appropriate; and nation of how the agency reached the deter- cinct statement of the basis for the finding. ‘‘(12) the term ‘substitution risk’ means an minations under subsection (c)(3); and ‘‘(2) If a major rule is adopted under para- increased risk to health, safety, or the envi- ‘‘(B) if required, the risk assessment in ac- graph (1), the agency shall comply with this ronment reasonably likely to result from a cordance with section 624. subchapter as promptly as possible unless regulatory option. ‘‘(c)(1) When the agency publishes a final compliance would be unreasonable because ‘‘§ 622. Applicability major rule, the agency shall also prepare and the rule is, or soon will be, no longer in ef- ‘‘Except as provided in section 623(e), this place in the rule making file a final regu- fect. subchapter shall apply to all proposed and latory analysis, and shall prepare a summary ‘‘§ 624. Principles for risk assessments final major rules. of the analysis consistent with subsection ‘‘(a)(1) Subject to paragraph (2), each agen- (d). ‘‘§ 623. Regulatory analysis cy shall design and conduct risk assessments ‘‘(2) Each final regulatory analysis shall in accordance with this subchapter for each ‘‘(a)(1) Before publishing a notice of a pro- address each of the requirements for the ini- proposed and final major rule the primary posed rule making for any rule, each agency tial regulatory analysis under subsection purpose of which is to address health, safety, shall determine whether the rule is or is not (b)(2), revised to reflect— or environmental risk, or which results in a a major rule covered by this subchapter. ‘‘(A) any material changes made to the significant substitution risk, in a manner ‘‘(2) The Director may designate any rule proposed rule by the agency after publica- that promotes rational and informed risk to be a major rule under section 621(6)(B), if tion of the notice of proposed rule making; management decisions and informed public the Director— ‘‘(B) any material changes made to the input into and understanding of the process ‘‘(A) makes such designation no later than cost-benefit analysis or risk assessment; and 30 days after the close of the comment period ‘‘(C) agency consideration of significant of making agency decisions. ‘‘(2) If a risk assessment under this sub- for the rule; and comments received regarding the proposed ‘‘(B) publishes such determination in the rule and the initial regulatory analysis, in- chapter is otherwise required by this section, Federal Register together with a succinct cluding regulatory review communications but the agency determines that— statement of the basis for the determination under subchapter IV. ‘‘(A) a final rule subject to this subchapter within 30 days after such determination. ‘‘(3)(A) The agency shall include in the is substantially similar to the proposed rule ‘‘(b)(1)(A) When an agency publishes a no- statement of basis and purpose for the rule a with respect to the risk being addressed; tice of proposed rule making for a major reasonable determination, based upon the ‘‘(B) a risk assessment for the proposed rule, the agency shall prepare and place in rule making record considered as a whole— rule has been carried out in a manner con- the rule making file an initial regulatory ‘‘(i) whether the rule is likely to provide sistent with this subchapter; and analysis, and shall include a summary of benefits that justify the costs of the rule; ‘‘(C) a new risk assessment for the final such analysis consistent with subsection (d) and rule is not required in order to respond to in the notice of proposed rule making. ‘‘(ii) whether the rule is likely to substan- comments received during the period for ‘‘(B)(i) When the Director has published a tially achieve the rule making objective in a comment on the proposed rule, determination that a rule is a major rule more cost-effective manner, or with greater the agency may publish such determination after the publication of the notice of pro- net benefits, than the other reasonable alter- along with the final rule in lieu of preparing posed rule making for the rule, the agency natives considered by the agency. a new risk assessment for the final rule. shall promptly prepare and place in the rule ‘‘(B) If the agency head cannot reasonably ‘‘(b) Each agency shall consider in each making file an initial regulatory analysis for determine that the final rule is likely to pro- risk assessment reliable and reasonably the rule and shall publish in the Federal vide benefits that justify the costs of the available scientific information and shall de- Register a summary of such analysis con- rule and substantially achieve the rule mak- scribe the basis for selecting such scientific sistent with subsection (d). ing objective in a more cost-effective manner information. ‘‘(ii) Following the issuance of an initial or with greater net benefits than the other ‘‘(c)(1) Each agency may use reasonable as- regulatory analysis under clause (i), the reasonable alternatives considered by the sumptions to the extent that relevant and agency shall give interested persons an op- agency, the agency head shall— reliable scientific information, including

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00077 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6746 CONGRESSIONAL RECORD — SENATE June 27, 1997 site-specific or substance-specific informa- formal or informal devices that are broadly ered by a court in determining whether the tion, is not reasonably available. representative and balanced and that consist final rule is arbitrary or capricious unless ‘‘(2) When a risk assessment involves a of panel members or participants with exper- the agency can demonstrate that the anal- choice of assumptions, the agency shall— tise relevant to the sciences involved in the ysis or assessment would not be material to ‘‘(A) identify the assumption and its sci- regulatory decisions and who are inde- the outcome of the rule. entific or policy basis, including the extent pendent of the agency program; ‘‘(e) If an agency fails to perform the cost- to which the assumption has been validated ‘‘(B) exclude any person as a panel member benefit analysis, cost-benefit determination, by, or conflicts with, empirical data; or participant if such person has a financial or risk assessment, a court shall remand or ‘‘(B) explain the basis for any choices interest in the outcome, unless such person invalidate the rule. among assumptions and, where applicable, fully discloses such interest to the agency ‘‘§ 628. Guidelines, interagency coordination, the basis for combining multiple assump- and the public; and research tions; and ‘‘(C) provide for the timely completion of ‘‘(a)(1) No later than 9 months after the ‘‘(C) describe reasonable alternative as- the peer review including meeting agency date of enactment of this section, the Direc- sumptions that were considered but not se- deadlines; tor, in consultation with the Director of the lected by the agency for use in the risk as- ‘‘(D) contain a balanced presentation of all Office of Science and Technology Policy and sessment, how such alternative assumptions considerations, including minority reports the relevant agency heads, shall develop would have changed the conclusions of the and an agency response to all significant guidelines for cost-benefit analyses and risk risk assessment, and the rationale for not peer review comments; and assessments required by this subchapter or using such alternatives. ‘‘(E) provide adequate protections for con- with significant implications for public pol- ‘‘(d) Each agency shall provide appropriate fidential business information and trade se- opportunity for public comment and partici- icy. To the extent feasible such guidelines crets, including requiring panel members or shall apply the principles of sections 623 and pation during the development of a risk as- participants to enter into confidentiality sessment. 624. The Director shall oversee and periodi- agreements. cally revise such guidelines as appropriate. ‘‘(e) Each risk assessment supporting a ‘‘(2) All peer review written comments or ‘‘(2) As soon as practicable and no later major rule under this subchapter shall in- conclusions and the agency’s written re- than 18 months after the date of enactment clude, as appropriate, each of the following: sponses to significant peer review comments of this section, each relevant agency shall ‘‘(1) A description of the hazard of concern. shall be made available to the public and adopt detailed guidelines for risk assess- ‘‘(2) A description of the populations or shall be made part of the rule making record ments required by this subchapter or with natural resources that are the subject of the for purposes of judicial review of any final significant implications for public policy. risk assessment. agency action. Such guidelines shall be consistent with the ‘‘(3) An explanation of the exposure sce- ‘‘(3) If the head of an agency, with the con- guidance issued under paragraph (1). Each narios used in the risk assessment, including currence of the Director, publishes a deter- agency shall periodically revise such agency an estimate of the corresponding population mination that a cost-benefit analysis or risk guidelines as appropriate. at risk and the likelihood of such exposure assessment, or any component thereof, has ‘‘(3) The guidelines under this subsection scenarios. been previously subjected to adequate peer shall be developed following notice and pub- ‘‘(4) A description of the nature and sever- review, no further peer review shall be re- lic comment. The development and issuance ity of the harm that could reasonably occur quired under this section for such analysis, of the guidelines shall not be subject to judi- as a result of exposure to the hazard. assessment, or component. ‘‘(5) A description of the major uncertain- cial review, except in accordance with sec- ‘‘§ 626. Deadlines for rule making ties in each component of the risk assess- tion 706(1) of this title. ment and their influence on the results of ‘‘(a) All deadlines in statutes or imposed ‘‘(b) To promote the use of cost-benefit the assessment. by a court of the United States, that require analysis and assessment in a consistent man- ‘‘(f) To the extent scientifically appro- an agency to propose or promulgate any ner and to identify agency research and priate, each agency shall— major rule during the 2-year period begin- training needs, the Director, in consultation ‘‘(1) express the overall estimate of risk as ning on the effective date of this section with the Director of the Office of Science and a reasonable range or probability distribu- shall be suspended until the earlier of— Technology Policy, shall— tion that reflects variabilities, uncertain- ‘‘(1) the date on which the requirements of ‘‘(1) oversee periodic evaluations of Federal ties, and lack of data in the analysis; this subchapter are satisfied; or agency cost-benefit analysis and risk assess- ‘‘(2) provide the range and distribution of ‘‘(2) the date occurring 6 months after the ment; risks and the corresponding exposure sce- date of the applicable deadline. ‘‘(2) provide advice and recommendations narios, identifying the range and distribu- ‘‘(b) In any case in which the failure to to the President and Congress to improve tion and likelihood of risk to the general promulgate a major rule by a deadline occur- agency use of cost-benefit analysis and risk population and, as appropriate, to more ring during the 2-year period beginning on assessment; highly exposed or sensitive subpopulations, the effective date of this section would cre- ‘‘(3) establish appropriate interagency including the most plausible estimates of the ate an obligation to regulate through indi- mechanisms to improve the consistency and risks; and vidual adjudications, the deadline shall be quality of cost-benefit analysis and risk as- ‘‘(3) where quantitative estimates are not suspended until the earlier of— sessment among Federal agencies; and available, describe the qualitative factors in- ‘‘(1) the date on which the requirements of ‘‘(4) establish appropriate mechanisms be- fluencing the range, distribution, and likeli- this subchapter are satisfied; or tween Federal and State agencies to improve hood of possible risks. ‘‘(2) the date occurring 6 months after the cooperation in the development and applica- ‘‘(g) When scientific information that per- date of the applicable deadline. tion of cost-benefit analysis and risk assess- mits relevant comparisons of risk is reason- ‘‘§ 627. Judicial review ment. ably available, each agency shall use the in- ‘‘(a) Compliance or noncompliance by an ‘‘(c)(1) The head of each agency, in con- formation to place the nature and magnitude agency with the provisions of this sub- sultation with the Director and the Director of a risk to health, safety, or the environ- chapter shall only be subject to judicial re- of the Office of Science and Technology Pol- ment being analyzed in relationship to other view in accordance with this section. icy, shall regularly evaluate and develop a reasonably comparable risks familiar to and ‘‘(b) Any determination of an agency strategy to meet agency needs for research routinely encountered by the general public. whether a rule is or is not a major rule under and training in cost-benefit analysis and risk Such comparisons should consider relevant section 621(6)(A) shall be set aside by a re- assessment, including research on modelling, distinctions among risks, such as the vol- viewing court only upon a clear and con- the development of generic data, use of as- untary or involuntary nature of risks. vincing showing that the determination is sumptions and the identification and quan- ‘‘(h) When scientifically appropriate infor- erroneous in light of the information avail- tification of uncertainty and variability. mation on significant substitution risks to able to the agency at the time the agency ‘‘(2)(A) No later than 6 months from the health, safety, or the environment is reason- made the determination. date of enactment of this section, the Direc- ably available to the agency, the agency ‘‘(c) Any determination by the Director tor, in consultation with the Director of the shall describe such risks in the risk assess- that a rule is a major rule under section Office of Science and Technology Policy, ment. 621(6), or any failure to make such deter- shall enter into appropriate arrangements ‘‘§ 625. Peer review mination, shall not be subject to judicial re- with an accredited scientific institution to ‘‘(a) Each agency shall provide for peer re- view in any manner. conduct research to— view in accordance with this section of any ‘‘(d) The cost-benefit analysis and any risk ‘‘(i) identify and evaluate a common basis cost benefit analysis and risk assessment re- assessment required under this subchapter to assist comparative risk analysis and risk quired by this subchapter that forms the shall not be subject to judicial review sepa- communication related to both carcinogens basis of any major rule covered by this sub- rate from review of the final rule to which and noncarcinogens; and chapter. they apply. The cost-benefit analysis, cost- ‘‘(ii) appropriately incorporate risk assess- ‘‘(b)(1) Peer review required under sub- benefit determination under section 623(c)(3), ments into related cost-benefit analyses. section (a) shall— and any risk assessment shall be part of the ‘‘(B) The results of the research conducted ‘‘(A) provide for the creation or utilization whole rule making record for purposes of ju- under this paragraph shall be submitted to of peer review panels, expert bodies, or other dicial review of the rule and shall be consid- the Director and Congress no later than 18

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00078 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6747 months after the date of enactment of this ‘‘(5) Members of each committee shall re- ‘‘(iv) solicits public comment on the pre- section. ceive travel expenses, including per diem in liminary determination for the rule; and ‘‘§ 629. Comparative risk analysis study lieu of subsistence, in accordance with sec- ‘‘(C) no later than 60 days before the dead- tions 5702 and 5703. line in such schedule, publish in the Federal ‘‘(a) No later than 180 days after the effec- ‘‘(6) Each committee shall be subject to the tive date of this section, the Director, in Register a final notice on the rule that— provisions of the Federal Advisory Com- ‘‘(i) addresses public comments generated consultation with the Director of the Office mittee Act (5 U.S.C. App.). of Science and Technology Policy, shall by the notice in subsection (c); ‘‘§ 633. Agency regulatory review enter into a contract with an accredited sci- ‘‘(ii) contains a determination to continue, entific institution to conduct a study that ‘‘(a) Each advisory committee appointed amend, or repeal the rule and an explanation provides— under section 632 shall develop a list of rules of such determination with respect to sub- ‘‘(1) a systematic comparison of the extent promulgated by the agency that the com- section (a) (1), (2), and (3); and and severity of significant risks to human mittee serves, which the committee deter- ‘‘(iii) if the agency determines to amend or mines should be reviewed by the agency and health, safety, or the environment (hereafter repeal the rule, contains, if required, a no- can reasonably be reviewed by the agency referred to as a comparative risk analysis); tice of proposed rule making under section within a 5-year period. In selecting rules for ‘‘(2) a study of methodologies for using 553. review, each committee shall consider the comparative risk analysis to compare dis- ‘‘(2) If the final determination of the agen- extent to which— similar risks to human health, safety, or the cy is to continue the rule, such determina- ‘‘(1) a rule could be revised to substantially environment; and tion shall constitute final agency action 60 increase net benefits, including through ‘‘(3) technical guidance and recommenda- days after the publication in the Federal flexible regulatory options; tions on the use of comparative risk analysis Register of the notice in paragraph (1)(C). ‘‘(2) the rule is important relative to other to assist in allocating resources within and ‘‘(i) If an agency makes a determination to rules being considered for review; and across agencies to set priorities for the re- amend or repeal a rule under subsection ‘‘(3) the agency has discretion under the duction of risks to human health, safety, or (h)(1)(C), the agency shall complete final statute authorizing the rule to modify or re- the environment. agency action with regard to such rule no peal the rule. later than 2 years after the deadline estab- ‘‘(b) The Director shall ensure that the ‘‘(b) In developing the list required under study required under subsection (a) is— lished for such rule under subsection (f)(2). subsection (a), each advisory committee ‘‘(j) Nothing in this section shall limit the ‘‘(1) conducted through an open process shall obtain comments and suggestions from providing peer review consistent with sec- discretion of an agency to decide, after hav- the public. ing proposed to modify or repeal a rule, not tion 625 and opportunities for public com- ‘‘(c) No later than 1 year after an advisory ment and participation; and to promulgate such modification or repeal. committee is established, such committee Such decision shall constitute final agency ‘‘(2) completed and submitted to Congress shall deliver to the agency the committee’s action for the purposes of judicial review. and the President no later than 3 years after recommended list of rules to be reviewed in ‘‘(k) Agency failure to take the actions re- the effective date of this section. order of priority. The agency shall imme- quired by this section shall be subject to ju- ‘‘(c) No later than 5 years after the effec- diately publish the list in the Federal Reg- dicial review only under section 706(1). There tive date of this section, and periodically ister and forward a copy of the list to the ap- thereafter, the President shall submit a re- propriate committees of jurisdiction in the shall be no judicial review of the preliminary port to Congress recommending legislative House of Representatives and the Senate. or final schedule. changes to assist in setting priorities to ‘‘(d)(1) No later than 60 days after receiving ‘‘(l) A court may remand a determination more effectively and efficiently reduce risks and reviewing the list of rules from its com- under subsection (h)(2) only upon a clear and to human health, safety, or the environment. mittee, the agency shall publish in the Fed- convincing showing that the agency could have adopted a reasonable alternative that ‘‘SUBCHAPTER III—REVIEW OF RULES eral Register a preliminary schedule for re- view of rules based on such list. would substantially increase net benefits, in- ‘‘§ 631. Definitions ‘‘(2) The agency shall provide in the Fed- cluding through flexible regulatory options, ‘‘For purposes of this subchapter the defi- eral Register at the time the preliminary while meeting the objectives of the statute nitions under sections 551 and 621 shall schedule is published an explanation of each as addressed by the rule making. apply. modification to the list provided by the advi- ‘‘SUBCHAPTER IV—EXECUTIVE ‘‘§ 632. Advisory committee on regulations sory committee and shall invite public com- OVERSIGHT ment on the preliminary schedule for a pe- ‘‘(a)(1)(A) No later than 90 days after the ‘‘§ 641. Definitions date of enactment of this section and every riod of no less than 60 days. ‘‘(e) The preliminary schedule under this ‘‘For purposes of this subchapter— 5 years thereafter, the head of each agency section shall propose deadlines for review of ‘‘(1) the definitions under sections 551 and described under subparagraph (B) shall es- each rule listed thereon, and such deadlines 621 shall apply; and tablish an advisory committee for the review shall occur no later than 5 years from the ‘‘(2) the term ‘regulatory action’ means of rules. date of publication of the final schedule. any one of the following: ‘‘(B) An agency referred to under subpara- ‘‘(f)(1) No later than 60 days after the close ‘‘(A) An agenda or schedule for rule mak- graph (A) is any agency that has promul- of the comment period, the agency shall pub- ings. gated a major rule during the 10-year period lish a final schedule of rules to be reviewed ‘‘(B) Advance notice of proposed rule mak- preceding the date of the establishment of an by the agency under this section. ing. advisory committee under subparagraph (A). ‘‘(2) The schedule shall establish a deadline ‘‘(C) Notice of proposed rule making. ‘‘(2) The head of an agency described under for completion of the review of each rule ‘‘(D) Final rule making, including interim paragraph (1) may establish panels under its listed on the schedule. Each deadline shall final rule making. advisory committee. occur no later than 5 years from the date of ‘‘§ 642. Presidential regulatory review ‘‘(b)(1) Each such agency head shall ap- publication of the final schedule. point a reasonable number of members to ‘‘(g) In preparing the preliminary and final ‘‘(a) The President shall establish a process serve on the agency’s advisory committee schedule, the agency shall give deference to for the review and coordination of Federal and shall designate a chairman from the the recommendations of its advisory com- agency regulatory actions. Such process members of the committee. Membership on mittee but may modify the list of rules to be shall be the responsibility of the Director. the committee shall represent a balanced reviewed, taking into account the factors ‘‘(b) For the purpose of carrying out the re- cross-section of public and private interests contained in subsection (a) and the resource view established under subsection (a), the Di- affected by the regulations of the agency, in- constraints of the agency. rector shall— cluding small businesses, small govern- ‘‘(h)(1) For each rule on the schedule under ‘‘(1) develop and oversee uniform regu- ments, and public interest groups. No em- subsection (e), the agency shall— latory policies and procedures, including ployee of the agency establishing the com- ‘‘(A) no later than 2 years before the dead- those by which each agency shall comply mittee shall serve as a member of such agen- line in such schedule, publish in the Federal with the requirements of this chapter; cy’s committee under this section. Register a notice that solicits public com- ‘‘(2) develop policies and procedures for the ‘‘(2) Each member shall be appointed for ment regarding whether the rule should be review of regulatory actions by the Director; the life of the advisory committee. The advi- continued, amended, or repealed; and sory committee shall terminate 1 year after ‘‘(B) no later than 1 year before the dead- ‘‘(3) develop and oversee an annual govern- the date on which the committee is estab- line in such schedule, publish in the Federal mentwide regulatory planning process that lished. Register a notice that— shall include review of planned agency major ‘‘(3) A vacancy on a committee shall be ‘‘(i) addresses public comments generated rules and other significant regulatory ac- filled in the same manner as the original ap- by the notice in subparagraph (A); tions and publication of— pointment. ‘‘(ii) contains a preliminary analysis by ‘‘(A) a summary of and schedule for pro- ‘‘(4) Each committee shall solicit public the agency with respect to subsection (a) (1), mulgation of planned agency major rules; comments and may solicit public participa- (2), and (3); ‘‘(B) agency specific schedules for review of tion through appropriate means including ‘‘(iii) contains a preliminary determina- existing rules under subchapter III; hearings, written comments, public meet- tion whether the rule should be continued, ‘‘(C) a summary of regulatory review ac- ings, and electronic mail. amended, or repealed; and tions undertaken in the prior year;

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00079 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6748 CONGRESSIONAL RECORD — SENATE June 27, 1997 ‘‘(D) a list of major rules promulgated in ‘‘§ 644. Judicial review fits of the rule (quantifiable and nonquantifi- the prior year for which an agency could not ‘‘The exercise of the authority granted able); the expected costs of the rule (quan- make the determinations that the benefits of under this subchapter by the Director or the tifiable and nonquantifiable); reasonable al- a rule justify the costs under section President shall not be subject to judicial re- ternatives, including flexible regulatory op- 623(c)(3); view in any manner.’’. tions—such as market-based mechanisms or ‘‘(E) identification of significant agency (b) PRESIDENTIAL AUTHORITY.—Nothing in outcome-oriented performance-based stand- noncompliance with this chapter in the prior this Act shall limit the exercise by the Presi- ards; year; and dent of the authority and responsibility that b. Cost-benefit determination. The agency ‘‘(F) recommendations for improving com- the President otherwise possesses under the shall include in the statement of basis and pliance with this chapter and increasing the Constitution and other laws of the United purpose for the rule a reasonable determina- efficiency and effectiveness of the regulatory States with respect to regulatory policies, tion: (1) whether the rule is likely to provide benefits that justify the costs of the rule; process. procedures, and programs of departments, and (2) whether the rule is likely to substan- ‘‘(c) The review established under sub- agencies, and offices. tially achieve the rule making objective in a section (a) shall be conducted as expedi- (c) TECHNICAL AND CONFORMING AMEND- more cost-effective manner, or with greater tiously as practicable and the Director’s re- MENTS.— net benefits, than the other reasonable alter- view of any regulatory action shall be lim- (1) Part I of title 5, United States Code, is natives considered by the agency. ited to no more than 90 days, unless extended amended by striking the chapter heading and If the agency cannot make those deter- for an additional 30 days at the written re- table of sections for chapter 6 and inserting minations, it shall: (1) explain why such de- quest of the rule making agency or the Di- the following: terminations cannot be made; (2) identify rector. ‘‘CHAPTER 6—THE ANALYSIS OF any statutory provision or other factor that ‘‘§ 643. Public disclosure of information REGULATORY FUNCTIONS prevents such determinations; and (3) de- scribe a reasonable alternative considered by ‘‘(a) The Director, in carrying out the pro- ‘‘SUBCHAPTER I—ANALYSIS OF the agency, if feasible, that would allow the visions of section 642, shall establish proce- REGULATORY FLEXIBILITY ‘‘Sec. agency to make such determinations. dures to provide public and agency access to The agency shall include an executive sum- ‘‘601. Definitions. information concerning regulatory review mary in the regulatory analysis and in the ‘‘602. Regulatory agenda. actions, including— statement of basis and purpose for the rule. ‘‘(1) disclosure to the public on an ongoing ‘‘603. Initial regulatory flexibility analysis. There is an exception from the regulatory basis of information regarding the status of ‘‘604. Final regulatory flexibility analysis. analysis requirements when an agency must regulatory actions undergoing review; ‘‘605. Avoidance of duplicative or unneces- act expeditiously to address an imminent ‘‘(2) disclosure to the public, no later than sary analyses. threat to health, safety or the environment. publication of a regulatory action, of— ‘‘606. Effect on other law. 2. Risk assessment principles (§ 624). If the ‘‘(A) all written communications relating ‘‘607. Preparation of analysis. major rule has the primary purpose of ad- to the substance of a regulatory action in- ‘‘608. Procedure for waiver or delay of com- dressing health, safety, or environmental cluding drafts of all proposals and associated pletion. risks, or results in a significant substitution analyses, between the Director or employees ‘‘609. Procedures for gathering comments. risk, the regulatory analysis must also in- of the Director and the regulatory agency; ‘‘610. Periodic review of rules. clude a risk assessment following general ‘‘(B) all written communications relating ‘‘611. Judicial review. statutory criteria to ensure that the assess- to the substance of a regulatory action be- ‘‘612. Reports and intervention rights. ment is scientifically sound and transparent, tween the Director or employees of the Di- ‘‘SUBCHAPTER II—REGULATORY including: Identify and explain assumptions rector and any person not employed by the ANALYSIS made when measuring risks; provide appro- executive branch of the Federal Government; ‘‘621. Definitions. priate opportunities for public comment and ‘‘(C) a list identifying the dates, names of ‘‘622. Applicability. participation during the development of the individuals involved, and subject matter dis- ‘‘623. Regulatory analysis. risk assessment; disclose relevant informa- cussed in substantive meetings and tele- ‘‘624. Principles for risk assessments. tion about the risk, including the range and phone conversations relating to the sub- ‘‘625. Peer review. distribution of risks and corresponding expo- stance of a regulatory action between the Di- ‘‘626. Deadlines for rule making. sure scenarios, identifying the range and dis- rector or employees of the Director and any ‘‘627. Judicial review. tribution and likehood of risk to the general person not employed by the executive branch ‘‘628. Guidelines, interagency coordination, population and any sensitive subpopulations, of the Federal Government; and and research. including the most plausible estimates of the ‘‘(D) a written explanation of any review ‘‘629. Comparative risk analysis study. risks; when scientific information permits, compare the risk being analyzed with other action and the date of such action; and ‘‘SUBCHAPTER III—REVIEW OF RULES ‘‘(3) disclosure to the regulatory agency, reasonably comparable risks familiar to and ‘‘631. Definitions. on a timely basis, of— routinely encountered by the general public. ‘‘632. Advisory committee on regulations. ‘‘(A) all written communications relating 3. Peer review (§ 625). Agencies shall con- ‘‘633. Agency regulatory review. to the substance of a regulatory action be- duct independent peer review for risk assess- tween the Director or employees of the Di- ‘‘SUBCHAPTER IV—EXECUTIVE ments and cost-benefit analyses related to rector and any person who is not employed OVERSIGHT major rules. Peer review is not required by the executive branch of the Federal Gov- ‘‘641. Definitions. where the agency and OMB certify that an ernment; ‘‘642. Presidential regulatory review. assessment or analysis has previously been ‘‘(B) a list identifying the dates, names of ‘‘643. Public disclosure of information. subjected to adequate peer review. 4. Deadlines for rule making (§ 626). For individuals involved, and subject matter dis- ‘‘644. Judicial review.’’. two years after the Act becomes effective, cussed in substantive meetings and tele- (2) Chapter 6 of title 5, United States Code, agencies are provided with a 6-month time phone conversations, and an invitation to is amended by inserting immediately before extension from a regulatory deadline if need- participate in meetings, relating to the sub- section 601, the following subchapter head- ed to satisfy the requirements of the Act. stance of a regulatory action between the Di- ing: 5. Judicial Review (§ 627). Judicial review is rector or employees of the Director and any ‘‘SUBCHAPTER I—ANALYSIS OF limited to making sure that agencies per- person not employed by the executive branch REGULATORY FLEXIBILITY’’. form the cost-benefit analyses and risk as- of the Federal Government; and sessments for major rules. (The process for ‘‘(C) a written explanation of any review SEC. 4. EFFECTIVE DATE. Except as otherwise provided in this Act, and content of such analysis is not subject to action taken concerning an agency regu- separate judicial review.) The cost-benefit latory action. this Act shall take effect 180 days after the date of enactment of this Act, but shall not analysis and risk assessment are to be in- ‘‘(b) Prior to the publication of any pro- apply to any agency rule for which a notice cluded in the rule making record for pur- posed or final rule, the agency shall include of proposed rulemaking is published on or be- poses of judicial review of the final rule in the rule making record— fore August 1, 1997. under the deferential arbitrary and capri- ‘‘(1) a document identifying in a complete, cious standard. clear, and simple manner, the substantive SUMMARY OF THE REGULATORY IMPROVEMENT 6. Guidelines, interagency coordination, changes between the draft submitted to the ACT OF 1997 and research (§ 628). Within 9 months, OMB is Director for review and the rule subse- 1. Regulatory Analysis (§ 623). When issuing required to consult with OSTP and relevant quently announced; major rules (costing over $100 million or agencies to develop broad guidelines for risk ‘‘(2) a document identifying those changes deemed by OMB to have a significant impact assessments and cost-benefit analyses con- in the rule that were made at the suggestion on the economy), Federal agencies must con- sistent with the Act. or recommendation of the Director; and duct a regulatory analysis, including a cost- Within 18 months, each relevant agency ‘‘(3) all written communications exchanged benefit analysis and, if relevant, a risk as- shall develop more detailed guidelines for between the Director and the agency during sessment. risk assessments tailored to agency pro- the review of the rule, including drafts of all a. Cost-benefit analysis. The cost-benefit grams consistent with the OMB/OSTP guide- proposals and associated analyses. analysis shall consider: The expected bene- lines.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00080 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6749 OMB shall consult with OSTP to coordi- tion of the Director; and all written commu- ing a sweeping law that led cities and nate and improve agency cost-benefit anal- nications exchanged between the Director states to spend nearly $20 billion to re- ysis and risk assessment practices and to de- and the agency during the review of the rule, move asbestos from public buildings. velop a strategy to agency research and including drafts of all proposals and associ- After further research, EPA officials training needs. ated analyses. Within 6 months, OMB shall consult with 10. Effective Date (Section 4). The Act eventually concluded that ripping out OSTP to arrange for research to identify and shall take effect 180 days after the date of the asbestos had been an expensive evaluate a common basis to assist compara- enactment, but shall not apply to any agen- mistake. Ironically, removing the as- tive risk analysis and risk communication cy rule for which a notice of proposed rule bestos actually raised the risk to the related to both carcinogens and noncarcino- making is published on or before August 1, public—because asbestos fibers become gens; and to appropriately incorporate risk 1997. airborne during removal. This mistake assessments into cost-benefit analyses. Mr. THOMPSON. Mr. President, I am never would have occurred if these in- 7. Comparative risk analysis study (§ 629). pleased to be able to join with Senator creased risks had been considered in OMB, in consultation with OSTP, shall enter the first place. I hope that would into a contract with an accredited scientific LEVIN and several of our colleagues in institution to conduct a study that provides introducing legislation to improve how change under the Regulatory Improve- a comparison of significant health, safety the federal government regulates. This ment Act. and environmental risks, the methodologies legislation is an effort by some of us to Finally, let me mention our Super- for such comparisons, and technical guidance devise a common solution to the prob- fund requirements. Superfund was and recommendations on the use of compara- lems of our regulatory system. We have passed with the good intention of tive risk analysis to set priorities within and some real political differences among cleaning up America’s toxic waste- across agencies. us, but we all share the same goals: sites. Unfortunately, things are not Within 5 years, the President shall submit working as well as intended. Superfund a report to Congress recommending legisla- clean air and water, injury free work- places, safe transportation systems, to has become a legal and regulatory tive changes to assist in setting priorities to maze where a good 90 percent of insur- more effectively and efficiently reduce risks name a few of the good things that can ers’ costs and 20 percent of liable par- to health, safety and the environment. come from regulation. We also all ties’ costs are spent on lawyers and 8. Review of Rules (§§ 631–633). Each agency share the goal of avoiding regulation consultants—not on cleaning up the that has issued a major rule within the last which unnecessarily interferes in peo- environment. We also have to ask if we 10 years shall establish a balanced advisory ple’s lives and businesses, which costs committee to recommend a list of rules that are focusing on the most important more than it benefits, or which—inad- the agency should review to increase net priorities. For example, Superfund im- vertently—causes actual harm. benefits. Membership of the committee shall poses extremely stringent standards I am pleased we are introducing this include a balanced cross-section of the public for cleaning up lead in groundwater. bill with Senators GLENN, ABRAHAM, and private interests affected by agency reg- Now, this is a good rule in many cases, ulations, including small business, small ROBB, ROTH, ROCKEFELLER and STE- because lead can be very toxic to chil- governments, and public interest groups. VENS. They have all toiled in the fields dren. The problem is that we may be After reviewing the recommendations of to improve regulation. overlooking more direct threats to the advisory group, the agency shall develop It was in this spirit that the legisla- and issue a schedule of rules to be reviewed children from lead. For example, lead tion we are introducing today was every 5 years, taking into account the extent paint in old houses can be a greater drafted. The Regulatory Improvement of the agencies resources to review such threat to children’s health than lead Act will promote the public’s right to rules. The agency may continue, modify or that may be under some industrial site know how and why agencies regulate, repeal the reviewed rule pursuant to notice where there are no children. Last con- and comment rule making. improve the quality of government de- gress, our committee heard testimony 9. Executive Oversight (§§ 641–644). The bill cisionmaking, and increase Govern- about how the Superfund law requires codifies the regulatory review process and ment accountability and responsive- groundwater in a Newark railyard to sets out responsibilities and authority of the ness to the people it serves. Office of Information and Regulatory Affairs be cleaner than drinking water—at The problem is that agencies some- (OIRA) to develop policies and procedures to enormous cost. Now, if land is going to times lose sight of common sense as review regulatory actions and to develop and be used for industrial purposes, and no they create regulations. Then even oversee an annual government-wide regu- children will be there, does this make well-intentioned rules can produce dis- latory planning process that includes the re- sense? The answer may be no—those view of major rules and other significant reg- appointing results. requirements may not improve the en- ulatory actions. Consider the airbag issue that has vironment much, but they may drive OIRA shall establish procedures to provide been in the news lately. The National businesses out of Newark. Nobody public and agency access to information con- Highway Transportation Safety Ad- cerning regulatory review actions. wants to open a business near a Super- ministration required high-force air- Information to be disclosed to the public fund site and risk being sued. No won- bags to maximize the odds of survival includes: the status of regulatory actions; der our inner cities are starved for written communications between OIRA and for adult males in highway crashes. jobs. In the end, we may be hurting the the agency on the regulatory action; written But the deployment force from these very people we should be concerned communications between OIRA and persons airbags can be so severe that they can about—the inner-city poor, those who outside the Executive Branch; and a list injure children, women, and the elder- identifying the dates, names of individuals already have to live with many risks in ly. Senator KEMPTHORNE has spoken their daily lives, those who do not have involved, and subject matter discussed in about the tragic death of a young girl meetings and telephone conversations relat- clout here in Washington. ing to the regulatory action between OIRA from Idaho who was decapitated when Virtually every serious student of and persons not employed by the Executive an airbag deployed during a low-impact the regulatory process agrees we can Branch. collision. The agency is now consid- do better. One study by the Harvard Information to be disclosed to the regu- ering the use of an airbag cut-off Center for Risk Analysis found that if latory agency includes: written communica- switch to avoid these tragedies. But agencies simply set their priorities in a tions between OIRA and persons outside the Mr. President, tragedies like this never smarter way, we could save an addi- Executive Branch on a regulatory action; a should have occurred. We could have list identifying the dates, names of individ- tional 60,000 lives per year at no addi- uals involved, and subject matter discussed avoided needless deaths and injuries if tional cost. Mr. President, we don’t in meetings and telephone conversations re- the agency had carefully considered have a moment to lose when we could lating to the regulatory action between the risks that high-impact airbags pose save more lives. We can set aside par- OIRA and persons not employed by the Exec- to certain populations. I hope today’s tisan politics, and we all can agree this utive Branch; and a written explanation of proposal will correct mistakes like this is the right thing to do. any review action taken. before they occur. Since I became chairman of the Gov- The agency shall include in the rule mak- A second example is the removal of ernmental Affairs Committee, I have ing record: a document identifying the sub- asbestos from our schools and other stantive changes between the draft sub- been working closely with Senator mitted to the Director for review and the public buildings. Early in the 1980s, LEVIN to forge bipartisan legislation rule subsequently announced; a document government scientists argued that as- with three major purposes: identifying those changes in the rule that bestos exposure could cause thousands First, to promote the public’s right were made at the suggestion or recommenda- of deaths. Congress responded by pass- to know how and why agencies make

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00081 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6750 CONGRESSIONAL RECORD — SENATE June 27, 1997 regulatory decisions. This legislation date and improve old rules, we do not S. 1080 over 15 years ago, to several bi- helps the public to understand agency want to set up a review process that partisan bills in the 104th Congress—S. decisions by directing agencies to— could create a litigation morass. In- 291, our unanimous Governmental Af- Allow the public to comment and stead of a petition process, agencies fairs Committee bill introduced by participate as rules are developed; dis- will use independent advisory commit- Senator ROTH and me, the Dole-John- close the benefits and burdens of major tees that would recommend a list of ston S. 343, and the Glenn-Chafee S. rules; disclose any environmental, rules that could be improved to sub- 1001. While these bills differed in many health and safety risks a rule is de- stantially increase net benefits to the ways, they all had one thing in com- signed to reduce, and make those risks public. The agency would defer to the mon, a bipartisan resolve to reform the understandable by comparing them recommendations of the advisory com- Federal regulatory process. with other risks familiar to the public; mittee, but they could not be dragged and identify major assumptions and into court if someone wanted a dif- The regulatory process is important uncertainties considered in creating ferent rule to be reviewed. because in our system of government, rules. Finally, this bill strikes a balanced Congress relies on agency regulations Second, to improve the quality of approach to judicial review. We allow to ensure the effective implementation government decisionmaking. Careful limited judicial review under the def- of the laws we enact. Improved public thought, grounded in science, will help erential arbitrary and capricious health and safety and environmental us to target problems and to find bet- standard to ensure that agencies issue protection are some of the successes ter solutions. We must carefully craft reasonable regulations using the tools provided by this process. of cost-benefit analysis and risk assess- new rules to be effective and efficient. Unfortunately, despite these suc- Agencies will carefully consider the ment. But this legislation does not pro- vide a series of trip wires that could cesses, congressional oversight has benefits and burdens of rules and use shown there are too many instances good scientific and technical informa- hinder agencies from performing their where agencies have regulated without tion. Agencies will seek out smarter missions. In other words, we realize the sufficiently analyzing the costs and ways to regulate, including flexible ap- agencies may not be perfect in com- benefits of regulation. Individuals, proaches such as outcome-oriented per- plying with this law. They may make businesses, and State and local govern- formance standards and market mecha- mistakes from time to time. We won’t ments pay too high a price for such nisms. We must modernize and improve imperil important regulations because rules already on the books. Inde- the agency made honest mistakes. We thoughtless rules. They also are often pendent committees will advise agen- just ask the agency to make reasonable burdened by statutory requirements cies how to revise rules to substan- and honest decisions, and the public de- that force agencies to impose overly tially increase the benefits to the pub- serves no less. prescriptive requirements, unnecessary Mr. President, we are devoting vast lic. unfunded mandates, or unjustified And finally, to increase Government resources to achieve our regulatory costs. goals. By some estimates, the annual accountability to the people it serves. So, while I have supported many pro- regulatory burden is nearly $700 billion The Act will require agencies to— grams to improve health and safety Clearly present regulatory proposals per year—almost $7,000 for the average American household. Our regulatory and the environment, I have also so the public, the Congress, and the worked to improve the regulatory proc- President can understand the problem goals are too important, and our re- sources are too precious, to spend this ess. This has involved legislation and at hand and help find a solution; ex- oversight in several different areas. plain any legal impediment or other money unwisely. The Regulatory Improvement Act For example, the Paperwork Reduction factor hindering the agency from will ensure that agencies conduct bet- Act, which we strengthened in 1995, re- issuing cost-effective and sensible reg- ter economic and scientific analysis be- quires Federal agencies to reduce bur- ulations, and describe any superior al- fore they issue regulations. Govern- densome information collection activi- ternatives; disclose realistic estimates ment will be more open to the public, ties, such as forms and regulatory re- of any risks addressed; document will better explain the problem, and porting requirements. The Unfunded changes made to proposed rules when will consider the best available infor- Mandates Act of 1994, which I intro- the rules are reviewed by the Office of mation to solve the problem. Agencies duced with Senator DIRK KEMPTHORNE, Management and Budget [OMB]; dis- will consider the benefits and burdens requires Congress and Federal agencies close contacts from persons outside the of different regulatory alternatives so to account for unfunded legislative and executive branch with OMB when it is we can reach the most sensible solu- regulatory requirements imposed on reviewing proposed rules, since such tions. And agencies will modernize old contacts may represent outside influ- State and local governments. Most re- rules on the books to increase the ben- cently, I supported enactment of the ence. efits to the public. In the process, we Mr. President, while it is important Congressional Review Act, which pro- won’t sacrifice our important national vides for expedited congressional re- to review what this legislation will ac- goals and values. We can make our complish, it also is important to note view of new regulations, so that we, as Government more effective, more open, politically accountable public rep- that this proposal avoids the conten- and more accountable than ever. tious issues that thwarted agreement Mr. GLENN. Mr. President, I am very resentatives, can take responsibility on legislation last Congress. pleased today to cosponsor the Regu- for implementation of the laws we First, this legislation does not con- latory Improvement Act of 1997. This enact. tain a supermandate. That is, while we legislation, introduced today by my These initiatives addressed several believe that cost-benefit analysis is an colleagues Senator CARL LEVIN and parts of the administrative process. important tool to inform agency deci- Senator FRED THOMPSON, reflects a bi- Still lacking is a comprehensive statu- sionmaking, the results of the cost- partisan effort to establish a balanced, tory framework for regulatory anal- benefit analysis do not trump existing comprehensive governmentwide stand- ysis. The search for the right mix of law. The bill explicitly recognizes that ard for Federal rulemaking. these regulatory analysis requirements sometimes an agency will issue a rule As former chairman and current was at the heart of the regulatory re- that would not pass a cost-benefit test. ranking member of the Committee on form debate in the early 1980’s, in the We only ask the agency to explain why Governmental Affairs, I have worked last Congress, and now again, in the it selected such a rule, including any for over a decade to improve the Fed- legislation introduced today. legal impediment that hindered the eral regulatory process. I must note agency from issuing a cost-justified that with me at every step has been my I believe that this legislation would rule. good friend and colleague, Senator establish the needed reforms in a bal- Second, this bill does not contain a CARL LEVIN. Now, we are joined by our anced and fair manner. It would re- petition process that would allow out- new Committee Chairman, Senator quire cost/benefit analysis and risk as- side parties to sue agencies in court to FRED THOMPSON. I am very happy to sessment of major rules, and require change particular rules that the liti- take part in this bipartisan effort. periodic review of existing rules. These gant does not like. While we believe Regulatory reform has seen many basic requirements will improve regu- there are fruitful opportunities to up- forms in Congress over the years, from latory decisionmaking and ensure that

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00082 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6751 Congress and the public are better in- making, we do not want paralysis by ston, Nunn and Heflin, toiled in these formed about regulatory impacts. analysis. And we do not want to create vineyards for many years. I believe that such regulatory reform new avenues for litigation to under- The reason for this continued effort can improve our Government and re- mine statutory requirements. If there is clear. Regulations produce enormous duce regulatory burdens without harm- is a problem with a statute, Congress benefits for society, protecting work- ing important public protections. As I should be informed and Congress ers, conserving our environment, and said many times during the debate in should correct the problem. promoting public health. But regula- the last Congress, true regulatory re- The bill’s second basic requirement is tions also impose a tremendous cost on form must strike a balance between for evaluating the risks that would be society. The purpose of regulatory re- the public’s concern over too much addressed by a major rule. This is also form is to make sure the benefits of the government and the public’s strong a fundamental provision, but here too, regulations warrant the costs. support for regulations to protect the I believe it will be very important to According to the GAO, expenditures environment, public health and safety. explore the bill’s specific risk assess- relating to pollution abatement alone The legislation developed by Senator ment language in more detail during exceeded $110 billion in 1992. While this LEVIN and Senator THOMPSON strikes committee hearings. For example, represents only a portion of the costs this balance. It requires: while science can provide critical data of regulation, it provides some guid- Cost-benefit analysis and risk assess- with which to inform a rulemaking de- ance regarding the magnitude of regu- ment of major rules; An agency cost cision, often times general observa- lation. If we can maintain the level of justification statement to explain tions cannot be reliably reduced to sin- pollution abatement, but increase the whether a rule’s benefits justify its gle point conclusions. Thus, I am con- efficiency in how we attain it, con- costs and whether it is more cost-effec- cerned that the bill’s use of the phrase sumers will ultimately reap the bene- tive or has more net benefits than ‘‘most plausible estimate of risk’’ fits. And of course every dollar that a other alternatives. If the agency can- could lead to the arbitrary selection of business spends beyond what is nec- not make that determination, it must a single risk figure, when a range of essary to protect us and our resources explain why not, and if feasible de- risks is all that the scientific evidence is one less dollar that could otherwise scribe an alternative that would, if per- would support. I agree that agencies be used to hire an employee, or fund a mitted, be cost justified; peer review of should not be led by speculation, but pay raise, or pay for a plant expansion. cost-benefit analyses and risk assess- we must not lose sight of the fact that Not only will consumers benefit, but so ments; OMB regulatory review, with caution is always in order when it will the economy. sunshine protections for fairness and comes to protecting public health and Regulating in a cost-effective fashion accountability; judicial review of rel- safety, and the environment. simply makes sense. If we can achieve evant regulatory analyses, but only in Finally, committee hearings will also the same environmental benefit for the context of review of the final rule be needed to explore the practical im- less money, or even better, achieve and the rulemaking record; and peri- pact of the legislation’s requirements more environmental benefit for the odic review of existing rules. for agency advisory panels, both for same money, then it makes sense to do All in all, I believe these are the nec- peer review of regulatory analyses and so. essary core elements of an effective identifying current rules for review. While the debate over regulatory re- regulatory reform bill. Nonetheless, These panels can provide a fair and ef- form has in the past been presented as past debates have shown that the devil fective means of providing important a choice between the economy and the is in the details. This legislation will information to agencies. But they can environment, there is a responsible be no exception. There are several also be used to unfairly sway decision- middle ground. If done wrong, regu- areas, in fact, that I believe should be makers and obscure behind-the-scenes latory reform could harm the environ- examined closely in committee hear- lobbying. Care must be taken to ensure ment, but if done right, both the econ- ings to ensure that the regulatory that such panels are broadly represent- omy and the environment benefit. process is improved and not impeded by ative and do not introduce undue delay As noted by Vice President GORE in this reform effort. or waste agency resources. Again, our November 1995, in announcing one of First, the legislation’s most funda- committee hearings will be important the administration’s regulatory reform mental provision is the requirement to discuss these issues. initiatives: that all agency major rules must have Senator LEVIN and Senator THOMP- For decades, the American political sys- a cost-benefit analysis. I believe that SON are to be commended for the work tem pitted the economy against the environ- given 16 years experience with regu- they have done to sift through the con- ment in a false conflict. America’s business latory review under Presidential Exec- tentious regulatory reform record and leaders were pitted against America’s envi- utive order, it is appropriate to estab- ronmentalists. It seemed that too often for draw out the core requirements and one side to get its way, the other side had to lish a statutory bottom line that all many of the needed details for effective lose ground, and you had to decide which major rules must be accompanied by a regulatory analysis. I believe we are side you were on, business or the environ- cost-benefit analysis. While a cost-ben- very close to having a bill that should ment. Most people didn’t like that choice, efit analysis should not control deci- pass the Senate unanimously. I support because most people, in their hearts, really sionmaking, it is a very useful tool for this legislation and urge my colleagues are on both sides and don’t see them as being decision-making, and should be used to to support it. in conflict. the extent both practical and per- Mr. ROBB. Mr. President, I rise I share the Vice President’s view that mitted. today in support of comprehensive, re- we can protect both the environment We need to be sure, however, that sponsible reform of our regulatory and the economy. The benefits of regu- this requirement is not used to under- process. It has been a long and tortuous latory reform will come primarily from mine program-specific statutory re- journey. Many thought it could not be relieving consumers from unnecessary quirements that may, for example, pre- done. But I’m pleased that it has been costs and strengthening people’s re- clude consideration of certain costs or done, and I’m pleased to join Senators spect for government. In addition, by alternatives. While I believe that a LEVIN and THOMPSON as an original developing a responsible approach to cost-benefit analysis should be done to sponsor of the Regulatory Improve- regulatory reform, we will be able to inform every major rulemaking deci- ments Act of 1997. prove what most of us having been say- sion, if a statute requires a certain ap- Efforts to reform the regulatory ing for years—that we can be true to proach to decisionmaking, the agency process began long before this Con- our principles to protect people and has to be bound by that requirement. gress, and the legislation we’re intro- preserve our natural resources without I think it will be very important to ducing today is a testament to the te- being antibusiness and antigrowth. discuss this issue during committee nacity of Senator LEVIN, who has At the same event in 1995, President hearings and decide whether the bill’s worked untiringly for responsible Clinton reiterated that growing the formulation is sufficient. A more ex- changes in the regulatory process for a economy and preserving our health and plicit savings clause may be needed. long time. Senator BUMPERS, as well as environment are compatible goals. The While we want to improve decision- our former colleagues Senators John- President stated that ‘‘protecting the

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00083 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6752 CONGRESSIONAL RECORD — SENATE June 27, 1997 health and safety of our citizens of the pitfalls found in the Dole bill. By fits a proposed rule is likely to provide, doesn’t have to come at the expense of narrowing the scope, we’ve also been and what the costs will be to achieve the bottom line,’’ and that ‘‘strength- able to concentrate our attention on those benefits. We also think people ening the economy doesn’t have to those elements which belong in a regu- have a right to know why an agency come at the expense of the air we latory reform bill but which were not would select a rule other than the most breathe, the food we eat, the water we resolved satisfactorily in the earlier cost-effective for meeting the objective drink.’’ bill. of the statute. During the last Congress, we wit- For example, we improved the ‘‘look- The bill broadly defines ‘‘benefits’’ nessed a massive effort to pass an ex- back process’’ which provides for the and ‘‘costs,’’ which provides agencies tremely broad regulatory reform bill, review of existing rules. The Dole bill with vast discretion. ‘‘Benefits’’ are de- offered by former Senator Dole. allowed rules to be placed on the sched- fined as ‘‘the reasonably identifiable Whether intentional or not, that bill ule for review either through agency significant favorable effects, quantifi- could have lowered the standards regu- action or a petitioning process review- able and nonquantifiable, including so- lating our health, our safety and our able by the courts. The petition process cial, health, environmental, economic national resources. was for those who could show that a and distributional effects, that are ex- In addition, that bill was too reliant rule would fail to meet the decisional pected to result directly or indirectly on litigation to challenge the enforce- criteria. Each petition denied would from implementation of, or compliance ment process. For example, the process have been separately reviewed by a with, a rule.’’ The term ‘‘costs’’ is simi- for reviewing existing rules was driven court. larly defined. largely by individual petitions each of The bill we’re introducing today As I stated at the beginning of my which were subject to review by a eliminates the courts from the agency comments, this has been a long, evolu- court. That bill also raised the specter review process altogether. The ques- tionary process. But I think this legis- that agency rules could be overturned tion of which rules should be reviewed lation we are introducing today rep- in court for minor procedural errors will not be the subject of litigation. In resents a responsible approach to im- that were unlikely to have affected the my view, this is one of the major im- proving the regulatory process. And I outcome of the decisionmaking proc- provements in this new version. Rather think it demonstrates what we can ac- ess. than having courts decide, through an complish when we set aside partisan The amount of litigation which adversary process, which rules should wrangling and rely on reason rather would have been created by the origi- be reviewed, the bill takes a more ra- than rhetoric to solve complex prob- nal bill, coupled with excessive paper- tional approach. Under the new bill, an lems such as this. Once again, I’ve been work requirements, would have led to advisory committee made up of a pleased to be involved in this process, agency overload. Rather than focusing cross-section of public and private in- and I commend both Senators LEVIN on producing and enforcing regulations terests affected by an agency’s regula- and THOMPSON for their determination to benefit society, the agencies would tions will recommend to the agency to see this through to conclusion. I have been tied up in court or proc- which rules to review. Agencies are re- look forward to working with my col- essing paper. And this problem would quired to give deference to the commit- leagues to improving the product and only have been exacerbated by deep tee’s list, and undertake a review of moving this legislation through the cuts proposed for many of the affected the rules selected. This will allow process. agencies. agencies to spend more of their time By Mr. DODD (for himself and After the original bill failed cloture reviewing rules and less of their time for the third time, former Senator Mr. BIDEN): in court. S. 983. A bill to prohibit the sale or Johnston, Senator LEVIN and I and our The most important aspect of a regu- other transfer of highly advanced staffs spent a great deal of time and en- latory reform bill is how it will change weapons to any country in Latin Amer- ergy trying to find common ground. agency behavior prospectively. We ica; to the Committee on Foreign Rela- Many Senators from both sides of the want to encourage agencies to choose tions. aisle were committed to reforming the the most cost-effective method for THE LATIN AMERICAN ARMS CONTROL ACT OF regulatory process, and we tried to use achieving the regulatory goal and to 1997 the synergy of the expertise of Sen- select a rule where the benefits justify Mr. DODD. Mr. President, today, I ators LEVIN and Johnston to develop an its costs whenever possible. come to the Senate floor to introduce acceptable package. Ideas and drafts Under current law, agencies are not legislation designed to send a signal to were frankly exchanged during the directed to take those factors into ac- the Clinton administration that the many hours of meetings we held. In be- count. In fact, agencies are given broad current United States policy of ban- tween meetings, we talked to inter- discretion under current law when de- ning the sale or transfer of sophisti- ested parties, including labor groups, veloping rules to implement statutes. cated fighter aircraft and other arma- environmental groups, business groups The only guide an agency must use to ments to Latin American countries— and the administration. The purpose of develop rules is the language of the which has by and large been United this excercise of listening and drafting statute upon which the rule is based. States policy for some 20 years—should was to determine whether we could That is the standard against which an not be altered. craft a responsible middle ground on agency’s action will be judged if chal- The bill I am introducing today regulatory reform. lenged in court. The agency must be would call upon the President to re- The three of us came very close to able to demonstrate that the rule satis- spect the requests of a number of Latin settling on a middle ground, but even- fies the statutory requirement. American leaders and prominent polit- tually the Presidential campaign made This legislation requires agencies to ical figures to maintain a moratorium it impossible to complete action. But consider additional criteria in devel- on the export of United States ad- what evolved from that process last oping major rules. The rule would not vanced weapons to that region. It year laid the groundwork for the ef- only have to meet the standard con- would also prohibit the issuances of the forts which began this Congress. With tained in the statute upon which the necessary licenses for such exports un- Presidential politics safely behind us, rule is based, as required under current less the President first certificated and with a substantially lowered dec- law, but would also have to consider that such sale was in the national secu- ibel level, Senators THOMPSON and whether the rule is the most cost-effec- rity interest of the United States and LEVIN were able to focus on the critical tive approach and meets a cost-benefit the Congress concurred with that find- elements and develop responsible re- test. If the agency adopts a rule which ing. form. The scope of the legislation has is not the most cost-effective, or where The Clinton administration is cur- been narrowed to address only those the benefits do not justify the costs, rently in the process of reviewing that issues which are essential to improving the agency must explain why it chose policy predominantly as a result of our regulatory process. that approach. We think consumers, heavy lobbying by those who are seek- By focusing on the essential require- taxpayers, and those subject to regula- ing to open up a new front for high dol- ments of reform, we’ve avoided many tion have a right to know what bene- lar sales of state-of-the-art defense

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00084 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6753 technology to countries in the Western ica. Nothing could be further from the tures in order to maintain parity with Hemisphere—particularly those in truth. Between 1992–1995 the United neighboring militaries—in some cases South America. States was the single largest supplier militaries that they have been in con- Mr. President, President Clinton has of weapons to Latin America, cap- flict within the last 20 years—Peru and a record he can be proud of with re- turing more than 25 percent of that Ecuador as recently as 1995. spect to the Western Hemisphere. The market. According to the Congres- I am strongly supportive of efforts 1994 Summit of the Americas, hosted sional Research Service during fiscal designed to improve U.S. export per- by the United States, to which all but years 1993–1996, U.S. arms sales to formance. Certainly we all want to see one head of state in the hemisphere Latin American nations averaged near- U.S. exports continue to grow—exports was invited, was hugely successful. ly $200 million annually. are critical to the health of our own Since that time, the President, to- No one is suggesting that Latin economy and are a primary source of gether with his colleagues throughout American countries, or that Latin jobs for hard working American men the region, has endeavored to pursue American militaries do not have legiti- and women. the hemispheric agenda that the re- mate defense and national security re- However, I would argue that it is gion’s leaders agreed to during the quirements that can only be met from shortsighted on our part to push coun- course of that summit—namely to foreign sources. I would strongly argue tries in the hemisphere to divert scarce strengthen democracy, increase trade, that our current policy is absolutely resources for nonproductive, one-time, bolster national security and combat compatible with those countries being arms purchases. drug trafficking. able to fulfill their legitimate require- These resources could be more wisely I would respectfully assert that were ments. spent repairing badly eroded infra- the United States to alter our policy of Sales of appropriate U.S. defense ar- structures and on other productive in- arms restraint with respect to the re- ticles and equipment have and should vestments that will reduce unemploy- gion, we would be undermining efforts continue. ment in these countries and generate to implement those important hemi- But, collective arms restraint should domestic purchasing power that will spheric objectives. Heretofore, the also be a part of any effort by regional provide for a more stable and sustain- President had been on the record in leaders to prepare their armed forces able market for U.S. nondefense ex- support of arms restraint, particularly for their role in the 21st century. ports. In that regard, I believe that the with respect to sales to developing Mr. President, it is my hope that the Governments of Argentina and Brazil countries. legislation I am introducing today will Last year, President Clinton joined deserve special recognition for the very call attention to the issues and con- with other members of the so called G– significant progress they have made in cerns I have raised today, and hope- 7 countries at the Lyon Summit to un- this area. fully will provoke a serious debate on derscore the importance of developing Mr. President, the region is at peace. the wisdom of altering a policy that and transition countries giving pri- Democracy is the order of the day. The has worked so well to promote U.S. in- ority to avoiding unproductive expend- demands on governments throughout terests in this hemisphere. itures, in particular excessive military the region to meet pressing economic spending. and social needs have never been great- Mr. President, I ask unanimous con- The International Monetary Fund er while government resources are se- sent to have printed in the RECORD a (IMF), which is responsible for moni- verely constrained. Now would seem a letter from former President Jimmy toring economic policies and balance of perfect opportunity to make real Carter in support of this legislation, payments throughout the world, has progress in reaching a regional arms along with the text of the bill. also given high priority to warning control agreement to deter future arms There being no objection, the bill and against the dangers of arms purchases. races, and thereby better marshal letter were ordered to be printed in the Most recently, on June 19, during the scarce resources. RECORD, as follows: Article IV consultations with the The entire region has just recently Be it enacted by the Senate and House of Rep- United States, where the performance recovered from a decade of negative resentatives of the United States of America in of the United States economy was re- growth. And, while growth is now on Congress assembled, viewed, the IMF staff, ‘‘urged the the upswing in many countries, more SECTION 1. SHORT TITLE. United States, together with other than half of them currently have per- This Act may be cited as the ‘‘Latin Amer- major countries, to administer their capita income levels below those ican Arms Control Act of 1997’’. policies on military sales to developing achieved by them 10 years ago. The SEC. 2. FINDINGS. and transition economy countries in a educational systems throughout the re- Congress makes the following findings: way that avoids encouraging unproduc- gion need major infusions of resources (1) It has been United States policy since tive expenditures and heightening se- to prepare the children of the Americas the Presidential directive of May 19, 1977, to refrain from making sales or other transfers curity tensions.’’ for the next decade. Currently, less to governments of Latin American countries It would be the ultimate irony, after than half of those children who enter of highly advanced weapons systems that all the time and effort that the Presi- the first grade remain in school could undermine regional military balances dent and his administration has ex- through the fifth grade. This is a stag- or stimulate an arms race. pended in helping to plant the seeds of gering statistic and one that needs to (2) There has only been one exception to democracy in our own hemisphere, and be changed. However, that isn’t going that policy, the sale of F–16 fighter aircraft in so carefully nurturing those seeds as to happen unless government resources to Venezuela in 1982, in response to a per- they have germinated and bloomed, if are devoted to this objective. ceived Cuban military buildup, including the he were to make a decision that would Perhaps that is why there has been acquisition by Cuba of Soviet-made MIG–23 fighters. undermine all of those efforts. no drumbeat from governments (3) While United States defense companies I believe that a decision to alter our throughout the hemisphere that Presi- have not been able to sell highly advanced current policy to permit the export of dent Clinton abandon our policy of weapons to Latin America, they are a major highly advanced weaponry to the re- arms restraint. In fact, heads of state supplier of military equipment to the region gion would do just that. Over the me- from Argentina, Brazil, Uruguay, and and hold the largest share of that market. dium term it could only serve to dis- Paraguay have publicly expressed their (4) From fiscal year 1993 through fiscal turb the delicate regional military bal- concerns about our altering the cur- year 1996 the United States Government sold ance and thereby pose a serious threat rent United States policy. $789,000,000 in arms to Latin America. to regional peace and economic pros- They know better than we do, the (5) In August 1996, Secretary of State War- perity. kinds of pressures that they will con- ren Christopher stated that his ‘‘strong con- viction is that we should be very careful Mr. President, if you were to listen front from their own militaries once about raising the level of competition be- to American defense contractors you this proverbial cat is out of the bag. tween countries with respect to arms sales’’. would think that our current policy One military instititution after an- (6) There are historic hostilities and mis- has prevented them from earning even other will seek to justify demands for trust in Latin America that can flare into 1 dollar on arms sales to Latin Amer- more and more costly defense expendi- serious conflict, as evidenced most recently

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00085 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6754 CONGRESSIONAL RECORD — SENATE June 27, 1997 by the 1995 border war between Peru and Ec- Act, that you plan to introduce in the Sen- vanced weapons. In this respect, it is uador that required international efforts to ate. It is a far-sighted statement, which I important to note that many senior resolve. hope your colleagues will endorse. Regret- figures in Latin America have come (7) For the first time in modern history, all tably, the momentum for an arms race in but one country in the Western Hemisphere South America seems to be increasing at the down on the side of restraint. In April is governed by democratically elected lead- very moment that the Cold War is over and of this year, for example, the Council ers. democracy has taken root. Your bill offers of Freely Elected Heads of Govern- (8) Latin America has just recovered from an alternative to an arms race in a way that ment—an organization consisting of a decade of negative growth, as measured on respects Latin America. current and former hemispheric leaders a real per capita basis, and 18 of the coun- I sincerely hope your colleagues join you from leading countries in the region— tries in the Western Hemisphere currently in this important endeavor at discouraging called on Latin American governments have per capita income levels below those an arms race in Latin America. I commend achieved by them ten years ago. you for your leadership in Congress on this to ‘‘accept a moratorium of two years (9) Poverty and insufficient educational issue. Let me know if there is anything else before purchasing any sophisticated opportunities continue to be a major chal- I can do to further our shared goal. weapons.’’ In the interim, the Council lenge to democratic governments in the Sincerely, urged governments of the region to Western Hemisphere, with less than one-half JIMMY CARTER. ‘‘explore ideas to restrain such arms,’’ of the children entering first grade remain- Mr. BIDEN. Mr. President, I am and urged governments that sell arms, ing in school until grade five, and with more than 100,000 street children in cities through- pleased to join the Senator from Con- including the United States, ‘‘to affirm out Latin American countries. necticut in sponsoring legislation their support for such a moratorium.’’ (10) At the meeting of the Council of Free- aimed at preventing the commence- This legislation that Senator DODD ly Elected Heads of Government on April 29, ment of an arms race in Latin Amer- and I introduce today would heed that 1997, representatives of Latin American gov- ica. request by expressing support for such ernments on the Council discussed the issue For the past two decades, the United a moratorium, and banning the trans- of arms sales to Latin American countries, States has prohibited the sale or trans- fer to the region of highly advanced pledged to accept a two-year moratorium on fer of advanced military equipment to the purchase of highly advanced weapons, weapons by the United States, unless called upon countries in the Western Hemi- the region. The ban, instituted by such transfer conforms to an inter- sphere to explore ideas to restrain future President Carter, has been generally national agreement governing sales to, purchases, and called upon the United States maintained since the late 1970’s, in- or purchases by, nations of the region. and other governments that sell arms to af- cluding during the administrations of In other words, if a regional arms con- firm their support for such a moratorium. Presidents Reagan and Bush. The lone trol agreement is negotiated permit- SEC. 3. SENSE OF THE SENATE. exception occurred in 1982, in response ting some sales but prohibiting others, It is the sense of the Senate that the Presi- to a perceived Cuban military buildup, arms transfers by the United States dent should respect the request of Latin when the United States sold F–16 fight- American heads of government for a two- would be allowed, provided such trans- year moratorium on the sale or other trans- er aircraft to the Government of Ven- fers conform to the arms control agree- fer of highly advanced weapons to Latin ezuela. ment then in place. American countries while proposals for re- The ban was instituted during a dif- It should be emphasized that this bill gional arms restraint are studied. ferent era, when many nations of the would not ban all sales of military SEC. 4. PROHIBITION. region were under the rule of military equipment to Latin America. Rather, (a) IN GENERAL.—Notwithstanding any dictators. To be sure, the nations of it would merely continue, in law, the other provision of law, under the Arms Ex- Latin America have made important policy and practice adhered to by the port Control Act or any other Act— (1) no sale or other transfer may be made advances since that period. Politically, executive branch for the past two dec- of any highly advanced weapon to any Latin dictatorship has given way to democ- ades: to not sell sophisticated military American country, racy. Every nation of the hemisphere— equipment such as advanced combat (2) no license may be issued for the export with the glaring exception of Cuba—is aircraft and attack helicopters to the of any highly advanced weapon to any Latin now governed by a democratically cho- nations of Latin America. It would per- American country, and sen leader. Additionally, after the lost mit U.S. firms to continue to sell other (3) no financing may be extended with re- decade of the 1980’s—a period of nega- spect to a sale or export of any highly ad- military equipment to Latin America— vanced weapon to a Latin American country, tive economic growth in many nations a market in which the United States unless the requirements of subsection (b) are of the region—the region is beginning now holds the largest share, and in satisfied and except as provided in sub- to recover economically. Indeed, the which U.S. firms have sold a total of section (c). nations of the region have made tre- nearly $800 million over the past 4 fis- (b) REQUIREMENTS.—The requirements of mendous progress in the past few cal years. this subsection are satisfied if— years, shedding the statist policies of Mr. President, it is the policy of the (1) the President determines and certifies past decades and embracing free mar- to Congress in advance that the sale, trans- United States to promote greater hem- fer, or financing, as the case may be, is nec- kets and free trade. ispheric integration—an objective pur- essary to further the national security inter- Although the times have changed, sued in the process initiated at the ests of the United States; and the need for restraint in the sale of Summit of the Americas, which was (2) Congress has enacted a joint resolution arms has not. First, although the re- hosted by President Clinton in 1994. approving the Presidential determination. gion is advancing economically, it is The policy set forth in this bill ad- (c) EXCEPTION.—Subsection (a) does not abundantly clear that few nations of vances that objective by honoring the apply to any sale, sales, financing, or license the region can afford the high costs permitted by an international agreement request of several Latin American na- that provides for restraint— that an arms race would impose. Sec- tions that they pursue a regional arms (1) in the purchase of highly advanced ond, an arms race in the region would control approach before advanced weapons by countries in Latin America; or be destabilizing—not only among na- weapons are introduced into the re- (2) in the sale or other transfer of highly tions of Latin America, but within gion. I urge my colleagues and the ad- advanced weapons to countries in Latin those nations where civilian control of ministration to support this legisla- America. the military is not yet fully consoli- tion. SEC. 5. DEFINITION OF HIGHLY ADVANCED dated. The Armed Forces remain im- WEAPONS In this Act, the term ‘‘highly advanced portant institutional actors in many By Mr. GRAHAM (for himself, weapons’’ includes advanced combat fighter nations of the region; the increased Mr. DEWINE, Mr. MACK, Mr. aircraft and attack helicopters but does not emphasis on arms procurement and MCCAIN, and Ms. MOSELEY- include transport helicopters. arms budgets could undermine the pri- BRAUN) (by request): orities and powers of the civilian lead- S. 984. A bill to promote the growth THE CARTER CENTER, ership. of free enterprise and economic oppor- Atlanta, GA, June 25, 1997. In the past year, there has been con- tunity in the Caribbean Basin region, Hon. CHRISTOPHER DODD, siderable discussion within the Clinton increase trade and investment between U.S. Senate, Committee on Foreign Relations, Washington, DC. administration, and among the nations the Caribbean Basin region and the TO SENATOR CHRISTOPHER DODD: I have of the region, about the wisdom of lift- United States, and encourage the adop- read the draft, Latin American Arms Control ing the U.S. ban on the sale of ad- tion by Caribbean Basin countries of

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00086 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6755 policies necessary for participation in implementation of the 1983 Caribbean Our security interests are also at the free trade area of the Americas; to Basin Initiative, from a deficit of $700 stake here. We have seen time and the Committee on Finance. million in 1985 to a surplus of $2.0 bil- again how economic instability can fo- THE UNITED STATES-CARIBBEAN BASIN TRADE lion in 1993. ment political turmoil, which in turn ENHANCEMENT ACT On a per capita basis, our surplus can require American political or mili- Mr. GRAHAM. Mr. President, I rise with the Caribbean has consistently tary involvement. this afternoon to introduce the United outplaced our surplus with any other In the past, as the citizens of my States-Caribbean Basin Trade En- region of the world. home State of Florida know all too hancement Act, and I am proud to be In the past 3 years alone, U.S. ex- well, economic and political instability joined by my colleagues Senators ports to the Caribbean Basin countries has also resulted in massive refugee DEWINE, MACK, MCCAIN, and MOSELEY- have increased by 22.8 percent. flows to the United States, which place BRAUN. This act also provides incentives for an unfair burden on U.S. taxpayers. This bill will enhance both our eco- continued legal and regulatory reform Second, the Caribbean has been one nomic and national security, while at that will make it easier for U.S. prod- of the principal transit regions for drug the same time strengthening that of ucts to compete in the markets of the traffickers moving their poisonous some of our closest and most loyal Caribbean Basin. cargo from the source countries of neighbors and allies—the nations of the By conditioning full benefits on the South America. Caribbean Basin. progress of economic reform, this act Several years ago, our efforts at re- Over the last decade, the United will benefit Americans as well as the ducing drug trafficking in the Carib- States has played a vital role in the people of the Caribbean. bean were so successful that we di- spread of democracy and the growth of It will open Caribbean markets to verted the traffickers to the Southwest free enterprise throughout the Western U.S. goods and services, and expand op- border. Unfortunately, recent law enforce- Hemisphere. portunities for U.S. businesses to enjoy Today, every nation in the Western the fruits of economic expansion that ment efforts along the Southwest bor- Hemisphere—with the notable, lamen- is occurring in the region. der have resulted in intensified relo- table exception of Cuba, where des- Let me give a couple of examples of cated, re-energized narcotics traf- potism and communism are taking ways that the incentives in this legis- ficking in the Caribbean. It is critical that the people of the their last gasps of life—has a demo- lation will help increase U.S. exports Caribbean Basin have real opportuni- cratic government and is opening its to the Caribbean. ties in the legal economy so they are economy in unprecedented ways. First, in order to receive any bene- not forced to turn to drug trafficking Democratic elections have become fits, a country must demonstrate its commitment to undertake its World to feed their families. the norm rather than the exception, In addition, the recent World Trade and hemispheric trade integration is a Trade Organization obligations on or ahead of schedule, and it must partici- Organization decision on bananas could common goal. have a devastating effect on the econo- But we in the United States must not pate in negotiations toward the com- mies of several countries in the region, allow success to breed neglect. pletion of a hemispheric free-trade thereby exacerbating the potential for Now is not the time to turn away agreement. Those are requirements for initial participation in this program. people to turn to illegal activities. from Latin America and Caribbean or Strengthening Caribbean economies Second, Caribbean nations must meet to turn our back on our backyard, through enhanced trade and economic certain economic requirements to re- something, unfortunately, that we activity will help keep drugs off the ceive the full benefits of our legisla- have done all too often in the past. streets of America, and out of the Continued attention is required to tion, which are only available after the hands of America’s children. consolidate and institutionalize these initial 3-year period. Mr. President, trade integration will These full benefits include equitable democratic and economic gains. occur in this hemisphere, whether we and reasonable market access to U.S. As we have seen recently in Haiti, choose to be part of it or not. economic and political instability in companies, protection of intellectual It is in our interest to bring more the Caribbean region can have tragic property rights, protection to investors countries into bilateral and multilat- consequences and impose enormous and investments, aggressive action eral trade agreements with the United costs to the United States. against corruption, transparent and States. We must remain vigilant and engaged competitive procedures in government If we fail to seize this opportunity, to ensure that other nations of the Car- procurement, and the adoption of others will take our place of leader- ibbean Basin do not experience similar internationally established rules on ship, and our economy will be the turmoil and tragedy. customs valuation. loser. The United States-Carribean Basin This legislation also encourages our This legislation gives us an oppor- Trade Enhancement Act is part of our trading partners to enhance U.S.-Carib- tunity to set the parameters of trade effort to consolidate democracy and bean cooperation in fighting drug traf- agreements, so that we can ensure that economic stability in the region. ficking. United States’ interests are secured, This act will bring tremendous bene- Mr. President, this legislation is not and that truly fair trading relation- fits to the United States as well. a free ride. It is a two-way street. ships are established. It is in both our economic and our We are providing these nations with There is no region in the world in national security interests to enact economic benefits, while at the same which the United States has a stronger this legislation. time expecting them to take steps that and more mutually beneficial relation- It will enhance our economic secu- will be good for American economic in- ship than the Caribbean Basin. rity both by opening new markets for terests. This bill will enhance our trading re- American goods, and by strengthening This act will strengthen Caribbean lationship with our neighbors and have the economies of our closest neighbors. economies while providing incentives tremendous benefits for the United Increased economic growth among to implement reforms that will open States. the nations of the region will provide new markets, and reduce risk, for U.S. I urge my colleagues to consider and growing markets for U.S. products. companies who wish to compete in the support the United States-Caribbean The United States enjoys a trade sur- Caribbean market. Trade Enhancement Act as a dem- plus with the Caribbean Basin. It will protect U.S. trademarks from onstration of our commitment to en- Historically, our economy has been piracy, permit U.S. companies to com- couraging economic and political sta- the chief beneficiary of a lowering of pete fairly for government procure- bility and to furthering the democratic trade barriers between the Caribbean ment contracts, and help to eliminate progress that has been made in our Basin and the United States. corruption. hemisphere, and around the world. The United States’ trade position rel- This is a good deal for both the Mr. President, I send the bill to the ative to the Caribbean Basin countries United States the countries of the Car- desk and ask for its appropriate refer- improved dramatically following the ibbean Basin. ral, and I ask unanimous consent that

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00087 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6756 CONGRESSIONAL RECORD — SENATE June 27, 1997 the text of the bill be printed in the ings given those terms in section 2 of the Congress the first report required under sec- RECORD. Uruguay Round Agreements Act (19 U.S.C. tion 212(f), the President may proclaim fur- There being no objection, the bill was 3501). ther reductions in duty for an article de- scribed in clause (i) or (ii) that is a product ordered to be printed in the RECORD, as SEC. 4. TEMPORARY PROVISIONS TO PROVIDE ADDITIONAL TRADE BENEFITS TO of a CBTEA beneficiary country if the Presi- follows: CERTAIN BENEFICIARY COUNTRIES. dent determines that the performance of the S. 984 (a) TEMPORARY PROVISIONS.—Section 213(b) country is satisfactory under the criteria Be it enacted by the Senate and House of Rep- of the Caribbean Basin Economic Recovery listed in paragraph (5)(C)(ii). The rate of resentatives of the United States of America in Act (19 U.S.C. 2703(b)) is amended to read as duty proclaimed by the President shall be no Congress assembled, follows: less than— ‘‘(b) IMPORT-SENSITIVE ARTICLES.— SECTION 1. SHORT TITLE. ‘‘(aa) with respect to an article described ‘‘(1) IN GENERAL.—Subject to paragraphs (2) This Act may be cited as the ‘‘United in clause (i), the amount determined under through (5), the duty-free treatment pro- States-Caribbean Basin Trade Enhancement subclause (III); and vided under this title does not apply to— Act’’. ‘‘(bb) with respect to an article described ‘‘(A) textile and apparel articles which SEC. 2. FINDINGS AND POLICY. in clause (ii), zero. were not eligible articles for purposes of this ‘‘(III) RATE OF DUTY FOR ARTICLES DE- (a) FINDINGS.—Congress makes the fol- title on January 1, 1994, as this title was in SCRIBED IN CLAUSE (i).—For purposes of sub- lowing findings: effect on that date; (1) The Caribbean Basin Economic Recov- clause (II)(aa), the amount of duty that the ‘‘(B) footwear not designated at the time of President may proclaim under such sub- ery Act (referred to in this Act as ‘‘CBERA’’) the effective date of this title as eligible ar- represents a permanent commitment by the clause with respect to an article described in ticles for the purpose of the generalized sys- clause (i) shall be the lesser of— United States to encourage the development tem of preferences under title V of the Trade ‘‘(aa) the rate of duty that would apply to of strong democratic governments and revi- Act of 1974; an article at the time of importation from a talized economies in neighboring countries ‘‘(C) tuna, prepared or preserved in any CBTEA beneficiary country but for the en- in the Caribbean Basin. manner, in airtight containers; actment of the CBTEA, or (2) Thirty-four democratically elected ‘‘(D) petroleum, or any product derived ‘‘(bb) the tariff treatment that is accorded leaders agreed at the 1994 Summit of the from petroleum, provided for in headings 2709 to a like article of Mexico under section 2 of Americas to conclude negotiation of a Free and 2710 of the HTS; the Annex as implemented pursuant to Trade Area of the Americas (referred to in ‘‘(E) watches and watch parts (including United States law. this Act as ‘‘FTAA’’) by the year 2005. cases, bracelets, and straps), of whatever ‘‘(IV) CERTAIN DEFINITIONS.—For purposes (3) The economic security of the countries type including, but not limited to, mechan- of this clause, the term ‘x’ means the rate of in the Caribbean Basin will be enhanced by ical, quartz digital or quartz analog, if such duty described in subclause (III)(aa) and the the completion of the FTAA. watches or watch parts contain any material term ‘y’ means the tariff treatment de- (4) Offering temporary benefits to Carib- which is the product of any country with re- scribed in subclause (III)(bb). bean Basin countries will enhance trade be- spect to which HTS column 2 rates of duty ‘‘(iv) NO QUANTITATIVE RESTRICTIONS.—Ex- tween the United States and the Caribbean apply; or cept as provided in subparagraph (E), no Basin, encourage development of trade and ‘‘(F) articles to which reduced rates of quantitative restriction or consultation investment policies that will facilitate par- duty apply under subsection (h). level may be applied to the importation into ticipation of Caribbean Basin countries in ‘‘(2) TRANSITION PERIOD TREATMENT OF CER- the United States of any textile or apparel the FTAA, preserve the United States com- TAIN TEXTILE AND APPAREL ARTICLES.— article that— mitment to Caribbean Basin beneficiary ‘‘(A) PREFERENTIAL TARIFF AND QUOTA ‘‘(I) is a CBTEA originating good, or countries, help further economic develop- TREATMENT.—During the transition period— ‘‘(II) qualifies for preferential tariff treat- ment in the Caribbean Basin region, and ac- ‘‘(i) GOODS ORIGINATING IN BENEFICIARY ment under clause (ii)(I) or (II). celerate the trend toward more open econo- COUNTRY.—Clause (iii) applies with respect to ‘‘(B) TRANSITION PERIOD TREATMENT OF CER- mies in the region. a textile or apparel article that is a CBTEA TAIN NONORIGINATING TEXTILE AND APPAREL (5) Promotion of the growth of free enter- originating good. ARTICLES.— prise and economic opportunity in the Carib- ‘‘(ii) CERTAIN OTHER GOODS.—Clause (iii) ‘‘(i) REQUEST FOR PREFERENTIAL TARIFF bean Basin will enhance the national secu- applies with respect to a textile or apparel TREATMENT.—At any time during the transi- rity interests of the United States. article that is imported into the United tion period, an interested United States per- (6) Increased trade and economic activity States from a CBTEA beneficiary country son may submit in writing to the President between the United States and Caribbean and that— a request that the President proclaim pref- Basin beneficiary countries will create ex- ‘‘(I) is assembled in a CBTEA beneficiary erential tariff treatment described in clauses panding export opportunities for United country from fabrics wholly formed and cut (iii) and (iv) with respect to any eligible tex- States businesses and workers. in the United States from yarns formed in tile or apparel article described in clause (ii). (b) POLICY.—It is the policy of the United the United States, and is imported into the Upon receiving the request, the President States to— United States— shall determine promptly whether the arti- (1) offer Caribbean Basin beneficiary coun- ‘‘(aa) under subheading 9802.00.80 of the cle is eligible for preferential tariff treat- tries willing to prepare to become a party to HTS; or ment. If the President determines that the the FTAA or a comparable trade agreement, ‘‘(bb) under chapter 61, 62, or 63 of the HTS, article is eligible for preferential treatment, tariff treatment essentially equivalent to if after such assembly the article would have the President shall proclaim such treatment that accorded to products of NAFTA coun- qualified for entry under subheading with respect to the article. If the President tries for products not currently eligible for 9802.00.80 of the HTS but for the fact the arti- does not make a determination within 120 duty-free treatment under the CBERA; and cle was subjected to stone-washing, enzyme- days after the date a request is received, the (2) seek the participation of Caribbean washing, acid-washing, perma-pressing, request shall be treated as approved and all Basin beneficiary countries in the FTAA or a oven-baking, bleaching, embroidery, or gar- articles listed in the request that are de- trade agreement comparable to the FTAA at ment-dyeing; or scribed in clause (ii) shall be accorded the the earliest possible date, with the goal of ‘‘(II) is identified under subparagraph (C) preferential treatment described in clauses achieving full participation in such agree- as a handloomed, handmade, or folklore arti- (iii) and (iv). ment not later than 2005. cle of such country and is certified as such ‘‘(ii) ELIGIBLE ARTICLES.—An article is de- SEC. 3. DEFINITIONS. by the competent authority of such country. scribed in this clause if it is an apparel arti- In this Act: ‘‘(iii) TARIFF TREATMENT.— cle provided for in chapter 61 or 62 of the (1) BENEFICIARY COUNTRY.—The term ‘‘ben- ‘‘(I) IN GENERAL.—The President shall pro- HTS and if— eficiary country’’ has the meaning given the claim— ‘‘(I) it is a product of a CBTEA beneficiary term in section 212(a)(1)(A) of the Caribbean ‘‘(aa) with respect to an article described country but does not qualify as a CBTEA Basin Economic Recovery Act (19 U.S.C. in clause (i) imported into the United States originating good; 2702(a)(1)(A)). from a CBTEA beneficiary country, a rate of ‘‘(II) it is an article described in the same (2) CBTEA.—The term ‘‘CBTEA’’ means duty equal to the lesser of ‘x’ or the amount 8-digit subheading of the HTS as an article the United States-Caribbean Basin Trade En- determined by using the formula ‘.5(x-y) + y’, that would be eligible for the preferential hancement Act. in which the terms ‘x’ and ‘y’ have the mean- tariff treatment under Appendix 6.B of the (3) NAFTA.—The term ‘‘NAFTA’’ means ings given such terms in subclause (IV); and Annex, as implemented pursuant to United the North American Free Trade Agreement ‘‘(bb) with respect to an article described States law, if the article were imported from entered into between the United States, in clause (ii), imported into the United Mexico in quantities that are less than or Mexico, and Canada on December 17, 1992. States from a CBTEA beneficiary country, a equal to the quantities specified in Schedule (4) NAFTA COUNTRY.—The term ‘‘NAFTA rate of duty equal to 50 percent of the 6.B.1; and country’’ means any country with respect to amount of duty that otherwise would apply ‘‘(III) the President determines that— which the NAFTA is in force. to such article. ‘‘(aa) the fabric from which the article is (5) WTO AND WTO MEMBER.—The terms ‘‘(II) ADDITIONAL REDUCTIONS.—On or after made is not commercially available from ‘‘WTO’’ and ‘‘WTO member’’ have the mean- the date on which the President submits to producers in the United States, or

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00088 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6757 ‘‘(bb) if the article is knit-to-shape in a respect to a like article described in the the country but for the enactment of the CBTEA beneficiary country, the yarn from same 8-digit subheading of the HTS that is CBTEA, or which it is knit is not commercially avail- imported from Mexico; or ‘‘(II) the tariff treatment that is accorded able from producers in the United States. ‘‘(II) bilateral emergency quantitative re- a like article of Mexico under Annex 302.2 of ‘‘(iii) PREFERENTIAL TARIFF TREATMENT.— striction actions of a kind described in sec- NAFTA as implemented pursuant to United The amount of duty imposed during the tion 5 of the Annex with respect to imports States law. transition period on an article receiving of any textile or apparel article of a CBTEA ‘‘(C) CERTAIN DEFINITIONS.—For purposes of preferential tariff treatment under this sub- beneficiary country, including articles eligi- subparagraph (A), the term ‘x’ means the paragraph shall be identical to the tariff ble for preferential tariff treatment under rate of duty described in subparagraph treatment that would apply to the article subparagraph (A), if the importation of such (B)(ii)(I) and the term ‘y’ means the tariff under subparagraph (A)(iii) if the article an article into the United States results in treatment described in subparagraph were a CBTEA originating good. conditions that would be cause for the tak- (B)(ii)(II). ‘‘(iv) QUANTITY OF ELIGIBLE ARTICLES RE- ing of such actions under such section 5 with ‘‘(D) EXCEPTION.—Paragraphs (A) and (B) CEIVING PREFERENTIAL TREATMENT.—In any respect to a like article described in the do not apply to any article accorded duty- 12-month period, the quantity of eligible ar- same 8-digit subheading of the HTS that is free treatment under U.S. Note 2(b) to sub- ticles in any category imported from a imported from Mexico. chapter II of chapter 98 of the HTS. CBTEA beneficiary country that may receive ‘‘(ii) RULES RELATING TO BILATERAL EMER- ‘‘(E) RELATIONSHIP TO DUTY REDUCTIONS the preferential tariff treatment described in GENCY ACTION.—For purposes of applying bi- clause (iii) may not exceed ten percent of the UNDER SUBSECTION (h).—If at any time during lateral emergency action under this subpara- the transition period the rate of duty that quantity of articles in such category im- graph— ported from such country under subheading would (but for action taken under subpara- ‘‘(I) the requirements of paragraph (5) of graph (A) or (B)) apply with respect to any 9802.00.80 of the HTS, excluding articles that section 4 of the Annex (relating to providing article under subsection (h) is a rate of duty qualified for preferential tariff treatment compensation) shall not apply; that is lower than the rate of duty resulting under subparagraph (A)(ii) (or would have ‘‘(II) the term ‘transition period’ in sec- from such action, then such lower rate of qualified for such treatment if that para- tions 4 and 5 of the Annex shall have the duty shall be applied. graph had been in effect with respect to im- meaning given that term in paragraph (5)(G) ‘‘(4) CUSTOMS PROCEDURES.— ports of such articles from such country), in of this subsection; ‘‘(A) IN GENERAL.— the preceding 12-month period. ‘‘(III) the requirements to consult specified ‘‘(i) REGULATIONS.—Any importer that ‘‘(C) HANDLOOMED, HANDMADE, AND FOLK- in section 4 or 5 of the Annex shall be treated claims preferential tariff treatment under LORE ARTICLES.—For purposes of subpara- as satisfied if the President requests con- paragraph (2) or (3) shall comply with cus- graph (A), the President, after consultation sultations with the beneficiary country in toms procedures similar in all material re- with the CBTEA beneficiary country con- question and the country does not agree to cerned, shall determine which, if any, par- consult within the time period specified spects to the requirements of Article 502(1) of ticular textile and apparel goods of the coun- under section 4 or 5, whichever is applicable; the NAFTA as implemented pursuant to try shall be treated as being handloomed, ‘‘(IV) during the first 14 months after im- United States law, in accordance with regu- handmade, or folklore goods of a kind de- ports commence from a CBTEA beneficiary lations promulgated by the Secretary of the scribed in section 2.3 (a), (b), or (c) or Appen- country under paragraph (2)(A) (or recom- Treasury. dix 3.1.B.11 of the Annex. mence because of a redesignation of such ‘‘(ii) DETERMINATION.—In order to qualify ‘‘(D) TRANSITION PERIOD ADJUSTMENT OF EX- country), the minimum quantity of any tex- for such preferential tariff treatment and for ISTING QUANTITATIVE RESTRICTIONS.— tile or apparel article from such country sub- a Certificate of Origin to be valid with re- ‘‘(i) IN GENERAL.—During the transition pe- ject to quantitative restrictions may be de- spect to any article for which such treat- riod, the President, after negotiating with termined under paragraph 7 of section 5 of ment is claimed, there shall be in effect a de- the CBTEA beneficiary country concerned, the Annex based on a reasonable estimate termination by the President that— may reduce the quantities of textile and ap- (using available data where possible) of the ‘‘(I) the CBTEA beneficiary country from parel articles that can be imported into the which the article is exported, and United States from that country under exist- quantity of such articles imported from such country during the relevant period (as de- ‘‘(II) each CBTEA beneficiary country in ing quantitative restrictions to reflect the which materials used in the production of quantities of textile and apparel articles fined in such paragraph 7) that did not qual- ify or would not have qualified as originating the article originate or undergo production from such country that are exempt from that contributes to a claim that the article quota restrictions pursuant to subparagraph goods; and ‘‘(V) after the 14-month period described in is a CBTEA originating good, has imple- (A)(iv). mented and follows, or is making substantial ‘‘(ii) TRANSSHIPMENTS.—Whenever the subclause (IV), the minimum quantity of ar- progress toward implementing and following, President finds, based on sufficient evidence, ticles subject to such quantitative restric- procedures and requirements similar in all that transshipment within the meaning of tions shall be determined under paragraph 7 material respects to the relevant procedures clause (iii) has occurred, the President, after of section 5 of the Annex based on the most and requirements under chapter 5 of the consultations with the CBTEA beneficiary recently available Bureau of the Census im- NAFTA. countries through whose territories the port statistics. President finds transshipment to have oc- ‘‘(3) PREFERENTIAL TARIFF TREATMENT OF ‘‘(B) CERTIFICATE OF ORIGIN.—The Certifi- curred, may reduce the quantities of textile CERTAIN OTHER ARTICLES ORIGINATING IN cate of Origin that otherwise would be re- and apparel articles that can be imported CBTEA BENEFICIARY COUNTRIES.— quired pursuant to the provisions of subpara- into the United States from each such coun- ‘‘(A) IN GENERAL.—During the transition graph (A) shall not be required in the case of try by such amount as the President deter- period, the President shall proclaim a rate of an article imported under paragraph (2) or (3) mines. duty, with respect to any article referred to if such Certificate of Origin would not be re- ‘‘(iii) TRANSSHIPMENT DESCRIBED.—Trans- in any of subparagraphs (B) through (F) of quired under Article 503 of the NAFTA (as shipment within the meaning of this clause paragraph (1) that is a CBTEA originating implemented pursuant to United States law), has occurred when preferential tariff treat- good, equal to the lesser of— if the article were imported from Mexico. ment for a textile or apparel article under ‘‘(i) ‘x’, or ‘‘(5) DEFINITIONS AND SPECIAL RULES.—For subparagraph (A) or (B) has been claimed on ‘‘(ii) the amount determined by using the purposes of this subsection— the basis of material false information con- formula ‘.5(x-y) + y’. ‘‘(A) ANNEX.—The term ‘the Annex’ means cerning the country of origin, manufacture, For purposes of the preceding sentence, the Annex 300–B of the NAFTA. processing, or assembly of the article or any terms ‘x’ and ‘y’ have the meanings given ‘‘(B) CATEGORY.—For purposes of paragraph of its components. For purposes of this such terms in subparagraph (C). (2)(B)(iv), ‘category’ means a category that clause, false information is material if dis- ‘‘(B) ADDITIONAL REDUCTIONS.— is described in the most current edition of closure of the true information would mean ‘‘(i) IN GENERAL.—On or after the date on the Correlation: Textile and Apparel Cat- or would have meant that the article is or which the President submits to Congress the egories with the Harmonized Tariff Schedule was ineligible for preferential tariff treat- first report required under section 212(f), the of the United States, prepared by the Depart- ment under subparagraph (A) or (B). President may proclaim further reductions ment of Commerce. ‘‘(E) BILATERAL EMERGENCY ACTIONS.— in the rate of duty for any article described ‘‘(C) CBTEA BENEFICIARY COUNTRY.— ‘‘(i) IN GENERAL.—The President may in subparagraph (A) in accordance with this ‘‘(i) IN GENERAL.—The term ‘CBTEA bene- take— subparagraph if the President determines ficiary country’ means any ‘beneficiary ‘‘(I) bilateral emergency tariff actions of a that the performance of the country is satis- country’, as defined by section 212(a)(1)(A) of kind described in section 4 of the Annex with factory under the criteria listed in paragraph this title, which the President determines respect to any textile or apparel article im- (5)(C)(ii). has demonstrated a commitment to— ported from a CBTEA beneficiary country if ‘‘(ii) RATE OF DUTY.—The rate of duty pro- ‘‘(I) undertake its obligations under the the application of tariff treatment under claimed by the President under this subpara- WTO on or ahead of schedule; subparagraph (A) to such article results in graph shall be no less than the lesser of— ‘‘(II) participate in negotiations toward the conditions that would be cause for the tak- ‘‘(I) the rate of duty that would apply to completion of the FTAA or a comparable ing of such actions under such section 4 with the article at the time of importation from trade agreement; and

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‘‘(III) undertake other steps necessary for WTO Ministerial Conference held in Singa- (b) DETERMINATION REGARDING RETENTION that country to become a party to the FTAA pore on December 9–13, 1996, and OF DESIGNATION.—Section 212(e) of the Carib- or a comparable trade agreement. ‘‘(bb) applies transparent and competitive bean Basin Economic Recovery Act (19 ‘‘(ii) CRITERIA FOR DETERMINATION.—In procedures in government procurement U.S.C. 2702(e)) is amended— making the determination under clause (i), equivalent to those contained in the WTO (1) in paragraph (1)— the President may consider the criteria in Agreement on Government Procurement (de- (A) by redesignating subparagraphs (A) and sections 212(b) and (c) and other appropriate scribed in section 101(d)(17) of the Uruguay (B) as clauses (i) and (ii), respectively; criteria, including— Round Agreements Act); (B) by inserting ‘‘(A)’’ after ‘‘(1)’’; ‘‘(I) the extent to which the country fol- ‘‘(XI) the extent to which the country fol- (C) by striking ‘‘would be barred’’ and all lows accepted rules of international trade lows the rules on customs valuation set forth that follows through the end period and in- provided for under the agreements listed in in the WTO Agreement on Implementation of serting: ‘‘no longer satisfies one or more of section 101(d) of the Uruguay Round Agree- Article VII of the GATT 1994 (described in the conditions for designation as a bene- ments Act; section 101(d)(8) of the Uruguay Round ficiary country set forth in subsection (b) or ‘‘(II) the extent to which the country pro- Agreements Act); such country fails adequately to meet one or vides protection of intellectual property ‘‘(XII) the extent to which the country af- more of the criteria set forth in subsection rights— fords to products of the United States which (c).’’; and ‘‘(aa) in accordance with standards estab- the President determines to be of commer- (D) by adding at the end the following: lished in the Agreement on Trade-Related cial importance to the United States with re- ‘‘(B) The President may, after the require- Aspects of Intellectual Property Rights de- spect to such country, and on a nondiscrim- ments of subsection (a)(2) and paragraph (2) scribed in section 101(d)(15) of the Uruguay inatory basis to like products of other WTO have been met— Round Agreements Act; members, tariff treatment that is no less fa- ‘‘(i) withdraw or suspend the designation of ‘‘(bb) in accordance with standards estab- vorable than the most favorable tariff treat- any country as a CBTEA beneficiary coun- lished in chapter 17 of the NAFTA; and ment provided by the country to any other try, or ‘‘(cc) by granting the holders of copyrights country pursuant to any free trade agree- ‘‘(ii) withdraw, suspend, or limit the appli- the ability to control the importation and ment to which such country is a party, other cation of preferential tariff treatment under sale of products that embody copyrighted than the Central American Common Market section 213(b)(2) and (3) to any article of any works, extending the period set forth in Arti- or the Caribbean Community and Common country, if, after such designation, the Presi- cle 1711(6) of NAFTA for protecting test data Market. dent determines that as a result of changed for agricultural chemicals to 10 years, pro- ‘‘(D) CBTEA ORIGINATING GOOD.— circumstances, the performance of such tecting trademarks regardless of their subse- ‘‘(i) IN GENERAL.—The term ‘CBTEA origi- country is not satisfactory under the criteria quent designation as geographic indications, nating good’ means a good that meets the set forth in section 213(b)(5)(C).’’; and and providing enforcement against the im- rules of origin for a good set forth in chapter (2) by adding after paragraph (2) the fol- portation of infringing products at the bor- 4 of the NAFTA as implemented pursuant to lowing new paragraph: der; United States law, and, in the case of a good ‘‘(3) If preferential treatment under section ‘‘(III) the extent to which the country pro- described in Appendix 6.A of the Annex, the 213(b)(2) and (3) is withdrawn, suspended, or vides protections to investors and invest- requirements stated in Appendix 6.A as im- limited with respect to a CBTEA beneficiary ments of the United States substantially plemented pursuant to United States law. country, such country shall not be deemed to equivalent to those set forth in chapter 11 of ‘‘(ii) APPLICATION OF CHAPTER 4 AND ANNEX be a ‘party’ for the purposes of applying sec- the NAFTA; 6.A.—In applying chapter 4 and Appendix 6.A tion 213(b)(5)(D) to imports of articles for ‘‘(IV) the extent to which the country pro- with respect to a CBTEA beneficiary country which preferential treatment has been with- vides the United States and other WTO mem- for purposes of this subsection— drawn, suspended, or limited with respect to bers nondiscriminatory, equitable, and rea- ‘‘(I) no country other than the United such country.’’. sonable market access with respect to the States and a CBTEA beneficiary country (c) REPORTING REQUIREMENTS.—Section 212(f) of the Caribbean Basin Economic Re- products for which benefits are provided may be treated as being a party to the covery Act (19 U.S.C. 2702(f)) is amended to under paragraphs (2) and (3), and in other rel- NAFTA; read as follows: evant product sectors as determined by the ‘‘(II) any reference to trade between the ‘‘(f) REPORTING REQUIREMENTS.—Not later President; United States and Mexico shall be deemed to than December 15, 2000, and at the end of ‘‘(V) the extent to which the country pro- refer to trade between the United States and each 3-year period thereafter, the President vides internationally recognized worker a CBTEA beneficiary country; shall submit to Congress a report regarding rights, including— ‘‘(III) any reference to a party shall be the operation of this title, including— ‘‘(aa) the right of association, deemed to refer to a CBTEA beneficiary ‘‘(1) with respect to subsections (b) and (c), ‘‘(bb) the right to organize and bargain col- country or the United States; and the results of a general review of beneficiary lectively, ‘‘(IV) any reference to parties shall be countries based on the considerations de- ‘‘(cc) prohibition on the use of any form of deemed to refer to any combination of scribed in such subsections; and coerced or compulsory labor, CBTEA beneficiary countries or to the ‘‘(2) the performance of each CBTEA bene- ‘‘(dd) a minimum age for the employment United States and a CBTEA beneficiary ficiary country with respect to the criteria of children, and country (or any combination thereof). set forth in section 213(b)(5)(C)(ii).’’. ‘‘(ee) acceptable conditions of work with ‘‘(E) INTERESTED UNITED STATES PERSON.— (d) INTERNATIONAL TRADE COMMISSION RE- respect to minimum wages, hours of work, For purposes of paragraph (2)(B)(i), the term PORTS.— and occupational safety and health; ’interested United States person’ means— (1) Section 215(a) of the Caribbean Basin ‘‘(VI) the extent to which the country ‘‘(i) a person doing business in the United Economic Recovery Act (19 U.S.C. 2704(a)) is adopts, maintains, and effectively enforces States as— amended to read as follows: laws providing for high levels of environ- ‘‘(I) an importer of wearing apparel or fab- ‘‘(a) REPORTING REQUIREMENT.— mental protection; ric piece goods, or ‘‘(1) IN GENERAL.—The United States Inter- ‘‘(VII) whether the country has met the ‘‘(II) a producer of wearing apparel, or national Trade Commission (in this section counter-narcotics certification criteria set ‘‘(ii) a labor union representing workers referred to as the ‘Commission’) shall submit forth in section 490 of the Foreign Assistance employed in the United States in the produc- to Congress and the President, biennial re- Act of 1961 for eligibility for United States tion of wearing apparel. ports regarding the economic impact of this assistance; ‘‘(F) TEXTILE OR APPAREL ARTICLE.—The title on United States industries and con- ‘‘(VIII) the extent to which the country be- term ‘textile or apparel article’ means any sumers. comes a party to and implements the Inter- article referred to in paragraph (1)(A) that is ‘‘(2) FIRST REPORT.—The first report shall American Convention Against Corruption, a good listed in Appendix 1.1 of the Annex. be submitted not later than September 30 of and becomes party to a convention regarding ‘‘(G) TRANSITION PERIOD.—The term ‘transi- the year following the year in which the Car- the extradition of its nationals. tion period’ means, with respect to a CBTEA ibbean Basin Trade Enhancement Act is en- ‘‘(IX) the extent to which the country en- beneficiary country, the period that begins acted. No report shall be required under this ters into and implements an agreement with on the date of enactment of the CBTEA and section after September 30, 2005. the United States for the exchange of tax in- ends on the earlier of— ‘‘(3) TREATMENT OF PUERTO RICO, ETC.—For formation, as described in section 274(h)(6)(C) ‘‘(i) September 30, 2005, or purposes of this section, industries in the of the Internal Revenue Code; ‘‘(ii) the date on which the FTAA or a com- Commonwealth of Puerto Rico and the insu- ‘‘(X) the extent to which the country— parable trade agreement enters into force lar possessions of the United States are con- ‘‘(aa) supports the multilateral and re- with respect to the United States and the sidered to be United States industries.’’. gional objectives of the United States with CBTEA beneficiary country. (2) Section 206(a) of the Andean Trade Pref- respect to government procurement, includ- ‘‘(H) CBTEA.—The term ‘CBTEA’ means erence Act (19 U.S.C. 3204(a)) is amended to ing the negotiation of government procure- the United States-Caribbean Basin Trade En- read as follows: ment provisions as part of the FTAA and hancement Act. ‘‘(a) REPORTING REQUIREMENTS.— conclusion of a WTO transparency agree- ‘‘(I) FTAA.—The term ‘FTAA’ means the ‘‘(1) IN GENERAL.—The United States Inter- ment as provided in the declaration of the Free Trade Area of the Americas.’’. national Trade Commission (in this section

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00090 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6759 referred to as the ‘Commission’) shall submit cation. Although Larry Doby accepted fice in my hometown of Paterson, NJ to Congress and the President, biennial re- an offer to play basketball for Long Is- after a true American hero, Larry Eu- ports regarding the economic impact of this land University, his collegiate athletic gene Doby. title on United States industries and con- career was shortened as he enlisted in Mr. President, 1997 marks the 50th sumers, and, in conjunction with other agen- cies, the effectiveness of this title in pro- the U.S. Navy to serve our country in anniversary of the breaking of major moting drug-related crop eradication and World War II. Following World War II, league baseball’s color barrier. In April crop substitution efforts of the beneficiary Doby played for the Negro League New- 1947, Jackie Robinson played his first countries. ark Eagles, where he led the league game with the National League’s ‘‘(2) SUBMISSION.—During the period that with a batting average of .458 and 13 Brooklyn Dodgers and ended segrega- this title is in effect, the report required by home runs. tion in our national pastime; simulta- paragraph (1) shall be submitted on Sep- Some of Larry Doby’s major league neously, he entered America’s pan- tember 30 of each year that the report re- baseball accomplishments include theon of heroes. quired by section 215 of the Caribbean Basin While we rightfully honor Mr. Robin- Economic Recovery Act is not submitted. being the first African-American play- son, we cannot forget that heroes rare- ‘‘(3) TREATMENT OF PUERTO RICO, ETC.— For er in the American League, the first purposes of this section, industries in the African-American player on a world se- ly fight their battles alone. Larry Doby Commonwealth of Puerto Rico and the insu- ries team, and the second African- is one of those heroes. Only 11 weeks lar possessions of the United States are con- American to manage in the major after Jackie Robinson first graced a sidered to be United States industries.’’. leagues. Mr. Doby will be recognized by major league diamond, Larry Doby of (e) CONFORMING AMENDMENTS.—Section major league baseball at the all-star Paterson, NJ took the field with the 213(a)(1) of the Caribbean Basin Economic game in Cleveland. The naming of this Cleveland Indians, becoming the first Recovery Act (19 U.S.C. 2703(a)(1)) is amend- ed by inserting ‘‘and except as provided in post office in Larry Doby’s honor in his African-American player in the Amer- subsection (b) (2) and (3)’’ after ‘‘Tax Reform hometown of Paterson would be a fit- ican League. Once on the team, he Act of 1986,’’. ting tribute to this great American. brought an ability and level of consist- SEC. 5. ADEQUATE AND EFFECTIVE PROTECTION Mr. President, I ask unanimous con- ency to the game that few could FOR INTELLECTUAL PROPERTY sent that the text of the bill be printed match. He was the first African-Amer- RIGHTS. in the RECORD. ican player to hit a home run in the Section 212(c) of the Caribbean Basin Eco- There being no objection, the bill was world series, and he was named to six nomic Recovery Act (19 U.S.C. 2702(c)) is ordered to be printed in the RECORD, as amended by adding at the end the following straight American League all-star flush sentence: follows: teams. During his 13 year career, he at- ‘‘Notwithstanding any other law, the Presi- S. 985 tained a .283 lifetime batting average dent may determine that a country is not Be it enacted by the Senate and House of Rep- and hit 253 home runs. providing adequate and effective protection resentatives of the United States of America in Mr. President, the day Larry Doby of intellectual property rights under para- Congress assembled, first took the field was definitely a graph (9), even if the country is in compli- SECTION 1. FINDINGS. great day for baseball enthusiasts. Mil- ance with the country’s obligations under Congress finds the following: lions of fans were able to enjoy the ex- the Agreement on Trade-Related Aspects of (1) Larry Eugene Doby was born in Cam- citement he brought to the plate and Intellectual Property Rights described in den, South Carolina, on December 12, 1923, the skill he brought to the field. and moved to Paterson, New Jersey, in 1938. section 101(d)(15) of the Uruguay Round But it was also a great day for every Agreements Act (19 U.S.C. 3511(d)(15)).’’. (2) After playing the 1946 season in the American. Along with Robinson’s ear- SEC. 6. DEFINITIONS. Negro League for the Newark Eagles, Larry Section 212(a)(1) of the Caribbean Basin Doby’s contract was purchased by the Cleve- lier integration of the National Economic Recovery Act (19 U.S.C. 2702(a)(1)) land Indians of the American League on July League, Doby’s joining the American is amended by adding at the end the fol- 3, 1947. League was a double play against rac- lowing new subparagraph: (3) On July 5, 1957, Larry Doby became the ism and inequality. And in the early ‘‘(D) The term ‘NAFTA’ means the North first African-American to play in the Amer- years it wasn’t easy. Doby had to meet ican League. American Free Trade Agreement entered the challenges of the game, while also into between the United States, Mexico, and (4) Larry Doby played in the American League for 13 years, appearing in 1,533 games facing sometimes angry opponents. But Canada on December 17, 1992. whether he was faced with a curve ball ‘‘(E) The terms ‘WTO’ and ‘WTO member’ and batting .283, with 253 home runs and 969 have the meanings given those terms in sec- runs batted in. hurled by an opposing pitcher, or a foul tion 2 of the Uruguay Round Agreements Act (5) Larry Doby was voted to 7 all-star remark hurled by a bigoted fan, he (19 U.S.C. 3501).’’. teams, led the American League in home handled it with dignity, grace, and runs twice, and played in 2 World Series. He skill. By Mr. TORRICELLI (for himself, was the first African-American to play in the Because of the manner in which he World Series and to hit a home run in a Mr. LAUTENBERG, and Mr. HOL- World Series game, both in 1948. handled such adversity, he not only LINGS): (6) Larry Doby was recognized for his re- tore down the walls of exclusion, he S. 985. A bill to designate the post of- markable achievements in baseball with his also opened the windows of opportunity fice located at 194 Ward Street in induction into the Baseball Hall of Fame in for many other African-American play- Paterson, NJ, as the ‘‘Larry Doby Post 1987. ers, who followed him into the major Office’’; to the Committee on Govern- (7) After his stellar playing career ended, leagues. Thanks to his example, we all mental Affairs. Larry Doby continued to make a significant learned that, in the words of Martin contribution to his community. He has been LARRY DOBY POST OFFICE LEGISLATION a pioneer in the cause of civil rights and has Luther King, ‘‘We must judge a person Mr. TORRICELLI. Mr. President, I received honorary doctorate degrees from on the content of his character, and rise today with Senator LAUTENBERG to Long Island University, Princeton Univer- not the color of his skin.’’ jointly recognize Larry Doby, the first sity, and Fairfield University. Mr. President, Larry Doby is right- African-American player in the Amer- SEC. 2. DESIGNATION OF LARRY DOBY POST OF- fully called a legend for his consistency ican League. Mr. Doby’s lifelong dedi- FICE. on the field and a hero for his char- cation to major league baseball, his (A) IN GENERAL.—The post office located at acter off the field. But I have the privi- community, and his country is truly 194 Ward Street in Paterson, New Jersey, lege of also calling him a friend. We remarkable and must be recognized. As shall be known and designated as the ‘‘Larry grew up together on the working class Doby Post Office’’. an ambassador for baseball, Mr. Doby (b) REFERENCES.—Any reference in a law, streets of Paterson. As a baseball fan, has served the league for nearly 20 map, regulation, document, paper, or other an American and a friend, I admire the years as a player, as a coach, and cur- record of the United States to the post office contributions that Larry made to both rently as a special assistant to the referred to in subsection (a) shall be deemed the game of baseball and to the strug- president of the American League. to be a reference to the ‘‘Larry Doby Post gle for equality. Mr. Doby, born in Camden, SC, later Office’’. When it comes to Larry, others may moved to Paterson, NJ, where he Mr. LAUTENBERG. Mr. President, I have filled his uniform, but no one will starred in four sports and ultimately rise to join with my friend and col- ever be able to fill his shoes. Above all, garnered numerous offers for athletic league, Senator BOB TORRICELLI, in in- Larry Doby proves that good and great scholarships toward his higher edu- troducing a bill to name a U.S. post of- can exist in the same individual.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00091 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6760 CONGRESSIONAL RECORD — SENATE June 27, 1997 Mr. President, I urge all my col- 1,500,000 cocaine users, 600,000 heroin S.J. RES. 34 leagues to join with Senator addicts, and 9,800,000 smokers of mari- Resolved by the Senate and House of Rep- TORRICELLI and me in celebrating juana. This menace isn’t just confined resentatives of the United States of America in Larry Doby by gracing the post office to inner cities or the poor. Illegal drug Congress assembled, located at 194 Ward Street in Paterson, use occurs among members of every SECTION 1. SUSPENSION OF DRUG CERTIFI- CATION PROCEDURES. NJ with his name. ethnic and socioeconomic group in the (a) FINDINGS.—Congress makes the fol- United States. lowing findings: By Mr. DODD (for himself and The human and economic costs are (1) The international drug trade poses a di- Mr. MCCAIN): enormous: Drug related illness, death, rect threat to the United States and to inter- S.J. Res. 34. A joint resolution sus- and crime cost the United States ap- national efforts to promote democracy, eco- pending the certification procedures proximately $67 billion in 1996, includ- nomic stability, human rights, and the rule under section 490(b) of the Foreign As- ing costs for lost productivity, pre- of law. (2) The United States has a vital national sistance Act of 1991 in order to foster mature death, and incarceration. greater multilateral cooperation in interest in combating the financial and other This is an enormously lucrative busi- resources of the multinational drug cartels, international counternarcotics pro- ness—drug trafficking generates esti- which resources threaten the integrity of po- grams; to the Committee on Foreign mated revenues of $400 billion annu- litical and financial institutions both in the Relations. ally. United States and abroad. Mr. DODD. Mr. President, today I The United States has spent more (3) Approximately 12,800,000 Americans use send to the desk a joint resolution on than $25 billion for foreign interdic- illegal drugs, including 1,500,000 cocaine behalf of myself and Senator JOHN tions and source country counter nar- users, 600,000 heroin addicts, and 9,800,000 MCCAIN which we believe will lead to marijuana users. cotics programs since 1981, and despite (4) Illegal drug use occurs among members more cooperative and effective efforts impressive seizures at the border, on of every ethnic and socioeconomic group in to meet the international threat posed the high seas, and in other countries, the United States. by international drug trafficking. foreign drugs are cheaper and more (5) Drug-related illness, death, and crime The resolution that we are intro- readily available in the United States cost the United States approximately ducing today calls upon the President today than two decades ago. $67,000,000,000 in 1996, including costs for lost to establish a high level, interdiscipli- So, despite the fact that we have had productivity, premature death, and incarcer- nary task force under the direction of ation. this drug certification procedure in (6) Worldwide drug trafficking generates Gen. Barry R. McCaffrey, Director of place since 1986—more than 10 years— revenues estimated at $400,000,000,000 annu- the Office of National Drug Control drugs continue to pour into this coun- ally. Policy, to develop a comprehensive try and to wreak havoc on our families (7) The United States has spent more than strategy for dealing with the supply and communities. $25,000,000,000 for drug interdiction and and demand side of the drug problem. I think it is time to be honest and source country counternarcotics programs It also urges the President to encour- admit our international drug strategy since 1981, and despite impressive seizures at age other drug producing and transit isn’t working and that means the en- the border, on the high seas, and in other countries to undertake similar efforts. countries, illegal drugs from foreign sources tire certification process. Nor are ef- are cheaper and more readily available in Within a year’s time it calls for an forts to revise the certification process the United States today than 20 years ago. international summit to be held, at to make it easier, politically, for the (8) The 1961 Single Convention on Narcotic which time, the efforts of all the par- U.S. Congress to stick a finger in the Drugs, the 1971 Convention on Psychotropic ties would be merged into a multilat- eye of other governments by unilater- Substances, and the 1988 Convention Against eral battle plan to engage the illegal ally grading them, likely to materially Illicit Traffic in Narcotic Drugs and Psycho- drug trade on every front. improve the situation—especially when tropic Substances form the legal framework In order to create the kind of inter- for international drug control cooperation. we are not prepared to subject our- (9) The United Nations International Drug national cooperation and mutual re- selves to similar unilateral grading by Control Program, the International Nar- spect that must be present if this effort others. cotics Control Board, and the Organization is to produce results, the resolution Rather, I believe that we need to of American States can play important roles would also suspend the annual drug reach out to other governments who in facilitating the development and imple- certification procedure for a period of 2 share our concerns about the threat mentation of more effective multilateral years, while efforts are ongoing to de- that drugs pose to the very fabric of programs to combat both domestic and velop and implement a new strategy. their societies and our own. It is arro- international drug trafficking and consump- As you know, Mr. President, the tion. gant to assume we are the only Nation (10) The annual certification process re- issue of how best to construct and im- that cares about such matters. We need quired by section 490 of the Foreign Assist- plement an effective counter narcotics to sit down and figure out what each of ance Act of 1961 (22 U.S.C. 2291j), which has policy has been the subject of much de- us can do better to make it harder for been in effect since 1986, has failed to foster bate in this Chamber, and I would add drug traffickers to ply their trade. It is bilateral or multilateral cooperation with much disagreement. in that spirit that I commend the reso- United States counternarcotics programs be- My intention in introducing this res- lution that Senator MCCAIN and I are cause its provisions are vague and inconsist- olution today is to try to see if there is introducing today to our colleagues. ently applied and fail to acknowledge that some way to end what has become a United States narcotics programs have not Together, working collectively we been fully effective in combating consump- stale annual event that has not can defeat the traffickers. But if we ex- tion or trafficking in illegal drugs, and re- brought us any closer to mounting a pend our energies playing the blame lated crimes, in the United States. credible effort to eliminate or even game, we are certainly not going to ef- (b) SENSE OF CONGRESS.—It is the sense of contain the international drug mafia. fectively address this threat. Congress that— We all can agree that drugs are a We aren’t going to stop one addi- (1) existing United States domestic and problem—a big problem. We can agree tional teenager from becoming hooked international counternarcotics program have as well that the international drug not reduced the supply of illegal drugs or sig- on drugs, or one more citizen from nificantly reduced domestic consumption of trade poses a direct threat to the being mugged outside his home by such drugs; United States and to international ef- some drug crazed thief. (2) The President should appoint a high forts to promote democracy, economic I would urge my colleagues to give level task force of foreign policy experts, law stability, human rights, and the rule of some thought and attention to our leg- enforcement officials, and drug specialists to law throughout the world, but most es- islative initiative. We believe it is wor- develop a comprehensive program for ad- pecially in our own hemisphere. thy of support. dressing domestic and international drug While the international impact is se- Mr. President, I ask unanimous con- trafficking and drug consumption and re- rious and of great concern, of even sent that the text of the joint resolu- lated crimes, with particular attention to fashioning a multilateral framework for im- greater concern to me personally are tion be printed in the RECORD. proving international cooperation in com- effects it is having here at home. There being no objection, the joint bating illegal drug trafficking, and should Today, approximately 12,800,000 Ameri- resolution was ordered to be printed in designate the Director of the Office of Na- cans use illegal drugs, including the RECORD, as follows: tional Drug Policy to chair the task force;

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00092 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6761 (3) the President should call upon the And still, the flow of illegal narcotics S. 224 heads of state of major illicit drug producing continues virtually unimpeded. At the request of Mr. WARNER, the countries, major drug transit countries, and Record-breaking seizures serve mainly name of the Senator from North Da- major money laundering countries to estab- to remind us of how much more is get- kota [Mr. DORGAN] was added as a co- lish similar high level task forces to work in coordination with the United States; and ting through our porous borders unde- sponsor of S. 224, a bill to amend title (4) not later than one year after the date of tected. Street prices alert us to the 10, United States Code, to permit cov- enactment of this Act, the President should failure of our best efforts at putting a ered beneficiaries under the military call for the convening of an international dent in the problem of drug trafficking. health care system who are also enti- summit of all interested governments to be To the extent that one area, for exam- tled to Medicare to enroll in the Fed- hosted by the Organization of American ple, cocaine, is tackled with any degree eral Employees Health Benefits Pro- States or another international organization of success, another bigger problem—the gram, and for other purposes. mutually agreed to by the parties, for the resurgence of heroin abuse comes to purpose of reviewing the findings and rec- S. 260 ommendations of the task forces referred to mind—rises up in its place. Clearly, it At the request of Mr. ABRAHAM, the in paragraphs (1) and (2) and adopting a is time to step back again and look name of the Senator from Arizona [Mr. counternarcotics plan of action for each more critically at every facet of the MCCAIN] was added as a cosponsor of S. country. problem. 260, a bill to amend the Controlled Sub- (c) SUSPENSION OF DRUG CERTIFICATION I do not believe ‘‘chicken-and-egg’’ stances Act with respect to penalties PROCESS.—(1) Section 490 of the Foreign As- debates about which problem, supply or sistance Act of 1961 (22 U.S.C. 2291j), relating for crimes involving cocaine, and for demand, should take higher priority other purposes. to annual certification procedures for assist- serve any useful purpose. The bill we ance for certain drug-producing and drug- S. 358 transit countries, shall not apply in 1998 and are offering today addresses both prob- lems. Nor I believe the certification At the request of Mr. DEWINE, the 1999. name of the Senator from New Jersey (2) The President may waive the applica- process has accomplished its intended bility of that section in 2000 if the President goal any more than such processes ever [Mr. TORRICELLI] was added as a co- determines that the waiver would facilitate really do irrespective of the subject sponsor of S. 358, a bill to provide for the enhancement of the United States inter- matter. In fact, the decision by the compassionate payments with regard national narcotics control programs. White House to decertify Colombia, to individuals with blood-clotting dis- Mr. MCCAIN. Mr. President, I join which has waged a valiant and costly— orders, such as hemophilia, who con- with my colleague and friend, Senator in both lives and treasure—struggle tracted human immunodeficiency virus DODD, in introducing a joint resolution against extremely powerful and ruth- due to contaminated blood products, calling on the President to take con- less cartels while recertifying Mexico, and for other purposes. crete steps to increase the level of whose law enforcement agencies are so S. 387 international cooperation in com- rife with corruption that that coun- At the request of Mr. HATCH, the bating the flow of narcotics into this try’s equivalent of General McCaffrey name of the Senator from Ohio [Mr. country, and to lead America toward was arrested for drug-related crimes, DEWINE] was added as a cosponsor of S. coming to grips with the domestic de- illuminates all too well the imprac- 387, a bill to amend the Internal Rev- mand that is tearing this country apart ticality of the current process. enue Code of 1986 to provide equity to while enriching the drug cartels of It is easy to argue that the drug exports of software. Latin America and our own organized problem has been studied to death. It S. 683 crime groups. has not, however, been examined from At the request of Mr. STEVENS, the This legislation acknowledges the the perspective, and at the level, rec- name of the Senator from New York problems endemic in waging the war on ommended in this resolution. If I be- [Mr. MOYNIHAN] was added as a cospon- drugs while domestic demand con- lieved for a second that this resolution sor of S. 683, a bill to require the Sec- tinues to remain high. It further recog- represented just another attempt at retary of the Treasury to mint coins in nizes the failure of numerous previous studying the problem of drugs, I would commemoration of the bicentennial of efforts at stemming the flow of illegal not have attached my name to it. The the Library of Congress. narcotics. It consequently expresses recommended steps, however, com- S. 751 the sense of Congress that the Presi- bined with the suspension of the drug At the request of Mr. SHELBY, the dent should appoint a high level task certification process, constitute a real name of the Senator from Mississippi force, to be chaired by the Director of and meaningful effort at focusing the [Mr. LOTT] was added as a cosponsor of the Office of National Drug Policy, to Nation’s attention on one of our most S. 751, a bill to protect and enhance establish a framework for improving serious problems. Drugs are, in every sportsmen’s opportunities and con- international cooperation in these ef- sense of the word, a scourge upon our servation of wildlife, and for other pur- forts. Finally, and of particular impor- society. We must take a comprehen- poses. tance, it suspends for 2 years the proc- sive, sober look at the scale of the S. 863 ess by which countries are certified as problem and what realistically can be cooperating in the war on drug. done about it. We must do this domes- At the request of Mr. MOYNIHAN, the The drug problem in this country tically and internationally. We must, names of the Senator from Ohio [Mr. dates at least as far back as the Civil once and for all, wage the war on drugs DEWINE], the Senator from California War, when wounded soldiers were as though we intend to prevail. I hope [Mrs. FEINSTEIN], and the Senator from turned into morphine addicts as the that my colleagues in the Senate and Florida [Mr. MACK] were added as co- only way to deaden the horrific pain the House of Representatives will sup- sponsors of S. 863, a bill to authorize caused from battle and disease. The port this legislation. the Government of India to establish a memorial to honor Mahatma Gandhi in problem grew to such an extent that f President Nixon felt compelled to es- the District of Columbia. tablish the Drug Enforcement Adminis- ADDITIONAL COSPONSORS S. 927 tration in order to better coordinate S. 61 At the request of Ms. SNOWE, the the antidrug effort. President Reagan At the request of Mr. LOTT, the names of the Senator from Alaska [Mr. assigned Vice President Bush to over- names of the Senator from Hawaii [Mr. STEVENS], the Senator from Wash- see a major escalation in the war on INOUYE] and the Senator from Wash- ington [Mr. GORTON], the Senator from drugs, a war carried on at considerable ington [Mr. GORTON] were added as co- Michigan [Mr. ABRAHAM], the Senator monetary cost throughout the Bush ad- sponsors of S. 61, a bill to amend title from Hawaii [Mr. INOUYE], the Senator ministration. President Clinton, to his 46, United States Code, to extend eligi- from New York [Mr. MOYNIHAN], the credit, appointed perhaps our finest bility for veterans’ burial benefits, fu- Senator from Maine [Ms. COLLINS], the ‘‘drug czar’’ in Gen. Barry McCaffrey, neral benefits, and related benefits for Senator from Florida [Mr. GRAHAM], who has waged the drug war as val- veterans of certain service in the the Senator from Virginia [Mr. WAR- iantly as he led troops in combat dur- United States merchant marine during NER], and the Senator from Alaska [Mr. ing Desert Storm. World War II. MURKOWSKI] were added as cosponsors

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00093 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6762 CONGRESSIONAL RECORD — SENATE June 27, 1997 of S. 927, a bill to reauthorize the Sea STEVENS], the Senator from Maryland issued to honor the marathon, the lunar new Grant Program. [Ms. MIKULSKI], and the Senator from year, and football coaches, honoring a his- toric convention that led to many break- SENATE JOINT RESOLUTION 6 Florida [Mr. GRAHAM] were added as cosponsors of amendment No. 555 pro- throughs in the history of the women’s At the request of Mr. KYL, the name rights movement is highly appropriate; of the Senator from South Carolina posed to S. 949, supra. Whereas honoring the first Women’s [Mr. THURMOND] was added as a cospon- AMENDMENT NO. 562 Rights Convention is educational, histori- sor of Senate Joint Resolution 6, a At the request of Mr. BIDEN the name cally important, and of widespread national joint resolution proposing an amend- of the Senator from Minnesota [Mr. appeal; ment to the Constitution of the United GRAMS] was added as a cosponsor of Whereas stamp issuance and stamp col- States to protect the rights of crime amendment No. 562 proposed to S. 949, lecting teach children about our Nation’s victims. an original bill to provide revenue rec- history and our Nation’s culture; and Whereas in the history of the struggle for AMENDMENT NO. 532 onciliation pursuant to section 104(b) equality, the significance of this event is im- At the request of Ms. LANDRIEU the of the concurrent resolution on the measurable: Now, therefore, be it names of the Senator from Massachu- budget for fiscal year 1998. Resolved by the Senate (the House of Rep- setts [Mr. KERRY], the Senator from f resentatives concurring), That— South Dakota [Mr. JOHNSON], and the (1) a postage stamp should be issued to SENATE CONCURRENT RESOLU- commemorate the 150th anniversary of the Senator from Illinois [Mr. DURBIN] TION 35 URGING ISSUANCE OF A were added as cosponsors of amend- first Women’s Rights Convention; and POSTAGE STAMP TO COMMEMO- (2) the Citizen’s Stamp Advisory Com- ment No. 532 proposed to S. 949, an RATE THE 150TH ANNIVERSARY mittee of the United States Postal Service original bill to provide revenue rec- OF THE FIRST WOMEN’S RIGHT should recommend to the Postmaster Gen- onciliation pursuant to section 104(b) CONVENTION eral that such a stamp be issued. of the concurrent resolution on the Mr. MOYNIHAN (for himself and Mr. Mr. MOYNIHAN. Mr. President, I rise budget for fiscal year 1998. along with my friend and colleague, MATO AMENDMENT NO. 537 D’A ) submitted the following con- current resolution; which was referred Senator D’AMATO, to submit a resolu- At the request of Mr. THURMOND his tion that urges the United States Post- name was added as a cosponsor of to the Committee on Governmental Af- fairs. al Service to issue a commemorative amendment No. 537 proposed to S. 949, postage stamp to celebrate the 150th S. CON. RES. 35 an original bill to provide revenue rec- anniversary of the first Women’s onciliation pursuant to section 104(b) Whereas 1998 marks the 150th anniversary Rights Convention held in Seneca of the first Women’s Rights Convention, of the concurrent resolution on the Falls, NY. In 1980 I introduced legisla- budget for fiscal year 1998. which was held at the Wesleyan Methodist Church in Seneca Falls, New York, on July tion to commemorate the idea of equal AMENDMENT NO. 539 19 and 20, 1848; rights for women by creating the Wom- At the request of Mr. GRAMM the Whereas the Women’s Rights Convention en’s Rights National Historic Park in names of the Senator from Utah [Mr. was called to consider ‘‘the Social, Civil, and Seneca Falls. That is where the Dec- HATCH] and the Senator from New Religious Condition of Women’’; laration of Sentiments was signed in Hampshire [Mr. GREGG] were added as Whereas the Women’s Rights Convention is 1848, stating that ‘‘all men and women cosponsors of amendment No. 539 pro- considered by many historians to be one of the most important events in the history of are created equal’’ and that women posed to S. 949, an original bill to pro- the women’s movement in the United States; should have equal political rights with vide revenue reconciliation pursuant to Whereas the Convention participants men. From this beginning sprang the section 104(b) of the concurrent resolu- issued a Declaration of Sentiments which 19th amendment and many other ad- tion on the budget for fiscal year 1998. was modeled after the Declaration of Inde- vances for women this century and AMENDMENT NO. 551 pendence; last. Whereas the Declaration of Sentiments At the request of Mr. NICKLES the Western New York was home to an further included a list of the ‘‘injustices’’ names of the Senator from Nebraska that were imposed on women over the cen- emerging reform movement during the [Mr. KERREY] and the Senator from turies, such as denying them the right to 1830’s and 1840’s. Among reformers set- Michigan [Mr. ABRAHAM] were added as participate in government, to retain their tling in Seneca Falls were Quaker cosponsors of amendment No. 551 pro- civil rights after marriage, to own property, women such as Lucretia Mott who took posed to S. 949, an original bill to pro- to keep their wages, to vote, and to pursue a an active role in the effort to end slav- vide revenue reconciliation pursuant to college education; ery. For Mott, Martha Wright, Mary section 104(b) of the concurrent resolu- Whereas the Women’s Rights Convention Ann M’Clintock, and Elizabeth Cady tion on the budget for fiscal year 1998. and the Declaration of Sentiments was a Stanton, reform also included demand- vital early step toward reversing such injus- At the request of Mr. KEMPTHORNE tices; ing rights for women. In July 1848, they his name was added as a cosponsor of Whereas the participants in the Women’s planned the convention and hammered amendment No. 551 proposed to S. 949, Rights Convention also played a prominent out a formal list of grievances based on supra. role in the movement to abolish slavery; the Declaration of Independence, de- At the request of Mr. CRAIG his name Whereas commemorating this historic an- nouncing inequities in property rights, was added as a cosponsor of amend- niversary will highlight the importance of education, employment, religion, mar- ment No. 551 proposed to S. 949, supra. continuing the struggle for equal rights and riage and family, and suffrage. On July opportunity for women in such areas as AMENDMENT NO. 555 health care, education, employment, and pay 19, the Declaration of Sentiments was At the request of Mr. KERRY his equity; presented before an audience of 300. name was added as a cosponsor of Whereas Congress recently honored The Women’s Rights Convention and amendment No. 555 proposed to S. 949, Lucretia Mott and Elizabeth Cady Stanton, the Declaration of Sentiments were a an original bill to provide revenue rec- the organizers of the Women’s Rights Con- vital early step toward reversing these onciliation pursuant to section 104(b) vention, along with Susan B. Anthony, as injustices against women. Many histo- of the concurrent resolution on the revolutionary leaders of the women’s move- rians consider the convention to be one ment by placing a statue of them in the Cap- budget for fiscal year 1998. itol Rotunda with statues of other revolu- of the most important events in the At the request of Mr. JEFFORDS the tionary leaders of our Nation’s history such history of the women’s movement in names of the Senator from Rhode Is- as George Washington, Abraham Lincoln, the United States. land [Mr. CHAFEE], the Senator from and Martin Luther King, Jr.; The women of Seneca Falls chal- New York [Mr. D’AMATO], the Senator Whereas a portion of this statue purpose- lenged America to social revolution from Oregon [Mr. SMITH], the Senator fully was left unfinished in 1921, the year fol- with a list of demands that touched from Utah [Mr. HATCH], the Senator lowing passage of the 19th Amendment, upon every aspect of life. Testing dif- which gave women the right to vote, to sig- from Colorado [Mr. CAMPBELL], the ferent approaches, the early women’s nify the need to continue working for an Senator from Massachusetts [Mr. KEN- Equal Rights Amendment, pay and pension rights leaders came to view the ballot NEDY], the Senator from Wyoming [Mr. equity, and other women’s rights; as the best way to challenge the sys- ENZI], the Senator from Colorado [Mr. Whereas, in light of the fact that com- tem, but they did not limit their ef- ALLARD], the Senator from Alaska [Mr. memorative stamps have recently been forts to this one issue. Fifty years after

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00094 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6763 the convention, women could claim SENATE RESOLUTION—104—REL- rate administrative region in a China char- property rights, employment and edu- ATIVE TO THE TAX STATUS OF acterized as ‘‘one country, two systems;’’ cational opportunities, divorce and PAYMENTS IN THE TOBACCO LI- (3) the executive branch should exercise child custody laws, and increased so- ABILITY SETTLEMENT due diligence in enforcing the terms and con- ditions of the Hong Kong Policy Act of 1992 cial freedoms. By the early 20th cen- Mr. HARKIN (for himself, Mr. LAU- and subsequent acts and provisions con- tury, a coalition of suffragists, temper- TENBERG, and Mr. KENNEDY) submitted cerning the protection of civil liberties and ance groups, reform-minded politi- the following resolution, which was re- the rule of law in Hong Kong; cians, and women’s social welfare orga- ferred to the Committee on Finance: (4) the United States looks forward to con- nizations mustered a successful push tinuing its close, productive relationship S. RES. 104 for the vote. with the people of Hong Kong; and Resolved, (5) the United States hopes to develop a Today Congress honors Lucretia Whereas the tobacco industry, State attor- Mott and Elizabeth Cady Stanton, positive, productive relationship with the neys general, and individual plaintiffs’ attor- People’s Republic of china based upon shared along with Susan B. Anthony, as revo- neys have reached an agreement to settle to- respect for human dignity and responsible lutionary leaders of the women’s move- bacco litigation in 40 States and the tobacco behavior in the international community of ment by placing a statue of them in industry has agreed to pay $368.5 billion over nations. 25 years, most of which would go to States; the Capitol Rotunda next to statues of f other leaders in our Nation’s history Whereas under the terms of this agree- such as George Washington, Abraham ment, this payment will be counted as a AMENDMENTS SUBMITTED ‘‘normal and necessary’’ business expense Lincoln, and Martin Luther King, Jr. and will therefore be considered tax deduct- It is only fitting that a stamp be ible for Federal tax purposes, potentially re- THE REVENUE RECONCILIATION issued commemorating this historic quiring American taxpayers to subsidize up ACT OF 1997 anniversary highlighting the impor- to $147 billion of the settlement payment; tance of continuing this struggle for and equal rights and opportunity for Whereas while many of the details of the GRAMM AMENDMENT NO. 566 women in areas such as health care, agreement will require further examination Mr. GRAMM proposed an amendment education, employment, and pay eq- and possible alteration, the United States Senate should go on record stating its con- to the bill (S. 949) to provide revenue uity. cern about this provision’s potential impact reconciliation pursuant to section Mr. D’AMATO. Mr. President, I rise on federal revenues and the deficit: There- 104(b) of the concurrent resolution on today with my friend and colleague, fore be it the budget for fiscal year 1998; from the the senior Senator from New York, Resolved, It is the sense of the Senate that Committee on Finance; as follows: Senator MOYNIHAN, to submit concur- to protect the interests of the American tax- rent resolution to commemorate the payer, any legislation implementing the to- At the appropriate place, add the fol- 150th anniversary of the first Women’s bacco liability settlement shall prohibit par- lowing: Rights Convention through the ties to the agreement from claiming Federal SEC. . GUARANTEED BALANCED BUDGET. (a) MAXIMUM DEFICIT AMOUNT.—Section 253 issuance of a U.S. postage stamp. tax deductions for these payments. f of the Balanced Budget and Emergency Def- American women in the middle part icit Control Act of 1985 is amended— of the 19th century had few distin- SENATE RESOLUTION 105— (1) in subsection (b), in the last sentence by guishable rights. They did not possess RELATIVE TO HONG KONG striking the period and inserting ‘‘and the right to vote, participate in gov- $10,000,000,000 for fiscal years 1998 and there- Mr. LOTT (for himself, Mr. LIEBER- ernment and if married, were not al- after.’’; and MAN, Mr. MURKOWSKI, Mr. HELMS, Mr. lowed to own property or keep wages if (2) by striking subsections (g) and (h) and COVERDELL, Mr. MCCONNELL, Mr. ROBB, they worked outside of the home. In inserting the following: Mr. THURMOND, Mr. MCCAIN, Mr. NICK- ‘‘(g) MAXIMUM DEFICIT AMOUNT.—In this the summer of 1848, a group of five LES, Mr. ROTH, Mrs. FEINSTEIN, and Mr. section— women sought to change these cir- CRAIG) submitted the following resolu- ‘‘(1) Notwithstanding any provision of this cumstances. tion; which was considered and agreed * * * the term ‘deficit’ shall have the On July 19 and 20, 1848, 300 women to: same meaning as the term ‘deficit’ in section and men converged on Wesleyan Meth- 3(6) of the Congressional Budget and Im- odist Church in Seneca Falls, NY to S. RES. 105 poundment Control Act of 1974 as on the day consider ‘‘the social, civil and religious Whereas at one minute past midnight on before the date of enactment of the Budget condition of women’’ at that time. Led July 1, 1997, Hong Kong will cease to be a co- Enforcement Act of 1990; and lonial possession of Great Britain and will ‘‘(2) the term ‘maximum deficit amount’ by Elizabeth Cady Stanton, Lucretia return to Chinese sovereignty; means— Mott, Jane Hunt, Ann McClintock and Whereas the people of Hong Kong enjoy ‘‘(A) with respect to fiscal year 1998, Martha Wright, a Declaration of Senti- civil liberties and political freedoms based $90,500,000,000; ments was presented to the audience on the democratic rule of law and the func- ‘‘(B) with respect to fiscal year 1999, which listed among them ‘‘all men and tions of a free market; $89,500,000,000; women are created equal’’ and that Whereas the People’s Republic of china has ‘‘(C) with respect to fiscal year 2000, ‘‘women’s political equality with man promised through international agreements $82,900,000,000; is the legitimate outgrowth of the fun- and Chinese law to preserve Hong Kong’s ‘‘(D) with respect to fiscal year 2001, way of life and to grant the people of Hong $53,100,000,000; damental principles of our government Kong substantial autonomy in self-govern- ‘‘(E) with respect to fiscal year 2002 and fis- as set forth in the Declaration of Inde- ment; cal years thereafter, zero.’’. pendence and the Constitution.’’ Whereas the United States is committed (b) LOOK-BACK SEQUESTER.—Section 253 of This historic Convention marked a through the Hong Kong Policy Act of 1992 to the Balanced Budget and Emergency Deficit turning point in the condition of monitoring, advocating and reporting on the Control Act of 1985 is amended by adding at women in American society. The public continuation of Hong Kong’s freedoms under the end thereof the following new subsection: airing of the Declaration of Sentiments Chinese rule; and ‘‘(h) LOOK-BACK SEQUESTER— began a progressive pursuit of equality Whereas the United States enjoys a long- ‘‘(1) IN GENERAL.—On July 1 of each fiscal standing commercial, cultural, and political year, the Director of OMB shall determine if for women that has endured to this relationship with Hong Kong and a devel- laws effective during the current fiscal year day. oping relationship with the People’s Repub- will cause the deficit to exceed the max- The issuance of this stamp will honor lic of China: Now, therefore, be it imum deficit amount for such fiscal year. If the courage that these early leaders Resolved, That it is the sense of the Senate the limit is exceeded, there shall be a pre- had in presenting their convictions and that— liminary sequester on July 1 to eliminate pursuing change for all women. (1) the people of the United States wish the excess. Through the issuance of a commemora- good fortune to the people of Hong Kong as ‘‘(2) PERMANENT SEQUESTER.—Budget au- tive stamp, the commitment to wom- they embark on their historic transition of thority sequestered on July 1 pursuant to sovereignty; paragraph (1) shall be permanently canceled en’s rights will be celebrated. I encour- (2) the United States urges the People’s on July 15. age my colleagues to join Senator Republic of China to honor both the spirit ‘‘(3) NO MARGIN.—The margin for deter- MOYNIHAN and me by cosponsoring this and the letter of its commitments to accord mining a sequester under this subsection measure. Hong Kong substantial autonomy as a sepa- shall be zero.

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‘‘(4) SEQUESTRATION PROCEDURES.—The pro- amounts equivalent to the applicable per- At the appropriate place add the following: vision of subsections (c), (d), and (e) of this centage of revenues received in the Treasury ‘‘(f) BUDGETARY TREATMENT OF SALES OF section shall apply to a sequester under this from income taxes imposed by this chapter CERTAIN FEDERAL LANDS.—The amounts re- subsection.’’. for any taxable year beginning after Decem- alized from the sale or lease of lands or in- (c) OFFSETTING TAX CUTS WITH CUTS IN DIS- ber 31, 1997, and before January 1, 2008, on in- terests in lands which are part of the Na- CRETIONARY SPENDING.—Section 252 of the dividual taxpayers who are residents of the tional Park System, the Forest Service Sys- Balanced Budget and Emergency Deficit District of Columbia as of the last day of tem or the U.S. Fish and Wildlife refuge sys- Control Act of 1985 is amended by adding at such taxable year. tem shall not be scored with respect to the the end the following: ‘‘(2) APPLICABLE PERCENTAGE.—For pur- level of budget authority, outlays, or reve- ‘‘(f) OFFSETS WITH DISCRETIONARY SPEND- poses of paragraph (1), the term ‘applicable nues.’’ ING.—For purposes of subsection (b), revenue percentage’ means the percentage which the reductions increasing the deficit may be off- Secretary determines necessary to result in CRAIG AMENDMENT NO. 569 set by reductions in discretionary appro- the following amounts being appropriated to priated amounts reducing the deficit.’’. the Trust Fund under paragraph (1): Mr. CRAIG proposed an amendment (d) ADJUSTMENT OF DISCRETIONARY SPEND- ‘‘(A) $5,000,000 for each of the calendar to the bill, S. 949, supra; as follows: ING LEVELS FOR TAX CUTS.—Section 251(b)(2) years 1998 through 2007. At the appropriate place insert the fol- of the Balanced Budget and Emergency Def- ‘‘(3) TRANSFER OF AMOUNTS.—The amounts lowing: icit Control Act of 1985 is amended by adding appropriated by paragraph (1) shall be trans- SEC. . RESTRICTION ON THE USE OF TAX IN- at the end the following: ferred at least monthly from the general CREASES. ‘‘(I) TAX RELIEF ADJUSTMENTS.—If, for any fund of the Treasury to the Trust Fund for (a) IN GENERAL.—In the Senate, for pur- fiscal year or years, appropriations for dis- DC Schools on the basis of estimates made poses of section 202 of House Concurrent Res- cretionary appropriations are reduced that by the Secretary of the amounts referred to olution 67 (104th Congress), it shall not be in Congress and the President designate in stat- in such paragraph. Proper adjustments shall order to consider any bill, joint resolution, ute as offsets for tax relief, the adjustments be made in the amounts subsequently trans- amendment, motion, or conference report shall be the total amount of such reductions ferred to the extent prior estimates were in that provides an increase in direct spending in appropriations in discretionary accounts excess of or less than the amounts required offset by an increase in receipts. and the outlays flowing in all years from to be transferred. (b) WAIVER.—This section may be waived such reductions.’’ ‘‘(c) EXPENDITURES FROM FUND.— or suspended in the Senate only by the af- (e) Notwithstanding any provision in this ‘‘(1) IN GENERAL.—Amounts in the Trust firmative vote of three-fifths of the Mem- or any other Act, section 253 of the Balanced Fund for DC Schools are hereby appro- bers, duly chosen and sworn. Budget and Emergency Deficit Control Act is priated, and shall be available without fiscal (c) APPEALS.—Appeals in the Senate from extended through fiscal year 2002. year limitation, for payment by the Sec- the decisions of the Chair relating to any retary of debt service on qualified DC school provision of this section shall be limited to 1 hour, to be equally divided between, and con- JEFFORDS AMENDMENT NO. 567 bonds. ‘‘(2) QUALIFIED DC SCHOOL BONDS.—The term trolled by, the appellant and the manager of (Ordered to lie on the table.) ‘qualified DC school bonds’ means bonds the concurrent resolution, bill, or joint reso- Mr. JEFFORDS submitted an amend- which— lution, as the case may be. An affirmative ment intended to be proposed by him ‘‘(A) are issued after March 31, 1998, by the vote of three-fifths of the Members of the to the bill, S. 949, supra; as follows: District of Columbia to finance the construc- Senate, duly chosen and sworn, shall be re- tion, rehabilitation, and repair of schools quired in the Senate to sustain an appeal of On page 164, in the matter between lines 16 under the jurisdiction of the government of the ruling of the Chair on a point of order and 17, insert after the item relating to sec- the District of Columbia, and raised under this section. tion 1400B the following: ‘‘(B) are certified by the District of Colum- (d) DETERMINATION OF BUDGET LEVELS.— ‘‘Sec. 1400C. Trust Fund for DC schools.’’ bia Control Board as meeting the require- For purposes of this section, the levels of di- On page 173, line 10, strike ‘‘$75,000,000’’ and ments of subparagraph (A) after giving 60 rect spending and receipts for a fiscal year insert ‘‘$60,000,000’’. days notice of any proposed certification to shall be determined on the basis of estimates On page 174, strike lines 21 through 23, and the Subcommittees on the District of Colum- made by the Committee on the Budget of the insert: bia of the Committees on Appropriations of Senate. ‘‘(a) EXCLUSION.— the House of Representatives and the Senate. ‘‘(1) IN GENERAL.—Gross income shall not ‘‘(d) REPORT.—It shall be the duty of the BROWNBACK (AND OTHERS) include qualified capital gain from the sale Secretary to hold the Trust Fund for DC AMENDMENT NO. 570 or exchange of any DC asset held for more Schools and to report to the Congress each Mr. BROWNBACK (for himself, Mr. than 5 years. year on the financial condition and the re- KOHL, and Mr. MCCAIN) proposed an ‘‘(2) SPECIAL 10 PERCENT RATE FOR DC AS- sults of the operations of such Fund during SETS ACQUIRED IN 1998.— the preceding fiscal year and on its expected amendment to the bill, S. 949, supra; as ‘‘(A) IN GENERAL.—In the case of any DC condition and operations during the next fis- follows: asset acquired during calendar year 1998— cal year. Such report shall be printed as a At the end of the bill, add the following: ‘‘(i) paragraph (1) shall not apply to any House document of the session of the Con- TITLE ll—BUDGET CONTROL qualified capital gain from the sale or ex- gress to which the report is made. SEC. ll01. SHORT TITLE; PURPOSE. change of such asset, and ‘‘(e) INVESTMENT.— (a) SHORT TITLE.—This title may be cited ‘‘(ii) the qualified capital gain described in ‘‘(1) IN GENERAL.—It shall be the duty of as the ‘‘Bipartisan Budget Enforcement Act clause (i) shall be treated as adjusted net the Secretary to invest such portion of the of 1997’’. capital gain described in section 1(h)(1)(D) Trust Fund for DC Schools as is not, in the (b) PURPOSE.—The purpose of this title is— for the taxable year of the sale or exchange Secretary’s judgment, required to meet cur- (1) to ensure a balanced Federal budget by (and the amount under section 1(h)(1)(D)(i) rent withdrawals. Such investments may be fiscal year 2002; for such taxable year shall be increased by made only in interest-bearing obligations of (2) to ensure that the Bipartisan Budget the amount of such gain). the United States. For such purpose, such Agreement is implemented; and ‘‘(B) SPECIAL RULE.—For purposes of sub- obligations may be acquired— (3) to create a mechanism to monitor total paragraph (A), any DC asset the basis of ‘‘(A) on original issue at the issue price, or costs of direct spending programs, and, in which is determined in whole or in part by ‘‘(B) by purchase of outstanding obliga- the event that actual or projected costs ex- reference to the basis of an asset to which tions at the market price. ceed targeted levels, to require the President subparagraph (A) applies shall be treated as ‘‘(2) SALE OF OBLIGATIONS.—Any obligation and Congress to address adjustments in di- a DC asset acquired during calendar year acquired by the Trust Fund for DC Schools rect spending. 1998. may be sold by the Secretary at the market SEC. ll02. ESTABLISHMENT OF DIRECT SPEND- On page 181, between lines 5 and 6, insert price. ING TARGETS. the following: ‘‘(3) INTEREST ON CERTAIN PROCEEDS.—The (a) IN GENERAL.—The initial direct spend- ‘‘SEC. 1400C. TRUST FUND FOR DC SCHOOLS. interest on, and the proceeds from the sale ing targets for each of fiscal years 1998 ‘‘(a) CREATION OF FUND.—There is estab- or redemption of, any obligations held in the through 2002 shall equal total outlays for all lished in the Treasury of the United States a Trust Fund for DC Schools shall be credited direct spending except net interest as deter- trust fund to be known as the ‘Trust Fund to and form a part of the Trust Fund for DC mined by the Director of the Office of Man- for DC Schools’, consisting of such amounts Schools.’’ agement and Budget (hereinafter referred to as may be appropriated or credited to the in this title as the ‘‘Director‘‘) under sub- Fund as provided in this section. BUMPERS AMENDMENT NO. 568 section (b). ‘‘(b) TRANSFER TO TRUST FUND OF AMOUNTS (b) INITIAL REPORT BY DIRECTOR.— EQUIVALENT TO CERTAIN TAXES.— Mr. BUMPERS proposed an amend- (1) IN GENERAL.—Not later than 30 days ‘‘(1) IN GENERAL.—There are hereby appro- ment to the bill, S. 949, supra; as fol- after the date of enactment of this title, the priated to the Trust Fund for DC Schools lows: Director shall submit a report to Congress

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00096 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6765 setting forth projected direct spending tar- rect spending message shall include the text hour, to be equally divided between, and con- gets for each of fiscal years 1998 through 2002. of a special resolution concurring in the trolled by, the appellant and the manager of (2) PROJECTIONS AND ASSUMPTIONS.—The President’s recommendation of no legislative the bill or joint resolution, as the case may Director’s projections shall be based on legis- action. be. An affirmative vote of three-fifths of the lation enacted as of 5 days before the report SEC. ll05. REQUIRED RESPONSE BY CONGRESS. Members of the Senate, duly chosen and is submitted under paragraph (1). The Direc- (a) IN GENERAL.—It shall not be in order in sworn, shall be required in the Senate to sus- tor shall use the same economic and tech- the House of Representatives or the Senate tain an appeal of the ruling of the Chair on nical assumptions used in preparing the con- to consider a concurrent resolution on the a point of order raised under this section. current resolution on the budget for fiscal budget unless that concurrent resolution ‘‘(d) DETERMINATION OF BUDGET LEVELS.— year 1998 (H.Con.Res. 84). fully addresses the entirety of any overage For purposes of this section, the levels of SEC. ll03. ANNUAL REVIEW OF DIRECT SPEND- contained in the applicable report of the new budget authority, outlays, and revenues ING AND RECEIPTS BY PRESIDENT. President under section ll04 through rec- for a fiscal year shall be determined on the As part of each budget submitted under onciliation directives. basis of estimates made by the Committee section 1105(a) of title 31, United States (b) WAIVER AND SUSPENSION.—This section on the Budget of the Senate.’’. (b) PRESIDENT’S BUDGET.—Section 1105(f) of Code, the President shall provide an annual may be waived or suspended in the Senate title 31, United States Code, is amended by review of direct spending and receipts, which only by the affirmative vote of three-fifths adding at the end the following: ‘‘The budget shall include— of the Members, duly chosen and sworn. This shall also be prepared in a manner that does (1) information on total outlays for pro- section shall be subject to the provisions of not cause a deficit for fiscal year 2002 or any grams covered by the direct spending tar- section 258 of the Balanced Budget and fiscal year thereafter.’’. gets, including actual outlays for the prior Emergency Deficit Control Act of 1985. fiscal year and projected outlays for the cur- (c) APPEALS.—Appeals in the Senate from rent fiscal year and the 5 succeeding fiscal the decisions of the Chair relating to any BYRD AMENDMENT NO. 572 years; and provision of this section shall be limited to 1 Mr. BYRD proposed an amendment (2) information on the major categories of hour, to be equally divided between, and con- to the bill, S. 949, supra; as follows: Federal receipts, including a comparison be- trolled by, the appellant and the manager of At the appropriate place, insert the fol- tween the levels of those receipts and the the bill or joint resolution, as the case may lowing: levels projected as of the date of enactment be. An affirmative vote of three-fifths of the of this title. Members of the Senate, duly chosen and SEC. . DEBATE ON A RECONCILIATION BILL. Section 310(e)(2) of the Congressional SEC. ll04. SPECIAL DIRECT SPENDING MES- sworn, shall be required in the Senate to sus- SAGE BY PRESIDENT. tain an appeal of the ruling of the Chair on Budget Act of 1974 is amended to read as fol- lows: (a) TRIGGER.—If the information submitted a point of order raised under this section. ‘‘(2) For purposes of consideration of any by the President under section ll03 indi- SEC. ll06. RELATIONSHIP TO BALANCED BUDG- reconciliation bill reported under subsection cates— ET AND EMERGENCY DEFICIT CON- (b)— TROL ACT. (1) that actual outlays for direct spending ‘‘(A) debate, and all amendments thereto in the prior fiscal year exceeded the applica- Reductions in outlays or increases in re- and debatable motions and appeals in con- ble direct spending target; or ceipts resulting from legislation reported nection therewith, shall be limited to not (2) that outlays for direct spending for the pursuant to section ll05 shall not be taken more than 30 hours; current or budget year are projected to ex- into account for purposes of any budget en- ‘‘(B) time on the bill may only be yielded ceed the applicable direct spending targets, forcement procedures under the Balanced back by consent and a motion to further the President shall include in his budget a Budget and Emergency Deficit Control Act limit debate shall be debatable with debate special direct spending message meeting the of 1985. limited to 1⁄2 hour equally divided; requirements of subsection (b). SEC. ll07. ESTIMATING MARGIN. ‘‘(C) time on amendments shall be limited (b) CONTENTS.— For any fiscal year for which the overage to 30 minutes to be equally divided in the (1) INCLUSIONS.—The special direct spend- is less than one-half of 1 percent of the direct usual form and on any second degree amend- ing message shall include— spending target for that year, the procedures ment or motion to 20 minutes to be equally (A) an analysis of the variance in direct set forth in sections ll04 and ll05 shall divided in the usual form; except that after spending over the direct spending targets; not apply. the 15th hour of consideration of a bill, time and SEC. ll08. EFFECTIVE DATE. on all amendments or motions shall be lim- (B) the President’s recommendations for This title shall apply to direct spending ited to 30 minutes. addressing the direct spending overages, if targets for fiscal years 1998 through 2002 and ‘‘(D) no first degree amendment may be any, in the prior, current, or budget year. shall expire at the end of fiscal year 2002. proposed after the 15th hour of consideration (2) ADDITIONAL MATTERS.—The President’s of a bill unless it has been submitted to the recommendations may consist of any of the Journal Clerk prior to the expiration of the following: FRIST (AND OTHERS) AMENDMENT 15th hour; (A) Proposed legislative changes to recoup NO. 571 ‘‘(E) no second degree amendment may be or eliminate the overage for the prior, cur- proposed after the 20th hour of consideration rent, and budget years in the current year, Mr. FRIST (for himself, Mr. CONRAD, of a bill unless it has been submitted to the the budget year, and the 4 outyears. Mr. ABRAHAM, Mr. SESSIONS, and Mr. Journal Clerk prior to the expiration of the (B) Proposed legislative changes to recoup ROBB) proposed an amendment to the 20th hour; and or eliminate part of the overage for the bill, S. 949, supra; as follows: ‘‘(F) After no more than thirty hours of prior, current, and budget year in the cur- At the appropriate place, add the fol- consideration of the measure, the Senate rent year, the budget year, and the 4 out- lowing: shall proceed, without any further debate on years, accompanied by a finding by the any question, to vote on the final disposition SEC. . ENFORCEMENT OF BALANCED BUDGET. President that, because of economic condi- thereof to the exclusion of all amendments (a) IN THE SENATE.—Title III of the Con- tions or for other specified reasons, only not then actually pending before the Senate gressional Budget Act of 1974 is amended by some of the overage should be recouped or at that time and to the exclusion of all mo- adding at the end the following: eliminated by outlay reductions or revenue tions, except a motion to table, or to recon- increases, or both. ‘‘ENFORCEMENT BALANCED BUDGET IN THE sider and one quorum call on demand to es- (C) A proposal to make no legislative SENATE tablish the presence of a quorum (and mo- changes to recoup or eliminate any overage, ‘‘SEC. 315. (a) POINT OF ORDER.—It shall not tions required to establish a quorum) imme- accompanied by a finding by the President be in order in the Senate to consider any res- diately before the final vote begins.’’ that, because of economic conditions or for olution or bill (or amendment, motion, or other specified reasons, no legislative conference report on such resolution or bill) KENNEDY (AND DASCHLE) changes are warranted. that provides or would cause a deficit (as de- AMENDMENT NO. 573 (c) PROPOSED SPECIAL DIRECT SPENDING termined for purposes of the Bipartisan RESOLUTION.—If the President recommends Budget Agreement of May 16, 1997) for fiscal Mr. KENNEDY (for himself and Mr. reductions consistent with subsection year 2002 or any fiscal year thereafter. DASCHLE) proposed an amendment to (b)(2)(A) or (B), the special direct spending ‘‘(b) WAIVER AND SUSPENSION.—This section the bill, S. 949, supra; as follows: message shall include the text of a special may be waived or suspended in the Senate On page 337, beginning with line 14, strike direct spending resolution implementing the only by the affirmative vote of three-fifths all through page 339, line 15, and insert the President’s recommendations through rec- of the Members, duly chosen and sworn. This following. onciliation directives instructing the appro- section shall be subject to the provisions of (a) CIGARETTES.— Section 5701(b) of the In- priate committees of the House of Represent- section 258 of the Balanced Budget and ternal Revenue Code of 1986 is amended— atives and Senate to determine and rec- Emergency Deficit Control Act of 1985. (1) in paragraph (1), by striking ‘‘$12 per ommend changes in laws within their juris- ‘‘(c) APPEALS.—Appeals in the Senate from thousand ($10 per thousand on cigarettes re- dictions. If the President recommends no re- the decisions of the Chair relating to any moved during 1991 or 1992)’’ and inserting ductions pursuant to (b)(2)(C), the special di- provision of this section shall be limited to 1 ‘‘$33.50 per thousand’’, and

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(2) in paragraph (2), by striking ‘‘$25.20 per On line 64, beginning with line 8, strike all ‘‘(C) SCHOOL.—The term ‘school’ means any thousand ($21 per thousand on cigarettes re- through page 67, line 15, and insert: school which provides elementary education moved during 1991 or 1992)’’ and inserting ‘‘(1) EDUCATION INDIVIDUAL RETIREMENT AC- or secondary education (through grade 12), as ‘‘$70.35 per thousand’’. COUNT.—The term ‘education individual re- determined under State law. (b) CIGARS.—Section 5701(a) of the Internal tirement account’ means a trust created or ‘‘(c) TAX TREATMENT OF DISTRIBUTIONS.— Revenue Code of 1986 is amended— organized in the United States exclusively ‘‘(1) IN GENERAL.—Any amount paid or dis- (1) in paragraph (1), by striking ‘‘$1.125 for the purpose of paying the qualified edu- tributed shall be includible in gross income cents per thousand (93.75 cents per thousand cation expenses of the account holder, but to the extent required by section 529(c)(3) on cigars removed during 1991 or 1992)’’ and only if the written governing instrument (determined as if such account were a quali- inserting ‘‘$3.141 cents per thousand’’, and creating the trust meets the following re- fied tuition program and as if qualified high- (2) by striking ‘‘equal to’’ and all that fol- quirements: er education expenses include qualified edu- lows in paragraph (2) and inserting ‘‘equal to ‘‘(A) No contribution will be accepted— cation expenses). 35.59 percent of the price for which sold but ‘‘(i) unless it is in cash, ‘‘(2) SPECIAL RULES FOR APPLYING ESTATE not more than $83.75 per thousand.’’ ‘‘(ii) after the date on which the account AND GIFT TAXES WITH RESPECT TO ACCOUNT.— (c) CIGARETTE PAPERS.—Section 5701(c) of holder attains age 18, or Rules similar to the rules of paragraphs (2), the Internal Revenue Code of 1986 is amended ‘‘(iii) except in the case of rollover con- (4), and (5) of section 529(c) shall apply for by striking ‘‘0.75 cent (0.625 cent on cigarette tributions, if such contribution would result purposes of this section. ‘‘(3) ADDITIONAL TAX FOR DISTRIBUTIONS NOT papers removed during 1991 or 1992)’’ and in- in aggregate contributions for the taxable USED FOR EDUCATIONAL EXPENSES.— serting ‘‘2.09 cents’’. year exceeding the sum of— ‘‘(I) $2,000, plus ‘‘(A) IN GENERAL.—The tax imposed by sec- (d) CIGARETTE TUBES.—Section 5701(d) of ‘‘(II) the amount of the credit allowable tion 529(f) shall apply to payments and dis- the Internal Revenue Code of 1986 is amended under section 25A for the taxable year for 1 tributions from an education individual re- by striking ‘‘1.5 cents (1.25 cents on cigarette qualifying child. tirement account in the same manner as tubes removed during 1991 or 1992)’’ and in- ‘‘(B) The trustee is a bank (as defined in such tax applies to qualified tuition pro- serting ‘‘4.18 cents’’. section 408(n)) or another person who dem- grams (as defined in section 529), except that (e) SMOKELESS TOBACCO.—Section 5701(e) of onstrates to the satisfaction of the Secretary section 529(f) shall be applied by reference by the Internal Revenue code of 1986 is amend- that the manner in which that person will qualified education expenses. ed— administer the trust will be consistent with (1) in paragraph (1), by striking ‘‘36 cents the requirements of this section. (30 cents on snuff removed during 1991 or KOHL (AND OTHERS) AMENDMENT ‘‘(C) No part of the trust assets will be in- NO. 575 1992)’’ and inserting ‘‘$1.00’’, and vested in life insurance contracts. (2) by striking ‘‘12 cents (10 cents on chew- ‘‘(D) The assets of the trust shall not be Mr. KOHL (for himself, Mr. HATCH, ing tobacco removed during 1991 or 1992)’’ in commingled with other property except in a Mr. DASCHLE, Mr. D’AMATO, Ms. paragraph (2) and inserting ‘‘33.5 cents’’. common trust fund or common investment MOSELEY-BRAUN, Mr. ABRAHAM, Mr. (f) PIPE TOBACCO.—Section 5701(f) of the In- fund. ternal Revenue Code of 1986 is amended by SPECTER, Ms. SNOWE, Mrs. BOXER, Mr. ‘‘(E) Upon the death of the account holder, DEWINE, Mrs. MURRAY, and Mr. JOHN- striking ‘‘67.5 cents (56.25 cents on pipe to- any balance in the account will be distrib- SON) proposed an amendment to the bacco removed during 1991 or 1992)’’ and in- uted as required under section 529(b)(8) (as if serting ‘‘$1.88’’. such account were a qualified tuition pro- bill, S. 949, supra; as follows: (g) IMPOSITION OF EXCISE TAX ON MANUFAC- gram). On page 20, between lines 5 and 6, insert: TURE OR IMPORTATION OF ROLL-YOUR-OWN TO- ‘‘(F) The account becomes an IRA Plus as SEC. 103. ALLOWANCE OF CREDIT FOR EM- BACCO.— of the date the account holder attains age 30 PLOYER EXPENSES FOR CHILD CARE (1) IN GENERAL.—Section 5701 (relating to (and meets all requirements for an IRA Plus ASSISTANCE. rate of tax) is amended by redesignating sub- on and after such date), unless the account (a) IN GENERAL.—Subpart D of part IV of section (g) as subsection (h) and by inserting holder elects to have sections 529(b)(8) apply subchapter A of chapter 1 (relating to busi- after subsection (f) the following new sub- as of such date (as if such account were a ness related credits) is amended by adding at section. qualified tuition program). the end the following new section: ‘‘(g) ROLL-YOUR-OWN TOBACCO.—On roll- ‘‘(2) QUALIFIED EDUCATION EXPENSES.— ‘‘SEC. 45D. EMPLOYER-PROVIDED CHILD CARE your-own tobacco, manufactured in or im- ‘‘(A) IN GENERAL.—The term ‘qualified edu- CREDIT. ported into the United States, there shall be cation expenses’ means— ‘‘(a) IN GENERAL.—For purposes of section imposed a tax of $1.74 cents per pound (and a ‘‘(i) qualified higher education expenses (as 38, the employer-provided child care credit proportionate tax at the like rate on all frac- defined in section 529(e)(3), and determined under this section for the taxable tional parts of a pound).’’ ‘‘(ii) in the case of taxable years beginning year is an amount equal to 50 percent of the On page 349, between lines 2 and 3, insert after December 31, 2000, qualified elementary qualified child care expenditures of the tax- the following: and secondary education expenses (as defined payer for such taxable year. ‘‘(k) APPROPRIATION OF PORTION OF RESULT- in paragraph (5)). ‘‘(b) DOLLAR LIMITATION.—The credit al- ING REVENUES FROM INCREASE IN TAXES ON ‘‘(B) QUALIFIED TUITION PROGRAMS.—Such lowable under subsection (a) for any taxable TOBACCO PRODUCTS TO CHILDREN’S HEALTH term shall include amounts paid or incurred year shall not exceed $150,000. ‘‘(c) DEFINITIONS.—For purposes of this sec- INSURANCE INITIATIVES.—In addition to any to purchase tuition credits or certificates, or amounts otherwise appropriated for the pur- to make contributions to an account, under tion— pose of carrying out title XXI of the Social a qualified tuition program (as defined in ‘‘(1) QUALIFIED CHILD CARE EXPENDITURE.— Security Act (relating to children’s health section 529(b)) for the benefit of the account The term ‘qualified child care expenditure’ insurance initiatives), there is appropriated holder. means any amount paid or incurred— from the increase in revenues resulting from ‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— ‘‘(A) to acquire, construct, rehabilitate, or the amendments made by this section The term ‘eligible educational institution’ expand property— $2,400,000,000 for each of the fiscal years 1998 has the meaning given such term by section ‘‘(i) which is to be used as part of a quali- through 2002.’’. 529(e)(5). fied child care facility of the taxpayer, ‘‘(4) ACCOUNT HOLDER.—The term ‘account ‘‘(ii) with respect to which a deduction for depreciation (or amortization in lieu of de- COVERDELL (AND OTHERS) holder’ means the individual for whose ben- efit the education individual retirement ac- preciation) is allowable, and AMENDMENT NO. 574 count is established. ‘‘(iii) which does not constitute part of the Mr. COVERDELL (for himself, Mr. ‘‘(5) QUALIFIED ELEMENTARY AND SECONDARY principal residence (within the meaning of section 1034) of the taxpayer or any employee ABRAHAM, Mr. COATS, Mr. CRAIG, Mr. EDUCATION EXPENSES.— ‘‘(A) IN GENERAL.—The term ‘qualified ele- of the taxpayer, SANTORUM, and Mr. ASHCROFT) pro- mentary and secondary education expenses’ ‘‘(B) for the operating costs of a qualified posed an amendment to the bill, S. 949, means tuition, fees, tutoring, special needs child care facility of the taxpayer, including supra, as follows: services, books, supplies, equipment, trans- costs related to the training of employees, to On page 19, between lines 14 and 15, insert: portation, and supplementary expenses re- scholarship programs, and to the providing ‘‘(D) ADJUSTMENT.—The Secretary shall re- quired for the enrollment or attendance at a of increased compensation to employees with duce the dollar amounts otherwise in effect public, private, or sectarian school of any de- higher levels of child care training, under this paragraph for any calendar year pendent of the taxpayer with respect to ‘‘(C) under a contract with a qualified child to the extent necessary to increase Federal whom the taxpayer is allowed a deduction care facility to provide child care services to revenues by the amount the Secretary esti- under section 151. employees of the taxpayer, or mates Federal revenues will be reduced by ‘‘(B) SPECIAL RULE FOR HOMESCHOOLING.— ‘‘(D) under a contract to provide child care reason of allowing distributions from edu- Scuh term shall include expenses described resource and referral services to employees cation individual retirement accounts under in subparagraph (A) required for education of the taxpayer, or section 530 to be used for qualified elemen- provided for homeschooling if the require- ‘‘(E) for the costs of seeking accreditation tary and secondary education expenses de- ments of any applicable State or local law from a child care credentialing or accredita- scribed in section 530(b)(2)(A)(ii).’’ are met with respect to such education. tion entity.

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‘‘(2) QUALIFIED CHILD CARE FACILITY.— person acquiring the interest in the facility (c) EFFECTIVE DATE.—The amendments ‘‘(A) IN GENERAL.—The term ‘qualified shall be treated as the taxpayer for purposes made by this section shall apply to taxable child care facility’ means a facility— of assessing any recapture liability (com- years beginning after December 31, 1997. ‘‘(i) the principal use of which is to provide puted as if there had been no change in own- SEC. 104. EXPANSION OF COORDINATED EN- child care assistance, and ership). FORCEMENT EFFORTS OF INTERNAL ‘‘(ii) which meets the requirements of all ‘‘(4) SPECIAL RULES.— REVENUE SERVICE AND HHS OFFICE applicable laws and regulations of the State ‘‘(A) TAX BENEFIT RULE.—The tax for the OF CHILD SUPPORT ENFORCEMENT. or local government in which it is located, taxable year shall be increased under para- (a) STATE REPORTING OF CUSTODIAL DATA.— including, but not limited to, the licensing of graph (1) only with respect to credits allowed Section 454A(e)(4)(D) of the Social Security the facility as a child care facility. by reason of this section which were used to Act (42 U.S.C. 654(e)(4)(D)) is amended by reduce tax liability. In the case of credits striking ‘‘the birth date of any child’’ and in- Clause (i) shall not apply to a facility which serting ‘‘the birth date and custodial status is the principal residence (within the mean- not so used to reduce tax liability, the carryforwards and carrybacks under section of any child’’. ing of section 1034) of the operator of the fa- (b) MATCHING PROGRAM BY IRS OF CUSTO- cility. 39 shall be appropriately adjusted. ‘‘(B) NO CREDITS AGAINST TAX.—Any in- DIAL DATA AND TAX STATUS INFORMATION.— ‘‘(B) SPECIAL RULES WITH RESPECT TO A TAX- crease in tax under this subsection shall not (1) NATIONAL DIRECTORY OF NEW HIRES.— PAYER.—A facility shall not be treated as a be treated as a tax imposed by this chapter Section 453(i)(3) of the Social Security Act qualified child care facility with respect to a for purposes of determining the amount of (42 U.S.C. 653(i)(3)) is amended by striking ‘‘a taxpayer unless— any credit under subpart A, B, or D of this claim with respect to employment in a tax ‘‘(i) enrollment in the facility is open to part. return’’ and inserting ‘‘information which is employees of the taxpayer during the taxable ‘‘(C) NO RECAPTURE BY REASON OF CASUALTY required on a tax return’’. year, LOSS.—The increase in tax under this sub- (2) FEDERAL CASE REGISTRY OF CHILD SUP- ‘‘(ii) the facility is not the principal trade section shall not apply to a cessation of op- PORT ORDERS.—Section 453(h) of the such Act or business of the taxpayer unless at least 30 eration of the facility as a qualified child (42 U.S.C. 653(h)) is amended by adding at the percent of the enrollees of such facility are care facility by reason of a casualty loss to end the following: dependents of employees of the taxpayer, and the extent such loss is restored by recon- ‘‘(3) ADMINISTRATION OF FEDERAL TAX ‘‘(iii) the use of such facility (or the eligi- struction or replacement within a reasonable LAWS.—The Secretary of the Treasury shall bility to use such facility) does not discrimi- period established by the Secretary. have access to the information described in nate in favor of employees of the taxpayer ‘‘(e) SPECIAL RULES.—For purposes of this paragraph (2), consisting of the names and who are highly compensated employees section— social security numbers of the custodial par- (within the meaning of section 414(q)). ‘‘(1) AGGREGATION RULES.—All persons ents linked with the children in the custody ‘‘(d) RECAPTURE OF ACQUISITION AND CON- which are treated as a single employer under of such parents, for the purpose of admin- STRUCTION CREDIT.— subsections (a) and (b) of section 52 shall be istering those sections of the Internal Rev- ‘‘(1) IN GENERAL.—If, as of the close of any treated as a single taxpayer. enue Code of 1986 which grant tax benefits taxable year, there is a recapture event with ‘‘(2) PASS-THRU IN THE CASE OF ESTATES AND based on support and residence provided de- respect to any qualified child care facility of TRUSTS.—Under regulations prescribed by pendent children.’’ the taxpayer, then the tax of the taxpayer the Secretary, rules similar to the rules of (c) EFFECTIVE DATE.—The amendments under this chapter for such taxable year subsection (d) of section 52 shall apply. made by this section shall take effect on Oc- shall be increased by an amount equal to the ‘‘(3) ALLOCATION IN THE CASE OF PARTNER- tober 1, 1997. product of— SHIPS.—In the case of partnerships, the cred- ‘‘(A) the applicable recapture percentage, it shall be allocated among partners under GRAHAM AMENDMENT NO. 576 and regulations prescribed by the Secretary. ‘‘(B) the aggregate decrease in the credits ‘‘(f) NO DOUBLE BENEFIT.— (Ordered to lie on the table.) allowed under section 38 for all prior taxable ‘‘(1) REDUCTION IN BASIS.—For purposes of Mr. GRAHAM submitted an amend- years which would have resulted if the quali- this subtitle— ment intended to be proposed by him fied child care expenditures of the taxpayer ‘‘(A) IN GENERAL.—If a credit is determined to the bill, S. 949, supra; as follows: described in subsection (c)(1)(A) with respect under this section with respect to any prop- On page 93, strike lines 13 through 25, and to such facility had been zero. erty by reason of expenditures described in insert: ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.— subsection (c)(1)(A), the basis of such prop- ‘‘(ii) a silver coin described in section ‘‘(A) IN GENERAL.—For purposes of this sub- erty shall be reduced by the amount of the 5112(e) of title 31, United States Code, section, the applicable recapture percentage credit so determined. ‘‘(iii) a platinum coin described in section shall be determined from the following table: ‘‘(B) CERTAIN DISPOSITIONS.—If during any 5112(k) of title 31, United States Code, or The applicable taxable year there is a recapture amount de- ‘‘(iv) a coin issued under the laws of any recapture termined with respect to any property the State, or ‘‘If the recapture event percentage is: basis of which was reduced under subpara- ‘‘(B) any gold, silver, platinum, or palla- occurs in: graph (A), the basis of such property (imme- dium bullion of a fineness equal to or exceed- Years 1–3 ...... 100 diately before the event resulting in such re- ing the minimum fineness required for met- Year 4 ...... 85 capture) shall be increased by an amount als which may be delivered in satisfaction of Year 5 ...... 70 equal to such recapture amount. For pur- a regulated futures contract subject to regu- Year 6 ...... 55 poses of the preceding sentence, the term ‘re- lation by the Commodity Futures Trading Year 7 ...... 40 capture amount’ means any increase in tax Commission under the Commodity Exchange Year 8 ...... 25 (or adjustment in carrybacks or carryovers) Act,’’. Years 9 and 10 ...... 10 determined under subsection (d). On page 205, before line 12, insert the fol- Years 11 and thereafter 0. ‘‘(2) OTHER DEDUCTIONS AND CREDITS.—No lowing: (c) SPECIAL AMORTIZATION RULE.— deduction or credit shall be allowed under ‘‘(B) YEARS.—For purposes of subparagraph (1) CODE AMENDMENT.—Section 412(b)(2) is any other provision of this chapter with re- (A), year 1 shall begin on the first day of the amended by striking ‘‘and’’ at the end of sub- spect to the amount of the credit determined taxable year in which the qualified child paragraph (C), by striking the period at the under this section. care facility is placed in service by the tax- end of subparagraph (D) and inserting ‘‘, ‘‘(g) TERMINATION.—This section shall not payer. and’’, and by inserting after subparagraph ‘‘(3) RECAPTURE EVENT DEFINED.—For pur- apply to taxable years beginning after De- cember 31, 1999.’’ (D) the following: poses of this subsection, the term ‘recapture ‘‘(E) the amount necessary to amortize in event’ means— (b) CONFORMING AMENDMENTS.— (1) Section 38(b) is amended— equal annual installments (until fully amor- ‘‘(A) CESSATION OF OPERATION.—The ces- (A) by striking out ‘‘plus’’ at the end of tized) over a period of 20 years the contribu- sation of the operation of the facility as a tions which would be required to be made qualified child care facility. paragraph (11), (B) by striking out the period at the end of under the plan but for the provisions of sub- ‘‘(B) CHANGE IN OWNERSHIP.— paragraph (12), and inserting a comma and section (c)(7)(A)(i)(I).’’. ‘‘(i) IN GENERAL.—Except as provided in (2) ERISA AMENDMENT.—Section 302(b)(2) of ‘‘plus’’, and clause (ii), the disposition of a taxpayer’s in- the Employee Retirement Income Security (C) by adding at the end the following new terest in a qualified child care facility with Act of 1974 (29 U.S.C. 1082(b)(2)) is amended paragraph: respect to which the credit described in sub- by striking ‘‘and’’ at the end of subparagraph ‘‘(13) the employer-provided child care section (a) was allowable. (C), by striking the period at the end of sub- credit determined under section 45D.’’ ‘‘(ii) AGREEMENT TO ASSUME RECAPTURE LI- paragraph (D) and inserting ‘‘, and’’, and by (2) The table of sections for subpart D of ABILITY.—Clause (i) shall not apply if the inserting after subparagraph (D) the fol- part IV of subchapter A of chapter 1 is person acquiring such interest in the facility lowing: agrees in writing to assume the recapture li- amended by adding at the end the following ‘‘(E) the amount necessary to amortize in ability of the person disposing of such inter- new item: equal annual installments (until fully amor- est in effect immediately before such disposi- ‘‘Sec. 45D. Employer-provided child care tized) over a period of 20 years the contribu- tion. In the event of such an assumption, the credit.’’ tions which would be required to be made

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under the plan but for the provisions of sub- ‘‘(i) taxable income reduced by the net cap- ‘‘(6) PRE-EFFECTIVE DATE GAIN.— section (c)(7)(A)(i)(I).’’. ital gain, or ‘‘(A) IN GENERAL.—In the case of a taxable (3) CONFORMING AMENDMENTS.— ‘‘(ii) the amount of taxable income taxed year which includes May 7, 1997, adjusted net (A) Section 412(c)(7)(D) is amended by add- at a rate below 28 percent, plus capital gain shall be determined without re- ing ‘‘and’’ at the end of clause (i), by striking ‘‘(B) 24 percent of the lesser of— gard to pre-May 7, 1997, gain. ‘‘, and’’ at the end of clause (ii) and inserting ‘‘(i) the unrecaptured section 1250 gain, or ‘‘(B) PRE-MAY 7, 1997, GAIN.—The term ‘pre- a period, and by striking clause (iii). ‘‘(ii) the amount of taxable income in ex- May 7, 1997, gain’ means the amount which (B) Section 302(c)(7)(D) of the Employee cess of the sum of the amount on which tax would be adjusted net capital gain for the Retirement Income Security Act of 1974 (29 is determined under subparagraph (A) plus taxable year if adjusted net capital gain were U.S.C. 1082(c)(7)(D)) is amended by adding the net capital gain determined without re- determined by taking into account only the ‘‘and’’ at the end of clause (i), by striking ‘‘, gard to unrecaptured section 1250 gain, plus gain or loss properly taken into account for and’’ at the end of clause (ii) and inserting a ‘‘(C) 28 percent of the amount of taxable in- the portion of the taxable year before May 7, period, and by striking clause (iii). come in excess of the sum of— 1997. (4) EFFECTIVE DATES.— ‘‘(i) the adjusted net capital gain, plus ‘‘(C) SPECIAL RULES FOR PASS-THRU ENTI- (A) IN GENERAL.—The amendments made ‘‘(ii) the sum of the amounts on which tax TIES.—In applying subparagraph (A) with re- by this subsection shall apply to plan years is determined under subparagraphs (A) and spect to any pass-thru entity, the determina- beginning after December 31, 1998. (B), plus tion of when gains and loss are properly (B) SPECIAL RULE FOR 1999.—In the case of a ‘‘(D) 10 percent of so much of the tax- taken into account shall be made at the enti- plan’s first year beginning in 1999, there payer’s adjusted net capital gain (or, if less, ty level. shall be added to the amount required to be taxable income) as does not exceed the ex- ‘‘(D) PASS-THRU ENTITY DEFINED.—For pur- amortized under section 412(b)(2)(E) of the cess (if any) of— poses of subparagraph (C), the term ‘pass- Internal Revenue Code of 1986 and section ‘‘(i) the amount of taxable income which thru entity’ means— 302(b)(2)(E) of the Employee Retirement In- would (without regard to this paragraph) be ‘‘(i) a regulated investment company, come Security Act of 1974 (as added by para- taxed at a rate of 15 percent or less, over ‘‘(ii) a real estate investment trust, graphs (1) and (2)) over the 20-year period be- ‘‘(ii) the taxable income reduced by the ad- ‘‘(iii) an S corporation, ginning with such year, the unamortized bal- justed net capital gain, plus ‘‘(iv) a partnership, ance (as of the close of the preceding plan ‘‘(E) 20 percent of the taxpayer’s adjusted ‘‘(v) an estate or trust, and year) of any amount required to be amor- net capital gain (or, if less, taxable income) ‘‘(vi) a common trust fund.’’ tized under section 412(c)(7)(D)(iii) of such in excess of the amount on which a tax is de- Code and section 302(c)(7)(D)(iii) of such Act termined under subparagraph (D). (b) MINIMUM TAX.— (as repealed by paragraph (3)) for plan years ‘‘(2) NET CAPITAL GAIN TAKEN INTO ACCOUNT (1) IN GENERAL.—Subsection (b) of section beginning before 1999. AS INVESTMENT INCOME.—For purposes of this 55 is amended by adding at the end the fol- On page 639, between lines 11 and 12, insert: subsection, the net capital gain for any tax- lowing new paragraph: (4) AMENDMENTS RELATED TO SECTION 1461.— able year shall be reduced (but not below ‘‘(3) MAXIMUM RATE OF TAX ON NET CAPITAL (A) Section 415(e)(5)(A) is amended to read zero) by the amount which the taxpayer GAIN OF NONCORPORATE TAXPAYERS.—The as follows: takes into account as investment income amount determined under the first sentence ‘‘(A) CERTAIN MINISTERS MAY PARTICI- under section 163(d)(4)(B)(iii). of paragraph (1)(A)(i) shall not exceed the PATE.—For purposes of this part— ‘‘(3) ADJUSTED NET CAPITAL GAIN.—For pur- sum of— ‘‘(i) IN GENERAL.—A duly ordained, com- poses of this subsection, the term ‘adjusted ‘‘(A) the amount determined under such missioned, or licensed minister of a church is net capital gain’ means net capital gain de- first sentence computed at the rates and in described in paragraph (3)(B) if, in connec- termined without regard to— the same manner as if this paragraph had tion with the exercise of their ministry, the ‘‘(A) collectibles gain, and not been enacted on the taxable excess re- minister— ‘‘(B) unrecaptured section 1250 gain. duced by the excess of the net capital gain ‘‘(I) is a self-employed individual (within ‘‘(4) COLLECTIBLES GAIN.—For purposes of over the sum of the collectibles gain (as de- the meaning of section 401(c)(1)(B), or fined in section 1(h)(4)) and the pre-effective ‘‘(II) is employed by an organization other paragraph (3)— date gain (as defined in section 1(h)(6)), plus than an organization which is described in ‘‘(A) IN GENERAL.—The term ‘collectibles gain’ means gain from the sale or exchange ‘‘(B) 24 percent of the lesser of— section 501(c)(3) and with respect to which of a collectible (as defined in section 408(m) ‘‘(i) the unrecaptured section 1250 gain (as the minister shares common religious bonds. without regard to paragraph (3) thereof) defined in section 1(h)(5)), or ‘‘(ii) TREATMENT AS EMPLOYER AND EM- which is a capital asset held for more than 1 ‘‘(ii) the amount of taxable excess in excess PLOYEE.—For purposes of sections 403(b)(1)(A) and 404(a)(10), a minister de- year but only to the extent such gain is of the sum of— scribed in clause (i)(I) shall be treated as em- taken into account in computing gross in- ‘‘(I) the adjusted net capital gain, plus ployed by the minister’s own employer which come. ‘‘(II) the amount on which a tax is deter- ARTNERSHIPS, ETC.—For purposes of is an organization described in section ‘‘(B) P mined under subparagraph (A), plus subparagraph (A), any gain from the sale of 501(c)(3) and exempt from tax under section ‘‘(C) 10 percent of so much of the tax- an interest in a partnership, S corporation, 501(a).’’ payer’s adjusted net capital gain (or, if less, (B) Section 403(b)(1)(A) is amended by or trust which is attributable to unrealized taxable excess) as does not exceed the striking ‘‘or’’ at the end of clause (i), by in- appreciation in the value of collectibles shall amount on which a tax is determined under serting ‘‘or’’ at the end of clause (ii), and by be treated as gain from the sale or exchange section 1(h)(1)(B), plus adding at the end the following new clause: of a collectible. Rules similar to the rules of ‘‘(D) 20 percent of the taxpayer’s adjusted ‘‘(iii) for the minister described in section section 751 shall apply for purposes of the net capital gain (or, if less, taxable excess) in 415(e)(5)(A) by the minister or by an em- preceding sentence. excess of the amount on which tax is deter- ployer,’’. ‘‘(C) COORDINATION WITH SECTION 1022.—Gain mined under subparagraph (C).’’ from the disposition of a collectible which is (2) CONFORMING AMENDMENT.—Clause (ii) of an indexed asset to which section 1022(a) ap- ALLARD AMENDMENT NO. 577 section 55(b)(1)(A) is amended by striking plies shall be disregarded for purposes of this ‘‘clause (i)’’ and inserting ‘‘this subsection’’. Mr. ALLARD proposed an amend- subsection. A taxpayer may elect to treat any collectible specified in such election as (c) OTHER CONFORMING AMENDMENTS.— ment to the bill, S. 949, supra; as fol- (1) Subsection (d) of section 291 is amended lows: not being an indexed asset for purposes of section 1022. Any such election, and any by inserting at the end the following new Beginning on page 94, line 8, strike all specification therein, once made, shall be ir- sentence: ‘‘Any capital gain dividend treated through page 101, line 16, and insert the fol- revocable. as having been paid out of such difference to lowing: ‘‘(5) UNRECAPTURED SECTION 1250 GAIN.—For a shareholder which is not a corporation re- SEC. 311. 20-PERCENT MAXIMUM CAPITAL GAINS purposes of this subsection, the term tains its characters as unrecaptured section RATE FOR INDIVIDUALS AND INDEX- ‘unrecaptured section 1250 gain’ means the 1250 gain for purposes of applying section ING OF CERTAIN ASSETS ACQUIRED excess (if any) of— 1(h) to such shareholder.’’ AFTER DECEMBER 31, 2000, FOR PUR- (2) Paragraph (1) of section 1445(e) is POSES OF DETERMINING GAIN. ‘‘(A) the amount which would be treated as amended by striking ‘‘28 percent’’ and insert- (a) IN GENERAL.—Subsection (h) of section ordinary income under section 1245 if all sec- ing ‘‘20 percent’’. 1 (relating to maximum capital gains rate) is tion 1250 property disposed of by the tax- (3) The second sentence of section amended to read as follows: payer were section 1245 property, over 7518(g)(6)(A), and the second sentence of sec- ‘‘(h) MAXIMUM CAPITAL GAINS RATE.— ‘‘(B) the amount treated as ordinary in- tion 607(h)(6)(A) of the Merchant Marine Act, ‘‘(1) IN GENERAL.—If a taxpayer has a net come under section 1250. 1936, are each amended by striking ‘‘28 per- capital gain for any taxable year, the tax im- In the case of a taxable year which includes cent’’ and inserting ‘‘20 percent’’. posed by this section for such taxable year May 7, 1997, unrecaptured section 1250 gain shall not exceed the sum of— shall be determined by taking into account (d) INDEXING.—Part II of subchapter O of ‘‘(A) a tax computed at the rates and in the only the gain properly taken into account chapter 1 (relating to basis rules of general same manner as if this subsection had not for the portion of the taxable year after May application) is amended by inserting after been enacted on the greater of— 6, 1997. section 1021 the following new section:

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‘‘SEC. 1022. INDEXING OF CERTAIN ASSETS AC- which substantially reduces the risk of loss ‘‘(A) REGULATED INVESTMENT COMPANIES.— QUIRED ON OR AFTER APRIL 1, 2002, from holding any asset, such asset shall not Stock in a regulated investment company FOR PURPOSES OF DETERMINING be treated as an indexed asset for the period (within the meaning of section 851) shall be GAIN. of such reduced risk. an indexed asset for any calendar quarter in ‘‘(a) GENERAL RULE.— ‘‘(2) SHORT SALES.— the same ratio as— ‘‘(1) INDEXED BASIS SUBSTITUTED FOR AD- ‘‘(A) IN GENERAL.—In the case of a short ‘‘(i) the average of the fair market values JUSTED BASIS.—Solely for purposes of deter- sale of an indexed asset with a short sale pe- of the indexed assets held by such company mining gain on the sale or other disposition by a taxpayer (other than a corporation) of riod in excess of 5 years, for purposes of this at the close of each month during such quar- an indexed asset which has been held for title, the amount realized shall be an ter, bears to more than 5 years, the indexed basis of the amount equal to the amount realized (deter- ‘‘(ii) the average of the fair market values asset shall be substituted for its adjusted mined without regard to this paragraph) in- of all assets held by such company at the basis. creased by the applicable inflation adjust- close of each such month. ment. In applying subsection (c)(2) for pur- ‘‘(B) REAL ESTATE INVESTMENT TRUSTS.— ‘‘(2) EXCEPTION FOR DEPRECIATION, ETC.— The deductions for depreciation, depletion, poses of the preceding sentence, the date on Stock in a real estate investment trust and amortization shall be determined with- which the property is sold short shall be (within the meaning of section 856) shall be out regard to the application of paragraph (1) treated as the date of acquisition and the an indexed asset for any calendar quarter in to the taxpayer or any other person. closing date for the sale shall be treated as the same ratio as— ‘‘(3) EXCEPTION FOR PRINCIPAL RESI- the date of disposition. ‘‘(i) the fair market value of the indexed DENCES.—Paragraph (1) shall not apply to ‘‘(B) SHORT SALE PERIOD.—For purposes of assets held by such trust at the close of such any disposition of the principal residence subparagraph (A), the short sale period be- quarter, bears to (within the meaning of section 121) of the gins on the day that the property is sold and ‘‘(ii) the fair market value of all assets taxpayer . ends on the closing date for the sale. held by such trust at the close of such quar- ‘‘(b) INDEXED ASSET.— ‘‘(e) TREATMENT OF REGULATED INVESTMENT ter. ‘‘(1) IN GENERAL.—For purposes of this sec- COMPANIES AND REAL ESTATE INVESTMENT ‘‘(C) RATIO OF 80 PERCENT OR MORE.—If the tion, the term ‘indexed asset’ means— TRUSTS.— ratio for any calendar quarter determined ‘‘(A) common stock in a C corporation ‘‘(1) ADJUSTMENTS AT ENTITY LEVEL.— under subparagraph (A) or (B) would (but for (other than a foreign corporation), and ‘‘(A) IN GENERAL.—Except as otherwise pro- this subparagraph) be 80 percent or more, ‘‘(B) tangible property, vided in this paragraph, the adjustment such ratio for such quarter shall be 100 per- which is a capital asset or property used in under subsection (a) shall be allowed to any cent. the trade or business (as defined in section qualified investment entity (including for ‘‘(D) RATIO OF 20 PERCENT OR LESS.—If the 1231(b)). purposes of determining the earnings and ratio for any calendar quarter determined ‘‘(2) STOCK IN CERTAIN FOREIGN CORPORA- profits of such entity). under subparagraph (A) or (B) would (but for TIONS INCLUDED.—For purposes of this sec- ‘‘(B) EXCEPTION FOR CORPORATE SHARE- this subparagraph) be 20 percent or less, such tion— HOLDERS.—Under regulations— ratio for such quarter shall be zero. ‘‘(A) IN GENERAL.—The term ‘indexed asset’ ‘‘(i) in the case of a distribution by a quali- ‘‘(E) LOOK-THRU OF PARTNERSHIPS.—For includes common stock in a foreign corpora- fied investment entity (directly or indi- purposes of this paragraph, a qualified in- tion which is regularly traded on an estab- rectly) to a corporation— vestment entity which holds a partnership lished securities market. ‘‘(I) the determination of whether such dis- interest shall be treated (in lieu of holding a ‘‘(B) EXCEPTION.—Subparagraph (A) shall tribution is a dividend shall be made without partnership interest) as holding its propor- not apply to— regard to this section, and tionate share of the assets held by the part- ‘‘(i) stock of a foreign investment company ‘‘(II) the amount treated as gain by reason nership. (within the meaning of section 1246(b)), of the receipt of any capital gain dividend ‘‘(3) TREATMENT OF RETURN OF CAPITAL DIS- ‘‘(ii) stock in a passive foreign investment shall be increased by the percentage by TRIBUTIONS.—Except as otherwise provided company (as defined in section 1296), which the entity’s net capital gain for the by the Secretary, a distribution with respect ‘‘(iii) stock in a foreign corporation held by taxable year (determined without regard to to stock in a qualified investment entity a United States person who meets the re- this section) exceeds the entity’s net capital which is not a dividend and which results in quirements of section 1248(a)(2), and gain for such year determined with regard to a reduction in the adjusted basis of such ‘‘(iv) stock in a foreign personal holding this section, and stock shall be treated as allocable to stock company (as defined in section 552). ‘‘(ii) there shall be other appropriate ad- acquired by the taxpayer in the order in ‘‘(C) TREATMENT OF AMERICAN DEPOSITORY justments (including deemed distributions) which such stock was acquired. RECEIPTS.—An American depository receipt so as to ensure that the benefits of this sec- ‘‘(4) QUALIFIED INVESTMENT ENTITY.—For for common stock in a foreign corporation tion are not allowed (directly or indirectly) purposes of this subsection, the term ‘quali- shall be treated as common stock in such to corporate shareholders of qualified invest- fied investment entity’ means— corporation. ment entities. ‘‘(A) a regulated investment company ‘‘(c) INDEXED BASIS.—For purposes of this For purposes of the preceding sentence, any (within the meaning of section 851), and section— amount includible in gross income under sec- ‘‘(B) a real estate investment trust (within ‘‘(1) GENERAL RULE.—The indexed basis for tion 852(b)(3)(D) shall be treated as a capital the meaning of section 856). any asset is— gain dividend and an S corporation shall not ‘‘(f) OTHER PASS-THRU ENTITIES.— ‘‘(A) the adjusted basis of the asset, in- be treated as a corporation. ‘‘(1) PARTNERSHIPS.— creased by ‘‘(C) EXCEPTION FOR QUALIFICATION PUR- ‘‘(A) IN GENERAL.—In the case of a partner- ‘‘(B) the applicable inflation adjustment. POSES.—This section shall not apply for pur- ship, the adjustment made under subsection ‘‘(2) APPLICABLE INFLATION ADJUSTMENT.— poses of sections 851(b) and 856(c). (a) at the partnership level shall be passed The applicable inflation adjustment for any ‘‘(D) EXCEPTION FOR CERTAIN TAXES IM- through to the partners. asset is an amount equal to— POSED AT ENTITY LEVEL.— ‘‘(B) SPECIAL RULE IN THE CASE OF SECTION ‘‘(A) the adjusted basis of the asset, multi- ‘‘(i) TAX ON FAILURE TO DISTRIBUTE ENTIRE 754 ELECTIONS.—In the case of a transfer of an plied by GAIN.—If any amount is subject to tax under interest in a partnership with respect to ‘‘(B) the percentage (if any) by which— section 852(b)(3)(A) for any taxable year, the which the election provided in section 754 is ‘‘(i) the chain-type price index for GDP for amount on which tax is imposed under such in effect— the last calendar quarter ending before the section shall be increased by the percentage ‘‘(i) the adjustment under section 743(b)(1) asset is disposed of, exceeds determined under subparagraph (B)(i)(II). A shall, with respect to the transferor partner, ‘‘(ii) the chain-type price index for GDP for similar rule shall apply in the case of any be treated as a sale of the partnership assets the last calendar quarter ending before the amount subject to tax under paragraph (2) or for purposes of applying this section, and asset was acquired by the taxpayer. (3) of section 857(b) to the extent attrib- ‘‘(ii) with respect to the transferee partner, The percentage under subparagraph (B) shall utable to the excess of the net capital gain the partnership’s holding period for purposes be rounded to the nearest 1⁄10 of 1 percentage over the deduction for dividends paid deter- of this section in such assets shall be treated point. mined with reference to capital gain divi- as beginning on the date of such adjustment. ‘‘(3) CHAIN-TYPE PRICE INDEX FOR GDP.— dends only. The first sentence of this clause ‘‘(2) S CORPORATIONS.—In the case of an S The chain-type price index for GDP for any shall not apply to so much of the amount corporation, the adjustment made under sub- calendar quarter is such index for such quar- subject to tax under section 852(b)(3)(A) as is section (a) at the corporate level shall be ter (as shown in the last revision thereof re- designated by the company under section passed through to the shareholders. This sec- leased by the Secretary of Commerce before 852(b)(3)(D). tion shall not apply for purposes of deter- the close of the following calendar quarter). ‘‘(ii) OTHER TAXES.—This section shall not mining the amount of any tax imposed by ‘‘(d) SUSPENSION OF HOLDING PERIOD WHERE apply for purposes of determining the section 1374 or 1375. DIMINISHED RISK OF LOSS; TREATMENT OF amount of any tax imposed by paragraph (4), ‘‘(3) COMMON TRUST FUNDS.—In the case of a SHORT SALES.— (5), or (6) of section 857(b). common trust fund, the adjustment made ‘‘(1) IN GENERAL.—If the taxpayer (or a re- ‘‘(2) ADJUSTMENTS TO INTERESTS HELD IN under subsection (a) at the trust level shall lated person) enters into any transaction ENTITY.— be passed through to the participants.

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‘‘(4) INDEXING ADJUSTMENT DISREGARDED IN ‘‘Sec. 1022. Indexing of certain assets ac- SEC. . EXCLUSION FROM INCOME OF SEVER- DETERMINING LOSS ON SALE OF INTEREST IN EN- quired on or after April 1, 2002, ANCE PAYMENT AMOUNTS; TIME PE- TITY.—Notwithstanding the preceding provi- for purposes of determining RIODS FOR CARRYBACK AND sions of this subsection, for purposes of de- gain.’’ CARRYFORWARD OF UNUSED CRED- ITS. termining the amount of any loss on a sale (a) EXCLUSION FROM INCOME OF SEVERANCE or exchange of an interest in a partnership, (f) EFFECTIVE DATES.— (1) IN GENERAL.—Except as provided in PAYMENT AMOUNTS.—Part III of subchapter B S corporation, or common trust fund, the ad- of chapter 1 (relating to items specifically justment made under subsection (a) shall not paragraphs (2) and (3), the amendments made by this section shall apply to taxable years excluded from gross income) is amended by be taken into account in determining the ad- redesignating section 138 as section 139 and justed basis of such interest. ending after May 6, 1997. (2) WITHHOLDING.—The amendment made by inserting after section 137 the following ‘‘(g) DISPOSITIONS BETWEEN RELATED PER- new section: SONS.— by subsection (c)(2) shall apply only to ‘‘SEC. 138. SEVERANCE PAYMENTS. ‘‘(1) IN GENERAL.—This section shall not amounts paid after the date of the enact- ‘‘(a) IN GENERAL.—In the case of an indi- apply to any sale or other disposition of ment of this Act. vidual, gross income shall not include any property between related persons except to (3) INDEXING.— qualified severance payment. the extent that the basis of such property in (A) IN GENERAL.—The amendments made ‘‘(b) LIMITATION.—The amount to which the the hands of the transferee is a substituted by subsections (d) and (e) shall apply to the exclusion under subsection (a) applies shall basis. disposition of any property the holding pe- not exceed $2,000 with respect to any separa- ‘‘(2) RELATED PERSONS DEFINED.—For pur- riod of which begins on or after April 1, 2002. tion from employment. poses of this section, the term ‘related per- (B) CERTAIN TRANSACTIONS BETWEEN RE- ‘‘(c) QUALIFIED SEVERANCE PAYMENT.—For sons’ means— LATED PERSONS.—The amendments made by purposes of this section— ‘‘(A) persons bearing a relationship set subsections (d) and (e) shall not apply to the ‘‘(1) IN GENERAL.—The term ‘qualified sev- forth in section 267(b), and disposition of any property acquired on or erance payment’ means any payment re- ‘‘(B) persons treated as single employer after April 1, 2002, from a related person (as ceived by an individual if— under subsection (b) or (c) of section 414. defined in section 1022(g)(2) of the Internal ‘‘(A) such payment was paid by such indi- ‘‘(h) TRANSFERS TO INCREASE INDEXING AD- Revenue Code of 1986, as added by this sec- vidual’s employer on account of such individ- JUSTMENT.—If any person transfers cash, tion) if— ual’s separation from employment, debt, or any other property to another per- (i) such property was so acquired for a ‘‘(B) such separation was in connection son and the principal purpose of such trans- price less than the property’s fair market with a reduction in the work force of the em- fer is to secure or increase an adjustment value, and ployer, and under subsection (a), the Secretary may dis- (ii) the amendments made by this section ‘‘(C) such individual does not attain em- allow part or all of such adjustment or in- did not apply to such property in the hands ployment within 6 months of the date of crease. of such related person. such separation in which the amount of com- ‘‘(i) SPECIAL RULES.—For purposes of this (g) ELECTION TO RECOGNIZE GAIN ON ASSETS pensation is equal to or greater than 95 per- section— HELD ON OR AFTER APRIL 1, 2002.—For pur- cent of the amount of compensation for the ‘‘(1) TREATMENT OF IMPROVEMENTS, ETC.—If poses of the Internal Revenue Code of 1986— employment that is related to such payment. there is an addition to the adjusted basis of (1) IN GENERAL.—A taxpayer other than a ‘‘(2) LIMITATION.—Such term shall not in- any tangible property or of any stock in a corporation may elect to treat— clude any payment received by an individual corporation during the taxable year by rea- (A) any readily tradable stock (which is an if the aggregate payments received with re- son of an improvement to such property or a indexed asset) held by such taxpayer on or spect to the separation from employment ex- contribution to capital of such corporation— after April 1, 2002, and not sold before the ceed $125,000.’’ ‘‘(A) such addition shall never be taken next business day after such date, as having (b) TIME PERIODS FOR CARRYBACK AND into account under subsection (c)(1)(A) if the been sold on such next business day for an CARRYFORWARD OF UNUSED CREDITS.—Section amount equal to its closing market price on aggregate amount thereof during the taxable 39(a) (relating to unused credits) is amend- such next business day (and as having been year with respect to such property or stock ed— reacquired on such next business day for an is less than $1,000, and (1) in paragraph (1), by striking ‘‘3’’ each amount equal to such closing market price), ‘‘(B) such addition shall be treated as a place it appears and inserting ‘‘1’’ and by and separate asset acquired at the close of such striking ‘‘15’’ each place it appears and in- (B) any other indexed asset held by the taxable year if the aggregate amount thereof serting ‘‘20’’; and taxpayer on or after April 1, 2002, as having during the taxable year with respect to such (2) in paragraph (2), by striking ‘‘18’’ each been sold on such date for an amount equal property or stock is $1,000 or more. place it appears and inserting ‘‘22’’ and by to its fair market value on such date (and as A rule similar to the rule of the preceding striking ‘‘17’’ each place it appears and in- having been reacquired on such date for an sentence shall apply to any other portion of serting ‘‘21’’. amount equal to such fair market value). an asset to the extent that separate treat- (c) CLERICAL AMENDMENT.—The table of ment of such portion is appropriate to carry (2) TREATMENT OF GAIN OR LOSS.— sections for part III of subchapter B of chap- out the purposes of this section. (A) Any gain resulting from an election ter 1 is amended by striking the item relat- ‘‘(2) ASSETS WHICH ARE NOT INDEXED ASSETS under paragraph (1) shall be treated as re- ing to section 138 and inserting the following THROUGHOUT HOLDING PERIOD.—The applica- ceived or accrued on the date the asset is new items: ble inflation adjustment shall be appro- treated as sold under paragraph (1) and shall ‘‘Sec. 138. Severance payments. priately reduced for periods during which the be recognized notwithstanding any provision asset was not an indexed asset. of the Internal Revenue Code of 1986. ‘‘Sec. 139. Cross references to other Acts.’’ (B) Any loss resulting from an election ‘‘(3) TREATMENT OF CERTAIN DISTRIBU- (d) EFFECTIVE DATES.— under paragraph (1) shall not be allowed for TIONS.—A distribution with respect to stock (1) IN GENERAL.—The amendments made by in a corporation which is not a dividend shall any taxable year. subsections (a) and (c) shall apply to taxable be treated as a disposition. (3) ELECTION.—An election under paragraph years beginning after December 31, 1997, and ‘‘(4) ACQUISITION DATE WHERE THERE HAS (1) shall be made in such manner as the Sec- before July 1, 2002. retary of the Treasury or his delegate may BEEN PRIOR APPLICATION OF SUBSECTION (a)(1) (2) SUBSECTION (b).—The amendments made WITH RESPECT TO THE TAXPAYER.—If there has prescribe and shall specify the assets for by subsection (b) shall apply to the been a prior application of subsection (a)(1) which such election is made. Such an elec- carryback and carryforward of credits aris- to an asset while such asset was held by the tion, once made with respect to any asset, ing in taxable years beginning after Decem- taxpayer, the date of acquisition of such shall be irrevocable. ber 31, 1997. asset by the taxpayer shall be treated as not (4) READILY TRADABLE STOCK.—For pur- earlier than the date of the most recent such poses of this subsection, the term ‘‘readily tradable stock’’ means any stock which, as HARKIN (AND OTHERS) prior application. AMENDMENT NO. 579 ‘‘(5) COLLAPSIBLE CORPORATIONS.—The ap- of April 1, 2002, is readily tradable on an es- plication of section 341(a) (relating to col- tablished securities market or otherwise. Mr. HARKIN (for himself, Mr. lapsible corporations) shall be determined D’AMATO, Mr. MACK, and Mr. SPECTER) without regard to this section. proposed an amendment to the bill, ‘‘(j) REGULATIONS.—The Secretary shall TORRICELLI (AND LANDRIEU) supra; as follows: prescribe such regulations as may be nec- AMENDMENT NO. 578 On page 1027, between lines 7 and 8, insert essary or appropriate to carry out the pur- the following: poses of this section.’’ Mr. TORRICELLI (for himself and (e) CLERICAL AMENDMENT.—The table of Subtitle N—National Fund for Health Ms. LANDRIEU) proposed an amendment Research sections for part II of subchapter O of chap- to the bill, S. 949, supra; as follows: ter 1 is amended by inserting after the item SEC. 5995. SHORT TITLE. relating to section 1021 the following new On page 267, between lines 15 and 16, insert This subtitle may be cited as the ‘‘Na- item: the following: tional Fund for Health Research Act’’.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00102 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6771 SEC. 5996. FINDINGS. (i) make a determination as to the amount conducting life insurance business) is amend- Congress makes the following findings: to be transferred to the Fund for the fiscal ed by adding at the end thereof the following (1) Nearly 4 of 5 peer reviewed research year involved under this subsection; and new subsection: projects deemed worthy of funding by the (ii) subject to subsection (d), transfer such ‘‘(c) TREATMENT OF CONSOLIDATIONS.—If 2 National Institutes of Health are not funded. amount to the Fund. or more life insurance departments to which (2) Less than 3 percent of the nearly one (C) FUND ADMINISTERED BY HEALTH AND subsection (a) applied are consolidated into a trillion dollars our Nation spends on health HUMAN SERVICES.—The Secretary of Health single life insurance company pursuant to a care is devoted to health research, while the and Human Services shall administer funds requirement of State law— defense industry spends 15 percent of its transferred into the Fund. ‘‘(1) such consolidation shall be treated as budget on research and development. (D) CAP ON TRANSFER.—Amounts trans- a reorganization described in section (3) Public opinion surveys have shown that ferred to the Fund under this subsection for 368(a)(1)(E), and Americans want more Federal resources put any year in the 5-fiscal year period beginning ‘‘(2) any payments required to be made to into health research and are willing to pay on October 1, 1997, shall not in combination policyholders in connection with such con- for it. with the appropriated amount exceed an solidation shall be treated as policyholder (4) Ample evidence exists to demonstrate amount equal to the amount appropriated dividends deductible under section 808 but that health research has improved the qual- for the National Institutes of Health for fis- only if— ‘‘(A) such payments are only with respect ity of health care in the United States. Ad- cal year 1997 multiplied by 2. to policies in effect immediately before such vances such as the development of vaccines, (c) OBLIGATIONS FROM FUND.— consolidation, the cure of many childhood cancers, drugs (1) IN GENERAL.—Subject to the provisions ‘‘(B) such payments are only with respect that effectively treat a host of diseases and of paragraph (4), with respect to the amounts to policies which are participating before disorders, a process to protect our Nation’s made available in the Fund in a fiscal year, and after such consolidation, blood supply from the HIV virus, progress the Secretary of Health and Human Services ‘‘(C) such payments shall cease with re- against cardiovascular disease including shall distribute— spect to any policy if such policy lapses after heart attack and stroke, and new strategies (A) 2 percent of such amounts during any such consolidation, for the early detection and treatment of dis- fiscal year to the Office of the Director of the * * * ‘‘(D) the policyholders before such consoli- eases such as colon, breast, and prostate can- dation had no divisible right to the surplus cer clearly demonstrates the benefits of * * * * * of any such department and had no right to health research. Act with respect to health information com- vote, and (5) Health research which holds the prom- munications; and ‘‘(E) the approval of such policyholders was ise of prevention of intentional and uninten- (D) the remainder of such amounts during not required for such consolidation.’’ tional injury and cure and prevention of dis- any fiscal year to member institutes and (b) EFFECTIVE DATE.—The amendment ease and disability, is critical to holding centers, including the Office of AIDS Re- made by subsection (a) shall take effect on down health care costs in the long term. search, of the National Institutes of Health December 31, 1991. (6) Expanded medical research is also crit- in the same proportion to the total amount ical to holding down the long-term costs of received under this section, as the amount of MOSELEY-BRAUN (AND OTHERS) the medicare program under title XVIII of annual appropriations under appropriations the Social Security Act. For example, recent Acts for each member institute and Centers AMENDMENT NO. 581 research has demonstrated that delaying the for the fiscal year bears to the total amount Ms. MOSELEY-BRAUN (for herself, onset of debilitating and costly conditions of appropriations under appropriations Acts Mr. KENNEDY, and Mr. WELLSTONE) pro- like Alzheimer’s disease could reduce general for all member institutes and Centers of the posed an amendment to the bill, S. 949, health care and medicare costs by billions of National Institutes of Health for the fiscal supra; as follows: dollars annually. year. On page 267, between lines 15 and 16, insert (7) The state of our Nation’s research fa- (2) PLANS OF ALLOCATION.—The amounts cilities at the National Institutes of Health transferred under paragraph (1)(D) shall be the following: and at universities is deteriorating signifi- allocated by the Director of the National In- Subtitle G—Tax Credit for Public Elementary cantly. Renovation and repair of these facili- stitutes of Health or the various directors of and Secondary School Construction ties are badly needed to maintain and im- the institutes and centers, as the case may SEC. 781. TAX CREDIT FOR PUBLIC ELEMENTARY prove the quality of research. be, pursuant to allocation plans developed by AND SECONDARY SCHOOL CON- (8) Because discretionary spending is likely the various advisory councils to such direc- STRUCTION. to decline in real terms over the next 5 tors, after consultation with such directors. (a) IN GENERAL.—Subpart B of part IV of years, the Nation’s investment in health re- (3) GRANTS AND CONTRACTS FULLY FUNDED subchapter A of chapter 1 (relating to gen- search through the National Institutes of IN FIRST YEAR.—With respect to any grant or eral business credits) is amended by adding Health is likely to decline in real terms un- contract funded by amounts distributed at the end the following new section: less corrective legislative action is taken. under paragraph (1), the full amount of the ‘‘SEC. 45B. CREDIT FOR PUBLIC ELEMENTARY (9) A health research fund is needed to total obligation of such grant or contract AND SECONDARY SCHOOL CON- maintain our Nation’s commitment to shall be funded in the first year of such grant STRUCTION. health research and to increase the percent- or contract, and shall remain available until ‘‘(a) IN GENERAL.—For purposes of section age of approved projects which receive fund- expended. 38, the amount of the school construction ing at the National Institutes of Health. (4) TRIGGER AND RELEASE OF MONIES.— credit determined under this section for an SEC. 5997. ESTABLISHMENT OF FUND. (A) TRIGGER AND RELEASE.—No expenditure eligible taxpayer for any taxable year with shall be made under paragraph (1) during any respect to an eligible school construction (a) ESTABLISHMENT.—There is established fiscal year in which the annual amount ap- project shall be an amount equal to the less- in the Treasury of the United States a fund, propriated for the National Institutes of er of— to be known as the ‘‘National Fund for Health is less than the amount so appro- ‘‘(1) the applicable percentage of the quali- Health Research’’ (hereafter in this section priated for the prior fiscal year. fied school construction costs, or referred to as the ‘‘Fund’’), consisting of (d) REQUIRED APPROPRIATION.—No transfer ‘‘(2) the excess (if any) of— such amounts as are transferred to the Fund may be made for a fiscal year under sub- ‘‘(A) the taxpayer’s allocable school con- under subsection (b) any sums specifically section (b) unless an appropriations Act pro- struction amount with respect to such designated for such purpose by future acts of viding for such a transfer has been enacted project under subsection (d), over Congress, and any interest earned on invest- with respect to such fiscal year. ‘‘(B) any portion of such allocable amount ment of amounts in the Fund. used under this section for preceding taxable (b) TRANSFERS TO FUND.— years. (1) IN GENERAL.—The Secretary of the KENNEDY (AND D’AMATO) ‘‘(b) ELIGIBLE TAXPAYER; ELIGIBLE SCHOOL Treasury shall transfer to the Fund amounts AMENDMENT NO. 580 CONSTRUCTION PROJECT.—For purposes of equivalent to one half the amounts for each (Ordered to lie on the table.) this section— of the fiscal years 1998 through 2002 derived Mr. KENNEDY (for himself, and Mr. ‘‘(1) ELIGIBLE TAXPAYER.—The term ‘eligi- for each such fiscal year under Section 311 ble taxpayer’ means any person which— D’AMATO) submitted an amendment in- through Section 314 of this act that exceeds ‘‘(A) has entered into a contract with a the amount of Federal revenues estimated by tended to be proposed by them to the local educational agency for the performance the Joint Tax Committee as of the date of bill, S. 949, supra; as follows: of construction or related activities in con- enactment of this act, to be gained from en- On page 267, between lines 15 and 16, insert nection with an eligible school construction actment of Section 311 through Section 314 the following: project, and for each such fiscal year. SEC. 780. TAX TREATMENT OF CONSOLIDATIONS ‘‘(B) has received an allocable school con- (B) DETERMINATION BY SECRETARY.—Not OF LIFE INSURANCE DEPARTMENTS struction amount with respect to such con- later than 6 months after the end of each of OF MUTUAL SAVINGS BANKS. tract under subsection (d). the fiscal years described in subparagraph (a) GENERAL RULE.—Section 594 (relating ‘‘(2) ELIGIBLE SCHOOL CONSTRUCTION (A), the Secretary of the Treasury shall— to alternative tax for mutual savings banks PROJECT.—

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‘‘(A) IN GENERAL.—The term ‘eligible ‘‘(3) COORDINATION WITH STATE PROGRAM.— projected cost of upgrading schools to ade- school construction project’ means any A local educational agency may not allocate quate condition; project related to a public elementary school school construction amounts for any cal- ‘‘(B) an estimate of the capacity of the or secondary school that is conducted for 1 endar year— schools in the State to house projected stu- or more of the following purposes: ‘‘(A) which in the aggregate exceed the dent enrollments, including the projected ‘‘(i) Construction of school facilities in amount of the State school construction cost of expanding school capacity to meet order to ensure the health and safety of all ceiling allocated to such agency for such cal- rising student enrollment; students, which may include— endar year under subsection (e), and ‘‘(C) the extent to which the schools in the ‘‘(I) the removal of environmental hazards, ‘‘(B) which is consistent with any specific State have the basic infrastructure elements ‘‘(II) improvements in air quality, plumb- allocation required by the State or this sec- necessary to incorporate modern technology ing, lighting, heating and air conditioning, tion. into their classrooms, including the pro- electrical systems, or basic school infra- ‘‘(e) STATE CEILINGS AND ALLOCATION.— jected cost of upgrading school infrastruc- structure, and ‘‘(1) IN GENERAL.—A State educational ture to enable the use of modern technology ‘‘(III) building improvements that increase agency shall allocate to local educational in classrooms; school safety. agencies within the State for any calendar ‘‘(D) the extent to which the schools in the ‘‘(ii) Construction activities needed to year a portion of the State school construc- State offer the physical infrastructure need- meet the requirements of section 504 of the tion ceiling for such year. Such allocations ed to provide a high-quality education to all Rehabilitation Act of 1973 (29 U.S.C. 794) or shall be consistent with the State applica- students; and of the Americans with Disabilities Act of tion which has been approved under sub- ‘‘(E) an identification of the State agency 1990 (42 U.S.C. 12101 et seq.). section (f) and with any requirement of this that will allocate credit amounts to local ‘‘(iii) Construction activities that increase section. educational agencies within the State. ‘‘(2) SPECIFIC ITEMS IN ALLOCATION.—The the energy efficiency of school facilities. ‘‘(2) STATE SCHOOL CONSTRUCTION CEILING.— State shall include in the State’s application ‘‘(iv) Construction that facilitates the use ‘‘(A) IN GENERAL.—The State school con- of modern educational technologies. struction ceiling for any State for any cal- the process by which the State will allocate ‘‘(v) Construction of new school facilities endar year shall be an amount equal to the the credits to local educational agencies within the State. The State shall consider in that are needed to accommodate growth in State’s allocable share of the national school its allocation process the extent to which— school enrollments. construction amount. ‘‘(A) the school district served by the local ‘‘(vi) Such other construction as the Sec- ‘‘(B) STATE’S ALLOCABLE SHARE.—The educational agency has— retary of Education determines appropriate. State’s allocable share of the national school ‘‘(i) a high number or percentage of the ‘‘(B) SPECIAL RULES.—For purposes of this construction amount for a fiscal year shall total number of children aged 5 to 17, inclu- paragraph— bear the same relation to the national school sive, in the State who are counted under sec- ‘‘(i) the term ‘construction’ includes recon- construction amount for the fiscal year as tion 1124(c) of the Elementary and Secondary struction, renovation, or other substantial the amount the State received under section Education Act of 1965 (20 U.S.C. 6333(c)); or rehabilitation, and 1124 of the Elementary and Secondary Edu- ‘‘(ii) a high percentage of the total number ‘‘(ii) an eligible school construction project cation Act of 1965 (20 U.S.C. 6333) for the pre- of low-income residents in the State; shall not include the costs of acquiring land ceding fiscal year bears to the total amount ‘‘(B) the local educational agency lacks the (or any costs related to such acquisition). received by all States under such section for fiscal capacity, including the ability to raise ‘‘(c) QUALIFIED SCHOOL CONSTRUCTION such preceding fiscal year. funds through the full use of such agency’s COSTS; APPLICABLE PERCENTAGE.—For pur- ‘‘(C) NATIONAL SCHOOL CONSTRUCTION bonding capacity and otherwise, to under- poses of this section— AMOUNT.—The national school construction take the eligible school construction project ‘‘(1) IN GENERAL.—The term ‘qualified amount for any calendar year is the lesser without assistance; school construction costs’ means the aggre- of— ‘‘(C) the local area makes an unusually gate amounts paid to an eligible taxpayer ‘‘(i) $1,000,000,000, or high local tax effort, or has a history of during the taxable year under the contract ‘‘(ii) the amount made available for such failed attempts to pass bond referenda; described in subsection (b)(1). year under the School Infrastructure Im- ‘‘(D) the local area contains a significant ‘‘(2) APPLICABLE PERCENTAGE.—The term provement Trust Fund established under sec- percentage of federally owned land that is ‘applicable percentage’ means, in the case of tion 9512, not subject to local taxation; an eligible school construction project re- reduced by any amount described in para- ‘‘(E) the threat the condition of the phys- lated to a local educational agency, the high- graph (3). ical facility poses to the safety and well- er of the following percentages: ‘‘(3) SPECIAL ALLOCATIONS FOR INDIAN being of students; ‘‘(A) If the local educational agency has a TRIBES AND TERRITORIES.— ‘‘(F) there is a demonstrated need for the percentage or number of children described ‘‘(A) ALLOCATION TO INDIAN TRIBES.—The construction, reconstruction, renovation, or in clause (i)(I) or (ii)(I) of section national school construction amount under rehabilitation based on the condition of the 1125(c)(2)(A) of the Elementary and Sec- paragraph (2)(C) shall be reduced by 1.5 per- facility; ondary Education Act of 1965 (20 U.S.C. cent for each calendar year and the Sec- ‘‘(G) the extent to which the facility is 6335(c)(2)(A)), the applicable percentage is 10 retary of Interior shall allocate such amount overcrowded; and percent. among Indian tribes according to their re- ‘‘(H) the extent to which assistance pro- ‘‘(B) If the local educational agency has a spective need for assistance under this sec- vided will be used to support eligible school percentage or number of children described tion. construction projects that would not other- in clause (i)(II) or (ii)(II) of such section, the ‘‘(B) ALLOCATION TO TERRITORIES.—The na- wise be possible to undertake. applicable percentage is 15 percent. tional school construction amount under ‘‘(3) IDENTIFICATION OF AREAS.—The State ‘‘(C) If the local educational agency has a paragraph (2)(C) shall be reduced by 0.5 per- shall include in the State’s application the percentage or number of children described cent for each calendar year and the Sec- process by which the State will identify the in clause (i)(III) or (ii)(III) of such section, retary of Education shall allocate such areas of greatest needs (whether those areas the applicable percentage is 20 percent. amount among the territories according to are in large urban centers, pockets of rural ‘‘(D) If the local educational agency has a their respective need for assistance under poverty, fast-growing suburbs, or elsewhere) percentage or number of children described this section. and how the State intends to meet the needs in clause (i)(IV) or (ii)(IV) of such section, ‘‘(4) REALLOCATION.—If the Secretary of of those areas. the applicable percentage is 25 percent. Education determines that a State is not ‘‘(4) ALLOCATIONS ON BASIS OF APPLICA- ‘‘(E) If the local educational agency has a making satisfactory progress in carrying out TION.—The Secretary of Education shall percentage or number of children described the State’s plan for the use of funds allo- evaluate applications submitted under this in clause (i)(V) or (ii)(V) of such section, the cated to the State under this section, the subsection and shall approve any such appli- applicable percentage is 30 percent. Secretary may reallocate all or part of the cation which meets the requirements of this State school construction ceiling to 1 or ‘‘(d) ALLOCABLE AMOUNT.—For purposes of section. more other States that are making satisfac- this section— ‘‘(g) REQUIRED ALLOCATIONS.—Notwith- ‘‘(1) IN GENERAL.—Subject to paragraph (3), tory progress. standing any process for allocation under a a local educational agency may allocate to ‘‘(e) STATE APPLICATION.— State application under subsection (f), in the any person a school construction amount ‘‘(1) IN GENERAL.—A State educational case of a State which contains 1 or more of with respect to any eligible school construc- agency shall not be eligible to allocate any the 100 school districts within the United tion project. amount to a local educational agency for States which contains the largest number of ‘‘(2) TIME FOR MAKING ALLOCATION.—An al- any calendar year unless the agency submits poor children (as determined by the Sec- location shall be taken into account under to the Secretary of Education (and the Sec- retary of Education), the State shall allocate paragraph (1) only if the allocation is made retary approves) an application containing each calendar year to the local educational at the time the contract described in sub- such information as the Secretary may re- agency serving such districts that portion of section (b)(1) is entered into (or such later quire, including— the State school construction ceiling which time as the Secretary may by regulation ‘‘(A) an estimate of the overall condition of bears the same ratio to such ceiling as the allow). school facilities in the State, including the number of children in such district for the

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00104 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6773 preceding calendar year who are counted for revenues by reason of credits allowed under and’’, and by inserting after subparagraph purposes of section 1124(c) of the Elementary section 38 which are attributable to the (D) the following: and Secondary Education Act of 1965 (20 school construction credit determined under ‘‘(E) the amount necessary to amortize in U.S.C. 6333(c)) bears to the total number of section 45D.’’ equal annual installments (until fully amor- children in such State who are so counted. (2) CONFORMING AMENDMENT.—The table of tized) over a period of 20 years the contribu- ‘‘(h) DEFINITIONS.—For purposes of this sec- section for subchapter A of chapter 98 is tions which would be required to be made tion— amended by adding at the end the following under the plan but for the provisions of sub- ‘‘(1) ELEMENTARY SCHOOL; LOCAL EDU- new item: section (c)(7)(A)(i)(I).’’. CATIONAL AGENCY; SECONDARY SCHOOL; STATE ‘‘Sec. 9512. School Infrastructure Improve- (2) ERISA AMENDMENT.—Section 302(b)(2) of EDUCATIONAL AGENCY.—The terms ‘elemen- ment Trust Fund. the Employee Retirement Income Security tary school’, ‘local educational agency’, ‘sec- Act of 1974 (29 U.S.C. 1082(b)(2)) is amended ondary school’, and ‘State educational agen- (d) CONFORMING AMENDMENT.—The table of by striking ‘‘and’’ at the end of subparagraph cy’ have the meanings given the terms in sections for subpart D of part IV of sub- (C), by striking the period at the end of sub- section 14101 of the Elementary and Sec- chapter A of chapter 1 is amended by adding paragraph (D) and inserting ‘‘, and’’, and by ondary Education Act of 1965 (20 U.S.C. 8801). at the end the following new item: inserting after subparagraph (D) the fol- ‘‘(2) TERRITORIES.—The term ‘territories’ ‘‘Sec. 45B. Credit for public elementary and lowing: means the United States Virgin Islands, secondary school construc- Guam, American Samoa, the Commonwealth tion.’’ ‘‘(E) the amount necessary to amortize in of the Northern Mariana Islands, the Repub- equal annual installments (until fully amor- (e) EFFECTIVE DATE.—The amendments lic of the Marshall Islands, the Federated tized) over a period of 20 years the contribu- made by this section shall apply to taxable tions which would be required to be made States of Micronesia, and the Republic of years beginning after December 31, 1997. Palau. under the plan but for the provisions of sub- ‘‘(3) STATE.—The term ‘State’ means each section (c)(7)(A)(i)(I).’’. of the several States of the United States, FEINGOLD (AND BUMPERS) (3) CONFORMING AMENDMENTS.— the District of Columbia, and the Common- AMENDMENT NO. 582 (A) Section 412(c)(7)(D) is amended by add- wealth of Puerto Rico.’’ Mr. FEINGOLD (for himself and Mr. ing ‘‘and’’ at the end of clause (i), by striking (b) INCLUSION IN GENERAL BUSINESS CRED- ‘‘, and’’ at the end of clause (ii) and inserting BUMPERS) proposed an amendment to IT.— a period, and by striking clause (iii). the bill, S. 949, supra; as follows: (1) IN GENERAL.—Section 38(b) is amended (B) Section 302(c)(7)(D) of the Employee by striking ‘‘plus’’ at the end of paragraph On page 400, between lines 14 and 15, insert Retirement Income Security Act of 1974 (29 (11), by striking the period at the end of the following: U.S.C. 1082(c)(7)(D)) is amended by adding paragraph (12) and inserting ‘‘, plus’’, and by SEC. . CERTAIN MINERALS NOT ELIGIBLE FOR ‘‘and’’ at the end of clause (i), by striking ‘‘, adding at the end the following new para- PERCENTAGE DEPLETION. and’’ at the end of clause (ii) and inserting a graph: (a) IN GENERAL.—Section 613(b)(1) (relating period, and by striking clause (iii). ‘‘(13) the school construction credit deter- to percentage depletion rates) is amended— (4) EFFECTIVE DATES.— mined under section 45D(a).’’ (A) in subparagraph (A), by striking ‘‘and (A) IN GENERAL.—The amendments made (2) TRANSITION RULE.—Section 39(d) is uranium’’; and by this subsection shall apply to plan years amended by adding at the end the following (B) in subparagraph (B), by striking ‘‘as- beginning after December 31, 1998. new paragraph: bestos,’’, ‘‘lead,’’, and ‘‘mercury,’’, ‘‘(8) NO CARRYBACK OF SECTION 45D CREDIT (b) CONFORMING AMENDMENTS.— (B) SPECIAL RULE FOR 1999.—In the case of a BEFORE ENACTMENT.—No portion of the un- (1) Section 613(b)(3)(A) is amended by in- plan’s first year beginning in 1999, there used business credit for any taxable year serting ‘‘other than lead, mercury, or ura- shall be added to the amount required to be which is attributable to the school construc- nium’’ after ‘‘mental mines’’. amortized under section 412(b)(2)(E) of the tion credit determined under section 45D (2) Section 613(b)(4) is amended by striking Internal Revenue Code of 1986 and section may be carried back to a taxable year ending ‘‘asbestos (if paragraph (1)(B) does not 302(b)(2)(E) of the Employee Retirement In- before the date of the enactment of section apply),’’. come Security Act of 1974 (as added by para- 45D.’’ (3) Section 613(b)(7) is amended by striking graphs (1) and (2)) over the 20-year period be- (c) ESTABLISHMENT OF SCHOOL INFRASTRUC- ‘‘or’’ at the end of subparagraph (B), by ginning with such year, the unamortized bal- TURE IMPROVEMENT TRUST FUND.— striking the period at the end of subpara- ance (as of the close of the preceding plan (1) IN GENERAL.—Subchapter A of chapter graph (C) and inserting ‘‘, or’’, and by insert- year) of any amount required to be amor- 98 is amended by adding at the end the fol- ing after subparagraph (C) the following: tized under section 412(c)(7)(D)(iii) of such lowing new section: ‘‘(D) mercury, uranium, lead, and asbes- Code and section 302(c)(7)(D)(iii) of such Act ‘‘SEC. 9512. SCHOOL INFRASTRUCTURE IMPROVE- tos.’’ (as repealed by paragraph (3)) for plan years MENT TRUST FUND. (4) Section 613(c)(4)(D) is amended by strik- beginning before 1999. ‘‘(a) CREATION OF TRUST FUND.—There is ing ‘‘lead,’’ and ‘‘uranium,’’. On page 639, between lines 11 and 12, insert: established in the Treasury of the United (c) EFFECTIVE DATE.—The amendments (4) AMENDMENTS RELATED TO SECTION 1461.— States a trust fund to be known as the made by this section shall apply to taxable (A) Section 415(e)(5)(A) is amended to read ‘School Infrastructure Improvement Trust years beginning after December 31, 1996. Fund’, consisting of such amounts as may be as follows: credited or paid to such Trust Fund as pro- ‘‘(A) CERTAIN MINISTERS MAY PARTICI- vided in this section or section 9602(b). GRAHAM AMENDMENT NO. 583 PATE.—For purposes of this part— ‘‘(b) TRANSFERS TO TRUST FUND.— Mr. ROTH (for Mr. GRAHAM) proposed ‘‘(i) IN GENERAL.—A duly ordained, com- ‘‘(1) IN GENERAL.—There are hereby appro- an amendment to the bill, S. 949, supra; missioned, or licensed minister of a church is priated to the Trust Fund for any calendar described in paragraph (3)(B) if, in connec- year an amount equal to the lesser of— as follows: tion with the exercise of their ministry, the ‘‘(A) the revenue surplus determined under On page 93, strike lines 13 through 25, and minister— paragraph (2) for the preceding calendar insert: ‘‘(I) is a self-employed individual (within year, or ‘‘(ii) a silver coin described in section the meaning of section 401(c)(1)(B), or 5112(e) of title 31, United States Code, ‘‘(B) $1,000,000,000. ‘‘(II) is employed by an organization other ‘‘(iii) a platinum coin described in section ‘‘(2) REVENUE SURPLUS.—The revenue sur- than an organization which is described in 5112(k) of title 31, United States Code, or plus determined under this paragraph for section 501(c)(3) and with respect to which ‘‘(iv) a coin issued under the laws of any any calendar year is an amount equal to the the minister shares common religious bonds. excess (if any) of— State, or REATMENT AS EMPLOYER AND EM- ‘‘(A) the Secretary’s estimate of revenues ‘‘(B) any gold, silver, platinum, or palla- ‘‘(ii) T PLOYEE.—For purposes of sections received in the Treasury of the United States dium bullion of a fineness equal to or exceed- 403(b)(1)(A) and 404(a)(10), a minister de- for the calendar year, over ing the minimum fineness required for met- scribed in clause (i)(I) shall be treated as em- ‘‘(B) the amount the Director of the Con- als which may be delivered in satisfaction of ployed by the minister’s own employer which gressional Budget Office estimated would be a regulated futures contract subject to regu- is an organization described in section so received in the report provided to the lation by the Commodity Futures Trading 501(c)(3) and exempt from tax under section Committees on the Budget of the House and Commission under the Commodity Exchange 501(a).’’ the Senate pursuant to section 202(f)(1) of Act, the Congressional Budget Act of 1974, as On page 205, before line 12, insert the fol- (B) Section 403(b)(1)(A) is amended by amended. lowing: striking ‘‘or’’ at the end of clause (i), by in- ‘‘(c) EXPENDITURES FROM TRUST FUND.— (c) SPECIAL AMORTIZATION RULE.— serting ‘‘or’’ at the end of clause (ii), and by Amounts in the Trust Fund shall be trans- (1) CODE AMENDMENT.—Section 412(b)(2) is adding at the end the following new clause: ferred to the general fund of the Treasury at amended by striking ‘‘and’’ at the end of sub- ‘‘(iii) for the minister described in section such times as the Secretary determines ap- paragraph (C), by striking the period at the 415(e)(5)(A) by the minister or by an em- propriate to offset any decrease in Federal end of subparagraph (D) and inserting ‘‘, ployer.’’.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00105 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6774 CONGRESSIONAL RECORD — SENATE June 27, 1997 NICKLES (AND BOND) AMENDMENT On page 20, between lines 5 and 6, insert than the amount which would be the balance NO. 584 the following; of such reserves as of the close of its last SEC. 105. ADOPTION EXPENSES. taxable year beginning before January 1, Mr. ROTH (for Mr. NICKLES, for him- (a) DISTRIBUTIONS FROM CERTAIN PLANS 1995, if the additions to such reserves for all OND self and Mr. B ) proposed an amend- MAY BE USED WITHOUT PENALTY TO PAY taxable years had been determined under ment to the bill, S. 949, supra; as fol- ADOPTION EXPENSES.— section 585(b)(2)(A). lows: (1) IN GENERAL.—Section 72(t)(2) (relating ‘‘(ii) APPLICATION OF CUT-OFF METHOD; On page 212, between lines 11 and 12, insert to exceptions to 10-percent additional tax on ETC.—In the case of a taxpayer to which this the following: early distributions from qualified retirement subparagraph applies— SEC. . SENSE OF THE SENATE WITH RESPECT TO plans) is amended by adding at the end the ‘‘(I) paragraph (5)(B) shall apply, and SELF-EMPLOYMENT TAX OF LIMITED following: ‘‘(II) this subparagraph shall not apply in PARTNERS. ‘‘(E) DISTRIBUTIONS FROM CERTAIN PLANS determining the amount taken into account (a) FINDINGS.—The Senate finds that— FOR ADOPTION EXPENSES.—Distributions to an by the taxpayer under subparagraph (A)(ii) (1) the Department of the Treasury issued individual from an individual retirement for purposes of paragraphs (5) and (6) or sub- Proposed Regulation 1.1402(a)–2 in January plan of so much of the qualified adoption ex- section (e)(1).’’ 1997 relating to the definition of a limited penses (as defined in section 23(d)(1)) of the (b) EFFECTIVE DATE.—The amendment partner for self-employment tax purposes individual as does not exceed $2,000.’’. made by this section shall take effect as if under section 1402(a)(13) of the Internal Rev- (C) CONFORMING AMENDMENT.—Section included in the amendment made by section enue Code; 72(t)(2)(B) is amended by striking ‘‘or (D)’’ 1616 of the Small Business Job Protection (2) since 1977, section 1402(a)(13) of such and inserting ‘‘, (D) or (E)’’. Act of 1996. Code has provided that— (3) EFFECTIVE DATE.—The amendments (A) a limited partner’s net earnings from made by this subsection shall apply to pay- SANTORUM AMENDMENT NO. 588 self-employment include only guaranteed ments and distributions after December 31, payments made to the individual for services 1996. Mr. ROTH (for Mr. SANTORUM) pro- actually rendered and do not include a lim- posed an amendment to the bill, S. 949, ited partner’s distributive share of the in- FAIRCLOTH (AND OTHERS) supra; as follows: come or loss of the partnership, and On page 267, between lines 15 and 16, insert (B) a general partner’s net earnings from AMENDMENT NO. 586 the following: self-employment include the partner’s dis- Mr. ROTH (for Mr. FAIRCLOTH, for SEC. . SENSE OF THE SENATE. tributive share; himself, Mr. HELMS, and Mr. LOTT) pro- (a) FINDINGS.—The Senate finds that— (3) the proposed regulations provide gen- posed an amendment to the bill, S. 949, erally— (1) Congress has not provided a genuine tax (A) that a partner will not be treated as a supra; as follows: cut for America’s middle-class families since limited partner if the individual— On page 267, between lines 15 and 16, insert 1981; (i) has personal liability for partnership the following: (2) President Clinton promised middle- debts, SECTION . CURRENT REFUNDINGS OF CERTAIN class tax cuts in 1992; (ii) has authority to contract on behalf of TAX-EXEMPT BONDS. (3) President Clinton raised taxes by the partnership, or (a) IN GENERAL.—Subsection (c) of section $240,000,000,000 in 1993; (iii) participates in the partnership’s trade 10632 of the Revenue Act of 1987 (relating to (4) President Clinton vetoed middle-class or business for more than 500 hours during bonds issued by Indian tribal governments) tax cuts in 1995; the taxable year; is amended by adding at the end the fol- (5) the Middle-class American worker had (B) that an individual meeting any one of lowing new sentence: ‘‘The amendments to work until May 9 in order to earn enough these three criteria will be treated as a gen- made by this section shall not apply to any money to pay all Federal, State, and local eral partner, and net earnings from self-em- obligation issued after such date if— taxes in 1997; ployment will include the partner’s distribu- ‘‘(1) such obligation is issued (or is part of (6) the Joint Economic Committee reports tive share of partnership income and loss, re- a series of obligations issued) to refund an that real total Government taxes per house- sulting in substantial tax liability because obligation issued on or before such date, hold in 1994 totaled $18,600; there is a 15.3 percent tax on self-employ- ‘‘(2) the average maturity date of the issue (7) more than 70 percent of the tax cuts in ment income below $65,400 in 1997 and a 2.9 of which the refunding obligation is a part is both the House of Representatives and the percent hospital insurance tax on self-em- not later than the average maturity date of Senate tax relief bills will go to Americans ployment income above that amount; the obligations to be refunded by such issue, earning less than $75,000 annually; (4) certain types of entities, such as lim- ‘‘(3) the amount of the refunding obligation (8) the Joint Economic Committee esti- ited liability companies and limited liability does not exceed the outstanding amount of mates that a family of 4 earning $30,000 will partnerships, were not widely used at the the refunded obligation, and receive 53 percent of the tax relief under the time the present rule relating to limited ‘‘(4) the net proceeds of the refunding obli- reconciliation bill; partners was enacted, and that the proposed gation are used to redeem the refunded obli- (9) the earned income tax credit was al- regulations attempt to address owners of gation not later than 90 days after the date ready expanded in President Clinton’s 1993 such entities. of the issuance of the refunding obligation. tax bill; (5) the Senate is concerned that the pro- For purposes of paragraph (2), average matu- (10) the fiscal year 1998 budget resolution posed change in the treatment of individuals rity shall be determined in accordance with does not make the $500-per-child tax credit who are limited partners under applicable section 147(b)(2)(A) of the Internal Revenue refundable; and State law exceeds the regulatory authority Code of 1986.’’ (11) those who receive the earned income of the Treasury Department and would effec- (b) EFFECTIVE DATE.—The amendment tax credit do not pay Federal income taxes tively change the law administratively with- made by subsection (a) shall apply to refund- but receive a substantial cash transfer from out congressional action; and ing obligations issued after the date of the the Federal Government in the form of re- (6) the proposed regulations address and enactment of this Act. fund checks above and beyond income tax re- raise significant policy issues and the pro- bates. posed definition of a limited partner may GORTON AMENDMENT NO. 587 (b) SENSE OF THE SENATE.—It is the sense have a substantial impact on the tax liabil- of the Senate that America’s middle-class ity of certain individuals and may also affect Mr. ROTH (for Mr. GORTON) proposed taxpayers shoulder the biggest tax burden individuals’ entitlement to social security an amendment to the bill, S. 949, supra; and that only those who pay Federal income benefits. as follows: taxes should benefit from the Federal in- (b) SENSE OF SENATE.—It is the sense of the come tax cuts contained in the Revenue Rec- At the end of title VII, insert: Senate that— onciliation Act of 1997. (1) the Department of the Treasury and the SEC. . SPECIAL RULE FOR THRIFTS WHICH BE- Internal Revenue Service should withdraw COME LARGE BANKS. Proposed Regulation 1.1402(a)–(2) which im- (a) IN GENERAL.—Section 593(g)(2) (defining BURNS AMENDMENT NO 589 poses a tax on limited partners; and applicable excess reserves) is amended by Mr. ROTH (for Mr. BURNS) proposed (2) Congress, not the Department of the adding at the end the following new subpara- an amendment to the bill, S. 949, supra; Treasury or the Internal Revenue Service, graph: should determine the tax law governing self- ‘‘(C) SPECIAL RULE FOR THRIFTS WHICH BE- as follows: employment income for limited partners. CAME LARGE BANKS IN 1995.— On page 267, between lines 15 and 16, insert ‘‘(i) IN GENERAL.—In the case of a bank (as the following: SPECTER AMENDMENT NO. 585 defined in section 581) which became a large SEC. 780. AVERAGING OF FARM INCOME OVER 3 bank (as defined in section 585(c)(2)) for its YEARS. Mr. ROTH (for Mr. SPECTER) proposed first taxable year beginning after December (a) IN GENERAL.—Subpart B of part II of an amendment to the bill S. 949, supra; 31, 1994, the balance taken into account subchapter E of chapter 1 of the Internal as follows: under subparagraph (A)(ii) shall not be less Revenue Code of 1986 (relating to taxable

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00106 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6775 year for which items of gross income in- with respect to the qualified tuition and re- fees, athletic fees, insurance expenses, or cluded) is amended by adding the following lated expenses of an individual unless the other expenses unrelated to an individual’s new section: taxpayer elects to have this section apply academic course of instruction. ‘‘SEC. 460A. AVERAGING OF FARM INCOME. with respect to such individual for such year. ‘‘(D) REDUCTION FOR SCHOLARSHIPS, ETC.— ‘‘(a) IN GENERAL.—At the election of a tax- ‘‘(B) CREDIT ALLOWED ONLY FOR 2 TAXABLE payer engaged in a farming business, the tax YEARS.—An election under this paragraph ‘‘For reduction for scholarships, etc. and imposed by section 1 for such taxable year shall not take effect with respect to an indi- limitation based on grants, see subsection shall be equal to the sum of— vidual for any taxable year if an election (g)(2). ‘‘(1) a tax computed under such section on under this paragraph (by the taxpayer or any ‘‘(2) ELIGIBLE EDUCATIONAL INSTITUTION.— taxable income reduced by elected farm in- other individual) is in effect with respect to The term ‘eligible educational institution’ come, plus such individual for any 2 prior taxable years. means an institution— ‘‘(2) the increase in tax which would result ‘‘(C) COORDINATION WITH EXCLUSIONS.—An ‘‘(A) which is described in section 481 of the if taxable income for the 3 prior taxable election under this paragraph shall not take Higher Education Act of 1965 (20 U.S.C. 1088), years were increased by the elected farm in- effect with respect to an individual for any as in effect on the date of the enactment of come. taxable year if there is in effect for such tax- this section, and ‘‘(b) DEFINITIONS.—In this section— able year an election under section ‘‘(B) which is eligible to participate in a ‘‘(1) ELECTED FARM INCOME.— 529(c)(3)(B) or 530(c)(1) (by the taxpayer or program under title IV of such Act. ‘‘(A) IN GENERAL.—The term ‘elected farm any other individual) to exclude from gross ‘‘(3) ELIGIBLE STUDENT.—The term ‘eligible income’ means so much of the taxable in- income distributions from a qualified tuition student’ means, with respect to any aca- come for the taxable year— program or education individual retirement ‘‘(i) which is attributable to any farming demic period, a student who— account used to pay qualified higher edu- ‘‘(A) meets the requirements of section business; and cation expenses of the individual. ‘‘(ii) which is specified in the election 484(a)(1) of the Higher Education Act of 1965 ‘‘(3) CREDIT ALLOWED FOR YEAR ONLY IF IN- under subsection (a). (20 U.S.C. 1091(a)(1)), as in effect on the date DIVIDUAL IS AT LEAST 1⁄2 TIME STUDENT FOR ‘‘(B) TREATMENT OF GAINS.—For purposes of of the enactment of this section, and PORTION OF YEAR.—No credit shall be allowed subparagraph (A), gain from the sale or other ‘‘(B) is carrying at least 1⁄2 the normal full- under subsection (a) for a taxable year with disposition of property (other than land) reg- time work load for the course of study the respect to the qualified tuition and related ularly used by the taxpayer in a farming student is pursuing. expenses of an individual unless such indi- business for a substantial period shall be ‘‘(4) COMMUNITY COLLEGE.—The term ‘com- vidual is an eligible student for at least one treated as attributable to a farming busi- munity college’ means any institution of academic period which begins during such ness. higher education (as defined in section 1201 year. ‘‘(2) FARMING BUSINESS.—The term ‘farm- of the Higher Education Act of 1965 (20 U.S.C. ‘‘(4) CREDIT ALLOWED ONLY FOR FIRST 2 ing business’ has the meaning given such 1141)) that awards an associate’s degree. YEARS OF POSTSECONDARY EDUCATION.—No term by section 263A(e)(4).’’ ‘‘(5) VOCATIONAL SCHOOL.—The term ‘voca- (b) CLERICAL AMENDMENT.—The table of credit shall be allowed under subsection (a) for any taxable year with respect to the tional school’ means a postsecondary voca- sections for such subpart B is amended by tional institution (as defined in section 481 of adding at the end the following new item: qualified tuition and related expenses of an individual if the individual has completed such Act (20 U.S.C. 1088)). ‘‘Sec. 460A. Averaging of farm income.’’ (before the beginning of such taxable year) ‘‘(e) TREATMENT OF EXPENSES PAID BY DE- (c) EFFECTIVE DATE.—The amendments the first 2 years of postsecondary education PENDENT.—If a deduction under section 151 made by this section shall apply to taxable at an eligible educational institution. with respect to an individual is allowed to years beginning after the date of the enact- ‘‘(c) LIMITATION BASED ON MODIFIED AD- another taxpayer for a taxable year begin- ment of this Act and before January 1, 2001. JUSTED GROSS INCOME.— ning in the calendar year in which such indi- Section 503 of the bill is amended on page ‘‘(1) IN GENERAL.—The amount which would 161, line 4 by striking ‘‘July 31, 1999’’ and in- (but for this subsection) be taken into ac- vidual’s taxable year begins— serting ‘‘May 31, 1999.’’ count under subsection (a) for the taxable ‘‘(1) no credit shall be allowed under sub- year shall be reduced (but not below zero) by section (a) to such individual for such indi- WELLSTONE (AND OTHERS) the amount determined under paragraph (2). vidual’s taxable year, and AMENDMENT NO. 590 ‘‘(2) AMOUNT OF REDUCTION.—The amount ‘‘(2) qualified tuition and related expenses paid by such individual during such individ- Mr. WELLSTONE (for himself, Mr. determined under this paragraph is the amount which bears the same ratio to the ual’s taxable year shall be treated for pur- BINGAMAN, Mr. KERRY, Mr. KENNEDY, amount which would be so taken into ac- poses of this section as paid by such other Mr. REED, and Mr. DODD) proposed an count as— taxpayer. amendment to the bill, S. 949, supra; as ‘‘(A) the excess of— ‘‘(f) TREATMENT OF CERTAIN PREPAY- follows: ‘‘(i) the taxpayer’s modified adjusted gross MENTS.—If qualified tuition and related ex- Strike section 201 and insert the following: income for such taxable year, over penses are paid by the taxpayer during a tax- SEC. 201. REFUNDABLE CHILD TAX CREDIT. ‘‘(ii) $40,000 ($80,000 in the case of a joint re- able year for an academic period which be- (a) IN GENERAL.—Subpart C of part IV of turn), bears to gins during the first 3 months following such ‘‘(B) $10,000 ($20,000 in the case of a joint re- subchapter A of chapter 1 (relating to re- taxable year, such academic period shall be turn). fundable credits) is amended by redesig- treated for purposes of this section as begin- nating section 35 as section 36 and by insert- ‘‘(3) MODIFIED ADJUSTED GROSS INCOME.— ning during such taxable year. ing after section 34 the following new sec- The term ‘modified adjusted gross income’ tion: means the adjusted gross income of the tax- ‘‘(g) SPECIAL RULES.— ‘‘SEC. 35. HIGHER EDUCATION TUITION AND RE- payer for the taxable year increased by any ‘‘(1) IDENTIFICATION REQUIREMENT.—No LATED EXPENSES. amount excluded from gross income under credit shall be allowed under subsection (a) ‘‘(a) ALLOWANCE OF CREDIT.— section 911, 931, or 933. to a taxpayer with respect to the qualified ‘‘(1) IN GENERAL.—In the case of an indi- ‘‘(d) DEFINITIONS.—For purposes of this sec- tuition and related expenses of an individual vidual, there shall be allowed as a credit tion— unless the taxpayer includes the name and against the tax imposed by this subtitle for ‘‘(1) QUALIFIED TUITION AND RELATED EX- taxpayer identification number of such indi- the taxable year the amount equal to 50 per- PENSES.— vidual on the return of tax for the taxable cent of qualified tuition and related expenses ‘‘(A) IN GENERAL.—The term ‘qualified tui- year. paid by the taxpayer during such taxable tion and related expenses’ means tuition and ‘‘(2) ADJUSTMENT FOR CERTAIN SCHOLAR- year for education furnished during any aca- fees required for the enrollment or attend- SHIPS, ETC.— demic period beginning in such year. ance of— ‘‘(A) IN GENERAL.—The amount of qualified ‘‘(2) SPECIAL RULE FOR EDUCATION AT COM- ‘‘(i) the taxpayer, tuition and related expenses otherwise taken MUNITY COLLEGES AND VOCATIONAL SCHOOLS.— ‘‘(ii) the taxpayer’s spouse, or into account under subsection (a) with re- In the case of qualified tuition and related ‘‘(iii) any dependent of the taxpayer with spect to an individual for an academic period expenses for education furnished at a com- respect to whom the taxpayer is allowed a shall be reduced (before the application of munity college or vocational school, para- deduction under section 151, subsections (b) and (c)) by the sum of any graph (1) shall be applied by substituting ‘75 at an eligible educational institution and amounts paid for the benefit of such indi- percent’ for ‘50 percent’. books required for courses of instruction of vidual which are allocable to such period ‘‘(b) LIMITATIONS.— such individual at such institution. as— ‘‘(1) DOLLAR LIMITATION.—The amount al- ‘‘(B) EXCEPTION FOR EDUCATION INVOLVING ‘‘(i) a qualified scholarship which is exclud- lowed as a credit under subsection (a) for any SPORTS, ETC.—Such term does not include ex- able from gross income under section 117, taxable year with respect to the qualified penses with respect to any course or other ‘‘(ii) an educational assistance allowance tuition and related expenses of any 1 indi- education involving sports, games, or hob- under chapter 30, 31, 32, 34, or 35 of title 38, vidual shall not exceed $1,500. bies, unless such course or other education is United States Code, or under chapter 1606 of ‘‘(2) ELECTION REQUIRED.— part of the individual’s degree program. title 10, United States Code, and ‘‘(A) IN GENERAL.—No credit shall be al- ‘‘(C) EXCEPTION FOR NONACADEMIC FEES.— ‘‘(iii) a payment (other than a gift, be- lowed under subsection (a) for a taxable year Such term does not include student activity quest, devise, or inheritance within the

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00107 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6776 CONGRESSIONAL RECORD — SENATE June 27, 1997 meaning of section 102(a)) for such individ- ‘‘(i) such dollar amount, multiplied by ceived with respect to the individual de- ual’s educational expenses, or attributable to ‘‘(ii) the cost-of-living adjustment deter- scribed in subparagraph (A) during the cal- such individual’s enrollment at an eligible mined under section 1(f)(3) for the calendar endar year, and educational institution, which is excludable year in which the taxable year begins, deter- ‘‘(ii) aggregate amount of reimbursements from gross income under any law of the mined by substituting ‘calendar year 1999’ or refunds (or similar amounts) paid to such United States. for ‘calendar year 1992’ in subparagraph (B) individual during the calendar year, and ‘‘(B) EXCEPTION FOR ROOM AND BOARD.— thereof. ‘‘(D) such other information as the Sec- Subject to subparagraph (C), subparagraph ‘‘(B) ROUNDING.—If any amount as adjusted retary may prescribe. (A) shall not apply to that portion of any under subparagraph (A) is not a multiple of ‘‘(c) APPLICATION TO GOVERNMENTAL amount which is properly allocable to room $5,000, such amount shall be rounded to the UNITS.—For purposes of this section— and board relating to the attendance of the next lowest multiple of $5,000. ‘‘(1) a governmental unit or any agency or individual at an eligible educational institu- ‘‘(i) COORDINATION WITH MEANS-TESTED instrumentality thereof shall be treated as a tion. PROGRAM.—For purposes of any means-tested person, and ‘‘(C) LIMITATION ON QUALIFIED TUITION AND Federal program, any refund made to an in- ‘‘(2) any return required under subsection RELATED EXPENSES.—In no event shall the dividual (or the spouse of an individual) shall qualified tuition and related expenses of an not be treated as income (and shall not be (a) by such governmental entity shall be individual for any academic period exceed taken into account in determining resources made by the officer or employee appro- the excess (if any) of— for the month of its receipt and the following priately designated for the purpose of mak- ‘‘(i) the costs of attendance (as defined in month). ing such return. section 472 of the Higher Education Act of ‘‘(j) REGULATIONS.—The Secretary may ‘‘(d) STATEMENTS TO BE FURNISHED TO INDI- 1965 (20 U.S.C. 1087ll) of the individual for prescribe such regulations as may be nec- VIDUALS WITH RESPECT TO WHOM INFORMA- such period, over essary or appropriate to carry out this sec- TION IS REQUIRED.—Every person required to ‘‘(ii) the aggregate amounts described in tion, including regulations providing for a make a return under subsection (a) shall fur- subparagraph (A) for such period (without re- recapture of credit allowed under this sec- nish to each individual whose name is re- gard to subparagraph (B)). tion in cases where there is a refund in a sub- quired to be set forth in such return under ‘‘(3) DENIAL OF CREDIT IF STUDENT CON- sequent taxable year of any amount which subparagraph (A) or (B) of subsection (b)(2) a VICTED OF A FELONY DRUG OFFENSE.—No cred- was taken into account in determining the written statement showing— it shall be allowed under subsection (a) for amount of such credit.’’ ‘‘(1) the name, address, and phone number (b) EXTENSION OF PROCEDURES APPLICABLE qualified tuition and related expenses for the of the information contact of the person re- TO MATHEMATICAL OR CLERICAL ERRORS.— enrollment or attendance of a student for quired to make such return, and Paragraph (2) of section 6213(g) (relating to any academic period if such student has been ‘‘(2) the aggregate amounts described in the definition of mathematical or clerical er- convicted of a Federal or State felony of- subparagraph (C) of subsection (b)(2). fense consisting of the possession or distribu- rors) is amended by striking ‘‘and’’ at the tion of a controlled substance before the end end of subparagraph (G), by striking the pe- The written statement required under the of the taxable year with or within which riod at the end of subparagraph (H) and in- preceding sentence shall be furnished on or such period ends. serting ‘‘, and’’, and by inserting after sub- before January 31 of the year following the ‘‘(4) DENIAL OF CREDIT WHERE NO HIGH paragraph (H) the following new subpara- calendar year for which the return under SCHOOL DEGREE.—No credit shall be allowed graph: subsection (a) was required to be made. under subsection (a) for qualified tuition and ‘‘(I) an omission of a correct TIN required related expenses for the enrollment or at- under section 35(g)(1) (relating to higher edu- ‘‘(e) DEFINITIONS.—For purposes of this sec- tendance of a student for any academic pe- cation tuition and related expenses) to be in- tion, the terms ‘eligible educational institu- riod if such student has not received a high cluded on a return.’’ tion’ and ‘qualified tuition and related ex- school degree (or its equivalent) before the (c) RETURNS RELATING TO TUITION AND RE- penses’ have the meanings given such terms beginning of such period. This paragraph LATED EXPENSES.— by section 35. shall not apply to a student if the student (1) IN GENERAL.—Subpart B of part III of ‘‘(f) RETURNS WHICH WOULD BE REQUIRED did not receive such degree by reason of en- subchapter A of chapter 61 (relating to infor- TO BE MADE BY 2 OR MORE PERSONS.—Except rollment in an early admission program to mation concerning transactions with other to the extent provided in regulations pre- an eligible educational institution. persons) is amended by inserting after sec- scribed by the Secretary, in the case of any ‘‘(5) DENIAL OF DOUBLE BENEFIT.—No credit tion 6050R the following new section: amount received by any person on behalf of shall be allowed under this section for any ‘‘SEC. 6050S. RETURNS RELATING TO HIGHER another person, only the person first receiv- expense for which a deduction is allowed EDUCATION TUITION AND RELATED ing such amount shall be required to make under any other provision of this chapter. EXPENSES. the return under subsection (a). ‘‘(6) NO CREDIT FOR MARRIED INDIVIDUALS ‘‘(a) IN GENERAL.—Any person— FILING SEPARATE RETURNS.—If the taxpayer ‘‘(1) which is an eligible educational insti- ‘‘(g) REGULATIONS.—The Secretary shall is a married individual (within the meaning tution which receives payments for qualified prescribe such regulations as may be nec- of section 7703), this section shall apply only tuition and related expenses with respect to essary to carry out the provisions of this sec- if the taxpayer and the taxpayer’s spouse file any individual for any calendar year, or tion. No penalties shall be imposed under a joint return for the taxable year. ‘‘(2) which is engaged in a trade or business section 6724 with respect to any return or ‘‘(7) NONRESIDENT ALIENS.—If the taxpayer and which, in the course of such trade or statement required under this section until is a nonresident alien individual for any por- business, makes payments during any cal- such time as such regulations are issued.’’ tion of the taxable year, this section shall endar year to any individual which con- (2) ASSESSABLE PENALTIES.— apply only if such individual is treated as a stitute reimbursements or refunds (or simi- (A) Subparagraph (B) of section 6724(d)(1) resident alien of the United States for pur- lar amounts) of qualified tuition and related (relating to definitions) is amended by redes- poses of this chapter by reason of an election expenses of such individual, ignating clauses (ix) through (xiv) as clauses under subsection (g) or (h) of section 6013. shall make the return described in sub- (x) through (xv), respectively, and by insert- ‘‘(h) INFLATION ADJUSTMENTS.— section (b) with respect to the individual at ing after clause (viii) the following new ‘‘(1) DOLLAR LIMITATION ON AMOUNT OF such time as the Secretary may by regula- clause: CREDIT.— tions prescribe. ‘‘(ix) section 6050S (relating to returns re- ‘‘(A) IN GENERAL.—In the case of a taxable ‘‘(b) FORM AND MANNER OF RETURNS.—A re- lating to payments for qualified tuition and year beginning after 1998, the $1,500 amount turn is described in this subsection if such related expenses),’’. in subsection (b)(1) shall be increased by an return— (B) Paragraph (2) of section 6724(d) is amount equal to— ‘‘(1) is in such form as the Secretary may amended by striking ‘‘or’’ at the end of the ‘‘(i) such dollar amount, multiplied by prescribe, next to last subparagraph, by striking the ‘‘(ii) the cost-of-living adjustment deter- ‘‘(2) contains— period at the end of the last subparagraph mined under section 1(f)(3) for the calendar ‘‘(A) the name, address, and TIN of the in- and inserting ‘‘, or’’, and by adding at the year in which the taxable year begins, deter- dividual with respect to whom payments de- end the following new subparagraph: mined by substituting ‘calendar year 1997’ scribed in subsection (a) were received from ‘‘(Z) section 6050S(d) (relating to returns for ‘calendar year 1992’ in subparagraph (B) (or were paid to), relating to qualified tuition and related ex- thereof. ‘‘(B) the name, address, and TIN of any in- penses).’’ ‘‘(B) ROUNDING.—If any amount as adjusted dividual certified by the individual described (3) CLERICAL AMENDMENT.—The table of under subparagraph (A) is not a multiple of in subparagraph (A) as the taxpayer who will sections for subpart B of part III of sub- $50, such amount shall be rounded to the claim the individual as a dependent for pur- chapter A of chapter 61 is amended by insert- next lowest multiple of $50. poses of the deduction allowable under sec- ing after the item relating to section 6050R ‘‘(2) INCOME LIMITS.— tion 151 for any taxable year ending with or the following new item: ‘‘(A) IN GENERAL.—In the case of a taxable within the calendar year, and year beginning after 2000, the $40,000 and ‘‘(C) the— ‘‘Sec. 6050S. Returns relating to higher edu- $80,000 amounts in subsection (c)(2) shall ‘‘(i) aggregate amount of payments for cation tuition and related ex- each be increased by an amount equal to— qualified tuition and related expenses re- penses.’’

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00108 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6777 (d) COORDINATION WITH SECTION 135.—Sub- ‘‘(2) as requiring a health plan to provide tecting the oceans. We also shared a section (d) of section 135 is amended by re- any mental health benefits. lifelong interest in ocean and coastal designating paragraphs (2) and (3) as para- ‘‘(c) SEPARATE APPLICATION TO EACH OP- management and in sustainable devel- graphs (3) and (4), respectively, and by in- TION OFFERED.—In the case of a health plan opment and use of marine resources. serting after paragraph (1) the following new that offers a child described in subsection (a) paragraph: 2 or more benefit package options under the One of the most valuable perks of ‘‘(2) COORDINATION WITH HIGHER EDUCATION plan, the requirements of this section shall membership in the U.S. Senate is the CREDIT.—The amount of the qualified higher be applied separately with respect to each opportunity it affords us to meet gifted education expenses otherwise taken into ac- such option. leaders from every walk of life. Few of count under subsection (a) with respect to ‘‘(d) DEFINITIONS.—In this section: those leaders have made a greater or the education of an individual shall be re- ‘‘(1) MEDICAL OR SURGICAL BENEFITS.—The more lasting contribution than duced (before the application of subsection term ‘medical or surgical benefits’ means Jacques-Yves Cousteau. (b)) by the amount of such expenses which benefits with respect to medical or surgical are taken into account in determining the services, as defined under the terms of the Jacques’ first adventure underwater credit allowable to the taxpayer or any other plan, but does not include mental health was in Vermont at age 10. For the next person under section 35 with respect to such benefits. 75 years, he continued his adventures, expenses. ‘‘(2) MENTAL HEALTH BENEFITS.—The term and he brought the rest of us with him. (e) CLERICAL AMENDMENT.—The table of ‘mental health benefits’ means benefits with He was a pioneer in undersea explo- sections for subpart C of part IV of sub- respect to mental health services, as defined ration, and I can testify firsthand that chapter A of chapter 1 is amended by insert- under the terms of the plan, but does not in- diving with him was an unforgettable ing after the item relating to section 35 the clude benefits with respect to the treatment experience. He developed the first following new items: of substance abuse and chemical dependency. scuba gear, took the first underwater ‘‘Sec. 35. Higher education tuition and re- f color pictures, and started the first un- lated expenses. NOTICE OF HEARING dersea colony. ‘‘Sec. 36. Overpayments of tax.’’ COMMITTEE ON ENERGY AND NATURAL Probably as important as his sci- (f) EFFECTIVE DATE.—The amendments RESOURCES entific and technical achievements, made by this section shall apply to expenses Mr. MURKOWSKI. Mr. President, I Jacques brought the oceans to life for paid after December 31, 1997 (in taxable years millions of Americans through breath- ending after such date), for education fur- would like to announce for the infor- nished in academic periods beginning after mation of the Senate and the public taking books, films, and his documen- such date. that a hearing has been scheduled be- tary television series, ‘‘The Undersea On page 13, beginning with line 21, strike fore the full Committee on Energy and World of Jacques Cousteau.’’ His film all through page 14, line 4, and insert: Natural Resources to consider the ‘‘The Silent World’’ brought viewers ‘‘(B) THRESHOLD AMOUNT.—For purposes of nomination of Patrick A. Shea to be aboard his ship, the Calypso, for the subparagraph (A), the term ‘threshold Director of the Bureau of Land Man- first time and won an Oscar for best amount’ means— agement. documentary. He went on to win 2 ‘‘(i) $90,000 in the case of a joint return, more Oscars, 10 Emmys, and numerous ‘‘(ii) $70,000 in the case of an individual The hearing will take place Thurs- day, July 17, 1997, at 9:30 a.m. in room other awards by astonishing viewers who is not married, and with the life under the waters all over ‘‘(iii) $45,000 in the case of a married indi- SD–366 of the Dirksen Senate Office vidual filing a separate return. Building in Washington, DC. the world from the Red Sea to Antarc- For further information, please call tica and from the Caribbean to the In- ENZI AMENDMENT NO. 591 Camille Heninger Flint at (202) 224– dian Ocean. 5070. As Jacques continued to explore the Mr. ROTH (for Mr. ENZI) proposed an ocean, he became deeply committed to f amendment to the bill, S. 949, supra; as protecting it against pollution and follows: AUTHORITY FOR COMMITTEES TO other manmade hazards. In 1971, he ac- On page 190, line 1, strike ‘‘(III)’’ and insert MEET cepted the Senate Commerce Commit- ‘‘(IV)’’ and insert a new subparagraph tee’s invitation to testify and spoke to (A)(ii)(III)— COMMITTEE ON GOVERNMENTAL AFFAIRS ‘‘(VI) the upgrading and maintenance of Mr. ROTH. Mr. President, I ask unan- us about the International Conference intercity primary and rural air service facili- imous consent on behalf of the Govern- on Ocean Pollution. He later testifed ties, and the purchase of intercity air service mental Affairs Committee to meet on before the committee on other ocean between primary and rural airports and re- Friday, June 27, after last vote, for a issues. His testimony and other activi- gional hubs; and ’’. business meeting on issues relating to ties were key to public realization that the matter of issuing subpoenas for the the oceans are not a vast and unlimited WELLSTONE (AND OTHERS) special investigation hearings. resource, that human activities do in- AMENDMENT NO. 592 The PRESIDING OFFICER. Without deed have profound impacts on the Mr. WELLSTONE (for himself, Mr. objection, it is so ordered. oceans, and consequently, that we have a duty to protect the marine environ- DOMENICI, Mr. REID, and Mr. CONRAD) f proposed an amendment to the bill, S. ment. 949, supra; as follows: ADDITIONAL STATEMENTS A number of years later, I was privi- At the appropriate place, insert: leged to present Jacques with the 1983 Neptune Award of the American Oce- ‘‘SEC. 2107A. MENTAL HEALTH PARITY. COMMEMORATING THE LIFE OF ‘‘(a) PROHIBITION.—In the case of a health anic Organization. The award recog- plan that enrolls children through the use of JACQUES-YVES COUSTEAU nized his extraordinary contribution to assistance provided under a grant program ∑ Mr. HOLLINGS. Mr. President, in promoting the use, understanding, and conducted under this title, such plan, if the every area of human endeavor, major protection of the oceans. At the award plan provides both medical and surgical ben- advances often seem to depend on a ceremony, Jacques showed his new film efits and mental health benefits, shall not single individual whose unique vision on his trip up the Amazon River. None impose treatment limitations or financial of those present will forget his evoc- requirements on the coverage of mental and dedication to pursuing that vision health benefits if similar limitations or re- break through existing barriers to un- ative description of the pink dolphins quirements are not imposed on medical and derstanding. On Tuesday, the world and flooded forests of the Amazon. surgical benefits. lost one of those individuals, a pioneer Jacques had a rare gift for allowing ‘‘(b) RULE OF CONSTRUCTION.—Nothing in in the area of oceanography and ma- people to see the wonderful diversity of this section shall be construed— rine conservation. I am speaking, of life beneath the water’s surface. ‘‘(1) as prohibiting a health plan from re- course, of Jacques-Yves Cousteau. Jacques-Yves Cousteau taught the quiring preadmission screening prior to the I have had the pleasure and honor of world how to appreciate, understand, authorization of services covered under the plan or from applying other limitations that knowing Jacques Cousteau as a friend explore, use, and preserve the oceans restrict coverage for mental health services and colleague for more than three dec- which cover 71 percent of the Earth’s to those services that are medically nec- ades. Our relationship was based on a surface. We will greatly miss his wit, essary; and common passion for exploring and pro- wisdom, and zest for life.∑

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00109 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6778 CONGRESSIONAL RECORD — SENATE June 27, 1997 MISS KANSAS generation begins retiring and putting mographic changes facing our country ∑ Mr. ROBERTS. Mr. President, I rise additional financial stress on the pro- over the next 30 to 40 years as the baby to congratulate Ms. Lesley Moss of gram. boomers retire and our Nation grays. Hoxie, KS, who has been crowned Miss I had hoped to support the Senate’s The commission will have one year to Kansas. Lesley began competing in the bill. In fact, the bill includes many study and report its recommendations Miss Kansas pageant at the age of 17— items I have supported for a long time, to Congress. Let’s hope that this proc- the youngest allowable age for a Miss including expanding Medicare’s cov- ess will ultimately result in a solid erage for preventive benefits, expand- Kansas participant—and was a top 10 package of changes that the Congress ing the health plan options available to finalist. will act on quickly. Last year Lesley won first runner-up seniors in North Dakota and across the With this package of recommenda- in the Miss Kansas pageant. When the country, and other changes to improve tions on long-term solvency I am will- 1996 Miss Kansas, Tara Holland, relin- access to health care in rural areas and quished her crown after winning the strengthen our ability to fight fraud ing to consider basic structural title of Miss America, Moss passed up and abuse in the program. I voted for a changes to the program, including the chance to take Holland’s place, be- substitute Medicare package offered by means testing and/or increasing the eli- cause she wanted to compete for the Senator REED that included these pro- gibility age if the following conditions title again. visions but did not include the more are met. Growing up on a farm 3 miles north controversial provisions found in the First, if we consider increasing the of Hoxie, Lesley realized that there is a Senate bill. Most notably, the Reed eligibility age, we must be able to re- substitute, like the Senate bill, would special sense of community throughout spond to the needs of the retirees be- have extended the life of the Medicare rural Kansas. tween the ages of 65 and 67 who will Lesley developed an original program trust fund for 10 more years, but would have done so without asking Medicare still need affordable insurance cov- called Project L.E.A.D. (Learning what erage. The Senate bill does not con- leadership is, Exercising personal lead- beneficiaries to pay significantly more sider this issue. It simply proposes to ership skills, Acting in collaboration for their health care and without leave these folks uninsured. Already, with others, Devoting time and energy knocking a number of seniors out of into community service) which encour- the Medicare Program. the number of retirees with employer- ages leadership through volunteerism Unfortunately, in several extremely provided health insurance has dropped within schools and communities of all important areas, this bill did not abide 14 percent in the six years between 1988 sizes. As Miss Kansas, Lesley will pro- by the bipartisan budget agreement to 1994, and every indication is that mote leadership to thousands of stu- achieved during months of negotiations this trend would be exacerbated by dents at over 200 schools this year. this spring. The Senate bill abandoned raising the Medicare eligibility age. Project L.E.A.D. will also be her plat- this approach by including several pro- Most low- or even middle-income sen- form when she represents Kansas at visions that will result in significantly iors in their mid-sixties will never be the Miss America pageant in Sep- higher out-of-pocket health care ex- able to afford the premiums that will tember. penses for our Nation’s older Ameri- be assessed by the health insurance in- Mr. President, I am proud of Lesley’s cans. dustry to cover people of that age. commitment to improve the lives of The Senate bill included two signifi- cant structural changes—an increase in Now, I voted in support of increasing Kansans and commend her for the per- the Social Security retirement age in severance and dedication it took to win the Medicare eligibility age from 65 to 1983, as part of a plan to extend the sol- the title of Miss Kansas. I wish her the 67 and a means test for the Medicare vency of the Social Security program best as she travels our great State pro- part B premium paid by upper income moting community leadership in the older Americans. I voted to strike well into the next century. But I do not 21st century.∑ these provisions from the Senate bill agree with those who compare the in- f because I think it is inappropriate to crease in the eligibility age for Medi- make these kinds of central changes to care to increasing the Social Security WHAT IS RIGHT FOR MEDICARE the Medicare Program on the spending retirement age to 67. Under Social Se- ∑ Mr. DORGAN. Mr. President, earlier side of the budget ledger in order to curity, seniors who need or choose to this week, the Senate voted on a rec- make room for larger tax cuts on the retire before age 67 will still have the onciliation bill that will make some of tax side of the ledger. It is my view option to do so, at a reduced benefit the most significant changes in the 30- that changes made to Medicare should level. The ramifications are very dif- year history of the Medicare Program, be made for the purpose of strength- ferent for increasing the Medicare eli- and I want to explain to my colleagues ening the program—not to provide gibility age. Under the Senate bill, and constituents why I opposed the room for tax cuts, the bulk of which these seniors will not have an option Senate’s bill. will go to upper income earners in this for getting Medicare benefits before I opposed the bill with some regret, country. Let’s keep Medicare healthy they turn 67 and many of them will be- because, for the most part, it reflects and our older Americans healthy as come uninsured. the bipartisan budget agreement, well. which I have supported. For example, I Why in this bill was it proposed that If we raise the Medicare eligibility voted for the bipartisan budget resolu- we ask seniors who make more than age from 65 to 67, we must provide tion earlier this month. That plan re- $50,000 to pay higher prices for their some means to guarantee the avail- quires the Congress to pass legislation Medicare policies so that investors who ability of affordable insurance cov- to cut the deficit by just over $200 bil- make $500,000 or more could be given erage for the citizens in that age group. lion over the next 5 years, with about tax cuts? There is no denying a direct One of the issues the Medicare commis- $115 billion of that deficit reduction to connection when the Medicare changes sion created by this bill is charged with come from slowing down the rate of were proposed in the context of rec- studying is whether it is feasible to growth of Medicare. So I am not un- onciliation legislation that includes allow retirees who have not yet willing to vote for restraining Medi- tax cuts. In this reconciliation process, reached the eligibility age for Medicare care spending in order to reduce the the act of achieving Medicare savings to buy into the program. This idea de- deficit. was intertwined with the desire for tax serves consideration before we act to We must put this country on track cuts on the revenue side. increase the eligibility age. toward a balanced budget while ensur- There are some signs of reasonable- ing the health and stability of the ness in this bill. For example, I support With respect to means testing or in- Medicare Program. Doing so requires this bill’s creation of a national, bipar- come relating, as it is called in the that we limit the rate of growth of the tisan commission charged with making Senate bill, I am willing to support Medicare Program. The Medicare Pro- recommendations to Congress on the means testing for Medicare, but again, gram has been growing at a rate of long-term changes necessary to ensur- only after careful consideration of the about 10 percent a year, a rate of ing the extended solvency of the Medi- ramifications for the entire Medicare growth that the country cannot sus- care program. On the advice of this program and for the purpose of extend- tain, especially once the baby boomer Commission we should confront the de- ing the solvency of Medicare, not as

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00110 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6779 part of a reconciliation bill that is de- eloquently the needs of veterans, and Throughout his service, Secretary signed to cut spending for the purpose the obligation of our Government to Brown has gone out of his way to en- of accommodating additional tax cuts. take care of those who served, often at sure that those who honorably served One of the reasons that Medicare has great personal sacrifice. His oratory their country receive the attention, such widespread support is because it could move an audience to tears, and benefits, and services they deserve. provides health insurance coverage for there was never any question but that Last year, Secretary Brown visited virtually all older Americans. If his concern was genuine and sincere. New Jersey, where he personally met through means testing we create an in- He truly was a ‘‘veterans’ veteran,’’ as with veterans to address their concerns centive for wealthier, healthier people he was often called, and he fought to about benefits and the VA healthcare to drop out of the program because the last to further and protect vet- system. After this meeting, numerous they can get a better deal outside of erans’ best interests. veterans from New Jersey contacted Medicare, then we ought to at least un- Jesse Brown undertook an ambitious me to convey their appreciation for derstand and consider the ramifica- agenda as Secretary. Under his watch, Secretary Brown’s work on their be- tions of that. the Veterans Health Administration half. There are other things about the was reorganized into 22 Veterans Inte- Mr. President, Secretary Brown’s Senate bill that create substantial new grated Service Networks [VISNs], the service to this country will be sorely burdens on low- and moderate-income VA health care system began the tran- missed. As a fellow veteran, I join all of older Americans. Under this bill, sen- sition from inpatient to outpatient the veterans in New Jersey and across iors will be asked to pay significant care, the Veterans Benefits Adminis- the country in thanking him for his new out-of-pocket costs. In North Da- tration moved to reduce its tremen- work and wishing him well in his fu- kota, 70 percent of our senior citizens dous backlog of cases, and benefits ture endeavors.∑ have incomes under $15,000, and on av- were extended to Persian Gulf war vet- f erage, they spend $2,500 for prescription erans suffering from undiagnosed ill- TRIBUTE TO THE HONORABLE drugs and other health care expenses nesses and Vietnam veterans’ children JESSE BROWN not covered by Medicare or supple- born with spina bifida. Most signifi- mental insurance. Many of these folks cantly, he was tremendously successful ∑ Mr. BRYAN. Mr. President, I rise simply cannot afford to pay much in protecting his department from today to recognize the innumerable more. some of the deep budget cuts suffered contributions and outstanding leader- I am concerned about the new $5 co- by most other Federal agencies. ship that have characterized the tenure payment for home health visits. I voted Secretary Brown’s departure is a of the Honorable Jesse Brown as the to eliminate this new cost from the great loss. I wish him every success in Secretary of Veterans Affairs. It is Senate bill. While $5 may not seem like the years ahead—and I have every con- with great appreciation, as well as sad- a lot of money to many of us, a lot of fidence that he will succeed in what- ness, that I speak of his accomplish- the seniors who rely on home health ever he undertakes.∑ ments today, as his term as the chief of care cannot afford this extra expense ∑ Mr. LAUTENBERG. Mr. President, I the second-largest agency in the Fed- and might be forced to enter a hospital rise today to pay tribute to Jesse eral Government will come to an end or nursing home at significantly great- Brown, who will retire as Secretary of on the first of July. Under his guidance er cost to the Medicare and Medicaid Veterans Affairs on July 1, 1997. over the past 41⁄2 years, the Department programs. Since his appointment to this post on of Veterans Affairs has undergone some This bill also erodes the protections January 22, 1993, Secretary Brown has of the most fundamental changes in that currently exist in Medicare which been the champion of our Nation’s 26 decades. In the past, such limit the amount doctors can charge million veterans. But his commitment groundbreaking reforms and restruc- Medicare beneficiaries above and be- to those who fought for this country turing may have inspired fear on Cap- yond the Medicare-approved amount. began long before he accepted the awe- itol Hill and in veterans’ facilities This bill results in millions of dollars some responsibility of heading the Fed- across the Nation, but with Jesse in new out-of-pocket costs. eral Government’s largest Department. Brown at the helm, the Department The conferees on this bill have an op- Secretary Brown’s service in the Ma- has undergone a transformation with portunity to address these concerns rine Corps formed the foundation for support, hard-earned at times, from and to drop troubling provisions from his strong commitment to veterans. He both budget-cutters in Congress and the bill, such as the means testing of later worked for the Disabled American from veterans across the country. the Medicare premium, the increase in Veterans, where he was an advocate for When Secretary Brown took office in the Medicare eligibility age, and the the highest quality healthcare and ben- 1993, he was faced with an outdated new home health care co-payment. efits for veterans and their families. health-care delivery system stretched Eliminating these provisions from the Secretary Brown translated his per- to its limits trying to maintain too final bill would still lengthen the sol- sonal experiences into action as he ac- many large, aging hospitals. The Sec- vency of the Medicare program for 10 cepted the charge of providing for retary rose to the challenge by closing more years, and I hope the conference those who have protected our country. hospitals that did not serve their pa- committee will take this action.∑ As a fellow veteran, I appreciate all tients well and beginning an overhaul f of Secretary Brown’s work on behalf of of the entire VA medical system into a our Nation’s veterans and their fami- network of 22 regional provider re- TRIBUTE TO JESSE BROWN, SEC- 1 lies. In the 4 ⁄2 years since he accepted gions. Within these regions, increased RETARY OF VETERANS AFFAIRS this challenging post, he has worked attention is being given to the quality ∑ Mr. ROCKEFELLER. Mr. President, diligently to move the VA into the 21st of care available as well as to out- the veterans’ community is about to century. His personal commitment to patient services. These changes, which lose one of its best and strongest cham- veterans has produced numerous ac- are still taking hold in many places, pions—Secretary of Veterans Affairs, complishments. demonstrate the vision that Secretary Jesse Brown. After 4 years as the Sec- Secretary Brown has overseen the Brown brought to his work; a vision of retary, Jesse Brown is retiring from Department’s first national summit on changing with the times, but never giv- Government service. He will be deeply homeless veterans. He has worked to ing up on the primary focus of pro- missed by millions of veterans and expand the Department’s services to viding services to veterans. their families, and everyone else who women veterans. And under his leader- Secretary Brown’s unyielding drive has had the good fortune of working ship, the VA has opened community to ensure that veterans have access to with him. based outpatient clinics, giving more needed services is very important to Secretary Brown is one of the veterans wider access to VA healthcare Nevada, one of only two States in the staunchest advocates the veterans’ services. In all that he has done, his Nation where the population of vet- community has ever known. A veteran commitment to broadening veterans’ erans is growing. While my State’s himself, injured during the Vietnam access to the system has never fal- problems are very different than those war, he articulated passionately and tered. of a Northeastern or Midwestern State,

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00111 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6780 CONGRESSIONAL RECORD — SENATE June 27, 1997 Secretary Brown took these differences has proven that he, and the agency he set their cost share requirements in into account and has been instru- led, do indeed put veterans first. When the food stamp and Medicaid programs. mental in helping Nevada be more re- he announced his resignation, Sec- Our amendment would take a small sponsive to the needs of the men and retary Brown said he wanted to be re- step toward addressing the use of these women who have served our country. membered as ‘‘someone who made a funds and target the savings into food The Department of Veterans Affairs difference in the quality of veterans’ stamp benefits for legal immigrants has begun to reallocate its resources so lives.’’ I speak for the veterans of Ne- who have dependent children. Over 5 that Federal funds are made available vada, and across the country, when I years, we hope to save $1 billion, which where veterans’ needs are most crit- say that Jesse Brown will be remem- fully covers the cost of restoring food ical. In southern Nevada, where ap- bered not only for improving veterans’ stamp benefits. proximately 118,000 veterans already access to needed benefits, but also for Unlike other low-income families in crowd existing facilities, new projects leading this agency with skill, with this country, legal immigrants are will allow Nevada’s veterans to access compassion, and most of all with an ap- banned from receiving food stamp ben- doctors, counselors, and other benefits preciation for the noble service of our efits. Food stamps are the Nation’s to which they are entitled. The Sec- Nation’s veterans.∑ largest and most successful food assist- ance program and cuts to this program retary has helped Nevada’s underserved f veterans gain access to the services made up half of the savings in last they deserve through his active sup- BALANCED BUDGET ACT OF 1997 year’s welfare reform effort. According port for efforts to construct and expand AMENDMENT NO. 450 to CBO, 17 percent of the immigrants desperately needed medical facilities in ∑ Mr. WELLSTONE. Mr. President, I receiving food stamps are children. southern Nevada. Secretary Brown has am pleased to join my colleague in of- This means more than 150,000 children come to the aid of Nevada’s veterans fering this amendment. have lost access to this critical pro- during crises, as well, stepping in to Last year during the welfare reform gram. In Minnesota roughly 15,900 indi- help find a solution when one of the VA debate, as part of the effort to balance viduals are expected to lose food stamp facilities in Nevada faced administra- the budget, the 104th Congress made benefits. According to INS, most of tive problems. dramatic cuts to programs for low-in- these immigrant families will natu- While I could go on much longer just come families. According to the Center ralize within 10 years, making them el- discussing Secretary Brown’s contribu- on Budget and Policy Priorities, more igible to apply for food stamps. CBO es- timates that it will cost $750 million to tions to Nevada’s veterans, I would be than 93 percent of the cuts in entitle- restore food stamp benefits for children amiss if I did not mention the profound ment programs in the 104th Congress 18 years and under. Senator DURBIN and impact he has had on all American vet- came from programs for low-income erans and their families. He has tack- I have provided an offset that achieves people. Congress reduced entitlement that amount over 5 years. No matter led the most sensitive issues facing programs by $65.6 billion over the pe- veterans, including his work to enact what your position on the overall budg- riod from 1996 to 2002. et deal, you must agree that no pur- laws authorizing the VA to provide I am deeply concerned about the ex- pose is served by denying children food. compensation and treatment for Per- tent to which legal immigrants are According to the Food Research and sian Gulf war veterans’ undiagnosed being harmed under the Welfare Re- Action Center, approximately 13.6 mil- illnesses. He also expanded services to form act. The Act cut $22 billion in lion children under age 12 are at risk of women veterans, which is evident at services to legal immigrants—a full 44 hunger during some part of the year. the new Addeliar D. Guy III Ambula- percent of the overall legislation. FRAC reports that although families tory Care center soon to open in Las The House Ways and Means Com- who face real issues of hunger may not Vegas. Finally, Secretary Brown con- mittee reconciliation mark provided be hungry every day of the month, or firmed the VA’s commitment to all the least generous allocation of fund- even every month of the year, the hun- veterans in need by convening the first ing for legal immigrants as compared ger affecting most low-income families summit on the issues facing homeless to the budget agreement and the Sen- is not a one-time or infrequent occur- veterans, and followed up on this by ate Finance Committee mark. The $9 rence. It is characterized—and this is adding homeless programs to the serv- billion allocation in the Ways and according to FRAC—by food shortages ices provided at VA medical centers. Means mark violates the budget agree- and chronic insecurity about whether Again, this effort has a great impact in ment, and it covers fewer people. Since the family will have enough food. Las Vegas, where a large number of it does not cover those who, in the fu- We are now benefiting from scientific homeless veterans have needs that ture, could be eligible for SSI assist- research that points to the significance have, until now, largely gone unmet. ance, it will leave many without any of the early years on development of With the help of the Department of means of support. According to the So- the brain. A consistently nutritious Veterans’ Affairs, however, Las Vegas cial Security Administration, 125,000 diet is one of the most important if not will soon boast a new initiative that fewer people will be served by the the most important ingredient to a joins hands with the city and county to House agreement compared to the child reaching his or her potential. In a provide assistance to the homeless vet- Budget Agreement. In Minnesota it 1995 study entitled Community Child- erans in Las Vegas. puts 1,145 elderly immigrants at risk of hood Hunger Identification Project; a Mr. President, I have only touched losing benefits. Survey of Childhood Hunger in the upon a few of the many positive Moreover, it puts an additional United States, FRAC determined that changes and initiatives launched by 161,000 people at risk of losing their undernourished children suffer from Secretary Brown, and I have not even benefits because their citizenship is un- two to four times as many health prob- made mention of his previous service known or difficult to prove. Probably lems. I quote from the survey: to his country as a soldier in Vietnam the worst provision in this agreement Hungry children are more likely to be ill or as the director of the Washington of- is that it makes an inhumane and irra- and absent from school. fice of the Disabled American Vet- tional distinction among disabled peo- The infant mortality rate is closely linked erans. I am sure that Secretary Brown ple based on an arbitrary date on the to inadequate quantity or quality in the diet will continue to make this world more of the infant’s mother. calendar. If you were disabled and re- Iron deficiency anemia in children can lead livable and more enjoyable for veterans ceiving SSI on August 22, 1996, then to adverse health effects such as develop- in whatever challenges he pursues in you retain eligibility. If not, there is mental and behavioral disturbances that can the future, buoyed by his commitment no hope for receiving future benefits. affect children’s ability to learn and to read to ‘‘putting veterans first.’’ Whether The Durbin/Wellstone amendment re- or do mathematics. According to the Centers guaranteeing a home loan for a veteran stores food stamp benefits to legal im- for Disease Control, anemia remains a sig- just returned from a tour overseas, migrant families with children 18 years nificant health problem among low-income children. streamlining health care procedures at old and under at a cost of $750 million Hungry children are less likely to interact a local walk-in clinic, or intervening to over 5 years. Our offset is achieved by with other people or to explore or learn from prevent the eviction of elderly VA placing limits on the amount of Fed- their surroundings. This interferes with nursing home residents, Jesse Brown eral money that States can use to off- their ability to learn from a very early age.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00112 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6781 According to the Tufts University Center fatal blow to the Brady law itself. children there. Lutheran Social Serv- on Hunger, Poverty and Nutrition Policy, Since its enactment, Brady background ices of Grand Forks held a festival on evidence from recent research about child checks have stopped over 186,000 per- Saturday, June 14, 1997, at which Gar- nutrition shows that, in addition to having a sons from obtaining guns. And these rett gave away most of the toys to the detrimental effect on the cognitive develop- ment of children, undernutrition results in Brady checks will continue for two rea- 1,200 children who attended. The fol- lost knowledge, brainpower, and produc- sons. First, virtually all of the police lowing day, Garrett and his family tivity. officers we have spoken to say they gave the rest of the toys away as they Hunger and insecurity about whether a will continue to do the Brady check visited the homes of families who had family will be able to obtain enough food to voluntarily—even if they are not re- lost almost everything they owned. avoid hunger, also have an emotional impact quired to do so. The reason why is sim- Garrett has received praise from on children and their parents. Anxiety, nega- ple: they know these checks save lives. many people since he began his cam- tive feelings about self-worth, and hostility Second, the provision struck down by toward the outside world can result from paign to brighten the spirits of the chronic hunger and food insecurity. the Court only relates to the so-called children of Grand Forks, especially interim Brady law. By the end of next The food stamp is designed to reach from his classmates and from the peo- year, Brady requires that a permanent ple who benefited from his endeavors. those families most in need and there instant check system be implemented. is plenty of evidence that the children The Midland Daily News quoted his And that system, operated by Federal friend, 7-year-old Anna Brown, who most at risk of hunger are in poor or officials, will be immune from con- low-income families. A 1996-study re- said, ‘‘I think it was generous of him stitutional challenge. because most kids don’t start a cam- ported about 6.1 million children under Still, the Supreme Court’s misguided 6 were living in poverty in 1994. An ad- paign just because they see something decision opens up the possibility that, on the news.’’ Grand Forks resident ditional 4.8 million young children before the instant check system be- lived near the poverty line, according Judy Holweger, whose son, Joel, re- comes fully operational, a handful of ceived a bicycle at the festival, said, to Columbia University’s National Cen- rogue police officers will refuse to do ter for Children in Poverty. Sixty-two ‘‘It really lifts these kids’ spirits. background checks. As a result of such They’ve lost a lot.’’ Garrett’s school- percent of poor children lived with at inaction, at least a few felons will com- least one parent or relative who mate, Claire Liang, may have put it mit violent crimes with guns they best when she said, ‘‘Not everyone has worked. Fewer than one-third of the never should have been able to obtain. children’s families relied exclusively a big heart like Garrett.’’ For this reason, we are working with We can all take inspiration from Gar- on welfare. The poverty rate grew fast- the President to draft legislation that est among Hispanic children, rising 43 rett Russell’s example of generosity will ensure 100 percent Brady compli- and selflessness. I know my colleagues percent since 1979, compared with a 38- ance—for example, by allowing gun percent rise among white children and join me in commending Garrett for his dealers to obtain background checks outstanding accomplishments, and in 19 percent among black children. from any police chief in their State, Last year’s reform banned legal im- wishing the people of Grand Forks, as not just the chief in the jurisdiction well as all those affected by the flood- migrant families with dependent chil- where the buyer resides. Because the dren from food stamp benefits. This ing this spring, a speedy and complete vast majority of police will continue to recovery.∑ amendment is about restoring critical conduct Brady checks voluntarily, this food assistance to those children. We approach will clearly preserve our no f cannot say we are for children and then check, no sale policy. turn our backs on legal immigrant Mr. President, today’s Supreme children. This amendment is reason- Court ruling, while unfortunate, does KIRSTEN FROHNMAYER able. It’s paid for and it makes immi- not take away from how effective the ∑ Mr. SMITH of Oregon. Mr. President, nent sense.∑ Brady law has been or will be. But it is I rise today to pay tribute to the re- f nevertheless a bad decision that will markable life of Kirsten Frohnmayer. DECISION STRIKING DOWN PART hurt us in our fight against crime. Kirsten, the daughter of University of OF BRADY LAW We’ll introduce bipartisan legislation Oregon president Dave Frohnmayer to fix it, and I hope my colleagues will and his wife Lynn, died last week after ∑ Mr. KOHL. Mr. President, I rise to support our efforts.∑ a courageous battle with Fanconi ane- discuss today’s Brady law decision, in f mia, a rare genetic disease that also which a deeply divided Supreme Court claimed the life of her sister, Katie. put judicial activism over public safe- GARRETT RUSSELL Kirsten lived much of her 24 years on ty. At a time when the United States ∑ Mr. LEVIN. Mr. President, I rise Earth with the knowledge that she was leads the world in gun carnage, surely today to recognize the achievements of battling a vicious disease. Yet she the Federal Government is entitled to a remarkable young man from the city never gave up, and she never allowed enlist the aid of States to keep guns of Midland, MI. Garrett Russell, an 8- herself to wallow in despair. Rather, as out of the hands of felons, illegal immi- year-old second grade student at her family and friends have testified, grants, and the criminally insane. Ask- Siebert Elementary School, collected she maintained an optimistic spirit ing local police to conduct background more than 100 bicycles and $25,000 that inspired countless men, women, checks—and nothing more—hardly worth of toys to give to victims of the and children. Kirsten also willingly amounts to a Federal power grab, as flooding in Grand Forks, ND. the majority has claimed. Instead, the When Garrett saw footage of the volunteered to undergo experimental majority’s opinion should make us fear flooding he was immediately moved medical procedures, in hopes that oth- what the Supreme Court could do next. into action. He asked his classmates to ers with the same disease might benefit Will the Court prohibit Congress help him provide toys to the thousands from what doctors learned through the from requiring States to report missing of the children in Grand Forks who procedure. children? Will it bar Congress from re- were forced to leave their belongings Mr. President, the Eugene Register quiring states to get lead out of school behind as they fled from their homes. Guard recently published an eloquent drinking water? Will it stop Congress Word of Garrett’s ‘‘Kids Helping Kids’’ tribute to Kirsten which contains her from requiring States to publicly dis- campaign spread quickly and caught own inspiring words. I ask that this close where hazardous waste is being the imagination of the generous people tribute be printed in the RECORD imme- stored? of the Tri-City area. Donations arrived diately following my remarks. All of these requirements are now daily, reaching a total of more than Mr. President, let me conclude by current law, and all of them are now in 3,000 toys and 100 bicycles. simply saying that the entire State of peril. Garrett, his sister Elise, and his par- Oregon joins with me in extending our We will have to consider these trou- ents, Dean and Kathy Russell, loaded thoughts and prayers to the entire bling issues in the future. But as for the toys into a truck and drove to Frohnmayer family. today, this decision alone is hardly a Grand Forks to distribute them to the The tribute follows:

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00113 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6782 CONGRESSIONAL RECORD — SENATE June 27, 1997 [From the Eugene Register Guard, June 23, real tax relief and adheres to the bal- imperative that we stay the course and 1997] anced budget agreement, which we maintain a balanced budget well after KIRSTEN worked hard to achieve. American fam- 2002. In her graduation speech at South Eugene ilies need this tax relief and they need Now that the Senate has completed High School six years ago this month, our continued commitment to a bal- action on part II of the budget agree- Kirsten Frohnmayer said: ‘‘My family jokes anced budget. ment, I sincerely hope that every effort that by having this serious health problem, I have listened to the concerns of will be made to correct the problems we provide an important community service. many of my colleagues regarding this with S. 947, the spending reconciliation We remind people that things in their own legislation and the benefits for working lives may not be as bad as they seem.’’ legislation. The Medicare provisions That was no joke. Following the joys and families. There is no disputing the fact added by the Senate Finance Com- sorrows of the Frohnmayer family has been that this legislation does benefit upper mittee go well beyond protecting Medi- a community activity here for more than income families, but it also benefits care and will jeopardize access to two decades. Their lives are at least more in- working families and the tax cuts are health care for millions of low income structive than soap operas. Kirsten’s own not at the expense of vital, investment senior citizens. I supported a balanced story, her cheerfully determined battle programs. I have heard a great deal budget agreement that included con- against a mysterious disease with a strange about the inequities in this legislation name and a lethal record, has been particu- straints on spending and tax relief. It larly gripping. and I supported the Daschle substitute is imperative that we enact both parts But not all stories have happy endings. which would have eliminated many of of the bi-partisan balanced budget This one is particularly sad because all of us these inequities. But, I do think it is agreement, and I will be making every were rooting so hard, hoping against hope. unfair to make the criticism without effort to improve S. 947 in conference The community genuinely grieves with the examining the entire balanced budget and I will continue to oppose efforts Frohnmayers, as in some degree does the agreement and the tax relief adopted in that seek to undermine the historic, bi- whole state. 1993 for struggling, working families. ∑ At 24, mentally and spiritually Kirsten had partisan balanced budget agreement. The bottom line is that working fami- done more living than many people twice her f age. She had an immense capacity for life. lies will benefit from estate tax relief, Partly because of her disease, she had a keen capital gains tax reductions, education HAPPY FOURTH OF JULY HOLIDAY appreciation for each day’s possibilities. investment tax credits, a per child tax Her positive outlook calls to mind the credit and expanded IRAs. ∑ Mr. BENNETT. Mr. President, as we obituary editorial famed Kansas editor Wil- Beyond taxes, my colleagues must re- prepare to celebrate America’s na- liam Allen White wrote 76 years ago after his member that the balanced budget tional holiday, I would like to take a own 16-year-old daughter was killed in a agreement was not only about tax re- moment and pay tribute to the found- freak riding accident: ‘‘Her humor was a con- lief, but it was also about helping ers of our country. James Madison, in tinual bubble of joy. . . . No angel was Mary working families by allocating addi- particular, is one of my heroes. I didn’t White, but an easy girl to live with, for she know much about James Madison until never nursed a grouch five minutes in her tional resources for health care, edu- life.’’ cation, environmental protection, and I went to college. I went to the Univer- On the list of personal tragedies to which nutritional assistance. It also pro- sity of Utah and majored in political humankind is vulnerable, the death of a tected Social Security and Medicare science. I became acquainted with child must rank at the top. It does not mat- for our Nation’s senior citizens. Before James Madison under the direction of ter whether the child is struck by a limb weighing any inequities, let’s make G. Homer Durham, who was chairman while riding her horse or is worn down over sure we examine the complete picture. of the political science department at many years and finally defeated by a vicious the University of Utah. He had a very disease; the loss is tremendously hard to The balanced budget agreement, bear. which this body adopted on June 5, radical notion about education. He said Hearts go out to David and Lynn 1997, calls for a significant investment the most important course in the polit- Frohnmayer and to Kirsten’s three remain- in education. The agreement assumes ical science department was political ing siblings. But we know, too, that they will additional Federal funding for impor- science 1. And he said, ‘‘Since I am the manage, because they are blessed with intel- tant programs aimed at improving ac- department head it follows that I ligence and strength of spirit—and because cess to quality education for our chil- should teach the department’s most they understand the wisdom of what Kirsten dren. I can assure my colleagues that important course.’’ So as an 18-year-old told her classmates at the close of her re- freshman I sat at the feet of Homer marks in 1991: working families will benefit from im- ‘‘A final thought I’d like to share with you proved educational opportunities for Durham and learned about the Con- tonight is my belief that sometimes we their children. Quality education is one stitution and James Madison. I read should live for the day. Too often life con- of the major priorities for many of the the Federalist Papers and began a life- sists of anticipation of the future or regrets constituents that I talk to in Wash- long love affair with political theory about the past. But we can’t change the past, ington State. And again, there are edu- and particularly the political theory and we don’t know what the future will hold. cation tax incentives which will help that undergirds America starting with So, at least some of the time, we should con- middle class working families who are Thomas Jefferson, James Madison, and centrate on the present. Whatever path the Constitutional Convention. you’ve chosen, whether you’re talking about facing escalating tuition and higher college, a job, volunteer work, or family, education costs. The Hope tax credits As we approach the Fourth of July you’re talking about life and life must be and the permanent extension of section holiday, I am reminded of another im- fun. Find the fun in life, for as Ferris Bueller 127 employer-provided educational as- portant item which we all cherish: the said on his day off, ‘life moves pretty fast, sistance tax exemption are the kind of American flag. The flag of the United and if you don’t stop and look around once in tax relief that my constituents have States is a unique symbol of national a while, you are going to miss it.’ endorsed. unity and represents the values of lib- ‘‘So . . . I hope that you will remember to There is no doubt that this legisla- erty, justice, and equality that make appreciate and protect what you have, be op- timistic and constructive in the face of ad- tion can and should be perfected. We this Nation an example unmatched versity, and stop to smell the roses. Good can work to target more relief to the throughout the world. The American night and good luck.’’∑ middle class and I will be seeking these flag is recognized around the world as f changes in conference. I am also hope- an icon of freedom, representing all ful we guarantee that these tax cuts do that we hold dear as citizens of the TAX RELIEF FOR WORKING not result in an explosion in the def- United States. This preeminent symbol FAMILIES icit. I will not sit by and watch our def- of our Nation has flown in every con- ∑ Mrs. MURRAY. Mr. President, today icit run out of control. When I first flict where American blood has been the Senate completed action on S. 949, came to the Senate in 1993, the deficit threatened and shed, and will always the Revenue Reconciliation Act of 1997, was close to $300 billion annually. For deserve our unbending respect and pro- legislation implementing the tax relief 1997, the Congressional Budget Office tection. provisions from the historic bipartisan has estimated that our deficit could be I rise today to support a bill which balanced budget agreement. I support as low as $70 billion. This was not done protects these two sacred items: the this legislation because it does provide without some pain and sacrifice. It is Constitution and the American flag.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00114 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6783 Many of my Republican colleagues ad- conduit for Chinese exports around the mune, and they may well end up sacri- vocate passing a constitutional amend- world. ficing that fabled golden goose. ment to prohibit flag desecration. I ad- To a large extent the Chinese leader- We may not know the answer to that mire and agree with their intent to ship has staked its legitimacy and its question for several years. As I said show proper respect to our flag, but I future on the ability to bring growth to earlier, the eyes of the world will be on disagree with their belief that a new China’s economy and an improving Hong Kong next week. But, those eyes constitutional amendment banning standard of living to its people. Over will not be taken off Hong Kong on flag burning is the best way to protect the next 5 years China will have to find July 2. You can be sure the world will the flag and punish flag burners. To jobs for an estimated 216 million new continue to watch China’s stewardship this end I, along with Senator MCCON- or displaced workers. Reason would of Hong Kong with intense interest for NELL, introduce legislation which will argue that China simply cannot afford many years. successfully and legally prevent the to substantially tamper with the eco- And, we shouldn’t just watch. The desecration of our national symbol. nomic growth engine that is Hong United States should do everything it Our bill provides for the imprison- Kong. can to support the people of Hong ment and fining of those who damage In addition to the negative economic Kong. The United States should en- an American flag intending to incite a consequences of mishandling the Hong courage China to see and understand breach of the peace. It also punishes Kong reversion, China has other incen- that its own interests are best served anyone who steals a flag belonging to tives to try hard to make things work. by maintaining true autonomy for the Federal Government or a flag dis- China has advertised the Hong Kong Hong Kong. Anything less would be a played on Federal property. In a review one country-two systems principle as a failure.∑ of our bill, senior constitutional legal model for any potential future discus- f experts at the U.S. Library of Congress sions on reunification of Taiwan with stated that if enacted, the bill would the mainland. While it’s still unclear WILL ISEA PART WAYS WITH THE withstand Supreme Court constitu- whether or not this is even a feasible NEA? tional scrutiny. I agree with this anal- proposition, you can be sure if things Mr. GRASSLEY. Mr. President, I ysis and believe it is possible to punish do not go well in Hong Kong, any possi- know that all of us agree there is no the despicable behavior of flag desecra- bility of talks with Taiwan on reunifi- greater national treasure this Nation tion, while still preserving the sta- cation will continue to remain remote has than our children. Nurturing and bility of a document that has served us for the foreseeable future. Finally, the encouraging them to live up to their well for over 200 years. success or failure of the Hong Kong potential is one of the most important With these comments, I wish my col- transition will have a substantial im- things we can do. That is why our edu- leagues a happy Fourth of July holi- pact on United States-Chinese bilateral cational system must be the best it can day. May we always remember the lib- relations, as well as on the worldwide be and our Nation’s educators must be erties and blessings which are ours due perception of China. the best they can be. But there is to the sacrifice and inspiration of our Having outlined the reasons for my something that I believe all the mem- American patriots.∑ optimism, I must now explain why I bers of congress need to be aware of be- f temper that optimism with a healthy cause it may have a profound and last- dose of caution. I am not sure, Mr. ing effect on educators throughout the HONG KONG REVERSION President, that the leadership in Bei- country. I am referring to the ongoing ∑ Mr. GLENN. Mr. President, next jing understands what it takes to nur- merger talks between the National week the eyes of the world will be fo- ture the robust and thriving socio- Education Association and the Amer- cused on Hong Kong when the British economic system of Hong Kong, par- ican Federation of Teachers. dependent territory reverts to Chinese ticularly the relationship between the This matter is of prime importance control. The end result of a negotiated political and economic spheres. I am to NEA members across the United agreement between the United King- not sure that the Chinese leadership States and I know it is of tremendous dom and China, the reversion itself is will necessarily favor their economic importance to the Iowa State Edu- widely accepted and not a matter of interests over political or perceived se- cation Association. It is disturbing controversy. Nevertheless, how China curity interests, if the two sets of in- that many members of the NEA are not will handle the dynamic and thriving terests collide. aware of this because this is not just territory of Hong Kong in the near and The record of the period of prepara- joining of two teachers’ organizations. longer term future is a matter of great tion for reversion is mixed. Hong Kong Given the AFT’s affiliation with the interest, and of considerable difference continues to thrive economically and AFL–CIO and the apparent willingness of opinion. business confidence remains high. of the NEA to accede to the demands of I count myself among those who are China has agreed to Hong Kong’s con- the AFT. Should the merger go cautiously, I underscore cautiously, op- tinued membership in international in- through, this new organization would timistic about the future of Hong stitutions as a separate entity and to be a member of the AFL–CIO, which Kong. The principle reason for my cau- the continuation of Hong Kong’s expe- could have tremendous policy implica- tious optimism is a belief that, in this rienced and professional civil service. tions for the largest organization rep- area, China will be guided primarily by On the other hand, China’s decision to resenting educators. For that reason, I consideration of its economic self in- replace the elected legislature, Legco, urge other members of congress to read terest. Many have likened Hong Kong with an appointed provisional legisla- the article I am submitting for consid- to the goose that laid the golden egg. ture and certain statements by Chinese eration. That characterization is well deserved. officials concerning definition of free- The article follows: Simply put, China has an enormous dom of the press have caused consider- WILL ISEA PART WAYS WITH THE NEA? stake in continued economic growth able unease among Hong Kong’s demo- (By James Flansburg) and prosperity in Hong Kong. Over the cratic political organizations, in the The Iowa State Education Association is last several years, economic growth in United States and in Britain. thinking about dropping its affiliation with Hong Kong has averaged 5 to 6 percent The great unanswered question is the National Education Association. a year; Hong Kong is now the eighth whether the Chinese leadership will be At ISEA’s annual meeting in Ames in early largest trader in the world; and its willing and able to effectively imple- April, a number of members said they fear GDP of almost $24,000 per capita ex- ment the one country-two systems that the NEA is moving toward a militant ceeds that of several western industri- model, preserving Hong Kong’s eco- unionism that could severely harm profes- alized nations. Hong Kong is an inter- nomic prosperity as well as the polit- sionalism in teaching. national business and financial center. ical freedoms the people began to enjoy The course being followed by the NEA would take away the independence of local The Hong Kong and Chinese economies under British rule. If alternatively, and State affiliates, while, at the same time, are already intertwined and co- they begin to roll back the political putting them deeply into partisan politics dependent. Hong Kong is a source of freedoms and individual liberties, in and formal efforts to control local school substantial investment in China and a my view, the economy will not be im- boards and policies.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00115 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6784 CONGRESSIONAL RECORD — SENATE June 27, 1997 ISEA represents about 35,000 Iowa teach- So the ISEA has no alternative but to While I supported that particular ers, and a vast majority of them have mis- think about and start making contingency part of the bill, I must share my deep givings over terms of a proposed merger be- plans to cancel its NEA affiliation. concern over other provisions that I tween NEA and the late Albert Shanker’s The details of that dominated a number of feel go too far. I find particularly unac- American Federation of Teachers, AFL–CIO. private discussions at the ISEA’s delegate Critics of the proposed merger contend assembly at the Hilton Coliseum at Ames in ceptable the provision which will raise that, more than an endeavor to improve the April. the age at which individuals are eligi- lot of teachers, it’s a surreptitious effort In most places, the merger seems a well- ble to receive Medicare from 65 to 67. aimed at strengthening the labor movement kept secret. The likelihood of these seniors finding and rebuilding the Democratic Party. The idea is to keep the implications of the affordable private insurance is slim— NEA has a membership of about 2.2 million merger from the teachers in the states where many will be forced to forego coverage. and AFT about 800,000, but the merger terms local organizations and their leaders are be- At a time when the number of unin- being pushed by NEA’s national leaders en- holden to NEA and AFT leaders. sured individuals in this country is dorse AFT’s way of doing business instead of ISEA has kept Iowa teachers up to date on the more moderate approach of the tradi- the merger talks, and has advocated that growing and employer-sponsored insur- tional NEA. other state organizations mirror the effort. ance is declining, I find it astonishing An indication of that came in a February ‘‘The more information that comes out on that some would choose to exacerbate speech by NEA President Robert Chase at a the proposed merger, the more the member- the current problem further with this National Press Club luncheon. ship seems disinclined to do it,’’ said one per- measure. ‘‘I came here this afternoon to introduce son who has been following the merger talks. I also opposed a provision that will the new National Education Association— It’s probably not hard to find people who require the poorest and sickest seniors the new union we are striving to create in would dismiss all this as intramural arm to pay up to $700 a year in home health public education,’’ he said. wrestling between two unions. Chase called for ‘‘building an entirely new That may well be. For the public, it may costs. One-quarter of the home health union-management relationship in public not make any difference which view prevails. users are over 85; 43 percent have in- education.’’ I’ve fought with ISEA over the years, and comes below $10,000. Forcing the most No one knows more than teachers what have been soundly denounced by dozens of vulnerable Medicare beneficiaries to schools need, he said: ‘‘higher academic teachers for dismissing it as little more than bear this significant financial burden standards; stricter discipline; an end to so- a trade union. under the guise of addressing the long- cial promotions; less bureaucracy; more re- Whatever. If I were an Iowa teacher, I’d be term financial challenges of this pro- sources where they count, in the classroom; against the merger because it surely would schools that are richly connected to parents gram is indefensible. take away all hopes of the organization ever Because of these concerns, I was un- and to the communities that surround becoming a professional association that them.’’ cared about anything except wages and able to support this bill. It is my sin- ‘‘To this end,’’ he continued ‘‘we aim not hours. cere hope, however, that these issues so much to redirect the NEA, as to reinvent On a practical basis, moreover, a merger will be resolved in conference and that it. would take away the implicit threat that ultimately we will pass into law a ‘‘The new direction . . . is about action. It many teachers’ groups now are able to use. measure that truly will protect our Na- is about changing how each of our local af- Deal with the moderate ISEA or its equiva- filiates does business, changing how they tion’s seniors and the vital safety net lent, they lead the school boards and others that Medicare provides to them.∑ bargain, changing what issues they put on to believe, or you may end up with the blood- the table, changing the ways they help their letting unionism of the AFT. f members to become the best teachers they On the other hand, I’d choose the AFT’s can be.’’ AN INDEPENDENCE DAY TRIBUTE militance before I’d relegate Iowa teachers ∑ The union’s goal? ‘‘An agreement that al- to the kind of second-class citizenship—lots Mr. SESSIONS. Mr. President, I rise lows teachers, in effect, to co-manage the of respect and no money and no say about today so that this great body may mo- school district.’’ their working conditions—they suffered mentarily reflect upon the importance Terms of the NEA–AFT merger would under before they acquired the ability to col- of our upcoming Fourth of July cele- make the new organization a member of the lectively bargain with the school districts AFL–CIO, with the power to override the bration. about 25 years ago.∑ concerns of local and State affiliates. Over 200 years ago, this country Such things as student welfare and profes- f began a historic experiment. Our sional teachers’ concerns and local school Founding Fathers were told it would conditions could be lost in the dust of battle THE BALANCED BUDGET ACT OF fail. Yet, after many trials and tribu- over union politics, local and national, and 1997 AND MEDICARE lations, the United States of America wages, hours and working conditions. ∑ Mr. DODD. Mr. President, with stands, it can fairly be argued, as the Local concerns would come behind the Wednesday’s passage of the Balanced greatest Nation in the history of the union’s national priorities. A community Budget Act of 1997, the Senate with might find itself held hostage by national world. Independence Day is our annual union goals that have nothing to do with the some trepidation, has taken a number celebration of this achievement. community itself. of courageous steps toward ensuring Yet, we must have the courage and The new national organization would have long-term solvency of the Medicare honesty to admit that we are not all the power to take control of local and state Program. that we hope to be. We have much organizations for refusing to follow the na- Specifically, I believe that the adop- work to do, and we have many dreams tional organization’s policy and political tion of means testing of Medicare pre- to make a reality. This is our Amer- lines. miums moves us in the right direction ican journey. And let us not forget the In effect, it would have the power to tram- ple the professional and ethical consider- toward the long-term solvency of this debt we owe to those who sacrificed to ations that have led the huge majority of critically important program. It is im- make this journey possible, the men teachers in Iowa and the nation to join a portant to remember that this provi- and women who have stood sentry as professional association such as ISEA rather sion will affect only those seniors with our country marched to greatness. than a local of the AFT. individual annual incomes over $50,000 Today, they protect the finest democ- The Iowa and New Jersey state affiliates of and married seniors with incomes racy the world has ever known and NEA have been the most vocal critics of the above $75,000, on a sliding-scale basis. keep watch around the globe. They are merger terms, which seem basically dictated While some tried to portray this provi- by the AFT’s power sources in New York and a beacon of hope, freedom, and justice other big urban centers. sion as a retreat from protecting our to all the world’s nations. Today, we Although a substantial majority of teach- Nation’s seniors, I view it as a step to- trumpet the personal courage of our ers across the country may oppose merger ward ensuring that our seniors will be forefathers and the continuing sac- terms, top NEA officials and staffers have well served for a long time to come. rifices of the members of our armed the power to bring it off. The adoption of this provision simply services. That’s because a number of state organiza- says that those Americans who can af- Who are these veterans and service tions are financially dependent on NEA and ford to contribute a little more for members? We all know them. He was have little choice except to do its bidding. ISEA, in contrast, is not financially de- their health care should do so. Such a your friend in school. She was the kid pendent on NEA. But it might have to drop measure is surely needed if we are to next door. You go to church with them, its affiliation with NEA to avoid being taken sustain the safety net that Medicare and you pass them in the grocery store. over by the newly merged organization. provides to millions of senior citizens. They are Americans just like you and

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00116 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6785 me, but when our Nation called, they chief executive officer of the American CHANGES TO THE BUDGET RESO- willingly put themselves in harm’s Medical Association from 1990 until LUTION DISCRETIONARY SPEND- way. We asked them to serve their 1996. ING LIMITS, APPROPRIATE country and they obliged us. They have BUDGETARY AGGREGATES, AND Dr. Todd was a dynamic leader and made this celebration possible. APPROPRIATIONS COMMITTEE Many of these regular Americans advocate for physicians and patients ALLOCATION throughout the country. His advice and found themselves in extraordinary cir- ∑ example were invaluable to lawmakers Mr. DOMENICI. Mr. President, sec- cumstances. They were only expected tion 202 of House Concurrent Resolu- in Washington and to his peers to do their duty, but they found the tion 84, the concurrent resolution on strength to do more. It is for these un- throughout the Nation. the budget for fiscal year 1998, requires common displays of valor that we have He steered the AMA through a time the chairman of the Senate Budget reserved the Congressional Medal of of stress and change in American medi- Committee to adjust the discretionary Honor. It is the highest honor which we cine, and made great strides in pre- spending limits, the appropriate budg- can bestow on a member of the Armed paring the AMA to lead the medical etary aggregates and the Appropria- Forces, and it is but a small dem- profession into the next century. But, tions Committee’s allocation contained onstration of our gratitude for their in the most recently adopted budget acting above and beyond the call of more than anything, Dr. Todd loved his profession. He called medicine ‘‘the resolution—in this case, House Concur- duty. rent Resolution 84—to reflect addi- most demanding, regarding, and enjoy- The men who have earned this award tional new budget authority for an in- do not ask for recognition or acclaim. able profession there could possibly crease in the maximum amount avail- They believe they were only doing be.’’ able to the Secretary of the Treasury their jobs. They consider themselves One of Dr. Todd’s many accomplish- pursuant to section 17 of the Bretton ordinary soldiers, sailors, and airmen. ments included guiding the American Woods Agreement Act, as amended But, we call them heroes. I dedicate from time to time—New Arrangements this day to them, and I humbly thank Medical Association through the im- plementation of a dramatic revision in to Borrow. them for their special sacrifice to guar- Section 202 of House Concurrent Res- antee the privileges we too often take the Medicare payment system. His ef- forts changed the old ‘‘reasonable and olution 84, the concurrent resolution for granted. on the budget for fiscal year 1998, re- I am proud to say that Alabama is customary fee’’ basis to a system that quires the chairman of the Senate home to 27 of these great Americans. takes into account the resources that Budget Committee to adjust the discre- Seven of these Alabama Congressional doctors bring to their profession, in- tionary spending limits, the appro- Medal of Honor winners are still alive cluding education, and training. priate budgetary aggregates and the today. Henry Eugene ‘‘Red’’ Erwin, Dr. Todd worked aggressively with a Appropriations Committee’s allocation Robert Lewis Howard, William Robert contained in the most recently adopted Lawley, Jr., Ola Lee Mize, Michael J. coalition of companies providing pro- budget resolution—in this case, House Novolsel, James Michael Sprayberry, fessional liability insurance for physi- Concurrent Resolution 84—to reflect and Harold Edward ‘‘Speedy’’ Wilson cians, on ways to curb the escalating additional new budget authority and all have different heroic tales but com- cost of malpractice insurance. He was outlays for an appropriation for arrear- mon heroic traits. They steeled them- deeply involved in drafting the guide- ages for international organizations, selves with tremendous gallantry and lines for the practice of various med- international peacekeeping, and multi- fought without regard for their safety. ical specialties to reduce the number of lateral development banks. From where did this courage come? For errors committed by doctors. I hereby submit revisions to the non- some, it was their loyalty to a fellow As executive vice president, Dr. Todd defense discretionary spending limits serviceman. For others, it was the for fiscal year 1998 contained in section strength of their convictions. And most also oversaw preparations for the es- tablishment of the National Patient 201 of House Concurrent Resolution 84 certainly, it was done with God’s help. in the following amounts: Let us today take a moment to con- Safety Foundation. Its chief mission is gratulate each veteran we know for a to protect patients by identifying and Budget authority: correcting errors in medical systems, 1998 job well done and come before them Current nondefense dis- with a spirit of the humblest gratitude notably in the hospital system. cretionary spending as we enjoy the bounty of this great, The physicians and patients of Amer- limit ...... $257,857,000,000 independent Nation. For we are the Na- ica alike have lost a friend and cham- Adjustment ...... 3,741,000,000 Revised nondefense dis- tion that people in every corner of the pion. We will miss Dr. Todd’s spirit, in- world wish to call their own. We are a cretionary spending tegrity, and love for medicine. people who will not stop short of great- limit ...... 261,598,000,000 Born in 1931, Dr. Todd graduated cum Outlays: ness, a nation who earns her prosperity Current nondefense dis- with the labor of her citizens, and the laude from Harvard College and Har- cretionary spending land of opportunity whose hand ex- vard Medical School. He interned and limit ...... 286,445,000,000 tends for both rich and poor alike. We served his residency in surgery at Co- Adjustment ...... 13,000,000 need not only be proud of our veterans lumbia Presbyterian Medical Center in Revised nondefense dis- but also of every citizen who holds the New York City, becoming chief resi- cretionary spending limit ...... 286,458,000,000 same ideals and dreams for America. dent in 1963. He was a Diplomate of the I hereby submit revisions to the She is great because of the business- American Board of Surgery and a Fel- budget authority, outlays, and deficit men who fuel her economy, the reli- low of the American College of Sur- gious leaders who guide her morals, the aggregates for fiscal year 1998 con- geons. He was in private practice many farmers who provide her bountiful sus- tained in section 101 of House Concur- years in New Jersey. tenance, and the many other Ameri- rent Resolution 84 in the following cans who are free to fulfill their Dr. Todd, who retired in 1996 after 6 amounts: dreams each day. yeas as executive vice-president, was Budget authority: God bless those who have stood and first elected a member of the board of 1998 fought on her behalf and, most of all, trustees in 1980. He became senior dep- Current aggregate ...... $1,386,700,000,000 God bless America. Adjustment ...... 3,741,000,000 uty executive vice president in 1985, Revised aggregate ...... 1,390,441,000,000 f and was named executive vice presi- Outlays: TRIBUTE TO JAMES S. TODD, M.D. dent in 1990. Current aggregate ...... 1,372,000,000,000 Adjustment ...... 13,000,000 ∑ Mr. FRIST. Mr. President, today, I Dr. Todd is survived by his wife, Mar- Revised aggregate ...... 1,372,013,000,000 rise to pay tribute to Dr. James S. jorie Patricia Thorn Todd, and his son, Deficit: Todd, executive vice president and Kendall Scott Todd.∑ Current aggregate ...... 173,000,000,000

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00117 Fmt 0637 Sfmt 0655 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6786 CONGRESSIONAL RECORD — SENATE June 27, 1997 1998 In order to expedite action on the sume consideration of H.R. 2014, the Adjustment ...... 13,000,000 bill, I want any amendments that are Tax Fairness Act and that the Senate Revised aggregate ...... 173,013,000,000 going to be offered to be delivered to insist on its amendment, request a con- I hereby submit revisions to the 1998 the committee. We would like for them ference with the House on the dis- Senate Appropriations Committee to be given to the Armed Services Com- agreeing votes, and the Chair be au- budget authority and outlay alloca- mittee as soon as possible next week. thorized to appoint conferees on the tions, pursuant to section 302 of the The Armed Services staff will work part of the Senate. Congressional Budget Act, in the fol- through the recess to clear the amend- The PRESIDING OFFICER. Without lowing amounts: ments of any Senators that do have objection, it is so ordered. Budget authority: amendments they want to offer. So we Mr. ROTH. Mr. President, I did not 1998 urge Senators to make us aware of the hear that. Are we talking about the ap- Current Appropriations amendments they have. pointment of conferees? Committee alloca- Mr. LOTT. We are, Mr. Chairman. tion ...... $788,769,000,000 f Mr. ROTH. Mr. President, reserving Adjustment ...... 3,741,000,000 NATIONAL DEFENSE AUTHORIZA- the right to object, I suggest that I Revised Appropriations TION ACT FOR FISCAL YEAR 1998 would like to have an opportunity to Committee alloca- Mr. LOTT. Mr. President, I ask unan- confer with the leader on this matter. tion ...... 792,510,000,000 Mr. LOTT. Mr. President, before I re- Outlays: imous consent that the Senate turn to sume my unanimous-consent request, I Current Appropriations S. 936, the Department of Defense au- Committee alloca- suggest the absence of a quorum. thorization bill. The PRESIDING OFFICER. The tion ...... 824,665,000,000 The PRESIDING OFFICER. Without Adjustment ...... 13,000,000 clerk will call the roll. objection, it is so ordered. The assistant legislative clerk pro- Revised Appropriations The clerk will report. Committee alloca- ceeded to call the roll. tion ...... 824,678,000,000∑ The assistant legislative clerk read Mr. LOTT. Mr. President, I ask unan- as follows: f imous consent that the order for the A bill (S. 936) to authorize appropriations quorum call be rescinded. ORDER OF PROCEDURE for fiscal year 1998 for military activities of The PRESIDING OFFICER. Without Mr. BAUCUS. Mr. President, I sug- the Department of Defense, for military con- objection, it is so ordered. struction, and for defense activities of the gest the absence of a quorum. Mr. LOTT. Mr. President, I believe Department of Energy, to prescribe per- we had gotten unanimous consent that The PRESIDING OFFICER. The sonnel strengths for such fiscal year for the clerk will call the roll. Armed Forces, and for other purposes. the Senate insist on its amendment and request a conference with regard to The legislative clerk proceeded to The Senate proceeded to consider the H.R. 2014, and to authorize appoint- call the roll. bill. Mr. LOTT. Mr. President, I ask unan- ment of conferees on the part of the f imous consent that the order for the Senate. Is that correct? quorum call be rescinded. CLOTURE MOTION The PRESIDING OFFICER. The Sen- The PRESIDING OFFICER. Without ator is correct. Mr. LOTT. Mr. President, I send a There being no objection, the Chair objection, it is so ordered. cloture motion to the desk. appointed, from the Committee on Fi- The PRESIDING OFFICER. The clo- f nance, Mr. ROTH, Mr. LOTT, and Mr. ture motion having been presented CONGRATULATING SENATOR ENZI MOYNIHAN; from the Committee on under rule XXII, the Chair, directs the Budget, Mr. DOMENICI, Mr. GRASSLEY, Mr. LOTT. Mr. President, I want to clerk to read the motion. Mr. NICKLES, Mr. LAUTENBERG, and Mr. observe what an excellent job the Pre- The assistant legislative clerk read CONRAD, conferees on the part of the siding Officer has done over the last 2 as follows: Senate. days. He was there until the wee hours, CLOTURE MOTION f or late hours last night, and has been We the undersigned Senators in accordance in the chair most of the day. The Sen- with the provisions of Rule XXII of the UNANIMOUS-CONSENT ator from Wyoming has done an excel- Standing Rules of the Senate, do hereby AGREEMENT—H.R. 2015 lent job. We appreciate his work. move to bring to a close debate on calendar Mr. LOTT. I now ask unanimous con- No. 88, S. 936, the National Defense Author- f ization Act for fiscal year 1998: Trent Lott, sent the Senate resume consideration ORDER OF PROCEDURE Strom Thurmond, Jesse Helms, Pete Domen- of H.R. 2015, the Balanced Budget Act, and the Senate insist on its amend- Mr. LOTT. Mr. President, I announce ici, R. F. Bennett, Dan Coats, John Warner, Phil Gramm, Thad Cochran, Larry E. Craig, ment and request a conference with the when the Senate returns following the Ted Stevens, Tim Hutchinson, Jon Kyl, Rick House on disagreeing votes, and the Independence Day recess, the Senate Santorum, Mike DeWine, and Spencer Abra- Chair be authorized to appoint con- will return to consideration of the De- ham. ferees on the part of the Senate. partment of Defense authorization bill. Mr. LOTT. Mr. President, we will go The PRESIDING OFFICER. Without I want all Senators to know in advance to the DOD authorization bill on Mon- objection, it is so ordered. it is my intent to complete action on day, July 7. Senators who have amend- The Chair appointed, from the Com- that bill—the DOD authorization bill— ments are urged to offer them during mittee on the Budget, Mr. DOMENICI, that week, and I intend to stay with it the day on Monday. However, no votes Mr. GRASSLEY, Mr. NICKLES, Mr. even though it means votes on Friday, will occur during Monday’s session of GRAMM, Mr. LAUTENBERG, Mr. CONRAD, July 11, and even on Saturday, if nec- the Senate. and Mrs. BOXER; from the Committee essary. Mr. President, I ask unanimous con- on Agriculture, Nutrition, and For- We have a lot of work to do. Earlier sent that the cloture vote occur at 2:15 estry, Mr. LUGAR, Mr. HELMS, and Mr. this year, because we were in a new p.m. on Tuesday, July 8, and the man- HARKIN; from the Committee on Bank- Congress, some of the committees were datory quorum of rule XXII be waived. ing, Housing, and Urban Affairs, Mr. not able to get their bills out, but we The PRESIDING OFFICER. Without D’AMATO, Mr. SHELBY, and Mr. SAR- now have a lot of bills that are coming objection, it is so ordered. BANES; from the Committee on Com- to the floor. The appropriations bills Mr. LOTT. Under rule XXII, all first- merce, Science, and Transportation, will be coming in rapid order. We have degree amendments must be filed with Mr. MCCAIN, Mr. STEVENS, and Mr. bills such as the FDA reform legisla- the clerk by 1 p.m. on Monday, July 7. HOLLINGS; from the Committee on En- tion, wildlife refuge bill, Amtrak re- All second-degree amendments must be ergy and Natural Resources, Mr. form, a whole number of bills. We are filed just prior to the cloture vote on MURKOSWKI, Mr. CRAIG, and Mr. BUMP- just going to have to work on Fridays, Tuesday. ERS; from the Committee on Finance, and we should begin, certainly, with UNANIMOUS-CONSENT AGREEMENT—H.R. 2014 Mr. ROTH, Mr. LOTT, and Mr. MOY- the Department of Defense authoriza- Mr. LOTT. Mr. President, I ask unan- NIHAN; from the Committee on Govern- tion bill. imous consent that the Senate now re- mental Affairs, Mr. THOMPSON, Ms.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00118 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6787 COLLINS, and Mr. GLENN; from the To be major general The following-named officer for appoint- Committee on Labor and Human Re- Brig. Gen. Phillip R. Anderson, 0000 ment in the U.S. Army to the grade indi- sources, Mr. JEFFORDS, Mr. COATS, and Brig. Gen. Burwell B. Bell III, 0000 cated while assigned to a position of impor- tance and responsibility under title 10, Mr. KENNEDY; and from the Committee Brig. Gen. Bryan D. Brown, 0000 Brig. Gen. Julian H. Burns, Jr., 0000 United States Code, section 601: on Veterans’ Affairs, Mr. SPECTER, Mr. Brig. Gen. Michael T. Byrnes, 0000 To be general THURMOND, and Mr. ROCKEFELLER, con- Brig. Gen. John S. Caldwell, Jr., 0000 Lt. Ben. Eric K. Shinesko, 0000 ferees on the part of the Senate. Brig. Gen. Reginal G. Clemmons, 0000 The following-named officer for appoint- Brig. Gen. George F. Close, Jr., 0000 f ment in the U.S. Army to the grade indi- Brig. Gen. Carl H. Freeman, 0000 cated while assigned to a position of impor- ORDER TO PRINT Brig. Gen. Joseph R. Inge, 0000 tance and responsibility under title 10, Brig. Gen. Philip R. Kensinger, Jr., 0000 Mr. LOTT. Mr. President, I ask unan- United States Code, section 601: Brig. Gen. Donald L. Kerrick, 0000 imous consent the Senate amendment To be lieutenant general to H.R. 2014 be printed as passed. Brig. Gen. Larry J. Lust, 0000 Maj. Gen. Robert S. Coffey, 0000 The PRESIDING OFFICER. Without Brig. Gen. John J. Marcello, 0000 Brig. Gen. Timothy J. Maude, 0000 objection, it is so ordered. The following-named officer for appoint- Brig. Gen. Dan K. McNeill, 0000 ment in the U.S. Army to the grade indi- f Brig. Gen. Paul T. Mikolashek, 0000 cated while assigned to a position of impor- EXECUTIVE SESSION Brig. Gen. Mary E. Morgan, 0000 tance and responsibility under title 10, Brig. Gen. Bruce K. Scott, 0000 United States Code, section 601: Brig. Gen. Jerry L. Sinn, 0000 To be lieutenant general Brig. Gen. James R. Snider, 0000 EXECUTIVE CALENDAR Brig. Gen. Edward Soriano, 0000 Maj. Gen. John W. Hendrix, 0000 Mr. LOTT. Mr. President, I ask unan- Brig. Gen. Julian A. Sullivan, Jr., 0000 IN THE MARINE CORPS imous consent that the Senate imme- Brig. Gen. John D. Thomas, Jr., 0000 The following-named officer for appoint- diately proceed to executive session to Brig. Gen. Howard J. von Kaenel, 0000 ment in the U.S. Marine Corps to the grade Brig. Gen. William S. Wallace, 0000 consider the following nomination on indicated while assigned to a position of im- Brig. Gen. William E. Ward, 0000 portance and responsibility under title 10, the Executive Calendar, Calendar No. Brig. Gen. David S. Weisman, 0000 United States Code, section 601: 122, 132, 138, 140 through 159, and all The following-named officer for appoint- To be lieutenant general nominations placed at the Secretary’s ment in the U.S. Army to the grade indi- Maj. Gen. Frank Libutti, 0000 desk in the Air Force, Army, Coast cated while assigned to a position of impor- The following-named officer for appoint- Guard, Marine Corps, and Navy; I fur- tance and responsibility under title 10, United States Code, section 601: ment in the U.S. Marine Corps to the grade ther ask unanimous consent that the indicated while assigned to a position of im- To be lieutenant general nominations be confirmed, the motion portance and responsibility under title 10, to reconsider be laid on the table, and Maj. Gen. David K. Heebner, 0000 United States Code, section 601: any statements relating to the nomina- The following Army National Guard of the To be lieutenant general United States officers for appointment in the tions appear at this point in the Maj. Gen. John E. Rhodes, 0000 Reserve of the Army to the grade indicated RECORD, and the President be imme- under title 10, United States Code, section IN THE NAVY diately notified of the Senate’s action 12203: The following-named officers for appoint- and the Senate then return to legisla- To be major general ment in the Reserve of the Navy to the grade tive business. Brig. Gen. Darrel P. Baker, 0000 indicated under title 10, United States Code, The PRESIDING OFFICER. Without Brig. Gen. Murrel J. Bowen, Jr., 0000 section 12203: objection, it is so ordered. Brig. Gen. John D. Havens, 0000 To be rear admiral The nominations considered and con- Brig. Gen. Eugene S. Imai, 0000 Rear Adm. (lh) William H. Butler, 0000 firmed en bloc are as follows: Brig. Gen. Thomas D. Kinley, 0000 Rear Adm. (lh) Casey W. Coane, 0000 THE JUDICIARY Brig. Gen. Federico Lopez III, 0000 Rear Adm. (lh) William E. Herron, 0000 Brig. Gen. Joel W. Norman, 0000 Alan S. Gold, of Florida, to be U.S. District Rear Adm. (lh) Stephen T. Keith, 0000 Brig. Gen. John C. Rowland, 0000 Judge for the Southern District of Florida. Rear Adm. (lh) William J. Logan, 0000 To be brigadier general The following-named officer for appoint- DEPARTMENT OF LABOR Col. John C. Atkinson, 0000 ment in the U.S. Navy to the grade indicated Kathryn O’Leary Higgins, of South Da- Col. John A. Bathke, 0000 while assigned to a position of importance kota, to be Deputy Secretary of Labor. Col. William H. Hall, 0000 and responsibility under title 10, United DEPARTMENT OF HEALTH AND HUMAN SERVICES Col. Dennis A. Kamimura, 0000 States Code, section 601: Richard J. Tarplin, of New York, to be an Col. Eugene P. Klynoot, 0000 To be vice admiral Assistant Secretary of Health and Human Col. Dennis D. Krsnak, 0000 Rear Adm. Henry C. Griffin III, 0000 Services. Col. Benny M. Paulino, 0000 Col. James L. Pruitt, 0000 The following-named officers for appoint- IN THE AIR FORCE Col. Edwin H. Roberts, Jr., 0000 ment in the U.S. Navy to the grade indicated The following-named officer for appoint- Col. Charles L. Rosenfeld, 0000 under title 10, United States Code, section ment in the Reserve of the Air Force to the Col. John R. Scales, 0000 624: grade indicated under title 10, United States Col. John A. Tymeson, 0000 To be rear admiral Code, section 12203: Col. Brian D. Winter, 0000 Rear Adm. (lh) Timothy R. Beard, 0000 To be major general The following-named officer for appoint- Rear Adm. (lh) David L. Brewer III, 0000 Brig. Gen. Wallace W. Whaley, 0000 ment in the U.S. Army to the grade indi- Rear Adm. (lh) Stanley W. Bryant, 0000 cated while assigned to a position of impor- Rear Adm. (lh) Toney M. Bucchi, 0000 IN THE ARMY tance and responsibility under title 10, Rear Adm. (lh) William W. Copeland, Jr., 0000 The following U.S. Army Reserve officers United States Code, section 601: Rear Adm. (lh) John W. Craine, Jr., 0000 for promotion in the Reserve of the Army to To be lieutenant general Rear Adm. (lh) Robert E. Frick, 0000 the grades indicated under title 10, United Maj. Gen. Richard A. Chilcoat, 0000 Rear Adm. (lh) Paul G. Gaffney II, 0000 States Code, sections 14101, 14315 and 12203(a): Rear Adm. (lh) Edmund P. Giambastiani, Jr., The following-named officer for appoint- To be brigadier general ment in the U.S. Army to the grade indi- 00008 Col. Herbert L. Altshuler, 0000 cated while assigned to a position of impor- Rear Adm. (lh) John J. Grossenbacher, 0000 The following-named officer for appoint- tance and responsibility under title 10, Rear Adm. (lh) James B. Hinkle, 0000 ment in the U.S. Air Force to the grade indi- United States Code, section 601: Rear Adm. (lh) Gordon S. Holder, 0000 Rear Adm. (lh) Martin J. Mayer, 0000 cated while assigned to a position of impor- To be lieutenant general Rear Adm. (lh) Barbara E. McGann, 0000 tance and responsibility under title 10, Maj. Gen. Thomas N. Burnette, Jr., 0000 United States Code, section 601: Rear Adm. (lh) Charles W. Moore, Jr., 0000 The following-named officer for appoint- Rear Adm. (lh) John B. Nathman, 0000 To be lieutenant general ment in the U.S. Army to the grade indi- Rear Adm. (lh) William R. Schmidt, 0000 Maj. Gen. Henry T. Glisson, 0000 cated while assigned to a position of impor- Rear Adm. (lh) Robert C. Williamson, 0000 The following-named officers for pro- tance and responsibility under title 10, The following-named officer for appoint- motion in the Regular Army of the United United States Code, section 601: ment in the U.S. Navy to the grade indicated States to the grade indicated under title 10, To be lieutenant general under title 10, United States Code, section United States Code, sections 611(a) and 624: Maj. Gen. Paul J. Kern, 0000 624:

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00119 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6788 CONGRESSIONAL RECORD — SENATE June 27, 1997 To be rear admiral (lower half) Marine Corps nomination of John M. this recovery. Making sure that work- Capt. Joseph W. Dyer, Jr., 0000 Metterle, which was received by the Senate ing families benefit from this economic and appeared in the Congressional Record of IN THE ARMY recovery—keeping the American dream June 10, 1997. alive—is the most important thing this The following-named officer for appoint- Marine Corps nomination of John J. Egan, ment in the U.S. Army to the grade indi- which was received by the Senate and ap- Congress can do. And it is the most im- cated while assigned to a position of impor- peared in the Congressional Record of June portant thing the Labor Department tance and responsibility under title 10, 10, 1997. can do. Kitty Higgins has the right United States Code, section 601: Navy nomination of Timothy S. Garrold, qualities and the right background to To be lieutenant general which was received by the Senate and ap- help both institutions live up to that Maj. Gen. David J. Kelley, 0000 peared in the Congressional Record of May responsibility. I wish her the best of 15, 1997. The following-named officer for appoint- luck. KATHRYN O’LEARY HIGGINS ment in the U.S. Army to the grade indi- f cated while assigned to a position of impor- Mr. DASCHLE. Mr. President, I tance and responsibility under title 10, wholeheartedly endorse the confirma- LEGISLATIVE SESSION United States Code, section 601: tion of Kathryn O’Leary Higgins as The PRESIDING OFFICER. Under To be lieutenant general Deputy Secretary of Labor. Kitty Hig- the previous order, the Senate will re- Maj. Gen. Randolph W. House, 0000 gins is the right person with the right sume legislative session. IN THE AIR FORCE, ARMY, COAST GUARD, experience at the right time. As chief f of staff for former Labor Secretary MARINE CORPS, NAVY AMENDING THE FEDERAL PROP- Robert Reich, she showed that she Air Force nomination of Andrew J. ERTY AND ADMINISTRATIVE knows how to pull the levers, she Jorgensen, which was received by the Senate SERVICES ACT OF 1949 and appeared in the Congressional Record of knows how to motivate people, she May 15, 1997. knows how the Labor Department Mr. LOTT. Mr. President, I ask unan- Army nominations beginning John A. works and she knows how to make the imous consent the Senate now proceed Adams, and ending Kenneth M. Younger, Department work for people. to consideration of Calendar No. 102, which nominations were received by the Sen- I’ve known and admired Kitty Hig- H.R. 173. ate and appeared in the Congressional The PRESIDING OFFICER. The Record of January 9, 1997. gins for years. She is the kind of person we need more of in Government. She’s clerk will report. Army nominations beginning Robert T. The assistant legislative clerk read intelligent and efficient and tenacious. Anderson, and ending Robert J. Wygonski, as follows: which nominations were received by the Sen- She’s idealistic and pragmatic. And, if ate and appeared in the Congressional A bill (H.R. 173) to amend the Federal that’s not enough, she’s from South Property and Administrative Services Act of Record of February 5, 1997. Dakota. In fact, she is the highest- Army nominations beginning Charles R. 1949, to authorize donation of surplus Fed- ranking South Dakotan in the adminis- eral law enforcement canines to their han- Bailey, and ending John L. Wydeven, which tration. nominations were received by the Senate and dlers. appeared in the Congressional Record of May Kitty Higgins has spent her entire The PRESIDING OFFICER. Is there 15, 1997. career in public service. For the last 2 objection to the immediate consider- Army nominations beginning Chessley R. years, she has served as Assistant to ation of the bill? Atchison, and *Stephen E. Schless, which the President and Cabinet Secretary in There being no objection, the Senate nominations were received by the Senate and the White House. Before that, she was proceeded to consider the bill. appeared in the Congressional Record of May Bob Reich’s chief of staff at Labor. She Mr. LOTT. I ask unanimous consent 15, 1997. is a former administrative assistant to the bill be considered read a third time Army nominations beginning Robert R. Congressman SANDER LEVIN and a Bottin, Jr., and ending Diane P. Rousseau, and passed, the motion to reconsider be which nominations were received by the Sen- former minority staff director for the laid upon the table, and any state- ate and appeared in the Congressional Senate Labor and Human Resources ments relating to the bill appear at Record of June 5, 1997. Committee under Senator KENNEDY. In this point in the RECORD. Army nominations beginning Doreen M. * addition, she has served as the former The PRESIDING OFFICER. Without Agin, and ending Donald G. *Zugner, which assistant director for domestic policy objection, it is so ordered. nominations were received by the Senate and during the Carter administration and a The bill (H.R. 173) was read the third appeared in the Congressional Record of former Manpower specialist with the time, and passed. June 10, 1997. Department of Labor. Army nominations beginning Bret T. f Ackermann, and ending Joan H. Zeller, She understands the executive ENERGY POLICY AND which nominations were received by the Sen- branch of Government, the House and CONSERVATION ACT AMENDMENTS ate and appeared in the Congressional the Senate. More importantly, she un- Record of June 10, 1997. derstands what each of us needs to be Mr. LOTT. Mr. President, I ask unan- Coast Guard nominations beginning Cath- able to work in good faith with the imous consent the Senate now proceed erine M. Kelly, and ending Ronald W. others to get results. to consideration of Calendar No. 77, S. Reusch, which nominations were received by There is one other chapter in Kitty 417. the Senate and appeared in the Congres- Higgins life that I believe makes her The PRESIDING OFFICER. The sional Record of February 27, 1997. the right person at the right time. clerk will report. Coast Guard nomination of Richard W. The assistant legislative clerk read Kitty Higgins started her working life Sanders, which was received by the Senate as follows: and appeared in the Congressional Record of at the Department of Labor as a clerk- A bill (S. 417) to extend energy conserva- May 15, 1997. typist. When her two sons were still tion programs under the Energy Policy and Marine Corps nomination of Gilda A. Jack- young, her husband, Bill, died. She Conservation Act through September 30, son, which was received by the Senate and raised her sons as a single mother. She 2002. appeared in the Congressional Record of knows what it’s like to be stretched The PRESIDING OFFICER. Is there April 7, 1997. thin between work and home. She un- Marine Corps nomination of Richard L. objection to the immediate consider- Songer, which was received by the Senate derstands the pressures that so many ation of the bill? and appeared in the Congressional Record of families are under today and she is de- There being no objection, the Senate May 15, 1997. termined to help alleviate those pres- proceeded to consider the bill, which Marine Corps nominations beginning Rob- sures for other working parents. had been reported from the Committee ert E. Ballard, and ending Patrick K. The national economy is the best its on Energy and Natural Resources, with Wyman, which nominations were received by been in years. The deficit is down, in- the Senate and appeared in the Congres- an amendment to strike all after the terest rates are down. The stock mar- enacting clause and inserting in lieu sional Record of May 15, 1997. ket is up, as well as employment and Marine Corps nominations David J. Biow, thereof the following: business investment and home owner- and ending Andrew D. Zinn, which nomina- SECTION 1. ENERGY POLICY AND CONSERVATION tions were received by the Senate and ap- ship and virtually every other eco- ACT AMENDMENTS. peared in the Congressional Record of June nomic indicator that ought to be up. The Energy Policy and Conservation Act is 2, 1997. But there are still people left out of amended—

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00120 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6789 (1) at the end of section 154 by adding the fol- ‘‘(A) the provisions of the international en- the Federated States of Micronesia, and the Re- lowing new subsection: ergy program which relate to international allo- public of Palau. ‘‘(f) No later than October 1, 1997, the Sec- cation of petroleum products and to the infor- ‘‘(F) OFFERING.—The term ‘offering’ means a retary shall prepare a statement of policy on mation system provided in the program, and solicitation for bids for a quantity or quantities Strategic Petroleum Reserve development, main- ‘‘(B) the emergency response measures adopt- of petroleum product from the Strategic Petro- tenance and drawdown. The statement of policy ed by the Governing Board of the International leum Reserve as specified in the notice of sale. shall evaluate the effect of sales of petroleum Energy Agency (including the July 11, 1984, de- ‘‘(G) NOTICE OF SALE.—The term ‘notice of from the Strategic Petroleum Reserve under au- cision by the Governing Board on ‘Stocks and sale’ means the document that announces— thorities other than those provided by this Act Supply Disruptions’) for— ‘‘(i) the sale of Strategic Petroleum Reserve on the ability of the United States to fulfill its ‘‘(i) the coordinated drawdown of stocks of products; obligations under the international energy pro- petroleum products held or controlled by govern- ‘‘(ii) the quantity, characteristics, and loca- gram. The statement of policy shall evaluate the ments; and tion of the petroleum product being sold; effectiveness of the Strategic petroleum Reserve ‘‘(ii) complementary actions taken by govern- ‘‘(iii) the delivery period for the sale; and ‘‘(iv) the procedures for submitting offers. at reducing the impact of severe energy supply ments during an existing or impending inter- ‘‘(2) IN GENERAL.—In the case of an offering interruptions, in light of existing quantities of national oil supply disruption’’; and of a quantity of petroleum product during a petroleum in the Strategic Petroleum Reserve, (G) by amending subsection (l) to read as fol- drawdown of the Strategic Petroleum Reserve— and the likelihood of purchases of additional lows: ‘‘(l) The antitrust defense under subsection (f) ‘‘(A) the State of Hawaii, in addition to hav- petroleum for storage. The statement of policy ing the opportunity to submit a competitive bid, shall set forth alternative strategies for draw- shall not extend to the international allocation of petroleum products unless allocation is re- may— down and the criteria to be employed at the time ‘‘(i) submit a binding offer, and shall on sub- quired by chapters III and IV of the inter- of drawdown to select among such strategies. mission of the offer, be entitled to purchase a national energy program during an inter- The statement of policy shall be published in the category of a petroleum product specified in a Federal Register and be subject to public com- national energy supply emergency.’’; (7) by amending the last sentence of section notice of sale at a price equal to the ment, and may be prepared without regard to volumetrically weighted average of the success- the requirements of section 553 of title 5, United 256(h) (42 U.S.C. 6276(h)) to read as follows: ‘‘There are authorized to be appropriated for ful bids made for the remaining quantity of the States Code, section 501 of the Department of petroleum product within the category that is Energy Organization Act (42 U.S.C. 7191), and each of fiscal years 1998 through 2002 such sums as may be necessary to carry out this part.’’; the subject of the offering; and section 523 of this Act.’’; ‘‘(ii) submit 1 or more alternative offers, for (8) in section 281 (42 U.S.C. 6285) by striking (2) by amending section 166 (42 U.S.C. 6246) to other categories of the petroleum product, that ‘‘1997’’ both places it appears and inserting in read as follows: will be binding if no price competitive contract lieu thereof ‘‘2002’’.; ‘‘AUTHORIZATION OF APPROPRIATIONS (9) in section 365(f)(1) (42 U.S.C. 6325(f)(1)) by is awarded for the category of petroleum prod- ‘‘SEC. 166. There are authorized to be appro- striking ‘‘not to exceed’’ and all that follows uct on which a binding offer is submitted under priated for each of fiscal years 1998 through through ‘‘fiscal year 1993’’ and inserting in lieu clause (i); and 2000 such sums as may be necessary to imple- ‘‘(B) at the request of the Governor of the thereof ‘‘for each of fiscal years 1998 through ment this part.’’; State of Hawaii, a petroleum product purchased 2002 such sums as may be necessary’’; by the State of Hawaii at a competitive sale or (3) at the end of part B of title I by adding the (10) by amending section 397 (42 U.S.C. 6371f) through a binding offer shall have first pref- following new section: to read as follows: ‘‘USE OF UNDERUTILIZED FACILITIES erence in scheduling for lifting. ‘‘AUTHORIZATION OF APPROPRIATIONS ‘‘SEC. 168. (a) Notwithstanding section 649(b) ‘‘(3) LIMITATION ON QUANTITY.— ‘‘SEC. 397. For the purpose of carrying out ‘‘(A) IN GENERAL.—In administering this sub- of the Department of Energy Organization Act this part, there are authorized to be appro- (42 U.S.C. 7259(b)), the Secretary is authorized section, in the case of each offering, the Sec- priated for each of fiscal years 1998 through retary may impose the limitation described in to store in underutilized Strategic Petroleum Re- 2002 such sums as may be necessary.’’; and serve facilities, by lease or otherwise, petroleum subparagraph (B) or (C) that result in the pur- (11) in section 400BB(b) (42 U.S.C. 6374a(b)) chase of the lesser quantity of petroleum prod- product owned by a foreign government or its by amending paragraph (1) to read as follows: representatives. Petroleum product stored under uct. ‘‘(1) There are authorized to be appropriated ‘‘(B) PORTION OF QUANTITY OF PREVIOUS IM- this section is not part of the Strategic Petro- to the Secretary for carrying out this section PORTS.—The Secretary may limit the quantity of leum Reserve, is not subject to part C of this such sums as may be necessary for each of fiscal a petroleum product that the State of Hawaii title, and notwithstanding any provision of this years 1998 through 2002, to remain available may purchase through a binding offer at any Act, may be exported from the United States. until expended.’’. offering to 1⁄12 of the total quantity of imports of ‘‘(b) Beginning on October 1, 2002, funds re- SEC. 2. PURCHASES FROM STRATEGIC PETRO- the petroleum product brought into the State sulting from the leasing or other use of a Re- LEUM RESERVE BY ENTITIES IN IN- during the previous year (or other period deter- serve facility under subsection (a) shall be avail- SULAR AREAS OF UNITED STATES mined by the Secretary to be representative). able to the Secretary, without further appro- AND FREELY ASSOCIATED STATES. ‘‘(C) PERCENTAGE OF OFFERING.—The Sec- priation, for the purchase of petroleum products (a) Section 161 of the Energy Policy and Con- retary may limit the quantity that may be pur- for the Reserve.’’; servation Act (42 U.S.C. 6241) is amended by chased through binding offers at any offering to (4) in section 181 (42 U.S.C. 6251) by striking adding at the end the following: 3 percent of the offering. ‘‘1997’’ other places it appears and inserting in ‘‘(j) PURCHASES FROM STRATEGIC PETROLEUM ‘‘(4) ADJUSTMENTS.— lieu thereof ‘‘2000’’; RESERVE BY ENTITIES IN INSULAR AREAS OF ‘‘(A) IN GENERAL.—Notwithstanding any limi- (5) by striking ‘‘section 252(l)(1)’’ in section UNITED STATES AND FREELY ASSOCIATED tation imposed under paragraph (3), in admin- 251(e)(1) (42 U.S.C. 6271(e)(1)) and inserting STATES.— istering this subsection, in the case of each of- ‘‘section 252(k)(1)’’; ‘‘(1) DEFINITIONS.—In this subsection: fering, the Secretary shall, at the request of the (6) in section 252 (42 U.S.C. 6272)— ‘‘(A) BINDING OFFER.—The term ‘binding Governor of the State of Hawaii, or an eligible (A) in subsections (a)(1) and (b), by striking offer’ means a bid submitted by the State of Ha- entity certified under paragraph (7), adjust the ‘‘allocation and information provisions of the waii for an assured award of a specific quantity quantity to be sold to the State of Hawaii in ac- international energy program’’ and inserting of petroleum product, with a price to be cal- cordance with this paragraph. ‘‘international emergency response provisions’’; culated pursuant to paragraph (2) of this sub- ‘‘(B) UPWARD ADJUSTMENT.—The Secretary (B) in subsection (d)(3), by striking ‘‘known’’ section, that obligates the offeror to take title to shall adjust upward to the next whole number and inserting after ‘‘circumstances’’ ‘‘known at the petroleum product without further negotia- increment of a full tanker load if the quantity the time of approval’’; tion or recourse to withdraw the offer. to be sold is— (C) in subsection (e)(2) by striking ‘‘shall’’ ‘‘(B) CATEGORY OF PETROLEUM PRODUCT.— ‘‘(i) less than 1 full tanker load; or and inserting ‘‘may’’; The term ‘category of petroleum product’ means ‘‘(ii) greater than or equal to 50 percent of a (D) in subsection (f)(2) by inserting ‘‘vol- a master line item within a notice of sale. full tanker load more than a whole number in- untary agreement or’’ after ‘‘approved’’; ‘‘(C) ELIGIBLE ENTITY.—The term ‘eligible en- crement of a full tanker load. (E) by amending subsection (h) to read as fol- tity’ means an entity that owns or controls a re- ‘‘(C) DOWNWARD ADJUSTMENT.—The Secretary lows: finery that is located within the State of Ha- shall adjust downward to the next whole num- ‘‘(h) Section 708 of the Defense Production waii. ber increment of a full tanker load if the quan- Act of 1950 shall not apply to any agreement or ‘‘(D) FULL TANKER LOAD.—The term ‘full tity to be sold is less than 50 percent of a full action undertaken for the purpose of developing tanker load’ means a tanker of approximately tanker load more than a whole number incre- or carrying out— 700,000 barrels of capacity, or such lesser tanker ment of a full tanker load. ‘‘(1) the international energy program, or capacity as may be designated by the State of ‘‘(5) DELIVERY TO OTHER LOCATIONS.—The ‘‘(2) any allocation, price control, or similar Hawaii. State of Hawaii may enter into an exchange or program with respect to petroleum products ‘‘(E) INSULAR AREA.—The term ‘insular area’ a processing agreement that requires delivery to under this Act.’’; means the Commonwealth of Puerto Rico, the other locations, if a petroleum product of similar (F) in subsection (k) by amending paragraph Commonwealth of the Northern Mariana Is- value or quantity is delivered to the State of Ha- (2) to read as follows: lands, the United States Virgin Islands, Guam, waii. ‘‘(2) The term ‘international emergency re- American Samoa, and the Freely Associated ‘‘(6) STANDARD SALES PROVISIONS.—Except as sponse provisions’ means— States of the Republic of the Marshall Islands, otherwise provided in this Act, the Secretary

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00121 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6790 CONGRESSIONAL RECORD — SENATE June 27, 1997 may require the State of Hawaii to comply with AMENDING SECTIONS OF THE DE- The resolution, with its preamble, the standard sales provisions applicable to pur- PARTMENT OF ENERGY ORGANI- reads as follows: chasers of petroleum product at competitive ZATION ACT S. RES. 105 sales. Whereas at one minute past midnight on ‘‘(7) ELIGIBLE ENTITIES.— Mr. LOTT. Mr. President, I ask unan- July 1, Hong Kong will cease to be a colonial ‘‘(A) IN GENERAL.—Subject to subparagraphs imous consent the Senate proceed to possession of Great Britain and will return (B) and (C) and notwithstanding any other pro- consideration of Calendar No. 78, H.R. to Chinese sovereignty; vision of this paragraph, if the Governor of the 649. Whereas the people of Hong Kong enjoy State of Hawaii certifies to the Secretary that The PRESIDING OFFICER. The civil liberties and political freedoms based the State has entered into an agreement with an clerk will report. on the democratic rule of law and the func- eligible entity to carry out this Act, the eligible The assistant legislative clerk read tions of a free market; entity may act on behalf of the State of Hawaii as follows: Whereas the People’s Republic of China has to carry out this subsection. A bill (H.R. 649) to amend sections of the promised through international agreements ‘‘(B) LIMITATION.—The Governor of the State Department of Energy Organization Act that and Chinese law to preserve Hong Kong’s of Hawaii shall not certify more than 1 eligible are obsolete or inconsistent with other stat- way of life and to grant the people of Hong entity under this paragraph for each notice of utes and to repeal a related section of the Kong substantial autonomy in self-govern- sale. Federal Energy Administration Act of 1974. ment; ‘‘(C) BARRED COMPANY.—If the Secretary has The PRESIDING OFFICER. Is there Whereas the United States is committed notified the Governor of the State of Hawaii through the Hong Kong Policy Act of 1992 to that a company has been barred from bidding objection to the immediate consider- monitoring, advocating and reporting on the (either prior to, or at the time that a notice of ation of the bill? continuation of Hong Kong’s freedoms under sale is issued), the Governor shall not certify the There being no objection, the Senate Chinese rule; and company under this paragraph. proceeded to consider the bill. Whereas the United States enjoys a long- ‘‘(8) SUPPLIES OF PETROLEUM PRODUCTS.—At Mr. LOTT. I ask unanimous consent standing commercial, cultural and political the request of the governor of an insular area, the bill be considered read a third time relationship with Hong Kong and a devel- or President of a Freely Associated State, the and passed, the motion to reconsider be oping relationship with the People’s Repub- Secretary shall, for a period not to exceed 180 laid on the table, and any statements lic of China: Now, therefore, be it days following a drawdown of the Strategic Pe- relating to the bill appear at this point Resolved, That it is the sense of the Senate troleum Reserve, assist the insular area in its ef- that— forts to maintain adequate supplies of petroleum in the RECORD. (1) the people of the United States wish products from traditional and non-traditional The PRESIDING OFFICER. Without good fortune to the people of Hong Kong as suppliers.’’. objection, it is so ordered. they embark on their historic transition of (b) REGULATIONS.— The bill (H.R. 649) was read the third sovereignty; (1) IN GENERAL.—The Secretary of Energy time, and passed. (2) the United States urges the People’s shall issue such regulations as are necessary to f Republic of China to honor both the spirit carry out the amendment made by subsection and the letter of its commitments to accord (a). AUTHORITY FOR COMMITTEES TO Hong Kong substantial autonomy as a sepa- REPORT rate administrative region in a China char- (2) ADMINISTRATIVE PROCEDURE.—Regulations acterized as ‘‘one country, two systems;’’ issued to carry out the amendment made by sub- Mr. LOTT. Mr. President, I ask unan- (3) the executive branch should exercise section (a) shall not be subject to— imous consent that on Tuesday, July 1, due diligence in enforcing the terms and con- (A) section 523 of the Energy Policy and Con- committees have between the hours of ditions of the Hong Kong Policy Act of 1992 servation Act (42 U.S.C. 6393); or 10 and 2 p.m., in order to file reported and subsequent acts and provisions con- (B) section 501 of the Department of Energy legislative and executive matters. cerning the protection of civil liberties and Organization Act (42 U.S.C. 7191). The PRESIDING OFFICER. Without the rule of law in Hong Kong; (c) EFFECTIVE DATE.—The amendment made objection, it is so ordered. (4) the United States looks forward to con- by subsection (a) takes effect on the earlier of— tinuing its close, productive relationship f (1) the date that is 180 days after the date of with the people of Hong Kong; and enactment of this Act; or WISHING THE PEOPLE OF HONG (5) the United States hopes to develop a (2) the date that final regulations are issued KONG GOOD FORTUNE positive, productive relationship with the under subsection (b). People’s Republic of China based upon shared Mr. LOTT. I ask unanimous consent respect for human dignity and responsible SEC. 3. ENERGY POLICY ACT OF 1992 AMEND- that the Senate proceed to the imme- behavior in the international community of MENT. diate of Senate Resolution 105, sub- nations. Section 2603 of the Energy Policy Act of 1992 mitted earlier today by Senators LIE- (25 U.S.C. 3503) is amended in subsection (c) by BERMAN and MACK. striking ‘‘and 1997’’ each place it appears and f inserting ‘‘1997, 1998, 1999, and 2000’’ in lieu The PRESIDING OFFICER. The thereof. clerk will report. OUR LIVES WERE CHANGED The assistant legislative clerk read SEC. 4. ENERGY CONSERVATION AND PRODUC- FOREVER TION ACT AMENDMENT. as follows: A resolution (S. Res. 105) expressing the Mr. LOTT. Mr. President, the loss of Section 422 of the Energy Conservation and child is probably the greatest heart- Production Act (42 U.S.C. 6872) is amended to sense of the Senate that the people of the read as follows: United States wish the people of Hong Kong ache that any parent can experience or good fortune as they embark on their his- could conceivably experience. ‘‘AUTHORIZATION OF APPROPRIATIONS toric transition of sovereignty from Great Last fall, Senator SANTORUM and his ‘‘SEC. 422. For the purpose of carrying out the Britain to the People’s Republic of China. wife, Karen, faced that tragedy. Most weatherization program under this part, there The PRESIDING OFFICER. Is there of us, I am sure, had occasion to speak are authorized to be appointed for each of fiscal years 1998 through 2002 such sums as may be objection to the immediate consider- with them then and were impressed by necessary. ation of the resolution? their faith and their courage. There being no objection, the Senate Senator SANTORUM talks about his Mr. LOTT. I ask unanimous consent proceeded to consider the resolution. family’s experience in an article in the the committee substitute amendment Mr. LOTT. I ask unanimous consent May 23 issue of ‘‘National Right to Life be agreed to and the bill be considered the resolution be agreed to, the pre- News.’’ Its title is ‘‘A Brief Life That read a third time and passed, the mo- amble be agreed to, the motion to re- Changed Our Lives Forever.’’ It is very tion to reconsider laid on the table, consider be laid upon the table and powerful, and I urge my colleagues to and any statements relating to the bill that any statements relating to the take the opportunity to read this arti- appear at this point in the RECORD. resolution appear at this point in the cle, because I think it will affect their The PRESIDING OFFICER. Without RECORD. lives also. objection, it is so ordered. The PRESIDING OFFICER. Without I ask unanimous consent that this ar- The committee amendment was objection, it is so ordered. ticle be printed in the RECORD. agreed to. The resolution (S. Res. 105) was There being no objection, the article The bill (S. 417) was read the third agreed to. was ordered to be printed in the time, and passed. The preamble was agreed to. RECORD, as follows:

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00122 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6791 [From the National Right to Life News, May couraged, there was an occasion where he The surgical procedure to drain the urine 23, 1997] had seen damaged kidneys have sufficient into the amniotic sac, in an effort to create A BRIEF THAT CHANGED OUR LIVES FOREVER levels of function, enabling a baby to survive the proper fluid environment for Gabriel, (By Rick Santorum) until a transplant. was scheduled at The Pennsylvania Hospital We adjourned to a supply room next to the with Dr. Bud Wiener. Dr. Wiener had done On September 26, 1996, the Senate voted to treatment area. The purpose of the meeting more of these procedures than anyone else sustain President Clinton’s veto of the par- was to discuss options. Dr. Donnenfeld took on the East Coast and had pioneered the tial-Birth Abortion Ban. I led the fight to the lead, saying that things were grave, and plastic tube that would be inserted in Gabri- override the veto on the floor of the Senate. presenting us with three options. ‘‘Your first el’s bladder to drain the urine. Central to the debate was the assertion by option is to terminate the pregnancy.’’ As The idea that surgery on a child in only his opponents of the ban that this procedure is the word pregnancy left his lips the room in- 20th week of life inside the womb boggles the necessary later in pregnancy in cases when a stantly went dark. The doctor quickly mind. And watching Dr. Wiener at work was severe fetal defect is discovered. I was told reached up and turned on the light, which something to behold as he guided the tube that I could not understand what these was on a timer. Through nervous and awk- into place. We would check in three days to women, who experienced this procedure, has ward laughter I said, ‘‘I guess that answers see if the tube was working, and of course gone through. ‘‘It has never touched your your question.’’ there is the customary surgical concern life,’’ one senator said. We knew that abortion was a legal option, about infection. This is a story of how just one week after it just wasn’t a sane one. It was inconceiv- Two days later while we were at home in that vote, it did. able to us as parents to kill our baby because Pittsburgh, Karen began feeling both chills We had been through the joyous sonogram he wasn’t perfect or because he might not and cramping—the chills were a sign of in- routine before—the technician would turn live a long life. While we couldn’t look into fection and the cramping was the beginning out the lights, spread gel on Karen’s growing his eyes or hold him in our arms, he was no of labor. adbomen, and then right there on the screen less our child than our other three children. Hoping desperately that it was food poi- in front of our eyes we would get the first And we loved him every bit as much. He was soning or the flu, Karen fought to hold it to- glimpse of our baby—a fuzzy, back-and-white our gift from God from the moment we found gether. A call to Dr. Donnenfeld was met picture that told us all was well. out Karen was pregnant. In our mind, from with an order to rush to Magee Women’s This time, however, was different. Sitting that time on our job as parents of this tiny Hospital. in the darkened room explaining what we life was to do everything we could to nurture There a doctor performed another were seeing to our three children—ages 5, 3, him through life. Karen and I have this say- sonogram. What we saw made this moment and 1—everything seemed fine. But the ing, ‘‘life is about being there,’’ and we were even more tragic. The fuzzy picture on the woman with the instrument was strangely going to be there for our baby. screen showed an active baby jumping and quiet, examining and re-examining a dark The second option was to do nothing. In moving freely in a sac of amniotic fluid. The circle on the screen. The doctor entered and this case our son would live only as long as procedure had worked like a charm, but silently repeated the routine. Finally, we he was in the womb. While in the womb our there was infection. were coldly given the verdict: ‘‘Your child baby’s lungs and kidneys were not necessary Karen was seized with horrible chills. has a fatal defect and is going to die.’’ for him to survive—Karen was performing Huddled under a dozen blankets her tempera- It’s not that the world stopped, nor that is those functions for him. ture soared to over 105. By this point there moved in slow motion, it was just that the The third option would entail several tests was little that could be done. Intra-uterine world took on a new meaning. Suddenly, our and possibly intrauterine surgery. Karen’s infections are untreatable as long as the child whom we loved, prayed for, dreamed immediate response was to do whatever it source of the infection—the amniotic sac—is took to save our son. about, and longed to meet was diagnosed in place. We knew that at 20 weeks [41⁄2 Our son went through two days of tests to with a fatal condition. Through our tears months], Gabriel could not survive outside determine kidney function. If there was no erupted the most basis of all parental emo- the womb. But, unless the amniotic sac and kidney function there would be no point in tions—we were going to save our child. thereby our son was delivered, Karen would I took the kids out into the hallway to the proceeding further—he would not develop enough in the womb to survive outside. The soon die, and Gabriel with her. phone and called Dr. N. Scott Adzick, who is Karen was given an antibiotic which re- first day the test results were so bad that we the surgeon in chief of pediatrics at Chil- duced the fever, made her comfortable and discussed whether it was worth going dren’s Hospital in Philadelphia. Six months took her out of immediate danger. She clung through a second painful day for Karen. Dr. earlier, I had gone to Children’s Hospital and to the baby with all her strength, but nature Adzick said we needed a miracle overnight to seen a world I had never known existed—a was relentless. Soon the labor intensified— world of Dr. Adzick’s creation—a world of get those kidneys to work better. We prayed more than I can remember for the body had identified the source of the surgery and care for children still in their our son, who we named that day Gabriel Mi- problem and took measures to eliminate the mother’s womb. I remembered his amazing chael, after the great Archangels. The next infection. She did everything she could to skill and how I sensed an aura of peace and day our prayers were answered with a mirac- delay the inevitable, putting her own life in a certainty of purpose surrounding his mis- ulous improvement; the kidneys were not danger in the process. I talked to everyone I sion. just okay, but functioning normally! We knew to see if there was something that I frantically described what had transpired could now do the surgery that would save his could be done. There was no answer to be and asked if he could help. Before he pep- life. found. pered me with questions, he calmly reas- Had this occurred in our lives years ear- Here again the doctors told us that abor- sured me that all was not lost. He had seen lier, I don’t know how we would have dealt tion was a legal option to protect Karen’s cases like this before and knew immediately with it. But in the past several years we had health and possibly save her life. But with that it had to be post-urethral valve syn- found a closer relationship with God. the support of Dr. Cynthia Simms we arrived drome. Scott’s principal concern had to do Shortly after being elected to the Senate, at another way—a way that gave our son the with the absence of fluid in the amniotic sac, Sen. Don Nickles of Oklahoma invited me to love and respect he deserved, and gave Karen which meant that our baby likely had a com- come to a small Bible study. I went that day and me a gift that we will forever cherish. plete obstruction of his urinary tract—in and I have attended faithfully ever since. I Our call to Dr. Adzick, who had become a short, a very rare condition that carried found the piece that fit what C.S. Lewis has supportive force for us throughout, put an with it a 100% mortality rate if untreated. called that ‘‘great, God-shaped hole in our end to our search for alternatives. He told Not typically understood is that the ele- soul.’’ I found a new and better relationship Karen that Gabriel would have to be deliv- ment comprising the amniotic fluid encom- with God. And I learned one of life’s best les- ered. I thanked God for the presence of passing the baby during development is the sons: that I can’t do anything alone, that I Karen’s parents who provided so much love baby’s urine. The fluid not only provides a had to give up my illusion of control and put and support and our friend Monsignor Bill barrier of protection from outside trauma, my trust in God. Kerr who was also there providing spiritual but it is necessary in the development of the Karen’s story is little different than mine. guidance. baby’s lungs. Without the fluid his lungs For the past several years Karen has pursued We knew the end was very near, so we tried would not develop enough for him to survive her faith on an ever ascending level. Through to pack a lifetime of love into those few outside the womb. In addition, this condition prayer, studying the Bible and Catholic cat- hours. I put my hands on Karen’s abdomen. would cause the kidneys to cease func- echism, and now attending daily mass, she We prayed and we cried. We told him how tioning. too learned to try to give up her control and much we loved him—how much we will miss Dr. Adzick arranged for tests to be done rely on God’s grace. mothering and fathering him, and how his the next day at The Pennsylvania Hospital. Thanks to Lloyd Ogilvie, the Chaplain of brothers and sisters will miss his presence in The initial results did not look good. Seated the Senate, our parish priests and the pray- their lives. in front of our second sonogram machine in ers of our friends, this crisis was not so much Within hours, at 12:45 a.m., our son was as many days, Dr. Adzick and Dr. Alan a ‘‘faith check’’ for us as it was a time of re- born. He was a beautiful, fully formed cre- Donnenfeld, an ob/gyn and perinatologist, assurance. For we knew that no matter what ation—a small, pink package of joy, sorrow, told us that the kidneys looked like their happened, God held all of us in his hands. hope, and questions. We bundled him up and function was severely compromised. Dr. With that knowledge there is a peace beyond put a little hat on his head to keep him Adzick told us that though he, too, was dis- human understanding. warm. We held him, sang to him and cried

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00123 Fmt 0637 Sfmt 0634 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6792 CONGRESSIONAL RECORD — SENATE June 27, 1997 for him. He was too small to make a sound, JOSEPH A. COPPOLA, 0000 Senate immediately resume consider- NELLO E. DACHMAN, 0000 but he spoke so powerfully to our hearts. His ation of the defense authorization bill. GERARD F. DORRE, 0000 eyes never opened to see his mommy and The PRESIDING OFFICER. Without ROURK A. ELLQUIST, 0000 daddy, but he allowed us to see in him the DOUGLAS M. FARLEY, 0000 objection, it is so ordered. DAVID W. FISHER, 0000 face of God. VERNON R. FREDERICK, JR., 0000 Two hours later, he died in my arms. Mr. LOTT. Mr. President, I ask unan- MICHAEL J. GALLAGHER, 0000 We tried to make Gabriel’s short time on imous consent that Senator COVERDELL LOWELL B. GOUTREMOUT, JR., 0000 RAYMOND L. KESSLER, 0000 earth filled with love, only love. We told him and Senator DASCHLE, or his designee, MARK A. KNOWLES, 0000 that soon he would experience something we each be recognized for up to 1 hour dur- RICHARD D. KOSS, 0000 MICHAEL J. LEWIS, 0000 are striving for. He will be with God in heav- ing Monday’s session of the Senate. JAMES R. LOGAN, 0000 en. Finally, we pledged to him that we would The PRESIDING OFFICER. Without KEVIN F. MASON, 0000 rededicate ourselves to joining him someday. THOMAS P. MCCABE, 0000 objection, it is so ordered. DANIEL J. MCLEAN, 0000 This is our story. The irony of finding our- WILLIAM A. MEZNARICH, JR., 0000 selves confronted with a baby with a fatal f WILLIE J. MOORE, 0000 defect—when only a few days before some ROBERT M. REILLY, 0000 PROGRAM THOMAS R. RICE, 0000 considered the absence of such experience to GUILLERMO R. RIVERO, 0000 disqualify me from the debate on partial- Mr. LOTT. Mr. President, again, I re- CARL J. SCHEIDT, 0000 birth abortion—was truly overwhelming. On SHANE D. SELLERS, 0000 mind all Senators, when the Senate re- DANIEL L. SPEEDY, 0000 two occasions, we too could have chosen the turns from the July 4th recess, we will LARRY E. SPICER, 0000 option to abort. We knew that Gabriel’s life resume consideration of the defense au- STANLEY E. THOMAS, 0000 would probably be measured in minutes and DARRELL W. TIBBETS, JR., 0000 thorization bill. As announced earlier, JAMES E. TURNER, 0000 hours, not in years and decades. We chose to GEORGE M. WYGANT, 0000 let Gabriel live and die in the fullness of no rollcall votes will occur on Monday, JOHN E. ZEGER, JR., 0000 time—being held and loved and nurtured by July 7. However, Senators should be IN THE ARMY two parents who loved him. prepared to offer their amendments to THE FOLLOWING-NAMED OFFICERS FOR APPOINTMENT We wouldn’t have traded the gift of those the defense bill so that progress can be TO THE GRADE INDICATED IN THE RESERVE OF THE two hours with our son for anything in the ARMY UNDER TITLE 10, UNITED STATES CODE, SECTIONS made on that important legislation. A 12203 AND 1552: world. And we know that he wouldn’t have cloture motion was filed to the defense To be colonel either. bill this afternoon, and under that In the midst of the debate that fall, wor- TERRY L. BELVIN, 0000 order, a cloture vote will occur at 2:15 MYRON J. BERMAN, 0000 ried about the impact of the gruesome de- ERWIN A. BURTNICK, 0000 scription of the procedure, one of the sen- p.m. on Tuesday, July 8. GARY W. GARDENHIRE, 0000 ators opposing the ban said that a partial- GEORGE C. GOLLER II, 0000 f KNUTE M. MILLER, 0000 birth abortion, like a simple appendectomy JERRY W. RESHETAR, 0000 was bloody—that was just the nature of the ADJOURNMENT UNTIL MONDAY, JAMES SPECHT, 0000 event. JULY 7, 1997 MARK O. WALSH, 0000 GEORGE W. WELLS, JR., 0000 The Washington Post described what hap- JAMES A. ZERNICKE, 0000 pened next. Mr. LOTT. Mr. President, if there is DEPARTMENT OF HEALTH AND HUMAN SERVICES ‘‘Republican Sen. Rick Santorum turned to no further business to come before the face the opposition and in a high, pleading Senate, I ask unanimous consent that NANCY-ANN MINN DEPARLE, OF TENNESSEE, TO BE AD- MINISTRATOR OF THE HEALTH CARE FINANCING ADMIN- voice cried out, ‘Where do we draw the line? the Senate stand in adjournment under ISTRATION, VICE BRUCE C. VLADECK. Some people have likened this procedure to the provisions of House Concurrent DEPARTMENT OF THE TREASURY an appendectomy. That’s not an appendix,’ Resolution 108. DAVID A. LIPTON, OF MASSACHUSETTS, TO BE AN he shouted, pointing to a drawing of a fetus. There being no objection, the Senate, UNDER SECRETARY OF THE TREASURY, VICE JEFFREY ‘That is not a blob of tissue. It is a baby. It’s at 6:56 p.m., adjourned until Monday, R. SHAFER, RESIGNED. a baby.’ f ‘‘And then, impossibly, in an already July 7, 1997, at 12 noon. hushed gallery, in one of those moments f CONFIRMATIONS when the floor of the Senate looks like a Executive nominations confirmed by stage set, with its small wooden desks some- NOMINATIONS the Senate June 27, 1997: how too small for the matters at hand, the Executive nominations received by DEPARTMENT OF LABOR cry of a baby pierced the room, echoing the Senate June 27, 1997: across the chamber from an outside hallway. KATHRYN O’LEARY HIGGINS, OF SOUTH DAKOTA, TO BE DEPUTY SECRETARY OF LABOR. ‘‘No one mentioned the cry, but for a few THE JUDICIARY DEPARTMENT OF HEALTH AND HUMAN SERVICES seconds no one spoke at all.’’ JAMES S. WARE, OF CALIFORNIA, TO BE U.S. CIRCUIT A freak occurrence—a visitor’s baby was JUDGE FOR THE NINTH CIRCUIT, VICE J. CLIFFORD WAL- RICHARD J. TARPLIN, OF NEW YORK, TO BE AN ASSIST- crying in the hallway as a door to the floor LACE, RETIRED. ANT SECRETARY OF HEALTH AND HUMAN SERVICES. IN THE MARINE CORPS THE ABOVE NOMINATIONS WERE APPROVED SUBJECT was opened and few seconds later closed. TO THE NOMINEES’ COMMITMENT TO RESPOND TO RE- A freak occurrence perhaps—or maybe, a THE FOLLOWING-NAMED LIMITED DUTY OFFICERS FOR QUESTS TO APPEAR AND TESTIFY BEFORE ANY DULY cry from the son whose voice we never heard, APPOINTMENT TO THE GRADES INDICATED IN THE U.S. CONSTITUTED COMMITTEE OF THE SENATE. MARINE CORPS UNDER TITLE 10, UNITED STATES CODE but whose life has forever changed ours. SECTION 624: THE JUDICIARY f To be lieutenant colonel ALAN S. GOLD, OF FLORIDA, TO BE U.S. DISTRICT JUDGE FOR THE SOUTHERN DISTRICT OF FLORIDA. DEMETRICE M. BABB, 0000 IN THE AIR FORCE MEASURE RETURNED TO JOHN W. BLOODWORTH, JR. 0000 CALENDAR—S. 949 DEBRA A. FLETCHER, 0000 THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT HAROLD J. GUILLORY, 0000 IN THE RESERVE OF THE AIR FORCE TO THE GRADE INDI- Mr. LOTT. Mr. President, I ask unan- MARIE G. JULIANO, 0000 CATED UNDER TITLE 10, UNITED STATES CODE, SECTION MARSHALL L. KINDRED, 0000 12203: imous consent that Calendar No. 92, S. PETER J. KOUTROUBA, 0000 949, be placed on the calendar. MICHAEL P. LINEHAM, 0000 To be major general ALBERT A. LUCKEY, 0000 BRIG. GEN. WALLACE W. WHALEY, 0000 The PRESIDING OFFICER. Without DANIEL P. LYBERT, 0000 objection, it is so ordered. HECTOR L. MELENDEZ, 0000 IN THE ARMY LARRY T. MESSNER, 0000 f MICHAEL C. MONTCRIEFF, 0000 THE FOLLOWING U.S. ARMY RESERVE OFFICERS FOR WILLIAM J. RESAVY, JR., 0000 PROMOTION IN THE RESERVE OF THE ARMY TO THE ORDERS FOR MONDAY, JULY 7, TIMOTHY R. ROLLINS, 0000 GRADES INDICATED UNDER TITLE 10, UNITED STATES STANLEY D. TEMPLE, 0000 CODE, SECTIONS 14101, 14315 AND 12203(A): 1997 JOHN M. THORNTON, 0000 To be brigadier general BERNDT H. TIETJEN, 0000 Mr. LOTT. Mr. President, I ask unan- MICHAEL K. TOELLNER, 0000 COL. HERBERT L. ALSHULER, 0000 imous consent that when the Senate To be major THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT completes its business today, it stand IN THE U.S. ARMY TO THE GRADE INDICATED WHILE AS- ERNEST D. BANKS, 0000 SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- in adjournment under the provisions of THOMAS P. BARZDITIS, 0000 BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION House Concurrent Resolution 108 until BRAD W. BERGMAN, 0000 601: WILLIAM BEROTTE, JR., 0000 the hour of 12 noon on Monday, July 7. MICHAEL J. BISSONNETTE, 0000 To be lieutenant general I further ask unanimous consent that CARMINE J. BORRELLI, 0000 MAJ. GEN. HENRY T. GLISSON, 0000 JACK V. BUTLER, JR., 0000 on Monday, immediately following the RICHARD W. BYNO, JR., 0000 THE FOLLOWING-NAMED OFFICERS FOR PROMOTION IN prayer, the routine requests through FRED M. CALLIES, 0000 THE REGULAR ARMY OF THE UNITED STATES TO THE ARTHUR P. COCHRAN, 0000 GRADE INDICATED UNDER TITLE 10, UNITED STATES the morning hour be granted and the ROBERT N. CONQUEST, 0000 CODE, SECTIONS 611(A) AND 624:

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00124 Fmt 0637 Sfmt 9801 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6793 To be major general To be general To be lieutenant general BRIG. GEN. PHILLIP R. ANDERSON, 0000 LT. GEN. ERIC K. SHINSEKI, 0000 MAJ. GEN. DAVID J. KELLEY, 0000 BRIG. GEN. BURWELL B. BELL III, 0000 BRIG. GEN. BRYAN D. BROWN, 0000 THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT BRIG. GEN. JULIAN H. BURNS, JR., 0000 IN THE U.S. ARMY TO THE GRADE INDICATED WHILE AS- IN THE U.S. ARMY TO THE GRADE INDICATED WHILE AS- BRIG. GEN. MICHAEL T. BYRNES, 0000 SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- BRIG. GEN. JOHN S. CALDWELL, JR., 0000 BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION BRIG. GEN. REGINAL G. CLEMMONS, 0000 601: 601: BRIG. GEN. GEORGE F. CLOSE, JR., 0000 To be lieutenant general BRIG. GEN. CARL H. FREEMAN, 0000 To be lieutenant general BRIG. GEN. JOSEPH R. INGE, 0000 MAJ. GEN. ROBERT S. COFFEY, 0000 BRIG. GEN. PHILIP R. KENSINGER, JR., 0000 MAJ. GEN. RANDOLPH W. HOUSE, 0000 BRIG. GEN. DONALD L. KERRICK, 0000 THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT BRIG. GEN. LARRY J. LUST, 0000 IN THE U.S. ARMY TO THE GRADE INDICATED WHILE AS- IN THE AIR FORCE BRIG. GEN. JOHN J. MARCELLO, 0000 SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- BRIG. GEN. TIMOTHY J. MAUDE, 0000 BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION AIR FORCE NOMINATION OF ANDREW J. JORGENSEN, BRIG. GEN. DAN K. MC NEILL, 4203 601: WHICH WAS RECEIVED BY THE SENATE AND APPEARED BRIG. GEN. PAUL T. MIKOLASHEK, 0000 To be lieutenant general IN THE CONGRESSIONAL RECORD OF MAY 15, 1997. BRIG. GEN. MARY E. MORGAN, 0000 BRIG. GEN. BRUCE K. SCOTT, 0000 MAJ. GEN. JOHN W. HENDRIX, 0000 IN THE ARMY BRIG. GEN. JERRY L. SINN, 0000 BRIG. GEN. JAMES R. SNIDER, 0000 IN THE MARINE CORPS ARMY NOMINATIONS BEGINNING JOHN A. ADAMS, AND BRIG. GEN. EDWARD SORIANO, 0000 ENDING KENNETH M. YOUNGER, WHICH NOMINATIONS THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT BRIG. GEN. JULIAN A. SULLIVAN, JR., 0000 WERE RECEIVED BY THE SENATE AND APPEARED IN THE IN THE U.S. MARINE CORPS TO THE GRADE INDICATED BRIG. GEN. JOHN D. THOMAS, JR., 0000 CONGRESSIONAL RECORD OF JANUARY 9, 1997. WHILE ASSIGNED TO A POSITION OF IMPORTANCE AND BRIG. GEN. HOWARD J. VON KAENEL, 0000 ARMY NOMINATIONS BEGINNING ROBERT T. ANDER- RESPONSIBILITY UNDER TITLE 10, UNITED STATES CODE, BRIG. GEN. WILLIAM S. WALLACE, 0000 SON, AND ENDING ROBERT J. WYGONSKI, WHICH WERE SECTION 601: BRIG. GEN. WILLIAM E. WARD, 0000 RECEIVED BY THE SENATE AND APPEARED IN THE CON- BRIG. GEN. DAVID S. WEISMAN, 0000 To be lieutenant general GRESSIONAL RECORD OF FEBRUARY 5, 1997. ARMY NOMINATIONS BEGINNING CHARLES R. BAILEY, THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT MAJ. GEN. FRANK LIBUTTI, 0000 AND ENDING JOHN L. WYDEVEN, WHICH NOMINATIONS IN THE U.S. ARMY TO THE GRADE INDICATED WHILE AS- WERE RECEIVED BY THE SENATE AND APPEARED IN THE THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- CONGRESSIONAL RECORD OF MAY 15, 1997. BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION IN THE U.S. MARINE CORPS TO THE GRADE INDICATED ARMY NOMINATIONS BEGINNING CHESSLEY R. ATCH- 601: WHILE ASSIGNED TO A POSITION OF IMPORTANCE AND ISON, AND ENDING *STEPHEN E. SCHLESS, WHICH NOMI- RESPONSIBILITY UNDER TITLE 10, UNITED STATES CODE, NATIONS WERE RECEIVED BY THE SENATE AND AP- To be lieutenant general SECTION 601: PEARED IN THE CONGRESSIONAL RECORD OF MAY 15, MAJ. GEN. DAVID K. HEEBNER, 0000 To be lieutenant general 1997. ARMY NOMINATIONS BEGINNING ROBERT R. BOTTIN, THE FOLLOWING ARMY NATIONAL GUARD OF THE MAJ. GEN. JOHN E. RHODES, 0000 JR., AND ENDING DIANE P. ROUSSEAU, WHICH NOMINA- UNITED STATES OFFICERS FOR APPOINTMENT IN THE TIONS WERE RECEIVED BY THE SENATE AND APPEARED RESERVE OF THE ARMY TO THE GRADE INDICATED IN THE NAVY UNDER TITLE 10, UNITED STATES CODE, SECTION 12203: IN THE CONGRESSIONAL RECORD OF JUNE 5, 1997. THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT ARMY NOMINATIONS BEGINNING DOREEN M* AGIN, AND To be major general IN THE RESERVE TO THE GRADE INDICATED UNDER ENDING DONALD G. ZUGNER, WHICH NOMINATIONS WERE TITLE 10, UNITED STATES CODE, SECTION 12203: RECEIVED BY THE SENATE AND APPEARED IN THE CON- BRIG. GEN. DARREL P. BAKER, 0000 GRESSIONAL RECORD OF JUNE 10, 1997. BRIG. GEN. MURREL J. BOWEN, JR., 0000 To be rear admiral ARMY NOMINATIONS BEGINNING BRET T. ACKERMANN, BRIG. GEN. JOHN D. HAVENS, 0000 AND ENDING JOAN H. ZELLER, WHICH WERE RECEIVED BRIG. GEN. EUGENE S. IMAI, 0000 REAR ADM. (LH) WILLIAM H. BUTLER, 0000 BY THE SENATE AND APPEARED IN THE CONGRESSIONAL BRIG. GEN. THOMAS D. KINLEY, 0000 REAR ADM. (LH) CASEY W. COANE, 0000 RECORD OF JUNE 10, 1997. BRIG. GEN. FEDERICO LOPEZ III, 0000 REAR ADM. (LH) WILLIAM E. HERRON, 0000 BRIG. GEN. JOEL W. NORMAN, 0000 REAR ADM. (LH) STEPHEN T. KEITH, 0000 BRIG. GEN. JOHN C. ROWLAND, 0000 REAR ADM. (LH) WILLIAM J. LOGAN, 0000 IN THE COAST GUARD

To be brigadier general THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT COAST GUARD NOMINATIONS BEGINNING CATHERINE IN THE U.S. NAVY TO THE GRADE INDICATED WHILE AS- M. KELLY, AND ENDING RONALD W. REUSCH, WHICH COL. JOHN C. ATKINSON, 0000 SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- NOMINATIONS WERE RECEIVED BY THE SENATE AND AP- COL. JOHN A. BATHKE, 0000 BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION PEARED IN THE CONGRESSIONAL RECORD OF FEBRUARY COL. WILLIAM H. HALL, 0000 601: 27, 1997. COL. DENNIS A. KAMIMURA, 0000 COAST GUARD NOMINATIONS OF RICHARD W. SANDERS, COL. EUGENE P. KYLNOOT, 0000 To be vice admiral WHICH WAS RECEIVED BY THE SENATE AND APPEARED COL. DENNIS D. KRSNAK, 0000 IN THE CONGRESSIONAL RECORD OF MAY 15, 1997. COL. BENNY M. PAULINO, 0000 REAR ADM. (LH) HENRY C. GIFFIN III, 0000 COL. JAMES L. PRUITT, 0000 THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT IN THE MARINE CORPS COL. EDWIN H. ROBERTS, JR., 0000 IN THE U.S. NAVY TO THE GRADE INDICATED UNDER COL. CHARLES L. ROSENFELD, 0000 TITLE 10, UNITED STATES CODE, SECTION 624: MARINE CORPS NOMINATION OF GILDA A. JACKSON, COL. JOHN R. SCALES, 0000 WHICH WAS RECEIVED BY THE SENATE AND APPEARED COL. JOHN A. TYMESON, 0000 To be rear admiral IN THE CONGRESSIONAL RECORD OF APRIL 7, 1997. COL. BRIAN D. WINTER, 0000 MARINE CORPS NOMINATION OF RICHARD L. SONGER, REAR ADM. (LH) TIMOTHY R. BEARD, 0000 THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT WHICH WAS RECEIVED BY THE SENATE AND APPEARED REAR ADM. (LH) DAVID L. BREWER III, 0000 IN THE CONGRESSIONAL RECORD OF MAY 15, 1997. IN THE U.S. ARMY TO THE GRADE INDICATED WHILE AS- REAR ADM. (LH) STANLEY W. BRYANT, 0000 SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- MARINE CORPS NOMINATIONS BEGINNING ROBERT E. REAR ADM. (LH) TONEY M. BUCCHI, 0000 BALLARD, AND ENDING PATRICK K WYMAN, WHICH NOMI- BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION REAR ADM. (LH) WILLIAM W. COPELAND, JR., 0000 601: NATIONS WERE RECEIVED BY THE SENATE AND AP- REAR ADM. (LH) JOHN W. CRAINE, JR., 0000 PEARED IN THE CONGRESSIONAL RECORD OF MAY 15, To be lieutenant general REAR ADM. (LH) ROBERT E. FRICK, 0000 1997. REAR ADM. (LH) PAUL G. GAFFNEY II, 0000 MARINE CORPS NOMINATIONS BEGINNING DAVID J. MAJ. GEN. RICHARD A. CHILCOAT, 0000 REAR ADM. (LH) EDMUND P. GIAMBASTIANI, JR., 0000 BIOW, AND ENDING ANDREW D. ZINN, WHICH NOMINA- REAR ADM. (LH) JOHN J. GROSSENBACHER, 0000 THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT TIONS WERE RECEIVED BY THE SENATE AND APPEARED REAR ADM. (LH) JAMES B. HINKLE, 0000 IN THE U.S. ARMY TO THE GRADE INDICATED WHILE AS- IN THE CONGRESSIONAL RECORD OF JUNE 2, 1997. REAR ADM. (LH) GORDON S. HOLDER, 0000 SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- MARINE CORPS NOMINATION OF JOHN M. METTERLE, REAR ADM. (LH) MARTIN J. MAYER, 0000 BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION WHICH WAS RECEIVED BY THE SENATE AND APPEARED REAR ADM. (LH) BARBARA E. MC GANN, 0000 601: IN THE CONGRESSIONAL RECORD OF JUNE 10, 1997. REAR ADM. (LH) CHARLES W. MOORE, JR., 0000 MARINE CORPS NOMINATION OF JOHN J. EGAN, WHICH To be lieutenant general REAR ADM. (LH) JOHN B. NATHMAN, 0000 WAS RECEIVED BY THE SENATE AND APPEARED IN THE REAR ADM. (LH) WILLIAM R. SCHMIDT, 0000 CONGRESSIONAL RECORD OF JUNE 10, 1997. MAJ. GEN. THOMAS N. BURNETTE, JR., 0000 REAR ADM. (LH) ROBERT C. WILLIAMSON, 0000

THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT IN THE NAVY IN THE U.S. ARMY TO THE GRADE INDICATED WHILE AS- IN THE U.S. NAVY TO THE GRADE INDICATED UNDER NAVY NOMINATION OF TIMOTHY S. GARROLD, WHICH SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- TITLE 10, UNITED STATES CODE, SECTION 624: BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION WAS RECEIVED BY THE SENATE AND APPEARED IN THE 601: To be rear admiral (lower half) CONGRESSIONAL RECORD OF MAY 15, 1997. NAVY NOMINATIONS BEGINNING JAMES P ADAMS, AND To be lieutenant general CAPT. JOSEPH W. DYER, JR., 0000 ENDING LEONARD A. ZINGARELLI, WHICH NOMINATIONS MAJ. GEN. PAUL J. KERN, 0000 IN THE ARMY WERE RECEIVED BY THE SENATE AND APPEARED IN THE CONGRESSIONAL RECORD OF JUNE 2, 1997. THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT NAVY NOMINATIONS BEGINNING CHRISTINE L IN THE U.S. ARMY TO THE GRADE INDICATED WHILE AS- IN THE U.S. ARMY TO THE GRADE INDICATED WHILE AS- ABELEIN, AND ENDING LARRY L YOUNGER, WHICH NOMI- SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- SIGNED TO A POSITION OF IMPORTANCE AND RESPONSI- NATIONS WERE RECEIVED BY THE SENATE AND AP- BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION BILITY UNDER TITLE 10, UNITED STATES CODE, SECTION PEARED IN THE CONGRESSIONAL RECORD OF JUNE 11, 601: 601: 1997.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00125 Fmt 0637 Sfmt 9801 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6794 CONGRESSIONAL RECORD — SENATE June 27, 1997 H.R. 2014, AS AMENDED AND Sec. 302. Establishment of nondeductible tax- Sec. 716. Repeal of application of unrelated PASSED free individual retirement ac- business income tax to ESOPs. counts. Sec. 717. Diversification in section 401(k) plan Resolved, That the bill from the House of Sec. 303. Distributions from certain plans may investments. Representatives (H.R. 2014) entitled ‘‘An Act be used without penalty to pur- Subtitle C—Revisions Relating to Disasters to provide for reconciliation pursuant to sub- chase first homes and when un- Sec. 721. Treatment of livestock sold on account sections (b)(2) and (d) of section 105 of the employed. concurrent resolution on the budget for fis- of weather-related conditions. Sec. 304. Certain bullion not treated as collect- Sec. 722. Gain or loss from sale of livestock dis- cal year 1998.’’, do pass with the following ibles. amendment: regarded for purposes of earned Strike out all after the enacting clause and Subtitle B—Capital Gains income credit. insert: Sec. 311. 20 percent maximum capital gains rate Sec. 723. Mortgage financing for residences lo- cated in disaster areas. SECTION 1. SHORT TITLE; AMENDMENT OF 1986 for individuals. CODE; TABLE OF CONTENTS. Sec. 312. Modifications to exclusion of gain on Sec. 724. Distributions from individual retire- (a) SHORT TITLE.—This Act may be cited as certain small business stock. ment accounts may be used with- the ‘‘Revenue Reconciliation Act of 1997’’. Sec. 313. Rollover of gain from sale of qualified out penalty to replace or repair (b) AMENDMENT OF 1986 CODE.—Except as oth- stock. property damaged in presi- erwise expressly provided, whenever in this Act Sec. 314. Exemption from tax for gain on sale of dentially declared disaster areas. an amendment or repeal is expressed in terms of principal residence. Sec. 725. Elimination of 10 percent floor for dis- an amendment to, or repeal of, a section or aster losses. TITLE IV—ESTATE, GIFT, AND Sec. 726. Abatement of interest on underpay- other provision, the reference shall be consid- GENERATION-SKIPPING TAX PROVISIONS ered to be made to a section or other provision ments by taxpayers in presi- Sec. 401. Cost-of-living adjustments relating to of the Internal Revenue Code of 1986. dentially declared disaster areas. estate and gift tax provisions. (c) TABLE OF CONTENTS.—The table of con- Subtitle D—Provisions Relating to Small tents for this Act is as follows: Sec. 402. Family-owned business exclusion. Businesses Sec. 403. Treatment of land subject to a quali- Sec. 1. Short title; amendment of 1986 Code; Sec. 731. Waiver of penalty through June 30, fied conservation easement. table of contents. 1998, on small businesses failing to Sec. 404. 20-year installment payment where es- TITLE I—CHILD TAX CREDIT AND OTHER make electronic fund transfers of tate consists largely of interest in FAMILY TAX RELIEF taxes. closely held business. Sec. 732. Minimum tax not to apply to farmers’ Sec. 101. Child tax credit. Sec. 405. No interest on certain portion of estate installment sales. Sec. 102. Adjustment of minimum tax exemption tax extended under section 6166, amounts for taxpayers other than Sec. 733. Increase in deduction for health insur- reduced interest on remaining ance costs of self-employed indi- corporations. portion, and no deduction for Sec. 103. Allowance of credit for employer ex- viduals. such reduced interest. penses for child care assistance. Sec. 734. Sense of the Senate with respect to Sec. 406. Extension of treatment of certain rents Sec. 104. Expansion of coordinated enforcement self-employment tax of limited under section 2032A to lineal de- efforts of Internal Revenue Serv- partners. scendants. ice and HHS Office of Child Sup- Subtitle E—Foreign Provisions Sec. 407. Expansion of exception from genera- port Enforcement. PART I—GENERAL PROVISIONS Sec. 105. Adoption expenses. tion-skipping transfer tax for transfers to individuals with de- Sec. 741. Treatment of computer software as TITLE II—EDUCATION INCENTIVES ceased parents. FSC export property. Subtitle A—Tax Benefits Relating to Education TITLE V—EXTENSIONS Sec. 742. Denial of treaty benefits for certain Expenses payments through hybrid entities. Sec. 201. HOPE credit for higher education tui- Sec. 501. Research tax credit. Sec. 743. United States property not to include tion and related expenses. Sec. 502. Contributions of stock to private foun- certain assets acquired by dealers Sec. 202. Deduction for interest on education dations. in ordinary course of trade or loans. Sec. 503. Work opportunity tax credit. business. Sec. 203. Penalty-free withdrawals from indi- Sec. 504. Orphan drug tax credit. Sec. 744. Exemption for active financing in- vidual retirement plans for higher TITLE VI—INCENTIVES FOR REVITALIZA- come. education expenses. TION OF THE DISTRICT OF COLUMBIA Sec. 745. Treatment of nonresident aliens en- Subtitle B—Expanded Education Investment Sec. 601. Tax incentives for revitalization of the gaged in international transpor- Savings Opportunities District of Columbia. tation services. PART I—QUALIFIED TUITION PROGRAMS TITLE VII—MISCELLANEOUS PROVISIONS PART II—TREATMENT OF PASSIVE FOREIGN INVESTMENT COMPANIES Sec. 211. Exclusion from gross income of edu- Subtitle A—Provisions Relating to Excise Taxes cation distributions from qualified Sec. 751. United States shareholders of con- Sec. 701. Repeal of tax on diesel fuel used in tuition programs. trolled foreign corporations not recreational boats. Sec. 212. Eligible educational institutions per- subject to PFIC inclusion. Sec. 702. Intercity passenger rail fund. mitted to maintain qualified tui- Sec. 752. Election of mark to market for market- Sec. 703. Modification of tax treatment of hard tion programs; other modifications able stock in passive foreign in- cider. of qualified State tuition pro- vestment company. Sec. 704. General revenue portion of highway grams. Sec. 753. Effective date. motor fuels taxes deposited into Subtitle F—Other Provisions PART II—EDUCATION INDIVIDUAL RETIREMENT Highway Trust Fund. ACCOUNTS Sec. 705. Rate of tax on certain special fuels de- Sec. 761. Tax-exempt status for certain State Sec. 213. Education individual retirement ac- termined on basis of Btu equiva- worker’s compensation act compa- counts. lency with gasoline. nies. Subtitle C—Other Education Initiatives Sec. 706. Study of feasibility of moving collec- Sec. 762. Election to continue exception from treatment of publicly traded part- Sec. 221. Extension of exclusion for employer- tion point for distilled spirits ex- nerships as corporations. provided educational assistance. cise tax. Sec. 222. Repeal of limitation on qualified Sec. 707. Extension and modification of sub- Sec. 763. Exclusion from unrelated business tax- 501(c)(3) bonds other than hos- sidies for alcohol fuels. able income for certain sponsor- pital bonds. Sec. 708. Clarification of authority to use semi- ship payments. Sec. 223. Increase in arbitrage rebate exception generic designations on wine la- Sec. 764. Associations of holders of timeshare for governmental bonds used to fi- bels. interests to be taxed like other nance education facilities. homeowners associations. Subtitle B—Provisions Relating to Pensions and Sec. 765. Increased deductibility of business Sec. 224. 2-percent floor on miscellaneous Fringe Benefits itemized deductions not to apply meal expenses for individuals sub- Sec. 711. Treatment of multiemployer plans to certain continuing education ject to Federal hours of service under section 415. expenses of elementary and sec- and seafood processors. Sec. 712. Technical correction relating to par- ondary school teachers. Sec. 766. Deduction in computing adjusted gross Sec. 225. Treatment of cancellation of certain tial termination of pension plans. income for expenses in connection student loans. Sec. 713. Increase in current liability funding with service performed by certain limit. officials. TITLE III—SAVINGS AND INVESTMENT Sec. 714. Spousal consent required for certain Sec. 767. Increase in standard mileage rate ex- INCENTIVES distributions and loans under pense deduction for charitable use Subtitle A—Retirement Savings qualified cash or deferred ar- of passenger automobile. Sec. 301. Restoration of IRA deduction for cer- rangement. Sec. 768. Expensing of environmental remedi- tain taxpayers. Sec. 715. Special rules for church plans. ation costs.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00126 Fmt 0637 Sfmt 6343 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6795 Sec. 769. Combined employment tax reporting Sec. 822. Certain preferred stock treated as Sec. 877. Expansion of requirement that invol- demonstration project. boot. untarily converted property be re- Sec. 770. Increased maximum capital expendi- Subtitle D—Administrative Provisions placed with property acquired ture limit for qualified small issue Sec. 831. Decrease of threshold for reporting from an unrelated person. bonds. Sec. 878. Treatment of exception from install- payments to corporations per- Sec. 771. Extension of credit for electricity pro- ment sales rules for sales of prop- forming services for Federal agen- duced from certain renewable re- erty by a manufacturer to a deal- cies. sources. er. Sec. 772. Taxable income limit on percentage de- Sec. 832. Disclosure of return information for Sec. 879. Minimum pension accrued benefit dis- pletion not to apply to marginal administration of certain veterans tributable without consent in- production. programs. creased to $5,000. Sec. 773. Clarification of treatment of certain Sec. 833. Returns of beneficiaries of estates and Sec. 880. Election to receive taxable cash com- receivables purchased by coopera- trusts required to file returns con- pensation in lieu of nontaxable tive hospital service organiza- sistent with estate or trust return parking benefits. tions. or to notify Secretary of inconsist- Sec. 881. Extension of temporary unemployment Sec. 774. Exception for bonds guaranteed by ency. tax. Federal Home Loan Bank Board Sec. 834. Continuous levy on certain payments. Sec. 882. Repeal of excess distribution and ex- from restriction on Federal guar- Sec. 835. Modification of levy exemption. cess retirement accumulation tax. antee of bonds. Sec. 836. Confidentiality and disclosure of re- Sec. 883. Limitation on charitable remainder Sec. 775. Increased period for deduction for turns and return information. trust eligibility for certain trusts. traveling expenses while working Subtitle E—Excise Tax Provisions Sec. 884. Increase in tax on prohibited trans- away from home. Sec. 841. Extension and modification of Airport actions. Sec. 885. Basis recovery rules for annuities over Sec. 776. Charitable contribution deduction for and Airway Trust Fund taxes. certain expenses incurred in sup- Sec. 842. Restoration of Leaking Underground more than one life. port of Native Alaskan subsist- Storage Tank Trust Fund taxes. TITLE IX—FOREIGN-RELATED ence whaling. Sec. 843. Application of communications tax to SIMPLIFICATION PROVISIONS Sec. 777. Modification to eligibility criteria for long-distance prepaid telephone Subtitle A—General Provisions designation of future enterprise cards. Sec. 901. Certain individuals exempt from for- zones in Alaska or Hawaii. Sec. 844. Uniform rate of tax on vaccines. eign tax credit limitation. Sec. 778. Clarification of de minimis fringe ben- Sec. 845. Credit for tire tax in lieu of exclusion Sec. 902. Exchange rate used in translating for- efit rules to no-charge employee of value of tires in computing eign taxes. meals. price. Sec. 903. Election to use simplified section 904 Sec. 779. Clarification of standard to be used in Sec. 846. Increase in excise taxes on tobacco limitation for alternative min- determining employment tax sta- products. imum tax. tus of securities brokers. Subtitle F—Provisions Relating to Tax-Exempt Sec. 904. Treatment of personal transactions by Sec. 780. Sense of the Senate regarding reform Entities individuals under foreign cur- of the Internal Revenue Code of rency rules. Sec. 851. Expansion of look-thru rule for inter- 1986. Subtitle B—Treatment of Controlled Foreign Sec. 781. Sense of the Senate regarding tax est, annuities, royalties, and rents Corporations treatment of stock options. derived by subsidiaries of tax-ex- Sec. 782. Sense of the Senate on estate taxes. empt organizations. Sec. 911. Gain on certain stock sales by con- Sec. 783. Qualified games of chance. Sec. 852. Limitation on increase in basis of trolled foreign corporations treat- Sec. 784. Survivor benefits for public safety offi- property resulting from sale by ed as dividends. cers killed in the line of duty. tax-exempt entity to a related per- Sec. 912. Miscellaneous modifications to subpart Sec. 785. Treatment of certain disability benefits son. F. received by former police officers Sec. 853. Termination of exception from rules Sec. 913. Indirect foreign tax credit allowed for or firefighters. relating to exempt organizations certain lower tier companies. Sec. 786. Removal of dollar limitation on benefit which provide commercial-type in- Subtitle C—Repeal of Excise Tax on Transfers to payments from a defined benefit surance. Foreign Entities plan maintained for certain police Subtitle G—Foreign Provisions Sec. 921. Repeal of excise tax on transfers to and fire employees. foreign entities; recognition of Sec. 787. Debate on a reconciliation bill. Sec. 861. Definition of foreign personal holding company income. gain on certain transfers to for- Sec. 788. Exclusion from income of severance eign trusts and estates. payment amounts; time periods Sec. 862. Personal property used predominantly Subtitle D—Information Reporting for carryback and carryforward in the United States treated as of unused credits. not property of a like kind with Sec. 931. Clarification of application of return Sec. 789. Current refundings of certain tax-ex- respect to property used predomi- requirement to foreign partner- empt bonds. nantly outside the United States. ships. Sec. 790. Special rule for thrifts which become Sec. 863. Holding period requirement for certain Sec. 932. Controlled foreign partnerships subject large banks. foreign taxes. to information reporting com- Sec. 791. Sense of the Senate regarding middle- Sec. 864. Source rules for inventory property. parable to information reporting class taxpayers benefiting from Sec. 865. Interest on underpayments not re- for controlled foreign corpora- tax cuts. duced by foreign tax credit tions. Sec. 792. Averaging of farm income over 3 years. carrybacks. Sec. 933. Modifications relating to returns re- TITLE VIII—REVENUES Sec. 866. Clarification of period of limitations quired to be filed by reason of on claim for credit or refund at- changes in ownership interests in Subtitle A—Financial Products tributable to foreign tax credit foreign partnership. Sec. 801. Constructive sales treatment for appre- carryforward. Sec. 934. Transfers of property to foreign part- ciated financial positions. Sec. 867. Modification to foreign tax credit nerships subject to information re- Sec. 802. Limitation on exception for investment carryback and carryover periods. porting comparable to information companies under section 351. Sec. 868. Repeal of exception to alternative min- reporting for such transfers to for- Sec. 803. Gains and losses from certain termi- imum foreign tax credit limit. eign corporations. nations with respect to property. Subtitle H—Other Revenue Provisions Sec. 935. Extension of statute of limitation for Subtitle B—Corporate Organizations and foreign transfers. Sec. 871. Termination of suspense accounts for Reorganizations Sec. 936. Increase in filing thresholds for re- family corporations required to turns as to organization of foreign Sec. 811. Tax treatment of certain extraordinary use accrual method of accounting. dividends. corporations and acquisitions of Sec. 872. Modification of taxable years to which stock in such corporations. Sec. 812. Application of section 355 to distribu- net operating losses may be car- tions followed by acquisitions and ried. Subtitle E—Determination of Foreign or to intragroup transactions. Sec. 873. Expansion of denial of deduction for Domestic Status of Partnerships Sec. 813. Tax treatment of redemptions involv- certain amounts paid in connec- Sec. 941. Determination of foreign or domestic ing related corporations. tion with insurance. status of partnerships. Sec. 814. Modification of holding period appli- Sec. 874. Allocation of basis among properties Subtitle F—Other Simplification Provisions cable to dividends received deduc- distributed by partnership. Sec. 951. Transition rule for certain trusts. tion. Sec. 875. Repeal of requirement that inventory Sec. 952. Repeal of stock and securities safe Subtitle C—Other Corporate Provisions be substantially appreciated. harbor requirement that principal Sec. 821. Registration and other provisions re- Sec. 876. Limitation on property for which in- office be outside the United lating to confidential corporate come forecast method may be States. tax shelters. used. Sec. 953. Miscellaneous clarifications.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00127 Fmt 0637 Sfmt 6343 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6796 CONGRESSIONAL RECORD — SENATE June 27, 1997 TITLE X—SIMPLIFICATION PROVISIONS Sec. 1053. Attribution rules applicable to tenant Sec. 1213. Repeal of required maintenance of RELATING TO INDIVIDUALS AND BUSI- ownership. records on premises of distilled NESSES Sec. 1054. Credit for tax paid by REIT on re- spirits plant. Subtitle A—Provisions Relating to Individuals tained capital gains. Sec. 1214. Fermented material from any brewery Sec. 1055. Repeal of 30-percent gross income re- may be received at a distilled spir- Sec. 1001. Basic standard deduction and min- quirement. its plant. imum tax exemption amount for Sec. 1056. Modification of earnings and profits Sec. 1215. Repeal of requirement for wholesale certain dependents. rules for determining whether dealers in liquors to post sign. Sec. 1002. Increase in amount of tax exempt REIT has earnings and profits Sec. 1216. Refund of tax to wine returned to from estimated tax requirements. from non-REIT year. bond not limited to Sec. 1003. Treatment of certain reimbursed ex- Sec. 1057. Treatment of foreclosure property. unmerchantable wine. penses of rural mail carriers. Sec. 1058. Payments under hedging instru- Sec. 1217. Use of additional ameliorating mate- Sec. 1004. Treatment of traveling expenses of ments. rial in certain wines. certain Federal employees en- Sec. 1059. Excess noncash income. Sec. 1218. Domestically produced beer may be gaged in criminal investigations. Sec. 1060. Prohibited transaction safe harbor. withdrawn free of tax for use of Subtitle B—Provisions Relating to Businesses Sec. 1061. Shared appreciation mortgages. foreign embassies, legations, etc. Generally Sec. 1062. Wholly owned subsidiaries. Sec. 1219. Beer may be withdrawn free of tax Sec. 1063. Effective date. Sec. 1011. Modifications to look-back method for destruction. for long-term contracts. Subtitle E—Provisions Relating to Regulated Sec. 1220. Authority to allow drawback on ex- Sec. 1012. Minimum tax treatment of certain Investment Companies ported beer without submission of property and casualty insurance Sec. 1071. Repeal of 30-percent gross income lim- records. companies. itation. Sec. 1221. Transfer to brewery of beer imported Sec. 1013. Use of estimates of shrinkage for in- Subtitle F—Taxpayer Protections in bulk without payment of tax. Sec. 1222. Transfer to bonded wine cellars of ventory accounting. Sec. 1081. Reasonable cause exception for cer- wine imported in bulk without Sec. 1014. Qualified lessee construction allow- tain penalties. payment of tax. ances for short-term leases. Sec. 1082. Clarification of period for filing Subtitle C—Simplification Relating to Electing claims for refunds. PART III—OTHER EXCISE TAX PROVISIONS Large Partnerships Sec. 1083. Repeal of authority to disclose Sec. 1231. Authority to grant exemptions from PART I—GENERAL PROVISIONS whether prospective juror has registration requirements. been audited. Sec. 1232. Repeal of expired provisions. Sec. 1021. Simplified flow-through for electing Sec. 1084. Clarification of statute of limitations. Sec. 1233. Simplification of imposition of excise large partnerships. Sec. 1085. Penalty for unauthorized inspection tax on arrows. Sec. 1022. Simplified audit procedures for elect- of tax returns or tax return infor- Sec. 1234. Modifications to retail tax on heavy ing large partnerships. mation. trucks. Sec. 1023. Due date for furnishing information Sec. 1086. Civil damages for unauthorized in- Sec. 1235. Skydiving flights exempt from tax on to partners of electing large part- spection of returns and return in- transportation of persons by air. nerships. formation; notification of unlaw- Sec. 1236. Allowance or credit of refund for tax- Sec. 1024. Returns may be required on magnetic ful inspection or disclosure. paid aviation fuel purchased by media. TITLE XI—SIMPLIFICATION PROVISIONS registered producer of aviation Sec. 1025. Treatment of partnership items of in- RELATING TO ESTATE AND GIFT TAXES fuel. dividual retirement accounts. Subtitle B—Tax-Exempt Bond Provisions Sec. 1026. Effective date. Sec. 1101. Gifts to charities exempt from gift tax filing requirements. Sec. 1241. Repeal of $100,000 limitation on PART II—PROVISIONS RELATED TO TEFRA Sec. 1102. Clarification of waiver of certain unspent proceeds under 1-year ex- PARTNERSHIP PROCEEDINGS rights of recovery. ception from rebate. Sec. 1031. Treatment of partnership items in de- Sec. 1103. Transitional rule under section Sec. 1242. Exception from rebate for earnings on ficiency proceedings. 2056A. bona fide debt service fund under Sec. 1032. Partnership return to be determina- Sec. 1104. Treatment for estate tax purposes of construction bond rules. tive of audit procedures to be fol- short-term obligations held by Sec. 1243. Repeal of debt service-based limita- lowed. nonresident aliens. tion on investment in certain non- Sec. 1033. Provisions relating to statute of limi- Sec. 1105. Distributions during first 65 days of purpose investments. tations. taxable year of estate. Sec. 1244. Repeal of expired provisions. Sec. 1034. Expansion of small partnership ex- Sec. 1106. Separate share rules available to es- Sec. 1245. Effective date. ception. tates. Subtitle C—Tax Court Procedures Sec. 1035. Exclusion of partial settlements from Sec. 1107. Executor of estate and beneficiaries Sec. 1251. Overpayment determinations of tax 1-year limitation on assessment. treated as related persons for dis- court. Sec. 1036. Extension of time for filing a request allowance of losses, etc. Sec. 1252. Redetermination of interest pursuant for administrative adjustment. Sec. 1108. Treatment of funeral trusts. to motion. Sec. 1037. Availability of innocent spouse relief Sec. 1109. Adjustments for gifts within 3 years Sec. 1253. Application of net worth requirement in context of partnership pro- of decedent’s death. for awards of litigation costs. ceedings. Sec. 1110. Clarification of treatment of survivor Sec. 1254. Proceedings for determination of em- Sec. 1038. Determination of penalties at part- annuities under qualified ter- ployment status. nership level. minable interest rules. Subtitle D—Other Provisions Sec. 1039. Provisions relating to court jurisdic- Sec. 1111. Treatment under qualified domestic tion, etc. trust rules of forms of ownership Sec. 1261. Extension of due date of first quarter Sec. 1040. Treatment of premature petitions which are not trusts. estimated tax payment by private filed by notice partners or 5-per- Sec. 1112. Opportunity to correct certain fail- foundations. cent groups. ures under section 2032A. Sec. 1262. Clarification of authority to withhold Sec. 1041. Bonds in case of appeals from certain Sec. 1113. Authority to waive requirement of Puerto Rico income taxes from proceeding. United States trustee for qualified salaries of Federal employees. Sec. 1042. Suspension of interest where delay in domestic trusts. Sec. 1263. Certain notices disregarded under computational adjustment result- TITLE XII—SIMPLIFICATION PROVISIONS provision increasing interest rate ing from certain settlements. RELATING TO EXCISE TAXES, TAX-EX- on large corporate underpay- Sec. 1043. Special rules for administrative ad- EMPT BONDS, AND OTHER MATTERS ments. justment requests with respect to Subtitle A—Excise Tax Simplification TITLE XIII—PENSION SIMPLIFICATION bad debts or worthless securities. PART I—EXCISE TAXES ON HEAVY TRUCKS AND Sec. 1301. Matching contributions of self-em- PART III—PROVISION RELATING TO CLOSING OF LUXURY CARS ployed individuals not treated as PARTNERSHIP TAXABLE YEAR WITH RESPECT Sec. 1201. Increase in de minimis limit for after- elective employer contributions. Sec. 1302. Contributions to IRAs through pay- TO DECEASED PARTNER, ETC. market alterations for heavy roll deductions. Sec. 1046. Closing of partnership taxable year trucks and luxury cars. Sec. 1303. Plans not disqualified merely by ac- with respect to deceased partner, PART II—PROVISIONS RELATED TO DISTILLED etc. cepting rollover contributions. SPIRITS, WINES, AND BEER Sec. 1304. Modification of prohibition of assign- Subtitle D—Provisions Relating to Real Estate Sec. 1211. Credit or refund for imported bottled ment or alienation. Investment Trusts distilled spirits returned to dis- Sec. 1305. Elimination of paperwork burdens on Sec. 1051. Clarification of limitation on max- tilled spirits plant. plans. imum number of shareholders. Sec. 1212. Authority to cancel or credit export Sec. 1306. Modification of 403(b) exclusion al- Sec. 1052. De minimis rule for tenant services bonds without submission of lowance to conform to 415 modi- income. records. fications.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00128 Fmt 0637 Sfmt 6343 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6797 Sec. 1307. New technologies in retirement plans. fying child who has attained the age of 13 as of an education individual retirement account Sec. 1308. Extension of moratorium on applica- the close of the calendar year in which the tax- maintained for the benefit of a beneficiary and tion of certain nondiscrimination able year of the taxpayer begins, the amount of such amount is subject to tax under section rules to State and local govern- the credit allowed under subsection (a) for such 529(f) or 530(c)(3), and ments. taxable year with respect to such child (after ‘‘(B) the amount of the credit allowed under Sec. 1309. Clarification of certain rules relating the application of paragraphs (2) and (3)) shall this section for the prior taxable year was con- to employee stock ownership plans not exceed the excess of— tingent on a contribution being made to such a of S corporations. ‘‘(A) the aggregate amount contributed by the program or account for the benefit of such bene- Sec. 1310. Modification of 10 percent tax for taxpayer for such taxable year for the benefit of ficiary, nondeductible contributions. such child to qualified tuition programs (as de- the taxpayer’s tax imposed by this chapter for Sec. 1311. Modification of funding requirements fined in section 529) and education individual the taxable year shall be increased by the lesser for certain plans. retirement accounts (as defined in section 530), of the amount described in subparagraph (A) or TITLE XIV—TECHNICAL AMENDMENTS RE- over the credit described in subparagraph (B). LATED TO SMALL BUSINESS JOB PRO- ‘‘(B) the aggregate amount distributed during ‘‘(2) NO CREDITS AGAINST TAX, ETC.—Any in- TECTION ACT OF 1996 AND OTHER LEGIS- such taxable year from such programs and ac- crease in tax under this subsection shall not be LATION counts (the beneficiary of which is such child) treated as a tax imposed by this chapter for pur- which is subject to tax under section 529(f) or Sec. 1401. Amendments related to Small Busi- poses of determining— 530(c)(3). ness Job Protection Act of 1996. ‘‘(A) the amount of any credit under this sub- ‘‘(2) LIMITATION BASED ON ADJUSTED GROSS IN- Sec. 1402. Amendments related to Health Insur- part or subpart B or D of this part, and COME.— ance Portability and Account- ‘‘(B) the amount of the minimum tax imposed ‘‘(A) IN GENERAL.—The $500 amount in sub- ability Act of 1996. by section 55. section (a) shall be reduced (but not below zero) Sec. 1403. Amendments related to Taxpayer Bill ‘‘(f) OTHER DEFINITIONS.—For purposes of by $25 for each $1,000 (or fraction thereof) by of Rights 2. this section, the terms ‘qualified tuition pro- which the taxpayer’s modified adjusted gross in- Sec. 1404. Miscellaneous provisions. gram’ and ‘education individual retirement ac- come exceeds the threshold amount. For pur- count’ have the meanings given such terms by TITLE XV—CHILDREN’S HEALTH poses of the preceding sentence, the term ‘modi- section 529 and 530, respectively. INSURANCE INITIATIVES fied adjusted gross income’ means adjusted gross ‘‘(g) PHASE-IN OF CREDIT.—In the case of tax- Sec. 1501. Establishment of children’s health in- income increased by any amount excluded from able years beginning in 1997— surance initiatives. gross income under section 911, 931, or 933. ‘‘(1) subsection (a)(1) shall be applied by sub- Sec. 1502. Applicability. ‘‘(B) THRESHOLD AMOUNT.—For purposes of stituting ‘$250’ for ‘$500’, and TITLE XVI—BUDGET ENFORCEMENT subparagraph (A), the term ‘threshold amount’ ‘‘(2) subsection (c)(1)(B) shall be applied by Subtitle A—Amendments to the Congressional means— substituting ‘age of 13’ for ‘age of 17’.’’. ‘‘(i) $110,000 in the case of a joint return, Budget and Impoundment Control Act of 1974 (b) CONFORMING AMENDMENTS.— ‘‘(ii) $75,000 in the case of an individual who (1) Subsection (a) of section 26 is amended by Sec. 1601. Amendments to section 201. is not married, and inserting ‘‘(other than the credit allowed by sec- Sec. 1602. Amendments to section 202. ‘‘(iii) $55,000 in the case of a married indi- tion 24)’’ after ‘‘credits allowed by this sub- Sec. 1603. Amendment to section 300. vidual filing a separate return. part’’. Sec. 1604. Amendments to section 301. For purposes of this subparagraph, marital sta- (2) The table of sections for subpart A of part Sec. 1605. Amendments to section 302. tus shall be determined under section 7703. IV of subchapter A of chapter 1 is amended by Sec. 1606. Amendments to section 303. ‘‘(3) LIMITATION BASED ON AMOUNT OF TAX.— inserting after the item relating to section 23 the Sec. 1607. Amendment to section 305. The aggregate credit allowed by subsection (a) following new item: Sec. 1608. Amendment to section 308. (determined after paragraph (2)) shall not ex- Sec. 1609. Amendments to section 311. ceed the excess (if any) of— ‘‘Sec. 24. Child tax credit.’’. Sec. 1610. Amendment to section 312. ‘‘(A) the taxpayer’s regular tax liability for (d) EFFECTIVE DATE.—The amendments made Sec. 1611. Adjustments. the taxable year reduced by the credits allow- by this section shall apply to taxable years be- Sec. 1612. Amendments to title V. able against such tax under this subpart (other ginning after December 31, 1996. Sec. 1613. Repeal of title VI. than this section), over Sec. 1614. Amendments to section 904. SEC. 102. ADJUSTMENT OF MINIMUM TAX EXEMP- ‘‘(B) the sum of— TION AMOUNTS FOR TAXPAYERS Sec. 1615. Repeal of sections 905 and 906. ‘‘(i) the taxpayer’s tentative minimum tax for OTHER THAN CORPORATIONS. Sec. 1616. Amendments to sections 1022 and such taxable year (determined without regard to (a) IN GENERAL.—Subsection (d) of section 55 1024. the alternative minimum tax foreign tax credit), is amended by adding at the end the following Sec. 1617. Amendment to section 1026. plus new paragraph: Subtitle B—Amendments to the Balanced Budg- ‘‘(ii) 50 percent of the credit allowed for the ‘‘(4) ADJUSTMENT OF EXEMPTION AMOUNTS FOR et and Emergency Deficit Control Act of 1985 taxable year under section 32. TAXPAYERS OTHER THAN CORPORATIONS.— Sec. 1651. Purpose. Any reduction in the credit otherwise allowable ‘‘(A) TAXABLE YEARS BEGINNING AFTER DECEM- Sec. 1652. General statement and definitions. by subsection (a) by reason of this paragraph BER 31, 2000 AND BEFORE JANUARY 1, 2003.—In the Sec. 1653. Enforcing discretionary spending lim- shall be allocated pro rata among all qualifying case of any calendar year after 2000 and before its. children for purposes of applying paragraph (1). 2003— Sec. 1654. Violent Crime Reduction Trust Fund. ‘‘(c) QUALIFYING CHILD.—For purposes of this ‘‘(i) the dollar amount applicable under para- Sec. 1655. Enforcing pay-as-you-go. section— graph (1)(A) for such a calendar year shall be Sec. 1656. Reports and orders. ‘‘(1) IN GENERAL.—The term ‘qualifying child’ $600 greater than the dollar amount applicable Sec. 1657. Exempt programs and activities. means any individual if— under paragraph (1)(A) for the prior calendar Sec. 1658. General and special sequestration ‘‘(A) the taxpayer is allowed a deduction year, and rules. under section 151 with respect to such indi- ‘‘(ii) the dollar amount applicable under para- Sec. 1659. The baseline. vidual for the taxable year, graph (1)(B) for such a calendar year shall be Sec. 1660. Technical correction. ‘‘(B) such individual has not attained the age $450 greater than the dollar amount applicable Sec. 1661. Judicial review. of 17 (age of 18 in the case of taxable years be- under paragraph (1)(B) for the prior calendar Sec. 1662. Effective date. ginning after 2002) as of the close of the cal- year. Sec. 1663. Reduction of preexisting balances endar year in which the taxable year of the tax- ‘‘(B) TAXABLE YEARS BEGINNING AFTER DECEM- and exclusion of effects of this payer begins, and BER 31, 2002.—In the case of any calendar year Act from paygo scorecard. ‘‘(C) such individual bears a relationship to after 2002— TITLE I—CHILD TAX CREDIT AND OTHER the taxpayer described in section 32(c)(3)(B). ‘‘(i) the dollar amount applicable under para- FAMILY TAX RELIEF ‘‘(2) EXCEPTION FOR CERTAIN NONCITIZENS.— graph (1)(A) for such a calendar year shall be The term ‘qualifying child’ shall not include $950 greater than the dollar amount applicable SEC. 101. CHILD TAX CREDIT. any individual who would not be a dependent if under paragraph (1)(A) for the prior calendar (a) IN GENERAL.—Subpart A of part IV of sub- the first sentence of section 152(b)(3) were ap- year, and chapter A of chapter 1 (relating to nonrefund- plied without regard to all that follows ‘resident ‘‘(ii) the dollar amount applicable under para- able personal credits) is amended by inserting of the United States’. graph (1)(B) for such a calendar year shall be after section 23 the following new section: ‘‘(d) TAXABLE YEAR MUST BE FULL TAXABLE $700 greater than the dollar amount applicable ‘‘SEC. 24. CHILD TAX CREDIT. YEAR.—Except in the case of a taxable year under paragraph (1)(B) for the prior calendar ‘‘(a) ALLOWANCE OF CREDIT.—There shall be closed by reason of the death of the taxpayer, year. allowed as a credit against the tax imposed by no credit shall be allowable under this section in ‘‘(C) APPLICATION OF TAXABLE YEARS.—The this chapter for the taxable year with respect to the case of a taxable year covering a period of dollar amount applicable under this paragraph each qualifying child of the taxpayer an less than 12 months. to any calendar year shall apply to taxable amount equal to $500. ‘‘(e) RECAPTURE OF CREDIT.— years beginning in such calendar year. ‘‘(b) LIMITATIONS.— ‘‘(1) IN GENERAL.—If— ‘‘(D) ADJUSTMENT.—The Secretary shall re- ‘‘(1) CREDIT LIMITED TO EDUCATION SAVINGS ‘‘(A) during any taxable year any amount is duce the dollar amounts otherwise in effect FOR CERTAIN CHILDREN.—In the case of a quali- withdrawn from a qualified tuition program or under this paragraph for any calendar year to

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00129 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6798 CONGRESSIONAL RECORD — SENATE June 27, 1997 the extent necessary to increase Federal reve- qualified child care facility with respect to a son of a casualty loss to the extent such loss is nues by the amount the Secretary estimates Fed- taxpayer unless— restored by reconstruction or replacement within eral revenues will be reduced by reason of allow- ‘‘(i) enrollment in the facility is open to em- a reasonable period established by the Sec- ing distributions from education individual re- ployees of the taxpayer during the taxable year, retary. tirement accounts under section 530 to be used ‘‘(ii) the facility is not the principal trade or ‘‘(e) SPECIAL RULES.—For purposes of this sec- for qualified elementary and secondary edu- business of the taxpayer unless at least 30 per- tion— cation expenses described in section cent of the enrollees of such facility are depend- ‘‘(1) AGGREGATION RULES.—All persons which 530(b)(2)(A)(ii).’’. ents of employees of the taxpayer, and are treated as a single employer under sub- (b) CONFORMING AMENDMENTS.— ‘‘(iii) the use of such facility (or the eligibility sections (a) and (b) of section 52 shall be treated (1) Subparagraph (C) of section 55(d)(1) is to use such facility) does not discriminate in as a single taxpayer. amended by striking ‘‘$22,500’’ and inserting favor of employees of the taxpayer who are ‘‘(2) PASS-THRU IN THE CASE OF ESTATES AND ‘‘the amount equal to 1⁄2 the dollar amount ap- highly compensated employees (within the TRUSTS.—Under regulations prescribed by the plicable under subparagraph (A) for the taxable meaning of section 414(q)). Secretary, rules similar to the rules of subsection year’’. ‘‘(d) RECAPTURE OF ACQUISITION AND CON- (d) of section 52 shall apply. (2) The last sentence of section 55(d)(3) is STRUCTION CREDIT.— ‘‘(3) ALLOCATION IN THE CASE OF PARTNER- amended by striking ‘‘$165,000 or (ii) $22,500’’ ‘‘(1) IN GENERAL.—If, as of the close of any SHIPS.—In the case of partnerships, the credit and inserting ‘‘the minimum amount of such in- taxable year, there is a recapture event with re- shall be allocated among partners under regula- come (as so determined) for which the exemption spect to any qualified child care facility of the tions prescribed by the Secretary. amount under paragraph (1)(C) is zero, or (ii) taxpayer, then the tax of the taxpayer under ‘‘(f) NO DOUBLE BENEFIT.— such exemption amount (determined without re- this chapter for such taxable year shall be in- ‘‘(1) REDUCTION IN BASIS.—For purposes of gard to this paragraph)’’. creased by an amount equal to the product of— this subtitle— (c) EFFECTIVE DATE.—The amendments made ‘‘(A) the applicable recapture percentage, and ‘‘(A) IN GENERAL.—If a credit is determined by this section shall apply to taxable years be- ‘‘(B) the aggregate decrease in the credits al- under this section with respect to any property ginning after December 31, 2000. lowed under section 38 for all prior taxable by reason of expenditures described in sub- SEC. 103. ALLOWANCE OF CREDIT FOR EMPLOYER years which would have resulted if the qualified section (c)(1)(A), the basis of such property shall EXPENSES FOR CHILD CARE ASSIST- child care expenditures of the taxpayer de- be reduced by the amount of the credit so deter- ANCE. scribed in subsection (c)(1)(A) with respect to mined. (a) IN GENERAL.—Subpart D of part IV of sub- such facility had been zero. ‘‘(B) CERTAIN DISPOSITIONS.—If during any chapter A of chapter 1 (relating to business re- ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.— taxable year there is a recapture amount deter- lated credits) is amended by adding at the end ‘‘(A) IN GENERAL.—For purposes of this sub- mined with respect to any property the basis of the following new section: section, the applicable recapture percentage which was reduced under subparagraph (A), the ‘‘SEC. 45D. EMPLOYER-PROVIDED CHILD CARE shall be determined from the following table: basis of such property (immediately before the CREDIT. ‘‘If the recapture event oc- The applicable recapture event resulting in such recapture) shall be in- ‘‘(a) IN GENERAL.—For purposes of section 38, curs in: percentage is: creased by an amount equal to such recapture the employer-provided child care credit deter- Years 1–3 ...... 100 amount. For purposes of the preceding sentence, mined under this section for the taxable year is Year 4 ...... 85 the term ‘recapture amount’ means any increase an amount equal to 50 percent of the qualified Year 5 ...... 70 in tax (or adjustment in carrybacks or child care expenditures of the taxpayer for such Year 6 ...... 55 carryovers) determined under subsection (d). taxable year. Year 7 ...... 40 ‘‘(2) OTHER DEDUCTIONS AND CREDITS.—No de- ‘‘(b) DOLLAR LIMITATION.—The credit allow- Year 8 ...... 25 duction or credit shall be allowed under any able under subsection (a) for any taxable year Years 9 and 10 ...... 10 other provision of this chapter with respect to shall not exceed $150,000. Years 11 and thereafter .. 0. the amount of the credit determined under this ‘‘(c) DEFINITIONS.—For purposes of this sec- ‘‘(B) YEARS.—For purposes of subparagraph section. tion— (A), year 1 shall begin on the first day of the ‘‘(g) TERMINATION.—This section shall not ‘‘(1) QUALIFIED CHILD CARE EXPENDITURE.— taxable year in which the qualified child care apply to taxable years beginning after December The term ‘qualified child care expenditure’ facility is placed in service by the taxpayer. 31, 1999.’’. means any amount paid or incurred— ‘‘(A) to acquire, construct, rehabilitate, or ex- ‘‘(3) RECAPTURE EVENT DEFINED.—For pur- (b) CONFORMING AMENDMENTS.— pand property— poses of this subsection, the term ‘recapture (1) Section 38(b) is amended— ‘‘(i) which is to be used as part of a qualified event’ means— (A) by striking out ‘‘plus’’ at the end of para- child care facility of the taxpayer, ‘‘(A) CESSATION OF OPERATION.—The cessation graph (11), ‘‘(ii) with respect to which a deduction for de- of the operation of the facility as a qualified (B) by striking out the period at the end of preciation (or amortization in lieu of deprecia- child care facility. paragraph (12), and inserting a comma and tion) is allowable, and ‘‘(B) CHANGE IN OWNERSHIP.— ‘‘plus’’, and ‘‘(iii) which does not constitute part of the ‘‘(i) IN GENERAL.—Except as provided in (C) by adding at the end the following new principal residence (within the meaning of sec- clause (ii), the disposition of a taxpayer’s inter- paragraph: tion 1034) of the taxpayer or any employee of est in a qualified child care facility with respect ‘‘(13) the employer-provided child care credit the taxpayer, to which the credit described in subsection (a) determined under section 45D.’’. ‘‘(B) for the operating costs of a qualified was allowable. (2) The table of sections for subpart D of part child care facility of the taxpayer, including ‘‘(ii) AGREEMENT TO ASSUME RECAPTURE LI- IV of subchapter A of chapter 1 is amended by costs related to the training of employees, to ABILITY.—Clause (i) shall not apply if the per- adding at the end the following new item: scholarship programs, and to the providing of son acquiring such interest in the facility agrees in writing to assume the recapture liability of ‘‘Sec. 45D. Employer-provided child care cred- increased compensation to employees with high- it.’’. er levels of child care training, the person disposing of such interest in effect ‘‘(C) under a contract with a qualified child immediately before such disposition. In the (c) EFFECTIVE DATE.—The amendments made care facility to provide child care services to em- event of such an assumption, the person acquir- by this section shall apply to taxable years be- ployees of the taxpayer, ing the interest in the facility shall be treated as ginning after December 31, 1997. ‘‘(D) under a contract to provide child care re- the taxpayer for purposes of assessing any re- SEC. 104. EXPANSION OF COORDINATED EN- source and referral services to employees of the capture liability (computed as if there had been FORCEMENT EFFORTS OF INTERNAL taxpayer, or no change in ownership). REVENUE SERVICE AND HHS OFFICE ‘‘(E) for the costs of seeking accreditation ‘‘(4) SPECIAL RULES.— OF CHILD SUPPORT ENFORCEMENT. from a child care credentialing or accreditation ‘‘(A) TAX BENEFIT RULE.—The tax for the tax- (a) STATE REPORTING OF CUSTODIAL DATA.— entity. able year shall be increased under paragraph (1) Section 454A(e)(4)(D) of the Social Security Act ‘‘(2) QUALIFIED CHILD CARE FACILITY.— only with respect to credits allowed by reason of (42 U.S.C. 654(e)(4)(D)) is amended by striking ‘‘(A) IN GENERAL.—The term ‘qualified child this section which were used to reduce tax li- ‘‘the birth date of any child’’ and inserting ‘‘the care facility’ means a facility— ability. In the case of credits not so used to re- birth date and custodial status of any child’’. ‘‘(i) the principal use of which is to provide duce tax liability, the carryforwards and (b) MATCHING PROGRAM BY IRS OF CUSTODIAL child care assistance, and carrybacks under section 39 shall be appro- DATA AND TAX STATUS INFORMATION.— ‘‘(ii) which meets the requirements of all ap- priately adjusted. (1) NATIONAL DIRECTORY OF NEW HIRES.—Sec- plicable laws and regulations of the State or ‘‘(B) NO CREDITS AGAINST TAX.—Any increase tion 453(i)(3) of the Social Security Act (42 local government in which it is located, includ- in tax under this subsection shall not be treated U.S.C. 653(i)(3)) is amended by striking ‘‘a claim ing, but not limited to, the licensing of the facil- as a tax imposed by this chapter for purposes of with respect to employment in a tax return’’ and ity as a child care facility. determining the amount of any credit under inserting ‘‘information which is required on a Clause (i) shall not apply to a facility which is subpart A, B, or D of this part. tax return’’. the principal residence (within the meaning of ‘‘(C) NO RECAPTURE BY REASON OF CASUALTY (2) FEDERAL CASE REGISTRY OF CHILD SUPPORT section 1034) of the operator of the facility. LOSS.—The increase in tax under this subsection ORDERS.—Section 453(h) of the such Act (42 ‘‘(B) SPECIAL RULES WITH RESPECT TO A TAX- shall not apply to a cessation of operation of the U.S.C. 653(h)) is amended by adding at the end PAYER.—A facility shall not be treated as a facility as a qualified child care facility by rea- the following:

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‘‘(3) ADMINISTRATION OF FEDERAL TAX LAWS.— tions from a qualified tuition program or edu- ‘‘(4) COMMUNITY COLLEGE.—The term ‘commu- The Secretary of the Treasury shall have access cation individual retirement account used to nity college’ means any institution of higher to the information described in paragraph (2), pay qualified higher education expenses of the education (as defined in section 1201 of the consisting of the names and social security num- individual. Higher Education Act of 1965 (20 U.S.C. 1141)) bers of the custodial parents linked with the ‘‘(3) CREDIT ALLOWED FOR YEAR ONLY IF INDI- that awards an associate’s degree. children in the custody of such parents, for the VIDUAL IS AT LEAST 1⁄2 TIME STUDENT FOR POR- ‘‘(5) VOCATIONAL SCHOOL.—The term ‘voca- purpose of administering those sections of the TION OF YEAR.—No credit shall be allowed under tional school’ means a postsecondary vocational Internal Revenue Code of 1986 which grant tax subsection (a) for a taxable year with respect to institution (as defined in section 481 of such Act benefits based on support and residence pro- the qualified tuition and related expenses of an (20 U.S.C. 1088)). vided dependent children.’’. individual unless such individual is an eligible ‘‘(e) TREATMENT OF EXPENSES PAID BY DE- (c) EFFECTIVE DATE.—The amendments made student for at least one academic period which PENDENT.—If a deduction under section 151 with by this section shall take effect on October 1, begins during such year. respect to an individual is allowed to another 1997. ‘‘(4) CREDIT ALLOWED ONLY FOR FIRST TWO taxpayer for a taxable year beginning in the SEC. 105. ADOPTION EXPENSES. YEARS OF POSTSECONDARY EDUCATION.—No cred- calendar year in which such individual’s tax- (a) DISTRIBUTIONS FROM CERTAIN PLANS MAY it shall be allowed under subsection (a) for a able year begins— BE USED WITHOUT PENALTY TO PAY ADOPTION taxable year with respect to the qualified tuition ‘‘(1) no credit shall be allowed under sub- EXPENSES.— and related expenses of an individual if the in- section (a) to such individual for such individ- (1) IN GENERAL.—Section 72(t)(2) (relating to dividual has completed (before the beginning of ual’s taxable year, and exceptions to 10-percent additional tax on early such taxable year) the first 2 years of postsec- ‘‘(2) qualified tuition and related expenses distributions from qualified retirement plans) is ondary education at an eligible educational in- paid by such individual during such individ- amended by adding at the end the following: stitution. ual’s taxable year shall be treated for purposes ‘‘(E) DISTRIBUTIONS FROM CERTAIN PLANS FOR ‘‘(c) LIMITATION BASED ON MODIFIED AD- of this section as paid by such other taxpayer. ADOPTION EXPENSES.—Distributions to an indi- JUSTED GROSS INCOME.— ‘‘(f) TREATMENT OF CERTAIN PREPAYMENTS.— vidual from an individual retirement plan of so ‘‘(1) IN GENERAL.—The amount which would If qualified tuition and related expenses are much of the qualified adoption expenses (as de- (but for this subsection) be taken into account paid by the taxpayer during a taxable year for fined in section 23(d)(1)) of the individual as under subsection (a) for the taxable year shall an academic period which begins during the does not exceed $2,000.’’. be reduced (but not below zero) by the amount first 3 months following such taxable year, such (2) CONFORMING AMENDMENT.—Section determined under paragraph (2). academic period shall be treated for purposes of 72(t)(2)(B) is amended by striking ‘‘or (D)’’ and ‘‘(2) AMOUNT OF REDUCTION.—The amount de- this section as beginning during such taxable inserting ‘‘, (D) or (E)’’. termined under this paragraph is the amount year. (3) EFFECTIVE DATE.—The amendments made which bears the same ratio to the amount which ‘‘(g) SPECIAL RULES.— by this subsection shall apply to payments and would be so taken into account as— ‘‘(1) IDENTIFICATION REQUIREMENT.—No credit distributions after December 31, 1996. ‘‘(A) the excess of— shall be allowed under subsection (a) to a tax- ‘‘(i) the taxpayer’s modified adjusted gross in- payer with respect to the qualified tuition and TITLE II—EDUCATION INCENTIVES come for such taxable year, over related expenses of an individual unless the tax- Subtitle A—Tax Benefits Relating to ‘‘(ii) $40,000 ($80,000 in the case of a joint re- payer includes the name and taxpayer identi- Education Expenses turn), bears to fication number of such individual on the re- ‘‘(B) $10,000 ($20,000 in the case of a joint re- SEC. 201. HOPE CREDIT FOR HIGHER EDUCATION turn of tax for the taxable year. turn). TUITION AND RELATED EXPENSES. ‘‘(2) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS, ‘‘(3) MODIFIED ADJUSTED GROSS INCOME.—The (a) IN GENERAL.—Subpart A of part IV of sub- ETC.—The amount of qualified tuition and re- term ‘modified adjusted gross income’ means the chapter A of chapter 1 (relating to nonrefund- lated expenses otherwise taken into account adjusted gross income of the taxpayer for the able personal credits) is amended by inserting under subsection (a) with respect to an indi- taxable year increased by any amount excluded after section 25 the following new section: vidual for an academic period shall be reduced from gross income under section 911, 931, or 933. ‘‘SEC. 25A. HIGHER EDUCATION TUITION AND RE- (before the application of subsections (b) and ‘‘(d) DEFINITIONS.—For purposes of this sec- LATED EXPENSES. (c)) by the sum of any amounts paid for the ben- tion— ‘‘(a) ALLOWANCE OF CREDIT.— ‘‘(1) QUALIFIED TUITION AND RELATED EX- efit of such individual which are allocable to ‘‘(1) IN GENERAL.—In the case of an indi- PENSES.— such period as— vidual, there shall be allowed as a credit against ‘‘(A) IN GENERAL.—The term ‘qualified tuition ‘‘(A) a qualified scholarship which is exclud- the tax imposed by this chapter for the taxable and related expenses’ means tuition and fees re- able from gross income under section 117, year the amount equal to 50 percent of qualified quired for the enrollment or attendance of— ‘‘(B) an educational assistance allowance tuition and related expenses paid by the tax- ‘‘(i) the taxpayer, under chapter 30, 31, 32, 34, or 35 of title 38, payer during such taxable year for education ‘‘(ii) the taxpayer’s spouse, or United States Code, or under chapter 1606 of furnished during any academic period begin- ‘‘(iii) any dependent of the taxpayer with re- title 10, United States Code, and ning in such year. spect to whom the taxpayer is allowed a deduc- ‘‘(C) a payment (other than a gift, bequest, ‘‘(2) SPECIAL RULE FOR EDUCATION AT COMMU- tion under section 151, devise, or inheritance within the meaning of sec- NITY COLLEGES AND VOCATIONAL SCHOOLS.—In at an eligible educational institution and books tion 102(a)) for such individual’s educational the case of qualified tuition and related ex- required for courses of instruction of such indi- expenses, or attributable to such individual’s penses for education furnished at a community vidual at such institution. enrollment at an eligible educational institution, college or vocational school, paragraph (1) shall ‘‘(B) EXCEPTION FOR EDUCATION INVOLVING which is excludable from gross income under be applied by substituting ‘75 percent’ for ‘50 SPORTS, ETC.—Such term does not include ex- any law of the United States. percent’. penses with respect to any course or other edu- ‘‘(3) DENIAL OF CREDIT IF STUDENT CONVICTED ‘‘(b) LIMITATIONS.— cation involving sports, games, or hobbies, un- OF A FELONY DRUG OFFENSE.—No credit shall be ‘‘(1) DOLLAR LIMITATION.—The amount al- less such course or other education is part of the allowed under subsection (a) for qualified tui- lowed as a credit under subsection (a) for any individual’s degree program. tion and related expenses for the enrollment or taxable year with respect to the qualified tuition ‘‘(C) EXCEPTION FOR NONACADEMIC FEES.— attendance of a student for any academic period and related expenses of any 1 individual shall Such term does not include student activity fees, if such student has been convicted of a Federal not exceed $1,500. athletic fees, insurance expenses, or other ex- or State felony offense consisting of the posses- ‘‘(2) ELECTION REQUIRED.— penses unrelated to an individual’s academic sion or distribution of a controlled substance be- ‘‘(A) IN GENERAL.—No credit shall be allowed course of instruction. fore the end of the taxable year with or within under subsection (a) for a taxable year with re- ‘‘(2) ELIGIBLE EDUCATIONAL INSTITUTION.— which such period ends. spect to the qualified tuition and related ex- The term ‘eligible educational institution’ means ‘‘(4) DENIAL OF CREDIT WHERE NO HIGH penses of an individual unless the taxpayer an institution— SCHOOL DEGREE.—No credit shall be allowed elects to have this section apply with respect to ‘‘(A) which is described in section 481 of the under subsection (a) for qualified tuition and such individual for such year. Higher Education Act of 1965 (20 U.S.C. 1088), related expenses for the enrollment or attend- ‘‘(B) CREDIT ALLOWED ONLY FOR 2 TAXABLE as in effect on the date of the enactment of this ance of a student for any academic period if YEARS.—An election under this paragraph shall section, and such student has not received a high school de- not take effect with respect to an individual for ‘‘(B) which is eligible to participate in a pro- gree (or its equivalent) before the beginning of any taxable year if an election under this para- gram under title IV of such Act. such period. This paragraph shall not apply to graph (by the taxpayer or any other individual) ‘‘(3) ELIGIBLE STUDENT.—The term ‘eligible a student if the student did not receive such de- is in effect with respect to such individual for student’ means, with respect to any academic gree by reason of enrollment in an early admis- any 2 prior taxable years. period, a student who— sion program to an eligible educational institu- ‘‘(C) COORDINATION WITH EXCLUSIONS.—An ‘‘(A) meets the requirements of section tion. election under this paragraph shall not take ef- 484(a)(1) of the Higher Education Act of 1965 (20 ‘‘(5) DENIAL OF DOUBLE BENEFIT.—No credit fect with respect to an individual for any tax- U.S.C. 1091(a)(1)), as in effect on the date of the shall be allowed under this section for any ex- able year if there is in effect for such taxable enactment of this section, and pense for which a deduction is allowed under year an election under section 529(c)(3)(B) or ‘‘(B) is carrying at least 1⁄2 the normal full- any other provision of this chapter. 530(c)(1) (by the taxpayer or any other indi- time work load for the course of study the stu- ‘‘(6) NO CREDIT FOR MARRIED INDIVIDUALS FIL- vidual) to exclude from gross income distribu- dent is pursuing. ING SEPARATE RETURNS.—If the taxpayer is a

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married individual (within the meaning of sec- ‘‘(b) FORM AND MANNER OF RETURNS.—A re- and by adding at the end the following new tion 7703), this section shall apply only if the turn is described in this subsection if such re- subparagraph: taxpayer and the taxpayer’s spouse file a joint turn— ‘‘(Z) section 6050S(d) (relating to returns re- return for the taxable year. ‘‘(1) is in such form as the Secretary may pre- lating to qualified tuition and related ex- ‘‘(7) NONRESIDENT ALIENS.—If the taxpayer is scribe, penses).’’. a nonresident alien individual for any portion ‘‘(2) contains— (3) CLERICAL AMENDMENT.—The table of sec- of the taxable year, this section shall apply only ‘‘(A) the name, address, and TIN of the indi- tions for subpart B of part III of subchapter A if such individual is treated as a resident alien vidual with respect to whom payments described of chapter 61 is amended by inserting after the of the United States for purposes of this chapter in subsection (a) were received from (or were item relating to section 6050R the following new by reason of an election under subsection (g) or paid to), item: (h) of section 6013. ‘‘(B) the name, address, and TIN of any indi- ‘‘Sec. 6050S. Returns relating to higher edu- ‘‘(h) INFLATION ADJUSTMENTS.— vidual certified by the individual described in ‘‘(1) DOLLAR LIMITATION ON AMOUNT OF CRED- cation tuition and related ex- subparagraph (A) as the taxpayer who will penses.’’. IT.— claim the individual as a dependent for pur- (d) COORDINATION WITH SECTION 135.—Sub- ‘‘(A) IN GENERAL.—In the case of a taxable poses of the deduction allowable under section section (d) of section 135 is amended by redesig- year beginning after 1998, the $1,500 amount in 151 for any taxable year ending with or within nating paragraphs (2) and (3) as paragraphs (3) subsection (b)(1) shall be increased by an the calendar year, and and (4), respectively, and by inserting after amount equal to— ‘‘(C) the— ‘‘(i) such dollar amount, multiplied by paragraph (1) the following new paragraph: ‘‘(i) aggregate amount of payments for quali- ‘‘(ii) the cost-of-living adjustment determined ‘‘(2) COORDINATION WITH HIGHER EDUCATION fied tuition and related expenses received with under section 1(f)(3) for the calendar year in CREDIT.—The amount of the qualified higher respect to the individual described in subpara- which the taxable year begins, determined by education expenses otherwise taken into ac- graph (A) during the calendar year, and substituting ‘calendar year 1997’ for ‘calendar count under subsection (a) with respect to the ‘‘(ii) aggregate amount of reimbursements or year 1992’ in subparagraph (B) thereof. education of an individual shall be reduced (be- refunds (or similar amounts) paid to such indi- ‘‘(B) ROUNDING.—If any amount as adjusted fore the application of subsection (b)) by the vidual during the calendar year, and under subparagraph (A) is not a multiple of $50, amount of such expenses which are taken into ‘‘(D) such other information as the Secretary such amount shall be rounded to the next lowest account in determining the credit allowable to may prescribe. multiple of $50. the taxpayer or any other person under section ‘‘(c) APPLICATION TO GOVERNMENTAL UNITS.— ‘‘(2) INCOME LIMITS.— 25A with respect to such expenses.’’. For purposes of this section— ‘‘(A) IN GENERAL.—In the case of a taxable (e) CLERICAL AMENDMENT.—The table of sec- ‘‘(1) a governmental unit or any agency or in- year beginning after 2000, the $40,000 and tions for subpart A of part IV of subchapter A strumentality thereof shall be treated as a per- $80,000 amounts in subsection (c)(2) shall each of chapter 1 is amended by inserting after the son, and be increased by an amount equal to— item relating to section 25 the following new ‘‘(2) any return required under subsection (a) ‘‘(i) such dollar amount, multiplied by item: ‘‘(ii) the cost-of-living adjustment determined by such governmental entity shall be made by under section 1(f)(3) for the calendar year in the officer or employee appropriately designated ‘‘Sec. 25A. Higher education tuition and related which the taxable year begins, determined by for the purpose of making such return. expenses.’’. substituting ‘calendar year 1999’ for ‘calendar ‘‘(d) STATEMENTS TO BE FURNISHED TO INDI- (f) EFFECTIVE DATE.—The amendments made year 1992’ in subparagraph (B) thereof. VIDUALS WITH RESPECT TO WHOM INFORMATION by this section shall apply to expenses paid after ‘‘(B) ROUNDING.—If any amount as adjusted IS REQUIRED.—Every person required to make a December 31, 1997 (in taxable years ending after under subparagraph (A) is not a multiple of return under subsection (a) shall furnish to such date), for education furnished in academic $5,000, such amount shall be rounded to the next each individual whose name is required to be set periods beginning after such date. lowest multiple of $5,000. forth in such return under subparagraph (A) or SEC. 202. DEDUCTION FOR INTEREST ON EDU- ‘‘(i) REGULATIONS.—The Secretary may pre- (B) of subsection (b)(2) a written statement CATION LOANS. scribe such regulations as may be necessary or showing— (a) IN GENERAL.—Part VII of subchapter B of appropriate to carry out this section, including ‘‘(1) the name, address, and phone number of chapter 1 (relating to additional itemized deduc- regulations providing for a recapture of credit the information contact of the person required tions for individuals) is amended by redesig- allowed under this section in cases where there to make such return, and nating section 221 as section 222 and by insert- is a refund in a subsequent taxable year of any ‘‘(2) the aggregate amounts described in sub- ing after section 220 the following new section: amount which was taken into account in deter- paragraph (C) of subsection (b)(2). mining the amount of such credit.’’. ‘‘SEC. 221. INTEREST ON EDUCATION LOANS. The written statement required under the pre- (b) EXTENSION OF PROCEDURES APPLICABLE TO ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case ceding sentence shall be furnished on or before MATHEMATICAL OR CLERICAL ERRORS.—Para- of an individual, there shall be allowed as a de- January 31 of the year following the calendar graph (2) of section 6213(g) (relating to the defi- duction for the taxable year an amount equal to year for which the return under subsection (a) nition of mathematical or clerical errors) is the interest paid by the taxpayer during the tax- was required to be made. amended by striking ‘‘and’’ at the end of sub- able year on any qualified education loan. ‘‘(e) DEFINITIONS.—For purposes of this sec- paragraph (G), by striking the period at the end ‘‘(b) MAXIMUM DEDUCTION.— tion, the terms ‘eligible educational institution’ of subparagraph (H) and inserting ‘‘, and’’, and ‘‘(1) IN GENERAL.—Except as provided in para- and ‘qualified tuition and related expenses’ by inserting after subparagraph (H) the fol- graph (2), the deduction allowed by subsection have the meanings given such terms by section lowing new subparagraph: (a) for the taxable year shall not exceed $2,500. ‘‘(I) an omission of a correct TIN required 25A. ‘‘(2) LIMITATION BASED ON MODIFIED ADJUSTED under section 25A(g)(1) (relating to higher edu- ‘‘(f) RETURNS WHICH WOULD BE REQUIRED TO GROSS INCOME.— cation tuition and related expenses) to be in- BE MADE BY 2 OR MORE PERSONS.—Except to ‘‘(A) IN GENERAL.—The amount which would cluded on a return.’’. the extent provided in regulations prescribed by (but for this paragraph) be allowable as a de- (c) RETURNS RELATING TO TUITION AND RE- the Secretary, in the case of any amount re- duction under this section shall be reduced (but LATED EXPENSES.— ceived by any person on behalf of another per- not below zero) by the amount determined under (1) IN GENERAL.—Subpart B of part III of sub- son, only the person first receiving such amount paragraph (2). chapter A of chapter 61 (relating to information shall be required to make the return under sub- ‘‘(B) AMOUNT OF REDUCTION.—The amount concerning transactions with other persons) is section (a). determined under this paragraph is the amount amended by inserting after section 6050R the fol- ‘‘(g) REGULATIONS.—The Secretary shall pre- which bears the same ratio to the amount which lowing new section: scribe such regulations as may be necessary to would be so taken into account as— ‘‘SEC. 6050S. RETURNS RELATING TO HIGHER carry out the provisions of this section. No pen- ‘‘(i) the excess of— EDUCATION TUITION AND RELATED alties shall be imposed under section 6724 with ‘‘(I) the taxpayer’s modified adjusted gross in- EXPENSES. respect to any return or statement required come for such taxable year, over ‘‘(a) IN GENERAL.—Any person— under this section until such time as such regu- ‘‘(II) $40,000 ($80,000 in the case of a joint re- ‘‘(1) which is an eligible educational institu- lations are issued.’’. turn), bears to tion which receives payments for qualified tui- (2) ASSESSABLE PENALTIES.— ‘‘(ii) $10,000 ($20,000 in the case of a joint re- tion and related expenses with respect to any (A) Subparagraph (B) of section 6724(d)(1) (re- turn). individual for any calendar year, or lating to definitions) is amended by redesig- ‘‘(C) MODIFIED ADJUSTED GROSS INCOME.—The ‘‘(2) which is engaged in a trade or business nating clauses (ix) through (xiv) as clauses (x) term ‘modified adjusted gross income’ means ad- and which, in the course of such trade or busi- through (xv), respectively, and by inserting justed gross income determined— ness, makes payments during any calendar year after clause (viii) the following new clause: ‘‘(i) without regard to this section and sec- to any individual which constitute reimburse- ‘‘(ix) section 6050S (relating to returns relating tions 135, 911, 931, and 933, and ments or refunds (or similar amounts) of quali- to payments for qualified tuition and related ex- ‘‘(ii) after application of sections 86, 219, and fied tuition and related expenses of such indi- penses),’’. 469. vidual, (B) Paragraph (2) of section 6724(d) is amend- For purposes of sections 86, 135, 219, and 469, shall make the return described in subsection (b) ed by striking ‘‘or’’ at the end of the next to last adjusted gross income shall be determined with- with respect to the individual at such time as subparagraph, by striking the period at the end out regard to the deduction allowed under this the Secretary may by regulations prescribe. of the last subparagraph and inserting ‘‘, or’’, section.

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‘‘(c) DEPENDENTS NOT ELIGIBLE FOR DEDUC- which the taxable year begins, determined by tributions shall not be taken into account under TION.—No deduction shall be allowed by this substituting ‘calendar year 1997’ for ‘calendar the preceding sentence if such distributions are section to an individual for the taxable year if year 1992’ in subparagraph (B) thereof. described in subparagraph (A), (C), or (D) or to a deduction under section 151 with respect to ‘‘(B) ROUNDING.—If any amount as adjusted the extent paragraph (1) does not apply to such such individual is allowed to another taxpayer under subparagraph (A) is not a multiple of $50, distributions by reason of subparagraph (B).’’. for the taxable year beginning in the calendar such amount shall be rounded to the next lowest (b) DEFINITION.—Section 72(t) is amended by year in which such individual’s taxable year be- multiple of $50. adding at the end the following new paragraph: gins. ‘‘(2) INCOME LIMITS.—In the case of a taxable ‘‘(7) QUALIFIED HIGHER EDUCATION EX- ‘‘(d) LIMIT ON PERIOD DEDUCTION AL- year beginning in a calendar year after 2000, the PENSES.—For purposes of paragraph (2)(E)— LOWED.—A deduction shall be allowed under $40,000 and $80,000 amounts in subsection (b)(2) ‘‘(A) IN GENERAL.—The term ‘qualified higher this section only with respect to interest paid on shall each be increased by the amount the education expenses’ means qualified higher edu- any qualified education loan during the first 60 $40,000 and $80,000 amounts under section cation expenses (as defined in section 529(e)(3)) months (whether or not consecutive) in which 25A(c)(2) are increased for taxable years begin- for education furnished to— interest payments are required. For purposes of ning in such calendar year.’’. ‘‘(i) the taxpayer, this paragraph, any loan and all refinancings (b) DEDUCTION ALLOWED WHETHER OR NOT ‘‘(ii) the taxpayer’s spouse, or of such loan shall be treated as 1 loan. TAXPAYER ITEMIZES OTHER DEDUCTIONS.—Sub- ‘‘(iii) any child (as defined in section ‘‘(e) DEFINITIONS.—For purposes of this sec- section (a) of section 62 is amended by inserting 151(c)(3)) or grandchild of the taxpayer or the tion— after paragraph (16) the following new para- taxpayer’s spouse, ‘‘(1) QUALIFIED EDUCATION LOAN.—The term graph: at an eligible educational institution (as defined ‘qualified education loan’ means any indebted- ‘‘(17) INTEREST ON EDUCATION LOANS.—The de- in section 529(e)(5)). ness incurred to pay qualified higher education duction allowed by section 221.’’. ‘‘(B) COORDINATION WITH OTHER BENEFITS.— expenses— (c) REPORTING REQUIREMENT.— The amount of qualified higher education ex- ‘‘(A) which are incurred on behalf of the tax- (1) IN GENERAL.—Section 6050S(a)(2) (relating penses for any taxable year shall be reduced as payer, the taxpayer’s spouse, or any dependent to returns relating to higher education tuition provided in section 25A(g)(2).’’. of the taxpayer as of the time the indebtedness and related expenses) is amended to read as fol- (c) EFFECTIVE DATE.—The amendments made was incurred, lows: by this section shall apply to distributions after ‘‘(B) which are paid or incurred within a rea- ‘‘(2) which is engaged in a trade or business December 31, 1997, with respect to expenses paid sonable period of time before or after the indebt- and which, in the course of such trade or busi- after such date (in taxable years ending after edness is incurred, and ness— such date), for education furnished in academic ‘‘(C) which are attributable to education fur- ‘‘(A) makes payments during any calendar periods beginning after such date. nished during a period during which the recipi- year to any individual which constitutes reim- Subtitle B—Expanded Education Investment ent was an eligible student. bursements or refunds (or similar amounts) of Savings Opportunities Such term includes indebtedness used to refi- qualified tuition and related expenses of such nance indebtedness which qualifies as a quali- individual, or PART I—QUALIFIED TUITION PROGRAMS fied education loan. The term ‘qualified edu- ‘‘(B) except as provided in regulations, re- SEC. 211. EXCLUSION FROM GROSS INCOME OF cation loan’ shall not include any indebtedness ceives from any individual interest aggregating EDUCATION DISTRIBUTIONS FROM owed to a person who is related (within the $600 or more for any calendar year on 1 or more QUALIFIED TUITION PROGRAMS. meaning of section 267(b) or 707(b)(1)) to the qualified education loans,’’. (a) IN GENERAL.—Subparagraph (B) of section taxpayer. (2) INFORMATION.—Section 6050S(b)(2) is 529(c)(3) (relating to distributions) is amended to ‘‘(2) QUALIFIED HIGHER EDUCATION EX- amended— read as follows: PENSES.—The term ‘qualified higher education (A) by inserting ‘‘or interest’’ after ‘‘pay- ‘‘(B) DISTRIBUTIONS FOR QUALIFIED HIGHER expenses’ means the cost of attendance (as de- ments’’ in subparagraph (A), and EDUCATION EXPENSES.—If a distributee elects the fined in section 472 of the Higher Education Act (B) in subparagraph (C), by striking ‘‘and’’ at application of this subparagraph for any tax- of 1965, 20 U.S.C. 1087ll, as in effect on the day the end of clause (i), by inserting ‘‘and’’ at the able year— before the date of the enactment of this Act) at end of clause (ii), and by inserting after clause ‘‘(i) no amount shall be includible in gross in- an eligible educational institution, reduced by (ii) the following: come by reason of a distribution which consists the sum of— ‘‘(iii) aggregate amount of interest received for of providing a benefit to the distributee which, ‘‘(A) the amount excluded from gross income the calendar year from such individual,’’. if paid for by the distributee, would constitute under section 135, 529, or 530 by reason of such (3) DEFINITION.—Section 6050S(e) is amended payment of a qualified higher education ex- expenses, and by inserting ‘‘, and except as provided in regula- pense, and ‘‘(B) the amount of any scholarship, allow- tions, the term ‘qualified education loan’ has ‘‘(ii) the amount which (but for the election) ance, or payment described in section 25A(g)(2). the meaning given such term by section would be includible in gross income by reason of For purposes of the preceding sentence, the term 221(e)(1)’’ after ‘‘section 25A’’. any other distribution shall not be so includible ‘eligible educational institution’ has the same (d) CLERICAL AMENDMENT.—The table of sec- in an amount which bears the same ratio to the meaning given such term by section 25A(d)(2), tions for part VII of subchapter B of chapter 1 amount which would be so includible as the except that such term shall also include an in- is amended by striking the last item and insert- amount of the qualified higher education ex- stitution conducting an internship or residency ing the following new items: penses of the distributee bears to the amount of program leading to a degree or certificate the distribution.’’. awarded by an institution of higher education, ‘‘Sec. 221. Interest on education loans. (b) EFFECTIVE DATE.—The amendments made a hospital, or a health care facility which offers ‘‘Sec. 222. Cross reference.’’. by this section shall apply to distributions after postgraduate training. (e) EFFECTIVE DATE.—The amendments made December 31, 1997, for education furnished in ‘‘(3) ELIGIBLE STUDENT.—The term ‘eligible by this section shall apply to any qualified edu- academic periods beginning after such date. student’ has the meaning given such term by cation loan (as defined in section 221(e)(1) of the section 25A(d)(3). SEC. 212. ELIGIBLE EDUCATIONAL INSTITUTIONS Internal Revenue Code of 1986, as added by this PERMITTED TO MAINTAIN QUALI- ‘‘(4) DEPENDENT.—The term ‘dependent’ has section) incurred on, before, or after the date of FIED TUITION PROGRAMS; OTHER the meaning given such term by section 152. the enactment of this Act, but only with respect MODIFICATIONS OF QUALIFIED ‘‘(f) SPECIAL RULES.— STATE TUITION PROGRAMS. ‘‘(1) DENIAL OF DOUBLE BENEFIT.—No deduc- to— (a) ELIGIBLE EDUCATIONAL INSTITUTIONS PER- tion shall be allowed under this section for any (1) any loan interest payment due after De- MITTED TO MAINTAIN QUALIFIED TUITION PRO- amount for which a deduction is allowable cember 31, 1996, and GRAMS.—Paragraph (1) of section 529(b) (defin- under any other provision of this chapter. (2) the portion of the 60-month period referred ing qualified State tuition program) is amended ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE- to in section 221(d) of the Internal Revenue by inserting ‘‘or by one or more eligible edu- TURN.—If the taxpayer is married at the close of Code of 1986 (as added by this section) after De- cational institutions’’ after ‘‘maintained by a the taxable year, the deduction shall be allowed cember 31, 1996. State or agency or instrumentality thereof’’. under subsection (a) only if the taxpayer and SEC. 203. PENALTY-FREE WITHDRAWALS FROM IN- (b) QUALIFIED HIGHER EDUCATION EXPENSES the taxpayer’s spouse file a joint return for the DIVIDUAL RETIREMENT PLANS FOR HIGHER EDUCATION EXPENSES. TO INCLUDE ROOM AND BOARD.—Paragraph (3) taxable year. ‘‘(3) MARITAL STATUS.—Marital status shall be (a) IN GENERAL.—Paragraph (2) of section of section 529(e) (defining qualified higher edu- determined in accordance with section 7703. 72(t) (relating to exceptions to 10-percent addi- cation expenses) is amended to read as follows: ‘‘(g) INFLATION ADJUSTMENTS.— tional tax on early distributions from qualified ‘‘(3) QUALIFIED HIGHER EDUCATION EX- ‘‘(1) DOLLAR LIMITATION ON AMOUNT OF CRED- retirement plans) is amended by adding at the PENSES.— IT.— end the following new subparagraph: ‘‘(A) IN GENERAL.—The term ‘qualified higher ‘‘(A) IN GENERAL.—In the case of a taxable ‘‘(E) DISTRIBUTIONS FROM INDIVIDUAL RETIRE- education expenses’ means tuition, fees, books, year beginning after 1998, the $2,500 amount in MENT PLANS FOR HIGHER EDUCATION EXPENSES.— supplies, and equipment required for the enroll- subsection (b)(1) shall be increased by an Distributions to an individual from an indi- ment or attendance of a designated beneficiary amount equal to— vidual retirement plan to the extent such dis- at an eligible education institution. ‘‘(i) such dollar amount, multiplied by tributions do not exceed the qualified higher ‘‘(B) ROOM AND BOARD INCLUDED FOR STU- ‘‘(ii) the cost-of-living adjustment determined education expenses (as defined in paragraph DENTS WHO ARE AT LEAST HALF-TIME.—In the under section 1(f)(3) for the calendar year in (7)) of the taxpayer for the taxable year. Dis- case of an individual who is an eligible student

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00133 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6802 CONGRESSIONAL RECORD — SENATE June 27, 1997 (as defined in section 25A(d)(3)) for any aca- contribution to a qualified tuition program on Any net income described in subparagraph (B) demic period, such term shall also include rea- behalf of any designated beneficiary shall not shall be included in the gross income of the con- sonable costs for such period (as determined be treated as a taxable gift.’’. tributor for the taxable year in which such ex- under the qualified tuition program) incurred by (ii) Paragraph (5) of section 529(c) is amended cess contribution was made.’’. the designated beneficiary for room and board to read as follows: (e) COORDINATION WITH EDUCATION SAVINGS while attending such institution. The amount ‘‘(5) OTHER GIFT TAX RULES.—For purposes of BOND.—Section 135(c)(2) (defining qualified treated as qualified higher education expenses chapters 12 and 13— higher education expenses) is amended by add- by reason of the preceding sentence shall not ex- ‘‘(A) TREATMENT OF DISTRIBUTIONS.—In no ing at the end the following: ceed the minimum amount (applicable to the event shall a distribution from a qualified tui- ‘‘(C) CONTRIBUTIONS TO QUALIFIED TUITION student) included for room and board for such tion program be treated as a taxable gift. PROGRAM.—Such term shall include any con- period in the cost of attendance (as defined in ‘‘(B) TREATMENT OF DESIGNATION OF NEW BEN- tribution to a qualified tuition program (as de- section 472 of the Higher Education Act of 1965, EFICIARY.—The taxes imposed by chapters 12 fined in section 529) on behalf of a designated 20 U.S.C. 1087ll, as in effect on the date of the and 13 shall apply to a transfer by reason of a beneficiary (as defined in such section) who is enactment of this paragraph) for the eligible change in the designated beneficiary under the an individual described in subparagraph (A); educational institution for such period.’’. program (or a rollover to the account of a new but there shall be no increase in the investment (c) ADDITIONAL MODIFICATIONS.— beneficiary) only if the new beneficiary is a gen- in the contract for purposes of applying section (1) MEMBER OF FAMILY.—Paragraph (2) of eration below the generation of the old bene- 72 by reason of any portion of such contribution section 529(e) (relating to other definitions and ficiary (determined in accordance with section which is not includible in gross income by rea- special rules) is amended to read as follows: 2651).’’. son of this subparagraph.’’. ‘‘(2) MEMBER OF FAMILY.—The term ‘member (B) ESTATE TAX TREATMENT.—Paragraph (4) (f) TAX ON EXCESS CONTRIBUTIONS.— of the family’ means— of section 529(c) is amended to read as follows: (1) IN GENERAL.—Subsection (a) of section 4973 ‘‘(A) an individual who bears a relationship ‘‘(4) ESTATE TAX TREATMENT.— is amended by striking ‘‘or’’ at the end of para- ‘‘(A) IN GENERAL.—No amount shall be includ- to another individual which is a relationship graph (2) and by inserting after paragraph (3) ible in the gross estate of any individual for described in paragraphs (1) through (8) of sec- the following new paragraphs: purposes of chapter 11 by reason of an interest tion 152(a), and ‘‘(4) a qualified tuition program (as defined in ‘‘(B) the spouse of any individual described in in a qualified tuition program. section 529) not maintained by a State or any ‘‘(B) AMOUNTS INCLUDIBLE IN ESTATE OF DES- subparagraph (A).’’. agency or instrumentality thereof, or IGNATED BENEFICIARY IN CERTAIN CASES.—Sub- (2) ELIGIBLE EDUCATIONAL INSTITUTION.—Sec- ‘‘(5) an education individual retirement ac- paragraph (A) shall not apply to amounts dis- tion 529(e) is amended by adding at the end the count (as defined in section 530),’’. tributed on account of the death of a bene- following: (2) EXCESS CONTRIBUTIONS DEFINED.—Section ficiary.’’. ‘‘(5) ELIGIBLE EDUCATIONAL INSTITUTION.— 4973 is amended by adding at the end the fol- (5) LIMITATION ON CONTRIBUTIONS TO QUALI- The term ‘eligible educational institution’ means lowing new subsection: FIED TUITION PROGRAMS NOT MAINTAINED BY A an institution— ‘‘(e) EXCESS CONTRIBUTIONS TO PRIVATE STATE.—Subsection (b) of section 529 is amended ‘‘(A) which is described in section 481 of the QUALIFIED TUITION PROGRAM AND EDUCATION by adding at the end the following new para- Higher Education Act of 1965 (20 U.S.C. 1088), INDIVIDUAL RETIREMENT ACCOUNTS.—For pur- graph: as in effect on the date of the enactment of this poses of this section— ‘‘(9) LIMITATION ON CONTRIBUTIONS TO QUALI- paragraph, and ‘‘(1) IN GENERAL.—In the case of private edu- FIED TUITION PROGRAMS NOT MAINTAINED BY A ‘‘(B) which is eligible to participate in a pro- cation investment accounts maintained for the STATE.—In the case of a program not main- benefit of any 1 beneficiary, the term ‘excess gram under title IV of such Act.’’. tained by a State or agency or instrumentality (3) NO CONTRIBUTIONS AFTER BENEFICIARY AT- contributions’ means the amount by which the thereof, such program shall not be treated as a TAINS AGE 18; DISTRIBUTIONS REQUIRED IN CER- amount contributed for the taxable year to such qualified tuition program unless it limits the an- TAIN CASES.— accounts exceeds the sum of $2,000 plus the nual contribution to the program on behalf of a (A) IN GENERAL.—Subsection (b) of section 529 amount of the credit allowed under section 25A designated beneficiary to the sum of $2,000 plus is amended by adding at the end the following for such beneficiary for such taxable year. the amount of the credit allowable under section new paragraph: ‘‘(2) PRIVATE EDUCATION INVESTMENT AC- 25A for 1 qualifying child.’’. ‘‘(8) RESTRICTIONS RELATING TO AGE OF BENE- COUNT.—For purposes of paragraph (1), the term (d) ADDITIONAL TAX ON AMOUNTS NOT USED FICIARY; COMPLETION OF EDUCATION.— ‘private education investment account’ means— FOR HIGHER EDUCATION EXPENSES.—Section 529 ‘‘(A) IN GENERAL.—A program shall be treated is amended by adding at the end the following ‘‘(A) a qualified tuition program (as defined as a qualified tuition program only if— new subsection: in section 529) not maintained by a State or any ‘‘(i) no contribution is accepted on behalf of a ‘‘(f) IMPOSITION OF ADDITIONAL TAX.— agency or instrumentality thereof, and designated beneficiary after the date on which ‘‘(1) IN GENERAL.—In the case of a qualified ‘‘(B) an education individual retirement ac- such beneficiary attains age 18, and tuition program not maintained by a State or count (as defined in section 530). ‘‘(ii) any balance to the credit of a designated any agency or instrumentality thereof, the tax ‘‘(3) SPECIAL RULES.—For purposes of para- beneficiary (if any) on the account termination imposed by this chapter for any taxable year on graph (1), the following contributions shall not date shall be distributed within 30 days after any taxpayer who receives a payment or dis- be taken into account: such date to such beneficiary (or in the case of tribution from such program which is includible ‘‘(A) Any contribution which is distributed death, the estate of the beneficiary). in gross income shall be increased by 10 percent out of the education individual retirement ac- ‘‘(B) ACCOUNT TERMINATION DATE.—For pur- of the amount which is so includible. count in a distribution to which section poses of subparagraph (A), the term ‘account ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not 530(c)(3)(B) applies. termination date’ means whichever of the fol- apply if the payment or distribution is— ‘‘(B) Any contribution to a qualified tuition lowing dates is the earliest: ‘‘(A) made to a beneficiary (or to the estate of program (as so defined) described in section ‘‘(i) The date on which the designated bene- the designated beneficiary) on or after the death 530(b)(2)(B) from any such account. ficiary attains age 30. of the designated beneficiary, ‘‘(C) Any rollover contribution.’’. ‘‘(ii) The date on which the designated bene- ‘‘(B) attributable to the designated bene- (g) CLARIFICATION OF TAXATION OF DISTRIBU- ficiary dies.’’. ficiary’s being disabled (within the meaning of TIONS.—Subparagraph (A) of section 529(c)(3) is (B) ROLLOVERS.—Section 529(c)(3) is amended section 72(m)(7)), or amended to read as follows: by adding at the end the following: ‘‘(C) made on account of a scholarship, allow- ‘‘(A) IN GENERAL.—Any distribution from a ‘‘(E) ROLLOVERS TO IRA PLUS ACCOUNTS AT ance, or payment described in section 25A(g)(2) qualified tuition program— AGE 30.—Subparagraph (A) shall not apply to received by the account holder to the extent the ‘‘(i) shall be includible in the gross income of any distribution to the designated beneficiary amount of the payment or distribution does not the distributee to the extent allocable to income required under subsection (b)(8) by reason of the exceed the amount of the scholarship, allow- under the program, and beneficiary attaining age 30 to the extent the ance, or payment. ‘‘(ii) shall not be includible in gross income to beneficiary, within 60 days of the distribution, ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BEFORE the extent allocable to the investment in the transfers such distribution to an IRA Plus ac- DUE DATE OF RETURN.—In the case of a qualified contract. count established on the individual’s behalf.’’. tuition program not maintained by a State or For purposes of the preceding sentence, rules (C) CONFORMING AMENDMENTS.— any agency or instrumentality thereof, para- similar to the rules of section 72(e)(3) shall (i) Section 408(a)(1) is amended by striking ‘‘or graph (1) shall not apply to the distribution to apply.’’. 403(b)(8)’’ and inserting ‘‘403(b)(8), or a contributor of any contribution made during a (h) TECHNICAL AMENDMENTS.— 529(c)(3)(E)’’. taxable year on behalf of a designated bene- (1) Paragraph (2) of section 26(b) is amended (ii) Subparagraph (A) of section 4973(b)(1) is ficiary to the extent that such contribution ex- by redesignating subparagraphs (E) through (P) amended by striking ‘‘or 408(b)(3)’’ and insert- ceeds the limitation in section 4973(e) if— as subparagraphs (F) through (Q), respectively, ing ‘‘408(b)(3), or 529(c)(3)(E)’’. ‘‘(A) such distribution is received on or before and by inserting after subparagraph (D) the fol- (4) ESTATE AND GIFT TAX TREATMENT.— the day prescribed by law (including extensions lowing new subparagraph: (A) GIFT TAX TREATMENT.— of time) for filing such contributor’s return for ‘‘(E) section 529(f) (relating to additional tax (i) Paragraph (2) of section 529(c) is amended such taxable year, and on certain distributions from qualified tuition to read as follows: ‘‘(B) such distribution is accompanied by the programs),’’. ‘‘(2) GIFT TAX TREATMENT OF CONTRIBU- amount of net income attributable to such excess (2) The text of section 529 is amended by strik- TIONS.—For purposes of chapters 12 and 13, any contribution. ing ‘‘qualified State tuition program’’ each

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place it appears and inserting ‘‘qualified tuition imposed by section 511 (relating to imposition of ‘‘(c) TAX TREATMENT OF DISTRIBUTIONS.— program’’. tax on unrelated business income of charitable ‘‘(1) IN GENERAL.—Any amount paid or dis- (3)(A) The section heading of section 529 is organizations). tributed shall be includible in gross income to amended to read as follows: ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For the extent required by section 529(c)(3) (deter- purposes of this section— ‘‘SEC. 529. QUALIFIED TUITION PROGRAMS.’’. mined as if such account were a qualified tui- (B) The item relating to section 529 in the ‘‘(1) EDUCATION INDIVIDUAL RETIREMENT AC- tion program and as if qualified higher edu- table of sections for part VIII of subchapter F of COUNT.—The term ‘education individual retire- cation expenses include qualified education ex- chapter 1 is amended by striking ‘‘State’’. ment account’ means a trust created or orga- (4)(A) The heading for part VIII of subchapter nized in the United States exclusively for the penses). F of chapter 1 is amended to read as follows: purpose of paying the qualified education ex- ‘‘(2) SPECIAL RULES FOR APPLYING ESTATE AND ‘‘PART VIII—HIGHER EDUCATION SAVINGS penses of the account holder, but only if the GIFT TAXES WITH RESPECT TO ACCOUNT.—Rules ENTITIES’’. written governing instrument creating the trust similar to the rules of paragraphs (2), (4), and (B) The table of parts for subchapter F of meets the following requirements: (5) of section 529(c) shall apply for purposes of chapter 1 is amended by striking the item relat- ‘‘(A) No contribution will be accepted— this section. ‘‘(i) unless it is in cash, ing to part VIII and inserting: ‘‘(ii) after the date on which the account ‘‘(3) ADDITIONAL TAX FOR DISTRIBUTIONS NOT ‘‘Part VIII. Higher education savings entities.’’. holder attains age 18, or USED FOR EDUCATIONAL EXPENSES.— (5)(A) Section 529(d) is amended to read as fol- ‘‘(iii) except in the case of rollover contribu- ‘‘(A) IN GENERAL.—The tax imposed by section lows: tions, if such contribution would result in ag- 529(f) shall apply to payments and distributions ‘‘(d) REPORTS.—Each officer or employee hav- gregate contributions for the taxable year ex- from an education individual retirement ac- ing control of the qualified tuition program or ceeding the sum of— count in the same manner as such tax applies to their designee shall make such reports regarding ‘‘(I) $2,000, plus qualified tuition programs (as defined in section such program to the Secretary and to designated ‘‘(II) the amount of the credit allowable under 529), except that section 529(f) shall be applied beneficiaries with respect to contributions, dis- section 25A for the taxable year for 1 qualifying by reference to qualified education expenses. tributions, and such other matters as the Sec- child. ‘‘(B) The trustee is a bank (as defined in sec- ‘‘(B) EXCESS CONTRIBUTIONS RETURNED BE- retary may require under regulations. The re- tion 408(n)) or another person who demonstrates FORE DUE DATE OF RETURN.—Subparagraph (A) ports required by this subsection shall be filed at to the satisfaction of the Secretary that the shall not apply to the distribution to a contrib- such time and in such manner and furnished to manner in which that person will administer the utor of any contribution paid during a taxable such individuals at such time and in such man- trust will be consistent with the requirements of year to an education individual retirement ac- ner as may be required by those regulations.’’. count to the extent that such contribution ex- (B) Paragraph (2) of section 6693(a) (relating this section. ‘‘(C) No part of the trust assets will be in- ceeds the limitation in section 4973(e) if such to failure to provide reports on individual retire- vested in life insurance contracts. distribution (and the net income with respect to ment accounts or annuities) is amended by ‘‘(D) The assets of the trust shall not be com- such excess contribution) meet requirements striking ‘‘and’’ at the end of subparagraph (A), mingled with other property except in a common by striking the period at the end of subpara- comparable to the requirements of section trust fund or common investment fund. 529(f)(3). graph (B) and inserting ‘‘, and’’, and by adding ‘‘(E) Upon the death of the account holder, at the end the following new subparagraph: any balance in the account will be distributed ‘‘(4) ROLLOVER CONTRIBUTIONS.—Paragraph ‘‘(C) Section 529(d) (relating to qualified tui- as required under section 529(b)(8) (as if such (1) shall not apply to any amount paid or dis- tion programs).’’. account were a qualified tuition program). tributed from an education individual retire- (C) The section heading for section 6693 is ‘‘(F) The account becomes an IRA Plus as of ment account to the extent that the amount re- amended by striking ‘‘INDIVIDUAL RETIRE- the date the account holder attains age 30 (and ceived is paid into another education individual MENT’’ and inserting ‘‘CERTAIN TAX-FA- meets all requirements for an IRA Plus on and retirement account for the benefit of the account VORED’’. after such date), unless the account holder holder or a member of the family (within the (D) The item relating to section 6693 in the elects to have sections 529(b)(8) apply as of such meaning of section 529(e)(2)) of the account table of sections for part I of subchapter B of date (as if such account were a qualified tuition holder not later than the 60th day after the date chapter 68 is amended by striking ‘‘individual program). of such payment or distribution. The preceding retirement’’ and inserting ‘‘certain tax-fa- ‘‘(2) QUALIFIED EDUCATION EXPENSES.— sentence shall not apply to any payment or dis- vored’’. ‘‘(A) IN GENERAL.—The term ‘qualified edu- tribution if it applied to any prior payment or (i) EFFECTIVE DATES.— cation expenses’ means— distribution during the 12-month period ending (1) IN GENERAL.—Except as otherwise provided ‘‘(i) qualified higher education expenses (as on the date of the payment or distribution. in this subsection, the amendments made by this defined in section 529(e)(3), and section shall take effect on January 1, 1998. ‘‘(ii) in the case of taxable years beginning ‘‘(5) CHANGE IN ACCOUNT HOLDER.—Any (2) EXPENSES TO INCLUDE ROOM AND BOARD, after December 31, 2000, qualified elementary change in the account holder of an education ETC.—The amendments made by subsection (b) and secondary education expenses (as defined individual retirement account shall not be treat- and (c)(2) shall apply to distributions after De- in paragraph (5)). ed as a distribution for purposes of paragraph cember 31, 1997, with respect to expenses paid ‘‘(B) QUALIFIED TUITION PROGRAMS.—Such (1) if the new account holder is a member of the after such date (in taxable years ending after term shall include amounts paid or incurred to family (as so defined) of the old account holder. such date), for education furnished in academic purchase tuition credits or certificates, or to ‘‘(6) SPECIAL RULES FOR DEATH AND DI- periods beginning after such date. make contributions to an account, under a VORCE.—Rules similar to the rules of paragraphs (3) COORDINATION WITH EDUCATION SAVINGS qualified tuition program (as defined in section (7) and (8) of section 220(f) shall apply. BONDS.—The amendment made by subsection (e) 529(b)) for the benefit of the account holder. ‘‘(d) TAX TREATMENT OF ACCOUNTS.—Rules shall apply to taxable years beginning after De- ‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— similar to the rules of paragraphs (2) and (4) of cember 31, 1997. The term ‘eligible educational institution’ has section 408(e) shall apply to any education indi- (4) ESTATE AND GIFT TAX CHANGES.— the meaning given such term by section vidual retirement account. (A) GIFT TAX CHANGES.—Paragraphs (2) and 529(e)(5). (5) of section 529(c) of the Internal Revenue ‘‘(4) ACCOUNT HOLDER.—The term ‘account ‘‘(e) COMMUNITY PROPERTY LAWS.—This sec- Code of 1986, as amended by this section, shall holder’ means the individual for whose benefit tion shall be applied without regard to any com- apply to transfers (including designations of the education individual retirement account is munity property laws. new beneficiaries) made after the date of the en- established. ‘‘(f) CUSTODIAL ACCOUNTS.—For purposes of actment of this Act. ‘‘(5) QUALIFIED ELEMENTARY AND SECONDARY (B) ESTATE TAX CHANGES.—Paragraph (4) of this section, a custodial account shall be treated EDUCATION EXPENSES.— as a trust if the assets of such account are held such section 529(c) shall apply to estates of de- ‘‘(A) IN GENERAL.—The term ‘qualified ele- by a bank (as defined in section 408(n)) or an- cedents dying after June 8, 1997. mentary and secondary education expenses’ other person who demonstrates, to the satisfac- (5) REPORTING.—The amendments made by means tuition, fees, tutoring, special needs serv- tion of the Secretary, that the manner in which subsection (g) shall apply after June 16, 1997. ices, books, supplies, equipment, transportation, he will administer the account will be consistent PART II—EDUCATION INDIVIDUAL and supplementary expenses required for the en- with the requirements of this section, and if the RETIREMENT ACCOUNTS rollment or attendance at a public, private, or custodial account would, except for the fact SEC. 213. EDUCATION INDIVIDUAL RETIREMENT sectarian school of any dependent of the tax- that it is not a trust, constitute an account de- ACCOUNTS. payer with respect to whom the taxpayer is al- scribed in subsection (b)(1). For purposes of this (a) IN GENERAL.—Part VIII of subchapter F of lowed a deduction under section 151. title, in the case of a custodial account treated chapter 1 (relating to qualified State tuition pro- ‘‘(B) SPECIAL RULE FOR HOMESCHOOLING.— grams) is amended by adding at the end the fol- Such term shall include expenses described in as a trust by reason of the preceding sentence, lowing new section: subparagraph (A) required for education pro- the custodian of such account shall be treated as the trustee thereof. ‘‘SEC. 530. EDUCATION INDIVIDUAL RETIREMENT vided for homeschooling if the requirements of ACCOUNTS. any applicable State or local law are met with ‘‘(g) REPORTS.—The trustee of an education ‘‘(a) GENERAL RULE.—An education indi- respect to such education. individual retirement account shall make such vidual retirement account shall be exempt from ‘‘(C) SCHOOL.—The term ‘school’ means any reports regarding such account to the Secretary taxation under this subtitle. Notwithstanding school which provides elementary education or and to the account holder with respect to con- the preceding sentence, the education individual secondary education (through grade 12), as de- tributions, distributions, and such other matters retirement account shall be subject to the taxes termined under State law. as the Secretary may require under regulations.

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The reports required by this subsection shall be SEC. 222. REPEAL OF LIMITATION ON QUALIFIED ‘‘(A) IN GENERAL.—The term ‘eligible teacher’ filed at such time and in such manner and fur- 501(c)(3) BONDS OTHER THAN HOS- means an individual who— PITAL BONDS. nished to such individuals at such time and in ‘‘(i) is a kindergarten through grade 12 teach- Section 145(b) (relating to qualified 501(c)(3) such manner as may be required by those regu- er in an elementary or secondary school, and lations.’’. bond) is amended by adding at the end the fol- ‘‘(ii) has completed at least 2 academic years (b) TAX ON PROHIBITED TRANSACTIONS.— lowing new paragraph: ‘‘(5) TERMINATION OF LIMITATION.—This sub- as a teacher described in subparagraph (A) be- (1) IN GENERAL.—Paragraph (1) of section section shall not apply with respect to bonds fore the qualified professional development ex- 4975(e) (relating to prohibited transactions) is issued after the date of the enactment of this penses of the individual have been incurred. amended by striking ‘‘or’’ at the end of subpara- paragraph to finance capital expenditures in- ‘‘(B) ELEMENTARY OR SECONDARY SCHOOL.— graph (D), by redesignating subparagraph (E) curred after such date.’’. The terms ‘elementary school’ and ‘secondary as subparagraph (F), and by inserting after sub- school’ have the meanings given such terms by paragraph (D) the following new subparagraph: SEC. 223. INCREASE IN ARBITRAGE REBATE EX- CEPTION FOR GOVERNMENTAL section 14101 of the Elementary and Secondary ‘‘(E) an education individual retirement ac- BONDS USED TO FINANCE EDU- Education Act of 1965 (20 U.S.C. 8801), as so in count described in section 530, or’’. CATION FACILITIES. effect.’’. (2) SPECIAL RULE.—Subsection (c) of section N ENERAL (a) I G .—Section 148(f)(4)(D) (relating (c) EFFECTIVE DATE.—The amendments made 4975 is amended by adding at the end of sub- to exception for governmental units issuing by this section shall apply to taxable years be- section (c) the following new paragraph: $5,000,000 or less of bonds) is amended by adding ginning after December 31, 1997. ‘‘(5) SPECIAL RULE FOR EDUCATION INDIVIDUAL at the end the following new clause: RETIREMENT ACCOUNTS.—An individual for ‘‘(vii) INCREASE IN EXCEPTION FOR BONDS FI- SEC. 225. TREATMENT OF CANCELLATION OF CER- whose benefit an education individual retire- NANCING PUBLIC SCHOOL CAPITAL EXPENDI- TAIN STUDENT LOANS. ment account is established and any contributor TURES.—Each of the $5,000,000 amounts in the (a) CERTAIN LOANS BY EXEMPT ORGANIZA- to such account shall be exempt from the tax im- preceding provisions of this subparagraph shall TIONS.— posed by this section with respect to any trans- be increased by the lesser of $5,000,000 or so (1) IN GENERAL.—Paragraph (2) of section action concerning such account (which would much of the aggregate face amount of the bonds 108(f) (defining student loan) is amended by otherwise be taxable under this section) if sec- as are attributable to financing the construction striking ‘‘or’’ at the end of subparagraph (B) tion 530(d) applies with respect to such trans- (within the meaning of subparagraph (C)(iv)) of and by striking subparagraph (D) and inserting action.’’. public school facilities.’’. the following: AILURE TO PROVIDE REPORTS ON EDU- (b) EFFECTIVE DATE.—The amendments made (c) F ‘‘(D) any educational organization described CATION INDIVIDUAL RETIREMENT ACCOUNTS.— by this section shall apply to bonds issued after in section 170(b)(1)(A)(ii) if such loan is made— Paragraph (2) of section 6693(a) (relating to fail- December 31, 1997. ‘‘(i) pursuant to an agreement with any entity ure to provide reports on individual retirement SEC. 224. 2-PERCENT FLOOR ON MISCELLANEOUS accounts or annuities) is amended by striking ITEMIZED DEDUCTIONS NOT TO described in subparagraph (A), (B), or (C) under ‘‘and’’ at the end of subparagraph (B), by strik- APPLY TO CERTAIN CONTINUING which the funds from which the loan was made ing the period at the end of subparagraph (C) EDUCATION EXPENSES OF ELEMEN- were provided to such educational organization, and inserting ‘‘, and’’, and by adding at the end TARY AND SECONDARY SCHOOL or TEACHERS. the following new subparagraph: ‘‘(ii) pursuant to a program of such edu- (a) IN GENERAL.—Section 67(b) (defining mis- ‘‘(D) Section 530(g) (relating to education in- cational organization which is designed to en- cellaneous itemized deductions) is amended by dividual retirement accounts).’’. courage its students to serve in occupations with striking ‘‘and’’ at the end of paragraph (11), by (d) TECHNICAL AMENDMENTS.— unmet needs or in areas with unmet needs and striking the period at the end of paragraph (12) under which the services provided by the stu- (1) Subparagraph (F) of section 26(b)(2), as and inserting ‘‘, and’’, and by adding at the end added by the preceding section, is amended by dents (or former students) are for or under the the following: direction of a governmental unit or an organiza- inserting before the comma ‘‘and section ‘‘(13) any deduction allowable for the quali- 530(c)(3) (relating to additional tax on certain tion described in section 501(c)(3) and exempt fied professional development expenses of an eli- from tax under section 501(a). distributions from education individual retire- gible teacher.’’. The term ‘student loan’ includes any loan made ment accounts)’’. (b) DEFINITIONS.—Section 67 is amended by (2) Subparagraph (C) of section 135(c)(2), as adding at the end the following new subsection: by an educational organization so described or by an organization exempt from tax under sec- added by the preceding section, is amended by ‘‘(g) QUALIFIED PROFESSIONAL DEVELOPMENT tion 501(a) to refinance a loan meeting the re- inserting ‘‘, or to an education individual retire- EXPENSES OF ELIGIBLE TEACHERS.—For pur- ment account (as defined in section 530) on be- poses of subsection (b)(13)— quirements of the preceding sentence.’’. half of an account holder (as defined in such ‘‘(1) QUALIFIED PROFESSIONAL DEVELOPMENT (2) EXCEPTION FOR DISCHARGES ON ACCOUNT section),’’ after ‘‘(as defined in such section)’’. EXPENSES.— OF SERVICES PERFORMED FOR CERTAIN LEND- (3) The table of sections for part VIII of sub- ‘‘(A) IN GENERAL.—The term ‘qualified profes- ERS.—Subsection (f) of section 108 is amended by chapter F of chapter 1 is amended by adding at sional development expenses’ means expenses— adding at the end the following new paragraph: the end the following new item: ‘‘(i) for tuition, fees, books, supplies, equip- ‘‘(3) EXCEPTION FOR DISCHARGES ON ACCOUNT ment, and transportation required for the en- OF SERVICES PERFORMED FOR CERTAIN LEND- ‘‘Sec. 530. Education individual retirement ac- rollment or attendance of an individual in a ERS.—Paragraph (1) shall not apply to the dis- counts.’’. qualified course of instruction, and charge of a loan made by an organization de- (e) EFFECTIVE DATE.—The amendments made ‘‘(ii) with respect to which a deduction is al- scribed in paragraph (2)(D) (or by an organiza- by this section shall apply to taxable years be- lowable under section 162 (determined without tion described in paragraph (2)(E) from funds ginning after December 31, 1997. regard to this section). provided by an organization described in para- Subtitle C—Other Education Initiatives ‘‘(B) QUALIFIED COURSE OF INSTRUCTION.— graph (2)(D)) if the discharge is on account of The term ‘qualified course of instruction’ means services performed for either such organiza- SEC. 221. EXTENSION OF EXCLUSION FOR EM- a course of instruction which— tion.’’. PLOYER-PROVIDED EDUCATIONAL ASSISTANCE. ‘‘(i) is at an institution of higher education (b) CERTAIN STUDENT LOANS THE REPAYMENT (as defined in section 481 of the Higher Edu- (a) IN GENERAL.—Section 127 (relating to edu- OF WHICH IS INCOME CONTINGENT.—Paragraph cation Act of 1965 (20 U.S.C. 1088), as in effect cational assistance programs) is amended by (1) of section 108(f) is amended by striking ‘‘any on the date of the enactment of this subsection), striking subsection (d) and by redesignating student loan if’’ and all that follows and insert- and subsection (e) as subsection (d). ing ‘‘any student loan if— ‘‘(ii) is part of a program of professional de- ‘‘(A) such discharge was pursuant to a provi- (b) REPEAL OF LIMITATION ON GRADUATE EDU- velopment which is approved and certified by sion of such loan under which all or part of the CATION.—The last sentence of section 127(c)(1) is the appropriate local educational agency as di- indebtedness of the individual would be dis- amended by striking ‘‘, and such term also does rectly related to— charged if the individual worked for a certain not include any payment for, or the provision of ‘‘(I) an increase in the individual’s knowledge period of time in certain professions for any of any benefits with respect to, any graduate level of content areas the individual is required to a broad class of employers, or course of a kind normally taken by an indi- teach, vidual pursuing a program leading to a law, ‘‘(II) the improvement of the individual’s ca- ‘‘(B) in the case of a loan made under part D business, medical, or other advanced academic pacity to teach students to the standards of the of title IV of the Higher Education Act of 1965 or professional degree’’. local educational agency, or which has a repayment schedule established (c) EFFECTIVE DATES.— ‘‘(III) the improvement of the individual’s ca- under section 455(e)(4) of such Act (relating to (1) EXTENSION.—The amendments made by pacity to use learning technology in teaching. income contingent repayments), such discharge subsection (a) shall apply to taxable years be- ‘‘(C) LOCAL EDUCATIONAL AGENCY.—The term is after the maximum repayment period under ginning after December 31, 1996. ‘local educational agency’ has the meaning such loan (as prescribed under such part).’’. (2) GRADUATE EDUCATION.—The amendment given such term by section 14101 of the Elemen- (c) EFFECTIVE DATE.—The amendments made made by subsection (b) shall apply with respect tary and Secondary Education Act of 1965, as so by this section shall apply to discharges of in- to expenses relating to courses beginning after in effect. debtedness after the date of the enactment of December 31, 1996. ‘‘(2) ELIGIBLE TEACHER.— this Act.

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TITLE III—SAVINGS AND INVESTMENT ‘‘(A) IN GENERAL.—Except as provided in sub- ‘‘(ii) DISTRIBUTIONS TO WHICH SUBPARAGRAPH INCENTIVES paragraph (B), subsections (a)(6) and (b)(3) of APPLIES.—This subparagraph shall apply to a Subtitle A—Retirement Savings section 408 (relating to required distributions) distribution from an individual retirement plan and section 4974 (relating to excise tax on cer- (other than an IRA Plus account) maintained SEC. 301. RESTORATION OF IRA DEDUCTION FOR CERTAIN TAXPAYERS. tain accumulations in qualified retirement for the benefit of an individual to an IRA Plus plans) shall not apply to any IRA Plus account. account maintained for the benefit of such indi- (a) INCREASE IN INCOME LIMITS APPLICABLE ‘‘(B) POST-DEATH DISTRIBUTIONS.—Rules simi- vidual if such distribution would be a qualified TO ACTIVE PARTICIPANTS.— lar to the rules of section 401(a)(9) (other than (1) IN GENERAL.—Subparagraph (B) of section rollover contribution were such individual re- 219(g)(3) (relating to applicable dollar amount) subparagraph (A) thereof) shall apply for pur- tirement plan an IRA Plus account. Clause is amended to read as follows: poses of this section. (i)(II) shall only apply to distributions before ‘‘(5) ROLLOVER CONTRIBUTIONS.— ‘‘(B) APPLICABLE DOLLAR AMOUNT.—The term January 1, 1999. ‘applicable dollar amount’ means the following: ‘‘(A) IN GENERAL.—No rollover contribution ‘‘(iii) CONVERSIONS.—The conversion of an in- ‘‘(i) In the case of a taxpayer filing a joint re- may be made to an IRA Plus account unless it dividual retirement plan (other than an IRA turn: is a qualified rollover contribution. Plus account) to an IRA Plus account shall be ‘‘(B) COORDINATION WITH LIMIT.—A qualified treated for purposes of this subparagraph as a ‘‘For taxable years begin- The applicable dollar rollover contribution shall not be taken into ac- distribution from such plan to such IRA Plus ning in: amount is: count for purposes of paragraph (2). 1998 or 1999 ...... $50,000 account. ‘‘(6) TIME WHEN CONTRIBUTIONS MADE.—For ‘‘(C) ADDITIONAL REPORTING REQUIREMENTS.— 2000 or 2001 ...... $60,000 purposes of this section, the rule of section 2002 or 2003 ...... $70,000 The Secretary shall require that trustees of IRA 219(f)(3) shall apply. 2004 and thereafter ...... $80,000. Plus accounts, trustees of individual retirement ‘‘(d) DISTRIBUTION RULES.—For purposes of ‘‘(ii) In the case of any other taxpayer (other plans, or both, whichever is appropriate, shall this title— than a married individual filing a separate re- include such additional information in reports ‘‘(1) GENERAL RULES.— turn): required under section 408(i) as is necessary to ‘‘(A) EXCLUSIONS FROM GROSS INCOME.—Any ensure that amounts required to be included in ‘‘For taxable years begin- The applicable dollar qualified distribution from an IRA Plus account gross income under subparagraph (B) are so in- ning in: amount is: shall not be includible in gross income. cluded. 1998 or 1999 ...... $30,000 ‘‘(B) NONQUALIFIED DISTRIBUTIONS.—In ap- OORDINATION WITH INDIVIDUAL RETIRE- 2000 or 2001 ...... $35,000 plying section 72 to any distribution from an ‘‘(4) C MENT ACCOUNTS.—Section 408(d)(2) shall not 2002 or 2003 ...... $40,000 IRA Plus account which is not a qualified dis- apply to IRA Plus accounts. 2004 and thereafter ...... $50,000. tribution, such distribution shall be treated as ‘‘(iii) In the case of a married individual filing made from contributions to the IRA Plus ac- ‘‘(5) QUALIFIED SPECIAL PURPOSE DISTRIBU- a separate return, zero.’’. count to the extent that such distribution, when TION.—For purposes of this section, the term (2) INCREASE IN PHASE-OUT RANGE FOR JOINT added to all previous distributions from the IRA ‘qualified special purpose distribution’ means RETURNS.—Clause (ii) of section 219(g)(2)(A) is Plus account, does not exceed the aggregate any distribution to which subparagraph (D) or amended by inserting ‘‘($20,000 in the case of a amount of contributions to the IRA Plus ac- (F) of section 72(t)(2) applies. joint return for a taxable year beginning after count. For purposes of the preceding sentence, ‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.— December 31, 2003)’’. all IRA Plus accounts maintained for the ben- For purposes of this section, the term ‘qualified (b) LIMITATIONS FOR ACTIVE PARTICIPATION efit of an individual shall be treated as 1 ac- rollover contribution’ means a rollover contribu- NOT BASED ON SPOUSE’S PARTICIPATION.—Para- count. tion to an IRA Plus account from another such graph (1) of section 219(g) (relating to limitation ‘‘(2) QUALIFIED DISTRIBUTION.—For purposes account, or from an individual retirement plan, on deduction for active participants in certain of this subsection— but only if such rollover contribution meets the pension plans) is amended by striking ‘‘or the ‘‘(A) IN GENERAL.—The term ‘qualified dis- requirements of section 408(d)(3). For purposes individual’s spouse’’. tribution’ means any payment or distribution— of section 408(d)(3)(B), there shall be dis- (c) EFFECTIVE DATE.—The amendments made ‘‘(i) made on or after the date on which the regarded any qualified rollover contribution by this section shall apply to taxable years be- individual attains age 591⁄2, from an individual retirement plan (other than ginning after December 31, 1997. ‘‘(ii) made to a beneficiary (or to the estate of an IRA Plus account) to an IRA Plus ac- SEC. 302. ESTABLISHMENT OF NONDEDUCTIBLE the individual) on or after the death of the indi- count.’’. TAX-FREE INDIVIDUAL RETIREMENT vidual, (b) EXCESS CONTRIBUTIONS.— ACCOUNTS. ‘‘(iii) attributable to the individual’s being (1) Section 4973 is amended by adding at the (a) IN GENERAL.—Subpart A of part I of sub- disabled (within the meaning of section end the following new subsection: chapter D of chapter 1 (relating to pension, 72(m)(7)), or ‘‘(f) EXCESS CONTRIBUTIONS TO IRA PLUS AC- profit-sharing, stock bonus plans, etc.) is ‘‘(iv) which is a qualified special purpose dis- COUNTS.—For purposes of this section, in the amended by inserting after section 408 the fol- tribution. case of IRA Plus accounts, the term ‘excess con- lowing new section: ‘‘(B) CERTAIN DISTRIBUTIONS WITHIN 5 tributions’ means the amount by which the ‘‘SEC. 408A. IRA PLUS ACCOUNTS. YEARS.—A payment or distribution shall not be amount contributed for the taxable year to such ‘‘(a) GENERAL RULE.—Except as provided in treated as a qualified distribution under sub- accounts exceeds the limitation in section this section, an IRA Plus account shall be treat- paragraph (A) if— 408A(c)(2).’’. ed for purposes of this title in the same manner ‘‘(i) it is made within the 5-taxable year pe- (2) Subsection (b) of section 4973 is amended as an individual retirement plan. riod beginning with the 1st taxable year for by adding at the end the following new sen- ‘‘(b) IRA PLUS ACCOUNT.—For purposes of which the individual made a contribution to an tence: ‘‘For purposes of this subsection, an IRA this title, the term ‘IRA Plus account’ means an IRA Plus account (or such individual’s spouse Plus account shall not be treated as an indi- individual retirement plan (as defined in section made a contribution to an IRA Plus account) es- vidual retirement plan.’’. 7701(a)(37)) which is designated (in such manner tablished for such individual, or (c) SPOUSAL IRA.—Clause (ii) of section as the Secretary may prescribe) at the time of es- ‘‘(ii) in the case of a payment or distribution 219(c)(1)(B) is amended to read as follows: tablishment of the plan as an IRA Plus account. properly allocable (as determined in the manner ‘‘(ii) the compensation includible in the gross Such designation shall be made in such manner prescribed by the Secretary) to a qualified roll- income of such individual’s spouse for the tax- as the Secretary may prescribe. over contribution (or income allocable thereto), able year reduced by— ‘‘(c) TREATMENT OF CONTRIBUTIONS.— it is made within the 5-taxable year period be- ‘‘(I) the amount allowed as a deduction under ‘‘(1) NO DEDUCTION ALLOWED.—No deduction ginning with the taxable year in which the roll- subsection (a) to such spouse for such taxable shall be allowed under section 219 for a con- over contribution was made. year, and tribution to an IRA Plus account. Clause (ii) shall not apply to a qualified rollover ‘‘(II) the amount of any contribution on be- ‘‘(2) CONTRIBUTION LIMIT.—The aggregate contribution from an IRA plus account. half of such spouse to an IRA Plus account amount of contributions for any taxable year to ‘‘(3) ROLLOVERS.— under section 408A for such taxable year.’’. all IRA Plus accounts maintained for the ben- ‘‘(A) IN GENERAL.—Any distribution which is efit of an individual shall not exceed the excess transferred in a qualified rollover contribution (d) REPEAL OF NONDEDUCTIBLE CONTRIBU- (if any) of— to an IRA Plus account shall not be included in TIONS.— ‘‘(A) the maximum amount allowable as a de- gross income. (1) Subsection (f) of section 219 is amended by duction under section 219 with respect to such ‘‘(B) INCOME INCLUSION FOR ROLLOVERS FROM striking paragraph (7). individual for such taxable year (computed NON-PLUS IRAS.— (2) Paragraph (5) of section 408(d) is amended without regard to subsection (g) of such sec- ‘‘(i) IN GENERAL.—In the case of any distribu- by striking the last sentence. tion), over tion to which this subparagraph applies— (3) Section 408(o) is amended by adding at the ‘‘(B) the amount so allowed. ‘‘(I) sections 72(t) and 408(d)(3) shall not end the following new paragraph: ‘‘(3) CONTRIBUTIONS PERMITTED AFTER AGE apply, and ‘‘(5) TERMINATION.—This subsection shall not 701⁄2.—Contributions to an IRA Plus account ‘‘(II) any amount required to be included in apply to any designated nondeductible contribu- may be made even after the individual for whom gross income by reason of this paragraph shall tion for any taxable year beginning after De- the account is maintained has attained age 701⁄2. be so included ratably over the 4-taxable year cember 31, 1997.’’. ‘‘(4) MANDATORY DISTRIBUTION RULES NOT TO period beginning with the taxable year in which (4) Section 4973(b) is amended by striking the APPLY, ETC.— the payment or distribution is made. last sentence.

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(e) CONFORMING AMENDMENT.—The table of ‘‘(iii) DATE OF ACQUISITION.—The term ‘date mined under subparagraph (A) plus the net cap- sections for subpart A of part I of subchapter D of acquisition’ means the date— ital gain determined without regard to of chapter 1 is amended by inserting after the ‘‘(I) on which a binding contract to acquire unrecaptured section 1250 gain, plus item relating to section 408 the following new the principal residence to which subparagraph ‘‘(C) 28 percent of the amount of taxable in- item: (A) applies is entered into, or come in excess of the sum of— ‘‘(II) on which construction or reconstruction ‘‘(i) the adjusted net capital gain, plus ‘‘Sec. 408A. IRA Plus accounts.’’. of such a principal residence is commenced. ‘‘(ii) the sum of the amounts on which tax is (f) EFFECTIVE DATE.—The amendments made ‘‘(E) SPECIAL RULE WHERE DELAY IN ACQUISI- determined under subparagraphs (A) and (B), by this section shall apply to taxable years be- TION.—If any distribution from any individual plus ginning after December 31, 1997. retirement plan fails to meet the requirements of ‘‘(D) 10 percent of so much of the taxpayer’s SEC. 303. DISTRIBUTIONS FROM CERTAIN PLANS subparagraph (A) solely by reason of a delay or adjusted net capital gain (or, if less, taxable in- MAY BE USED WITHOUT PENALTY TO cancellation of the purchase or construction of come) as does not exceed the excess (if any) of— PURCHASE FIRST HOMES AND WHEN the residence, the amount of the distribution ‘‘(i) the amount of taxable income which UNEMPLOYED. may be contributed to an individual retirement would (without regard to this paragraph) be (a) FIRST HOMES.— plan as provided in section 408(d)(3)(A)(i) (de- taxed at a rate of 15 percent or less, over (1) IN GENERAL.—Paragraph (2) of section termined by substituting ‘120 days’ for ‘60 days’ ‘‘(ii) the taxable income reduced by the ad- 72(t) (relating to exceptions to 10-percent addi- in such section), except that— justed net capital gain, plus tional tax on early distributions from qualified ‘‘(i) section 408(d)(3)(B) shall not be applied to ‘‘(E) 20 percent of the taxpayer’s adjusted net retirement plans), as amended by section 203, is such contribution, and capital gain (or, if less, taxable income) in ex- amended by adding at the end the following ‘‘(ii) such amount shall not be taken into ac- cess of the amount on which a tax is determined new subparagraph: count in determining whether section under subparagraph (D). ‘‘(F) DISTRIBUTIONS FROM CERTAIN PLANS FOR 408(d)(3)(A)(i) applies to any other amount.’’. ‘‘(2) NET CAPITAL GAIN TAKEN INTO ACCOUNT FIRST HOME PURCHASES.—Distributions to an in- (b) PENALTY-FREE DISTRIBUTIONS FOR CER- AS INVESTMENT INCOME.—For purposes of this dividual from an individual retirement plan TAIN UNEMPLOYED INDIVIDUALS.—Subparagraph subsection, the net capital gain for any taxable which are qualified first-time homebuyer dis- (D) of section 72(t)(2) is amended— year shall be reduced (but not below zero) by tributions (as defined in paragraph (8)). Dis- (1) in clause (i), by inserting ‘‘and’’ at the end the amount which the taxpayer takes into ac- tributions shall not be taken into account under of subclause (I), by striking ‘‘, and’’ at the end count as investment income under section the preceding sentence if such distributions are of subclause (II) and inserting a period, and by 163(d)(4)(B)(iii). described in subparagraph (A), (C), (D), or (E) striking subclause (III), and ‘‘(3) ADJUSTED NET CAPITAL GAIN.—For pur- or to the extent paragraph (1) does not apply to (2) by striking ‘‘FOR HEALTH INSURANCE PRE- poses of this subsection, the term ‘adjusted net such distributions by reason of subparagraph MIUMS’’ in the heading thereof. capital gain’ means net capital gain determined (B).’’. (c) EFFECTIVE DATE.—The amendments made without regard to— (2) DEFINITIONS.—Section 72(t), as amended by this section shall apply to payments and dis- ‘‘(A) collectibles gain, and by section 203, is amended by adding at the end tributions in taxable years beginning after De- ‘‘(B) unrecaptured section 1250 gain. the following new paragraphs: cember 31, 1997. ‘‘(4) COLLECTIBLES GAIN.—For purposes of ‘‘(8) QUALIFIED FIRST-TIME HOMEBUYER DIS- SEC. 304. CERTAIN BULLION NOT TREATED AS paragraph (3)— TRIBUTIONS.—For purposes of paragraph COLLECTIBLES. ‘‘(A) IN GENERAL.—The term ‘collectibles gain’ (2)(F)— (a) IN GENERAL.—Paragraph (3) of section means gain from the sale or exchange of a col- ‘‘(A) IN GENERAL.—The term ‘qualified first- 408(m) (relating to exception for certain coins) is lectible (as defined in section 408(m) without re- time homebuyer distribution’ means any pay- amended to read as follows: gard to paragraph (3) thereof) which is a capital ment or distribution received by an individual to ‘‘(3) EXCEPTION FOR CERTAIN COINS AND BUL- asset held for more than 1 year but only to the the extent such payment or distribution is used LION.—For purposes of this subsection, the term extent such gain is taken into account in com- by the individual before the close of the 120th ‘collectible’ shall not include— puting gross income. day after the day on which such payment or ‘‘(A) any coin which is— ‘‘(B) PARTNERSHIPS, ETC.—For purposes of distribution is received to pay qualified acquisi- ‘‘(i) a gold coin described in paragraph (7), subparagraph (A), any gain from the sale of an tion costs with respect to a principal residence (8), (9), or (10) of section 5112(a) of title 31, interest in a partnership, S corporation, or trust of a first-time homebuyer who is such indi- United States Code, which is attributable to unrealized appreciation vidual, the spouse of such individual, or any ‘‘(ii) a silver coin described in section 5112(e) in the value of collectibles shall be treated as child, grandchild, or ancestor of such individual of title 31, United States Code, gain from the sale or exchange of a collectible. or the individual’s spouse. ‘‘(iii) a platinum coin described in section Rules similar to the rules of section 751 shall ‘‘(B) LIFETIME DOLLAR LIMITATION.—The ag- 5112(k) of title 31, United States Code, or apply for purposes of the preceding sentence. gregate amount of payments or distributions re- ‘‘(iv) a coin issued under the laws of any ‘‘(5) UNRECAPTURED SECTION 1250 GAIN.—For ceived by an individual which may be treated as State, or purposes of this subsection, the term qualified first-time homebuyer distributions for ‘‘(B) any gold, silver, platinum, or palladium ‘unrecaptured section 1250 gain’ means the ex- any taxable year shall not exceed the excess (if bullion of a fineness equal to or exceeding the cess (if any) of— any) of— minimum fineness required for metals which ‘‘(A) the amount which would be treated as ‘‘(i) $10,000, over may be delivered in satisfaction of a regulated ordinary income under section 1245 if all section ‘‘(ii) the aggregate amounts treated as quali- futures contract subject to regulation by the 1250 property disposed of by the taxpayer were fied first-time homebuyer distributions with re- Commodity Futures Trading Commission under section 1245 property, over spect to such individual for all prior taxable the Commodity Exchange Act, ‘‘(B) the amount treated as ordinary income years. if such bullion is in the physical possession of a under section 1250. ‘‘(C) QUALIFIED ACQUISITION COSTS.—For pur- trustee described under subsection (a) of this In the case of a taxable year which includes poses of this paragraph, the term ‘qualified ac- section.’’. May 7, 1997, unrecaptured section 1250 gain quisition costs’ means the costs of acquiring, (b) EFFECTIVE DATE.—The amendment made shall be determined by taking into account only constructing, or reconstructing a residence. by this section shall apply to taxable years be- the gain properly taken into account for the Such term includes any usual or reasonable set- ginning after December 31, 1997. portion of the taxable year after May 6, 1997. tlement, financing, or other closing costs. Subtitle B—Capital Gains ‘‘(6) PRE-EFFECTIVE DATE GAIN.— ‘‘(D) FIRST-TIME HOMEBUYER; OTHER DEFINI- SEC. 311. 20-PERCENT MAXIMUM CAPITAL GAINS ‘‘(A) IN GENERAL.—In the case of a taxable TIONS.—For purposes of this paragraph— RATE FOR INDIVIDUALS. year which includes May 7, 1997, adjusted net ‘‘(i) FIRST-TIME HOMEBUYER.—The term ‘first- (a) IN GENERAL.—Subsection (h) of section 1 capital gain shall be determined without regard time homebuyer’ means any individual if— (relating to maximum capital gains rate) is to pre-May 7, 1997, gain. ‘‘(I) such individual (and if married, such in- amended to read as follows: ‘‘(B) PRE-MAY 7, 1997, GAIN.—The term ‘pre- dividual’s spouse) had no present ownership in- ‘‘(h) MAXIMUM CAPITAL GAINS RATE.— May 7, 1997, gain’ means the amount which terest in a principal residence during the 2-year ‘‘(1) IN GENERAL.—If a taxpayer has a net would be adjusted net capital gain for the tax- period ending on the date of acquisition of the capital gain for any taxable year, the tax im- able year if adjusted net capital gain were de- principal residence to which this paragraph ap- posed by this section for such taxable year shall termined by taking into account only the gain plies, and not exceed the sum of— or loss properly taken into account for the por- ‘‘(II) subsection (h) or (k) of section 1034 (as ‘‘(A) a tax computed at the rates and in the tion of the taxable year before May 7, 1997. in effect on the day before the date of the enact- same manner as if this subsection had not been ‘‘(C) SPECIAL RULES FOR PASS-THRU ENTI- ment of this paragraph) did not suspend the enacted on the greater of— TIES.—In applying subparagraph (A) with re- running of any period of time specified in sec- ‘‘(i) taxable income reduced by the net capital spect to any pass-thru entity, the determination tion 1034 (as so in effect) with respect to such gain, or of when gains and loss are properly taken into individual on the day before the date the dis- ‘‘(ii) the amount of taxable income taxed at a account shall be made at the entity level. tribution is applied pursuant to subparagraph rate below 28 percent, plus ‘‘(D) PASS-THRU ENTITY DEFINED.—For pur- (A). ‘‘(B) 24 percent of the lesser of— poses of subparagraph (C), the term ‘pass-thru ‘‘(ii) PRINCIPAL RESIDENCE.—The term ‘prin- ‘‘(i) the unrecaptured section 1250 gain, or entity’ means— cipal residence’ has the same meaning as when ‘‘(ii) the amount of taxable income in excess of ‘‘(i) a regulated investment company, used in section 121. the sum of the amount on which tax is deter- ‘‘(ii) a real estate investment trust,

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‘‘(iii) an S corporation, (c) STOCK OF LARGER BUSINESSES ELIGIBLE ‘‘(b) DEFINITIONS AND SPECIAL RULES.—For ‘‘(iv) a partnership, FOR REDUCED RATES.—Paragraph (1) of section purposes of this section— ‘‘(v) an estate or trust, and 1202(d) is amended by striking ‘‘$50,000,000’’ ‘‘(1) QUALIFIED SMALL BUSINESS STOCK.—The ‘‘(vi) a common trust fund.’’. each place it appears and inserting term ‘qualified small business stock’ has the (b) MINIMUM TAX.— ‘‘$100,000,000’’. meaning given such term by section 1202(b). (1) IN GENERAL.—Subsection (b) of section 55 is (d) REPEAL OF PER-ISSUER LIMITATION.—Sec- ‘‘(2) ELIGIBLE GAIN.—The term ‘eligible gain’ amended by adding at the end the following tion 1202 is amended by striking subsection (b). means any gain from the sale or exchange of new paragraph: (e) OTHER MODIFICATIONS.— qualified small business stock held for more ‘‘(3) MAXIMUM RATE OF TAX ON NET CAPITAL (1) REPEAL OF WORKING CAPITAL LIMITA- than 5 years. GAIN OF NONCORPORATE TAXPAYERS.—The TION.—Paragraph (6) of section 1202(e) is ‘‘(3) PURCHASE.—A taxpayer shall be treated amount determined under the first sentence of amended— as having purchased any property if, but for paragraph (1)(A)(i) shall not exceed the sum (A) by striking ‘‘2 years’’ in subparagraph (B) paragraph (4), the unadjusted basis of such of— and inserting ‘‘5 years’’, and property in the hands of the taxpayer would be ‘‘(A) the amount determined under such first (B) by striking the last sentence. its cost (within the meaning of section 1012). sentence computed at the rates and in the same (2) EXCEPTION FROM REDEMPTION RULES ‘‘(4) BASIS ADJUSTMENTS.—If gain from any manner as if this paragraph had not been en- WHERE BUSINESS PURPOSE.—Paragraph (3) of sale is not recognized by reason of subsection acted on the taxable excess reduced by the ex- section 1202(c) is amended by adding at the end (a), such gain shall be applied to reduce (in the cess of the net capital gain over the sum of the the following new subparagraph: order acquired) the basis for determining gain or collectibles gain (as defined in section 1(h)(4)) ‘‘(D) WAIVER WHERE BUSINESS PURPOSE.—A loss of any qualified small business stock which and the pre-effective date gain (as defined in purchase of stock by the issuing corporation is purchased by the taxpayer during the 60-day section 1(h)(6)), plus shall be disregarded for purposes of subpara- period described in subsection (a). ‘‘(B) 24 percent of the lesser of— graph (B) if the issuing corporation establishes ‘‘(c) SPECIAL RULES FOR TREATMENT OF RE- ‘‘(i) the unrecaptured section 1250 gain (as de- that there was a business purpose for such pur- PLACEMENT STOCK.— fined in section 1(h)(5)), or chase and one of the principal purposes of the ‘‘(1) HOLDING PERIOD FOR ACCRUED GAIN.—For ‘‘(ii) the amount of taxable excess in excess of purchase was not to avoid the limitations of this purposes of this chapter, gain from the disposi- the sum of— section.’’. tion of any replacement qualified small business ‘‘(I) the adjusted net capital gain, plus (f) CONFORMING AMENDMENTS.— stock shall be treated as gain from the sale or ‘‘(II) the amount on which a tax is determined (1) Subsection (c) of section 1202 is amended exchange of qualified small business stock held under subparagraph (A), plus by striking ‘‘subsections (f) and (h)’’ and insert- more than 5 years to the extent that the amount ‘‘(C) 10 percent of so much of the taxpayer’s ing ‘‘subsections (e) and (g)’’. of such gain does not exceed the amount of the adjusted net capital gain (or, if less, taxable ex- (2) Paragraph (2) of section 1202(c) is amend- reduction in the basis of such stock by reason of cess) as does not exceed the amount on which a ed— subsection (b)(4). tax is determined under section 1(h)(1)(B), plus (A) by striking ‘‘subsection (e)’’ each place it ‘‘(2) TACKING OF HOLDING PERIOD FOR PUR- ‘‘(D) 20 percent of the taxpayer’s adjusted net appears and inserting ‘‘subsection (d)’’, and POSES OF DEFERRAL.—Solely for purposes of ap- capital gain (or, if less, taxable excess) in excess (B) by striking ‘‘subsection (e)(4)’’ in subpara- plying this section, if any replacement qualified of the amount on which tax is determined under graph (B)(ii) and inserting ‘‘subsection (d)(4)’’. small business stock is disposed of before the subparagraph (C).’’. (3) Paragraph (1) of section 1202(e) is amended taxpayer has held such stock for more than 5 (2) CONFORMING AMENDMENT.—Clause (ii) of by striking ‘‘subsection (c)(2)’’ and inserting years, gain from such stock shall be treated eli- section 55(b)(1)(A) is amended by striking ‘‘subsection (b)(2)’’. gible gain for purposes of subsection (a). ‘‘clause (i)’’ and inserting ‘‘this subsection’’. (4) Paragraph (1) of section 1202(g) is amend- ‘‘(3) REPLACEMENT QUALIFIED SMALL BUSINESS (c) OTHER CONFORMING AMENDMENTS.— ed to read as follows: STOCK.—For purposes of this subsection, the (1) Subsection (d) of section 291 is amended by ‘‘(1) IN GENERAL.—If any amount included in term ‘replacement qualified small business stock’ inserting at the end the following new sentence: gross income by reason of holding an interest in means any qualified small business stock the ‘‘Any capital gain dividend treated as having a pass-thru entity meets the requirements of basis of which was reduced under subsection been paid out of such difference to a share- paragraph (2), such amount shall be treated as (b)(4).’’. holder which is not a corporation retains its gain from the sale or exchange of any qualified (b) CONFORMING AMENDMENTS.— characters as unrecaptured section 1250 gain for small business stock held for more than 5 (1) Section 1016(a)(23) is amended— purposes of applying section 1(h) to such share- years.’’. (A) by striking ‘‘or 1044’’ and inserting ‘‘, holder.’’. (5) Section 1202, as amended by the preceding 1044, or 1045’’, and (2) Paragraph (1) of section 1445(e) is amended provisions of this section, is amended by redesig- (B) by striking ‘‘or 1044(d)’’ and inserting ‘‘, by striking ‘‘28 percent’’ and inserting ‘‘20 per- nating subsections (c) through (k) as sub- 1044(d), or 1045(b)(4)’’. (2) The table of sections for part III of sub- cent’’. sections (b) through (j), respectively. chapter O of chapter 1 is amended by adding at (3) The second sentence of section (6) So much of paragraph (2) of section 172(d) the end the following new item: 7518(g)(6)(A), and the second sentence of section as precedes subparagraph (A) thereof is amend- 607(h)(6)(A) of the Merchant Marine Act, 1936, ed to read as follows: ‘‘Sec. 1045. Rollover of gain from qualified small are each amended by striking ‘‘28 percent’’ and ‘‘(2) CAPITAL GAINS AND LOSSES.—In the case business stock to another quali- inserting ‘‘20 percent’’. of any taxpayer—’’. fied small business stock.’’. (d) EFFECTIVE DATES.— (g) EFFECTIVE DATES.— (c) EFFECTIVE DATES.— (1) IN GENERAL.—Except as provided in para- (1) IN GENERAL.—Except as provided in para- (1) IN GENERAL.—Except as provided in para- graph (2), the amendments made by this section graph (2), the amendments made by this section graph (2), the amendments made by this section shall apply to taxable years ending after May 6, shall apply to stock issued after August 10, 1993. shall apply to stock issued after August 10, 1993. 1997. (2) SUBSECTIONS (a) and (c).—The amend- (2) STOCK HELD BY A CORPORATION.—In the (2) WITHHOLDING.—The amendment made by ments made by subsections (a) and (c) shall case of stock held by a corporation, the amend- subsection (c)(2) shall apply only to amounts apply to stock issued after the date of the enact- ments made by this section shall apply to stock paid after the date of the enactment of this Act. ment of this Act. issued after the date of the enactment of this SEC. 312. MODIFICATIONS TO EXCLUSION OF SEC. 313. ROLLOVER OF GAIN FROM SALE OF Act. GAIN ON CERTAIN SMALL BUSINESS QUALIFIED STOCK. SEC. 314. EXEMPTION FROM TAX FOR GAIN ON STOCK. (a) IN GENERAL.—Part III of subchapter O of SALE OF PRINCIPAL RESIDENCE. (a) EXCLUSION AVAILABLE TO CORPORA- chapter 1 is amended by adding at the end the (a) IN GENERAL.—Section 121 (relating to one- TIONS.— following new section: time exclusion of gain from sale of principal res- (1) IN GENERAL.—Subsection (a) of section 1202 ‘‘SEC. 1045. ROLLOVER OF GAIN FROM QUALIFIED idence by individual who has attained age 55) is is amended by striking ‘‘In the case of a tax- SMALL BUSINESS STOCK TO AN- amended to read as follows: payer other than a corporation, gross’’ and in- OTHER QUALIFIED SMALL BUSINESS ‘‘SEC. 121. EXCLUSION OF GAIN FROM SALE OF serting ‘‘Gross’’. STOCK. PRINCIPAL RESIDENCE. (2) TECHNICAL AMENDMENT.—Subsection (c) of ‘‘(a) NONRECOGNITION OF GAIN.—In the case ‘‘(a) EXCLUSION.—Gross income shall not in- section 1202 is amended by adding at the end the of any sale of qualified small business stock clude gain from the sale or exchange of property following new paragraph: with respect to which the taxpayer elects the if, during the 5-year period ending on the date ‘‘(4) STOCK HELD AMONG MEMBERS OF CON- application of this section, eligible gain from of the sale or exchange, such property has been TROLLED GROUP NOT ELIGIBLE.—Stock of a mem- such sale shall be recognized only to the extent owned and used by the taxpayer as the tax- ber of a parent-subsidiary controlled group (as that the amount realized on such sale exceeds— payer’s principal residence for periods aggre- defined in subsection (c)(3)) shall not be treated ‘‘(1) the cost of any qualified small business gating 2 years or more. as qualified small business stock while held by stock purchased by the taxpayer during the 60- ‘‘(b) LIMITATIONS.— another member of such group.’’. day period beginning on the date of such sale, ‘‘(1) IN GENERAL.—The amount of gain ex- (b) REPEAL OF MINIMUM TAX PREFERENCE.— reduced by cluded from gross income under subsection (a) (1) Subsection (a) of section 57 is amended by ‘‘(2) any portion of such cost previously taken with respect to any sale or exchange shall not striking paragraph (7). into account under this section. exceed $250,000. (2) Subclause (II) of section 53(d)(1)(B)(ii) is This section shall not apply to any gain which ‘‘(2) $500,000 LIMITATION FOR CERTAIN JOINT amended by striking ‘‘, (5), and (7)’’ and insert- is treated as ordinary income for purposes of RETURNS.—Paragraph (1) shall be applied by ing ‘‘and (5)’’. this title. substituting ‘$500,000’ for ‘$250,000’ if—

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‘‘(A) a husband and wife make a joint return section, if the taxpayer holds stock as a tenant- ‘‘(g) RESIDENCES ACQUIRED IN ROLLOVERS for the taxable year of the sale or exchange of stockholder (as defined in section 216) in a coop- UNDER SECTION 1034.—For purposes of this sec- the property, erative housing corporation (as defined in such tion, in the case of property the acquisition of ‘‘(B) either spouse meets the ownership re- section), then— which by the taxpayer resulted under section quirements of subsection (a) with respect to such ‘‘(A) the holding requirements of subsection 1034 (as in effect on the day before the date of property, (a) shall be applied to the holding of such stock, the enactment of this section) in the nonrecogni- ‘‘(C) both spouses meet the use requirements and tion of any part of the gain realized on the sale of subsection (a) with respect to such property, ‘‘(B) the use requirements of subsection (a) or exchange of another residence, in deter- and shall be applied to the house or apartment mining the period for which the taxpayer has ‘‘(D) neither spouse is ineligible for the bene- which the taxpayer was entitled to occupy as owned and used such property as the taxpayer’s fits of subsection (a) with respect to such prop- such stockholder. principal residence, there shall be included the erty by reason of paragraph (3). ‘‘(4) INVOLUNTARY CONVERSIONS.— aggregate periods for which such other resi- ‘‘(3) APPLICATION TO ONLY 1 SALE OR EX- ‘‘(A) IN GENERAL.—For purposes of this sec- dence (and each prior residence taken into ac- CHANGE EVERY 2 YEARS.— tion, the destruction, theft, seizure, requisition, count under section 1223(7) in determining the ‘‘(A) IN GENERAL.—Subsection (a) shall not or condemnation of property shall be treated as holding period of such property) had been so apply to any sale or exchange by the taxpayer the sale of such property. owned and used.’’. if, during the 2-year period ending on the date ‘‘(B) APPLICATION OF SECTION 1033.—In apply- (b) REPEAL OF NONRECOGNITION OF GAIN ON of such sale or exchange, there was any other ing section 1033 (relating to involuntary conver- ROLLOVER OF PRINCIPAL RESIDENCE.—Section sale or exchange by the taxpayer to which sub- sions), the amount realized from the sale or ex- 1034 (relating to rollover of gain on sale of prin- section (a) applied. change of property shall be treated as being the cipal residence) is hereby repealed. ‘‘(B) PRE-MAY 7, 1997, SALES NOT TAKEN INTO amount determined without regard to this sec- (c) EXCEPTION FROM REPORTING.—Subsection ACCOUNT.—Subparagraph (A) shall be applied tion, reduced by the amount of gain not in- (e) of section 6045 (relating to return required in without regard to any sale or exchange before cluded in gross income pursuant to this section. the case of real estate transactions) is amended May 7, 1997. ‘‘(C) PROPERTY ACQUIRED AFTER INVOLUNTARY by adding at the end the following new para- ‘‘(c) EXCLUSION FOR TAXPAYERS FAILING TO CONVERSION.—If the basis of the property sold or graph: MEET CERTAIN REQUIREMENTS.— exchanged is determined (in whole or in part) ‘‘(5) EXCEPTION FOR SALES OR EXCHANGES OF ‘‘(1) IN GENERAL.—In the case of a sale or ex- under section 1033(b) (relating to basis of prop- CERTAIN PRINCIPAL RESIDENCES.— change to which this subsection applies, the erty acquired through involuntary conversion), ‘‘(A) IN GENERAL.—Paragraph (1) shall not ownership and use requirements of subsection then the holding and use by the taxpayer of the apply to any sale or exchange of a residence for (a) shall not apply and subsection (b)(3) shall converted property shall be treated as holding $250,000 or less if the person referred to in para- not apply; but the amount of gain excluded from and use by the taxpayer of the property sold or graph (2) receives written assurance in a form gross income under subsection (a) with respect exchanged. acceptable to the Secretary from the seller to such sale or exchange shall not exceed— ‘‘(5) RECOGNITION OF GAIN ATTRIBUTABLE TO that— ‘‘(A) the amount which bears the same ratio DEPRECIATION.—Subsection (a) shall not apply ‘‘(i) such residence is the principal residence to the amount which would be so excluded if to so much of the gain from the sale of any (within the meaning of section 121) of the seller, such requirements had been met, as property as does not exceed the portion of the ‘‘(ii) if the Secretary requires the inclusion on ‘‘(B) the shorter of— depreciation adjustments (as defined in section the return under subsection (a) of information ‘‘(i) the aggregate periods, during the 5-year 1250(b)(3)) attributable to periods after May 6, as to whether there is federally subsidized mort- period ending on the date of such sale or ex- 1997, in respect of such property. gage financing assistance with respect to the change, such property has been owned and used ‘‘(6) DETERMINATION OF USE DURING PERIODS mortgage on residences, that there is no such as- by the taxpayer as the taxpayer’s principal resi- OF OUT-OF-RESIDENCE CARE.—In the case of a sistance with respect to the mortgage on such dence, or taxpayer who— residence, and ‘‘(ii) the period after the date of the most re- ‘‘(A) becomes physically or mentally incapable ‘‘(iii) the full amount of the gain on such sale cent prior sale or exchange by the taxpayer to of self-care, and or exchange is excludable from gross income ‘‘(B) owns property and uses such property as which subsection (a) applied and before the date under section 121. the taxpayer’s principal residence during the 5- of such sale or exchange, If such assurance includes an assurance that year period described in subsection (a) for peri- bears to 2 years. the seller is married, the preceding sentence ods aggregating at least 1 year, ‘‘(2) SALES AND EXCHANGES TO WHICH SUB- shall be applied by substituting ‘$500,000’ for then the taxpayer shall be treated as using such SECTION APPLIES.—This subsection shall apply ‘$250,000’. property as the taxpayer’s principal residence ‘‘(B) SELLER.—For purposes of this para- to any sale or exchange if— during any time during such 5-year period in ‘‘(A) subsection (a) would not (but for this graph, the term ‘seller’ includes the person re- which the taxpayer owns the property and re- subsection) apply to such sale or exchange by linquishing the residence in an exchange.’’. sides in any facility (including a nursing home) (d) CONFORMING AMENDMENTS.— reason of— licensed by a State or political subdivision to (1) The following provisions of the Internal ‘‘(i) a failure to meet the ownership and use care for an individual in the taxpayer’s condi- Revenue Code of 1986 are each amended by requirements of subsection (a), or tion. striking ‘‘section 1034’’ and inserting ‘‘section ‘‘(ii) subsection (b)(3), and ‘‘(7) DETERMINATION OF MARITAL STATUS.—In 121’’: sections 25(e)(7), 56(e)(1)(A), 56(e)(3)(B)(i), ‘‘(B) such sale or exchange is by reason of a the case of any sale or exchange, for purposes of 143(i)(1)(C)(i)(I), 163(h)(4)(A)(i)(I), change in place of employment, health, or, to this section— 280A(d)(4)(A), 464(f)(3)(B)(i), 1033(h)(4), the extent provided in regulations, unforeseen ‘‘(A) the determination of whether an indi- 1274(c)(3)(B), 6334(a)(13), and 7872(f)(11)(A). circumstances. vidual is married shall be made as of the date of (2) Paragraph (4) of section 32(c) is amended ‘‘(d) SPECIAL RULES.— the sale or exchange, and by striking ‘‘(as defined in section 1034(h)(3))’’ ‘‘(1) PROPERTY OF DECEASED SPOUSE.—For ‘‘(B) an individual legally separated from his and by adding at the end the following new sen- purposes of this section, in the case of an un- spouse under a decree of divorce or of separate tence: ‘‘For purposes of the preceding sentence, married individual whose spouse is deceased on maintenance shall not be considered as married. the term ‘extended active duty’ means any pe- the date of the sale or exchange of property, the ‘‘(8) SALES OF REMAINDER INTERESTS.—For riod of active duty pursuant to a call or order period such unmarried individual owned such purposes of this section— to such duty for a period in excess of 90 days or property shall include the period such deceased ‘‘(A) IN GENERAL.—At the election of the tax- for an indefinite period.’’. spouse owned such property before death. payer, this section shall not fail to apply to the (3) Subparagraph (A) of 143(m)(6) is amended ‘‘(2) PROPERTY OWNED BY SPOUSE OR FORMER sale or exchange of an interest in a principal by inserting ‘‘(as in effect on the day before the SPOUSE.—For purposes of this section— residence by reason of such interest being a re- date of the enactment of the Revenue Reconcili- ‘‘(A) PROPERTY TRANSFERRED TO INDIVIDUAL mainder interest in such residence, but this sec- ation Act of 1997)’’ after ‘‘1034(e)’’. FROM SPOUSE OR FORMER SPOUSE.—In the case tion shall not apply to any other interest in (4) Subsection (e) of section 216 is amended by of an individual holding property transferred to such residence which is sold or exchanged sepa- striking ‘‘such exchange qualifies for non- such individual in a transaction described in rately. recognition of gain under section 1034(f)’’ and section 1041(a), the period such individual owns ‘‘(B) EXCEPTION FOR SALES TO RELATED PAR- inserting ‘‘such dwelling unit is used as his such property shall include the period the trans- TIES.—Subparagraph (A) shall not apply to any principal residence (within the meaning of sec- feror owned the property. sale to, or exchange with, any person who bears tion 121)’’. ‘‘(B) PROPERTY USED BY FORMER SPOUSE PUR- a relationship to the taxpayer which is de- (5) Section 512(a)(3)(D) is amended by insert- SUANT TO DIVORCE DECREE, ETC.—Solely for pur- scribed in section 267(b) or 707(b). ing ‘‘(as in effect on the day before the date of poses of this section, an individual shall be ‘‘(e) DENIAL OF EXCLUSION FOR EXPATRI- the enactment of the Revenue Reconciliation treated as using property as such individual’s ATES.—This section shall not apply to any sale Act of 1997)’’ after ‘‘1034’’. principal residence during any period of owner- or exchange by an individual if the treatment (6) Paragraph (7) of section 1016(a) is amend- ship while such individual’s spouse or former provided by section 877(a)(1) applies to such in- ed by inserting ‘‘(as in effect on the day before spouse is granted use of the property under a di- dividual. the date of the enactment of the Revenue Rec- vorce or separation instrument (as defined in ‘‘(f) ELECTION TO HAVE SECTION NOT onciliation Act of 1997)’’ after ‘‘1034’’ and by in- section 71(b)(2)). APPLY.—This section shall not apply to any sale serting ‘‘(as so in effect)’’ after ‘‘1034(e)’’. ‘‘(3) TENANT-STOCKHOLDER IN COOPERATIVE or exchange with respect to which the taxpayer (7) Paragraph (3) of section 1033(k) is amend- HOUSING CORPORATION.—For purposes of this elects not to have this section apply. ed to read as follows:

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‘‘(3) For exclusion from gross income of gain (1) ESTATE TAX CREDIT.— (1) by striking the subsection heading and in- from involuntary conversion of principal resi- (A) IN GENERAL.—Subsection (a) of section serting the following: dence, see section 121.’’. 2010 (relating to unified credit against estate ‘‘(b) EXCLUSIONS FROM GIFTS.— (8) Subsection (e) of section 1038 is amended to tax) is amended by striking ‘‘$192,800’’ and in- ‘‘(1) IN GENERAL.—’’, read as follows: serting ‘‘the applicable credit amount’’. (2) by moving the text 2 ems to the right, and ‘‘(e) PRINCIPAL RESIDENCES.—If— (B) APPLICABLE CREDIT AMOUNT.—Section (3) by adding at the end the following new ‘‘(1) subsection (a) applies to a reacquisition 2010 is amended by redesignating subsection (c) paragraph: of real property with respect to the sale of as subsection (d) and by inserting after sub- ‘‘(2) INFLATION ADJUSTMENT.—In the case of which gain was not recognized under section 121 section (b) the following new subsection: gifts made in a calendar year after 1998, the (relating to gain on sale of principal residence); ‘‘(c) APPLICABLE CREDIT AMOUNT.—For pur- $10,000 amount contained in paragraph (1) shall and poses of this section— be increased by an amount equal to— ‘‘(2) within 1 year after the date of the reac- ‘‘(1) IN GENERAL.—For purposes of this sec- ‘‘(A) $10,000, multiplied by quisition of such property by the seller, such tion, the applicable credit amount is the amount ‘‘(B) the cost-of-living adjustment determined property is resold by him, of the tentative tax which would be determined under section 1(f)(3) for such calendar year by then, under regulations prescribed by the Sec- under the rate schedule set forth in section substituting ‘calendar year 1997’ for ‘calendar retary, subsections (b), (c), and (d) of this sec- 2001(c) if the amount with respect to which such year 1992’ in subparagraph (B) thereof. tion shall not apply to the reacquisition of such tentative tax is to be computed were the applica- If any amount as adjusted under the preceding property and, for purposes of applying section ble exclusion amount determined in accordance sentence is not a multiple of $1,000, such amount 121, the resale of such property shall be treated with the following table: shall be rounded to the next lowest multiple of as a part of the transaction constituting the ‘‘In the case of estates $1,000.’’. original sale of such property.’’. of decedents dying, and The applicable (d) EXEMPTION FROM GENERATION-SKIPPING (9) Paragraph (7) of section 1223 is amended gifts made, during: exclusion amount is: TAX.—Section 2631 (relating to GST exemption) by inserting ‘‘(as in effect on the day before the 1998 ...... $ 625,000 is amended by adding at the end the following date of the enactment of the Revenue Reconcili- 1999 ...... $ 640,000 new subsection: ation Act of 1997)’’ after ‘‘1034’’. 2000 ...... $ 660,000 ‘‘(c) INFLATION ADJUSTMENT.—In the case of (10)(A) Subsection (d) of section 1250 is 2001 ...... $ 675,000 an individual who dies in any calendar year amended by striking paragraph (7) and by re- 2002 ...... $ 725,000 after 1998, the $1,000,000 amount contained in designating paragraphs (9) and (10) as para- 2003 ...... $ 750,000 subsection (a) shall be increased by an amount graphs (7) and (8), respectively. 2004 ...... $ 800,000 equal to— (B) Subsection (e) of section 1250 is amended 2005 ...... $ 900,000 ‘‘(1) $1,000,000, multiplied by by striking paragraph (3). 2006 or thereafter ...... $1,000,000. ‘‘(2) the cost-of-living adjustment determined (11) Subsection (c) of section 6012 is amended under section 1(f)(3) for such calendar year by by striking ‘‘(relating to one-time exclusion of ‘‘(2) COST-OF-LIVING ADJUSTMENT.—In the case of any decedent dying, and gift made, in a substituting ‘calendar year 1997’ for ‘calendar gain from sale of principal residence by indi- year 1992’ in subparagraph (B) thereof. vidual who has attained age 55)’’ and inserting calendar year after 2006, the $1,000,000 amount set forth in paragraph (1) shall be increased by If any amount as adjusted under the preceding ‘‘(relating to gain from sale of principal resi- sentence is not a multiple of $10,000, such dence)’’. an amount equal to— ‘‘(A) $1,000,000, multiplied by amount shall be rounded to the next lowest mul- (12) Paragraph (2) of section 6212(c) is amend- tiple of $10,000.’’. ed by striking subparagraph (C) and by redesig- ‘‘(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by (e) AMOUNT SUBJECT TO REDUCED RATE nating the succeeding subparagraphs accord- WHERE EXTENSION OF TIME FOR PAYMENT OF ingly. substituting ‘calendar year 2005’ for ‘calendar year 1992’ in subparagraph (B) thereof. ESTATE TAX ON CLOSELY HELD BUSINESS.—Sub- (13) Section 6504 is amended by striking para- section (j) of section 6601 is amended by redesig- graph (4) and by redesignating the succeeding If any amount as adjusted under the preceding sentence is not a multiple of $10,000, such nating paragraph (3) as paragraph (4) and by paragraphs accordingly. inserting after paragraph (2) the following new (14) The item relating to section 121 in the amount shall be rounded to the next lowest mul- tiple of $10,000.’’. paragraph: table of sections for part III of subchapter B of ‘‘(3) INFLATION ADJUSTMENT.—In the case of chapter 1 is amended to read as follows: (C) ESTATE TAX RETURNS.—Paragraph (1) of section 6018(a) is amended by striking estates of decedents dying in a calendar year ‘‘Sec. 121. Exclusion of gain from sale of prin- ‘‘$600,000’’ and inserting ‘‘the applicable exclu- after 1998, the $1,000,000 amount contained in cipal residence.’’. sion amount in effect under section 2010(c) for paragraph (2)(A) shall be increased by an (15) The table of sections for part III of sub- the calendar year which includes the date of amount equal to— chapter O of chapter 1 of such Code is amended death’’. ‘‘(A) $1,000,000, multiplied by by striking the item relating to section 1034. (D) PHASEOUT OF GRADUATED RATES AND UNI- ‘‘(B) the cost-of-living adjustment determined (d) EFFECTIVE DATE.— FIED CREDIT.—Paragraph (2) of section 2001(c) is under section 1(f)(3) for such calendar year by (1) IN GENERAL.—The amendments made by amended by striking ‘‘$21,040,000’’ and inserting substituting ‘calendar year 1997’ for ‘calendar this section shall apply to sales and exchanges ‘‘the amount at which the average tax rate year 1992’ in subparagraph (B) thereof. after May 6, 1997. under this section is 55 percent’’. If any amount as adjusted under the preceding (2) SALES BEFORE DATE OF ENACTMENT.—At (E) ESTATES OF NONRESIDENTS NOT CITIZENS.— sentence is not a multiple of $10,000, such the election of the taxpayer, the amendments Subparagraph (A) of section 2102(c)(3) is amend- amount shall be rounded to the next lowest mul- made by this section shall not apply to any sale ed by striking ‘‘$192,800’’ and inserting ‘‘the ap- tiple of $10,000.’’. or exchange before the date of the enactment of plicable credit amount in effect under section (f) EFFECTIVE DATE.—The amendments made this Act. 2010(c) for the calendar year which includes the by this section shall apply to the estates of dece- (3) BINDING CONTRACTS.—At the election of date of death’’. dents dying, and gifts made, after December 31, the taxpayer, the amendments made by this sec- (2) UNIFIED GIFT TAX CREDIT.—Paragraph (1) 1997. tion shall not apply to a sale or exchange after of section 2505(a) is amended by striking SEC. 402. FAMILY-OWNED BUSINESS EXCLUSION. the date of the enactment of this Act, if— ‘‘$192,800’’ and inserting ‘‘the applicable credit (a) IN GENERAL.—Part III of subchapter A of (A) such sale or exchange is pursuant to a amount in effect under section 2010(c) for such chapter 11 (relating to gross estate) is amended contract which was binding on such date, or calendar year’’. by inserting after section 2033 the following new (B) without regard to such amendments, gain (b) ALTERNATE VALUATION OF CERTAIN FARM, section: would not be recognized under section 1034 of ETC., REAL PROPERTY.—Subsection (a) of sec- ‘‘SEC. 2033A. FAMILY-OWNED BUSINESS EXCLU- the Internal Revenue Code of 1986 (as in effect tion 2032A is amended by adding at the end the SION. on the day before the date of the enactment of following new paragraph: ‘‘(a) IN GENERAL.—In the case of an estate of this Act) on such sale or exchange by reason of ‘‘(3) INFLATION ADJUSTMENT.—In the case of a decedent to which this section applies, the a new residence acquired on or before such date estates of decedents dying in a calendar year value of the gross estate shall not include the or with respect to the acquisition of which by after 1998, the $750,000 amount contained in lesser of— the taxpayer a binding contract was in effect on paragraph (2) shall be increased by an amount ‘‘(1) the adjusted value of the qualified fam- such date. equal to— ily-owned business interests of the decedent oth- This paragraph shall not apply to any sale or ‘‘(A) $750,000, multiplied by erwise includible in the estate, or exchange by an individual if the treatment pro- ‘‘(B) the cost-of-living adjustment determined ‘‘(2) $1,000,000. vided by section 877(a)(1) of the Internal Rev- under section 1(f)(3) for such calendar year by ‘‘(b) ESTATES TO WHICH SECTION APPLIES.— enue Code of 1986 applies to such individual. substituting ‘calendar year 1997’ for ‘calendar ‘‘(1) IN GENERAL.—This section shall apply to TITLE IV—ESTATE, GIFT, AND year 1992’ in subparagraph (B) thereof. an estate if— GENERATION-SKIPPING TAX PROVISIONS If any amount as adjusted under the preceding ‘‘(A) the decedent was (at the date of the de- SEC. 401. COST-OF-LIVING ADJUSTMENTS RELAT- sentence is not a multiple of $10,000, such cedent’s death) a citizen or resident of the ING TO ESTATE AND GIFT TAX PRO- amount shall be rounded to the next lowest mul- United States, VISIONS. tiple of $10,000.’’. ‘‘(B) the executor elects the application of this (a) INCREASE IN UNIFIED ESTATE AND GIFT (c) ANNUAL GIFT TAX EXCLUSION.—Subsection section and files the agreement referred to in TAX CREDIT.— (b) of section 2503 is amended— subsection (h),

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00141 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6810 CONGRESSIONAL RECORD — SENATE June 27, 1997 ‘‘(C) the sum of— ‘‘(B) any indebtedness to the extent the tax- business is a qualified family-owned business in- ‘‘(i) the adjusted value of the qualified family- payer establishes that the proceeds of such in- terest, and owned business interests described in paragraph debtedness were used for the payment of edu- ‘‘(ii) this section shall be applied separately in (2), plus cational and medical expenses of the decedent, determining if such interest in any other trade ‘‘(ii) the amount of the gifts of such interests the decedent’s spouse, or the decedent’s depend- or business is a qualified family-owned business determined under paragraph (3), ents (within the meaning of section 152), plus interest. exceeds 50 percent of the adjusted gross estate, ‘‘(C) any indebtedness not described in sub- ‘‘(C) INDIVIDUAL OWNERSHIP RULES.—For pur- and paragraph (A) or (B), to the extent such indebt- poses of this section, an interest owned, directly ‘‘(D) during the 8-year period ending on the edness does not exceed $10,000. or indirectly, by or for an entity described in date of the decedent’s death there have been pe- ‘‘(e) QUALIFIED FAMILY-OWNED BUSINESS IN- paragraph (1)(B) shall be considered as being riods aggregating 5 years or more during TEREST.— owned proportionately by or for the entity’s which— ‘‘(1) IN GENERAL.—For purposes of this sec- shareholders, partners, or beneficiaries. A per- ‘‘(i) such interests were owned by the decedent tion, the term ‘qualified family-owned business son shall be treated as a beneficiary of any trust or a member of the decedent’s family, and interest’ means— only if such person has a present interest in ‘‘(ii) there was material participation (within ‘‘(A) an interest as a proprietor in a trade or such trust. the meaning of section 2032A(e)(6)) by the dece- business carried on as a proprietorship, or ‘‘(f) TAX TREATMENT OF FAILURE TO MATERI- dent or a member of the decedent’s family in the ‘‘(B) an interest in an entity carrying on a ALLY PARTICIPATE IN BUSINESS OR DISPOSITIONS operation of the business to which such interests trade or business, if— OF INTERESTS.— relate. ‘‘(i) at least— ‘‘(1) IN GENERAL.—There is imposed an addi- ‘‘(2) INCLUDIBLE QUALIFIED FAMILY-OWNED ‘‘(I) 50 percent of such entity is owned (di- tional estate tax if, within 10 years after the BUSINESS INTERESTS.—The qualified family- rectly or indirectly) by the decedent and mem- date of the decedent’s death and before the date owned business interests described in this para- bers of the decedent’s family, of the qualified heir’s death— graph are the interests which— ‘‘(II) 70 percent of such entity is so owned by ‘‘(A) the material participation requirements ‘‘(A) are included in determining the value of members of 2 families, or described in section 2032A(c)(6)(B) are not met the gross estate (without regard to this section), ‘‘(III) 90 percent of such entity is so owned by with respect to the qualified family-owned busi- and members of 3 families, and ness interest which was acquired (or passed) ‘‘(B) are acquired by any qualified heir from, ‘‘(ii) for purposes of subclause (II) or (III) of from the decedent, or passed to any qualified heir from, the dece- clause (i), at least 30 percent of such entity is so ‘‘(B) the qualified heir disposes of any portion dent (within the meaning of section 2032A(e)(9)). owned by the decedent and members of the dece- of a qualified family-owned business interest ‘‘(3) INCLUDIBLE GIFTS OF INTERESTS.—The dent’s family. (other than by a disposition to a member of the amount of the gifts of qualified family-owned ‘‘(2) LIMITATION.—Such term shall not in- qualified heir’s family or through a qualified business interests determined under this para- clude— conservation contribution under section 170(h)), ‘‘(A) any interest in a trade or business the graph is the excess of— ‘‘(C) the qualified heir loses United States citi- principal place of business of which is not lo- ‘‘(A) the sum of— zenship (within the meaning of section 877) or cated in the United States, ‘‘(i) the amount of such gifts from the dece- with respect to whom an event described in sub- ‘‘(B) any interest in an entity, if the stock or dent to members of the decedent’s family taken paragraph (A) or (B) of section 877(e)(1) occurs, debt of such entity or a controlled group (as de- into account under subsection 2001(b)(1)(B), and such heir does not comply with the require- fined in section 267(f)(1)) of which such entity plus ments of subsection (g), or was a member was readily tradable on an estab- ‘‘(ii) the amount of such gifts otherwise ex- ‘‘(D) the principal place of business of a trade lished securities market or secondary market (as cluded under section 2503(b), or business of the qualified family-owned busi- defined by the Secretary) at any time within 3 to the extent such interests are continuously ness interest ceases to be located in the United years of the date of the decedent’s death, held by members of such family (other than the States. decedent’s spouse) between the date of the gift ‘‘(C) any interest in a trade or business not ‘‘(2) ADDITIONAL ESTATE TAX.— and the date of the decedent’s death, over described in section 542(c)(2), if more than 35 ‘‘(A) IN GENERAL.—The amount of the addi- percent of the adjusted ordinary gross income of ‘‘(B) the amount of such gifts from the dece- tional estate tax imposed by paragraph (1) shall such trade or business for the taxable year dent to members of the decedent’s family other- be equal to— which includes the date of the decedent’s death wise included in the gross estate. ‘‘(i) the applicable percentage of the adjusted ‘‘(c) ADJUSTED GROSS ESTATE.—For purposes would qualify as personal holding company in- tax difference attributable to the qualified fam- of this section, the term ‘adjusted gross estate’ come (as defined in section 543(a)), ily-owned business interest (as determined means the value of the gross estate (determined ‘‘(D) that portion of an interest in a trade or under rules similar to the rules of section without regard to this section)— business that is attributable to— 2032A(c)(2)(B)), plus ‘‘(1) reduced by any amount deductible under ‘‘(i) cash or marketable securities, or both, in ‘‘(ii) interest on the amount determined under paragraph (3) or (4) of section 2053(a), and excess of the reasonably expected day-to-day clause (i) at the underpayment rate established ‘‘(2) increased by the excess of— working capital needs of such trade or business, under section 6621 for the period beginning on ‘‘(A) the sum of— and the date the estate tax liability was due under ‘‘(i) the amount of gifts determined under sub- ‘‘(ii) any other assets of the trade or business this chapter and ending on the date such addi- section (b)(3), plus (other than assets used in the active conduct of ‘‘(ii) the amount (if more than de minimis) of a trade or business described in section tional estate tax is due. other transfers from the decedent to the dece- 542(c)(2)), which produce, or are held for the ‘‘(B) APPLICABLE PERCENTAGE.—For purposes dent’s spouse (at the time of the transfer) within production of, income of which is described in of this paragraph, the applicable percentage 10 years of the date of the decedent’s death, section 543(a) or in section 954(c)(1) (determined shall be determined under the following table: plus without regard to subparagraph (A) thereof and ‘‘If the event described in ‘‘(iii) the amount of other gifts (not included by substituting ‘trade or business’ for ‘controlled paragraph (1) occurs in under clause (i) or (ii)) from the decedent within foreign corporation’). the following year of The applicable 3 years of such date, other than gifts to members ‘‘(3) RULES REGARDING OWNERSHIP.— material participation: percentage is: of the decedent’s family otherwise excluded ‘‘(A) OWNERSHIP OF ENTITIES.—For purposes 1 through 6 ...... 100 under section 2503(b), over of paragraph (1)(B)— 7 ...... 80 ‘‘(B) the sum of the amounts described in ‘‘(i) CORPORATIONS.—Ownership of a corpora- 8 ...... 60 clauses (i), (ii), and (iii) of subparagraph (A) tion shall be determined by the holding of stock 9 ...... 40 which are otherwise includible in the gross es- possessing the appropriate percentage of the 10 ...... 20. tate. total combined voting power of all classes of ‘‘(g) SECURITY REQUIREMENTS FOR NONCITIZEN For purposes of the preceding sentence, the Sec- stock entitled to vote and the appropriate per- QUALIFIED HEIRS.— retary may provide that de minimis gifts to per- centage of the total value of shares of all classes ‘‘(1) IN GENERAL.—Except upon the applica- sons other than members of the decedent’s fam- of stock. tion of subparagraph (F) or (M) of subsection ily shall not be taken into account. ‘‘(ii) PARTNERSHIPS.—Ownership of a partner- (i)(3), if a qualified heir is not a citizen of the ‘‘(d) ADJUSTED VALUE OF THE QUALIFIED ship shall be determined by the owning of the United States, any interest under this section FAMILY-OWNED BUSINESS INTERESTS.—For pur- appropriate percentage of the capital interest in passing to or acquired by such heir (including poses of this section, the adjusted value of any such partnership. any interest held by such heir at a time de- qualified family-owned business interest is the ‘‘(B) OWNERSHIP OF TIERED ENTITIES.—For scribed in subsection (f)(1)(C)) shall be treated value of such interest for purposes of this chap- purposes of this section, if by reason of holding as a qualified family-owned business interest ter (determined without regard to this section), an interest in a trade or business, a decedent, only if the interest passes or is acquired (or is reduced by the excess of— any member of the decedent’s family, any quali- held) in a qualified trust. ‘‘(1) any amount deductible under paragraph fied heir, or any member of any qualified heir’s ‘‘(2) QUALIFIED TRUST.—The term ‘qualified (3) or (4) of section 2053(a), over family is treated as holding an interest in any trust’ means a trust— ‘‘(2) the sum of— other trade or business— ‘‘(A) which is organized under, and governed ‘‘(A) any indebtedness on any qualified resi- ‘‘(i) such ownership interest in the other trade by, the laws of the United States or a State, and dence of the decedent the interest on which is or business shall be disregarded in determining ‘‘(B) except as otherwise provided in regula- deductible under section 163(h)(3), plus if the ownership interest in the first trade or tions, with respect to which the trust instrument

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requires that at least 1 trustee of the trust be an ‘‘(A) the applicable percentage of the value of ‘‘(4) ELECTION.—The election under this sub- individual citizen of the United States or a do- land subject to a qualified conservation ease- section shall be made on the return of the tax mestic corporation. ment, reduced by the amount of any deduction imposed by section 2001. Such an election, once ‘‘(h) AGREEMENT.—The agreement referred to under section 2055(f) with respect to such land, made, shall be irrevocable. in this subsection is a written agreement signed or ‘‘(5) CALCULATION OF ESTATE TAX DUE.—An by each person in being who has an interest ‘‘(B) the excess (if any) of— executor making the election described in para- (whether or not in possession) in any property ‘‘(i) $1,000,000, over graph (4) shall, for purposes of calculating the designated in such agreement consenting to the ‘‘(ii) the exclusion allowed with respect to the amount of tax imposed by section 2001, include application of subsection (f) with respect to such qualified family-owned business interests of the the value of any development right (as defined property. decedent under section 2033A. in paragraph (3)) retained by the donor in the ‘‘(i) OTHER DEFINITIONS AND APPLICABLE ‘‘(2) APPLICABLE PERCENTAGE.—For purposes conveyance of such qualified conservation ease- RULES.—For purposes of this section— of paragraph (1), the term ‘applicable percent- ment. The computation of tax on any retained ‘‘(1) QUALIFIED HEIR.—The term ‘qualified age’ means 40 percent reduced (but not below development right prescribed in this paragraph heir’— zero) by 2 percentage points for each percentage shall be done in such manner and on such forms ‘‘(A) has the meaning given to such term by point (or fraction thereof) by which the value of as the Secretary shall prescribe. section 2032A(e)(1), and the qualified conservation easement is less than ‘‘(6) DEFINITIONS.—For purposes of this sub- ‘‘(B) includes any active employee of the trade 30 percent of the value of the land (determined section— or business to which the qualified family-owned without regard to the value of such easement ‘‘(A) LAND SUBJECT TO A QUALIFIED CONSERVA- business interest relates if such employee has and reduced by the value of any retained devel- TION EASEMENT.—The term ‘land subject to a been employed by such trade or business for a opment right (as defined in paragraph (4)). qualified conservation easement’ means land— period of at least 10 years before the date of the ‘‘(3) TREATMENT OF CERTAIN INDEBTEDNESS.— ‘‘(i) which is located— ‘‘(A) IN GENERAL.—The exclusion provided in decedent’s death. ‘‘(I) in or within 25 miles of an area which, on paragraph (1) shall not apply to the extent that ‘‘(2) MEMBER OF THE FAMILY.—The term the date of the decedent’s death, is a metropoli- ‘member of the family’ has the meaning given to the land is debt-financed property. tan area (as defined by the Office of Manage- ‘‘(B) DEFINITIONS.—For purposes of this para- such term by section 2032A(e)(2). ment and Budget), graph— ‘‘(3) APPLICABLE RULES.—Rules similar to the ‘‘(II) in or within 25 miles of an area which, ‘‘(i) DEBT-FINANCED PROPERTY.—The term on the date of the decedent’s death, is a na- following rules shall apply: ‘debt-financed property’ means any property ‘‘(A) Section 2032A(b)(4) (relating to decedents tional park or wilderness area designated as with respect to which there is an acquisition in- part of the National Wilderness Preservation who are retired or disabled). debtedness (as defined in clause (ii)) on the date ‘‘(B) Section 2032A(b)(5) (relating to special System (unless it is determined by the Secretary of the decedent’s death. that land in or within 25 miles of such a park rules for surviving spouses). ‘‘(ii) ACQUISITION INDEBTEDNESS.—The term or wilderness area is not under significant de- ‘‘(C) Section 2032A(c)(2)(D) (relating to partial ‘acquisition indebtedness’ means, with respect to velopment pressure), or dispositions). debt-financed property, the unpaid amount of— ‘‘(III) in or within 10 miles of an area which, ‘‘(D) Section 2032A(c)(3) (relating to only 1 ‘‘(I) the indebtedness incurred by the donor in on the date of the decedent’s death, is an Urban additional tax imposed with respect to any 1 acquiring such property, portion). ‘‘(II) the indebtedness incurred before the ac- National Forest (as designated by the Forest ‘‘(E) Section 2032A(c)(4) (relating to due date). quisition of such property if such indebtedness Service), ‘‘(F) Section 2032A(c)(5) (relating to liability would not have been incurred but for such ac- ‘‘(ii) which was owned by the decedent or a for tax; furnishing of bond). quisition, member of the decedent’s family at all times dur- ‘‘(G) Section 2032A(c)(7) (relating to no tax if ‘‘(III) the indebtedness incurred after the ac- ing the 3-year period ending on the date of the use begins within 2 years; active management by quisition of such property if such indebtedness decedent’s death, and eligible qualified heir treated as material partici- would not have been incurred but for such ac- ‘‘(iii) with respect to which a qualified con- pation). quisition and the incurrence of such indebted- servation easement has been made by the dece- ‘‘(H) Paragraphs (1) and (3) of section ness was reasonably foreseeable at the time of dent or a member of the decedent’s family. UALIFIED CONSERVATION EASEMENT.— 2032A(d) (relating to election; agreement). such acquisition, and ‘‘(B) Q ‘‘(I) Section 2032A(e)(10) (relating to commu- ‘‘(IV) the extension, renewal, or refinancing The term ‘qualified conservation easement’ nity property). of an acquisition indebtedness. means a qualified conservation contribution (as ‘‘(J) Section 2032A(e)(14) (relating to treatment ‘‘(4) TREATMENT OF RETAINED DEVELOPMENT defined in section 170(h)(1)) of a qualified real of replacement property acquired in section 1031 RIGHT.— property interest (as defined in section or 1033 transactions). ‘‘(A) IN GENERAL.—Paragraph (1) shall not 170(h)(2)(C)), except that clause (iv) of section ‘‘(K) Section 2032A(f) (relating to statute of apply to the value of any development right re- 170(h)(4)(A) shall not apply, and the restriction limitations). tained by the donor in the conveyance of a on the use of such interest described in section ‘‘(L) Section 6166(b)(3) (relating to farmhouses qualified conservation easement. 170(h)(2)(C) shall include a prohibition on com- and certain other structures taken into ac- ‘‘(B) TERMINATION OF RETAINED DEVELOPMENT mercial recreational activity. count). RIGHT.—If every person in being who has an in- ‘‘(C) MEMBER OF FAMILY.—The term ‘member ‘‘(M) Subparagraphs (B), (C), and (D) of sec- terest (whether or not in possession) in the land of the decedent’s family’ means any member of tion 6166(g)(1) (relating to acceleration of pay- executes an agreement to extinguish perma- the family (as defined in section 2032A(e)(2)) of ment). nently some or all of any development rights (as the decedent. ‘‘(N) Section 6324B (relating to special lien for defined in subparagraph (D)) retained by the ‘‘(7) APPLICATION OF THIS SECTION TO INTER- additional estate tax).’’. donor on or before the date for filing the return ESTS IN PARTNERSHIPS, CORPORATIONS, AND (b) CLERICAL AMENDMENT.—The table of sec- of the tax imposed by section 2001, then any tax TRUSTS.—This section shall apply to an interest tions for part III of subchapter A of chapter 11 imposed by section 2001 shall be reduced accord- in a partnership, corporation, or trust if at least is amended by inserting after the item relating ingly. Such agreement shall be filed with the re- 30 percent of the entity is owned (directly or in- to section 2033 the following new item: turn of the tax imposed by section 2001. The directly) by the decedent, as determined under agreement shall be in such form as the Secretary the rules described in section 2033A(e)(3).’’. ‘‘Sec. 2033A. Family-owned business exclu- shall prescribe. (b) CARRYOVER BASIS.—Section 1014(a) (relat- sion.’’. ‘‘(C) ADDITIONAL TAX.—Any failure to imple- ing to basis of property acquired from a dece- (c) EFFECTIVE DATE.—The amendments made ment the agreement described in subparagraph dent), as amended by section 502(b), is amended by this section shall apply to estates of dece- (B) not later than the earlier of— by striking the period at the end of paragraph dents dying after December 31, 1997. ‘‘(i) the date which is 2 years after the date of (4) and inserting ‘‘, or’’ and by adding at the SEC. 403. TREATMENT OF LAND SUBJECT TO A the decedent’s death, or end the following new paragraph: QUALIFIED CONSERVATION EASE- ‘‘(ii) the date of the sale of such land subject ‘‘(5) to the extent of the applicability of the MENT. to the qualified conservation easement, exclusion described in section 2031(c), the basis (a) ESTATE TAX WITH RESPECT TO LAND SUB- shall result in the imposition of an additional in the hands of the decedent.’’. JECT TO A QUALIFIED CONSERVATION EASE- tax in the amount of the tax which would have (c) QUALIFIED CONSERVATION CONTRIBUTION MENT.—Section 2031 (relating to the definition been due on the retained development rights IS NOT A DISPOSITION.—Subsection (c) of section of gross estate) is amended by redesignating sub- subject to such agreement. Such additional tax 2032A (relating to alternative valuation method) section (c) as subsection (d) and by inserting shall be due and payable on the last day of the is amended by adding at the end the following after subsection (b) the following new sub- 6th month following such date. new paragraph: section: ‘‘(D) DEVELOPMENT RIGHT DEFINED.—For pur- ‘‘(8) QUALIFIED CONSERVATION CONTRIBUTION ‘‘(c) ESTATE TAX WITH RESPECT TO LAND SUB- poses of this paragraph, the term ‘development IS NOT A DISPOSITION.—A qualified conservation JECT TO A QUALIFIED CONSERVATION EASE- right’ means any right to use the land subject to contribution (as defined in section 170(h)) by MENT.— the qualified conservation easement in which gift or otherwise shall not be deemed a disposi- ‘‘(1) IN GENERAL.—If the executor makes the such right is retained for any commercial pur- tion under subsection (c)(1)(A).’’. election described in paragraph (4), then, except pose which is not subordinate to and directly (d) QUALIFIED CONSERVATION CONTRIBUTION as otherwise provided in this subsection, there supportive of the use of such land as a farm for WHERE SURFACE AND MINERAL RIGHTS ARE SEP- shall be excluded from the gross estate the lesser farming purposes (within the meaning of section ARATED.—Section 170(h)(5)(B)(ii) (relating to of— 6420(c)). special rule) is amended to read as follows:

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‘‘(ii) SPECIAL RULE.—With respect to any con- ing to rate on estate tax extended under section (2) Section 2612(c)(2) (as so redesignated) is tribution of property in which the ownership of 6166), the no-interest portion shall be zero.’’. amended by striking ‘‘section 2651(e)(2)’’ and in- the surface estate and mineral interests has (b) DISALLOWANCE OF INTEREST DEDUCTION.— serting ‘‘section 2651(f)(2)’’. been and remains separated, subparagraph (A) (1) ESTATE TAX.—Paragraph (1) of section (c) EFFECTIVE DATE.—The amendments made shall be treated as met if the probability of sur- 2053(c) is amended by adding at the end the fol- by this section shall apply to terminations, dis- face mining occurring on such property is so re- lowing new subparagraph: tributions, and transfers occurring after Decem- mote as to be negligible.’’. ‘‘(D) SECTION 6166 INTEREST.—No deduction ber 31, 1997. (e) EFFECTIVE DATES.— shall be allowed under this section for any in- TITLE V—EXTENSIONS (1) EXCLUSION.—The amendments made by terest payable under section 6601 on any unpaid portion of the tax imposed by section 2001 for SEC. 501. RESEARCH TAX CREDIT. subsections (a) and (b) shall apply to estates of (a) IN GENERAL.—Paragraph (1) of section decedents dying after December 31, 1997. the period during which an extension of time for payment of such tax is in effect under section 41(h) (relating to termination) is amended— (2) EASEMENTS.—The amendments made by (1) by striking ‘‘May 31, 1997’’ and inserting 6166.’’. subsections (c) and (d) shall apply to easements ‘‘May 31, 1999’’, and (2) INCOME TAX.—Subparagraph (E) of section granted after December 31, 1997. (2) by striking in the last sentence ‘‘during the 163(h)(2) is amended by striking ‘‘or 6166’’. SEC. 404. 20-YEAR INSTALLMENT PAYMENT first 11 months of such taxable year.’’ and in- (c) EFFECTIVE DATE.—The amendments made WHERE ESTATE CONSISTS LARGELY serting ‘‘during the 35-month period beginning OF INTEREST IN CLOSELY HELD by this section shall apply to estates of dece- dents dying after December 31, 1997. with the first month of such year. The 35 BUSINESS. months referred to in the preceding sentence SEC. 406. EXTENSION OF TREATMENT OF CER- (a) IN GENERAL.—Section 6166(a) (relating to shall be reduced by the number of full months extension of time for payment of estate tax TAIN RENTS UNDER SECTION 2032A TO LINEAL DESCENDANTS. after June 1996 (and before the first month of where estate consists largely of interest in close- such first taxable year) during which the tax- ly held business) is amended by striking ‘‘10’’ in (a) GENERAL RULE.—Paragraph (7) of section 2032A(c) (relating to special rules for tax treat- payer paid or incurred any amount which is paragraph (1) and the heading thereof and in- taken into account in determining the credit serting ‘‘20’’. ment of dispositions and failures to use for qualified use) is amended by adding at the end under this section.’’. (b) EFFECTIVE DATE.—The amendments made (b) TECHNICAL AMENDMENTS.— by this section shall apply to estates of dece- the following new subparagraph: ‘‘(E) CERTAIN RENTS TREATED AS QUALIFIED (1) Subparagraph (B) of section 41(c)(4) is dents dying after December 31, 1997. USE.—For purposes of this subsection, a sur- amended to read as follows: SEC. 405. NO INTEREST ON CERTAIN PORTION OF viving spouse or lineal descendant of the dece- ‘‘(B) ELECTION.—An election under this para- ESTATE TAX EXTENDED UNDER SEC- dent shall not be treated as failing to use quali- graph shall apply to the taxable year for which TION 6166, REDUCED INTEREST ON made and all succeeding taxable years unless re- REMAINING PORTION, AND NO DE- fied real property in a qualified use solely be- cause such spouse or descendant rents such voked with the consent of the Secretary.’’. DUCTION FOR SUCH REDUCED IN- (2) Paragraph (1) of section 45C(b) is amended TEREST. property to a member of the family of such by striking ‘‘May 31, 1997’’ and inserting ‘‘May (a) NO INTEREST AND REDUCED INTEREST.— spouse or descendant on a net cash basis. For 31, 1999’’. (1) IN GENERAL.—Paragraphs (1) and (2) of purposes of the preceding sentence, a legally (c) EFFECTIVE DATE.—The amendments made adopted child of an individual shall be treated section 6601(j) (relating to 4-percent rate on cer- by this section shall apply to amounts paid or as the child of such individual by blood.’’. tain portion of estate tax extended under section incurred after May 31, 1997. 6166), as amended by section 501(e), are amend- (b) CONFORMING AMENDMENT.—Section 2032A(b)(5)(A) is amended by striking the last SEC. 502. CONTRIBUTIONS OF STOCK TO PRIVATE ed to read as follows: FOUNDATIONS. ‘‘(1) IN GENERAL.—If the time for payment of sentence. (c) EFFECTIVE DATE.—The amendments made (a) IN GENERAL.—Clause (ii) of section an amount of tax imposed by chapter 11 is ex- 170(e)(5)(D) (relating to termination) is amended tended as provided in section 6166, then in lieu by this section shall apply with respect to leases entered into after December 31, 1976. by striking ‘‘May 31, 1997’’ and inserting ‘‘May of the annual rate provided by subsection (a)— 31, 1999’’. SEC. 407. EXPANSION OF EXCEPTION FROM GEN- ‘‘(A) no interest shall be paid on the no-inter- FFECTIVE ATE ERATION-SKIPPING TRANSFER TAX (b) E D .—The amendment made est portion of such amount, and by subsection (a) shall apply to contributions ‘‘(B) interest on so much of such amount as FOR TRANSFERS TO INDIVIDUALS WITH DECEASED PARENTS. made after May 31, 1997. exceeds such no-interest portion shall be paid at (a) IN GENERAL.—Section 2651 (relating to SEC. 503. WORK OPPORTUNITY TAX CREDIT. a rate equal to 45 percent of the annual rate generation assignment) is amended by redesig- (a) EXTENSION.—Subparagraph (B) of section provided by subsection (a). nating subsection (e) as subsection (f), and by 51(c)(4) (relating to termination) is amended by For purposes of this subsection, the amount of inserting after subsection (d) the following new striking ‘‘September 30, 1997’’ and inserting any deficiency which is prorated to installments subsection: ‘‘May 31, 1999’’. payable under section 6166 shall be treated as ‘‘(e) SPECIAL RULE FOR PERSONS WITH A DE- (b) MODIFICATION OF ELIGIBILITY REQUIRE- an amount of tax payable in installments under CEASED PARENT.— MENT BASED ON PERIOD ON WELFARE.— such section. ‘‘(1) IN GENERAL.—For purposes of deter- (1) IN GENERAL.—Subparagraph (A) of section ‘‘(2) NO-INTEREST PORTION.—For purposes of mining whether any transfer is a generation- 51(d)(2) (defining qualified IV–A recipient) is this section, the term ‘no-interest portion’ means skipping transfer, if— amended by striking all that follows ‘‘a IV–A the lesser of— ‘‘(A) an individual is a descendant of a parent program’’ and inserting ‘‘for any 9 months dur- ‘‘(A)(i) the amount of the tentative tax which of the transferor (or the transferor’s spouse or ing the 18-month period ending on the hiring would be determined under the rate schedule set former spouse), and date.’’. forth in section 2001(c) if the amount with re- ‘‘(B) such individual’s parent who is a lineal (2) CONFORMING AMENDMENT.—Subparagraph spect to which such tentative tax is to be com- descendant of the parent of the transferor (or (A) of section 51(d)(3) is amended to read as fol- puted were the sum of $1,000,000 and the appli- the transferor’s spouse or former spouse) is dead lows: cable exclusion amount in effect under section at the time the transfer (from which an interest ‘‘(A) IN GENERAL.—The term ‘qualified vet- 2010(c), reduced by of such individual is established or derived) is eran’ means any veteran who is certified by the ‘‘(ii) the applicable credit amount in effect subject to a tax imposed by chapter 11 or 12 designated local agency as being a member of a under section 2010(c), or upon the transferor (and if there shall be more family receiving assistance under a food stamp ‘‘(B) the amount of the tax imposed by chap- than 1 such time, then at the earliest such time), program under the Food Stamp Act of 1977 for ter 11 which is extended as provided in section such individual shall be treated as if such indi- at least a 3-month period ending during the 12- 6166.’’. vidual were a member of the generation which is month period ending on the hiring date.’’. (2) CONFORMING AMENDMENTS.— 1 generation below the lower of the transferor’s (c) QUALIFIED SSI RECIPIENTS TREATED AS (A) Section 6601(j), as amended by section 501, generation or the generation assignment of the MEMBERS OF TARGETED GROUPS.— is amended— youngest living ancestor of such individual who (1) IN GENERAL.—Section 51(d)(1) (relating to (i) by striking ‘‘4-percent’’ each place it ap- is also a descendant of the parent of the trans- members of targeted groups) is amended by pears in paragraph (3) and inserting ‘‘no-inter- feror (or the transferor’s spouse or former striking ‘‘or’’ at the end of subparagraph (F), by est’’, and spouse), and the generation assignment of any striking the period at the end of subparagraph (ii) by striking ‘‘4-PERCENT RATE ON CERTAIN descendant of such individual shall be adjusted (G) and inserting ‘‘, or’’, and by adding at the PORTION OF’’ in the heading and inserting accordingly. end the following new subparagraph: ‘‘RATE ON’’. ‘‘(2) LIMITED APPLICATION OF SUBSECTION TO ‘‘(H) a qualified SSI recipient.’’. (B) Section 6166(b)(7)(A)(iii) is amended to COLLATERAL HEIRS.—This subsection shall not (2) QUALIFIED SSI RECIPIENTS.—Section 51(d) is read as follows: apply with respect to a transfer to any indi- amended by redesignating paragraphs (9), (10), ‘‘(iii) for purposes of applying section 6601(j) vidual who is not a lineal descendant of the and (11) as paragraphs (10), (11), and (12), re- (relating to rate on estate tax extended under transferor (or the transferor’s spouse or former spectively, and by inserting after paragraph (8) section 6166), the no-interest portion shall be spouse) if, at the time of the transfer, such the following new paragraph: zero.’’. transferor has any living lineal descendant.’’. ‘‘(9) QUALIFIED SSI RECIPIENT.—The term (C) Section 6166(b)(8)(A)(iii) is amended to (b) CONFORMING AMENDMENTS.— ‘qualified SSI recipient’ means any individual read as follows: (1) Section 2612(c) (defining direct skip) is who is certified by the designated local agency ‘‘(iii) NO-INTEREST PORTION NOT TO APPLY.— amended by striking paragraph (2) and by re- as receiving supplemental security income bene- For purposes of applying section 6601(j) (relat- designating paragraph (3) as paragraph (2). fits under title XVI of the Social Security Act

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(including supplemental security income bene- ‘‘(4) DATE OF ACQUISITION.—The term ‘date of tion 179) (or land which is functionally related fits of the type described in section 1616 of such acquisition’ has the same meaning as when used and subordinate to such property) and substan- Act or section 212 of Public Law 93–66) for any in section 72t(8)(D)(iii). tially all of the use of which is in the District of month ending within the 60-day period ending ‘‘(c) CARRYOVER OF CREDIT.—If the credit al- Columbia and is in the active conduct of a trade on the hiring date.’’. lowable under subsection (a) exceeds the limita- or business in the District of Columbia. A rule (d) PERCENTAGE OF WAGES ALLOWED AS CRED- tion imposed by section 26(a) for such taxable similar to the rule of section 1397C(a)(2) shall IT.— year reduced by the sum of the credits allowable apply for purposes of the preceding sentence. (1) IN GENERAL.—Subsection (a) of section 51 under subpart A of part IV of subchapter A ‘‘(c) QUALIFIED EQUITY INVESTMENT CREDIT.— (relating to determination of amount) is amend- (other than this section and section 25), such ex- ‘‘(1) IN GENERAL.—For purposes of this sec- ed by striking ‘‘35 percent’’ and inserting ‘‘40 cess shall be carried to the succeeding taxable tion, the qualified equity investment credit de- percent’’. year and added to the credit allowable under termined under this section for any taxable year (2) APPLICATION OF CREDIT FOR INDIVIDUALS subsection (a) for such taxable year. is an amount equal to the percentage specified PERFORMING FEWER THAN 400 HOURS OF SERV- ‘‘(d) SPECIAL RULES.—For purposes of this by the Economic Development Corporation (but ICES.—Paragraph (3) of section 51(i) is amended section— not greater than 25 percent) of the aggregate to read as follows: ‘‘(1) ALLOCATION OF DOLLAR LIMITATION.— amount paid in cash by the taxpayer during the ‘‘(3) INDIVIDUALS NOT MEETING MINIMUM EM- ‘‘(A) MARRIED INDIVIDUALS FILING JOINTLY.— taxable year for the purchase of District busi- PLOYMENT PERIODS.— In the case of a husband and wife who file a ness investments. ‘‘(A) REDUCTION OF CREDIT FOR INDIVIDUALS joint return, the $5,000 limitation under sub- ‘‘(2) DISTRICT BUSINESS INVESTMENT.—For PERFORMING FEWER THAN 400 HOURS OF SERV- section (a) shall apply to the joint return. purposes of this subsection, the term ‘District ICES.—In the case of an individual who has ‘‘(B) MARRIED INDIVIDUALS FILING SEPA- business investment’ means— completed at least 120 hours, but less than 400 RATELY.—In the case of a married individual fil- ‘‘(A) any District business stock, and hours, of services performed for the employer, ing a separate return, subsection (a) shall be ap- ‘‘(B) any District partnership interest. subsection (a) shall be applied by substituting plied by substituting ‘$2,500’ for ‘$5,000’. ‘‘(3) DISTRICT BUSINESS STOCK.—For purposes ‘25 percent’ for ‘40 percent’. ‘‘(C) OTHER TAXPAYERS.—If 2 or more individ- of this subsection— ‘‘(B) DENIAL OF CREDIT FOR INDIVIDUALS PER- uals who are not married purchase a principal ‘‘(A) IN GENERAL.—Except as provided in sub- FORMING FEWER THAN 120 HOURS OF SERVICES.— residence, the amount of the credit allowed paragraph (B), the term ‘District business stock’ No wages shall be taken into account under under subsection (a) shall be allocated among means any stock in a domestic corporation if— subsection (a) with respect to any individual such individuals in such manner as the Sec- ‘‘(i) such stock is acquired by the taxpayer at unless such individual has completed at least retary may prescribe, except that the total its original issue (directly or through an under- 120 hours of services performed for the em- amount of the credits allowed to all such indi- writer) solely in exchange for cash, and ployer.’’. viduals shall not exceed $5,000. ‘‘(ii) as of the time such stock was issued, (e) EFFECTIVE DATE.—The amendments made ‘‘(2) PURCHASE.—The term ‘purchase’ means such corporation was engaged in a trade or by this section shall apply to individuals who any acquisition, but only if— business in the District of Columbia (or, in the begin work for the employer after September 30, ‘‘(A) the property is not acquired from a per- case of a new corporation, such corporation was 1997. son whose relationship to the person acquiring being organized for purposes of engaging in such a trade or business). SEC. 504. ORPHAN DRUG TAX CREDIT. it would result in the disallowance of losses under section 267 or 707(b) (but, in applying sec- ‘‘(B) REDEMPTIONS.—A rule similar to the rule (a) IN GENERAL.—Section 45C (relating to clin- of section 1202(c)(3) shall apply for purposes of ical testing expenses for certain drugs for rare tion 267 (b) and (c) for purposes of this section, this paragraph. diseases or conditions) is amended by striking paragraph (4) of section 267(c) shall be treated ‘‘(4) QUALIFIED DISTRICT PARTNERSHIP INTER- subsection (e). as providing that the family of an individual shall include only his spouse, ancestors, and EST.—For purposes of this subsection, the term (b) EFFECTIVE DATE.—The amendment made ‘qualified District partnership interest’ means by subsection (a) shall apply to amounts paid or lineal descendants), and ‘‘(B) the basis of the property in the hands of any interest in a partnership if— incurred after May 31, 1997. the person acquiring it is not determined— ‘‘(A) such interest is acquired by the taxpayer TITLE VI—INCENTIVES FOR REVITALIZA- ‘‘(i) in whole or in part by reference to the ad- from the partnership solely in exchange for TION OF THE DISTRICT OF COLUMBIA justed basis of such property in the hands of the cash, and SEC. 601. TAX INCENTIVES FOR REVITALIZATION person from whom acquired, or ‘‘(B) as of the time such interest was acquired, OF THE DISTRICT OF COLUMBIA. ‘‘(ii) under section 1014(a) (relating to prop- such partnership was engaging in a trade or (a) IN GENERAL.—Chapter 1 is amended by erty acquired from a decedent). business in the District of Columbia (or, in the adding at the end the following new subchapter: ‘‘(3) PURCHASE PRICE.—The term ‘purchase case of a new partnership, such partnership was ‘‘Subchapter W—Incentives for the price’ means the adjusted basis of the principal being organized for purposes of engaging in Revitalization of the District of Columbia residence on the date of acquisition. such a trade or business). ‘‘(d) REPORTING.—If the Secretary requires in- A rule similar to the rule of paragraph (3)(B) ‘‘Sec. 1400. First-time homebuyer credit for formation reporting under section 6045 to verify shall apply for purposes of this paragraph. District of Columbia. the eligibility of taxpayers for the credit allow- ‘‘(5) RECAPTURE OF CREDIT UPON CERTAIN DIS- ‘‘Sec. 1400A. Credit for equity investments in able by this section, the exception provided by POSITIONS OF DISTRICT BUSINESS INVESTMENTS.— and loans to District of Columbia section 6045(e)(5) shall not apply. ‘‘(A) IN GENERAL.—If a taxpayer disposes of businesses. ‘‘(e) CREDIT TREATED AS NONREFUNDABLE any District business investment (or any other property the basis of which is determined in ‘‘Sec. 1400B. Zero percent capital gains rate. PERSONAL CREDIT.—For purposes of this title, the credit allowed by this section shall be treat- whole or in part by reference to the adjusted ‘‘Sec. 1400C. Trust Fund for DC schools. ed as a credit allowable under subpart A of part basis of such investment) before the end of the ‘‘SEC. 1400. FIRST-TIME HOMEBUYER CREDIT FOR IV of subchapter A of this chapter. 5-year period beginning on the date such invest- DISTRICT OF COLUMBIA. ‘‘SEC. 1400A. CREDIT FOR EQUITY INVESTMENTS ment was acquired by the taxpayer, the tax- ‘‘(a) ALLOWANCE OF CREDIT.—In the case of IN AND LOANS TO DISTRICT OF CO- payer’s tax imposed by this chapter for the tax- an individual who is a first-time homebuyer of LUMBIA BUSINESSES. able year in which such distribution occurs a principal residence in the District of Columbia ‘‘(a) GENERAL RULE.—For purposes of section shall be increased by the aggregate decrease in during any taxable year, there shall be allowed 38, the DC investment credit determined under the credits allowed under section 38 for all prior as a credit against the tax imposed by this chap- this section for any taxable year is— taxable years which would have resulted solely ter for the taxable year an amount equal to so ‘‘(1) the qualified lender credit for such year, from reducing to zero any credit determined much of the purchase price of the residence as and under this section with respect to such invest- does not exceed $5,000. ‘‘(2) the qualified equity investment credit for ment. ‘‘(b) FIRST-TIME HOMEBUYER.—For purposes such year. ‘‘(B) EXCEPTIONS.—Subparagraph (A) shall of this section— ‘‘(b) QUALIFIED LENDER CREDIT.—For pur- not apply to any gift, transfer, or transaction ‘‘(1) IN GENERAL.—The term ‘first-time home- poses of this section— described in paragraph (1), (2), or (3) of section buyer’ has the same meaning as when used in ‘‘(1) IN GENERAL.—The qualified lender credit 1245(b). section 72(t)(8)(D)(i), except that ‘principal resi- for any taxable year is the amount of credit ‘‘(C) SPECIAL RULE.—Any increase in tax dence in the District of Columbia during the 1- specified for such year by the Economic Devel- under subparagraph (A) shall not be treated as year period’ shall be substituted for ‘principal opment Corporation with respect to qualified a tax imposed by this chapter for purposes of— residence during the 2-year period’ in subclause District loans made by the taxpayer. ‘‘(i) determining the amount of any credit al- (I) thereof. ‘‘(2) LIMITATION.—In no event may the quali- lowable under this chapter, and ‘‘(2) ONE-TIME ONLY.—If an individual is fied lender credit with respect to any loan ex- ‘‘(ii) determining the amount of the tax im- treated as a first-time homebuyer with respect to ceed 25 percent of the cost of the property pur- posed by section 55. any principal residence, such individual may chased with the proceeds of the loan. ‘‘(6) BASIS REDUCTION.—For purposes of this not be treated as a first-time homebuyer with re- ‘‘(3) QUALIFIED DISTRICT LOAN.—For purposes title, the basis of any District business invest- spect to any other principal residence. of paragraph (1), the term ‘qualified district ment shall be reduced by the amount of the ‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin- loan’ means any loan for the purchase (as de- credit determined under this section with respect cipal residence’ has the same meaning as when fined in section 179(d)(2)) of property to which to such investment. used in section 121. section 168 applies (or would apply but for sec- ‘‘(d) LIMITATION ON AMOUNT OF CREDIT.—

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‘‘(1) IN GENERAL.—The amount of the DC in- case of a new corporation, such corporation was ‘‘(d) OTHER DEFINITIONS AND SPECIAL vestment credit determined under this section being organized for purposes of being a DC busi- RULES.—For purposes of this section— with respect to any taxpayer for any taxable ness), and ‘‘(1) QUALIFIED CAPITAL GAIN.—Except as oth- year shall not exceed the credit amount allo- ‘‘(iii) during substantially all of the tax- erwise provided in this subsection, the term cated to such taxpayer for such taxable year by payer’s holding period for such stock, such cor- ‘qualified capital gain’ means any gain recog- the Economic Development Corporation. poration qualified as a DC business. nized on the sale or exchange of— ‘‘(2) OVERALL LIMITATION.—The aggregate ‘‘(B) REDEMPTIONS.—A rule similar to the rule ‘‘(A) a capital asset, or credit amount which may be allocated by the of section 1202(c)(3) shall apply for purposes of ‘‘(B) property used in the trade or business (as Economic Development Corporation under this this paragraph. defined in section 1231(b)). section shall not exceed $60,000,000. ‘‘(3) DC PARTNERSHIP INTEREST.—The term ‘‘(2) GAIN BEFORE 1998 NOT QUALIFIED.—The ‘‘(3) CRITERIA FOR ALLOCATING CREDIT ‘DC partnership interest’ means any capital or term ‘qualified capital gain’ shall not include AMOUNTS.—The allocation of credit amounts profits interest in a domestic partnership which any gain attributable to periods before January under this section shall be made in accordance is originally issued after December 31, 1997, if— 1, 1998. with criteria established by the Economic Devel- ‘‘(A) such interest is acquired by the taxpayer, ‘‘(3) CERTAIN GAIN ON REAL PROPERTY NOT opment Corporation. In establishing such cri- before January 1, 2003, from the partnership QUALIFIED.—The term ‘qualified capital gain’ teria, such Corporation shall take into ac- solely in exchange for cash, shall not include any gain which would be count— ‘‘(B) as of the time such interest was acquired, treated as ordinary income under section 1250 if ‘‘(A) the degree to which the business receiv- such partnership was a DC business (or, in the section 1250 applied to all depreciation rather ing the loan or investment will provide job op- case of a new partnership, such partnership was than the additional depreciation. portunities for low and moderate income resi- being organized for purposes of being a DC busi- ‘‘(4) INTANGIBLES AND LAND NOT INTEGRAL dents of a targeted area, and ness), and PART OF DC BUSINESS.—The term ‘qualified cap- ‘‘(B) whether such business is within a tar- ‘‘(C) during substantially all of the taxpayer’s ital gain’ shall not include any gain which is geted area. holding period for such interest, such partner- attributable to real property, or an intangible ‘‘(4) TARGETED AREA.—For purposes of para- ship qualified as a DC business. asset, which is not an integral part of a DC graph (3), the term ‘targeted area’ means— A rule similar to the rule of paragraph (2)(B) business. ‘‘(A) any census tract located in the District shall apply for purposes of this paragraph. ‘‘(5) RELATED PARTY TRANSACTIONS.—The term of Columbia which is part of an enterprise com- ‘‘(4) DC BUSINESS PROPERTY.— ‘qualified capital gain’ shall not include any munity designated under subchapter U before ‘‘(A) IN GENERAL.—The term ‘DC business gain attributable, directly or indirectly, in the date of the enactment of this subchapter, property’ means tangible property if— whole or in part, to a transaction with a related and ‘‘(i) such property was acquired by the tax- person. For purposes of this paragraph, persons ‘‘(B) any other census tract which is located payer by purchase (as defined in section are related to each other if such persons are de- in the District of Columbia and which has a 179(d)(2)) after December 31, 1997, and before scribed in section 267(b) or 707(b)(1). poverty rate of not less than 35 percent. January 1, 2003, ‘‘(e) CERTAIN OTHER RULES TO APPLY.—Rules ‘‘(e) ECONOMIC DEVELOPMENT CORPORA- ‘‘(ii) the original use of such property in the similar to the rules of subsections (g), (h), (i)(2), TION.—For purposes of this section, the term District of Columbia commences with the tax- and (j) of section 1202 shall apply for purposes ‘Economic Development Corporation’ has the payer, and of this section. meaning given such term by section 1400A(b). ‘‘(iii) during substantially all of the tax- ‘‘(f) SALES AND EXCHANGES OF INTERESTS IN ‘‘(f) REGULATIONS.—The Secretary shall pre- payer’s holding period for such property, sub- PARTNERSHIPS AND S CORPORATIONS WHICH ARE scribe such regulations as may be appropriate to stantially all of the use of such property was in DC BUSINESSES.—In the case of the sale or ex- carry out this section. a DC business of the taxpayer. change of an interest in a partnership, or of ‘‘(g) APPLICATION OF SECTION.—This section ‘‘(B) SPECIAL RULE FOR BUILDINGS WHICH ARE stock in an S corporation, which was a DC busi- shall apply to any credit amount allocated for SUBSTANTIALLY IMPROVED.— ness during substantially all of the period the taxable years beginning after December 31, 1997, ‘‘(i) IN GENERAL.—The requirements of clauses taxpayer held such interest or stock, the amount and before January 1, 2003. (i) and (ii) of subparagraph (A) shall be treated of qualified capital gain shall be determined ‘‘SEC. 1400B. ZERO PERCENT CAPITAL GAINS as met with respect to— without regard to— RATE. ‘‘(I) property which is substantially improved ‘‘(1) any gain which is attributable to real ‘‘(a) EXCLUSION.— by the taxpayer before January 1, 2003, and property, or an intangible asset, which is not an ‘‘(1) IN GENERAL.—Gross income shall not in- ‘‘(II) any land on which such property is lo- integral part of a DC business, and clude qualified capital gain from the sale or ex- cated. ‘‘(2) any gain attributable to periods before change of any DC asset held for more than 5 ‘‘(ii) SUBSTANTIAL IMPROVEMENT.—For pur- January 1, 1998. years. poses of clause (i), property shall be treated as ‘‘SEC. 1400C. TRUST FUND FOR DC SCHOOLS. ‘‘(2) SPECIAL 10 PERCENT RATE FOR DC ASSETS substantially improved by the taxpayer only if, ‘‘(a) CREATION OF FUND.—There is established ACQUIRED IN 1998.— during any 24-month period beginning after De- in the Treasury of the United States a trust ‘‘(A) IN GENERAL.—In the case of any DC cember 31, 1997, additions to basis with respect fund to be known as the ‘Trust Fund for DC asset acquired during calendar year 1998— to such property in the hands of the taxpayer ‘‘(i) paragraph (1) shall not apply to any Schools’, consisting of such amounts as may be exceed the greater of— qualified capital gain from the sale or exchange appropriated or credited to the Fund as pro- ‘‘(I) an amount equal to the adjusted basis of of such asset, and vided in this section. such property at the beginning of such 24-month ‘‘(ii) the qualified capital gain described in ‘‘(b) TRANSFER TO TRUST FUND OF AMOUNTS period in the hands of the taxpayer, or clause (i) shall be treated as adjusted net capital EQUIVALENT TO CERTAIN TAXES.— ‘‘(II) $5,000. gain described in section 1(h)(1)(D) for the tax- ‘‘(1) IN GENERAL.—There are hereby appro- ‘‘(6) TREATMENT OF SUBSEQUENT PURCHASERS, able year of the sale or exchange (and the priated to the Trust Fund for DC Schools ETC.—The term ‘DC asset’ includes any property amount under section 1(h)(1)(D)(i) for such tax- amounts equivalent to the applicable percentage which would be a DC asset but for paragraph able year shall be increased by the amount of of revenues received in the Treasury from in- (2)(A)(i), (3)(A), or (4)(A)(ii) in the hands of the such gain). come taxes imposed by this chapter for any tax- taxpayer if such property was a DC asset in the ‘‘(B) SPECIAL RULE.—For purposes of subpara- able year beginning after December 31, 1997, and hands of a prior holder. graph (A), any DC asset the basis of which is before January 1, 2008, on individual taxpayers ‘‘(7) 5-YEAR SAFE HARBOR.—If any property determined in whole or in part by reference to who are residents of the District of Columbia as ceases to be a DC asset by reason of paragraph the basis of an asset to which subparagraph (A) of the last day of such taxable year. (2)(A)(iii), (3)(C), or (4)(A)(iii) after the 5-year applies shall be treated as a DC asset acquired ‘‘(2) APPLICABLE PERCENTAGE.—For purposes period beginning on the date the taxpayer ac- during calendar year 1998. of paragraph (1), the term ‘applicable percent- quired such property, such property shall con- ‘‘(b) DC ASSET.—For purposes of this sec- age’ means the percentage which the Secretary tion— tinue to be treated as meeting the requirements determines necessary to result in $5,000,000 being ‘‘(1) IN GENERAL.—The term ‘DC asset’ of such paragraph; except that the amount of appropriated to the Trust Fund under para- means— gain to which subsection (a) applies on any sale graph (1) for each of the calendar years 1998 ‘‘(A) any DC business stock, or exchange of such property shall not exceed through 2007. ‘‘(B) any DC partnership interest, and the amount which would be qualified capital ‘‘(3) TRANSFER OF AMOUNTS.—The amounts ‘‘(C) any DC business property. gain had such property been sold on the date of appropriated by paragraph (1) shall be trans- ‘‘(2) DC BUSINESS STOCK.— such cessation. ferred at least monthly from the general fund of ‘‘(A) IN GENERAL.—The term ‘DC business ‘‘(c) DC BUSINESS.—For purposes of this sec- the Treasury to the Trust Fund for DC Schools stock’ means any stock in a domestic corpora- tion, the term ‘DC business’ means any entity on the basis of estimates made by the Secretary tion which is originally issued after December which is an enterprise zone business (as defined of the amounts referred to in such paragraph. 31, 1997, if— in section 1397B), determined— Proper adjustments shall be made in the ‘‘(i) such stock is acquired by the taxpayer, ‘‘(1) by treating the District of Columbia as an amounts subsequently transferred to the extent before January 1, 2003, at its original issue (di- empowerment zone and as if no other area is an prior estimates were in excess of or less than the rectly or through an underwriter) solely in ex- empowerment zone or enterprise community, amounts required to be transferred. change for cash, and ‘‘(c) EXPENDITURES FROM FUND.— ‘‘(ii) as of the time such stock was issued, ‘‘(2) without regard to subsections (b)(6) and ‘‘(1) IN GENERAL.—Amounts in the Trust Fund such corporation was a DC business (or, in the (c)(5) of section 1397B. for DC Schools are hereby appropriated, and

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shall be available without fiscal year limitation, (b) CONFORMING AMENDMENTS.— ceive under this subsection an amount equal to for payment by the Secretary of debt service on (1) Subparagraph (A) of section 4041(a)(1) is the lesser of— qualified DC school bonds. amended— ‘‘(A) the State’s qualified expenses for the fis- ‘‘(2) QUALIFIED DC SCHOOL BONDS.—The term (A) by striking ‘‘, a diesel-powered train, or a cal year, or ‘qualified DC school bonds’ means bonds diesel-powered boat’’ each place it appears and ‘‘(B) the product of— which— inserting ‘‘or a diesel-powered train’’, and ‘‘(i) 1⁄12 of 1 percent of the aggregate amounts ‘‘(A) are issued after March 31, 1998, by the (B) by striking ‘‘vehicle, train, or boat’’ and appropriated from the Intercity Passenger Rail District of Columbia to finance the construction, inserting ‘‘vehicle or train’’. Fund for such fiscal year under paragraph (1), rehabilitation, and repair of schools under the (2) Paragraph (1) of section 4041(a) is amend- and jurisdiction of the government of the District of ed by striking subparagraph (D). ‘‘(ii) the number of months such State is a Columbia, and (c) EFFECTIVE DATE.—The amendments made non-Amtrak State in such fiscal year. ‘‘(B) are certified by the District of Columbia by this section shall take effect on January 1, If the amount determined under subparagraph Control Board as meeting the requirements of 1998. (B) exceeds the amount under subparagraph (A) for any fiscal year, the amount under subpara- subparagraph (A) after giving 60 days notice of SEC. 702. INTERCITY PASSENGER RAIL FUND. any proposed certification to the Subcommittees graph (B) for the following fiscal year shall be (a) ESTABLISHMENT OF FUND.—The Internal increased by the amount of such excess. on the District of Columbia of the Committees on Revenue Code of 1986 is amended by adding at Appropriations of the House of Representatives ‘‘(3) TRANSFERS FROM FUND FOR CERTAIN RE- the end the following new subtitle: and the Senate. PAYMENTS AND CREDITS.— ‘‘(d) REPORT.—It shall be the duty of the Sec- ‘‘Subtitle L—Intercity Passenger Rail Fund ‘‘(A) IN GENERAL.—The Secretary shall pay retary to hold the Trust Fund for DC Schools ‘‘Sec. 9901. Intercity passenger rail fund. from time to time from the Intercity Passenger and to report to the Congress each year on the ‘‘SEC. 9901. INTERCITY PASSENGER RAIL FUND. Rail Fund into the general fund of the Treasury financial condition and the results of the oper- ‘‘(a) CREATION OF FUND.—There is established amounts equivalent to— ations of such Fund during the preceding fiscal in the Treasury of the United States a fund to ‘‘(i) the amounts paid before October 1, 2001, year and on its expected condition and oper- be known as the ‘Intercity Passenger Rail under— ‘‘(I) section 6420 (relating to amounts paid in ations during the next fiscal year. Such report Fund’, consisting of such amounts as may be respect of gasoline used on farms), shall be printed as a House document of the ses- appropriated to the Fund as provided in this sion of the Congress to which the report is ‘‘(II) section 6421 (relating to amounts paid in section. respect of gasoline used for certain nonhighway made. ‘‘(b) TRANSFER TO INTERCITY PASSENGER RAIL ‘‘(e) INVESTMENT.— purposes or by local transit systems), and FUND OF AMOUNTS EQUIVALENT TO CERTAIN ‘‘(1) IN GENERAL.—It shall be the duty of the ‘‘(III) section 6427 (relating to fuels not used TAXES.— Secretary to invest such portion of the Trust for taxable purposes), ‘‘(1) IN GENERAL.—There are hereby appro- Fund for DC Schools as is not, in the Sec- on the basis of claims filed for periods ending priated to the Intercity Passenger Rail Fund retary’s judgment, required to meet current before April 16, 2001, and amounts equivalent to the net revenues received withdrawals. Such investments may be made ‘‘(ii) the credits allowed under section 34 (re- in the Treasury from the applicable portion of only in interest-bearing obligations of the lating to credit for certain uses of gasoline and the taxes imposed by sections 4041, 4042, 4081, United States. For such purpose, such obliga- special fuels) with respect to gasoline and spe- and 4091 after September 30, 1997, and before tions may be acquired— cial fuels used before April 16, 2001. ‘‘(A) on original issue at the issue price, or April 16, 2001. The amounts payable from the Intercity Pas- ‘‘(B) by purchase of outstanding obligations ‘‘(2) APPLICABLE PORTION.—For purposes of senger Rail Fund under this subparagraph shall at the market price. paragraph (1), the term ‘applicable portion’ be determined by taking into account only ‘‘(2) SALE OF OBLIGATIONS.—Any obligation means the lesser of— amounts transferred to such Fund. acquired by the Trust Fund for DC Schools may ‘‘(A) 0.5 cent multiplied by the number of gal- ‘‘(B) TRANSFERS BASED ON ESTIMATES.—Trans- be sold by the Secretary at the market price. lons on which the taxes described in paragraph fers under subparagraph (A) shall be made on ‘‘(3) INTEREST ON CERTAIN PROCEEDS.—The in- (1) are imposed, or the basis of estimates by the Secretary, and terest on, and the proceeds from the sale or re- ‘‘(B) the portion of such taxes not otherwise proper adjustments shall be made in amounts demption of, any obligations held in the Trust appropriated to a trust fund under subchapter subsequently transferred to the extent prior esti- Fund for DC Schools shall be credited to and A of chapter 98. mates were in excess or less than the amounts form a part of the Trust Fund for DC Schools.’’. ‘‘(3) NET REVENUES.—For purposes of para- required to be transferred. (b) CREDITS MADE PART OF GENERAL BUSINESS graph (1), the term ‘net revenues’ means the ‘‘(d) DEFINITIONS.—For purposes of this sec- CREDIT.— amount estimated by the Secretary based on the tion— (1) Subsection (b) of section 38 is amended by excess of— ‘‘(1) QUALIFIED EXPENSES.—The term ‘quali- striking ‘‘plus’’ at the end of paragraph (11), by ‘‘(A) the applicable portion of the taxes re- fied expenses’ means expenses incurred after striking the period at the end of paragraph (12) ceived in the Treasury under sections 4041, 4042, September 30, 1997, and before April 16, 2001— and inserting ‘‘, plus’’, and by adding at the 4081, and 4091, over ‘‘(A) for— end the following new paragraph: ‘‘(B) the decrease in the tax imposed by chap- ‘‘(i) in the case of the National Railroad Pas- ‘‘(13) the DC investment credit determined ter 1 resulting from the applicable portion of the senger Corporation— under section 1400A(a).’’. taxes imposed by sections 4041, 4042, 4081, and ‘‘(I) the acquisition of equipment, rolling (2) Subsection (d) of section 39 is amended by 4091. stock, and other capital improvements, the up- adding at the end the following new paragraph: ‘‘(4) TRANSFER OF AMOUNTS.—The amounts grading of maintenance facilities, and the main- ‘‘(8) NO CARRYBACK OF DC CREDITS BEFORE EF- appropriated by paragraph (1) shall be trans- tenance of existing equipment, in intercity pas- FECTIVE DATE.—No portion of the unused busi- ferred at least monthly from the general fund of senger rail service, and ness credit for any taxable year which is attrib- ‘‘(II) the payment of interest and principal on the Treasury to the Intercity Passenger Rail utable to the credit under section 1400A, or to obligations incurred for such acquisition, up- Fund on the basis of estimates made by the Sec- the credits under subchapter U by reason of sec- grading, and maintenance, and retary of the amounts referred to in such para- tion 1400, may be carried back to a taxable year ‘‘(ii) in the case of a non-Amtrak State— graph. Proper adjustments shall be made in the ending before the date of the enactment of sec- ‘‘(I) the acquisition of equipment, rolling amounts subsequently transferred to the extent tions 1400A and 1400.’’. stock, and other capital improvements, the up- (3) Subsection (c) of section 196 is amended by prior estimates were in excess of or less than the grading of maintenance facilities, and the main- striking ‘‘and’’ at the end of paragraph (6), by amounts required to be transferred. tenance of existing equipment, in intercity pas- striking the period at the end of paragraph (7) ‘‘(c) EXPENDITURES FROM FUND.— senger rail or bus service, and inserting ‘‘, and’’, and by adding at the end ‘‘(1) IN GENERAL.—In addition to any amounts ‘‘(II) the purchase of intercity passenger rail the following new paragraph: appropriated from the general fund of the services from the National Railroad Passenger ‘‘(8) the DC investment credit determined Treasury of the United States for fiscal years Corporation, under section 1400A(a).’’. 1998 through 2001 to enable the Secretary of ‘‘(III) capital expenditures related to rail op- (c) CLERICAL AMENDMENT.—The table of sub- Transportation to make grants to the National erations for Class II or Class III rail carriers in chapters for chapter 1 is amended by adding at Railroad Passenger Corporation, amounts in the the State, the end the following new item: Intercity Passenger Rail Fund shall be avail- ‘‘(IV) any project that is eligible to receive able, as provided by appropriation Acts, to fi- ‘‘Subchapter W. Incentives for the Revitaliza- funding under section 5309, 5310, or 5311 of title nance qualified expenses of— tion of the District of Columbia.’’. 49, United States Code, ‘‘(A) the National Railroad Passenger Cor- ‘‘(V) any project that is eligible to receive (d) EFFECTIVE DATE.—This section shall take poration, and funding under section 130 of title 23, United effect on the date of the enactment of this Act. ‘‘(B) each non-Amtrak State, to the extent de- States Code, TITLE VII—MISCELLANEOUS PROVISIONS termined under paragraph (3). ‘‘(VI) the upgrading and maintenance of Subtitle A—Provisions Relating to Excise The amount available for any fiscal year under intercity primary and rural air service facilities, Taxes the preceding sentence shall be the amount dedi- and the purchase of intercity air service be- SEC. 701. REPEAL OF TAX ON DIESEL FUEL USED cated to such Fund for such fiscal year (and no tween primary and rural airports and regional IN RECREATIONAL BOATS. other amount) and shall remain available until hubs, and (a) IN GENERAL.—Subparagraph (B) of section expended. ‘‘(VII) the payment of interest and principal 6421(e)(2) (defining off-highway business use) is ‘‘(2) MAXIMUM AMOUNT OF FUNDS TO NON-AM- on obligations incurred for such acquisition, up- amended by striking clauses (iii) and (iv). TRAK STATES.—Each non-Amtrak State shall re- grading, maintenance, and purchase, and

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00147 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6816 CONGRESSIONAL RECORD — SENATE June 27, 1997 ‘‘(B) certified by the Secretary of Transpor- no other fruit product, and containing at least ‘‘(i) except as otherwise provided in this sub- tation as meeting the requirements of subpara- one-half of 1 percent and not more than 7 per- paragraph, the rate of tax specified in section graph (A). cent of alcohol by volume, 22.6 cents per wine 4081(a)(2)(A)(i) which is in effect at the time of ‘‘(2) NON-AMTRAK STATE.—The term ‘non-Am- gallon.’’. such sale or use, trak State’ means any State which does not re- (b) EXCLUSION FROM SMALL PRODUCER CRED- ‘‘(ii) 13.6 cents per gallon in the case of lique- ceive intercity passenger rail service from the IT.—Paragraph (1) of section 5041(c) (relating to fied petroleum gas, and National Railroad Passenger Corporation. credit for small domestic producers) is amended ‘‘(iii) 11.9 cents per gallon in the case of lique- ‘‘(e) TAX TREATMENT OF FUND EXPENDI- by striking ‘‘subsection (b)(4)’’ and inserting fied natural gas. TURES.—With respect to any payment of quali- ‘‘paragraphs (4) and (6) of subsection (b)’’. In the case of any sale or use after September fied expenses described in subsection (d)(1)(A)(i) (c) EFFECTIVE DATE.—The amendments made 30, 1999, clause (ii) shall be applied by sub- from the Intercity Passenger Rail Fund during by this section shall take effect on October 1, stituting ‘3.2 cents’ for ‘13.6 cents’, and clause any taxable year to a taxpayer— 1997. (iii) shall be applied by substituting ‘2.8 cents’ ‘‘(1) such payment shall not be included in the SEC. 704. GENERAL REVENUE PORTION OF HIGH- for ‘11.9 cents’.’’. gross income of the taxpayer for such taxable WAY MOTOR FUELS TAXES DEPOS- (b) METHANOL FUEL PRODUCED FROM NAT- year, ITED INTO HIGHWAY TRUST FUND. URAL GAS.— ‘‘(2) no deduction shall be allowed to the tax- (a) IN GENERAL.—Paragraph (4) of section (1) IN GENERAL.—Subparagraph (A) of section payer with respect to any amount paid or in- 9503(b) is amended by striking ‘‘and’’ at the end 4041(m)(1) is amended by striking clause (i) and curred which is attributable to such payment, of subparagraph (A), and by striking subpara- inserting the following new clause: and graph (B) and inserting the following new sub- ‘‘(i) after September 30, 1997, and before Octo- ‘‘(3) the basis of any property shall be reduced paragraphs: ber 1, 1999— by the portion of the cost of such property ‘‘(B) there shall not be taken into account the ‘‘(I) in the case of fuel none of the alcohol in which is attributable to such payment. taxes imposed by sections 4041 and 4081 to the which consists of ethanol, 9.15 cents per gallon, ‘‘(f) REPORT.—It shall be the duty of the Sec- extent attributable to— and retary to hold the Intercity Passenger Rail Fund ‘‘(i) the Leaking Underground Storage Tank ‘‘(II) in any other case, 11.3 cents per gallon, and to report to the Congress each year on the Trust Fund financing rate, or and’’. financial condition and the results of the oper- ‘‘(ii) fuel used in a train, (c) EFFECTIVE DATE.—The amendments made ‘‘(C) in the case of fuels used as described in ations of such Fund during the preceding fiscal by this section shall take effect on the date of paragraph (4)(D), (5)(B), or (6)(D) of subsection year and on its expected condition and oper- the enactment of this Act. (c), there shall not be taken into account— ations during the next fiscal year. Such report SEC. 706. STUDY OF FEASIBILITY OF MOVING COL- ‘‘(i) in the case of gasoline and special motor shall be printed as a House document of the ses- LECTION POINT FOR DISTILLED fuels, so much of the rate of tax as exceeds 11.5 SPIRITS EXCISE TAX. sion of the Congress to which the report is cents per gallon, and (a) IN GENERAL.—The Secretary of the Treas- made. ‘‘(ii) in the case of diesel fuel, so much of the ury or his delegate shall conduct a study of op- ‘‘(g) INVESTMENT.— rate of tax as exceeds 17.5 cents per gallon, and tions for changing the event on which the tax ‘‘(1) IN GENERAL.—It shall be the duty of the ‘‘(D) there shall not be taken into account so imposed by section 5001 of the Internal Revenue Secretary to invest such portion of the Intercity much of the rate of the taxes received in the Code of 1986 is determined. One such option Passenger Rail Fund as is not, in the Sec- Treasury after June 30, 2000, as exceeds the ex- which shall be studied is determining such tax retary’s judgment, required to meet current cess of 4.3 cents per gallon over the portion (if on removal from registered wholesale ware- withdrawals. Such investments may be made any) of such rate as is taken into account in de- houses. In studying each such option, such Sec- only in interest-bearing obligations of the termining the amount appropriated to the Inter- retary shall focus on administrative issues in- United States. For such purpose, such obliga- city Passenger Rail Fund under section 9901.’’. cluding— tions may be acquired— (b) LIMITATION ON EXPENDITURES.—Sub- (1) tax compliance, ‘‘(A) on original issue at the issue price, or section (c) of section 9503 is amended by adding (2) the number of taxpayers required to pay ‘‘(B) by purchase of outstanding obligations at the end the following new paragraph: the tax, at the market price. ‘‘(7) LIMITATION ON EXPENDITURES.—Notwith- (3) the types of financial responsibility re- ‘‘(2) SALE OF OBLIGATIONS.—Any obligation standing any other provision of law, in calcu- quirements that might be required, and acquired by the Intercity Passenger Rail Fund lating amounts under section 157(a) of title 23, (4) special requirements regarding segregation may be sold by the Secretary at the market United States Code, and sections 1013(c), of nontax-paid distilled spirits from other prod- price. 1015(a), and 1015(b) of the Intermodal Surface ucts. ‘‘(3) INTEREST ON CERTAIN PROCEEDS.—The in- Transportation Efficiency Act of 1991 (Public Such study shall review the effects of each such terest on, and the proceeds from the sale or re- Law 102–240; 105 Stat. 1914), deposits in the option on the Department of the Treasury (in- demption of, any obligations held in the Inter- Highway Trust Fund resulting from the amend- cluding staffing and other demands on budg- city Passenger Rail Fund shall be credited to ments made by the Revenue Reconciliation Act etary resources) and the change in the period the general fund of the Treasury of the United of 1997 shall not be taken into account.’’. between the time such tax is currently paid and States. (c) TECHNICAL AMENDMENTS.— the time such tax would be paid under each ‘‘(h) TERMINATION.—The Secretary shall de- (1) Section 9503 is amended by striking sub- such option. termine and retain, not later than October 1, section (f). (b) REPORT.—The report of such study shall 2001, the amount in the Intercity Passenger Rail (2) Paragraphs (4)(D), (5)(B), and (6)(D) of be submitted to the Committee on Finance of the Fund necessary to pay any outstanding quali- section 9503(c) are each amended by striking Senate and the Committee on Ways and Means fied expenses, and shall transfer any amount ‘‘attributable to the Highway Trust Fund fi- of the House of Representatives not later than not so retained to the general fund of the Treas- nancing rate’’ and inserting ‘‘attributable to January 31, 1998. ury.’’. taxes taken into account in determining trans- SEC. 707. EXTENSION AND MODIFICATION OF (b) CONFORMING AMENDMENT.—The table of fers under subparagraph (C) of subsection SUBSIDIES FOR ALCOHOL FUELS. subtitles for such Code is amended by adding at (b)(4)’’. (a) EXTENSIONS.— the end the following new item: (d) EFFECTIVE DATE.—The amendments made (1) ALCOHOL FUELS CREDIT.—Subsection (e) of by this section shall apply to taxes received in ‘‘SUBTITLE L. Intercity Passenger Rail Fund.’’. section 40 is amended— the Treasury after September 30, 1997. (A) by striking ‘‘December 31, 2000’’ and in- (c) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to taxes SEC. 705. RATE OF TAX ON CERTAIN SPECIAL serting ‘‘December 31, 2007’’, and FUELS DETERMINED ON BASIS OF (B) by striking ‘‘January 1, 2001’’ and insert- imposed after September 30, 1997. BTU EQUIVALENCY WITH GASOLINE. ing ‘‘January 1, 2007’’. (d) BUDGETARY TREATMENT OF AMOUNTS DE- (a) SPECIAL MOTOR FUELS.—Paragraph (2) of (2) EXCISE TAXES.— POSITED INTO INTERCITY PASSENGER RAIL section 4041(a) (relating to special motor fuels) is (A) Section 4041(b)(2)(C) is amended by strik- FUND.—Pursuant to section 207 of such H. Con. amended to read as follows: ing ‘‘October 1, 2000’’ and inserting ‘‘October 1, Res. 84, of the total revenues raised by this Act, ‘‘(2) SPECIAL MOTOR FUELS.— 2007’’. amounts equal to the amounts deposited into the ‘‘(A) IN GENERAL.—There is hereby imposed a (B) Sections 4041(k)(3), 4081(c)(8), 4091(c)(5), Intercity Passenger Rail Fund for each fiscal tax on benzol, benzene, naphtha, liquefied pe- and 6427(f)(4) are each amended by striking year are hereby dedicated to finance such Fund. troleum gas, casing head and natural gasoline, ‘‘September 30, 2000’’ and inserting ‘‘September SEC. 703. MODIFICATION OF TAX TREATMENT OF or any other liquid (other than kerosene, gas 30, 2007’’. HARD CIDER. oil, or fuel oil, or any product taxable under (b) MODIFICATION.— (a) HARD CIDER CONTAINING NOT MORE THAN section 4081)— (1) IN GENERAL.—Subsection (h) of section 40 7 PERCENT ALCOHOL TAXED AS WINE.—Sub- ‘‘(i) sold by any person to an owner, lessee, or is amended to read as follows: section (b) of section 5041 (relating to imposition other operator of a motor vehicle or motorboat ‘‘(h) REDUCED CREDIT FOR ETHANOL BLEND- and rate of tax) is amended by striking ‘‘and’’ for use as a fuel in such motor vehicle or motor- ERS.— at the end of paragraph (4), by striking the pe- boat, or ‘‘(1) IN GENERAL.—In the case of any alcohol riod at the end of paragraph (5) and inserting ‘‘; ‘‘(ii) used by any person as a fuel in a motor mixture credit or alcohol credit with respect to and’’, and by adding at the end the following vehicle or motorboat unless there was a taxable any alcohol which is ethanol— new paragraph: sale of such liquid under clause (i). ‘‘(A) subsections (b)(1)(A) and (b)(2)(A) shall ‘‘(6) On hard cider derived primarily from ap- ‘‘(B) RATE OF TAX.—The rate of the tax im- be applied by substituting ‘the blender amount’ ples or apple concentrate and water, containing posed by this paragraph shall be— for ‘60 cents’;

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‘‘(B) subsection (b)(3) shall be applied by sub- (2) by inserting ‘‘AND MULTIEMPLOYER’’ after plan but for the provisions of subsection stituting ‘the low-proof blender amount’ for ‘45 ‘‘GOVERNMENTAL’’ in the heading thereof. (c)(7)(A)(i)(I).’’. cents’ and ‘the blender amount’ for ‘60 cents’; (b) EFFECTIVE DATE.—The amendments made (3) CONFORMING AMENDMENTS.— and by this section shall apply to years beginning (A) Section 412(c)(7)(D) is amended by adding ‘‘(C) subparagraphs (A) and (B) of subsection after December 31, 1997. ‘‘and’’ at the end of clause (i), by striking ‘‘, (d)(3) shall be applied by substituting ‘the SEC. 712. TECHNICAL CORRECTION RELATING TO and’’ at the end of clause (ii) and inserting a blender amount’ for ‘60 cents’ and ‘the low- PARTIAL TERMINATION OF PENSION period, and by striking clause (iii). proof blender amount’ for ‘45 cents’. PLANS. (B) Section 302(c)(7)(D) of the Employee Re- ‘‘(2) AMOUNTS.—For purposes of paragraph (a) IN GENERAL.—So much of section 552 of tirement Income Security Act of 1974 (29 U.S.C. (1), the blender amount and the low-proof the Tax Reform Act of 1984 (Public Law 98–369) 1082(c)(7)(D)) is amended by adding ‘‘and’’ at blender amount shall be determined in accord- as precedes subparagraph (A) of paragraph (1) the end of clause (i), by striking ‘‘, and’’ at the ance with the following table: is amended to read as follows: end of clause (ii) and inserting a period, and by ‘‘For purposes of interpreting or applying sec- striking clause (iii). (4) EFFECTIVE DATES.— tion 411(d)(3) of the Internal Revenue Code of 53 cents ...... 39.26 cents (A) IN GENERAL.—The amendments made by 52 cents ...... 38.52 cents 1986 (relating to minimum vesting standards in this subsection shall apply to plan years begin- 2005 or there- the case of partial termination), any other pro- after ...... 51 cents ...... 37.78 cents.’’. ning after December 31, 1998. vision of Federal law, and any provision of any (B) SPECIAL RULE FOR 1999.—In the case of a (2) Subparagraph (A) of section 4041(b)(2) is plan or trust which directly or indirectly incor- plan’s first year beginning in 1999, there shall be amended by striking ‘‘5.4 cents’’ and inserting porates, or is determined by reference to, such added to the amount required to be amortized ‘‘the applicable blender rate’’ and by adding at section 411(d)(3), a partial termination shall not under section 412(b)(2)(E) of the Internal Rev- the end the following flush sentence: have occurred based in whole or in part on a de- enue Code of 1986 and section 302(b)(2)(E) of the ‘‘For purposes of clause (i), the applicable cline in plan participation if— Employee Retirement Income Security Act of blender rate is 1⁄10 of the blender amount appli- ‘‘(1) the decline in plan participation—’’. 1974 (as added by paragraphs (1) and (2)) over cable under section 40(h)(2) for the calendar (b) EFFECTIVE DATE.—The amendment made the 20-year period beginning with such year, the year in which the sale or use occurs.’’. by this section shall take effect as if included in unamortized balance (as of the close of the pre- (3) Paragraphs (4)(A) and (5) of section the provisions of section 552 of the Tax Reform ceding plan year) of any amount required to be 4081(c) are each amended by striking ‘‘5.4 cents’’ Act of 1984. amortized under section 412(c)(7)(D)(iii) of such each place it appears and inserting ‘‘the appli- SEC. 713. INCREASE IN CURRENT LIABILITY Code and section 302(c)(7)(D)(iii) of such Act (as cable blender rate (as defined in section FUNDING LIMIT. repealed by paragraph (3)) for plan years begin- 4041(b)(2)(A))’’. (a) AMENDMENT TO 1986 CODE.—Section ning before 1999. (4) Paragraph (1) of section 4091(c) is amended 412(c)(7) (relating to full-funding limitation) is SEC. 714. SPOUSAL CONSENT REQUIRED FOR by striking ‘‘13.4 cents’’ each place it appears amended— CERTAIN DISTRIBUTIONS AND and inserting ‘‘the applicable blender amount’’ (A) by striking ‘‘150 percent’’ in subparagraph LOANS UNDER QUALIFIED CASH OR and by adding at the end the following new sen- (A)(i)(I) and inserting ‘‘the applicable percent- DEFERRED ARRANGEMENT. tence: ‘‘For purposes of this paragraph, the term age’’, and (a) IN GENERAL.—Section 401(k) is amended by ‘applicable blender amount’ means 13.3 cents in (B) by adding at the end the following: adding at the end the following new paragraph: the case of any sale or use during 2001 or 2002, ‘‘(F) APPLICABLE PERCENTAGE.—For purposes ‘‘(13) SPOUSAL CONSENT REQUIRED.— ‘‘(A) IN GENERAL.—An arrangement shall not 13.2 cents in the case of any sale or use during of subparagraph (A)(i)(I), the applicable per- be treated as a qualified cash or deferred ar- 2003 or 2004, and 13.1 cents in the case of any centage shall be determined in accordance with the following table: rangement unless— sale or use during 2005 or thereafter.’’. ‘‘(i) a distribution under the plan of which (c) EFFECTIVE DATE.— ‘‘In the case of any plan The applicable percentage such arrangement is a part, or (1) SUBSECTION (a).—The amendments made year beginning in— is— ‘‘(ii) a loan all or part of which is secured by by subsection (a) shall take effect on the date of 1999 or 2000 ...... 155 the participant’s interest in the plan of which the enactment of this Act. 2001 or 2002 ...... 160 such arrangement is a part, (2) SUBSECTION (b).—The amendments made 2003 or 2004 ...... 165 may not be made without the written consent of by subsection (b) shall take effect on January 1, 2005 and succeeding years ...... 170.’’. the spouse. 2001. (b) AMENDMENT TO ERISA.—Section 302(c)(7) ‘‘(B) EXCEPTIONS.—Subparagraph (A) shall SEC. 708. CLARIFICATION OF AUTHORITY TO USE of the Employee Retirement Income Security Act not apply— SEMI-GENERIC DESIGNATIONS ON of 1974 (29 U.S.C. 1082(c)(7)) is amended— ‘‘(i) to distributions described in section WINE LABELS. (A) by striking ‘‘150 percent’’ in subparagraph 402(c)(4)(A) or 411(a)(11), or (a) IN GENERAL.—Section 5388 (relating to des- (A)(i)(I) and inserting ‘‘the applicable percent- ‘‘(ii) in any case described in section 417(a)(2) ignation of wines) is amended by adding at the age’’, and (relating to cases where spouse cannot be lo- end the following new subsection: (B) by adding at the end the following: cated). ‘‘(c) USE OF SEMI-GENERIC DESIGNATIONS.—A ‘‘(F) APPLICABLE PERCENTAGE.—For purposes ‘‘(C) OTHER RULES.—The Secretary shall pre- name of geographic significance, which is also of subparagraph (A)(i)(I), the applicable per- scribe rules similar to the rules under section 417 the designation of a class or type of wine, shall centage shall be determined in accordance with for the form and timing of any consent required be deemed to have become semi-generic only if so the following table: by this paragraph.’’. found by the Secretary. Semi-generic designa- (b) EFFECTIVE DATE.— tions may be used to designate wines of an ori- ‘‘In the case of any plan The applicable percentage (1) IN GENERAL.—The amendment made by year beginning in— is— gin other than that indicated by such name only this section shall apply to plan years beginning 1999 or 2000 ...... 155 after December 31, 1998. if— 2001 or 2002 ...... 160 ‘‘(1) there appears in direct conjunction there- (2) PLAN AMENDMENTS.—A plan shall not be 2003 or 2004 ...... 165 treated as failing to meet the requirements of with an appropriate appellation of origin dis- 2005 and succeeding years ...... 170.’’. closing the true place of origin of the wine, and section 411(d)(6) of the Internal Revenue Code (c) SPECIAL AMORTIZATION RULE.— ‘‘(2) the wine so designated conforms to the of 1986 or section 204(g) of the Employee Retire- (1) CODE AMENDMENT.—Section 412(b)(2) is standard of identity, if any, for such wine con- ment Income Security Act of 1974 merely because amended by striking ‘‘and’’ at the end of sub- it is amended to meet the requirements of section tained in the regulations in this section or, if paragraph (C), by striking the period at the end there be no such standard, to the trade under- 401(k)(4)(13) of such Code (as added by sub- of subparagraph (D) and inserting ‘‘, and’’, and section (a)). standing of such class or type. by inserting after subparagraph (D) the fol- Examples of semi-generic names which are also SEC. 715. SPECIAL RULES FOR CHURCH PLANS. lowing: (a) IN GENERAL.—Section 414(e)(5) relating to type designations for grape wines are Angelica, ‘‘(E) the amount necessary to amortize in Burgundy, Claret, Chablis, Champagne, Chi- special rules for chaplains and self-employed equal annual installments (until fully amor- ministers is amended— anti, Malaga, Marsala, Madeira, Moselle, Port, tized) over a period of 20 years the contributions Rhine Wine (syn. Hock), Sauterne, Haut Sau- (1) by striking ‘‘not eligible to participate’’ in which would be required to be made under the subparagraph (C) and inserting ‘‘not otherwise terne, Sherry, Tokay.’’. plan but for the provisions of subsection (b) EFFECTIVE DATE.—The amendment made participating’’, and (c)(7)(A)(i)(I).’’. by this section shall take effect on the date of (2) by adding at the end the following new (2) ERISA AMENDMENT.—Section 302(b)(2) of the enactment of this Act. subparagraph: the Employee Retirement Income Security Act of ‘‘(E) EXCLUSION.—In the case of a contribu- Subtitle B—Provisions Relating to Pensions 1974 (29 U.S.C. 1082(b)(2)) is amended by strik- tion to a church plan made on behalf of a min- and Fringe Benefits ing ‘‘and’’ at the end of subparagraph (C), by ister described in subparagraph (A)(i)(II), such SEC. 711. TREATMENT OF MULTIEMPLOYER striking the period at the end of subparagraph contribution shall not be included in the gross PLANS UNDER SECTION 415. (D) and inserting ‘‘, and’’, and by inserting income of the minister to the extent that such (a) IN GENERAL.—Section 415(b)(11) is amend- after subparagraph (D) the following: contribution would not be so included if the ed— ‘‘(E) the amount necessary to amortize in minister was an employee of a church.’’. (1) by inserting ‘‘or a multiemployer plan (as equal annual installments (until fully amor- (b) EFFECTIVE DATE.—The amendments made defined in section 414(f))’’ after ‘‘section tized) over a period of 20 years the contributions by this section shall apply to years beginning 414(d))’’, and which would be required to be made under the after December 31, 1997.

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SEC. 716. REPEAL OF APPLICATION OF UNRE- (b) INVOLUNTARY CONVERSIONS.—Subsection amount of such distributions exceeds $10,000 LATED BUSINESS INCOME TAX TO (e) of section 1033 (relating to livestock sold on during the 2-year period described in clause (i). ESOPS. account of drought) is amended— ‘‘(C) DISASTER-DAMAGED PROPERTY.—The (a) IN GENERAL.—Section 512(e) is amended— (1) by inserting ‘‘, flood, or other weather-re- term ‘disaster-damaged property’ means prop- (1) by striking ‘‘described in section lated conditions’’ before the period at the end erty— 1361(c)(7)’’ in paragraph (1) and inserting ‘‘de- thereof; and ‘‘(i) which was located in a disaster area on scribed in section 501(c)(3) and exempt from tax- (2) by inserting ‘‘, FLOOD, OR OTHER WEATH- the date of the determination referred to in sub- ation under section 501(a)’’, and ER-RELATED CONDITIONS’’ after ‘‘DROUGHT’’ in paragraph (C), and (2) by inserting ‘‘CHARITABLE ORGANIZATIONS the subsection heading. ‘‘(ii) which was destroyed or substantially HOLDING STOCK IN’’ after ‘‘APPLICABLE TO’’ in (c) EFFECTIVE DATE.—The amendments made damaged as a result of the disaster occurring in the heading. by this section shall apply to sales and ex- such area. (b) EFFECTIVE DATE.—The amendments made changes after December 31, 1996. ‘‘(D) DISASTER AREA.—The term ‘disaster by this section shall apply to taxable years be- SEC. 722. GAIN OR LOSS FROM SALE OF LIVE- area’ means an area determined by the Presi- ginning after December 31, 1997. STOCK DISREGARDED FOR PUR- dent during 1997 to warrant assistance by the SEC. 717. DIVERSIFICATION IN SECTION 401(k) POSES OF EARNED INCOME CREDIT. Federal Government under the Robert T. Staf- PLAN INVESTMENTS. (a) IN GENERAL.—Section 32(i)(2)(D) (relating ford Disaster Relief and Emergency Assistance (a) LIMITATIONS ON INVESTMENT IN EMPLOYER to disqualified income) is amended by inserting Act.’’. SECURITIES AND EMPLOYER REAL PROPERTY BY ‘‘determined without regard to gain or loss from (c) EFFECTIVE DATE.—The amendments made CASH OR DEFERRED ARRANGEMENTS.—Section the sale of livestock described in section by this section shall apply to payments and dis- 407(d)(3) of the Employee Retirement Income Se- 1231(b)(3),’’ after ‘‘taxable year,’’. tributions after December 31, 1996, with respect curity Act of 1974 (29 U.S.C. 1107(d)(3)) is (b) EFFECTIVE DATE.—The amendment made to disasters occurring after such date. amended by adding at the end the following: by this section shall apply to taxable years be- SEC. 725. ELIMINATION OF 10 PERCENT FLOOR ‘‘(D)(i) The term ‘eligible individual account ginning after December 31, 1995. FOR DISASTER LOSSES. plan’ does not include that portion of an indi- SEC. 723. MORTGAGE FINANCING FOR RESI- (a) GENERAL RULE.—Section 165(h)(2)(A) (re- vidual account plan that consists of elective de- DENCES LOCATED IN DISASTER lating to net casualty loss allowed only to the ferrals (as defined in section 402(g)(3) of the In- AREAS. extent it exceeds 10 percent of adjusted gross in- ternal Revenue Code of 1986) pursuant to a Subsection (k) of section 143 (relating to mort- come) is amended by striking clauses (i) and (ii) qualified cash or deferred arrangement as de- gage revenue bonds; qualified mortgage bond and inserting the following new clauses: fined in section 401(k) of the Internal Revenue and qualified veteran’s mortgage bond) is ‘‘(i) the amount of the personal casualty gains Code of 1986 (and earnings allocable thereto), if amended by adding at the end the following for the taxable year, such elective deferrals (or earnings allocable new paragraph: ‘‘(ii) the amount of the federally declared dis- thereto) are required to be invested in qualifying ‘‘(11) SPECIAL RULES FOR RESIDENCES LOCATED aster losses for the taxable year (or, if lesser, the employer securities or qualifying employer real IN DISASTER AREAS.—In the case of a residence net casualty loss), plus property or both pursuant to the documents and located in an area determined by the President ‘‘(iii) the portion of the net casualty loss instruments governing the plan or at the direc- to warrant assistance from the Federal Govern- which is not deductible under clause (ii) but tion of a person other than the participant on ment under the Disaster Relief and Emergency only to the extent such portion exceeds 10 per- whose behalf such elective deferrals are made to Assistance Act (as in effect on the date of the cent of the adjusted gross income of the indi- the plan (or the participant’s beneficiary). enactment of the Revenue Reconciliation Act of vidual. ‘‘(ii) For purposes of subsection (a), such por- 1997), this section shall be applied with the fol- For purposes of the preceding sentence, the term tion shall be treated as a separate plan. lowing modifications to financing provided with ‘net casualty loss’ means the excess of personal ‘‘(iii) This subparagraph shall not apply to an respect to such residence within 1 year after the casualty losses for the taxable year over per- individual account plan if the fair market value date of the disaster declaration: sonal casualty gains.’’. of the assets of all individual account plans ‘‘(A) Subsection (d) (relating to 3-year require- (b) FEDERALLY DECLARED DISASTER LOSS DE- maintained by the employer equals not more ment) shall not apply. FINED.—Section 165(h)(3) (relating to treatment than 10 percent of the fair market value of the ‘‘(B) Subsections (e) and (f) (relating to pur- of casualty gains and losses) is amended by add- assets of all pension plans maintained by the chase price requirement and income require- ing at the end the following new subparagraph: employer. ment) shall be applied as if such residence were ‘‘(C) FEDERALLY DECLARED DISASTER LOSS.— ‘‘(iv) This subparagraph shall not apply to an a targeted area residence. ‘‘(i) IN GENERAL.—The term ‘federally declared individual account plan that is an employee The preceding sentence shall apply only with disaster loss’ means any personal casualty loss stock ownership plan as defined in section respect to bonds issued after December 31, 1996, attributable to a disaster occurring during 1997 409(a) or 4975(e)(7) of the Internal Revenue and before January 1, 1999.’’. in an area subsequently determined by the President of the United States to warrant assist- Code. SEC. 724. DISTRIBUTIONS FROM INDIVIDUAL RE- ‘‘(v) This subparagraph shall not apply to an TIREMENT ACCOUNTS MAY BE USED ance by the Federal Government under the Rob- individual account plan if not more than 1 per- WITHOUT PENALTY TO REPLACE OR ert T. Stafford Disaster Relief and Emergency cent of an employees eligible compensation de- REPAIR PROPERTY DAMAGED IN Assistance Act. PRESIDENTIALLY DECLARED DIS- ‘‘(ii) DOLLAR LIMITATION.—Such term shall posited to the plan as an elective deferral (as so ASTER AREAS. not include personal casualty losses to the ex- defined) is required to be invested in the quali- (a) IN GENERAL.—Section 72(t)(2) (relating to tent such losses exceed $10,000 for the taxable fying employer securities.’’. exceptions to 10-percent additional tax on early year.’’. (b) EFFECTIVE DATE.— distributions), as amended by sections 203 and (c) CONFORMING AMENDMENT.—The heading (1) IN GENERAL.—The amendments made by 303, is amended by adding at the end the fol- this section shall apply to employer securities for section 165(h)(2) is amended by striking lowing new subparagraph: and employer real property acquired after the ‘‘NET CASUALTY LOSS’’ and inserting ‘‘NET NON- ‘‘(G) DISTRIBUTIONS FOR DISASTER-RELATED beginning of the first plan year beginning after DISASTER CASUALTY LOSS’’. EXPENSES.—Distributions from an individual re- (d) EFFECTIVE DATE.—The amendments made the 90th day after the date of enactment of this tirement plan which are qualified disaster-re- by this section shall apply to losses attributable Act. lated distributions.’’. to disasters occurring after December 31, 1996, (2) SPECIAL RULE FOR CERTAIN ACQUISITIONS.— (b) QUALIFIED DISASTER-RELATED DISTRIBU- including for purposes of determining the por- Employer securities and employer real property TIONS.—Section 72(t), as amended by sections tion of such losses allowable in taxable years acquired pursuant to a binding written contract 203 and 303, is amended by adding at the end ending before such date pursuant to an election to acquire such securities and real property in the following new paragraph: under section 165(i) of the Internal Revenue effect on the date of enactment of this Act and ‘‘(9) QUALIFIED DISASTER-RELATED DISTRIBU- Code of 1986. at all times thereafter, shall be treated as ac- TIONS.—For purposes of paragraph (2)(E)— quired immediately before such date. SEC. 726. ABATEMENT OF INTEREST ON UNDER- ‘‘(A) IN GENERAL.—The term ‘qualified dis- PAYMENTS BY TAXPAYERS IN PRESI- Subtitle C—Revisions Relating to Disasters aster-related distribution’ means any payment DENTIALLY DECLARED DISASTER SEC. 721. TREATMENT OF LIVESTOCK SOLD ON or distribution received by an individual to the AREAS. ACCOUNT OF WEATHER-RELATED extent that the payment or distribution is used (a) IN GENERAL.—Section 6404 (relating to CONDITIONS. by such individual within 60 days of the pay- abatements) is amended by adding at the end (a) DEFERRAL OF INCOME INCLUSION.—Sub- ment or distribution to pay for the repair or re- the following: section (e) of section 451 (relating to special placement of tangible property which is dis- ‘‘(h) ABATEMENT OF INTEREST ON UNDERPAY- rules for proceeds from livestock sold on account aster-damaged property. MENTS BY TAXPAYERS IN PRESIDENTIALLY DE- of drought) is amended— ‘‘(B) LIMITATIONS.— CLARED DISASTER AREAS.— (1) by striking ‘‘drought conditions, and that ‘‘(i) ONLY DISTRIBUTIONS WITHIN 2 YEARS.— ‘‘(1) IN GENERAL.—If the Secretary extends for these drought conditions’’ in paragraph (1) and The term ‘qualified disaster-related distribution’ any period the time for filing income tax returns inserting ‘‘drought, flood, or other weather-re- shall only include any payment or distribution under section 6081 and the time for paying in- lated conditions, and that such conditions’’; which is made during the 2-year period begin- come tax with respect to such returns under sec- and ning on the date of the determination referred to tion 6161 (and waives any penalties relating to (2) by inserting ‘‘, FLOOD, OR OTHER WEATH- in subparagraph (D). the failure to so file or so pay) for any indi- ER-RELATED CONDITIONS’’ after ‘‘DROUGHT’’ in ‘‘(ii) DOLLAR LIMITATION.—Such term shall vidual located in a Presidentially declared dis- the subsection heading. not include distributions to the extent the aster

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00150 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6819 area, the Secretary shall abate for such period (B) a general partner’s net earnings from self- entity that is disregarded for United States Fed- the assessment of any interest prescribed under employment include the partner’s distributive eral income tax purposes) and is treated as fis- section 6601 on such income tax. share; cally nontransparent for purposes of the tax ‘‘(2) PRESIDENTIALLY DECLARED DISASTER (3) the proposed regulations provide gen- laws of the jurisdiction of residence of the tax- AREA.—For purposes of paragraph (1), the term erally— payer.’’. ‘Presidentially declared disaster area’ means, (A) that a partner will not be treated as a lim- (b) EFFECTIVE DATE.—The amendments made with respect to any individual, any area which ited partner if the individual— by this section shall apply upon the date of en- the President has determined during 1997 war- (i) has personal liability for partnership debts, actment of this Act. rants assistance by the Federal Government (ii) has authority to contract on behalf of the SEC. 743. UNITED STATES PROPERTY NOT TO IN- under the Robert T. Stafford Disaster Relief and partnership, or CLUDE CERTAIN ASSETS ACQUIRED Emergency Assistance Act. (iii) participates in the partnership’s trade or BY DEALERS IN ORDINARY COURSE OF TRADE OR BUSINESS. ‘‘(3) INDIVIDUAL.—For purposes of this sub- business for more than 500 hours during the tax- (a) IN GENERAL.—Section 956(c)(2) is amended section, the term ‘individual’ shall not include able year; by striking ‘‘and’’ at the end of subparagraph any estate or trust.’’. (B) that an individual meeting any one of (H), by striking the period at the end of sub- (b) EFFECTIVE DATE.—The amendment made these three criteria will be treated as a general paragraph (I) and inserting a semicolon, and by by this section shall apply to disasters declared partner, and net earnings from self-employment adding at the end the following new subpara- after December 31, 1996. will include the partner’s distributive share of graphs: partnership income and loss, resulting in sub- Subtitle D—Provisions Relating to Small ‘‘(J) deposits of cash or securities made or re- Businesses stantial tax liability because there is a 15.3 per- ceived on commercial terms in the ordinary cent tax on self-employment income below course of a United States or foreign person’s SEC. 731. WAIVER OF PENALTY THROUGH JUNE $65,400 in 1997 and a 2.9 percent hospital insur- 30, 1998, ON SMALL BUSINESSES business as a dealer in securities or in commod- ance tax on self-employment income above that FAILING TO MAKE ELECTRONIC ities, but only to the extent such deposits are FUND TRANSFERS OF TAXES. amount; made or received as collateral or margin for (i) No penalty shall be imposed under the Inter- (4) certain types of entities, such as limited li- a securities loan, notional principal contract, nal Revenue Code of 1986 solely by reason of a ability companies and limited liability partner- options contract, forward contract, or futures failure by a person to use the electronic fund ships, were not widely used at the time the contract, or (ii) any other financial transaction transfer system established under section 6302(h) present rule relating to limited partners was en- in which the Secretary determines that it is cus- of such Code if— acted, and that the proposed regulations at- tomary to post collateral or margin; and (1) such person is a member of a class of tax- tempt to address owners of such entities; ‘‘(K) an obligation of a United States person payers first required to use such system on or (5) the Senate is concerned that the proposed to the extent the principal amount of the obliga- after July 1, 1997, and change in the treatment of individuals who are tion does not exceed the fair market value of (2) such failure occurs before July 1, 1998. limited partners under applicable State law ex- readily marketable securities sold or purchased ceeds the regulatory authority of the Treasury SEC. 732. MINIMUM TAX NOT TO APPLY TO FARM- pursuant to a sale and repurchase agreement or ERS’ INSTALLMENT SALES. Department and would effectively change the otherwise posted or received as collateral for the law administratively without congressional ac- (a) IN GENERAL.—Subsection (a) of section 56 obligation in the ordinary course of its business tion; and is amended by striking paragraph (6) (relating by a United States or foreign person which is a (6) the proposed regulations address and raise to treatment of installment sales). dealer in securities or commodities. significant policy issues and the proposed defi- (b) EFFECTIVE DATES.— For purposes of subparagraphs (J) and (K), the nition of a limited partner may have a substan- (1) IN GENERAL.—The amendment made by term ‘dealer in securities’ has the meaning given tial impact on the tax liability of certain indi- this section shall apply to dispositions in tax- such term by section 475(c)(1), and the term viduals and may also affect individuals’ entitle- able years beginning after December 31, 1987. ‘dealer in commodities’ means a futures commis- ment to social security benefits. (2) SPECIAL RULE FOR 1987.—In the case of tax- sion merchant or any person which would be a (b) SENSE OF SENATE.—It is the sense of the able years beginning in 1987, the last sentence of dealer in securities if securities under section Senate that— section 56(a)(6) of the Internal Revenue Code of 475(c)(2) included commodities, evidences of an (1) the Department of the Treasury and the 1986 (as in effect for such taxable years) shall be interest in commodities, and derivative instru- Internal Revenue Service should withdraw Pro- applied by inserting ‘‘or in the case of a tax- ments in respect of commodities (other than any posed Regulation 1.1402(a)–2 which imposes a payer using the cash receipts and disbursements activity gain or loss from which is described in tax on limited partners; and method of accounting, any disposition described section 1256(a)(3)).’’. (2) Congress, not the Department of the Treas- in section 453C(e)(1)(B)(ii)’’ after ‘‘section (b) EFFECTIVE DATE.—The amendments made ury or the Internal Revenue Service, should de- 453C(e)(4)’’. by this section shall apply to taxable years of termine the tax law governing self-employment foreign corporations beginning after December SEC. 733. INCREASE IN DEDUCTION FOR HEALTH income for limited partners. INSURANCE COSTS OF SELF-EM- 31, 1997, and to taxable years of United States PLOYED INDIVIDUALS. Subtitle E—Foreign Provisions shareholders with or within which such taxable (a) IN GENERAL.—The table contained in sec- PART I—GENERAL PROVISIONS years of foreign corporations end. SEC. 744. EXEMPTION FOR ACTIVE FINANCING IN- tion 162(l)(1)(B) is amended to read as follows: SEC. 741. TREATMENT OF COMPUTER SOFTWARE COME. AS FSC EXPORT PROPERTY. ‘‘For taxable years begin- The applicable percentage (a) EXEMPTION FROM FOREIGN PERSONAL ning in calendar is— (a) IN GENERAL.—Subparagraph (B) of section HOLDING COMPANY INCOME.—Subsection (c) of year— 927(a)(2) (relating to property excluded from eli- section 954 is amended by adding at the end the 1997 ...... 50 gibility as FSC export property) is amended by following new paragraph: 1998 ...... 50 inserting ‘‘, and other than computer software ‘‘(4) CERTAIN INCOME DERIVED IN ACTIVE CON- 1999 through 2001 ...... 60 (whether or not patented)’’ before ‘‘, for com- DUCT OF TRADE OR BUSINESS.— 2002 ...... 60 mercial or home use’’. ‘‘(A) IN GENERAL.—For purposes of paragraph 2003 ...... 70 (b) EFFECTIVE DATE.—The amendment made (1), foreign personal holding company income 2004 ...... 80 by subsection (a) shall apply to gross receipts shall not include income which is— 2005 ...... 85 attributable to periods after December 31, 1997, ‘‘(i) derived in or incident to the active con- 2006 ...... 90 in taxable years ending after such date. duct by a controlled foreign corporation of a 2007 ...... 100.’’. SEC. 742. DENIAL OF TREATY BENEFITS FOR CER- banking, financing, or similar business, but only (b) EFFECTIVE DATE.—The amendment made TAIN PAYMENTS THROUGH HYBRID if the corporation is predominantly engaged in by this section shall apply to taxable years be- ENTITIES. the active conduct of such business, ginning after December 31, 1996. (a) IN GENERAL.—Section 894 (relating to in- ‘‘(ii) received from a person other than a re- SEC. 734. SENSE OF THE SENATE WITH RESPECT come affected by treaty) is amended by inserting lated person (within the meaning of subsection TO SELF-EMPLOYMENT TAX OF LIM- after subsection (b) the following new sub- (d)(3)) and derived from the investments made ITED PARTNERS. section: by a qualifying insurance company of its un- (a) FINDINGS.—The Senate finds that— ‘‘(c) DENIAL OF TREATY BENEFITS FOR CER- earned premiums or reserves ordinary and nec- (1) the Department of the Treasury issued TAIN PAYMENTS THROUGH HYBRID ENTITIES.— essary for the proper conduct of its insurance Proposed Regulation 1.1402(a)–2 in January 1997 The Secretary shall prescribe such regulations business, or relating to the definition of a limited partner for as may be necessary or appropriate to determine ‘‘(iii) received from a person other than a re- self-employment tax purposes under section the extent to which a taxpayer shall be denied lated person (within the meaning of subsection 1402(a)(13) of the Internal Revenue Code; benefits under any income tax treaty of the (d)(3)) and derived from investments made by a (2) since 1977, section 1402(a)(13) of such Code United States with respect to any payment re- qualifying insurance company of an amount of has provided that— ceived by, or income attributable to any activi- its assets equal to— (A) a limited partner’s net earnings from self- ties of, an entity organized in any jurisdiction ‘‘(I) in the case of contracts regulated in the employment include only guaranteed payments (including the United States) that is treated as country in which sold as property, casualty, or made to the individual for services actually ren- a partnership or is otherwise treated as fiscally health insurance contracts, one-third of its pre- dered and do not include a limited partner’s dis- transparent for United States Federal income miums earned on insurance contracts during the tributive share of the income or loss of the part- tax purposes (including a common investment taxable year (as defined in section 832(b)(4)), nership, and trust under section 584, a grantor trust, or an and

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00151 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6820 CONGRESSIONAL RECORD — SENATE June 27, 1997 ‘‘(II) in the case of contracts regulated in the able years of United States shareholders with or of the corporation and the corporation is a con- country in which sold as life insurance or annu- within which such taxable years of foreign cor- trolled foreign corporation. ity contracts, the greater of 10 percent of the re- porations end. ‘‘(3) NEW HOLDING PERIOD IF QUALIFIED POR- serves described in clause (ii) or $10,000,000, SEC. 745. TREATMENT OF NONRESIDENT ALIENS TION ENDS.— which are not directly or indirectly attributable ENGAGED IN INTERNATIONAL ‘‘(A) IN GENERAL.—Except as provided in sub- to the insurance or reinsurance of risks of per- TRANSPORTATION SERVICES. paragraph (B), if the qualified portion of a sons who are related persons (within the mean- (a) SOURCING RULES.— shareholder’s holding period with respect to any ing of subsection (d)(3)). (1) IN GENERAL.—Section 861(a)(3) is amended stock ends after December 31, 1997, solely for ‘‘(B) APPLICABLE PRINCIPLES.— by adding at the end the following new flush purposes of this part, the shareholder’s holding ‘‘(i) BANKING, ETC. INCOME.—The Secretary sentence: period with respect to such stock shall be treat- shall prescribe regulations which interpret sub- ‘‘In addition, compensation for labor or services ed as beginning as of the first day following paragraph (A)(i) in accordance with the appli- performed in the United States shall not be such period. cable principles of section 904(d)(2)(C), except deemed to be income from sources within the ‘‘(B) EXCEPTION.—Subparagraph (A) shall not that in prescribing such regulations, the Sec- United States if the labor or services are per- apply if such stock was, with respect to such retary shall include income from all leases in in- formed by a nonresident alien individual in con- shareholder, stock in a passive foreign invest- come from a banking, financing, or similar busi- nection with the individual’s temporary pres- ment company at any time before the qualified ness. ence in the United States as a regular member of portion of the shareholder’s holding period with ‘‘(ii) LOOK-THRU RULES.—The Secretary shall the crew of a foreign vessel engaged in transpor- respect to such stock and no election under sec- prescribe regulations consistent with the prin- tation between the United States and a foreign tion 1298(b)(1) is made.’’. ciples of section 904(d)(3) which provide that country or a possession of the United States.’’. SEC. 752. ELECTION OF MARK TO MARKET FOR dividends, interest, income equivalent to inter- (2) TRANSPORTATION INCOME.—Subparagraph MARKETABLE STOCK IN PASSIVE est, rents, or royalties received or accrued from (B) of section 863(c)(2) is amended by adding at FOREIGN INVESTMENT COMPANY. a related person (within the meaning of sub- the end the following flush sentence: (a) IN GENERAL.—Part VI of subchapter P of section (d)(3)) shall be subject to look-thru ‘‘In the case of transportation income derived chapter 1 is amended by redesignating subpart C treatment for purposes of this section. from, or in connection with, a vessel, this sub- as subpart D, by redesignating sections 1296 and ‘‘(iii) SPECIAL RULE FOR BANKING OR SECURI- paragraph shall only apply if the taxpayer is a 1297 as sections 1297 and 1298, respectively, and TIES BUSINESS.—In the case of a corporation de- citizen or resident alien.’’. by inserting after subpart B the following new scribed in subparagraph (C)(ii), the regulations (3) CONFORMING AMENDMENT.—Section subpart: 410(b)(3)(C) is amended by inserting ‘‘without under clauses (i) and (ii) shall be consistent ‘‘Subpart C—Election of Mark to Market For regard to the last sentence thereof’’ after ‘‘sec- with the applicable principles of section 1296(b) Marketable Stock (as in effect on the day before the enactment of tion 861(a)(3)’’. the Revenue Reconciliation Act of 1997). (b) EXCLUSION FROM INCOME.—Section 872(b) ‘‘Sec. 1296. Election of mark to market for mar- ‘‘(C) PREDOMINANTLY ENGAGED.—For purposes is amended by redesignating paragraphs (6) and ketable stock. of subparagraph (A)(i), a corporation shall be (7) as paragraphs (7) and (8), respectively, and ‘‘SEC. 1296. ELECTION OF MARK TO MARKET FOR deemed predominantly engaged in the active by inserting after paragraph (5) the following MARKETABLE STOCK. conduct of a banking, financing, or similar busi- new paragraph: ‘‘(a) GENERAL RULE.—In the case of market- ness only if— ‘‘(6) PERSONAL SERVICES OF CREW MEMBERS.— able stock in a passive foreign investment com- ‘‘(i) more than 70 percent of its gross income Income derived by an individual resident of a pany which is owned (or treated under sub- from such business is derived from transactions foreign country from personal services as a reg- section (g) as owned) by a United States person with unrelated persons (as defined in subsection ular crew member on board a vessel to which at the close of any taxable year of such person, (d)(3)), and more than 20 percent of its gross in- paragraph (1) applies.’’. at the election of such person— come from that business is derived from trans- (c) PRESENCE IN UNITED STATES.— ‘‘(1) If the fair market value of such stock as actions with unrelated persons (as so defined) (1) IN GENERAL.—Paragraph (7) of section of the close of such taxable year exceeds its ad- located within the country under the laws of 7701(b) is amended by adding at the end the fol- justed basis, such United States person shall in- which the controlled foreign corporation is cre- lowing new subparagraph: clude in gross income for such taxable year an ated or organized, or ‘‘(D) CREW MEMBERS TEMPORARILY PRESENT.— amount equal to the amount of such excess. ‘‘(ii) the corporation is— If an individual is temporarily present in the ‘‘(2) If the adjusted basis of such stock exceeds ‘‘(I) predominantly engaged in the active con- United States as a regular member of the crew of the fair market value of such stock as of the duct of a banking or securities business (within a foreign vessel engaged in transportation be- close of such taxable year, such United States the meaning of section 1296(b), as in effect be- tween the United States and a foreign country person shall be allowed a deduction for such fore the enactment of the Revenue Reconcili- or a possession of the United States, such indi- taxable year equal to the lesser of— ation Act of 1997), or vidual shall not be treated as present in the ‘‘(A) the amount of such excess, or ‘‘(II) a qualified bank affiliate or a qualified United States on any such day.’’. ‘‘(B) the unreversed inclusions with respect to securities affiliate for purposes of section 1296(b) (2) CONFORMING AMENDMENT.—Subparagraph such stock. (as so in effect). (A) of section 7701(b)(7) is amended by striking ‘‘(b) BASIS ADJUSTMENTS.— ‘‘(D) QUALIFYING INSURANCE COMPANY.—For ‘‘or (C)’’ and inserting ‘‘, (C), or (D)’’. ‘‘(1) IN GENERAL.—The adjusted basis of stock purposes of clauses (ii) and (iii) of subpara- (d) EFFECTIVE DATES.— in a passive foreign investment company— graph (A), the term ‘qualifying insurance com- (1) IN GENERAL.—The amendments made by ‘‘(A) shall be increased by the amount in- pany’ means any entity which is subject to reg- this section shall apply to remuneration for cluded in the gross income of the United States ulation as an insurance company under the services performed in taxable years beginning person under subsection (a)(1) with respect to laws of its country of incorporation and which after December 31, 1997. such stock, and realizes at least 50 percent of its gross income (2) PRESENCE.—The amendment made by sub- ‘‘(B) shall be decreased by the amount al- (other than gross income derived from invest- section (c) shall apply to taxable years begin- lowed as a deduction to the United States per- ments) from premiums written on risks situated ning after December 31, 1997. son under subsection (a)(2) with respect to such within its country of incorporation. PART II—TREATMENT OF PASSIVE stock. ‘‘(E) APPLICATION.—This paragraph shall FOREIGN INVESTMENT COMPANIES ‘‘(2) SPECIAL RULE FOR STOCK CONSTRUC- TIVELY OWNED.—In the case of stock in a pas- apply to taxable years of foreign corporations SEC. 751. UNITED STATES SHAREHOLDERS OF beginning after December 31, 1997, and before CONTROLLED FOREIGN CORPORA- sive foreign investment company which the January 1, 1999, and to taxable years of United TIONS NOT SUBJECT TO PFIC INCLU- United States person is treated as owning under States shareholders with or within which such SION. subsection (g)— taxable years of foreign corporations end.’’. Section 1296 is amended by adding at the end ‘‘(A) the adjustments under paragraph (1) (b) EXEMPTION FROM FOREIGN BASE COMPANY the following new subsection: shall apply to such stock in the hands of the SERVICES INCOME.—Paragraph (2) of section ‘‘(e) EXCEPTION FOR UNITED STATES SHARE- person actually holding such stock but only for 954(e) is amended by striking ‘‘or’’ at the end of HOLDERS OF CONTROLLED FOREIGN CORPORA- purposes of determining the subsequent treat- subparagraph (A), by striking the period at the TIONS.— ment under this chapter of the United States end of subparagraph (B) and inserting ‘‘, or’’, ‘‘(1) IN GENERAL.—For purposes of this part, a person with respect to such stock, and and by adding at the end the following: corporation shall not be treated with respect to ‘‘(B) similar adjustments shall be made to the ‘‘(C) in the case of taxable years described in a shareholder as a passive foreign investment adjusted basis of the property by reason of subsection (c)(4)(E), the active conduct by a company during the qualified portion of such which the United States person is treated as controlled foreign corporation of a banking, fi- shareholder’s holding period with respect to owning such stock. nancing, insurance, or similar business, but stock in such corporation. ‘‘(c) CHARACTER AND SOURCE RULES.— only if the corporation is predominantly en- ‘‘(2) QUALIFIED PORTION.—For purposes of ‘‘(1) ORDINARY TREATMENT.— gaged in the active conduct of that business this subsection, the term ‘qualified portion’ ‘‘(A) GAIN.—Any amount included in gross in- (within the meaning of subsection (c)(4)(C)).’’. means the portion of the shareholder’s holding come under subsection (a)(1), and any gain on (c) EFFECTIVE DATE.—The amendments made period— the sale or other disposition of marketable stock by this section shall apply to taxable years of ‘‘(A) which is after December 31, 1997, and in a passive foreign investment company (with foreign corporations beginning after December ‘‘(B) during which the shareholder is a United respect to which an election under this section 31, 1997, and before January 1, 1999, and to tax- States shareholder (as defined in section 951(b)) is in effect), shall be treated as ordinary income.

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‘‘(B) LOSS.—Any— duction allocable to foreign personal holding during, or amount included in gross income ‘‘(i) amount allowed as a deduction under company income so described. under this section for, such first taxable year, subsection (a)(2), and ‘‘(g) STOCK OWNED THROUGH CERTAIN FOR- but ‘‘(ii) loss on the sale or other disposition of EIGN ENTITIES.—Except as provided in regula- ‘‘(ii) such regulated investment company’s tax marketable stock in a passive foreign investment tions— under this chapter for such first taxable year company (with respect to which an election ‘‘(1) IN GENERAL.—For purposes of this sec- shall be increased by the aggregate amount of under this section is in effect) to the extent that tion, stock owned, directly or indirectly, by or interest which would have been determined the amount of such loss does not exceed the un- for a foreign partnership or foreign trust or for- under section 1291(c)(3) if section 1291 were ap- reversed inclusions with respect to such stock, eign estate shall be considered as being owned plied without regard to this subparagraph. shall be treated as an ordinary loss. The amount proportionately by its partners or beneficiaries. Clause (ii) shall not apply if for the preceding so treated shall be treated as a deduction allow- Stock considered to be owned by a person by taxable year the company elected to mark to able in computing adjusted gross income. reason of the application of the preceding sen- market the stock held by such company as of ‘‘(2) SOURCE.—The source of any amount in- tence shall, for purposes of applying such sen- the last day of such preceding taxable year. cluded in gross income under subsection (a)(1) tence, be treated as actually owned by such per- ‘‘(B) DISALLOWANCE OF DEDUCTION.—No de- (or allowed as a deduction under subsection son. duction shall be allowed to any regulated in- (a)(2)) shall be determined in the same manner ‘‘(2) TREATMENT OF CERTAIN DISPOSITIONS.— vestment company for the increase in tax under as if such amount were gain or loss (as the case In any case in which a United States person is subparagraph (A)(ii). may be) from the sale of stock in the passive for- treated as owning stock in a passive foreign in- ‘‘(k) ELECTION.—This section shall apply to eign investment company. vestment company by reason of paragraph (1)— marketable stock in a passive foreign investment ‘‘(d) UNREVERSED INCLUSIONS.—For purposes ‘‘(A) any disposition by the United States per- company which is held by a United States per- of this section, the term ‘unreversed inclusions’ son or by any other person which results in the son only if such person elects to apply this sec- means, with respect to any stock in a passive United States person being treated as no longer tion with respect to such stock. Such an election foreign investment company, the excess (if any) owning such stock, and shall apply to the taxable year for which made of— ‘‘(B) any disposition by the person owning and all subsequent taxable years unless— ‘‘(1) the amount included in gross income of such stock, ‘‘(1) such stock ceases to be marketable stock, shall be treated as a disposition by the United the taxpayer under subsection (a)(1) with re- or spect to such stock for prior taxable years, over States person of the stock in the passive foreign ‘‘(2) the Secretary consents to the revocation ‘‘(2) the amount allowed as a deduction under investment company. of such election. ‘‘(h) COORDINATION WITH SECTION 851(b).— subsection (a)(2) with respect to such stock for ‘‘(l) TRANSITION RULE FOR INDIVIDUALS BE- For purposes of paragraphs (2) and (3) of sec- prior taxable years. COMING SUBJECT TO UNITED STATES TAX.—If tion 851(b), any amount included in gross in- The amount referred to in paragraph (1) shall any individual becomes a United States person come under subsection (a) shall be treated as a include any amount which would have been in- in a taxable year beginning after December 31, dividend. cluded in gross income under subsection (a)(1) 1997, solely for purposes of this section, the ad- with respect to such stock for any prior taxable ‘‘(i) STOCK ACQUIRED FROM A DECEDENT.—In the case of stock of a passive foreign investment justed basis (before adjustments under sub- year but for section 1291. section (b)) of any marketable stock in a passive ‘‘(e) MARKETABLE STOCK.—For purposes of company which is acquired by bequest, devise, foreign investment company owned by such in- this section— or inheritance (or by the decedent’s estate) and dividual on the first day of such taxable year ‘‘(1) IN GENERAL.—The term ‘marketable stock’ with respect to which an election under this sec- means— tion was in effect as of the date of the dece- shall be treated as being the greater of its fair ‘‘(A) any stock which is regularly traded on— dent’s death, notwithstanding section 1014, the market value on such first day or its adjusted ‘‘(i) a national securities exchange which is basis of such stock in the hands of the person so basis on such first day.’’. (b) COORDINATION WITH INTEREST CHARGE, registered with the Securities and Exchange acquiring it shall be the adjusted basis of such ETC.— Commission or the national market system es- stock in the hands of the decedent immediately (1) Paragraph (1) of section 1291(d) is amend- tablished pursuant to section 11A of the Securi- before his death (or, if lesser, the basis which ed by adding at the end the following new flush ties and Exchange Act of 1934, or would have been determined under section 1014 sentence: ‘‘(ii) any exchange or other market which the without regard to this subsection). ‘‘Except as provided in section 1296(j), this sec- Secretary determines has rules adequate to ‘‘(j) COORDINATION WITH SECTION 1291 FOR tion also shall not apply if an election under carry out the purposes of this part, FIRST YEAR OF ELECTION.— ‘‘(B) to the extent provided in regulations, ‘‘(1) TAXPAYERS OTHER THAN REGULATED IN- section 1296(k) is in effect for the taxpayer’s tax- stock in any foreign corporation which is com- VESTMENT COMPANIES.— able year.’’. parable to a regulated investment company and ‘‘(A) IN GENERAL.—If the taxpayer elects the (2) The subsection heading for subsection (d) which offers for sale or has outstanding any application of this section with respect to any of section 1291 is amended by striking ‘‘SUBPART stock of which it is the issuer and which is re- marketable stock in a corporation after the be- B’’ and inserting ‘‘SUBPARTS B AND C’’. deemable at its net asset value, and ginning of the taxpayer’s holding period in such (3) Subparagraph (A) of section 1291(a)(3) is ‘‘(C) to the extent provided in regulations, stock, and if the requirements of subparagraph amended to read as follows: any option on stock described in subparagraph (B) are not satisfied, section 1291 shall apply ‘‘(A) HOLDING PERIOD.—The taxpayer’s hold- (A) or (B). to— ing period shall be determined under section ‘‘(2) SPECIAL RULE FOR REGULATED INVEST- ‘‘(i) any distributions with respect to, or dis- 1223; except that— MENT COMPANIES.—In the case of any regulated position of, such stock in the first taxable year ‘‘(i) for purposes of applying this section to an investment company which is offering for sale or of the taxpayer for which such election is made, excess distribution, such holding period shall be has outstanding any stock of which it is the and treated as ending on the date of such distribu- issuer and which is redeemable at its net asset ‘‘(ii) any amount which, but for section 1291, tion, and value, all stock in a passive foreign investment would have been included in gross income under ‘‘(ii) if section 1296 applied to such stock with company which it owns directly or indirectly subsection (a) with respect to such stock for respect to the taxpayer for any prior taxable shall be treated as marketable stock for purposes such taxable year in the same manner as if such year, such holding period shall be treated as be- of this section. Except as provided in regula- amount were gain on the disposition of such ginning on the first day of the first taxable year tions, similar treatment as marketable stock stock. beginning after the last taxable year for which shall apply in the case of any other regulated ‘‘(B) REQUIREMENTS.—The requirements of section 1296 so applied.’’. investment company which publishes net asset this subparagraph are met if, with respect to (c) TREATMENT OF MARK-TO-MARKET GAIN valuations at least annually. each of such corporation’s taxable years for UNDER SECTION 4982.— ‘‘(f) TREATMENT OF CONTROLLED FOREIGN which such corporation was a passive foreign (1) Subsection (e) of section 4982 is amended CORPORATIONS WHICH ARE SHAREHOLDERS IN investment company and which begin after De- by adding at the end thereof the following new PASSIVE FOREIGN INVESTMENT COMPANIES.—In cember 31, 1986, and included any portion of the paragraph: the case of a foreign corporation which is a con- taxpayer’s holding period in such stock, such ‘‘(6) TREATMENT OF GAIN RECOGNIZED UNDER trolled foreign corporation and which owns (or corporation was treated as a qualified electing SECTION 1296.—For purposes of determining a is treated under subsection (g) as owning) stock fund under this part with respect to the tax- regulated investment company’s ordinary in- in a passive foreign investment company— payer. come— ‘‘(1) this section (other than subsection (c)(2)) ‘‘(2) SPECIAL RULES FOR REGULATED INVEST- ‘‘(A) notwithstanding paragraph (1)(C), sec- shall apply to such foreign corporation in the MENT COMPANIES.— tion 1296 shall be applied as if such company’s same manner as if such corporation were a ‘‘(A) IN GENERAL.—If a regulated investment taxable year ended on October 31, and United States person, and company elects the application of this section ‘‘(B) any ordinary gain or loss from an actual ‘‘(2) for purposes of subpart F of part III of with respect to any marketable stock in a cor- disposition of stock in a passive foreign invest- subchapter N— poration after the beginning of the taxpayer’s ment company during the portion of the cal- ‘‘(A) any amount included in gross income holding period in such stock, then, with respect endar year after October 31 shall be taken into under subsection (a)(1) shall be treated as for- to such company’s first taxable year for which account in determining such regulated invest- eign personal holding company income described such company elects the application of this sec- ment company’s ordinary income for the fol- in section 954(c)(1)(A), and tion with respect to such stock— lowing calendar year. ‘‘(B) any amount allowed as a deduction ‘‘(i) section 1291 shall not apply to such stock In the case of a company making an election under subsection (a)(2) shall be treated as a de- with respect to any distribution or disposition under paragraph (4), the preceding sentence

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00153 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6822 CONGRESSIONAL RECORD — SENATE June 27, 1997 shall be applied by substituting the last day of porarily assigned out-of-State) which seeks such SEC. 763. EXCLUSION FROM UNRELATED BUSI- the company’s taxable year for October 31.’’. insurance and meets other reasonable require- NESS TAXABLE INCOME FOR CER- (2) Subsection (b) of section 852 is amended by ments relating thereto, TAIN SPONSORSHIP PAYMENTS. adding at the end thereof the following new ‘‘(iii)(I) the State makes a financial commit- (a) IN GENERAL.—Section 513 (relating to un- paragraph: ment with respect to such organization either by related trade or business income) is amended by ‘‘(10) SPECIAL RULE FOR CERTAIN LOSSES ON extending the full faith and credit of the State adding at the end the following new subsection: STOCK IN PASSIVE FOREIGN INVESTMENT COM- to debt of such organization or by providing the ‘‘(i) TREATMENT OF CERTAIN SPONSORSHIP PANY.—To the extent provided in regulations, initial operating capital of such organization PAYMENTS.— the taxable income of a regulated investment and (II) in the case of periods after the date of ‘‘(1) IN GENERAL.—The term ‘unrelated trade company (other than a company to which an enactment of this subparagraph, the assets of or business’ does not include the activity of so- election under section 4982(e)(4) applies) shall be such organization revert to the State upon dis- liciting and receiving qualified sponsorship pay- computed without regard to any net reduction solution, and ments. in the value of any stock of a passive foreign in- ‘‘(iv) the majority of the board of directors or ‘‘(2) QUALIFIED SPONSORSHIP PAYMENTS.—For vestment company with respect to which an oversight body of such organization are ap- purposes of this subsection— election under section 1296(k) is in effect occur- pointed by the chief executive officer or other ‘‘(A) IN GENERAL.—The term ‘qualified spon- ring after October 31 of the taxable year, and executive branch official of the State, by the sorship payment’ means any payment made by any such reduction shall be treated as occurring State legislature, or by both.’’. any person engaged in a trade or business with on the first day of the following taxable year.’’. (b) CONFORMING AMENDMENTS.—Section respect to which there is no arrangement or ex- (3) Subsection (c) of section 852 is amended by 501(c)(27) of such Code is amended by inserting pectation that such person will receive any sub- inserting after ‘‘October 31 of such year’’ the ‘‘(A)’’ after ‘‘(27)’’, by redesignating subpara- stantial return benefit other than the use or ac- following: ‘‘, without regard to any net reduc- graphs (A), (B), and (C) as clauses (i), (ii), and knowledgement of the name or logo (or product tion in the value of any stock of a passive for- (iii), respectively, and by redesignating clauses lines) of such person’s trade or business in con- eign investment company with respect to which (i) and (ii) of subparagraphs (B) and (C) (before nection with the activities of the organization an election under section 1296(k) is in effect oc- redesignation) as subclauses (I) and (II), respec- that receives such payment. Such a use or ac- curring after October 31 of such year,’’. tively. knowledgement does not include advertising (d) CONFORMING AMENDMENTS.— (c) EFFECTIVE DATE.—The amendments made such person’s products or services (including (1) Sections 532(b)(4) and 542(c)(10) are each by this section shall apply to taxable years be- messages containing qualitative or comparative amended by striking ‘‘section 1296’’ and insert- ginning after December 31, 1997. language, price information or other indications ing ‘‘section 1297’’. SEC. 762. ELECTION TO CONTINUE EXCEPTION of savings or value, an endorsement, or an in- (2) Subsection (f) of section 551 is amended by FROM TREATMENT OF PUBLICLY ducement to purchase, sell, or use such products striking ‘‘section 1297(b)(5)’’ and inserting ‘‘sec- TRADED PARTNERSHIPS AS COR- or services). tion 1298(b)(5)’’. PORATIONS. ‘‘(B) LIMITATIONS.— (3) Subsections (a)(1) and (d) of section 1293 (a) IN GENERAL.—Section 7704 is amended by ‘‘(i) CONTINGENT PAYMENTS.—The term ‘quali- are each amended by striking ‘‘section 1297(a)’’ adding at the end thereof the following new fied sponsorship payment’ does not include any and inserting ‘‘section 1298(a)’’. subsection: payment if the amount of such payment is con- (4) Paragraph (3) of section 1297(b), as redes- ‘‘(g) EXCEPTION FOR EXISTING PUBLICLY tingent upon the level of attendance at one or ignated by subsection (a), is hereby repealed. TRADED PARTNERSHIPS.— more events, broadcast ratings, or other factors (5) The table of sections for subpart D of part ‘‘(1) IN GENERAL.—Subsection (a) shall not indicating the degree of public exposure to one VI of subchapter P of chapter 1, as redesignated apply to an existing publicly traded partnership or more events. by subsection (a), is amended to read as follows: which elects the application of this subsection ‘‘(ii) ACKNOWLEDGEMENTS OR ADVERTISING IN and consents to the application of the tax im- PERIODICALS.—The term ‘qualified sponsorship ‘‘Sec. 1297. Passive foreign investment company. posed by paragraph (3). payment’ does not include any payment which ‘‘Sec. 1298. Special rules.’’. ‘‘(2) EXISTING PUBLICLY TRADED PARTNER- entitles the payor to an acknowledgement or ad- (6) The table of subparts for part VI of sub- SHIP.—For purposes of this section, the term ‘ex- vertising in regularly scheduled and printed ma- chapter P of chapter 1 is amended by striking isting publicly traded partnership’ means any terial published by or on behalf of the payee or- the last item and inserting the following new publicly traded partnership to which subsection ganization that is not related to and primarily items: (a) does not apply as of the date of the enact- distributed in connection with a specific event ment of this paragraph (other than by reason of conducted by the payee organization. ‘‘Subpart C. Election of mark to market for mar- subsection (c)(1)). ‘‘(3) ALLOCATION OF PORTIONS OF SINGLE PAY- ketable stock. ‘‘(3) ADDITIONAL TAX ON ELECTING PUBLICLY MENT.—For purposes of this subsection, to the ‘‘Subpart D. General provisions.’’. TRADED PARTNERSHIPS.— extent that a portion of a payment would (if (e) CLARIFICATION OF GAIN RECOGNITION ‘‘(A) IMPOSITION OF TAX.—There is hereby im- made as a separate payment) be a qualified ELECTION.—The last sentence of section posed for each taxable year on the income of sponsorship payment, such portion of such pay- 1298(b)(1), as so redesignated, is amended by in- every electing publicly traded partnership a tax ment and the other portion of such payment serting ‘‘(determined without regard to the pre- equal to 3.5 percent of the gross income for such shall be treated as separate payments.’’. ceding sentence)’’ after ‘‘investment company’’. taxable year from the active conduct of trades (b) EFFECTIVE DATE.—The amendment made SEC. 753. EFFECTIVE DATE. and businesses by the partnership. by this section shall apply to payments solicited ‘‘(B) ELECTING PUBLICLY TRADED PARTNER- The amendments made by this part shall or received after December 31, 1997. SHIP.—For purposes of this paragraph, the term apply to— SEC. 764. ASSOCIATIONS OF HOLDERS OF ‘electing publicly traded partnership’ means any (1) taxable years of United States persons be- TIMESHARE INTERESTS TO BE partnership for which the consent under para- TAXED LIKE OTHER HOMEOWNERS ginning after December 31, 1997, and graph (1) is in effect. ASSOCIATIONS. (2) taxable years of foreign corporations end- ‘‘(C) ADJUSTMENTS IN THE CASE OF TIERED (a) TIMESHARE ASSOCIATIONS INCLUDED AS ing with or within such taxable years of United PARTNERSHIPS.—For purposes of this paragraph, HOMEOWNER ASSOCIATIONS.— States persons. if the income of the partnership includes its dis- (1) IN GENERAL.—Paragraph (1) of section Subtitle F—Other Provisions tributive share of income from another partner- 528(c) (defining homeowners association) is SEC. 761. TAX-EXEMPT STATUS FOR CERTAIN ship for any taxable year, the gross income re- amended— STATE WORKER’S COMPENSATION ferred to in subparagraph (A) shall include the (A) by striking ‘‘or a residential real estate ACT COMPANIES. gross income of such other partnership from the management association’’ and inserting ‘‘, a res- (a) IN GENERAL.—Section 501(c)(27) (relating active conduct of trades and businesses of such idential real estate management association, or to membership organizations under workmen’s other partnership (in lieu of such distributive a timeshare association’’ in the material pre- compensation acts) is amended by adding at the share). A similar rule shall apply in the case of ceding subparagraph (A), end the following: lower-tiered partnerships. (B) by striking ‘‘or’’ at the end of clause (i) of ‘‘(B) Any organization (including a mutual ‘‘(D) TREATMENT OF TAX.—For purposes of subparagraph (B), by striking the period at the insurance company) if— this title, the tax imposed by this paragraph end of clause (ii) of subparagraph (B) and in- ‘‘(i) such organization is created by State law shall be treated as imposed by chapter 1 other serting ‘‘, or’’, and by adding at the end of sub- and is organized and operated under State law than for purposes of determining the amount of paragraph (B) the following new clause: exclusively to— any credit allowable under chapter 1. ‘‘(iii) owners of timeshare rights to use, or ‘‘(I) provide workmen’s compensation insur- ‘‘(4) ELECTION.—An election and consent timeshare ownership interests in, association ance which is required by State law or with re- under this subsection shall apply to the taxable property in the case of a timeshare associa- spect to which State law provides significant year for which made and all subsequent taxable tion,’’, and disincentives if such insurance is not purchased years unless revoked by the partnership. Such (C) by inserting ‘‘and, in the case of a by an employer, and revocation may be made without the consent of timeshare association, for activities provided to ‘‘(II) provide related coverage which is inci- the Secretary, but, once so revoked, may not be or on behalf of members of the association’’ be- dental to workmen’s compensation insurance, reinstated.’’. fore the comma at the end of subparagraph (C). ‘‘(ii) such organization must provide work- (b) EFFECTIVE DATE.—The amendment made (2) TIMESHARE ASSOCIATION DEFINED.—Sub- men’s compensation insurance to any employer by this section shall apply to taxable years be- section (c) of section 528 is amended by redesig- in the State (for employees in the State or tem- ginning after December 31, 1997. nating paragraph (4) as paragraph (5) and by

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00154 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6823 inserting after paragraph (3) the following new of expenses paid or incurred with respect to shall be treated as a qualified contaminated site paragraph: services performed by an official as an employee with respect to expenditures paid or incurred ‘‘(4) TIMESHARE ASSOCIATION.—The term of a State or a political subdivision thereof in a during any taxable year only if the taxpayer re- ‘timeshare association’ means any organization position compensated in whole or in part on a ceives a statement from the appropriate agency (other than a condominium management asso- fee basis.’’. of the State in which such area is located that ciation) meeting the requirement of subpara- (b) EFFECTIVE DATE.—The amendment made such area meets the requirements of clauses (ii) graph (A) of paragraph (1) if any member there- by this section shall apply to expenses paid or and (iii) of subparagraph (A). of holds a timeshare right to use, or a timeshare incurred in taxable years beginning after De- ‘‘(C) APPROPRIATE STATE AGENCY.— For pur- ownership interest in, real property constituting cember 31, 1997. poses of subparagraph (B), the appropriate association property.’’. SEC. 767. INCREASE IN STANDARD MILEAGE RATE agency of a State is the agency designated by (b) EXEMPT FUNCTION INCOME.—Paragraph EXPENSE DEDUCTION FOR CHARI- the Administrator of the Environmental Protec- (3) of section 528(d) is amended by striking ‘‘or’’ TABLE USE OF PASSENGER AUTO- tion Agency for purposes of this section. If no at the end of subparagraph (A), by striking the MOBILE. agency of a State is designated under the pre- period at the end of subparagraph (B) and in- (a) IN GENERAL.—Section 170(i) (relating to ceding sentence, the appropriate agency for serting ‘‘, or’’, and by adding at the end the fol- standard mileage rate for use of passenger auto- such State shall be the Environmental Protec- lowing new subparagraph: mobile) is amended to read as follows: tion Agency. ‘‘(C) owners of timeshare rights to use, or ‘‘(i) STANDARD MILEAGE RATE FOR USE OF ‘‘(2) TARGETED AREA.— timeshare ownership interests in, real property PASSENGER AUTOMOBILE.— ‘‘(A) IN GENERAL.—The term ‘targeted area’ in the case of a timeshare association.’’. ‘‘(1) GENERAL RULE.—Except as provided in means— (c) ASSOCIATION PROPERTY.—Paragraph (5) of paragraph (2), for purposes of computing the de- ‘‘(i) any empowerment zone or enterprise com- section 528(c), as redesignated by paragraph (2), duction under this section for use of a passenger munity (and any supplemental zone designated is amended by adding at the end the following automobile, the standard mileage rate shall be on December 21, 1994), and new flush sentence: 15 cents per mile. ‘‘(ii) any site announced before February 1, ‘‘In the case of a timeshare association, such ‘‘(2) INDEXING AFTER 1998.—In the case of tax- 1997, as being included as a brownfields pilot term includes property in which the timeshare able years beginning in a calendar year after project of the Environmental Protection Agency. association, or members of the association, have 1998, the 15-cent amount under paragraph (1) ‘‘(B) NATIONAL PRIORITIES LISTED SITES NOT rights arising out of recorded easements, cov- shall be increased by an amount equal to the INCLUDED.—Such term shall not include any site enants, or other recorded instruments to use product of such amount and the cost-of-living which is on, or proposed for, the national prior- property related to the timeshare project.’’. adjustment determined under section 1(f)(3) for ities list under section 105(a)(8)(B) of the Com- (d) RATE OF TAX.—Subsection (b) of section such calendar year, except that subparagraph prehensive Environmental Response, Compensa- 528 (relating to certain homeowners associa- (B) thereof shall be applied by substituting tion, and Liability Act of 1980 (as in effect on tions) is amended by inserting before the period ‘1997’ for ‘1992’. If the amount as increased the date of the enactment of this section). ‘‘(32 percent of such income in the case of a under the preceding sentence is not a multiple of ‘‘(C) CERTAIN RULES TO APPLY.—For purposes timeshare association)’’. 1 cent, such amount shall be rounded to the of this paragraph the rules of sections 1392(b)(4) (e) EFFECTIVE DATE.—The amendments made next lowest multiple of 1 cent.’’. and 1393(a)(9) shall apply. by this section shall apply to taxable years be- (b) EFFECTIVE DATE.—The amendment made ‘‘(d) HAZARDOUS SUBSTANCE.—For purposes of ginning after December 31, 1996. by subsection (a) shall apply to taxable years this section— SEC. 765. INCREASED DEDUCTIBILITY OF BUSI- beginning after December 31, 1997. ‘‘(1) IN GENERAL.—The term ‘hazardous sub- NESS MEAL EXPENSES FOR INDIVID- SEC. 768. EXPENSING OF ENVIRONMENTAL REME- stance’ means— UALS SUBJECT TO FEDERAL HOURS DIATION COSTS. ‘‘(A) any substance which is a hazardous sub- OF SERVICE AND SEAFOOD PROC- (a) IN GENERAL.—Part VI of subchapter B of stance as defined in section 101(14) of the Com- ESSORS. chapter 1 is amended by adding at the end the prehensive Environmental Response, Compensa- (a) IN GENERAL.—Section 274(n) (relating to following new section: only 50 percent of meal and entertainment ex- tion, and Liability Act of 1980, and ‘‘(B) any substance which is designated as a penses allowed as deduction) is amended by ‘‘SEC. 198. EXPENSING OF ENVIRONMENTAL RE- MEDIATION COSTS. hazardous substance under section 102 of such adding at the end the following new paragraph: ‘‘(a) IN GENERAL.—A taxpayer may elect to Act. ‘‘(3) SPECIAL RULE FOR INDIVIDUALS SUBJECT treat any qualified environmental remediation ‘‘(2) EXCEPTION.—Such term shall not include TO FEDERAL HOURS OF SERVICE AND SEAFOOD expenditure which is paid or incurred by the any substance with respect to which a removal PROCESSORS.— ‘‘(A) IN GENERAL.—In the case of any ex- taxpayer as an expense which is not chargeable or remedial action is not permitted under section penses for food or beverages consumed— to capital account. Any expenditure which is so 104 of such Act by reason of subsection (a)(3) ‘‘(i) while away from home (within the mean- treated shall be allowed as a deduction for the thereof. ing of section 162(a)(2)) by an individual during, taxable year in which it is paid or incurred. ‘‘(e) DEDUCTION RECAPTURED AS ORDINARY IN- or incident to, the period of duty subject to the ‘‘(b) QUALIFIED ENVIRONMENTAL REMEDIATION COME ON SALE, ETC.—Solely for purposes of sec- hours of service limitations of the Department of EXPENDITURE.—For purposes of this section— tion 1245, in the case of property to which a Transportation, or ‘‘(1) IN GENERAL.—The term ‘qualified envi- qualified environmental remediation expendi- ‘‘(ii) by an individual in connection with the ronmental remediation expenditure’ means any ture would have been capitalized but for this individual’s employment at a seafood processing expenditure— section— facility located in the United States, North of 53 ‘‘(A) which is otherwise chargeable to capital ‘‘(1) the deduction allowed by this section for degrees North latitude, account, and such expenditure shall be treated as a deduction paragraph (1) shall be applied by substituting ‘‘(B) which is paid or incurred in connection for depreciation, and ‘the applicable percentage’ for ‘50 percent’. with the abatement or control of hazardous sub- ‘‘(2) such property (if not otherwise section ‘‘(B) APPLICABLE PERCENTAGE.—For purposes stances at a qualified contaminated site. 1245 property) shall be treated as section 1245 of this paragraph, the term ‘applicable percent- ‘‘(2) SPECIAL RULE FOR EXPENDITURES FOR DE- property solely for purposes of applying section age’ means the percentage determined under the PRECIABLE PROPERTY.—Such term shall not in- 1245 to such deduction. following table: clude any expenditure for the acquisition of ‘‘(f) COORDINATION WITH OTHER PROVI- property of a character subject to the allowance ‘‘For taxable years be- The applicable SIONS.—Sections 280B and 468 shall not apply to for depreciation which is used in connection ginning amounts which are treated as expenses under in calendar year— percentage is— with the abatement or control of hazardous sub- this section. 98 or 1999 stances at a qualified contaminated site; except ‘‘(g) REGULATIONS.—The Secretary shall pre- 55 that the portion of the allowance under section scribe such regulations as may be necessary or 2000 or 2001 ...... 60 167 for such property which is otherwise allo- appropriate to carry out the purposes of this 2002 or 2003 ...... 65 cated to such site shall be treated as a qualified section.’’. 2004 or 2005 ...... 70 environmental remediation expenditure. (b) CLERICAL AMENDMENT.—The table of sec- 2006 or 2007 ...... 75 ‘‘(c) QUALIFIED CONTAMINATED SITE.—For tions for part VI of subchapter B of chapter 1 is 2008 or thereafter ...... 80.’’. purposes of this section— amended by adding at the end the following (b) EFFECTIVE DATE.—The amendment made ‘‘(1) QUALIFIED CONTAMINATED SITE.— new item: by subsection (a) shall apply to taxable years ‘‘(A) IN GENERAL.—The term ‘qualified con- ‘‘Sec. 198. Expensing of environmental remedi- beginning after December 31, 1997. taminated site’ means any area— ation costs.’’. SEC. 766. DEDUCTION IN COMPUTING ADJUSTED ‘‘(i) which is held by the taxpayer for use in GROSS INCOME FOR EXPENSES IN a trade or business or for the production of in- (c) EFFECTIVE DATE.—The amendments made CONNECTION WITH SERVICE PER- come, or which is property described in section by this section shall apply to expenditures paid FORMED BY CERTAIN OFFICIALS. 1221(1) in the hands of the taxpayer, or incurred after the date of the enactment of (a) IN GENERAL.—Paragraph (2) of section ‘‘(ii) which is within a targeted area, and this Act, in taxable years ending after such 62(a) (defining adjusted gross income) is amend- ‘‘(iii) at or on which there has been a release date. ed by adding at the end the following new sub- (or threat of release) or disposal of any haz- SEC. 769. COMBINED EMPLOYMENT TAX REPORT- paragraph: ardous substance. ING DEMONSTRATION PROJECT. ‘‘(C) CERTAIN EXPENSES OF OFFICIALS.—The ‘‘(B) TAXPAYER MUST RECEIVE STATEMENT (a) IN GENERAL.—The Secretary of the Treas- deductions allowed by section 162 which consist FROM STATE ENVIRONMENTAL AGENCY.—An area ury shall provide for a demonstration project to

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00155 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6824 CONGRESSIONAL RECORD — SENATE June 27, 1997 assess the feasibility and desirability of expand- (A) in paragraph (2), by inserting ‘‘subject to SEC. 777. MODIFICATION TO ELIGIBILITY CRI- ing combined Federal and State tax reporting. subsection (o),’’ before ‘‘traveling expenses’’, TERIA FOR DESIGNATION OF FU- (b) DESCRIPTION OF DEMONSTRATION and TURE ENTERPRISE ZONES IN ALAS- KA OR HAWAII. PROJECT.—The demonstration project under (B) by striking the last sentence, and subsection (a) shall be— (2) by redesignating subsection (o) as sub- Section 1392 (relating to eligibility criteria) is (1) carried out between the Internal Revenue section (p) and by inserting after subsection (n) amended by adding at the end the following Service and the State of Montana for a period the following new subsection: new subsection: ending with the date which is 5 years after the ‘‘(o) EXPENSES WHILE AWAY FROM HOME.— ‘‘(d) SPECIAL ELIGIBILITY FOR NOMINATED date of the enactment of this Act, For purposes of subsection (a)(2)— AREAS LOCATED IN ALASKA OR HAWAII.—A nom- (2) limited to the reporting of employment ‘‘(1) IN GENERAL.—A taxpayer shall not be inated area in Alaska or Hawaii shall be treated taxes, and treated as being temporarily away from home as meeting the requirements of paragraphs (2), (3) limited to the disclosure of the taxpayer during any period of employment if such period (3), and (4) of subsection (a) if for each census identity (as defined in section 6103(b)(6) of such exceeds 1 year. tract or block group within such area 20 percent Code) and the signature of the taxpayer. ‘‘(2) SPECIAL RULES FOR CONSTRUCTION or more of the families have income which is 50 Such identity and signature may be disclosed PROJECTS.— percent or less of the statewide median family notwithstanding section 6103 of the Internal ‘‘(A) 18-MONTH PERIOD FOR CERTAIN income (as determined under section 143).’’. Revenue Code of 1986. PROJECTS.—If— SEC. 778. CLARIFICATION OF DE MINIMIS FRINGE BENEFIT RULES TO NO-CHARGE EM- SEC. 770. INCREASED MAXIMUM CAPITAL EX- ‘‘(i) the employment described in paragraph PLOYEE MEALS. PENDITURE LIMIT FOR QUALIFIED (1) is in connection with an identifiable con- SMALL ISSUE BONDS. struction project with a completion date that is (a) IN GENERAL.—Paragraph (2) of section (a) IN GENERAL.—Subparagraph (A) of section reasonably expected to occur within 5 years 132(e) (defining de minimis fringe) is amended 144(a)(4) (relating to $10,000,000 limit in certain after the starting date of such project, and by adding at the end the following new sen- cases) is amended by adding at the end the fol- ‘‘(ii) the taxpayer continues to maintain a tence: ‘‘For purposes of subparagraph (B), an lowing new flush sentence: household as his principal residence and incur employee entitled under section 119 to exclude ‘‘Capital expenditures which would (but for this duplicative expenses at such residence, the value of a meal provided at such facility sentence) be taken into account under clause paragraph (1) shall be applied by substituting shall be treated as having paid an amount for (ii) shall be taken into account only to the ex- ‘18 months’ for ‘1 year’. such meal equal to the direct operating costs of tent such expenditures exceed $10,000,000.’’. ‘‘(B) 2-YEAR PERIOD FOR PROJECTS IN AREAS the facility attributable to such meal.’’. (b) EFFECTIVE DATE.—The amendment made LACKING FAMILY SUPPORT INFRASTRUCTURE.—If (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to— the employment described in paragraph (1) is in by this section shall apply to taxable years be- (1) obligations issued after December 31, 1997, connection with an identifiable construction ginning after December 31, 1997. and project described in subparagraph (A) which is SEC. 779. CLARIFICATION OF STANDARD TO BE (2) capital expenditures made after such date located in an area which lacks adequate hous- USED IN DETERMINING EMPLOY- with respect to obligations issued on or before ing, educational, medical, or other facilities nec- MENT TAX STATUS OF SECURITIES such date. essary for families, paragraph (1) shall be ap- BROKERS. (a) IN GENERAL.—In determining for purposes SEC. 771. EXTENSION OF CREDIT FOR ELEC- plied by substituting ‘2 years’ for ‘1 year’.’’. TRICITY PRODUCED FROM CERTAIN (b) EFFECTIVE DATE.—The amendments made of chapter 1 of the Internal Revenue Code of RENEWABLE RESOURCES. by this section shall apply to costs paid or in- 1986 whether a registered representative of a se- Paragraph (3) of section 45(c) is amended by curred in taxable years beginning after Decem- curities broker-dealer is an employee (as defined striking ‘‘July 1, 1999’’ and inserting ‘‘July 1, ber 31, 1997. in section 3121(d) of the Internal Revenue Code 2001’’. SEC. 776. CHARITABLE CONTRIBUTION DEDUC- of 1986), no weight shall be given to instructions from the service recipient which are imposed SEC. 772. TAXABLE INCOME LIMIT ON PERCENT- TION FOR CERTAIN EXPENSES IN- AGE DEPLETION NOT TO APPLY TO CURRED IN SUPPORT OF NATIVE only in compliance with investor protection MARGINAL PRODUCTION. ALASKAN SUBSISTENCE WHALING. standards imposed by the Federal Government, (a) IN GENERAL.—Paragraph (6) of section (a) IN GENERAL.—Section 170 (relating to any State government, or a governing body pur- 613A(c) is amended by adding at the end the fol- charitable, etc., contributions and gifts) is suant to a delegation by a Federal or State lowing new subparagraph: amended by redesignating subsection (m) as sub- agency. ‘‘(H) EXEMPTION FROM TAXABLE INCOME LIMIT section (n) and by inserting after subsection (l) (b) EFFECTIVE DATE.—Subsection (a) shall WHERE REFERENCE PRICE BELOW $14.—The second the following new subsection: apply to services performed after December 31, sentence of subsection (a) of section 613 shall ‘‘(m) EXPENSES PAID BY CERTAIN WHALING 1997. not apply to so much of the allowance for deple- CAPTAINS IN SUPPORT OF NATIVE ALASKAN SUB- SEC. 780. SENSE OF THE SENATE REGARDING RE- tion as is determined under subparagraph (A) SISTENCE WHALING.— FORM OF THE INTERNAL REVENUE for any taxable year beginning in a calendar ‘‘(1) IN GENERAL.—In the case of an individual CODE OF 1986. year for which the reference price (as defined in who is recognized by the Alaska Eskimo Whal- (a) FINDINGS.—The Senate finds that— section 29(d)(2)(C)) is below $14.’’. ing Commission as a whaling captain charged (1) the Internal Revenue Code of 1986 (‘‘tax (b) EFFECTIVE DATE.—The amendment made with the responsibility of maintaining and car- code’’) is unnecessarily complex, having grown by subsection (a) shall apply to taxable years rying out sanctioned whaling activities and who from 14 pages at its inception to 3,458 pages by beginning after December 31, 1997. engages in such activities during the taxable 1995; (2) this complexity resulted in taxpayers SEC. 773. CLARIFICATION OF TREATMENT OF year, the amount described in paragraph (2) (to CERTAIN RECEIVABLES PURCHASED the extent such amount does not exceed $7,500 spending about 5,300,000,000 hours and BY COOPERATIVE HOSPITAL SERV- for the taxable year) shall be treated for pur- $225,000,000,000 trying to comply with the tax ICE ORGANIZATIONS. poses of this section as a charitable contribu- code in 1996; (a) IN GENERAL.—Subparagraph (A) of section tion. (3) the current congressional budgetary proc- 501(e)(1) is amended by inserting ‘‘(including ‘‘(2) AMOUNT DESCRIBED.—The amount de- ess is weighted too heavily toward tax increases, the purchase of patron accounts receivable on a scribed in this paragraph is the aggregate of the as evidenced by the fact that since 1954 there recourse basis)’’ after ‘‘billing and collection’’. reasonable and necessary whaling expenses paid have been 27 major bills enacted that increased (b) EFFECTIVE DATE.—The amendment made by the taxpayer during the taxable year in car- Federal income taxes and only 9 bills that de- by subsection (a) shall apply to taxable years rying out sanctioned whaling activities. For creased Federal income taxes, 3 of which were beginning after December 31, 1996. purposes of the preceding sentence, the term de minimis decreases; SEC. 774. EXCEPTION FOR BONDS GUARANTEED ‘whaling expenses’ includes expenses for— (4) the tax burden on working families has BY FEDERAL HOME LOAN BANK ‘‘(A) the acquisition and maintenance of reached an unsustainable level, as evidenced by BOARD FROM RESTRICTION ON FED- whaling boats, weapons, and gear used in sanc- the fact that in 1948 the average American fam- ERAL GUARANTEE OF BONDS. tioned whaling activities, ily with children paid only 4.3 percent of its in- (a) IN GENERAL.—Clause (i) of section ‘‘(B) the supplying of food for the crew and come to the Federal Government in direct taxes 149(b)(3)(A) is amended by striking ‘‘or the Gov- other provisions for carrying out such activities, and today the average family pays about 25 per- ernment National Mortgage Association’’ and and cent; inserting ‘‘the Government National Mortgage ‘‘(C) storage and distribution of the catch (5) the tax code unfairly penalizes saving and Association, or the Federal Home Loan Bank from such activities. investment by double taxing these activities Board’’. ‘‘(3) SANCTIONED WHALING ACTIVITIES.—For while only taxing income used for consumption (b) EFFECTIVE DATE.—The amendment made purposes of this subsection, the term ‘sanctioned once, and as a result the United States has one by subsection (a) shall apply to bonds issued whaling activities’ means subsistence bowhead of the lowest saving rates, at 4.7 percent, in the after the date of the enactment of this Act. whale hunting activities conducted pursuant to industrialized world; SEC. 775. INCREASED PERIOD FOR DEDUCTION the management plan of the Alaska Eskimo (6) the tax code stifles economic growth by dis- FOR TRAVELING EXPENSES WHILE Whaling Commission.’’. couraging work and capital formation through WORKING AWAY FROM HOME. (b) EFFECTIVE DATE.—The amendment made excessively high tax rates; (a) IN GENERAL.—Section 162 (relating to by subsection (a) shall apply to taxable years (7) Congress and the President have found it trade or business expenses) is amended— ending after the date of the enactment of this necessary, on 2 separate occasions, to enact (1) in subsection (a)— Act. laws to protect taxpayers from the abuses of the

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Internal Revenue Service and a third bill has (as such term is defined in section 1204 of the (b) EFFECTIVE DATE.—The amendment made been introduced in the one hundred fifth Con- Omnibus Crime Control and Safe Streets Act of by subsection (a) shall apply to years beginning gress; and 1968) killed in the line of duty— after December 31, 1996. (8) the complexity of the tax code has in- ‘‘(1) if such annuity is provided under a gov- SEC. 787. DEBATE ON A RECONCILIATION BILL. creased the number of Internal Revenue Service ernmental plan which meets the requirements of Section 310(e)(2) of the Congressional Budget employees responsible for administering the tax section 401(1) to the spouse (or a former spouse) Act of 1974 is amended to read as follows: laws to 110,000 and this costs the taxpayers of the public safety officer or to a child of such ‘‘(2) For purposes of consideration of any rec- $9,800,000,000 each year. officer; and onciliation bill reported under subsection (b)— (b) SENSE OF THE SENATE.—It is the sense of ‘‘(2) to the extent such annuity is attributable ‘‘(A) debate, and all amendments thereto and the Senate that— to such officer’s service as a public safety offi- debatable motions and appeals in connection (1) the Internal Revenue Code of 1986 needs cer. therewith, shall be limited to not more than 30 broad-based reform; and ‘‘(b) EXCEPTIONS.— hours; (2) the President should submit to Congress a ‘‘(1) IN GENERAL.—Subsection (a) shall not ‘‘(B) time on the bill may only be yielded back comprehensive proposal to reform the Internal apply with respect to the death of any public by consent and a motion to further limit debate Revenue Code of 1986. safety officer if— shall be debatable with debate limited to 1⁄2 hour SEC. 781. SENSE OF THE SENATE REGARDING TAX ‘‘(A) the death was caused by the intentional equally divided; TREATMENT OF STOCK OPTIONS. misconduct of the officer or by such officer’s in- ‘‘(C) time on amendments shall be limited to 30 (a) FINDINGS.—The Senate finds that— tention to bring about such officer’s death; minutes to be equally divided in the usual form (1) currently businesses can deduct the value ‘‘(B) the officer was voluntarily intoxicated and on any second degree amendment or motion of stock options as a business expense on their (as defined in section 1204 of the Omnibus Crime to 20 minutes to be equally divided in the usual income tax returns, even though the stock op- Control and Safe Streets Act of 1968) at the time form, except that after the 15th hour of consid- tions are not treated as an expense on the books of death; or eration of a bill, time on all amendments or mo- of those same businesses; and ‘‘(C) the officer was performing such officer’s tions shall be limited to 20 minutes; (2) stock options are the only form of com- duties in a grossly negligent manner at the time ‘‘(D) no first degree amendment may be pro- pensation that is treated in this way. of death. posed after the 15th hour of consideration of a ‘‘(2) EXCEPTION FOR BENEFITS PAID TO CER- (b) SENSE OF THE SENATE.—It is the sense of bill unless it has been submitted to the Journal TAIN INDIVIDUALS.—Subsection (a) shall not the Senate that the Committee on Finance of the Clerk prior to the expiration of the 15th hour; apply to any payment to an individual whose Senate should hold hearings on the tax treat- ‘‘(E) no second degree amendment may be pro- actions were a substantial contributing factor to ment of stock options. posed after the 20th hour of consideration of a the death of the officer.’’. SEC. 782. SENSE OF THE SENATE ON ESTATE bill unless it has been submitted to the Journal (b) EFFECTIVE DATE.—The amendments made TAXES. Clerk prior to the expiration of the 20th hour; by this subsection shall apply to amounts re- (a) FINDINGS.—The Senate finds that where- and ceived in taxable years beginning after Decem- as— ‘‘(F) after no more than thirty hours of con- ber 31, 1996, with respect to individuals dying (1) the Federal estate tax punishes hard work- sideration of the measure, the Senate shall pro- after such date. ing small business owners and discourages sav- ceed, without any further debate on any ques- ings and growth; SEC. 785. TREATMENT OF CERTAIN DISABILITY tion, to vote on the final disposition thereof to (2) the Federal estate tax imposes an unfair BENEFITS RECEIVED BY FORMER PO- the exclusion of all amendments not then actu- LICE OFFICERS OR FIREFIGHTERS. economic burden on small businesses and re- ally pending before the Senate at that time and (a) GENERAL RULE.—For purposes of deter- duces their ability to survive and compete with to the exclusion of all motions, except a motion mining whether any amount to which this sec- large corporations; and to table, or to reconsider and one quorum call tion applies is excludable from gross income (3) a reduction in Federal estate taxes for fam- on demand to establish the presence of a under section 104(a)(1) of the Internal Revenue ily-owned farms and enterprises will help to pre- quorum (and motions required to establish a Code of 1986, the following conditions shall be vent the liquidation of small businesses that quorum) immediately before the final vote be- treated as personal injuries or sickness in the strengthen American communities by providing gins.’’. jobs and security. course of employment: (1) Heart disease. SEC. 788. EXCLUSION FROM INCOME OF SEVER- (b) SENSE OF THE SENATE.—It is the sense of (2) Hypertension. ANCE PAYMENT AMOUNTS; TIME PE- the Senate that— RIODS FOR CARRYBACK AND (b) AMOUNTS TO WHICH SECTION APPLIES.— (1) the estate tax relief provided in this bill is CARRYFORWARD OF UNUSED CRED- This section shall apply to any amount— an important step that will enable more family- ITS. (1) which is payable— owned farms and small businesses to survive (a) EXCLUSION FROM INCOME OF SEVERANCE (A) to an individual (or to the survivors of an and continue to provide economic security and PAYMENT AMOUNTS.—Part III of subchapter B individual) who was a full-time employee of any job creation in American communities; and of chapter 1 (relating to items specifically ex- police department or fire department which is (2) Congress should eliminate the Federal es- cluded from gross income) is amended by redes- organized and operated by a State, by any polit- tate tax liability for family-owned businesses by ignating section 138 as section 139 and by insert- ical subdivision thereof, or by any agency or in- the end of 2002 on a deficit-neutral basis. ing after section 137 the following new section: strumentality of a State or political subdivision SEC. 783. QUALIFIED GAMES OF CHANCE. thereof, and ‘‘SEC. 138. SEVERANCE PAYMENTS. (a) IN GENERAL.—The term ‘‘unrelated trade (B) under a State law (as in existence on July ‘‘(a) IN GENERAL.—In the case of an indi- or business’’ does not include the activity of 1, 1992) which irrebuttably presumed that heart vidual, gross income shall not include any qualified games of chance. disease and hypertension are work-related ill- qualified severance payment. (b) QUALIFIED GAMES OF CHANCE.—For pur- nesses but only for employees separating from ‘‘(b) LIMITATION.—The amount to which the poses of this subsection, the term ‘‘qualified service before such date; and exclusion under subsection (a) applies shall not games of chance’’ means any game of chance, (2) which is received in calendar year 1989, exceed $2,000 with respect to any separation other than provided in subsection (f), conducted 1990, or 1991. from employment. by an organization if— For purposes of the preceding sentence, the term ‘‘(c) QUALIFIED SEVERANCE PAYMENT.—For (1) such organization is licensed pursuant to ‘‘State’’ includes the District of Columbia. purposes of this section— State law to conduct such game; (c) WAIVER OF STATUTE OF LIMITATIONS.—If, ‘‘(1) IN GENERAL.—The term ‘qualified sever- (2) only organizations which are organized as on the date of the enactment of this Act (or at ance payment’ means any payment received by nonprofit corporations or are exempt from tax any time within the 1-year period beginning on an individual if— under section 501(a) may be so licensed to con- such date of enactment) credit or refund of any ‘‘(A) such payment was paid by such individ- duct such game within the State; and overpayment of tax resulting from the provisions ual’s employer on account of such individual’s (3) the conduct of such game does not violate of this section is barred by any law or rule of separation from employment, State or local law. law, credit or refund of such overpayment shall, ‘‘(B) such separation was in connection with SEC. 784. SURVIVOR BENEFITS FOR PUBLIC SAFE- nevertheless, be allowed or made if claim there- a reduction in the work force of the employer, TY OFFICERS KILLED IN THE LINE fore is filed before the date 1 year after such and OF DUTY. date of enactment. ‘‘(C) such individual does not attain employ- ment within 6 months of the date of such sepa- (a) IN GENERAL.—Part III of subchapter B of SEC. 786. REMOVAL OF DOLLAR LIMITATION ON chapter 1 (relating to items specifically excluded BENEFIT PAYMENTS FROM A DE- ration in which the amount of compensation is from gross income) is amended by redesignating FINED BENEFIT PLAN MAINTAINED equal to or greater than 95 percent of the section 138 as section 139 and by inserting after FOR CERTAIN POLICE AND FIRE EM- amount of compensation for the employment section 137 the following new section: PLOYEES. that is related to such payment. ‘‘SEC. 138. SURVIVOR BENEFITS ATTRIBUTABLE (a) IN GENERAL.—Subparagraph (G) of section ‘‘(2) LIMITATION.—Such term shall not include TO SERVICE BY A PUBLIC SAFETY 415(b)(2) of the Internal Revenue Code of 1986 is any payment received by an individual if the OFFICER WHO IS KILLED IN THE amended by striking ‘‘participant—’’ and all aggregate payments received with respect to the LINE OF DUTY. that follows and inserting ‘‘participant, sub- separation from employment exceed $125,000.’’. ‘‘(a) IN GENERAL.—Gross income shall not in- paragraphs (C) and (D) of this paragraph and (b) TIME PERIODS FOR CARRYBACK AND clude any amount paid as a survivor annuity on subparagraph (B) of paragraph (1) shall not CARRYFORWARD OF UNUSED CREDITS.—Section account of the death of a public safety officer apply.’’. 39(a) (relating to unused credits) is amended—

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00157 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6826 CONGRESSIONAL RECORD — SENATE June 27, 1997 (1) in paragraph (1), by striking ‘‘3’’ each (1) Congress has not provided a genuine tax TITLE VIII—REVENUES place it appears and inserting ‘‘1’’ and by strik- cut for America’s middle-class families since Subtitle A—Financial Products ing ‘‘15’’ each place it appears and inserting 1981; SEC. 801. CONSTRUCTIVE SALES TREATMENT FOR ‘‘20’’; and (2) President Clinton promised middle-class APPRECIATED FINANCIAL POSI- (2) in paragraph (2), by striking ‘‘18’’ each tax cuts in 1992; TIONS. place it appears and inserting ‘‘22’’ and by (3) President Clinton raised taxes by (a) IN GENERAL.—Part IV of subchapter P of striking ‘‘17’’ each place it appears and insert- $240,000,000,000 in 1993; chapter 1 is amended by adding at the end the ing ‘‘21’’. (4) President Clinton vetoed middle-class tax following new section: (c) CLERICAL AMENDMENT.—The table of sec- cuts in 1995; tions for part III of subchapter B of chapter 1 ‘‘SEC. 1259. CONSTRUCTIVE SALES TREATMENT (5) the middle-class American worker had to FOR APPRECIATED FINANCIAL POSI- is amended by striking the item relating to sec- TIONS. tion 138 and inserting the following new items: work until May 9 in order to earn enough money to pay all Federal, State, and local taxes ‘‘(a) IN GENERAL.—If there is a constructive ‘‘Sec. 138. Severance payments. in 1997; sale of an appreciated financial position— ‘‘Sec. 139. Cross references to other Acts.’’. (6) the Joint Economic Committee reports that ‘‘(1) the taxpayer shall recognize gain as if (d) EFFECTIVE DATES.— real total Government taxes per household in such position were sold, assigned, or otherwise (1) IN GENERAL.—The amendments made by 1994 totaled $18,600; terminated at its fair market value on the date subsections (a) and (c) shall apply to taxable (7) more than 70 percent of the tax cuts in of such constructive sale (and any gain shall be years beginning after December 31, 1997, and be- both the House of Representatives and the Sen- taken into account for the taxable year which fore July 1, 2002. ate tax relief bills will go to Americans earning includes such date), and (2) SUBSECTION (b).—The amendments made by less than $75,000 annually; ‘‘(2) for purposes of applying this title for pe- subsection (b) shall apply to the carryback and (8) the Joint Economic Committee estimates riods after the constructive sale— carryforward of credits arising in taxable years ‘‘(A) proper adjustment shall be made in the that a family of 4 earning $30,000 will receive 53 beginning after December 31, 1997. amount of any gain or loss subsequently real- percent of the tax relief under the reconciliation ized with respect to such position for any gain SEC. 789. CURRENT REFUNDINGS OF CERTAIN bill; TAX-EXEMPT BONDS. taken into account by reason of paragraph (1), (9) the earned income tax credit was already (a) IN GENERAL.—Subsection (c) of section and 10632 of the Revenue Act of 1987 (relating to expanded in President Clinton’s 1993 tax bill; ‘‘(B) the holding period of such position shall bonds issued by Indian tribal governments) is (10) the fiscal year 1998 budget resolution does be determined as if such position were originally amended by adding at the end the following not make the $500-per-child tax credit refund- acquired on the date of such constructive sale. new sentence: ‘‘The amendments made by this able; and ‘‘(b) APPRECIATED FINANCIAL POSITION.—For section shall not apply to any obligation issued (11) those who receive the earned income tax purposes of this section— after such date if— credit do not pay Federal income taxes but re- ‘‘(1) IN GENERAL.—Except as provided in para- ‘‘(1) such obligation is issued (or is part of a ceive a substantial cash transfer from the Fed- graph (2), the term ‘appreciated financial posi- series of obligations issued) to refund an obliga- eral Government in the form of refund checks tion’ means any position with respect to any tion issued on or before such date, above and beyond income tax rebates. stock, debt instrument, or partnership interest if ‘‘(2) the average maturity date of the issue of (b) SENSE OF THE SENATE.—It is the sense of there would be gain were such position sold, as- which the refunding obligation is a part is not the Senate that America’s middle-class tax- signed, or otherwise terminated at its fair mar- later than the average maturity date of the obli- payers shoulder the biggest tax burden and that ket value. gations to be refunded by such issue, only those who pay Federal income taxes should ‘‘(2) EXCEPTIONS.—The term ‘appreciated fi- ‘‘(3) the amount of the refunding obligation benefit from the Federal income tax cuts con- nancial position’ shall not include— does not exceed the outstanding amount of the tained in the Revenue Reconciliation Act of ‘‘(A) any position with respect to debt if— refunded obligation, and 1997. ‘‘(i) the interest payments (or other similar ‘‘(4) the net proceeds of the refunding obliga- amounts) with respect to such debt meet the re- tion are used to redeem the refunded obligation SEC. 792. AVERAGING OF FARM INCOME OVER 3 YEARS. quirements of clause (i) of section 860G(a)(1)(B), not later than 90 days after the date of the (a) IN GENERAL.—Subpart B of part II of sub- and issuance of the refunding obligation. ‘‘(ii) such debt is not convertible (directly or For purposes of paragraph (2), average maturity chapter E of chapter 1 of the Internal Revenue Code of 1986 (relating to taxable year for which indirectly) into stock of the issuer or any related shall be determined in accordance with section person, and 147(b)(2)(A) of the Internal Revenue Code of items of gross income included) is amended by adding the following new section: ‘‘(B) any position which is marked to market 1986.’’. under any provision of this title or the regula- (b) EFFECTIVE DATE.—The amendment made ‘‘SEC. 460A. AVERAGING OF FARM INCOME. tions thereunder. by subsection (a) shall apply to refunding obli- ‘‘(a) IN GENERAL.—At the election of a tax- ‘‘(3) POSITION.—The term ‘position’ means an gations issued after the date of the enactment of payer engaged in a farming business, the tax interest, including a futures or forward con- this Act. imposed by section 1 for such taxable year shall tract, short sale, or option. SEC. 790. SPECIAL RULE FOR THRIFTS WHICH BE- be equal to the sum of— ‘‘(c) CONSTRUCTIVE SALE.—For purposes of COME LARGE BANKS. ‘‘(1) a tax computed under such section on this section— (a) IN GENERAL.—Section 593(g)(2) (defining taxable income reduced by elected farm income, ‘‘(1) IN GENERAL.—A taxpayer shall be treated applicable excess reserves) is amended by adding plus as having made a constructive sale of an appre- at the end the following new subparagraph: ‘‘(2) the increase in tax which would result if ciated financial position if the taxpayer (or a re- ‘‘(C) SPECIAL RULE FOR THRIFTS WHICH BE- taxable income for the 3 prior taxable years were lated person)— CAME LARGE BANKS IN 1995.— increased by the elected farm income. ‘‘(i) IN GENERAL.—In the case of a bank (as ‘‘(A) enters into a short sale of the same or defined in section 581) which became a large ‘‘(b) DEFINITIONS.—In this section— substantially identical property, bank (as defined in section 585(c)(2)) for its first ‘‘(1) ELECTED FARM INCOME.— ‘‘(B) enters into an offsetting notional prin- taxable year beginning after December 31, 1994, ‘‘(A) IN GENERAL.—The term ‘elected farm in- cipal contract with respect to the same or sub- the balance taken into account under subpara- come’ means so much of the taxable income for stantially identical property, ‘‘(C) enters into a futures or forward contract graph (A)(ii) shall not be less than the amount the taxable year— to deliver the same or substantially identical which would be the balance of such reserves as ‘‘(i) which is attributable to any farming busi- property, of the close of its last taxable year beginning be- ness; and ‘‘(D) in the case of an appreciated financial fore January 1, 1995, if the additions to such re- ‘‘(ii) which is specified in the election under position that is a short sale or a contract de- serves for all taxable years had been determined subsection (a). scribed in subparagraph (B) or (C) with respect under section 585(b)(2)(A). ‘‘(B) TREATMENT OF GAINS.—For purposes of to any property, acquires the same or substan- ‘‘(ii) APPLICATION OF CUT-OFF METHOD; ETC.— subparagraph (A), gain from the sale or other In the case of a taxpayer to which this subpara- disposition of property (other than land) regu- tially identical property, or ‘‘(E) to the extent prescribed by the Secretary graph applies— larly used by the taxpayer in a farming business in regulations, enters into 1 or more other trans- ‘‘(I) paragraph (5)(B) shall apply, and for a substantial period shall be treated as at- actions (or acquires 1 or more positions) that ‘‘(II) this subparagraph shall not apply in de- tributable to a farming business. have substantially the same effect as a trans- termining the amount taken into account by the ‘‘(2) FARMING BUSINESS.—The term ‘farming action described in any of the preceding sub- taxpayer under subparagraph (A)(ii) for pur- business’ has the meaning given such term by paragraphs. poses of paragraphs (5) and (6) or subsection section 263A(e)(4).’’. ‘‘(2) EXCEPTION FOR SALES OF NONPUBLICLY (e)(1).’’. (b) CLERICAL AMENDMENT.—The table of sec- (b) EFFECTIVE DATE.—The amendment made TRADED PROPERTY.—The term ‘constructive sale’ tions for such subpart B is amended by adding by this section shall take effect as if included in shall not include any contract for sale of any at the end the following new item: the amendments made by section 1616 of the stock, debt instrument, or partnership interest Small Business Job Protection Act of 1996. ‘‘Sec. 460A. Averaging of farm income.’’. which is not a marketable security (as defined SEC. 791. SENSE OF THE SENATE REGARDING (c) EFFECTIVE DATE.—The amendments made in section 453(f)) if the contract settles within 1 MIDDLE-CLASS TAXPAYERS BENE- by this section shall apply to taxable years be- year after the date such contract is entered into. FITING FROM TAX CUTS. ginning after the date of the enactment of this ‘‘(3) EXCEPTION FOR CERTAIN CLOSED TRANS- (a) FINDINGS.—The Senate finds that— Act and before January 1, 2001. ACTIONS.—In applying this section, there shall

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be disregarded any transaction (which would IN COMMODITIES.—Subsection (d) of section 475 then, for purposes of such Code, such position otherwise be treated as a constructive sale) dur- (relating to mark to market accounting method (and any property related thereto, as deter- ing the taxable year if— for dealers in securities) is amended by adding mined under the principles of section 1259(d)(1) ‘‘(A) such transaction is closed before the end at the end the following new paragraph: of such Code (as so added)) shall be treated as of the 30th day after the close of such taxable ‘‘(4) ELECTION OF MARK TO MARKET FOR SECU- property constituting rights to receive an item of year, and RITIES TRADERS AND FOR TRADERS AND DEALERS income in respect of a decedent under section ‘‘(B) in the case of a transaction which is IN COMMODITIES.— 691 of such Code. closed during the 90-day period ending on such ‘‘(A) IN GENERAL.—In the case of a person— (4) ELECTION OF SECURITIES TRADERS, AND FOR 30th day— ‘‘(i) who is engaged in a trade or business to TRADERS AND DEALERS IN COMMODITIES, TO BE ‘‘(i) the taxpayer holds the appreciated finan- which this paragraph applies, and TREATED AS DEALERS IN SECURITIES.— cial position throughout the 60-day period be- ‘‘(ii) who elects to be treated as a dealer in se- (A) IN GENERAL.—The amendment made by ginning on the date such transaction is closed, curities for purposes of this section with respect subsection (b) shall apply to taxable years end- and to such trade or business, ing after the date of the enactment of this Act. ‘‘(ii) at no time during such 60-day period is subsections (a), (b)(3), (c)(3), and (e) and the (B) 4-YEAR SPREAD OF ADJUSTMENTS.—In the the taxpayer’s risk of loss with respect to such preceding provisions of this subsection (or, in case of a taxpayer who elects under section position reduced by reason of a circumstance the case of a dealer in commodities, this section) 475(d)(4) of the Internal Revenue Code of 1986 which would be described in section 246(c)(4) if shall apply to all commodities and securities (as added by this section) to change its method references to stock included references to such held by such person in any trade or business of accounting for its first taxable year ending position. with respect to which such election is in effect after the date of the enactment of this Act, the If a position with respect to a transaction which in the same manner as if such person were a net amount of the adjustments required to be is closed during the 90-day period as described dealer in securities and all references to securi- taken into account by the taxpayer under sec- in subparagraph (B) is reestablished, then such ties included references to commodities. tion 481 of the Internal Revenue Code of 1986 transaction shall be disregarded in applying this ‘‘(B) APPLICATION OF PARAGRAPH.—This para- shall be taken into account ratably over the 4- section if the reestablished position is closed graph shall apply to any active trade or busi- taxable year period beginning with such first during such 90-day period in a transaction ness— taxable year. which meets the requirements of subparagraph ‘‘(i) as a trader in securities, or SEC. 802. LIMITATION ON EXCEPTION FOR IN- (B). ‘‘(ii) as a trader or dealer in commodities. VESTMENT COMPANIES UNDER SEC- ‘‘(C) EXCEPTION FOR CERTAIN HOLDINGS OF TION 351. ‘‘(4) RELATED PERSON.—A person is related to TRADERS.—In the case of a trader in securities (a) IN GENERAL.—Paragraph (1) of section another person with respect to a transaction if— 351(e) (relating to exceptions) is amended by ‘‘(A) the relationship is described in section or commodities, subsection (a) shall not apply to adding at the end the following: ‘‘For purposes 267 or 707(b), and any security or commodity (to which subsection of the preceding sentence, the determination of ‘‘(B) such transaction is entered into with a (a) would otherwise apply solely by reason of whether a company is an investment company view toward avoiding the purposes of this sec- this paragraph) if such security or commodity is shall be made— tion. clearly identified in the trader’s records (before the close of the day applicable under subsection ‘‘(A) by taking into account all stock and se- ‘‘(d) OTHER DEFINITIONS.—For purposes of curities held by the company, and this section— (b)(2)) as being held other than in a trade or business to which the election under subpara- ‘‘(B) by treating as securities— ‘‘(1) FORWARD CONTRACT.—The term ‘forward ‘‘(i) money, contract’ means a contract to deliver a substan- graph (A) is in effect. A security or commodity ‘‘(ii) stocks and other equity interests in a cor- tially fixed amount of property for a substan- so identified shall be treated as described in sub- poration, evidences of indebtedness, options, tially fixed price. section (b)(1). forward or futures contracts, notional principal ‘‘(D) COMMODITY.—For purposes of this para- ‘‘(2) OFFSETTING NOTIONAL PRINCIPAL CON- contracts and derivatives, TRACT.—The term ‘offsetting notional principal graph, the term ‘commodities’ includes only ‘‘(iii) any foreign currency, contract’ means, with respect to any property, commodities of a kind customarily dealt in on ‘‘(iv) any interest in a real estate investment an agreement which includes— an organized commodity exchange. trust, a common trust fund, a regulated invest- ‘‘(A) a requirement to pay (or provide credit ‘‘(E) ELECTION.—An election under this para- ment company, a publicly-traded partnership for) all or substantially all of the investment graph may be made separately for each trade or (as defined in section 7704(b)) or any other eq- yield (including appreciation) on such property business and without the consent of the Sec- uity interest (other than in a corporation) for a specified period, and retary. Such an election, once made, shall apply which pursuant to its terms or any other ar- ‘‘(B) a right to be reimbursed for (or receive to the taxable year for which made and all sub- rangement is readily convertible into, or ex- credit for) all or substantially all of any decline sequent taxable years unless revoked with the changeable for, any asset described in any pre- in the value of such property. consent of the Secretary.’’. ceding clause, this clause or clause (v) or (viii), ‘‘(e) SPECIAL RULES.— (c) CLERICAL AMENDMENT.—The table of sec- ‘‘(v) except to the extent provided in regula- ‘‘(1) TREATMENT OF SUBSEQUENT SALE OF POSI- tions for part IV of subchapter P of chapter 1 is tions prescribed by the Secretary, any interest in TION WHICH WAS DEEMED SOLD.—If— amended by adding at the end the following a precious metal, unless such metal is used or ‘‘(A) there is a constructive sale of any appre- new item: held in the active conduct of a trade or business ciated financial position, ‘‘Sec. 1259. Constructive sales treatment for ap- after the contribution, ‘‘(B) such position is subsequently disposed of, preciated financial positions.’’. ‘‘(vi) except as otherwise provided in regula- tions prescribed by the Secretary, interests in and (d) EFFECTIVE DATES.— any entity if substantially all of the assets of ‘‘(C) at the time of such disposition, the trans- (1) IN GENERAL.—Except as otherwise provided such entity consist (directly or indirectly) of any action resulting in the constructive sale of such in this subsection, the amendments made by this assets described in any preceding clause or position is open with respect to the taxpayer or section shall apply to any constructive sale after any related person, clause (viii), June 8, 1997. ‘‘(vii) to the extent provided in regulations solely for purposes of determining whether the (2) EXCEPTION FOR SALES OF POSITIONS, ETC. prescribed by the Secretary, any interest in any taxpayer has entered into a constructive sale of HELD BEFORE JUNE 9, 1997.—A constructive sale entity not described in clause (vi), but only to any other appreciated financial position held by before June 9, 1997, and the property to which the extent of the value of such interest that is the taxpayer, the taxpayer shall be treated as the position involved in the transaction relates, attributable to assets listed in clauses (i) entering into such transaction immediately after shall not be taken into account in determining such disposition. For purposes of the preceding through (v) or clause (viii), or whether any other constructive sale after June ‘‘(viii) any other asset specified in regulations sentence, an assignment or other termination 8, 1997, has occurred if, within before the close prescribed by the Secretary. shall be treated as a disposition. of the 30-day period beginning on the date of The Secretary may prescribe regulations that, ‘‘(2) CERTAIN TRUST INSTRUMENTS TREATED AS the enactment of this Act, such position and under appropriate circumstances, treat any STOCK.—For purposes of this section, an interest property are clearly identified in the taxpayer’s asset described in clauses (i) through (v) as not in a trust which is actively traded (within the records as offsetting. The preceding sentence so listed.’’. meaning of section 1092(d)(1)) shall be treated as shall cease to apply as of the date the taxpayer (b) EFFECTIVE DATE.— stock. ceases to hold such position or property. (1) IN GENERAL.—The amendment made by ‘‘(3) MULTIPLE POSITIONS IN PROPERTY.—If a (3) SPECIAL RULE.—In the case of a decedent subsection (a) shall apply to transfers after June taxpayer holds multiple positions in property, dying after June 8, 1997, if— 8, 1997, in taxable years ending after such date. the determination of whether a specific trans- (A) there was a constructive sale on or before (2) BINDING CONTRACTS.—The amendment action is a constructive sale and, if so, which such date of any appreciated financial position, made by subsection (a) shall not apply to any appreciated financial position is deemed sold (B) the transaction resulting in such construc- transfer pursuant to a written binding contract shall be made in the same manner as actual tive sale of such position remains open (with re- in effect on June 8, 1997, that provides for the sales. spect to the decedent or any related person) for transfer of a fixed amount of property, and at ‘‘(f) REGULATIONS.—The Secretary shall pre- not less than 2 years after the date of such all times thereafter before such transfer. scribe such regulations as may be necessary or transaction (whether such period is before or SEC. 803. GAINS AND LOSSES FROM CERTAIN TER- appropriate to carry out the purposes of this after June 8, 1997), and MINATIONS WITH RESPECT TO PROP- section.’’. (C) such transaction is not closed within the ERTY. (b) ELECTION OF MARK TO MARKET FOR SECU- 30-day period beginning on the date of the en- (a) APPLICATION OF CAPITAL TREATMENT TO RITIES TRADERS AND FOR TRADERS AND DEALERS actment of this Act, PROPERTY OTHER THAN PERSONAL PROPERTY.—

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(1) IN GENERAL.—Paragraph (1) of section (2) TRANSITION RULE.—The amendments made ‘‘(iii) The acquisition by a person of stock in 1234A (relating to gains and losses from certain by this section shall not apply to any distribu- any successor corporation of the distributing terminations) is amended by striking ‘‘personal tion made pursuant to the terms of— corporation or any controlled corporation by property (as defined in section 1092(d)(1))’’ and (A) a written binding contract in effect on reason of holding stock or securities in such dis- inserting ‘‘property’’. May 3, 1995, and at all times thereafter before tributing or controlled corporation. (2) EFFECTIVE DATE.—The amendment made such distribution, or ‘‘(iv) The acquisition of stock in a corporation by paragraph (1) shall apply to terminations (B) a tender offer outstanding on May 3, 1995. ERTAIN DIVIDENDS NOT PURSUANT TO CER- if shareholders owning directly or indirectly more than 30 days after the date of the enact- (3) C TAIN REDEMPTIONS.—In determining whether the stock possessing— ment of this Act. (b) APPLICATION OF CAPITAL TREATMENT, ETC. amendment made by subsection (a) applies to ‘‘(I) more than 50 percent of the total com- TO OBLIGATIONS ISSUED BY NATURAL PERSONS.— any extraordinary dividend other than a divi- bined voting power of all classes of stock enti- (1) IN GENERAL.—Section 1271(b) is amended to dend treated as an extraordinary dividend tled to vote, and read as follows: under section 1059(e)(1) of the Internal Revenue ‘‘(II) more than 50 percent of the total value ‘‘(b) EXCEPTION FOR CERTAIN OBLIGATIONS.— Code of 1986 (as amended by this Act), para- of shares of all classes of stock, ‘‘(1) IN GENERAL.—This section shall not apply graphs (1) and (2) shall be applied by sub- in the distributing corporation or any controlled to— stituting ‘‘September 13, 1995’’ for ‘‘May 3, corporation before such acquisition own indi- ‘‘(A) any obligation issued by a natural per- 1995’’. rectly stock possessing such vote and value in son before June 9, 1997, and SEC. 812. APPLICATION OF SECTION 355 TO DIS- ‘‘(B) any obligation issued before July 2, 1982, TRIBUTIONS FOLLOWED BY ACQUISI- such distributing or controlled corporation after by an issuer which is not a corporation and is TIONS AND TO INTRAGROUP TRANS- such acquisition. not a government or political subdivision there- ACTIONS. This subparagraph shall not apply to any ac- of. (a) DISTRIBUTIONS FOLLOWED BY ACQUISI- quisition if the stock held before the acquisition ‘‘(2) TERMINATION.—Paragraph (1) shall not TIONS.—Section 355 (relating to distribution of was acquired pursuant to a plan (or series of re- apply to any obligation acquired after June 8, stock and securities of a controlled corporation) lated transactions) described in subparagraph 1997, unless the basis of the obligation in the is amended by adding at the end the following (A)(ii). new subsection: hands of the acquirer is determined solely by ‘‘(B) ASSET ACQUISITIONS.—Except as provided ‘‘(e) RECOGNITION OF GAIN WHERE CERTAIN reference to the adjusted basis of the obligation in regulations, for purposes of this subsection, if DISTRIBUTIONS OF STOCK OR SECURITIES ARE in the hands of the person from whom ac- the assets of the distributing corporation or any FOLLOWED BY ACQUISITION.— quired.’’. controlled corporation are acquired by a suc- (2) EFFECTIVE DATE.—The amendment made ‘‘(1) GENERAL RULE.—If there is a distribution cessor corporation in a transaction described in by paragraph (1) shall take effect on the date of to which this subsection applies, the following subparagraph (A), (C), or (D) of section enactment of this Act. rules shall apply: ‘‘(A) ACQUISITION OF CONTROLLED CORPORA- 368(a)(1) or any other transaction specified in Subtitle B—Corporate Organizations and TION.—If there is an acquisition described in regulations by the Secretary, the shareholders Reorganizations paragraph (2)(A)(ii) with respect to any con- (immediately before the acquisition) of the cor- SEC. 811. TAX TREATMENT OF CERTAIN EXTRAOR- trolled corporation, any stock or securities in poration acquiring such assets shall be treated DINARY DIVIDENDS. the controlled corporation shall not be treated as acquiring stock in the corporation from (a) TREATMENT OF EXTRAORDINARY DIVIDENDS as qualified property for purposes of subsection which the assets were acquired. IN EXCESS OF BASIS.—Paragraph (2) of section (c)(2) of this section or section 361(c)(2). EFINITION AND SPECIAL RULES.—For 1059(a) (relating to corporate shareholder’s rec- ‘‘(4) D ‘‘(B) ACQUISITION OF DISTRIBUTING CORPORA- purposes of this subsection— ognition of gain attributable to nontaxed por- TION.—If there is an acquisition described in tion of extraordinary dividends) is amended to paragraph (2)(A)(ii) with respect to the distrib- ‘‘(A) 50-PERCENT OR GREATER INTEREST.—The read as follows: uting corporation, the controlled corporation term ‘50-percent or greater interest’ has the ‘‘(2) AMOUNTS IN EXCESS OF BASIS.—If the shall recognize gain in an amount equal to the meaning given such term by subsection (d)(4). nontaxed portion of such dividends exceeds such amount of net gain which would be recognized ‘‘(B) DISTRIBUTIONS IN TITLE 11 OR SIMILAR basis, such excess shall be treated as gain from if all the assets of the distributing corporation CASE.—Paragraph (1) shall not apply to any dis- the sale or exchange of such stock for the tax- (immediately after the distribution) were sold (at tribution made in a title 11 or similar case (as able year in which the extraordinary dividend is such time) for fair market value. Any gain rec- defined in section 368(a)(3)). received.’’. ognized under the preceding sentence shall be ‘‘(C) AGGREGATION AND ATTRIBUTION RULES.— (b) TREATMENT OF REDEMPTIONS WHERE OP- treated as long-term capital gain and shall be TIONS INVOLVED.—Paragraph (1) of section ‘‘(i) AGGREGATION.—The rules of paragraph taken into account for the taxable year which (7)(A) of subsection (d) shall apply. 1059(e) (relating to treatment of partial liquida- includes the day after the date of such distribu- ‘‘(ii) ATTRIBUTION.—Section 355(d)(8)(A) shall tions and non-pro rata redemptions) is amended tion. to read as follows: ‘‘(2) DISTRIBUTIONS TO WHICH SUBSECTION AP- apply in determining whether a person holds ‘‘(1) TREATMENT OF PARTIAL LIQUIDATIONS PLIES.— stock or securities in any corporation. AND CERTAIN REDEMPTIONS.—Except as other- ‘‘(A) IN GENERAL.—This subsection shall apply ‘‘(D) SUCCESSORS AND PREDECESSORS.—For wise provided in regulations— to any distribution— purposes of this subsection, any reference to a ‘‘(A) REDEMPTIONS.—In the case of any re- ‘‘(i) to which this section (or so much of sec- controlled corporation or a distributing corpora- demption of stock— tion 356 as relates to this section) applies, and tion shall include a reference to any predecessor ‘‘(i) which is part of a partial liquidation ‘‘(ii) which is part of a plan (or series of re- or successor of such corporation. (within the meaning of section 302(e)) of the re- lated transactions) pursuant to which 1 or more deeming corporation, persons acquire directly or indirectly stock rep- ‘‘(E) STATUTE OF LIMITATIONS.—If there is an ‘‘(ii) which is not pro rata as to all share- resenting a 50-percent or greater interest in the acquisition to which paragraph (1) (A) or (B) holders, or distributing corporation or any controlled cor- applies— ‘‘(iii) which would not have been treated (in poration. ‘‘(i) the statutory period for the assessment of whole or in part) as a dividend if any options ‘‘(B) PLAN PRESUMED TO EXIST IN CERTAIN any deficiency attributable to any part of the had not been taken into account under section CASES.—If 1 or more persons acquire directly or gain recognized under this subsection by reason 318(a)(4), indirectly stock representing a 50-percent or of such acquisition shall not expire before the any amount treated as a dividend with respect greater interest in the distributing corporation expiration of 3 years from the date the Secretary to such redemption shall be treated as an ex- or any controlled corporation during the 4-year is notified by the taxpayer (in such manner as traordinary dividend to which paragraphs (1) period beginning on the date which is 2 years the Secretary may by regulations prescribe) that and (2) of subsection (a) apply without regard before the date of the distribution, such acquisi- such acquisition occurred, and to the period the taxpayer held such stock. In tion shall be treated as pursuant to a plan de- ‘‘(ii) such deficiency may be assessed before the case of a redemption described in clause (iii), scribed in subparagraph (A)(ii) unless it is es- the expiration of such 3-year period notwith- only the basis in the stock redeemed shall be tablished that the distribution and the acquisi- standing the provisions of any other law or rule taken into account under subsection (a). tion are not pursuant to a plan or series of re- ‘‘(B) REORGANIZATIONS, ETC.—An exchange of law which would otherwise prevent such as- lated transactions. sessment. described in section 356 which is treated as a ‘‘(C) COORDINATION WITH SUBSECTION (d).— dividend shall be treated as a redemption of This subsection shall not apply to any distribu- ‘‘(5) REGULATIONS.—The Secretary shall pre- stock for purposes of applying subparagraph tion to which subsection (d) applies. scribe such regulations as may be necessary to (A).’’. ‘‘(3) SPECIAL RULES RELATING TO ACQUISI- carry out the purposes of this subsection, in- (c) TIME FOR REDUCTION.—Paragraph (1) of TIONS.— cluding regulations— section 1059(d) is amended to read as follows: ‘‘(A) CERTAIN ACQUISITIONS NOT TAKEN INTO ‘‘(A) providing for the application of this sub- ‘‘(1) TIME FOR REDUCTION.—Any reduction in ACCOUNT.—Except as provided in regulations, section where there is more than 1 controlled basis under subsection (a)(1) shall be treated as the following acquisitions shall not be treated as corporation, occurring at the beginning of the ex-dividend described in paragraph (2)(A)(ii): ‘‘(B) treating 2 or more distributions as 1 dis- date of the extraordinary dividend to which the ‘‘(i) The acquisition of stock in any controlled tribution where necessary to prevent the avoid- reduction relates.’’. corporation by the distributing corporation. (d) EFFECTIVE DATES.— ‘‘(ii) The acquisition by a person of stock in ance of such purposes, and (1) IN GENERAL.—The amendments made by any controlled corporation by reason of holding ‘‘(C) providing for the application of rules this section shall apply to distributions after stock or securities in the distributing corpora- similar to the rules of subsection (d)(6) where May 3, 1995. tion. appropriate for purposes of paragraph (2)(B).’’.

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(b) SPECIAL RULES FOR CERTAIN INTRAGROUP (2) DIVISIVE TRANSACTIONS.—The amendments (2) TRANSITION RULE.—The amendments made TRANSACTIONS.— made by subsection (c) shall apply to transfers by this section shall not apply to any distribu- (1) SECTION 355 NOT TO APPLY.—Section 355, as after the date of the enactment of this Act. tion or acquisition after June 8, 1997, if such dis- amended by subsection (a), is amended by add- (3) TRANSITION RULE.—The amendments made tribution or acquisition is— ing at the end the following new subsection: by this section shall not apply to any distribu- (A) made pursuant to a written agreement ‘‘(f) SECTION NOT TO APPLY TO CERTAIN tion pursuant to an acquisition described in sec- which was binding on such date and at all times INTRAGROUP DISTRIBUTIONS.—Except as pro- tion 355(e)(2)(A)(ii) of the Internal Revenue thereafter, vided in regulations, this section (or so much of Code of 1986 (or, in the case of the amendments (B) described in a ruling request submitted to section 356 as relates to this section) shall not made by subsection (c), any transfer) after April the Internal Revenue Service on or before such apply to the distribution of stock from 1 member 16, 1997, if such acquisition or transfer is— date, or of an affiliated group (as defined in section (A) made pursuant to a written agreement (C) described in a public announcement or fil- 1504(a)) to another member of such group if which was (subject to customary conditions) ing with the Securities and Exchange Commis- such distribution is part of a plan (or series of binding on such date and at all times thereafter, sion on or before such date. related transactions) described in subsection (B) described in a ruling request submitted to the Internal Revenue Service on or before such SEC. 814. MODIFICATION OF HOLDING PERIOD (e)(2)(A)(ii).’’. APPLICABLE TO DIVIDENDS RE- (2) ADJUSTMENTS TO BASIS.—Section 358 (relat- date, or CEIVED DEDUCTION. (C) described on or before such date in a pub- ing to basis to distributees) is amended by add- (a) IN GENERAL.—Subparagraph (A) of section lic announcement or in a filing with the Securi- ing at the end the following new subsection: 246(c)(1) is amended to read as follows: ties and Exchange Commission required solely ‘‘(g) ADJUSTMENTS IN INTRAGROUP TRANS- ‘‘(A) which is held by the taxpayer for 45 days by reason of the distribution. ACTIONS INVOLVING SECTION 355.—In the case of or less during the 90-day period beginning on an exchange to which section 355 (or so much of This paragraph shall not apply to any written agreement, ruling request, or public announce- the date which is 45 days before the date on section 356 as relates to section 355) applies and which such share becomes ex-dividend with re- which involves the distribution of stock from 1 ment or filing unless it identifies the acquirer of the distributing corporation or any controlled spect to such dividend, or’’. member of an affiliated group (as defined in sec- (b) CONFORMING AMENDMENTS.— tion 1504(a)) to another member of such group, corporation, or the transfer or transferee, whichever is applicable. (1) Paragraph (2) of section 246(c) is amended the Secretary may, notwithstanding any other to read as follows: SEC. 813. TAX TREATMENT OF REDEMPTIONS IN- provision of this section, provide adjustments to ‘‘(2) 90-DAY RULE IN THE CASE OF CERTAIN the adjusted basis of any stock which— VOLVING RELATED CORPORATIONS. (a) STOCK PURCHASES BY RELATED CORPORA- PREFERENCE DIVIDENDS.—In the case of stock ‘‘(1) is in a corporation which is a member of having preference in dividends, if the taxpayer such group, and TIONS.—The last sentence of section 304(a)(1) (relating to acquisition by related corporation receives dividends with respect to such stock ‘‘(2) is held by another member of such group, which are attributable to a period or periods ag- to appropriately reflect the proper treatment of other than subsidiary) is amended to read as gregating in excess of 366 days, paragraph such distribution.’’. follows: ‘‘To the extent that such distribution is (1)(A) shall be applied— (c) DETERMINATION OF CONTROL IN CERTAIN treated as a distribution to which section 301 ‘‘(A) by substituting ‘90 days’ for ‘45 days’ DIVISIVE TRANSACTIONS.— applies, the transferor and the acquiring cor- (1) SECTION 351 TRANSACTIONS.—Section 351(c) poration shall be treated in the same manner as each place it appears, and (relating to special rule) is amended to read as if the transferor had transferred the stock so ac- ‘‘(B) by substituting ‘180-day period’ for ‘90- follows: quired to the acquiring corporation in exchange day period’.’’. ‘‘(c) SPECIAL RULES WHERE DISTRIBUTION TO for stock of the acquiring corporation in a (2) Paragraph (3) of section 246(c) is amended SHAREHOLDERS.—In determining control for transaction to which section 351(a) applies, and by adding ‘‘and’’ at the end of subparagraph purposes of this section— then the acquiring corporation had redeemed (A), by striking subparagraph (B), and by redes- ‘‘(1) the fact that any corporate transferor the stock it was treated as issuing in such trans- ignating subparagraph (C) as subparagraph distributes part or all of the stock in the cor- action.’’. (B). poration which it receives in the exchange to its (b) COORDINATION WITH SECTION 1059.— (c) EFFECTIVE DATE.— shareholders shall not be taken into account, Clause (iii) of section 1059(e)(1)(A), as amended (1) IN GENERAL.—The amendments made by and by this title, is amended to read as follows: this section shall apply to dividends received or ‘‘(2) if the requirements of section 355 are met ‘‘(iii) which would not have been treated (in accrued after the 30th day after the date of the with respect to such distribution, the share- whole or in part) as a dividend if— enactment of this Act. holders shall be treated as in control of such ‘‘(I) any options had not been taken into ac- (2) TRANSITIONAL RULE.—The amendments corporation immediately after the exchange if count under section 318(a)(4), or made by this section shall not apply to divi- ‘‘(II) section 304(a) had not applied,’’. the shareholders hold (immediately after the dis- dends received or accrued during the 2-year pe- (c) SPECIAL RULE FOR ACQUISITIONS BY FOR- tribution) stock possessing— riod beginning on the date of the enactment of EIGN CORPORATIONS.—Section 304(b) (relating to ‘‘(A) more than 50 percent of the total com- this Act if— special rules for application of subsection (a)) is bined voting power of all classes of stock of such (A) the dividend is paid with respect to stock amended by adding at the end the following corporation entitled to vote, and held by the taxpayer on June 8, 1997, and all new paragraph: ‘‘(B) more than 50 percent of the total value times thereafter until the dividend is received, ‘‘(5) ACQUISITIONS BY FOREIGN CORPORA- of shares of all classes of stock of such corpora- (B) such stock is continuously subject to a po- TIONS.— tion.’’. ‘‘(A) IN GENERAL.—In the case of any acquisi- sition described in section 246(c)(4) of the Inter- (2) D REORGANIZATIONS.—Section 368(a)(2)(H) tion to which subsection (a) applies in which nal Revenue Code of 1986 on June 8, 1997, and (relating to special rule for determining whether the acquiring corporation is a foreign corpora- all times thereafter until the dividend is re- certain transactions are qualified under para- tion, the only earnings and profits taken into ceived, and graph (1)(D)) is amended to read as follows: account under paragraph (2)(A) shall be those (C) such stock and position are clearly identi- ‘‘(H) SPECIAL RULES FOR DETERMINING WHETH- earnings and profits— fied in the taxpayer’s records within 30 days ER CERTAIN TRANSACTIONS ARE QUALIFIED UNDER ‘‘(i) which are attributable (under regulations after the date of the enactment of this Act. PARAGRAPH (1)(D).—For purposes of determining prescribed by the Secretary) to stock of the ac- Stock shall not be treated as meeting the re- whether a transaction qualifies under para- quiring corporation owned (within the meaning quirement of subparagraph (B) if the position is graph (1)(D)— of section 958(a)) by a corporation or individual sold, closed, or otherwise terminated and rees- ‘‘(i) in the case of a transaction with respect which is— tablished. to which the requirements of subparagraphs (A) ‘‘(I) a United States shareholder (within the Subtitle C—Other Corporate Provisions and (B) of section 354(b)(1) are met, the term meaning of section 951(b)) of the acquiring cor- ‘control’ has the meaning given such term by poration, and SEC. 821. REGISTRATION AND OTHER PROVI- section 304(c), and ‘‘(II) the transferor or a person who bears a SIONS RELATING TO CONFIDENTIAL CORPORATE TAX SHELTERS. ‘‘(ii) in the case of a transaction with respect relationship to the transferor described in sec- (a) IN GENERAL.—Section 6111 (relating to reg- to which the requirements of section 355 are met, tion 267(b) or 707(b), and the shareholders described in paragraph (1)(D) ‘‘(ii) which were accumulated during the pe- istration of tax shelters) is amended by redesig- shall be treated as having control of the cor- riod or periods such stock was owned by such nating subsections (d) and (e) as subsections (e) poration to which the assets are transferred if person while the acquiring corporation was a and (f), respectively, and by inserting after sub- such shareholders hold (immediately after the controlled foreign corporation. section (c) the following new subsection: transfer) stock possessing— ‘‘(B) APPLICATION OF SECTION 1248.—For pur- ‘‘(d) CERTAIN CONFIDENTIAL ARRANGEMENTS ‘‘(I) more than 50 percent of the total com- poses of subparagraph (A), the rules of section TREATED AS TAX SHELTERS.— bined voting power of all classes of stock of such 1248(d) shall apply except to the extent other- ‘‘(1) IN GENERAL.—For purposes of this sec- corporation entitled to vote, and wise provided by the Secretary. tion, the term ‘tax shelter’ includes any entity, ‘‘(II) more than 50 percent of the total value ‘‘(C) REGULATIONS.—The Secretary shall pre- plan, arrangement, or transaction— of shares of all classes of stock of such corpora- scribe such regulations as are appropriate to ‘‘(A) a significant purpose of the structure of tion.’’. carry out the purposes of this paragraph.’’. which is the avoidance or evasion of Federal in- (d) EFFECTIVE DATES.— (d) EFFECTIVE DATE.— come tax for a direct or indirect participant (1) SECTION 355 RULES.—The amendments made (1) IN GENERAL.—The amendments made by which is a corporation, by subsections (a) and (b) shall apply to dis- this section shall apply to distributions and ac- ‘‘(B) which is offered to any potential partici- tributions after April 16, 1997. quisitions after June 8, 1997. pant under conditions of confidentiality, and

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‘‘(C) for which the tax shelter promoters may (1) RESTRICTION ON REASONABLE BASIS FOR only upon the holder’s separation from service receive fees in excess of $100,000 in the aggre- CORPORATE UNDERSTATEMENT OF INCOME TAX.— from the issuer or a related person. gate. Subparagraph (B) of section 6662(d)(2) is ‘‘(ii) EXCEPTION.—Clause (i)(I) shall not apply ‘‘(2) CONDITIONS OF CONFIDENTIALITY.—For amended by adding at the end the following if the stock relinquished in the exchange, or the purposes of paragraph (1)(B), an offer is under new flush sentence: stock acquired in the exchange is in— conditions of confidentiality if— ‘‘For purposes of clause (ii)(II), in no event ‘‘(I) a corporation if any class of stock in such ‘‘(A) the potential participant to whom the shall a corporation be treated as having a rea- corporation or a related party is readily offer is made (or any other person acting on be- sonable basis for its tax treatment of an item at- tradable on an established securities market or half of such participant) has an understanding tributable to a multiple-party financing trans- otherwise, or or agreement with or for the benefit of any pro- action if such treatment does not clearly reflect ‘‘(II) any other corporation if such exchange moter of the tax shelter that such participant the income of the corporation.’’. is part of a transaction or series of transactions (or such other person) will limit disclosure of the (2) MODIFICATION TO DEFINITION OF TAX SHEL- in which such corporation is to become a cor- tax shelter or any significant tax features of the TER.—Clause (iii) of section 6662(d)(2)(C) is poration described in subclause (I). tax shelter, or amended by striking ‘‘the principal purpose’’ ‘‘(3) DEFINITIONS.—For purposes of this sub- ‘‘(B) any promoter of the tax shelter— and inserting ‘‘a significant purpose’’. section— ‘‘(i) claims, knows, or has reason to know, (d) CONFORMING AMENDMENTS.— ‘‘(A) PREFERRED STOCK.—The term ‘preferred ‘‘(ii) knows or has reason to know that any (1) Paragraph (2) of section 6707(a) is amend- stock’ means stock which is limited and pre- other person (other than the potential partici- ed by striking ‘‘The penalty’’ and inserting ‘‘Ex- ferred as to dividends and does not participate pant) claims, or cept as provided in paragraph (3), the penalty’’. (including through a conversion privilege) in ‘‘(iii) causes another person to claim, (2) Subparagraph (A) of section 6707(a)(1) is corporate growth to any significant extent. that the tax shelter (or any aspect thereof) is amended by striking ‘‘paragraph (2)’’ and in- ‘‘(B) RELATED PERSON.—A person shall be proprietary to any person other than the poten- serting ‘‘paragraph (2) or (3), as the case may treated as related to another person if they bear tial participant or is otherwise protected from be’’. a relationship to such other person described in disclosure to or use by others. (e) EFFECTIVE DATE.— section 267(b) or 707(b). For purposes of this subsection, the term ‘pro- (1) IN GENERAL.—Except as provided in para- ‘‘(4) REGULATIONS.—The Secretary may pre- moter’ means any person or any related person graph (2), the amendments made by this section scribe such regulations as may be necessary or (within the meaning of section 267 or 707) who shall apply to any tax shelter (as defined in sec- appropriate to carry out the purposes of this participates in the organization, management, tion 6111(d) of the Internal Revenue Code of subsection and sections 354(a)(2)(C), or sale of the tax shelter. 1986, as amended by this section) interests in 355(a)(3)(D), and 356(e). The Secretary may also ‘‘(3) PERSONS OTHER THAN PROMOTER RE- which are offered to potential participants after prescribe regulations, consistent with the treat- QUIRED TO REGISTER IN CERTAIN CASES.— the Secretary of the Treasury prescribes guid- ment under this subsection and such sections, ‘‘(A) IN GENERAL.—If— ance with respect to meeting requirements added for the treatment of nonqualified preferred stock ‘‘(i) the requirements of subsection (a) are not by such amendments. under other provisions of this title.’’. met with respect to any tax shelter (as defined (2) MODIFICATIONS TO SUBSTANTIAL UNDER- (b) SECTION 354.—Paragraph (2) of section in paragraph (1)) by any tax shelter promoter, STATEMENT PENALTY.—The amendments made 354(a) (relating to exchanges of stock and secu- and by subsection (c) shall apply to items with re- rities in certain reorganizations) is amended by ‘‘(ii) no tax shelter promoter is a United States spect to transactions entered into after the date adding at the end the following new subpara- person, of the enactment of this Act. graph: then each United States person who discussed ‘‘(C) NONQUALIFIED PREFERRED STOCK.— participation in such shelter shall register such SEC. 822. CERTAIN PREFERRED STOCK TREATED AS BOOT. ‘‘(i) IN GENERAL.—Nonqualified preferred shelter under subsection (a). (a) SECTION 351.—Section 351 (relating to stock (as defined in section 351(g)(2)) received in ‘‘(B) EXCEPTION.—Subparagraph (A) shall not exchange for stock other than nonqualified pre- apply to a United States person who discussed transfer to corporation controlled by transferor) ferred stock (as so defined) shall not be treated participation in a tax shelter if— is amended by redesignating subsection (g) as ‘‘(i) such person notified the promoter in writ- subsection (h) and by inserting after subsection as stock or securities. ‘‘(ii) RECAPITALIZATIONS OF FAMILY-OWNED ing (not later than the close of the 90th day (f) the following new subsection: CORPORATIONS.— after the day on which such discussions began) ‘‘(g) NONQUALIFIED PREFERRED STOCK NOT ‘‘(I) IN GENERAL.—Clause (i) shall not apply that such person would not participate in such TREATED AS STOCK.— in the case of a recapitalization under section shelter, and ‘‘(1) IN GENERAL.—For purposes of subsections 368(a)(1)(E) of a family-owned corporation. ‘‘(ii) such person does not participate in such (a) and (b), the term ‘stock’ shall not include ‘‘(II) FAMILY-OWNED CORPORATION.—For pur- shelter. nonqualified preferred stock. poses of this clause, except as provided in regu- ‘‘(4) OFFER TO PARTICIPATE TREATED AS OFFER ‘‘(2) NONQUALIFIED PREFERRED STOCK.—For lations, the term ‘family-owned corporation’ FOR SALE.—For purposes of subsections (a) and purposes of paragraph (1)— (b), an offer to participate in a tax shelter (as ‘‘(A) IN GENERAL.—The term ‘nonqualified means any corporation which is described in defined in paragraph (1)) shall be treated as an preferred stock’ means preferred stock if— clause (i) of section 447(d)(2)(C) throughout the offer for sale.’’. ‘‘(i) the holder of such stock has the right to 8-year period beginning on the date which is 5 (b) PENALTY.—Subsection (a) of section 6707 require the issuer or a related person to redeem years before the date of the recapitalization. For (relating to failure to furnish information re- or purchase the stock, purposes of the preceding sentence, stock shall garding tax shelters) is amended by adding at ‘‘(ii) the issuer or a related person is required not be treated as owned by a family member the end the following new paragraph: to redeem or purchase such stock, during any period described in section ‘‘(3) CONFIDENTIAL ARRANGEMENTS.— ‘‘(iii) the issuer or a related person has the 355(d)(6)(B).’’. ‘‘(A) IN GENERAL.—In the case of a tax shelter right to redeem or purchase the stock and, as of (c) SECTION 355.—Paragraph (3) of section (as defined in section 6111(d)), the penalty im- the issue date, it is more likely than not that 355(a) is amended by adding at the end the fol- posed under paragraph (1) shall be an amount such right will be exercised, or lowing new subparagraph: equal to the greater of— ‘‘(iv) the dividend rate on such stock varies in ‘‘(D) NONQUALIFIED PREFERRED STOCK.—Non- ‘‘(i) 50 percent of the fees paid to all promoters whole or in part (directly or indirectly) with ref- qualified preferred stock (as defined in section of the tax shelter with respect to offerings made erence to interest rates, commodity prices, or 351(g)(2)) received in a distribution with respect before the date such shelter is registered under other similar indices. to stock other than nonqualified preferred stock section 6111, or ‘‘(B) LIMITATIONS.—Clauses (i), (ii), and (iii) (as so defined) shall not be treated as stock or ‘‘(ii) $10,000. of subparagraph (A) shall apply only if the securities.’’. Clause (i) shall be applied by substituting ‘75 right or obligation referred to therein may be ex- (d) SECTION 356.—Section 356 is amended by percent’ for ‘50 percent’ in the case of an inten- ercised within the 20-year period beginning on redesignating subsections (e) and (f) as sub- tional failure or act described in paragraph (1). the issue date of such stock and such right or sections (f) and (g), respectively, and by insert- ‘‘(B) SPECIAL RULE FOR PARTICIPANTS RE- obligation is not subject to a contingency which, ing after subsection (d) the following new sub- QUIRED TO REGISTER SHELTER.—In the case of a as of the issue date, makes remote the likelihood section: person required to register such a tax shelter by of the redemption or purchase. ‘‘(e) NONQUALIFIED PREFERRED STOCK TREAT- reason of section 6111(d)(3)— ‘‘(C) EXCEPTIONS FOR CERTAIN RIGHTS OR OB- ED AS OTHER PROPERTY.—For purposes of this ‘‘(i) such person shall be required to pay the LIGATIONS.— section— penalty under paragraph (1) only if such person ‘‘(i) IN GENERAL.—A right or obligation shall ‘‘(1) IN GENERAL.—Except as provided in para- actually participated in such shelter, not be treated as described in clause (i), (ii), or graph (2), the term ‘other property’ includes ‘‘(ii) the amount of such penalty shall be de- (iii) of subparagraph (A) if— nonqualified preferred stock (as defined in sec- termined by taking into account under subpara- ‘‘(I) it may be exercised only upon the death, tion 351(g)(2)). graph (A)(i) only the fees paid by such person, disability, or mental incompetency of the holder, ‘‘(2) EXCEPTION.—The term ‘other property’ and or does not include nonqualified preferred stock ‘‘(iii) such penalty shall be in addition to the ‘‘(II) in the case of a right or obligation to re- (as so defined) to the extent that, under section penalty imposed on any other person for failing deem or purchase stock transferred in connec- 354 or 355, such preferred stock would be per- to register such shelter.’’. tion with the performance of services for the mitted to be received without the recognition of (c) MODIFICATIONS TO SUBSTANTIAL UNDER- issuer or a related person (and which represents gain.’’. STATEMENT PENALTY.— reasonable compensation), it may be exercised (e) CONFORMING AMENDMENTS.—

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(1) Subparagraph (B) of section 354(a)(2) and ‘‘(c) BENEFICIARY’S RETURN MUST BE CON- ‘‘(1) IN GENERAL.—The effect of a levy on subparagraph (C) of section 355(a)(3)(C) are SISTENT WITH ESTATE OR TRUST RETURN OR SEC- specified payments to or received by a taxpayer each amended by inserting ‘‘(including non- RETARY NOTIFIED OF INCONSISTENCY.— shall be continuous from the date such levy is qualified preferred stock, as defined in section ‘‘(1) IN GENERAL.—A beneficiary of any estate first made until such levy is released. Notwith- 351(g)(2))’’ after ‘‘stock’’. or trust to which subsection (a) applies shall, on standing section 6334, such continuous levy (2) Subparagraph (A) of section 354(a)(3) and such beneficiary’s return, treat any reported shall attach to up to 15 percent of any specified subparagraph (A) of section 355(a)(4) are each item in a manner which is consistent with the payment due to the taxpayer. amended by inserting ‘‘nonqualified preferred treatment of such item on the applicable entity’s ‘‘(2) SPECIFIED PAYMENT.—For the purposes of stock and’’ after ‘‘including’’. return. paragraph (1), the term ‘specified payment’ (3) Section 1036 is amended by redesignating ‘‘(2) NOTIFICATION OF INCONSISTENT TREAT- means— subsection (b) as subsection (c) and by inserting MENT.— ‘‘(A) any Federal payment other than a pay- after subsection (a) the following new sub- ‘‘(A) IN GENERAL.—In the case of any reported ment for which eligibility is based on the income section: item, if— or assets (or both) of a payee, and ‘‘(b) NONQUALIFIED PREFERRED STOCK NOT ‘‘(i)(I) the applicable entity has filed a return ‘‘(B) any payment described in paragraph (4), TREATED AS STOCK.—For purposes of this sec- but the beneficiary’s treatment on such bene- (7), (9), or (11) of section 6334(a).’’. tion, nonqualified preferred stock (as defined in ficiary’s return is (or may be) inconsistent with (b) EFFECTIVE DATE.—The amendment made section 351(g)(2)) shall be treated as property the treatment of the item on the applicable enti- by subsection (a) shall apply to levies issued other than stock.’’. ty’s return, or after the date of the enactment of this Act. (f) EFFECTIVE DATE.— ‘‘(II) the applicable entity has not filed a re- SEC. 835. MODIFICATION OF LEVY EXEMPTION. (1) IN GENERAL.—The amendments made by turn, and (a) IN GENERAL.—Section 6334 (relating to this section shall apply to transactions after ‘‘(ii) the beneficiary files with the Secretary a property exempt from levy) is amended by redes- June 8, 1997. statement identifying the inconsistency, ignating subsection (f) as subsection (g) and by paragraph (1) shall not apply to such item. (2) TRANSITION RULE.—The amendments made inserting after subsection (e) the following new ‘‘(B) BENEFICIARY RECEIVING INCORRECT IN- by this section shall not apply to any trans- subsection: FORMATION.—A beneficiary shall be treated as action after June 8, 1997, if such transaction is— ‘‘(f) LEVY ALLOWED ON CERTAIN SPECIFIED having complied with clause (ii) of subpara- (A) made pursuant to a written agreement PAYMENTS.—Any payment described in subpara- graph (A) with respect to a reported item if the which was binding on such date and at all times graph (B) of section 6331(h)(2) shall not be ex- beneficiary— thereafter, empt from levy if the Secretary approves the (B) described in a ruling request submitted to ‘‘(i) demonstrates to the satisfaction of the Secretary that the treatment of the reported item levy thereon under section 6331(h).’’. the Internal Revenue Service on or before such (b) EFFECTIVE DATE.—The amendment made on the beneficiary’s return is consistent with the date, or by subsection (a) shall apply to levies issued treatment of the item on the statement furnished (C) described on or before such date in a pub- after the date of the enactment of this Act. under subsection (a) to the beneficiary by the lic announcement or in a filing with the Securi- SEC. 836. CONFIDENTIALITY AND DISCLOSURE OF ties and Exchange Commission required solely applicable entity, and ‘‘(ii) elects to have this paragraph apply with RETURNS AND RETURN INFORMA- by reason of the transaction. TION. respect to that item. (a) IN GENERAL.—Subsection (k) of section Subtitle D—Administrative Provisions ‘‘(3) EFFECT OF FAILURE TO NOTIFY.—In any 6103 is amended by adding at the end the fol- SEC. 831. DECREASE OF THRESHOLD FOR RE- case— PORTING PAYMENTS TO CORPORA- ‘‘(A) described in subparagraph (A)(i)(I) of lowing new paragraph: TIONS PERFORMING SERVICES FOR paragraph (2), and ‘‘(8) LEVIES ON CERTAIN GOVERNMENT PAY- FEDERAL AGENCIES. ‘‘(B) in which the beneficiary does not comply MENTS.— (a) IN GENERAL.—Subsection (d) of section with subparagraph (A)(ii) of paragraph (2), ‘‘(A) DISCLOSURE OF RETURN INFORMATION IN 6041A (relating to returns regarding payments of any adjustment required to make the treatment LEVIES ON FINANCIAL MANAGEMENT SERVICE.—In remuneration for services and direct sales) is of the items by such beneficiary consistent with serving a notice of levy, or release of such levy, amended by adding at the end the following the treatment of the items on the applicable en- with respect to any applicable government pay- new paragraph: tity’s return shall be treated as arising out of ment, the Secretary may disclose to officers and ‘‘(3) PAYMENTS TO CORPORATIONS BY FEDERAL mathematical or clerical errors and assessed ac- employees of the Financial Management Serv- EXECUTIVE AGENCIES.— cording to section 6213(b)(1). Paragraph (2) of ice— ‘‘(A) IN GENERAL.—Notwithstanding any regu- section 6213(b) shall not apply to any assess- ‘‘(i) return information, including taxpayer lation prescribed by the Secretary before the ment referred to in the preceding sentence. identity information, date of the enactment of this paragraph, sub- ‘‘(4) DEFINITIONS.—For purposes of this sub- ‘‘(ii) the amount of any unpaid liability under section (a) shall apply to remuneration paid to section— this title (including penalties and interest), and a corporation by any Federal executive agency ‘‘(A) REPORTED ITEM.—The term ‘reported ‘‘(iii) the type of tax and tax period to which (as defined in section 6050M(b)). item’ means any item for which information is such unpaid liability relates. ‘‘(B) EXCEPTION.—Subparagraph (A) shall not required to be furnished under subsection (a). ‘‘(B) RESTRICTION ON USE OF DISCLOSED IN- apply to— ‘‘(B) APPLICABLE ENTITY.—The term ‘applica- FORMATION.—Return information disclosed ‘‘(i) services under contracts described in sec- ble entity’ means the estate or trust of which the under subparagraph (A) may be used by officers tion 6050M(e)(3) with respect to which the re- taxpayer is the beneficiary. and employees of the Financial Management quirements of section 6050M(e)(2) are met, and ‘‘(5) ADDITION TO TAX FOR FAILURE TO COM- Service only for the purpose of, and to the ex- ‘‘(ii) such other services as the Secretary may PLY WITH SECTION.—For addition to tax in the tent necessary in, transferring levied funds in specify in regulations prescribed after the date case of a beneficiary’s negligence in connection satisfaction of the levy, maintaining appropriate of the enactment of this paragraph.’’. with, or disregard of, the requirements of this agency records in regard to such levy or the re- (b) EFFECTIVE DATE.—The amendment made section, see part II of subchapter A of chapter lease thereof, notifying the taxpayer and the by this section shall apply to returns the due 68.’’. agency certifying such payment that the levy date for which (determined without regard to (b) FOREIGN TRUSTS.—Subsection (d) of sec- has been honored, or in the defense of any liti- any extension) is more than 90 days after the tion 6048 (relating to information with respect to gation ensuing from the honor of such levy. date of the enactment of this Act. certain foreign trusts) is amended by adding at ‘‘(C) APPLICABLE GOVERNMENT PAYMENT.—For SEC. 832. DISCLOSURE OF RETURN INFORMATION the end the following new paragraph: purposes of this paragraph, the term ‘applicable FOR ADMINISTRATION OF CERTAIN ‘‘(5) UNITED STATES PERSON’S RETURN MUST BE government payment’ means— VETERANS PROGRAMS. CONSISTENT WITH TRUST RETURN OR SECRETARY ‘‘(i) any Federal payment (other than a pay- (a) GENERAL RULE.—Subparagraph (D) of sec- NOTIFIED OF INCONSISTENCY.—Rules similar to ment for which eligibility is based on the income tion 6103(l)(7) (relating to disclosure of return the rules of section 6034A(c) shall apply to items or assets (or both) of a payee) certified to the Fi- information to Federal, State, and local agen- reported by a trust under subsection (b)(1)(B) nancial Management Service for disbursement, cies administering certain programs) is amended and to United States persons referred to in such and by striking ‘‘Clause (viii) shall not apply after subsection.’’. ‘‘(ii) any other payment which is certified to September 30, 1998.’’. (c) EFFECTIVE DATE.—The amendments made the Financial Management Service for disburse- (b) EFFECTIVE DATE.—The amendment made by this section shall apply to returns of bene- ment and which the Secretary designates by by subsection (a) shall take effect on the date of ficiaries and owners filed after the date of the published notice.’’. the enactment of this Act. enactment of this Act. (b) CONFORMING AMENDMENTS.— (1) Section 6301(p) is amended— SEC. 833. RETURNS OF BENEFICIARIES OF ES- SEC. 834. CONTINUOUS LEVY ON CERTAIN PAY- TATES AND TRUSTS REQUIRED TO MENTS. (A) in paragraph (3)(A), by striking ‘‘(2), or FILE RETURNS CONSISTENT WITH (a) IN GENERAL.—Section 6331 (relating to levy (6)’’ and inserting ‘‘(2), (6), or (8)’’, and ESTATE OR TRUST RETURN OR TO and distraint) is amended— (B) in paragraph (4), by inserting ‘‘(k)(8),’’ NOTIFY SECRETARY OF INCONSIST- (1) by redesignating subsection (h) as sub- after ‘‘(j) (1) or (2),’’ each place it appears. ENCY. section (i), and (2) Section 552a(a)(8)(B) of title 5, United (a) DOMESTIC ESTATES AND TRUSTS.—Section (2) by inserting after subsection (g) the fol- States Code, is amended by striking ‘‘or’’ at the 6034A (relating to information to beneficiaries of lowing new subsection: end of clause (v), by adding ‘‘or’’ at the end of estates and trusts) is amended by adding at the ‘‘(h) CONTINUING LEVY ON CERTAIN PAY- clause (vi), and by adding at the end the fol- end the following new subsection: MENTS.— lowing new clause:

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‘‘(vii) matches performed incident to a levy de- ‘‘(A) IN GENERAL.—Subsections (a) and (b) after September 30, 1997, shall be treated as paid scribed in section 6103(k)(8) of the Internal Rev- shall be applied by substituting ‘7.5 percent’ for after September 30, 1997. For purposes of the enue Code of 1986;’’. ‘10 percent’ in the case of any segment begin- preceding sentence, all persons treated as a sin- (c) EFFECTIVE DATE.—The amendments made ning or ending at an airport which is a rural gle employer under subsection (a) or (b) of sec- by this section shall apply to levies issued after airport for the calendar year in which such seg- tion 52 of such Code shall be treated as members the date of the enactment of this Act. ment begins or ends (as the case may be). of a controlled group. Subtitle E—Excise Tax Provisions ‘‘(B) RURAL AIRPORT.—For purposes of sub- (e) DELAYED DEPOSITS OF AIRLINE TICKET paragraph (A), the term ‘rural airport’ means, AX EVENUES SEC. 841. EXTENSION AND MODIFICATION OF AIR- T R .—In the case of deposits of taxes PORT AND AIRWAY TRUST FUND with respect to any calendar year, any airport imposed by section 4261 of the Internal Revenue TAXES. if— Code of 1986, the due date for any such deposit (a) FUEL TAXES.— ‘‘(i) there were fewer than 100,000 commercial which would (but for this subsection) be re- (1) AVIATION FUEL.—Clause (ii) of section passengers departing by air during the second quired to be made— 4091(b)(3)(A) is amended by striking ‘‘September preceding calendar year from such airport, and (1) after August 14, 1997, and before October 1, 30, 1997’’ and inserting ‘‘September 30, 2007’’. ‘‘(ii) such airport— 1997, shall be October 10, 1997, and (2) AVIATION GASOLINE.—Subparagraph (B) of ‘‘(I) is not located within 75 miles of another (2) after July 1, 2001, and before October 1, section 4081(d)(2) is amended by striking ‘‘Sep- airport which is not described in clause (i), or 2001, shall be October 10, 2001. tember 30, 1997’’ and inserting ‘‘September 30, ‘‘(II) is receiving essential air service subsidies SEC. 842. RESTORATION OF LEAKING UNDER- 2007’’. as of the date of the enactment of this para- GROUND STORAGE TANK TRUST (3) NONCOMMERCIAL AVIATION.—Subpara- graph. FUND TAXES. graph (B) of section 4041(c)(3) is amended by ‘‘(C) TRANSPORTATION INVOLVING MULTIPLE Paragraph (3) of section 4081(d) is amended by striking ‘‘September 30, 1997’’ and inserting SEGMENTS.—In the case of transportation in- striking ‘‘shall not apply after December 31, ‘‘September 30, 2007’’. volving more than 1 segment at least 1 of which 1995’’ and inserting ‘‘shall apply after Sep- (b) TICKET TAXES.— does not begin or end at a rural airport, sub- tember 30, 1997, and before October 1, 2007’’. paragraph (A) shall be applied by taking into (1) PERSONS.—Clause (ii) of section SEC. 843. APPLICATION OF COMMUNICATIONS 4261(g)(1)(A) is amended by striking ‘‘September account only an amount which bears the same TAX TO LONG-DISTANCE PREPAID 30, 1997’’ and inserting ‘‘September 30, 2007’’. ratio to the amount paid for such transportation TELEPHONE CARDS. (2) PROPERTY.—Clause (ii) of section as the number of specified miles in segments (a) IN GENERAL.—Section 4251 is amended by 4271(d)(1)(A) is amended by striking ‘‘September which begin or end at a rural airport bears to adding at the end the following new subsection: 30, 1997’’ and inserting ‘‘September 30, 2007’’. the total number of specified miles in such ‘‘(d) TREATMENT OF PREPAID TELEPHONE (c) MODIFICATIONS.— transportation. CARDS.— (1) USE OF INTERNATIONAL TRAVEL FACILI- ‘‘(3) AMOUNTS PAID FOR RIGHT TO AWARD FREE ‘‘(1) IN GENERAL.—For purposes of this sub- TIES.—Subsection (c) of section 4261 is amended OR REDUCED RATE AIR TRANSPORTATION.—Any chapter, in the case of communications services to read as follows: amount paid (or other benefit provided) to an acquired by means of a prepaid telephone ‘‘(c) USE OF INTERNATIONAL TRAVEL FACILI- air carrier (or any related person) for the right card— TIES.— to provide mileage awards for (or other reduc- ‘‘(A) the purchase of such card shall not be ‘‘(1) IN GENERAL.—There is hereby imposed a tions in the cost of) any transportation of per- treated as an amount paid for communications tax of $8 on any amount paid (whether within sons by air shall be treated for purposes of sub- services, but or without the United States) for any transpor- section (a) as an amount paid for taxable trans- ‘‘(B) the amount paid to any telephone carrier tation of any person by air, if such transpor- portation, and such amount shall be taxable from any person who is not such a provider on tation begins or ends in the United States. under subsection (a) without regard to any account of the use of such a card to acquire ‘‘(2) EXCEPTION FOR TRANSPORTATION EN- other provision of this subchapter. The Sec- communications services shall be treated as an TIRELY TAXABLE UNDER SUBSECTION (a).—This retary shall prescribe rules which reallocate amount paid for such communications services. subsection shall not apply to any transportation items of income, deduction, credit, exclusion, or ‘‘(2) PREPAID TELEPHONE CARD.—For purposes all of which is taxable under subsection (a) (de- other allowance to the extent necessary to pre- of paragraph (1), the term ‘prepaid telephone termined without regard to sections 4281 and vent the avoidance of tax imposed by reason of card’ means any card or other similar arrange- 4282). this paragraph.’’. ment which permits its holder to obtain commu- ‘‘(3) SPECIAL RULE FOR ALASKA AND HAWAII.— (3) SECONDARY LIABILITY OF CARRIER FOR UN- nications services and pay for such services in In any case in which the tax imposed by para- PAID TAX.—Subsection (c) of section 4263 is advance.’’. graph (1) applies to a segment between the con- amended by striking ‘‘subchapter—’’ and all (b) EFFECTIVE DATE.—The amendments made tinental United States and Alaska or Hawaii or that follows and inserting ‘‘subchapter, such by this section shall apply to amounts paid on between Alaska and Hawaii, such tax shall tax shall be paid by the carrier providing the or after the date of the enactment of this Act. apply only to departures and shall be at the initial segment of such transportation which be- SEC. 844. UNIFORM RATE OF TAX ON VACCINES. rate of $6.’’. gins or ends in the United States.’’. N ENERAL (2) SPECIAL RULES.—Section 4261 is amended (4) TECHNICAL AMENDMENTS.— (a) I G .—Subsection (b) of section by redesignating subsections (e), (f), and (g), as (A) Paragraph (2) of section 4262(a) is amend- 4131 is amended to read as follows: subsections (f), (g), and (h), respectively, and by ed by striking ‘‘United States, but’’ and all that ‘‘(b) AMOUNT OF TAX.— inserting after subsection (d) the following new follows and inserting ‘‘United States.’’. ‘‘(1) IN GENERAL.—The amount of the tax im- subsection: (B) Subsection (c) of section 4262 is amended posed by subsection (a) shall be 84 cents per ‘‘(e) SPECIAL RULES.— by striking paragraph (3). dose of any taxable vaccine. ‘‘(1) APPLICATION OF SUBSECTION (a)TODO- (d) EFFECTIVE DATES.— ‘‘(2) COMBINATIONS OF VACCINES.—If any tax- MESTIC SEGMENTS OF INTERNATIONAL TRANSPOR- (1) FUEL TAXES.—The amendments made by able vaccine is described in more than 1 sub- TATION.— subsection (a) shall apply take effect on October paragraph of section 4132(a)(1), the amount of ‘‘(A) IN GENERAL.—In the case of taxable 1, 1997. the tax imposed by subsection (a) on such vac- transportation described in section 4262(a)(2), (2) TICKET TAXES.— cine shall be the sum of the amounts for the the tax imposed by subsection (a) shall be ap- (A) IN GENERAL.—Except as otherwise pro- vaccines which are so included.’’. plied by taking into account only an amount vided in this paragraph, the amendments made (b) TAXABLE VACCINES.—Paragraph (1) of sec- which bears the same ratio to the amount paid by subsections (b) and (c) shall apply to trans- tion 4132(a) is amended to read as follows: for such transportation as the number of speci- portation beginning on or after October 1, 1997. ‘‘(1) TAXABLE VACCINE.—The term ‘taxable fied miles in the domestic segments of such (B) TREATMENT OF AMOUNTS PAID FOR TICKETS vaccine’ means any of the following vaccines transportation bears to the total number of spec- PURCHASED BEFORE DATE OF ENACTMENT.—The which are manufactured or produced in the ified miles in such transportation. amendments made by subsection (c) shall not United States or entered into the United States ‘‘(B) SPECIFIED MILES.—For purposes of sub- apply to amounts paid for a ticket purchased for consumption, use, or warehousing: paragraph (A), the term ‘specified miles’ means before the date of the enactment of this Act for ‘‘(A) Any vaccine containing diphtheria tox- the great circle miles (as specified by the Sec- a specified flight beginning on or after October oid. retary) between the 2 points of each segment. 1, 1997. ‘‘(B) Any vaccine containing tetanus toxoid. The Secretary may specify mileage which shall (C) AMOUNTS PAID FOR RIGHT TO AWARD MILE- ‘‘(C) Any vaccine containing pertussis bac- apply in lieu of the mileage determined under AGE AWARDS.— teria, extracted or partial cell bacteria, or spe- the preceding sentence with respect to any 2 (i) IN GENERAL.—Paragraph (2) of section cific pertussis antigens. points if the Secretary determines that the mile- 4261(e) of the Internal Revenue Code of 1986 (as ‘‘(D) Any vaccine against measles. age on the route customarily traveled by air be- added by the amendment made by subsection ‘‘(E) Any vaccine against mumps. tween such points is different from the mileage (c)) shall apply to amounts paid after September ‘‘(F) Any vaccine against rubella. determined under the preceding sentence. 30, 1997. ‘‘(G) Any vaccine containing polio virus. ‘‘(C) DOMESTIC SEGMENT.—For purposes of (ii) PAYMENTS WITHIN CONTROLLED GROUP.— ‘‘(H) Any HIB vaccine. this section, the term ‘domestic segment’ means For purposes of clause (i), any amount paid ‘‘(I) Any vaccine against hepatitis B. any segment which is taxable transportation de- after June 16, 1997, and before October 1, 1997, ‘‘(J) Any vaccine against chicken pox.’’. scribed in section 4262(a)(1). by 1 member of a controlled group for a right (c) CONFORMING AMENDMENT.—Subsection (a) ‘‘(2) REDUCED RATE OF TAX FOR SEGMENTS TO which is described in such section 4261(e)(2) and of section 4132 is amended by striking para- AND FROM RURAL AIRPORTS.— is furnished by another member of such group graphs (2), (3), and (4) and by redesignating

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00164 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6833 paragraphs (5) through (8) as paragraphs (2) tax at the like rate on all fractional parts of a ‘‘SEC. 5754. RESTRICTION ON IMPORTATION OF through (5), respectively. pound).’’. PREVIOUSLY EXPORTED TOBACCO (d) EFFECTIVE DATE.—The amendments made (2) ROLL-YOUR-OWN TOBACCO.—Section 5702 PRODUCTS. by this section shall take effect on October 1, (relating to definitions) is amended by adding at ‘‘(a) IN GENERAL.—Tobacco products and cig- 1997. the end the following new subsection: arette papers and tubes previously exported (e) LIMITATION ON CERTAIN CREDITS OR RE- ‘‘(p) ROLL-YOUR-OWN TOBACCO.—The term from the United States may be imported or FUNDS.—For purposes of applying section ‘roll-your-own tobacco’ means any tobacco brought into the United States only as provided 4132(b) of the Internal Revenue Code of 1986 which, because of its appearance, type, pack- in section 5704(d). For purposes of this section, with respect to any claim for credit or refund aging, or labeling, is suitable for use and likely section 5704(d), section 5761, and such other pro- filed before April 1, 1998, the amount of tax to be offered to, or purchased by, consumers as visions as the Secretary may specify by regula- taken into account shall not exceed the tax com- tobacco for making cigarettes.’’. tions, references to exportation shall be treated puted under the rate in effect on October 1, (3) TECHNICAL AMENDMENTS.— as including a reference to shipment to the Com- 1997. (A) Subsection (c) of section 5702 is amended monwealth of Puerto Rico. by striking ‘‘and pipe tobacco’’ and inserting ‘‘(b) CROSS REFERENCE.— SEC. 845. CREDIT FOR TIRE TAX IN LIEU OF EX- CLUSION OF VALUE OF TIRES IN ‘‘pipe tobacco, and roll-your-own tobacco’’. ‘‘For penalty for the sale of tobacco products COMPUTING PRICE. (B) Subsection (d) of section 5702 is amend- and cigarette papers and tubes in the United (a) IN GENERAL.—Subsection (e) of section ed— States which are labeled for export, see sec- 4051 is amended to read as follows: (i) in the material preceding paragraph (1), by tion 5761(c).’’. ‘‘(e) CREDIT AGAINST TAX FOR TIRE TAX.—If— striking ‘‘or pipe tobacco’’ and inserting ‘‘pipe (ii) The table of sections for subpart F of ‘‘(1) tires are sold on or in connection with the tobacco, or roll-your-own tobacco’’, and chapter 52 is amended by adding at the end the sale of any article, and (ii) by striking paragraph (1) and inserting following new item: ‘‘(2) tax is imposed by this subchapter on the the following new paragraph: ‘‘Sec. 5754. Restriction on importation of pre- sale of such tires, ‘‘(1) a person who produces cigars, cigarettes, viously exported tobacco prod- there shall be allowed as a credit against the tax smokeless tobacco, pipe tobacco, or roll-your- ucts.’’. imposed by this subchapter an amount equal to own tobacco solely for the person’s own per- (2) IMPORTERS REQUIRED TO BE QUALIFIED.— the tax (if any) imposed by section 4071 on such sonal consumption or use, and’’. (C) The chapter heading for chapter 52 is (A) Sections 5712, 5713(a), 5721, 5722, tires.’’. amended to read as follows: 5762(a)(1), and 5763 (b) and (c) are each amend- (b) CONFORMING AMENDMENT.—Subparagraph ed by inserting ‘‘or importer’’ after ‘‘manufac- (B) of section 4052(b)(1) is amended by striking ‘‘CHAPTER 52—TOBACCO PRODUCTS AND turer’’. clause (iii), by adding ‘‘and’’ at the end of CIGARETTE PAPERS AND TUBES’’. (B) The heading of subsection (b) of section clause (ii), and by redesignating clause (iv) as (D) The table of chapters for subtitle E is 5763 is amended by inserting ‘‘QUALIFIED IM- clause (iii). amended by striking the item relating to chapter PORTERS,’’ after ‘‘MANUFACTURERS,’’. 52 and inserting the following new item: (c) EFFECTIVE DATE.—The amendments made (C) The heading for subchapter B of chapter by this section shall take effect on January 1, ‘‘CHAPTER 52. Tobacco products and cigarette 52 is amended by inserting ‘‘and Importers’’ 1998. papers and tubes.’’. after ‘‘Manufacturers’’. SEC. 846. INCREASE IN EXCISE TAXES ON TO- (h) MODIFICATIONS OF CERTAIN TOBACCO TAX (D) The item relating to subchapter B in the BACCO PRODUCTS. PROVISIONS.— table of subchapters for chapter 52 is amended (a) CIGARETTES.—Subsection (b) of section (1) EXEMPTION FOR EXPORTED TOBACCO PROD- by inserting ‘‘and importers’’ after ‘‘manufac- 5701 is amended— UCTS AND CIGARETTE PAPERS AND TUBES TO turers’’. (1) by striking ‘‘$12 per thousand ($10 per APPLY ONLY TO ARTICLES MARKED FOR EX- (3) BOOKS OF 25 OR FEWER CIGARETTE PAPERS thousand on cigarettes removed during 1991 or PORT.— SUBJECT TO TAX.—Subsection (c) of section 5701 1992)’’ in paragraph (1) and inserting ‘‘$22 per (A) Subsection (b) of section 5704 is amended is amended by striking ‘‘On each book or set of thousand’’, and by adding at the end the following new sen- cigarette papers containing more than 25 pa- (2) by striking ‘‘$25.20 per thousand ($21 per tence: ‘‘Tobacco products and cigarette papers pers,’’ and inserting ‘‘On cigarette papers,’’. thousand on cigarettes removed during 1991 or and tubes may not be transferred or removed (4) STORAGE OF TOBACCO PRODUCTS.—Sub- 1992)’’ in paragraph (2) and inserting ‘‘$46.20 under this subsection unless such products or section (k) of section 5702 is amended by insert- per thousand’’. papers and tubes bear such marks, labels, or no- ing ‘‘under section 5704’’ after ‘‘internal revenue (b) CIGARS.—Subsection (a) of section 5701 is tices as the Secretary shall by regulations pre- bond’’. amended— scribe.’’. (5) AUTHORITY TO PRESCRIBE MINIMUM MANU- (1) by striking ‘‘$1.125 cents per thousand (B) Section 5761 is amended by redesignating FACTURING ACTIVITY REQUIREMENTS.—Section (93.75 cents per thousand on cigars removed subsections (c) and (d) as subsections (d) and 5712 is amended by striking ‘‘or’’ at the end of during 1991 or 1992)’’ in paragraph (1) and in- (e), respectively, and by inserting after sub- paragraph (1), by redesignating paragraph (2) serting ‘‘$2.063 cents per thousand’’, and section (b) the following new subsection: as paragraph (3), and by inserting after para- (2) by striking ‘‘equal to’’ and all that follows ‘‘(c) SALE OF TOBACCO PRODUCTS AND CIGA- graph (1) the following new paragraph: in paragraph (2) and inserting ‘‘equal to 23.375 RETTE PAPERS AND TUBES FOR EXPORT.—Except ‘‘(2) the activity proposed to be carried out at percent of the price for which sold but not more as provided in subsections (b) and (d) of section such premises does not meet such minimum ca- than $55 per thousand.’’. 5704— pacity or activity requirements as the Secretary (c) CIGARETTE PAPERS.—Subsection (c) of sec- ‘‘(1) every person who sells, relands, or re- may prescribe, or’’. tion 5701 is amended by striking ‘‘0.75 cent (0.625 ceives within the jurisdiction of the United (i) EFFECTIVE DATE.— cent on cigarette papers removed during 1991 or States any tobacco products or cigarette papers (1) IN GENERAL.—The amendments made by 1992)’’ and inserting ‘‘1.38 cents’’. or tubes which have been labeled or shipped for this section shall apply to articles removed (as (d) CIGARETTE TUBES.—Subsection (d) of sec- exportation under this chapter, defined in section 5702(k) of the Internal Rev- tion 5701 is amended by striking ‘‘1.5 cents (1.25 ‘‘(2) every person who sells or receives such re- enue Code of 1986, as amended by this section) cents on cigarette tubes removed during 1991 or landed tobacco products or cigarette papers or after September 30, 1997. 1992)’’ and inserting ‘‘2.75 cents’’. tubes, and (2) TRANSITIONAL RULE.—Any person who— (e) SMOKELESS TOBACCO.—Subsection (e) of ‘‘(3) every person who aids or abets in such (A) on the date of the enactment of this Act section 5701 is amended— selling, relanding, or receiving, is engaged in business as a manufacturer of roll- (1) by striking ‘‘36 cents (30 cents on snuff re- shall, in addition to the tax and any other pen- your-own tobacco or as an importer of tobacco moved during 1991 or 1992)’’ in paragraph (1) alty provided in this title, be liable for a penalty products or cigarette papers and tubes, and and inserting ‘‘66 cents’’, and equal to the greater of $1,000 or 5 times the (B) before October 1, 1997, submits an applica- (2) by striking ‘‘12 cents (10 cents on chewing amount of the tax imposed by this chapter. All tion under subchapter B of chapter 52 of such tobacco removed during 1991 or 1992)’’ in para- tobacco products and cigarette papers and tubes Code to engage in such business, graph (2) and inserting ‘‘22 cents’’. relanded within the jurisdiction of the United may, notwithstanding such subchapter B, con- (f) PIPE TOBACCO.—Subsection (f) of section States, and all vessels, vehicles, and aircraft tinue to engage in such business pending final 5701 is amended by striking ‘‘67.5 cents (56.25 used in such relanding or in removing such action on such application. Pending such final cents on pipe tobacco removed during 1991 or products, papers, and tubes from the place action, all provisions of such chapter 52 shall 1992)’’ and inserting ‘‘$1.2375 cents’’. where relanded, shall be forfeited to the United apply to such applicant in the same manner and (g) IMPOSITION OF EXCISE TAX ON MANUFAC- States.’’. to the same extent as if such applicant were a TURE OR IMPORTATION OF ROLL-YOUR-OWN TO- (C) Subsection (a) of section 5761 is amended holder of a permit under such chapter 52 to en- BACCO.— by striking ‘‘subsection (b)’’ and inserting ‘‘sub- gage in such business. (1) IN GENERAL.—Section 5701 (relating to rate section (b) or (c)’’. (j) FLOOR STOCKS TAXES.— of tax) is amended by redesignating subsection (D) Subsection (d) of section 5761, as redesig- (1) IMPOSITION OF TAX.—On tobacco products (g) as subsection (h) and by inserting after sub- nated by subparagraph (B), is amended by strik- and cigarette papers and tubes manufactured in section (f) the following new subsection: ing ‘‘The penalty imposed by subsection (b)’’ or imported into the United States which are re- ‘‘(g) ROLL-YOUR-OWN TOBACCO.—On roll- and inserting ‘‘The penalties imposed by sub- moved before October 1, 1997, and held on such your-own tobacco, manufactured in or imported sections (b) and (c)’’. date for sale by any person, there is hereby im- into the United States, there shall be imposed a (E)(i) Subpart F of chapter 52 is amended by posed a tax in an amount equal to the excess tax of 66 cents per pound (and a proportionate adding at the end the following new section: of—

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00165 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6834 CONGRESSIONAL RECORD — SENATE June 27, 1997 (A) the tax which would be imposed under trolled entity’), notwithstanding paragraphs (1), tween a tax-exempt entity and a related person, section 5701 of the Internal Revenue Code of (2), and (3), the controlling organization shall the basis of the related person in the property 1986 on the article if the article had been re- include such payment as an item of gross income acquired shall not exceed the adjusted basis of moved on such date, over derived from an unrelated trade or business to such property (immediately before the exchange) (B) the prior tax (if any) imposed under sec- the extent such payment reduces the net unre- in the hands of the tax-exempt entity, increased tion 5701 of such Code on such article. lated income of the controlled entity (or in- by the amount of gain recognized to the tax-ex- (2) AUTHORITY TO EXEMPT CIGARETTES HELD IN creases any net unrelated loss of the controlled empt entity on the transfer which is subject to VENDING MACHINES.—To the extent provided in entity). There shall be allowed all deductions of tax under section 511. regulations prescribed by the Secretary, no tax the controlling organization directly connected ‘‘(b) DEFINITIONS.—For purposes of this sec- shall be imposed by paragraph (1) on cigarettes with amounts treated as derived from an unre- tion— held for retail sale on October 1, 1997, by any lated trade or business under the preceding sen- ‘‘(1) TAX-EXEMPT ENTITY.—The term ‘tax-ex- person in any vending machine. If the Secretary tence. empt entity’ has the meaning given such term by provides such a benefit with respect to any per- ‘‘(B) NET UNRELATED INCOME OR LOSS.—For section 168(h)(2) determined without regard to son, the Secretary may reduce the $500 amount purposes of this paragraph— subparagraph (A)(iii) thereof. in paragraph (3) with respect to such person. ‘‘(i) NET UNRELATED INCOME.—The term ‘net ‘‘(2) RELATED PERSON.—The term ‘related per- (3) CREDIT AGAINST TAX.—Each person shall unrelated income’ means— son’ means any person bearing a relationship to be allowed as a credit against the taxes imposed ‘‘(I) in the case of a controlled entity which is the tax-exempt entity which is described in sec- by paragraph (1) an amount equal to $500. Such not exempt from tax under section 501(a), the tion 267(b) or 707(b)(1). For purposes of applying credit shall not exceed the amount of taxes im- portion of such entity’s taxable income which section 267(b)(2) under the preceding sentence, posed by paragraph (1) on October 1, 1997, for would be unrelated business taxable income if such an entity shall be treated as if it were an which such person is liable. such entity were exempt from tax under section individual.’’. (4) LIABILITY FOR TAX AND METHOD OF PAY- 501(a) and had the same exempt purposes (as de- (b) CLERICAL AMENDMENT.—The table of sec- MENT.— fined in section 513A(a)(5)(A)) as the controlling tions for part IV of subchapter O of chapter 1 is (A) LIABILITY FOR TAX.—A person holding organization, or amended by striking the last item and inserting cigarettes on October 1, 1997, to which any tax ‘‘(II) in the case of a controlled entity which the following: imposed by paragraph (1) applies shall be liable is exempt from tax under section 501(a), the for such tax. amount of the unrelated business taxable in- ‘‘Sec. 1061. Basis limitation for sale or exchange (B) METHOD OF PAYMENT.—The tax imposed come of the controlled entity. of property by tax-exempt entity by paragraph (1) shall be paid in such manner ‘‘(ii) NET UNRELATED LOSS.—The term ‘net un- to related person. as the Secretary shall prescribe by regulations. related loss’ means the net operating loss ad- ‘‘Sec. 1062. Cross references.’’. (C) TIME FOR PAYMENT.—The tax imposed by justed under rules similar to the rules of clause (c) EFFECTIVE DATE.— paragraph (1) shall be paid on or before Janu- (i). (1) IN GENERAL.—The amendments made by ary 2, 1998. ‘‘(C) SPECIFIED PAYMENT.—For purposes of this section shall apply to sales and exchanges (5) ARTICLES IN FOREIGN TRADE ZONES.—Not- this paragraph, the term ‘specified payment’ after June 8, 1997. withstanding the Act of June 18, 1934 (48 Stat. means any interest, annuity, royalty, or rent. (2) BINDING CONTRACTS.—The amendments 998, 19 U.S.C. 81a) and any other provision of ‘‘(D) DEFINITION OF CONTROL.—For purposes made by this section shall not apply to any sale law, any article which is located in a foreign of this paragraph— or exchange pursuant to a written contract trade zone on October 1, 1997, shall be subject to ‘‘(i) CONTROL.—The term ‘control’ means— which was binding on June 8, 1997, and at all the tax imposed by paragraph (1) if— ‘‘(I) in the case of a corporation, ownership times thereafter before the sale or exchange. (A) internal revenue taxes have been deter- (by vote or value) of more than 50 percent of the SEC. 853. TERMINATION OF EXCEPTION FROM mined, or customs duties liquidated, with re- stock in such corporation, RULES RELATING TO EXEMPT ORGA- spect to such article before such date pursuant ‘‘(II) in the case of a partnership, ownership NIZATIONS WHICH PROVIDE COM- to a request made under the 1st proviso of sec- of more than 50 percent of the profits interests MERCIAL-TYPE INSURANCE. tion 3(a) of such Act, or or capital interests in such partnership, or (a) IN GENERAL.—Subparagraph (A) of section (B) such article is held on such date under the ‘‘(III) in any other case, ownership of more 1012(c)(4) of the Tax Reform Act of 1986 shall supervision of a customs officer pursuant to the than 50 percent of the beneficial interests in the not apply to any taxable year beginning after 2d proviso of such section 3(a). entity. December 31, 1997. (6) DEFINITIONS.—For purposes of this sub- ‘‘(ii) CONSTRUCTIVE OWNERSHIP.—Section 318 (b) SPECIAL RULES.—In the case of an organi- section— (relating to constructive ownership of stock) zation to which section 501(m) of the Internal (A) IN GENERAL.—Terms used in this sub- shall apply for purposes of determining owner- Revenue Code of 1986 applies solely by reason of section which are also used in section 5702 of ship of stock in a corporation. Similar principles the amendment made by subsection (a)— the Internal Revenue Code of 1986 shall have shall apply for purposes of determining owner- (1) no adjustment shall be made under section the respective meanings such terms have in such ship of interests in any other entity. 481 (or any other provision) of such Code on ac- section, as amended by this Act. ‘‘(E) RELATED PERSONS.—The Secretary shall count of a change in its method of accounting (B) SECRETARY.—The term ‘‘Secretary’’ means prescribe such rules as may be necessary or ap- for its first taxable year beginning after Decem- the Secretary of the Treasury or the Secretary’s propriate to prevent avoidance of the purposes ber 31, 1997, and delegate. of this paragraph through the use of related (2) for purposes of determining gain or loss, (7) CONTROLLED GROUPS.—Rules similar to the persons.’’. the adjusted basis of any asset held on the 1st rules of section 5061(e)(3) of such Code shall (b) EFFECTIVE DATE.— day of such taxable year shall be treated as apply for purposes of this subsection. (1) IN GENERAL.—Except as provided in para- equal to its fair market value as of such day. (8) OTHER LAWS APPLICABLE.—All provisions graph (2), the amendments made by this section (c) RESERVE WEAKENING AFTER JUNE 8, 1997.— of law, including penalties, applicable with re- shall apply to taxable years beginning after the Any reserve weakening after June 8, 1997, by an spect to the taxes imposed by section 5701 of date of the enactment of this Act. organization described in subsection (b) shall be such Code shall, insofar as applicable and not (2) CONTROL TEST.—In the case of taxable treated as occurring in such organizations 1st inconsistent with the provisions of this sub- years beginning before January 1, 1999, an orga- taxable year beginning after December 31, 1997. section, apply to the floor stocks taxes imposed nization shall be treated as controlling another (d) REGULATIONS.—The Secretary of the by paragraph (1), to the same extent as if such organization for purposes of section 512(b)(13) of Treasury or his delegate may prescribe rules for taxes were imposed by such section 5701. The the Internal Revenue Code of 1986 (as amended providing proper adjustments for organizations Secretary may treat any person who bore the ul- by this section) only if it controls such organiza- described in subsection (b) with respect to short timate burden of the tax imposed by paragraph tion within the meaning of such section, deter- taxable years which begin during 1998 by reason (1) as the person to whom a credit or refund mined by substituting ‘‘80 percent’’ for ‘‘50 per- of section 843 of the Internal Revenue Code of under such provisions may be allowed or made. cent’’ each place it appears in subparagraph (D) 1986. Subtitle F—Provisions Relating to Tax- thereof. Subtitle G—Foreign Provisions Exempt Entities SEC. 852. LIMITATION ON INCREASE IN BASIS OF SEC. 861. DEFINITION OF FOREIGN PERSONAL SEC. 851. EXPANSION OF LOOK-THRU RULE FOR PROPERTY RESULTING FROM SALE HOLDING COMPANY INCOME. INTEREST, ANNUITIES, ROYALTIES, BY TAX-EXEMPT ENTITY TO A RE- AND RENTS DERIVED BY SUBSIDI- LATED PERSON. (a) INCOME FROM NOTIONAL PRINCIPAL CON- ARIES OF TAX-EXEMPT ORGANIZA- (a) IN GENERAL.—Part IV of subchapter O of TRACTS AND PAYMENTS IN LIEU OF DIVIDENDS.— TIONS. chapter 1 (relating to special rules for gain or (1) IN GENERAL.—Paragraph (1) of section (a) IN GENERAL.—Paragraph (13) of section loss on disposition of property) is amended by 954(c) (defining foreign personal holding com- 512(b) is amended to read as follows: redesignating section 1061 as section 1062 and by pany income) is amended by adding at the end ‘‘(13) SPECIAL RULES FOR CERTAIN AMOUNTS inserting after section 1060 the following new the following new subparagraphs: RECEIVED FROM CONTROLLED ENTITIES.— section: ‘‘(F) INCOME FROM NOTIONAL PRINCIPAL CON- ‘‘(A) IN GENERAL.—If an organization (in this ‘‘SEC. 1061. BASIS LIMITATION FOR SALE OR EX- TRACTS.—Net income from notional principal paragraph referred to as the ‘controlling organi- CHANGE OF PROPERTY BY TAX-EX- contracts. Any item of income, gain, deduction, zation’) receives (directly or indirectly) a speci- EMPT ENTITY TO RELATED PERSON. or loss from a notional principal contract en- fied payment from another entity which it con- ‘‘(a) GENERAL RULE.—In the case of a sale or tered into for purposes of hedging any item de- trols (in this paragraph referred to as the ‘con- exchange of property directly or indirectly be- scribed in any preceding subparagraph shall not

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00166 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6835 be taken into account for purposes of this sub- transfer pursuant to a written binding contract the country referred to in subparagraph (A), paragraph but shall be taken into account in effect on June 8, 1997, and at all times there- and under such other subparagraph. after before the disposition of property. A con- ‘‘(ii) such country allows a credit against its ‘‘(G) PAYMENTS IN LIEU OF DIVIDENDS.—Pay- tract shall not fail to meet the requirements of net basis tax for the full amount of the tax paid ments in lieu of dividends which are made pur- the preceding sentence solely because— to such other foreign country. suant to an agreement to which section 1058 ap- (A) it provides for a sale in lieu of an ex- ‘‘(C) REGULATIONS.—The Secretary may pre- plies.’’. change, or scribe such regulations as may be appropriate to (2) CONFORMING AMENDMENT.—Subparagraph (B) the property to be acquired as replacement prevent the abuse of the exception provided by (B) of section 954(c)(1) is amended— property was not identified under such contract this paragraph. (A) by striking the second sentence, and before June 9, 1997. ‘‘(5) CERTAIN RULES TO APPLY.—For purposes (B) by striking ‘‘also’’ in the last sentence. SEC. 863. HOLDING PERIOD REQUIREMENT FOR of this subsection, the rules of paragraphs (3) (b) EXCEPTION FOR DEALERS.—Paragraph (2) CERTAIN FOREIGN TAXES. and (4) of section 246(c) shall apply. of section 954(c) is amended by adding at the (a) IN GENERAL.—Section 901 is amended by ‘‘(6) TREATMENT OF BONA FIDE SALES.—If a end the following new subparagraph: redesignating subsection (k) as subsection (l) person’s holding period is reduced by reason of ‘‘(C) EXCEPTION FOR DEALERS.—Except as pro- and by inserting after subsection (j) the fol- the application of the rules of section 246(c)(4) vided in subparagraph (A), (E), or (G) of para- lowing new subsection: to any contract for the bona fide sale of stock, graph (1) or by regulations, in the case of a reg- ‘‘(k) MINIMUM HOLDING PERIOD FOR CERTAIN the determination of whether such person’s ular dealer in property (within the meaning of TAXES.— holding period meets the requirements of para- paragraph (1)(B)), forward contracts, option ‘‘(1) WITHHOLDING TAXES.— graph (2) with respect to taxes deemed paid contracts, or similar financial instruments (in- ‘‘(A) IN GENERAL.—In no event shall a credit under section 902 or 960 shall be made as of the cluding notional principal contracts and all in- be allowed under subsection (a) for any with- date such contract is entered into. struments referenced to commodities), there holding tax on a dividend with respect to stock ‘‘(7) TAXES ALLOWED AS DEDUCTION, ETC.— shall not be taken into account in computing in a corporation if— Sections 275 and 78 shall not apply to any tax foreign personal holding income any item of in- ‘‘(i) such stock is held by the recipient of the which is not allowable as a credit under sub- come, gain, deduction, or loss from any trans- dividend for 15 days or less during the 30-day section (a) by reason of this subsection.’’. action (including hedging transactions) entered period beginning on the date which is 15 days (b) NOTICE OF WITHHOLDING TAXES PAID BY into in the ordinary course of such dealer’s before the date on which such share becomes ex- REGULATED INVESTMENT COMPANY.—Subsection trade or business as such a dealer.’’. dividend with respect to such dividend, or (c) of section 853 (relating to foreign tax credit allowed to shareholders) is amended by adding (c) EFFECTIVE DATE.—The amendments made ‘‘(ii) to the extent that the recipient of the div- by this section shall apply to taxable years be- idend is under an obligation (whether pursuant at the end the following new sentence: ‘‘Such ginning after the date of the enactment of this to a short sale or otherwise) to make related notice shall also include the amount of such Act. payments with respect to positions in substan- taxes which (without regard to the election tially similar or related property. under this section) would not be allowable as a SEC. 862. PERSONAL PROPERTY USED PREDOMI- credit under section 901(a) to the regulated in- NANTLY IN THE UNITED STATES ‘‘(B) WITHHOLDING TAX.—For purposes of this TREATED AS NOT PROPERTY OF A paragraph, the term ‘withholding tax’ includes vestment company by reason of section 901(k).’’. LIKE KIND WITH RESPECT TO PROP- any tax determined on a gross basis; but does (c) EFFECTIVE DATE.—The amendments made ERTY USED PREDOMINANTLY OUT- not include any tax which is in the nature of a by this section shall apply to dividends paid or SIDE THE UNITED STATES. prepayment of a tax imposed on a net basis. accrued more than 30 days after the date of the (a) IN GENERAL.—Subsection (h) of section ‘‘(2) DEEMED PAID TAXES.—In the case of in- enactment of this Act. 1031 (relating to exchange of property held for come, war profits, or excess profits taxes deemed SEC. 864. SOURCE RULES FOR INVENTORY PROP- productive use or investment) is amended to paid under section 853, 902, or 960 through a ERTY. read as follows: chain of ownership of stock in 1 or more cor- (a) IN GENERAL.—Section 865(b) is amended by ‘‘(h) SPECIAL RULES FOR FOREIGN REAL AND porations, no credit shall be allowed under sub- adding at the end the following new paragraph: ‘‘(2) CERTAIN SALES FOR USE IN UNITED PERSONAL PROPERTY.—For purposes of this sec- section (a) for such taxes if— STATES.—If— tion— ‘‘(A) any stock of any corporation in such ‘‘(A) a United States resident sells (directly or ‘‘(1) REAL PROPERTY.—Real property located chain (the ownership of which is required to ob- indirectly) inventory property to another United in the United States and real property located tain credit under subsection (a) for such taxes) States resident for use, consumption, or disposi- outside the United States are not property of a is held for less than the period described in like kind. tion in the United States, and paragraph (1)(A)(i), or ‘‘(B) such sale is not attributable to an office ‘‘(2) PERSONAL PROPERTY.— ‘‘(B) the corporation holding the stock is ‘‘(A) IN GENERAL.—Personal property used or other fixed place of business maintained by under an obligation referred to in paragraph the seller outside the United States, predominantly within the United States and (1)(A)(ii). personal property used predominantly outside any income of such United States resident (or ‘‘(3) 45-DAY RULE IN THE CASE OF CERTAIN any related person) from such sale shall be the United States are not property of a like PREFERENCE DIVIDENDS.—In the case of stock kind. sourced in the United States.’’. having preference in dividends and dividends (b) CONFORMING AMENDMENTS.—Section 865(b) ‘‘(B) PREDOMINANT USE.—Except as provided with respect to such stock which are attrib- is amended— in subparagraph (C) and (D), the predominant utable to a period or periods aggregating in ex- (1) by striking ‘‘In the case of’’ and inserting: use of any property shall be determined based cess of 366 days, paragraph (1)(A)(i) shall be ap- ‘‘(1) IN GENERAL.—In the case of’’, and on— plied— (2) by redesignating paragraphs (1) and (2) as ‘‘(i) in the case of the property relinquished in ‘‘(A) by substituting ‘45 days’ for ‘15 days’ subparagraphs (A) and (B), respectively. the exchange, the 2-year period ending on the each place it appears, and (c) EFFECTIVE DATE.—The amendments made date of such relinquishment, and ‘‘(B) by substituting ‘90-day period’ for ‘30- by this section shall apply to taxable years be- ‘‘(ii) in the case of the property acquired in day period’. ginning after the date of the enactment of this the exchange, the 2-year period beginning on ‘‘(4) EXCEPTION FOR CERTAIN TAXES PAID BY Act. the date of such acquisition. SECURITIES DEALERS.— SEC. 865. INTEREST ON UNDERPAYMENTS NOT ‘‘(C) PROPERTY HELD FOR LESS THAN 2 ‘‘(A) IN GENERAL.—Paragraphs (1) and (2) REDUCED BY FOREIGN TAX CREDIT YEARS.—Except in the case of an exchange shall not apply to any qualified tax with respect CARRYBACKS. which is part of a transaction (or series of to any security held in the active conduct in a (a) IN GENERAL.—Subsection (d) of section transactions) structured to avoid the purposes foreign country of a securities business of any 6601 is amended by redesignating paragraphs (2) of this subsection— person— and (3) as paragraphs (3) and (4), respectively, ‘‘(i) only the periods the property was held by ‘‘(i) who is registered as a securities broker or and by inserting after paragraph (1) the fol- the person relinquishing the property (or any dealer under section 15(a) of the Securities Ex- lowing new paragraph: related person) shall be taken into account change Act of 1934, ‘‘(2) FOREIGN TAX CREDIT CARRYBACKS.—If under subparagraph (B)(i), and ‘‘(ii) who is registered as a Government securi- any credit allowed for any taxable year is in- ‘‘(ii) only the periods the property was held by ties broker or dealer under section 15C(a) of creased by reason of a carryback of tax paid or the person acquiring the property (or any re- such Act, or accrued to foreign countries or possessions of lated person) shall be taken into account under ‘‘(iii) who is licensed or authorized in such the United States, such increase shall not affect subparagraph (B)(ii). foreign country to conduct securities activities the computation of interest under this section ‘‘(D) SPECIAL RULE FOR CERTAIN PROPERTY.— in such country and is subject to bona fide regu- for the period ending with the filing date for the Property described in any subparagraph of sec- lation by a securities regulating authority of taxable year in which such taxes were in fact tion 168(g)(4) shall be treated as used predomi- such country. paid or accrued, or, with respect to any portion nantly in the United States.’’. ‘‘(B) QUALIFIED TAX.—For purposes of sub- of such credit carryback from a taxable year at- (b) EFFECTIVE DATE.— paragraph (A), the term ‘qualified tax’ means a tributable to a net operating loss carryback or a (1) IN GENERAL.—The amendment made by tax paid to a foreign country (other than the capital loss carryback from a subsequent taxable this section shall apply to transfers after June 8, foreign country referred to in subparagraph (A)) year, such increase shall not affect the com- 1997, in taxable years ending after such date. if— putation of interest under this section for the (2) BINDING CONTRACTS.—The amendment ‘‘(i) the dividend to which such tax is attrib- period ending with the filing date for such sub- made by this section shall not apply to any utable is subject to taxation on a net basis by sequent taxable year.’’.

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(b) CONFORMING AMENDMENT TO REFUNDS AT- (b) EFFECTIVE DATE.—The amendment made ‘‘(ii) ELIGIBLE LOSS.—For purposes of clause TRIBUTABLE TO FOREIGN TAX CREDIT by this section shall apply to taxable years be- (i), the term ‘eligible loss’ means— CARRYBACKS.— ginning after the date of the enactment of this ‘‘(I) in the case of an individual, losses of (1) IN GENERAL.—Subsection (f) of section 6611 Act. property arising from fire, storm, shipwreck, or is amended by redesignating paragraphs (2) and Subtitle H—Other Revenue Provisions other casualty, or from theft, (3) as paragraphs (3) and (4), respectively, and ‘‘(II) in the case of a taxpayer which is a SEC. 871. TERMINATION OF SUSPENSE ACCOUNTS by inserting after paragraph (1) the following FOR FAMILY CORPORATIONS RE- small business, losses attributable to Presi- new paragraph: QUIRED TO USE ACCRUAL METHOD dentially declared disasters (as defined in sec- ‘‘(2) FOREIGN TAX CREDIT CARRYBACKS.—For OF ACCOUNTING. tion 1033(h)(3)), and purposes of subsection (a), if any overpayment (a) IN GENERAL.—Subsection (i) of section 447 ‘‘(III) in the case of a taxpayer engaged in the of tax imposed by subtitle A results from a (relating to method of accounting for corpora- trade or business of farming (as defined in sec- carryback of tax paid or accrued to foreign tions engaged in farming) is amended by strik- tion 263A(e)(4)), losses attributable to such countries or possessions of the United States, ing paragraph (3), by redesignating paragraphs Presidentially declared disasters. such overpayment shall be deemed not to have (4), (5), and (6) as paragraphs (3), (4), and (5), ‘‘(iii) SMALL BUSINESS.—For purposes of this been made before the filing date for the taxable respectively, and by adding at the end the fol- subparagraph, the term ‘small business’ means a year in which such taxes were in fact paid or lowing new paragraph: corporation or partnership which meets the accrued, or, with respect to any portion of such ‘‘(6) TERMINATION.— gross receipts test of section 448(c) for the tax- credit carryback from a taxable year attrib- ‘‘(A) IN GENERAL.—No suspense account may able year in which the loss arose (or, in the case utable to a net operating loss carryback or a be established under this subsection by any cor- of a sole proprietorship, which would meet such capital loss carryback from a subsequent taxable poration required by this section to change its test if such proprietorship were a corpora- year, such overpayment shall be deemed not to method of accounting for any taxable year end- tion).’’. have been made before the filing date for such ing after June 8, 1997. (c) EFFECTIVE DATE.—The amendments made subsequent taxable year.’’. ‘‘(B) PHASEOUT OF EXISTING SUSPENSE AC- by this section shall apply to net operating (2) CONFORMING AMENDMENTS.— COUNTS.— losses for taxable years beginning after the date (A) Paragraph (4) of section 6611(f) (as so re- ‘‘(i) IN GENERAL.—Each suspense account of the enactment of this Act. designated) is amended— under this subsection shall be reduced (but not SEC. 873. EXPANSION OF DENIAL OF DEDUCTION (i) by striking ‘‘PARAGRAPHS (1) AND (2)’’ and below zero) for each taxable year beginning FOR CERTAIN AMOUNTS PAID IN inserting ‘‘PARAGRAPHS (1), (2), AND (3)’’, and after June 8, 1997, by an amount equal to the CONNECTION WITH INSURANCE. (ii) by striking ‘‘paragraph (1) or (2)’’ each lesser of— (a) DENIAL OF DEDUCTION FOR PREMIUMS.— place it appears and inserting ‘‘paragraph (1), ‘‘(I) the applicable portion of such account, or Paragraph (1) of section 264(a) is amended to (2), or (3)’’. ‘‘(II) 50 percent of the taxable income of the read as follows: (B) Clause (ii) of section 6611(f)(4)(B) (as so corporation for the taxable year, or, if the cor- ‘‘(1) Premiums on any life insurance policy, or redesignated) is amended by striking ‘‘and’’ at poration has no taxable income for such year, endowment or annuity contract, if the taxpayer the end of subclause (I), by redesignating sub- the amount of any net operating loss (as defined is directly or indirectly a beneficiary under the clause (II) as subclause (III), and by inserting in section 172(c)) for such taxable year. policy or contract.’’. after subclause (I) the following new subclause: For purposes of the preceding sentence, the (b) INTEREST ON POLICY LOANS.—Paragraph ‘‘(II) in the case of a carryback of taxes paid amount of taxable income and net operating loss (4) of section 264(a) is amended by striking ‘‘in- or accrued to foreign countries or possessions of shall be determined without regard to this para- dividual, who’’ and all that follows and insert- the United States, the taxable year in which graph. ing ‘‘individual.’’. such taxes were in fact paid or accrued (or, with ‘‘(ii) COORDINATION WITH OTHER REDUC- (c) PRO RATA ALLOCATION OF INTEREST EX- respect to any portion of such carryback from a TIONS.—The amount of the applicable portion PENSE TO POLICY CASH VALUES.—Section 264 is taxable year attributable to a net operating loss for any taxable year shall be reduced (but not amended by adding at the end the following carryback or a capital loss carryback from a below zero) by the amount of any reduction re- new subsection: subsequent taxable year, such subsequent tax- quired for such taxable year under any other ‘‘(e) PRO RATA ALLOCATION OF INTEREST EX- able year), and’’. provision of this subsection. PENSE TO POLICY CASH VALUES.— (C) Subclause (III) of section 6611(f)(4)(B)(ii) ‘‘(iv) INCLUSION IN INCOME.—Any reduction in ‘‘(1) IN GENERAL.—No deduction shall be al- (as so redesignated) is amended by inserting a suspense account under this paragraph shall lowed for that portion of the taxpayer’s interest ‘‘(as defined in paragraph (3)(B))’’ after ‘‘credit be included in gross income for the taxable year expense which is allocable to unborrowed policy carryback’’ the first place it appears. of the reduction. cash values. (D) Section 6611 is amended by striking sub- ‘‘(C) APPLICABLE PORTION.—For purposes of ‘‘(2) ALLOCATION.—For purposes of paragraph section (g) and by redesignating subsections (h) subparagraph (B), the term ‘applicable portion’ (1), the portion of the taxpayer’s interest ex- and (i) as subsections (g) and (h), respectively. means, for any taxable year, the amount which pense which is allocable to unborrowed policy (c) EFFECTIVE DATE.—The amendments made would ratably reduce the amount in the account cash values is an amount which bears the same by this section shall apply to carrybacks arising (after taking into account prior reductions) to ratio to such interest expense as— in taxable years beginning after the date of the zero over the period consisting of such taxable ‘‘(A) the taxpayer’s average unborrowed pol- enactment of this Act. year and the remaining taxable years in such icy cash values of life insurance policies, and SEC. 866. CLARIFICATION OF PERIOD OF LIMITA- first 20 taxable years. annuity and endowment contracts, issued after TIONS ON CLAIM FOR CREDIT OR RE- ‘‘(D) AMOUNTS AFTER 20TH YEAR.—Any June 8, 1997, bears to FUND ATTRIBUTABLE TO FOREIGN amount in the account as of the close of the ‘‘(B) the average adjusted bases (within the TAX CREDIT CARRYFORWARD. 20th year referred to in subparagraph (C) shall meaning of section 1016) for all assets of the tax- (a) IN GENERAL.—Subparagraph (A) of section be treated as the applicable portion for each payer. 6511(d)(3) is amended by striking ‘‘for the year succeeding year thereafter to the extent not re- ‘‘(3) UNBORROWED POLICY CASH VALUES.—The with respect to which the claim is made’’ and duced under this paragraph for any prior tax- term ‘unborrowed policy cash value’ means, inserting ‘‘for the year in which such taxes were able year after such 20th year.’’. with respect to any life insurance policy or an- actually paid or accrued’’. (b) EFFECTIVE DATE.—The amendments made nuity or endowment contract, the excess of— (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years end- ‘‘(A) the cash surrender value of such policy by subsection (a) shall apply to taxes paid or ac- ing after June 8, 1997. or contract determined without regard to any crued in taxable years beginning after the date SEC. 872. MODIFICATION OF TAXABLE YEARS TO surrender charge, over of the enactment of this Act. WHICH NET OPERATING LOSSES MAY ‘‘(B) the amount of any loan in respect of SEC. 867. MODIFICATION TO FOREIGN TAX CRED- BE CARRIED. such policy or contract. IT CARRYBACK AND CARRYOVER PE- (a) IN GENERAL.—Subparagraph (A) of section ‘‘(4) EXCEPTION FOR CERTAIN POLICIES AND RIODS. 172(b)(1) (relating to years to which loss may be CONTRACTS COVERING OFFICERS, DIRECTORS, AND (a) IN GENERAL.—Subsection (c) of section 904 carried) is amended— EMPLOYEES.—Paragraph (1) shall not apply to (relating to limitation on credit) is amended— (1) by striking ‘‘3’’ in clause (i) and inserting any policy or contract owned by an entity en- (1) by striking ‘‘in the second preceding tax- ‘‘2’’, and gaged in a trade or business which covers any able year,’’, and (2) by striking ‘‘15’’ in clause (ii) and inserting individual who is an officer, director, or em- (2) by striking ‘‘or fifth’’ and inserting ‘‘fifth, ‘‘20’’. ployee of such trade or business at the time first sixth, or seventh’’. (b) RETENTION OF 3-YEAR CARRYBACK FOR covered by the policy or contract, and such poli- (b) EFFECTIVE DATE.—The amendment made CASUALTY LOSSES OF INDIVIDUALS.—Paragraph cies and contracts shall not be taken into ac- by subsection (a) shall apply to credits arising (1) of section 172(b) is amended by adding at the count under paragraph (2). in taxable years beginning after December 31, end the following new subparagraph: ‘‘(5) EXCEPTION FOR POLICIES AND CONTRACTS 1997. ‘‘(F) RETENTION OF 3-YEAR CARRYBACK IN CER- HELD BY NATURAL PERSONS; TREATMENT OF SEC. 868. REPEAL OF EXCEPTION TO ALTER- TAIN CASES.— PARTNERSHIPS AND S CORPORATIONS.— NATIVE MINIMUM FOREIGN TAX ‘‘(i) IN GENERAL.—Subparagraph (A)(i) shall ‘‘(A) POLICIES AND CONTRACTS HELD BY NAT- CREDIT LIMIT. be applied by substituting ‘3 years’ for ‘2 years’ URAL PERSONS.— (a) IN GENERAL.—Section 59(a)(2) (relating to with respect to the portion of the net operating ‘‘(i) IN GENERAL.—This subsection shall not limitation to 90 percent of tax) is amended by loss for the taxable year which is an eligible loss apply to any policy or contract held by a nat- striking subparagraph (C). with respect to the taxpayer. ural person.

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‘‘(ii) EXCEPTION WHERE BUSINESS IS BENE- icy cash values (within the meaning of section ‘‘(A) first to properties with unrealized depre- FICIARY.—If a trade or business is directly or in- 264(e)(3)(A)) of life insurance policies and annu- ciation in proportion to their respective amounts directly the beneficiary under any policy or con- ity and endowment contracts to which section of unrealized depreciation before such decrease tract, to the extent of the unborrowed cash 264(e) applies,’’. (but only to the extent of each property’s unre- value of such policy or contract, such policy or (5) Paragraph (1) of section 812(d) is amended alized depreciation), and contract shall be treated as held by such trade by striking ‘‘and’’ at the end of subparagraph ‘‘(B) then, to the extent such decrease is not or business and not by a natural person. (B), by striking the period at the end of sub- allocated under subparagraph (A), in proportion ‘‘(iii) SPECIAL RULES.— paragraph (C) and inserting ‘‘, and’’, and by to their respective adjusted bases (as adjusted ‘‘(I) CERTAIN TRADES OR BUSINESSES NOT adding at the end the following new subpara- under subparagraph (A)).’’. TAKEN INTO ACCOUNT.—Clause (ii) shall not graph: (b) EFFECTIVE DATE.—The amendment made apply to any trade or business carried on as a ‘‘(D) the increase for any taxable year in the by subsection (a) shall apply to distributions sole proprietorship and to any trade or business policy cash values (within the meaning of sec- after the date of the enactment of this Act. tion 264(e)(3)(A)) of life insurance policies and performing services as an employee. SEC. 875. REPEAL OF REQUIREMENT THAT INVEN- ‘‘(II) LIMITATION ON UNBORROWED CASH annuity and endowment contracts to which sec- TORY BE SUBSTANTIALLY APPRE- VALUE.—The amount of the unborrowed cash tion 264(e) applies.’’. CIATED. (6) Subparagraph (B) of section 832(b)(5) is value of any policy or contract which is taken (a) IN GENERAL.—Paragraph (2) of section amended by striking ‘‘and’’ at the end of clause into account by reason of clause (ii) shall not 751(a) is amended to read as follows: (i), by striking the period at the end of clause exceed the benefit to which the trade or business ‘‘(2) inventory items of the partnership,’’. (ii) and inserting ‘‘, and’’, and by adding at the is entitled under the policy or contract. (b) CONFORMING AMENDMENTS.— end the following new clause: ‘‘(iv) REPORTING.—The Secretary shall require (1) Subsection (d) of section 751 is amended to such reporting from policyholders and issuers as ‘‘(iii) the increase for the taxable year in pol- icy cash values (within the meaning of section read as follows: is necessary to carry out clause (ii). Any report ‘‘(d) INVENTORY ITEMS.—For purposes of this required under the preceding sentence shall be 264(e)(3)(A)) of life insurance policies and annu- ity and endowment contracts to which section subchapter, the term ‘inventory items’ means— treated as a statement referred to in section 264(e) applies.’’. ‘‘(1) property of the partnership of the kind 6724(d)(1). (c) CONFORMING AMENDMENT.—Subparagraph described in section 1221(1), ‘‘(B) TREATMENT OF PARTNERSHIPS AND S COR- (A) of section 265(b)(4) is amended by inserting ‘‘(2) any other property of the partnership PORATIONS.—In the case of a partnership or S ‘‘, section 264,’’ before ‘‘and section 291’’. which, on sale or exchange by the partnership, corporation, this subsection shall be applied at (d) EFFECTIVE DATE.—The amendments made would be considered property other than a cap- the partnership and corporate levels. by this section shall apply to contracts issued ital asset and other than property described in ‘‘(6) SPECIAL RULES.— after June 8, 1997, in taxable years ending after section 1231, ‘‘(A) COORDINATION WITH SUBSECTION (a) AND such date. For purposes of the preceding sen- ‘‘(3) any other property of the partnership SECTION 265.—If interest on any indebtedness is tence, any material increase in the death benefit which, if sold or exchanged by the partnership, disallowed under subsection (a) or section 265— or other material change in the contract shall be would result in a gain taxable under subsection ‘‘(i) such disallowed interest shall not be treated as a new contract but the addition of (a) of section 1246 (relating to gain on foreign taken into account for purposes of applying this covered lives shall be treated as a new contract investment company stock), and subsection, and only with respect to such additional covered ‘‘(4) any other property held by the partner- ‘‘(ii) for purposes of applying paragraph lives. For purposes of this subsection, an in- ship which, if held by the selling or distributee (2)(B), the adjusted bases otherwise taken into crease in the death benefit under a policy or partner, would be considered property of the account shall be reduced (but not below zero) by contract issued in connection with a lapse de- type described in paragraph (1), (2), or (3).’’. the amount of such indebtedness. scribed in section 501(d)(2) of the Health Insur- (2) Sections 724(d)(2), 731(a)(2)(B), 731(c)(6), ‘‘(B) COORDINATION WITH SECTION 263A.—This ance Portability and Accountability Act of 1996 732(c)(1)(A) (as amended by the preceding sec- subsection shall be applied before the applica- shall not be treated as a new contract. tion), 735(a)(2), and 735(c)(1) are each amended tion of section 263A (relating to capitalization of SEC. 874. ALLOCATION OF BASIS AMONG PROP- by striking ‘‘section 751(d)(2)’’ and inserting certain expenses where taxpayer produces prop- ERTIES DISTRIBUTED BY PARTNER- ‘‘section 751(d)’’. erty).’’. SHIP. (c) EFFECTIVE DATE.—The amendments made ‘‘(7) INTEREST EXPENSE.—The term ‘interest (a) IN GENERAL.—Subsection (c) of section 732 by this section shall apply to sales, exchanges, expense’ means the aggregate amount allowable is amended to read as follows: and distributions after the date of the enact- to the taxpayer as a deduction for interest ‘‘(c) ALLOCATION OF BASIS.— ment of this Act. (within the meaning of section 265(b)(4)) for the ‘‘(1) IN GENERAL.—The basis of distributed taxable year (determined without regard to this properties to which subsection (a)(2) or (b) is ap- SEC. 876. LIMITATION ON PROPERTY FOR WHICH plicable shall be allocated— INCOME FORECAST METHOD MAY BE subsection, section 265(b), and section 291). USED. ‘‘(8) AGGREGATION RULES.— ‘‘(A)(i) first to any unrealized receivables (as (a) LIMITATION.—Subsection (g) of section 167 ‘‘(A) IN GENERAL.—All members of a controlled defined in section 751(c)) and inventory items is amended by adding at the end the following group (within the meaning of subsection (as defined in section 751(d)(2)) in an amount new paragraph: (d)(5)(B)) shall be treated as 1 taxpayer for pur- equal to the adjusted basis of each such prop- ‘‘(6) LIMITATION ON PROPERTY FOR WHICH IN- poses of this subsection. erty to the partnership, and COME FORECAST METHOD MAY BE USED.—The de- ‘‘(B) TREATMENT OF INSURANCE COMPANIES.— ‘‘(ii) if the basis to be allocated is less than This subsection shall not apply to an insurance the sum of the adjusted bases of such properties preciation deduction allowable under this sec- company, and subparagraph (A) shall be ap- to the partnership, then, to the extent any de- tion may be determined under the income fore- plied without regard to any insurance com- crease is required in order to have the adjusted cast method or any similar method only with re- pany.’’. bases of such properties equal the basis to be al- spect to— ‘‘(A) property described in paragraph (3) or (b) TREATMENT OF INSURANCE COMPANIES.— located, in the manner provided in paragraph (1) Clause (ii) of section 805(a)(4)(C) is amend- (3), and (4) of section 168(f), ed by inserting ‘‘, or out of the increase for the ‘‘(B) to the extent of any basis not allocated ‘‘(B) copyrights, taxable year in policy cash values (within the under subparagraph (A), to other distributed ‘‘(C) books, meaning of section 264(e)(3)(A)) of life insurance properties— ‘‘(D) patents, and policies and annuity and endowment contracts ‘‘(i) first by assigning to each such other prop- ‘‘(E) other property specified in regulations. to which section 264(e) applies’’ after ‘‘tax-ex- erty such other property’s adjusted basis to the Such methods may not be used with respect to partnership, and empt interest’’. any amortizable section 197 intangible (as de- ‘‘(ii) then, to the extent any increase or de- (2) Clause (iii) of section 805(a)(4)(D) is fined in section 197(c)).’’. crease in basis is required in order to have the amended by striking ‘‘and’’ and inserting ‘‘, the (b) DEPRECIATION PERIOD FOR RENT-TO-OWN adjusted bases of such other distributed prop- increase for the taxable year in policy cash val- PROPERTY.— erties equal such remaining basis, in the manner ues (within the meaning of section 264(e)(3)(A)) (1) IN GENERAL.—Subparagraph (A) of section provided in paragraph (2) or (3), whichever is 168(e)(3) (relating to 3-year property) is amend- of life insurance policies and annuity and en- appropriate. dowment contracts to which section 264(e) ap- ed by striking ‘‘and’’ at the end of clause (i), by ‘‘(2) METHOD OF ALLOCATING INCREASE.—Any striking the period at the end of clause (ii) and plies, and’’. increase required under paragraph (1)(B) shall (3) Subparagraph (B) of section 807(a)(2) is inserting ‘‘, and’’, and by adding at the end the be allocated among the properties— following new clause: amended by striking ‘‘interest,’’ and inserting ‘‘(A) first to properties with unrealized appre- ‘‘(iii) any qualified rent-to-own property.’’. ‘‘interest and the amount of the policyholder’s ciation in proportion to their respective amounts (2) 4-YEAR CLASS LIFE.—The table contained in share of the increase for the taxable year in pol- of unrealized appreciation before such increase section 168(g)(3)(B) is amended by inserting be- icy cash values (within the meaning of section (but only to the extent of each property’s unre- fore the first item the following new item: 264(e)(3)(A)) of life insurance policies and annu- alized appreciation), and ity and endowment contracts to which section ‘‘(B) then, to the extent such increase is not ‘‘(A)(iii) ...... 4’’. 264(e) applies,’’. allocated under subparagraph (A), in proportion (3) DEFINITION OF QUALIFIED RENT-TO-OWN (4) Subparagraph (B) of section 807(b)(1) is to their respective fair market values. PROPERTY.—Subsection (i) of section 168 is amended by striking ‘‘interest,’’ and inserting ‘‘(3) METHOD OF ALLOCATING DECREASE.—Any amended by adding at the end the following ‘‘interest and the amount of the policyholder’s decrease required under paragraph (1)(A) or new paragraph: share of the increase for the taxable year in pol- (1)(B) shall be allocated— ‘‘(14) QUALIFIED RENT-TO-OWN PROPERTY.—

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‘‘(A) IN GENERAL.—The term ‘qualified rent- ‘‘(2) TAXPAYERS TO WHICH SUBSECTION AP- 457(e)(9) are each amended by striking ‘‘$3,500’’ to-own property’ means property held by a rent- PLIES.—This subsection shall apply to— and inserting ‘‘APPLICABLE LIMIT’’. to-own dealer for purposes of being subject to a ‘‘(A) a C corporation, (b) AMENDMENTS TO ERISA.— rent-to-own contract. ‘‘(B) a partnership in which 1 or more C cor- (1) IN GENERAL.—Section 203(e)(1) of the Em- ‘‘(B) RENT-TO-OWN DEALER.—The term ‘rent- porations own, directly or indirectly (determined ployee Retirement Income Security Act of 1974 to-own dealer’ means a person that, in the ordi- in accordance with section 707(b)(3)), more than (29 U.S.C. 1053(e)(1)) is amended by striking nary course of business, regularly enters into 50 percent of the capital interest, or profits in- ‘‘$3,500’’ and inserting ‘‘the applicable limit rent-to-own contracts with customers for the use terest, in such partnership at the time of the in- under section 411(a)(11) of the Internal Revenue of consumer property, if a substantial portion of voluntary conversion, and Code of 1986 for the plan year’’. those contracts terminate and the property is re- ‘‘(C) any other taxpayer if, with respect to (2) CONFORMING AMENDMENTS.—Sections turned to such person before the receipt of all property which is involuntarily converted dur- 204(d)(1) and 205(g) (1) and (2) (29 U.S.C. payments required to transfer ownership of the ing the taxable year, the aggregate of the 1054(d)(1) and 1055(g) (1) and (2)) are each property from such person to the customer. amount of realized gain on such property on amended by striking ‘‘$3,500’’ and inserting ‘‘the ‘‘(C) CONSUMER PROPERTY.—The term ‘con- which there is realized gain exceeds $100,000. applicable limit under section 411(a)(11) of the sumer property’ means tangible personal prop- In the case of a partnership, subparagraph (C) Internal Revenue Code of 1986 for the plan erty of a type generally used within the home. shall apply with respect to the partnership and year’’. Such term shall not include cellular telephones with respect to each partner. A similar rule shall (c) EFFECTIVE DATE.—The amendments made and any computer or peripheral equipment (as apply in the case of an S corporation and its by this section shall apply to plan years begin- defined in section 168(i)). shareholders. ning after the date of the enactment of this Act. ‘‘(D) RENT-TO-OWN CONTRACT.—The term ‘‘(3) RELATED PERSON.—For purposes of this SEC. 880. ELECTION TO RECEIVE TAXABLE CASH ‘rent-to-own contract’ means any lease for the subsection, a person is related to another person COMPENSATION IN LIEU OF NON- use of consumer property between a rent-to-own if the person bears a relationship to the other TAXABLE PARKING BENEFITS. dealer and a customer who is an individual person described in section 267(b) or 707(b)(1).’’. (a) IN GENERAL.—Section 132(f)(4) (relating to which— (b) EFFECTIVE DATE.—The amendment made benefits not in lieu of compensation) is amended ‘‘(i) is titled ‘Rent-to-Own Agreement’ or by this section shall apply to involuntary con- by adding at the end the following new sen- ‘Lease Agreement with Ownership Option,’ or versions occurring after June 8, 1997. tence: ‘‘This paragraph shall not apply to any uses other similar language, SEC. 878. TREATMENT OF EXCEPTION FROM IN- qualified parking provided in lieu of compensa- ‘‘(ii) provides for level, regular periodic pay- STALLMENT SALES RULES FOR tion which otherwise would have been includ- ments (for a payment period which is a week or SALES OF PROPERTY BY A MANUFAC- ible in gross income of the employee, and no month), TURER TO A DEALER. amount shall be included in the gross income of ‘‘(iii) provides that legal title to such property (a) IN GENERAL.—Paragraph (2) of section remains with the rent-to-own dealer until the 811(c) of the Tax Reform Act of 1986 is hereby the employee solely because the employee may customer makes all the payments described in repealed. choose between the qualified parking and com- clause (ii) or early purchase payments required (b) EFFECTIVE DATE.— pensation.’’. under the contract to acquire legal title to the (1) IN GENERAL.—The amendment made by (b) EFFECTIVE DATE.—The amendment made item of property, this section shall apply to taxable years begin- by this section shall apply to taxable years be- ‘‘(iv) provides a beginning date and a max- ning more than 1 year after the date of the en- ginning after December 31, 1997. imum period of time for which the contract may actment of this Act. SEC. 881. EXTENSION OF TEMPORARY UNEMPLOY- be in effect that does not exceed 156 weeks or 36 (2) COORDINATION WITH SECTION 481.—In the MENT TAX. months from such beginning date (including re- case of any taxpayer required by this section to Section 3301 (relating to rate of unemployment newals or options to extend), change its method of accounting for any taxable tax) is amended— ‘‘(v) provides for level payments within the year— (1) by striking ‘‘1998’’ in paragraph (1) and 156-week or 36-month period that, in the aggre- (A) such changes shall be treated as initiated inserting ‘‘2007’’, and gate, generally exceed the normal retail price of by the taxpayer, (2) by striking ‘‘1999’’ in paragraph (2) and the consumer property plus interest, (B) such changes shall be treated as made inserting ‘‘2008’’. ‘‘(vi) provides for payments under the con- with the consent of the Secretary, and SEC. 882. REPEAL OF EXCESS DISTRIBUTION AND tract that, in the aggregate, do not exceed (C) the net amount of the adjustments re- EXCESS RETIREMENT ACCUMULA- $10,000 per item of consumer property, quired to be taken into account under section TION TAX. ‘‘(vii) provides that the customer does not 481(a) of the Internal Revenue Code of 1986 (a) REPEAL OF EXCESS DISTRIBUTION AND EX- have any legal obligation to make all the pay- shall be taken into account ratably over the 4 CESS RETIREMENT ACCUMULATION TAX.—Section ments referred to in clause (ii) set forth under taxable year period beginning with the first tax- 4980A (relating to excess distributions from the contract, and that at the end of each pay- able year beginning after the date of the enact- qualified retirement plans) is repealed. ment period the customer may either continue to ment of this Act. (b) CONFORMING AMENDMENTS.— use the consumer property by making the pay- SEC. 879. MINIMUM PENSION ACCRUED BENEFIT (1) Section 691(c)(1) is amended by striking ment for the next payment period or return such DISTRIBUTABLE WITHOUT CONSENT subparagraph (C). property to the rent-to-own dealer in good INCREASED TO $5,000. (2) Section 2013 is amended by striking sub- working order, in which case the customer does (a) AMENDMENT TO 1986 CODE.— section (g). not incur any further obligations under the con- (1) IN GENERAL.—Subparagraph (A) of section (3) Section 2053(c)(1)(B) is amended by strik- tract and is not entitled to a return of any pay- 411(a)(11) (relating to restrictions on certain ing the last sentence. ments previously made under the contract, and mandatory distributions) is amended by striking (4) Section 6018(a) is amended by striking ‘‘(viii) provides that the customer has no right ‘‘$3,500’’ and inserting ‘‘the applicable limit’’. paragraph (4). PPLICABLE LIMIT to sell, sublease, mortgage, pawn, pledge, en- (2) A .—Paragraph (11) of sec- (c) EFFECTIVE DATES.— cumber, or otherwise dispose of the consumer tion 411(a) is amended by adding at the end the (1) EXCESS DISTRIBUTION TAX REPEAL.—Except property until all the payments stated in the following new subparagraph: as provided in paragraph (2), the repeal made ‘‘(D) APPLICABLE LIMIT.— contract have been made.’’. by subsection (a) shall apply to excess distribu- ‘‘(i) IN GENERAL.—For purposes of subpara- (c) EFFECTIVE DATE.—The amendment made tions received after December 31, 1996. graph (A), the applicable limit is $5,000. by this section shall apply to property placed in (2) EXCESS RETIREMENT ACCUMULATION TAX ‘‘(ii) INFLATION ADJUSTMENT.—In the case of service after the date of the enactment of this REPEAL.—The repeal made by subsection (a) plan years beginning in a calendar year after Act. with respect to section 4980A(d) of the Internal 1997, the dollar amount contained in clause (i) SEC. 877. EXPANSION OF REQUIREMENT THAT IN- Revenue Code of 1986 and the amendments made VOLUNTARILY CONVERTED PROP- shall be increased by an amount equal to— ‘‘(I) such dollar amount, multiplied by by subsection (b) shall apply to estates of dece- ERTY BE REPLACED WITH PROPERTY dents dying after December 31, 1996. ACQUIRED FROM AN UNRELATED ‘‘(II) the cost-of-living adjustment determined PERSON. under section 1(f)(3) for such calendar year by SEC. 883. LIMITATION ON CHARITABLE REMAIN- (a) IN GENERAL.—Subsection (i) of section 1033 substituting ‘calendar year 1996’ for ‘calendar DER TRUST ELIGIBILITY FOR CER- is amended to read as follows: year 1992’ in subparagraph (B) thereof. TAIN TRUSTS. ‘‘(i) REPLACEMENT PROPERTY MUST BE AC- If any amount as adjusted under the preceding (a) IN GENERAL.—Paragraphs (1)(A) and QUIRED FROM UNRELATED PERSON IN CERTAIN sentence is not a multiple of $50, such amount (2)(A) of section 664(d) (relating to charitable re- CASES.— shall be rounded to the next lowest multiple of mainder annuity trust) are each amended by in- ‘‘(1) IN GENERAL.—If the property which is in- $50.’’. serting ‘‘nor more than 50 percent’’ after ‘‘not voluntarily converted is held by a taxpayer to (3) CONFORMING AMENDMENTS.— less than 5 percent’’. which this subsection applies, subsection (a) (A) Section 411(a)(7)(B), paragraphs (1) and (b) EFFECTIVE DATE.—The amendments made shall not apply if the replacement property or (2) of section 417(e), and section 457(e)(9) are by this section shall apply to transfers in trust stock is acquired from a related person. The pre- each amended by striking ‘‘$3,500’’ each place it after June 18, 1997. ceding sentence shall not apply to the extent appears (other than the headings) and inserting SEC. 884. INCREASE IN TAX ON PROHIBITED that the related person acquired the replacement ‘‘the applicable limit under section TRANSACTIONS. property or stock from an unrelated person dur- 411(a)(11)(D)’’. (a) IN GENERAL.—Section 4975(a) is amended ing the period applicable under subsection (B) The headings for paragraphs (1) and (2) of by striking ‘‘10 percent’’ and inserting ‘‘15 per- (a)(2)(B). section 417(e) and subparagraph (A) of section cent’’.

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(b) EFFECTIVE DATE.—The amendment made ‘‘(D) ESTATES AND TRUSTS NOT ELIGIBLE.— ‘‘(A) IN GENERAL.—Except as provided in sub- by this section shall apply to prohibited trans- This subsection shall not apply to any estate or paragraph (B), in making the redetermination actions occurring after the date of the enact- trust.’’. under paragraph (1), no credit shall be allowed ment of this Act. (b) EFFECTIVE DATE.—The amendment made for accrued taxes not paid before the date re- SEC. 885. BASIS RECOVERY RULES FOR ANNU- by subsection (a) shall apply to taxable years ferred to in subparagraph (B) of paragraph (1). ITIES OVER MORE THAN ONE LIFE. beginning after December 31, 1997. ‘‘(B) TAXES SUBSEQUENTLY PAID.—Any such (a) IN GENERAL.—Section 72(d)(1)(B) is SEC. 902. EXCHANGE RATE USED IN TRANS- taxes if subsequently paid— amended by adding at the end the following LATING FOREIGN TAXES. ‘‘(i) shall be taken into account— new clause: (a) ACCRUED TAXES TRANSLATED BY USING ‘‘(I) in the case of taxes deemed paid under ‘‘(iv) NUMBER OF ANTICIPATED PAYMENTS AVERAGE RATE FOR YEAR TO WHICH TAXES RE- section 902 or section 960, for the taxable year in WHERE MORE THAN ONE LIFE.—If the annuity is LATE.— which paid (and no redetermination shall be payable over the lives of more than 1 individual, (1) IN GENERAL.—Subsection (a) of section 986 made under this section by reason of such pay- the number of anticipated payments shall be de- (relating to translation of foreign taxes) is ment), and termined as follows: amended to read as follows: ‘‘(II) in any other case, for the taxable year to ‘‘If the combined ages of The number is: ‘‘(a) FOREIGN INCOME TAXES.— which such taxes relate, and annuitants are: ‘‘(1) TRANSLATION OF ACCRUED TAXES.— ‘‘(ii) shall be translated as provided in section Not more than 110 ...... 410 ‘‘(A) IN GENERAL.—For purposes of deter- 986(a)(2)(A). More than 110 but not more than 120 360 mining the amount of the foreign tax credit, in ‘‘(3) ADJUSTMENTS.—The amount of tax (if More than 120 but not more than 130 310 the case of a taxpayer who takes foreign income any) due on any redetermination under para- More than 130 but not more than 140 260 taxes into account when accrued, the amount of More than 140 ...... 210.’’. graph (1) shall be paid by the taxpayer on no- any foreign income taxes (and any adjustment (b) CONFORMING AMENDMENT.—Section tice and demand by the Secretary, and the 72(d)(1)(B)(iii) is amended— thereto) shall be translated into dollars by using amount of tax overpaid (if any) shall be credited (1) by inserting ‘‘If the annuity is payable the average exchange rate for the taxable year or refunded to the taxpayer in accordance with over the life of a single individual, the number to which such taxes relate. subchapter B of chapter 66 (section 6511 et seq.). of anticipated payments shall be determined as ‘‘(B) EXCEPTION FOR CERTAIN TAXES.—Sub- ‘‘(4) BOND REQUIREMENTS.—In the case of any follows:’’ after the heading and before the table, paragraph (A) shall not apply to any foreign in- tax accrued but not paid, the Secretary, as a and come taxes— condition precedent to the allowance of the (2) by striking ‘‘primary’’ in the table. ‘‘(i) paid after the date 2 years after the close credit provided in this subpart, may require the (c) EFFECTIVE DATE.—The amendments made of the taxable year to which such taxes relate, taxpayer to give a bond, with sureties satisfac- by this section shall apply with respect to annu- or tory to and approved by the Secretary, in such ity starting dates beginning after December 31, ‘‘(ii) paid before the beginning of the taxable sum as the Secretary may require, conditioned 1997. year to which such taxes relate. on the payment by the taxpayer of any amount TITLE IX—FOREIGN-RELATED ‘‘(C) EXCEPTION FOR INFLATIONARY CUR- of tax found due on any such redetermination. SIMPLIFICATION PROVISIONS RENCIES.—Subparagraph (A) shall not apply to Any such bond shall contain such further con- any foreign income taxes the liability for which Subtitle A—General Provisions ditions as the Secretary may require. is denominated in any inflationary currency (as ‘‘(5) OTHER SPECIAL RULES.—In any redeter- SEC. 901. CERTAIN INDIVIDUALS EXEMPT FROM determined under regulations). mination under paragraph (1) by the Secretary FOREIGN TAX CREDIT LIMITATION. ‘‘(D) CROSS REFERENCE.— of the amount of tax due from the taxpayer for (a) GENERAL RULE.—Section 904 (relating to limitations on foreign tax credit) is amended by ‘‘For adjustments where tax is not paid the year or years affected by a refund, the redesignating subsection (j) as subsection (k) within 2 years, see section 905(c). amount of the taxes refunded for which credit and by inserting after subsection (i) the fol- ‘‘(2) TRANSLATION OF TAXES TO WHICH PARA- has been allowed under this section shall be re- lowing new subsection: GRAPH (1) DOES NOT APPLY.—For purposes of de- duced by the amount of any tax described in ‘‘(j) CERTAIN INDIVIDUALS EXEMPT.— termining the amount of the foreign tax credit, section 901 imposed by the foreign country or ‘‘(1) IN GENERAL.—In the case of an individual in the case of any foreign income taxes to which possession of the United States with respect to to whom this subsection applies for any taxable subparagraph (A) of paragraph (1) does not such refund; but no credit under this subpart, year— apply— or deduction under section 164, shall be allowed ‘‘(A) the limitation of subsection (a) shall not ‘‘(A) such taxes shall be translated into dol- for any taxable year with respect to any such apply, lars using the exchange rates as of the time such tax imposed on the refund. No interest shall be ‘‘(B) no taxes paid or accrued by the indi- taxes were paid to the foreign country or posses- assessed or collected on any amount of tax due vidual during such taxable year may be deemed sion of the United States, and on any redetermination by the Secretary, result- paid or accrued under subsection (c) in any ‘‘(B) any adjustment to the amount of such ing from a refund to the taxpayer, for any pe- other taxable year, and taxes shall be translated into dollars using— riod before the receipt of such refund, except to ‘‘(C) no taxes paid or accrued by the indi- ‘‘(i) except as provided in clause (ii), the ex- the extent interest was paid by the foreign coun- vidual during any other taxable year may be change rate as of the time when such adjust- try or possession of the United States on such deemed paid or accrued under subsection (c) in ment is paid to the foreign country or posses- refund for such period.’’. such taxable year. sion, or (b) AUTHORITY TO USE AVERAGE RATES.— ‘‘(2) INDIVIDUALS TO WHOM SUBSECTION AP- ‘‘(ii) in the case of any refund or credit of for- (1) IN GENERAL.—Subsection (a) of section 986 PLIES.—This subsection shall apply to an indi- eign income taxes, using the exchange rate as of (as amended by subsection (a)) is amended by vidual for any taxable year if— the time of the original payment of such foreign redesignating paragraph (3) as paragraph (4) ‘‘(A) the entire amount of such individual’s income taxes. and inserting after paragraph (2) the following gross income for the taxable year from sources ‘‘(3) FOREIGN INCOME TAXES.—For purposes of new paragraph: without the United States consists of qualified this subsection, the term ‘foreign income taxes’ ‘‘(3) AUTHORITY TO PERMIT USE OF AVERAGE passive income, means any income, war profits, or excess profits RATES.—To the extent prescribed in regulations, ‘‘(B) the amount of the creditable foreign taxes paid or accrued to any foreign country or the average exchange rate for the period (speci- taxes paid or accrued by the individual during to any possession of the United States.’’. fied in such regulations) during which the taxes the taxable year does not exceed $300 ($600 in (2) ADJUSTMENT WHEN NOT PAID WITHIN 2 or adjustment is paid may be used instead of the the case of a joint return), and YEARS AFTER YEAR TO WHICH TAXES RELATE.— exchange rate as of the time of such payment.’’. ‘‘(C) such individual elects to have this sub- Subsection (c) of section 905 is amended to read (2) DETERMINATION OF AVERAGE RATES.—Sub- section apply for the taxable year. as follows: section (c) of section 989 is amended by striking ‘‘(3) DEFINITIONS.—For purposes of this sub- DJUSTMENTS TO ACCRUED TAXES.— ‘‘and’’ at the end of paragraph (4), by striking section— ‘‘(c) A the period at the end of paragraph (5) and in- ‘‘(A) QUALIFIED PASSIVE INCOME.—The term ‘‘(1) IN GENERAL.—If— ‘qualified passive income’ means any item of ‘‘(A) accrued taxes when paid differ from the serting ‘‘, and’’, and by adding at the end there- gross income if— amounts claimed as credits by the taxpayer, of the following new paragraph: ‘‘(i) such item of income is passive income (as ‘‘(B) accrued taxes are not paid before the ‘‘(6) setting forth procedures for determining defined in subsection (d)(2)(A) without regard to date 2 years after the close of the taxable year the average exchange rate for any period.’’. clause (iii) thereof), and to which such taxes relate, or (3) CONFORMING AMENDMENTS.—Subsection (b) ‘‘(ii) such item of income is shown on a payee ‘‘(C) any tax paid is refunded in whole or in of section 989 is amended by striking ‘‘weight- statement furnished to the individual. part, ed’’ each place it appears. ‘‘(B) CREDITABLE FOREIGN TAXES.—The term the taxpayer shall notify the Secretary, who (c) EFFECTIVE DATES.— ‘creditable foreign taxes’ means any taxes for shall redetermine the amount of the tax for the (1) IN GENERAL.—The amendments made by which a credit is allowable under section 901; year or years affected. The Secretary may pre- subsections (a)(1) and (b) shall apply to taxes except that such term shall not include any tax scribe adjustments to the pools of post-1986 for- paid or accrued in taxable years beginning after unless such tax is shown on a payee statement eign income taxes under sections 902 and 960 in December 31, 1997. furnished to such individual. lieu of the redetermination under the preceding (2) SUBSECTION (a)(2).—The amendment made ‘‘(C) PAYEE STATEMENT.—The term ‘payee sentence. by subsection (a)(2) shall apply to taxes which statement’ has the meaning given to such term ‘‘(2) SPECIAL RULE FOR TAXES NOT PAID WITHIN relate to taxable years beginning after December by section 6724(d)(2). 2 YEARS.— 31, 1997.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00171 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6840 CONGRESSIONAL RECORD — SENATE June 27, 1997 SEC. 903. ELECTION TO USE SIMPLIFIED SECTION sale or exchange shall be included in the gross lowing new sentence: ‘‘For purposes of this sub- 904 LIMITATION FOR ALTERNATIVE income of such controlled foreign corporation as section, any exemption (or reduction) with re- MINIMUM TAX. a dividend to the same extent that it would have spect to the tax imposed by section 884 shall not (a) GENERAL RULE.—Subsection (a) of section been so included under section 1248(a) if such be taken into account.’’. 59 (relating to alternative minimum tax foreign controlled foreign corporation were a United (2) EFFECTIVE DATE.—The amendment made tax credit) is amended by adding at the end States person. For purposes of determining the by paragraph (1) shall apply to taxable years thereof the following new paragraph: amount which would have been so includible, beginning after December 31, 1986. ‘‘(3) ELECTION TO USE SIMPLIFIED SECTION 904 the determination of whether such other foreign SEC. 913. INDIRECT FOREIGN TAX CREDIT AL- LIMITATION.— corporation was a controlled foreign corporation LOWED FOR CERTAIN LOWER TIER ‘‘(A) IN GENERAL.—In determining the alter- shall be made without regard to the preceding COMPANIES. native minimum tax foreign tax credit for any sentence. (a) SECTION 902 CREDIT.— taxable year to which an election under this ‘‘(2) SAME COUNTRY EXCEPTION NOT APPLICA- (1) IN GENERAL.—Subsection (b) of section 902 paragraph applies— BLE.—Clause (i) of section 954(c)(3)(A) shall not (relating to deemed taxes increased in case of ‘‘(i) subparagraph (B) of paragraph (1) shall apply to any amount treated as a dividend by certain 2nd and 3rd tier foreign corporations) is not apply, and reason of paragraph (1). amended to read as follows: ‘‘(ii) the limitation of section 904 shall be ‘‘(3) CLARIFICATION OF DEEMED SALES.—For ‘‘(b) DEEMED TAXES INCREASED IN CASE OF based on the proportion which— purposes of this subsection, a controlled foreign CERTAIN LOWER TIER CORPORATIONS.— ‘‘(I) the taxpayer’s taxable income (as deter- corporation shall be treated as having sold or ‘‘(1) IN GENERAL.—If— mined for purposes of the regular tax) from exchanged any stock if, under any provision of ‘‘(A) any foreign corporation is a member of a sources without the United States (but not in this subtitle, such controlled foreign corporation qualified group, and excess of the taxpayer’s entire alternative min- is treated as having gain from the sale or ex- ‘‘(B) such foreign corporation owns 10 percent imum taxable income), bears to change of such stock.’’. or more of the voting stock of another member of ‘‘(II) the taxpayer’s entire alternative min- (b) AMENDMENT OF SECTION 904(d).—Clause (i) such group from which it receives dividends in imum taxable income for the taxable year. of section 904(d)(2)(E) is amended by striking any taxable year, ‘‘(B) ELECTION.— ‘‘and except as provided in regulations, the tax- such foreign corporation shall be deemed to ‘‘(i) IN GENERAL.—An election under this payer was a United States shareholder in such have paid the same proportion of such other paragraph may be made only for the taxpayer’s corporation’’. member’s post-1986 foreign income taxes as first taxable year which begins after December (c) EFFECTIVE DATES.— would be determined under subsection (a) if 31, 1997, and for which the taxpayer claims an (1) The amendment made by subsection (a) such foreign corporation were a domestic cor- alternative minimum tax foreign tax credit. shall apply to gain recognized on transactions poration. ‘‘(ii) ELECTION REVOCABLE ONLY WITH CON- occurring after the date of the enactment of this ‘‘(2) QUALIFIED GROUP.—For purposes of SENT.—An election under this paragraph, once Act. paragraph (1), the term ‘qualified group’ made, shall apply to the taxable year for which (2) The amendment made by subsection (b) means— made and all subsequent taxable years unless shall apply to distributions after the date of the ‘‘(A) the foreign corporation described in sub- revoked with the consent of the Secretary.’’. enactment of this Act. section (a), and (b) EFFECTIVE DATE.—The amendment made SEC. 912. MISCELLANEOUS MODIFICATIONS TO ‘‘(B) any other foreign corporation if— by this section shall apply to taxable years be- SUBPART F. ‘‘(i) the domestic corporation owns at least 5 ginning after December 31, 1997. (a) SECTION 1248 GAIN TAKEN INTO ACCOUNT percent of the voting stock of such other foreign SEC. 904. TREATMENT OF PERSONAL TRANS- IN DETERMINING PRO RATA SHARE.— corporation indirectly through a chain of for- ACTIONS BY INDIVIDUALS UNDER (1) IN GENERAL.—Paragraph (2) of section eign corporations connected through stock own- FOREIGN CURRENCY RULES. 951(a) (defining pro rata share of subpart F in- ership of at least 10 percent of their voting (a) GENERAL RULE.—Subsection (e) of section come) is amended by adding at the end thereof stock, 988 (relating to application to individuals) is the following new sentence: ‘‘For purposes of ‘‘(ii) the foreign corporation described in sub- amended to read as follows: subparagraph (B), any gain included in the section (a) is the first tier corporation in such ‘‘(e) APPLICATION TO INDIVIDUALS.— gross income of any person as a dividend under chain, and ‘‘(1) IN GENERAL.—The preceding provisions of section 1248 shall be treated as a distribution re- ‘‘(iii) such other corporation is not below the this section shall not apply to any section 988 ceived by such person with respect to the stock sixth tier in such chain. transaction entered into by an individual which involved.’’. The term ‘qualified group’ shall not include any is a personal transaction. (2) EFFECTIVE DATE.—The amendment made foreign corporation below the third tier in the ‘‘(2) EXCLUSION FOR CERTAIN PERSONAL TRANS- by paragraph (1) shall apply to dispositions chain referred to in clause (i) unless such for- ACTIONS.—If— after the date of the enactment of this Act. eign corporation is a controlled foreign corpora- ‘‘(A) nonfunctional currency is disposed of by (b) BASIS ADJUSTMENTS IN STOCK HELD BY tion (as defined in section 957) and the domestic an individual in any transaction, and FOREIGN CORPORATION.— corporation is a United States shareholder (as ‘‘(B) such transaction is a personal trans- (1) IN GENERAL.—Section 961 (relating to ad- defined in section 951(b)) in such foreign cor- action, justments to basis of stock in controlled foreign poration. Paragraph (1) shall apply to those no gain shall be recognized for purposes of this corporations and of other property) is amended taxes paid by a member of the qualified group subtitle by reason of changes in exchange rates by adding at the end thereof the following new below the third tier only with respect to periods after such currency was acquired by such indi- subsection: during which it was a controlled foreign cor- vidual and before such disposition. The pre- ‘‘(c) BASIS ADJUSTMENTS IN STOCK HELD BY poration.’’. ceding sentence shall not apply if the gain FOREIGN CORPORATION.—Under regulations pre- (2) CONFORMING AMENDMENTS.— which would otherwise be recognized on the scribed by the Secretary, if a United States (A) Subparagraph (B) of section 902(c)(3) is transaction exceeds $200. shareholder is treated under section 958(a)(2) as amended by adding ‘‘or’’ at the end of clause (i) ‘‘(3) PERSONAL TRANSACTIONS.—For purposes owning any stock in a controlled foreign cor- and by striking clauses (ii) and (iii) and insert- of this subsection, the term ‘personal trans- poration which is actually owned by another ing the following new clause: action’ means any transaction entered into by controlled foreign corporation, adjustments ‘‘(ii) the requirements of subsection (b)(2) are an individual, except that such term shall not similar to the adjustments provided by sub- met with respect to such foreign corporation.’’. include any transaction to the extent that ex- sections (a) and (b) shall be made to the basis of (B) Subparagraph (B) of section 902(c)(4) is penses properly allocable to such transaction such stock in the hands of such other controlled amended by striking ‘‘3rd foreign corporation’’ meet the requirements of section 162 or 212 foreign corporation, but only for the purposes of and inserting ‘‘sixth tier foreign corporation’’. (other than that part of section 212 dealing with determining the amount included under section (C) The heading for paragraph (3) of section expenses incurred in connection with taxes).’’. 951 in the gross income of such United States 902(c) is amended by striking ‘‘WHERE DOMESTIC (b) EFFECTIVE DATE.—The amendments made shareholder (or any other United States share- CORPORATION ACQUIRES 10 PERCENT OF FOREIGN by this section shall apply to taxable years be- holder who acquires from any person any por- CORPORATION’’ and inserting ‘‘WHERE FOREIGN ginning after December 31, 1997. tion of the interest of such United States share- CORPORATION FIRST QUALIFIES’’. Subtitle B—Treatment of Controlled Foreign holder by reason of which such shareholder was (D) Paragraph (3) of section 902(c) is amended Corporations treated as owning such stock, but only to the by striking ‘‘ownership’’ each place it appears. SEC. 911. GAIN ON CERTAIN STOCK SALES BY extent of such portion, and subject to such proof (b) SECTION 960 CREDIT.—Paragraph (1) of CONTROLLED FOREIGN CORPORA- of identity of such interest as the Secretary may section 960(a) (relating to special rules for for- TIONS TREATED AS DIVIDENDS. prescribe by regulations).’’. eign tax credits) is amended to read as follows: (a) GENERAL RULE.—Section 964 (relating to (2) EFFECTIVE DATE.—The amendment made ‘‘(1) DEEMED PAID CREDIT.—For purposes of miscellaneous provisions) is amended by adding by paragraph (1) shall apply for purposes of de- subpart A of this part, if there is included under at the end thereof the following new subsection: termining inclusions for taxable years of United section 951(a) in the gross income of a domestic ‘‘(e) GAIN ON CERTAIN STOCK SALES BY CON- States shareholders beginning after corporation any amount attributable to earn- TROLLED FOREIGN CORPORATIONS TREATED AS December 31, 1997. ings and profits of a foreign corporation which DIVIDENDS.— (c) CLARIFICATION OF TREATMENT OF BRANCH is a member of a qualified group (as defined in ‘‘(1) IN GENERAL.—If a controlled foreign cor- TAX EXEMPTIONS OR REDUCTIONS.— section 902(b)) with respect to the domestic cor- poration sells or exchanges stock in any other (1) IN GENERAL.—Subsection (b) of section 952 poration, then, except to the extent provided in foreign corporation, gain recognized on such is amended by adding at the end thereof the fol- regulations, section 902 shall be applied as if the

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amount so included were a dividend paid by of property to a partnership if such gain, when (1) by striking ‘‘LOSSES AND’’ in the heading such foreign corporation (determined by apply- recognized, will be includible in the gross income and inserting ‘‘DEDUCTIONS, LOSSES, AND’’, and ing section 902(c) in accordance with section of a person other than a United States person.’’. (2) by striking ‘‘loss or’’ each place it appears 904(d)(3)(B)).’’. (4) REPEAL OF UNITED STATES SOURCE TREAT- and inserting ‘‘deduction, loss, or’’. (c) EFFECTIVE DATE.— MENT OF DEEMED ROYALTIES.—Subparagraph (c) EFFECTIVE DATE.—The amendments made (1) IN GENERAL.—The amendments made by (C) of section 367(d)(2) is amended to read as by this section shall apply to taxable years be- this section shall apply to taxes of foreign cor- follows: ginning after the date of the enactment of this porations for taxable years of such corporations ‘‘(C) AMOUNTS RECEIVED TREATED AS ORDI- Act. beginning after the date of enactment of this NARY INCOME.—For purposes of this chapter, SEC. 932. CONTROLLED FOREIGN PARTNERSHIPS Act. any amount included in gross income by reason SUBJECT TO INFORMATION REPORT- (2) SPECIAL RULE.—In the case of any chain of of this subsection shall be treated as ordinary ING COMPARABLE TO INFORMATION foreign corporations described in clauses (i) and income.’’. REPORTING FOR CONTROLLED FOR- EIGN CORPORATIONS. (ii) of section 902(b)(2)(B) of the Internal Rev- (5) TRANSFERS OF INTANGIBLES TO PARTNER- (a) IN GENERAL.—So much of section 6038 (re- enue Code of 1986 (as amended by this section), SHIPS.— lating to information with respect to certain for- no liquidation, reorganization, or similar trans- (A) Subsection (d) of section 367 is amended eign corporations) as precedes paragraph (2) of action in a taxable year beginning after the date by adding at the end the following new para- subsection (a) is amended to read as follows: of the enactment of this Act shall have the ef- graph: ‘‘SEC. 6038. INFORMATION REPORTING WITH RE- fect of permitting taxes to be taken into account ‘‘(3) REGULATIONS RELATING TO TRANSFERS OF under section 902 of the Internal Revenue Code SPECT TO CERTAIN FOREIGN COR- INTANGIBLES TO PARTNERSHIPS.—The Secretary PORATIONS AND PARTNERSHIPS. of 1986 which could not have been taken into may provide by regulations that the rules of ‘‘(a) REQUIREMENT.— account under such section but for such trans- paragraph (2) also apply to the transfer of in- ‘‘(1) IN GENERAL.—Every United States person action. tangible property by a United States person to a shall furnish, with respect to any foreign busi- Subtitle C—Repeal of Excise Tax on Transfers partnership in circumstances consistent with the ness entity which such person controls, such in- to Foreign Entities purposes of this subsection.’’. formation as the Secretary may prescribe relat- SEC. 921. REPEAL OF EXCISE TAX ON TRANSFERS (B) Section 721 is amended by adding at the ing to— TO FOREIGN ENTITIES; RECOGNI- end the following new subsection: ‘‘(A) the name, the principal place of business, TION OF GAIN ON CERTAIN TRANS- ‘‘(d) TRANSFERS OF INTANGIBLES.— and the nature of business of such entity, and FERS TO FOREIGN TRUSTS AND ES- ‘‘For regulatory authority to treat intangi- the country under whose laws such entity is in- TATES. bles transferred to a partnership as sold, see corporated (or organized in the case of a part- (a) REPEAL OF EXCISE TAX.—Chapter 5 (relat- section 367(d)(3).’’. nership); ing to transfers to avoid income tax) is hereby (c) TECHNICAL AND CONFORMING AMEND- ‘‘(B) in the case of a foreign corporation, its repealed. MENTS.— post-1986 undistributed earnings (as defined in (b) RECOGNITION OF GAIN ON CERTAIN TRANS- (1) Subsection (h) of section 814 is amended by section 902(c)); FERS TO FOREIGN TRUSTS AND ESTATES.—Sub- striking ‘‘or 1491’’. ‘‘(C) a balance sheet for such entity listing as- part F of part I of subchapter J of chapter 1 is (2) Section 1057 (relating to election to treat sets, liabilities, and capital; amended by adding at the end the following transfer to foreign trust, etc., as taxable ex- ‘‘(D) transactions between such entity and— new section: change) is hereby repealed. ‘‘(i) such person, ‘‘SEC. 684. RECOGNITION OF GAIN ON CERTAIN (3) Section 6422 is amended by striking para- ‘‘(ii) any corporation or partnership which TRANSFERS TO CERTAIN FOREIGN such person controls, and TRUSTS AND ESTATES. graph (5) and by redesignating paragraphs (6) through (13) as paragraphs (5) through (12), re- ‘‘(iii) any United States person owning, at the ‘‘(a) IN GENERAL.—Except as provided in reg- time the transaction takes place— ulations, in the case of any transfer of property spectively. (4) The table of chapters for subtitle A is ‘‘(I) in the case of a foreign corporation, 10 by a United States person to a foreign estate or percent or more of the value of any class of trust, for purposes of this subtitle, such transfer amended by striking the item relating to chapter 5. stock outstanding of such corporation, and shall be treated as a sale or exchange for an ‘‘(II) in the case of a foreign partnership, at amount equal to the fair market value of the (5) The table of sections for part IV of sub- chapter O of chapter 1 is amended by striking least a 10-percent interest in such partnership; property transferred, and the transferor shall and recognize as gain the excess of— the item relating to section 1057. (6) The table of sections for subpart F of part ‘‘(E)(i) in the case of a foreign corporation, a ‘‘(1) the fair market value of the property so description of the various classes of stock out- transferred, over I of subchapter J of chapter 1 is amended by adding at the end the following new item: standing, and a list showing the name and ad- ‘‘(2) the adjusted basis (for purposes of deter- dress of, and number of shares held by, each mining gain) of such property in the hands of ‘‘Sec. 684. Recognition of gain on certain trans- United States person who is a shareholder of the transferor. fers to certain foreign trusts and record owning at any time during the annual ‘‘(b) EXCEPTION.—Subsection (a) shall not estates.’’. accounting period 5 percent or more in value of apply to a transfer to a trust by a United States (d) EFFECTIVE DATE.—The amendments made any class of stock outstanding of such foreign person to the extent that any person is treated by this section shall take effect on the date of corporation, and as the owner of such trust under section 671.’’. the enactment of this Act. ‘‘(ii) information comparable to the informa- (b) OTHER ANTI-AVOIDANCE PROVISIONS RE- Subtitle D—Information Reporting tion described in clause (i) in the case of a for- PLACING REPEALED EXCISE TAX.— eign partnership. (1) GAIN RECOGNITION ON EXCHANGES INVOLV- SEC. 931. CLARIFICATION OF APPLICATION OF The Secretary may also require the furnishing ING FOREIGN PERSONS.—Section 1035 is amended RETURN REQUIREMENT TO FOREIGN of any other information which is similar or re- PARTNERSHIPS. by redesignating subsection (c) as subsection (d) lated in nature to that specified in the preceding (a) IN GENERAL.—Section 6031 (relating to re- and by inserting after subsection (b) the fol- sentence or which the Secretary determines to be turn of partnership income) is amended by add- lowing new subsection: appropriate to carry out the provisions of this ing at the end the following new subsection: ‘‘(c) EXCHANGES INVOLVING FOREIGN PER- title.’’. ‘‘(e) FOREIGN PARTNERSHIPS.— SONS.—To the extent provided in regulations, (b) DEFINITIONS.— ‘‘(1) EXCEPTION FOR FOREIGN PARTNERSHIP.— subsection (a) shall not apply to any exchange (1) IN GENERAL.—Subsection (e) of section 6038 having the effect of transferring property to any Except as provided in paragraph (2), the pre- (relating to definitions) is amended— person other than a United States person.’’. ceding provisions of this section shall not apply (A) by redesignating paragraphs (1) and (2) as (2) TRANSFERS TO FOREIGN CORPORATIONS.— to a foreign partnership. paragraphs (2) and (4), respectively, Section 367 is amended by adding at the end the ‘‘(2) CERTAIN FOREIGN PARTNERSHIPS RE- (B) by inserting before paragraph (2) (as so re- following new subsection: QUIRED TO FILE RETURN.—Except as provided in designated) the following new paragraph: ‘‘(f) OTHER TRANSFERS.—To the extent pro- regulations prescribed by the Secretary, this sec- ‘‘(1) FOREIGN BUSINESS ENTITY.—The term vided in regulations, if a United States person tion shall apply to a foreign partnership for any ‘foreign business entity’ means a foreign cor- transfers property to a foreign corporation as taxable year if for such year, such partnership poration and a foreign partnership.’’, and paid-in surplus or as a contribution to capital has— (C) by inserting after paragraph (2) (as so re- (in a transaction not otherwise described in this ‘‘(A) gross income derived from sources within designated) the following new paragraph: section), such foreign corporation shall not, for the United States, or ‘‘(3) PARTNERSHIP-RELATED DEFINITIONS.— purposes of determining the extent to which ‘‘(B) gross income which is effectively con- ‘‘(A) CONTROL.—A person is in control of a gain shall be recognized on such transfer, be nected with the conduct of a trade or business partnership if such person owns directly or indi- considered to be a corporation.’’. within the United States. rectly more than a 50 percent interest in such (3) CERTAIN TRANSFERS TO PARTNERSHIPS.— The Secretary may provide simplified filing pro- partnership. Section 721 is amended by adding at the end the cedures for foreign partnerships to which this ‘‘(B) 50-PERCENT INTEREST.—For purposes of following new subsection: section applies.’’. subparagraph (A), a 50-percent interest in a ‘‘(c) REGULATIONS RELATING TO CERTAIN (b) SANCTION FOR FAILURE BY FOREIGN PART- partnership is— TRANSFERS TO PARTNERSHIPS.—The Secretary NERSHIP TO COMPLY WITH SECTION 6031 TO IN- ‘‘(i) an interest equal to 50 percent of the cap- may provide by regulations that subsection (a) CLUDE DENIAL OF DEDUCTIONS.—Subsection (f) ital interest, or 50 percent of the profits interest, shall not apply to gain realized on the transfer of section 6231 is amended— in such partnership, or

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00173 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6842 CONGRESSIONAL RECORD — SENATE June 27, 1997 ‘‘(ii) to the extent provided in regulations, an end the following new sentence: ‘‘Paragraphs ferred by such person or any related person to interest to which 50 percent of the deductions or (1) and (2) shall apply to any acquisition or dis- such partnership or a related partnership dur- losses of such partnership are allocated. position only if the United States person directly ing the 12-month period ending on the date of For purposes of the preceding sentence, rules or indirectly holds at least a 10-percent interest the transfer) exceeds $100,000. similar to the rules of section 267(c) (other than in such partnership either before or after such For purposes of the preceding sentence, the paragraph (3)) shall apply, except so as to con- acquisition or disposition, and paragraph (3) value of any transferred property is its fair mar- sider a United States person as owning such an shall apply to any change only if the change is ket value at the time of its transfer. interest which is owned by a person which is equivalent to at least a 10-percent interest in ‘‘(2) SPECIAL RULE.—If by reason of an adjust- not a United States person. such partnership.’’. ment under section 482 or otherwise, a contribu- ‘‘(C) 10-PERCENT INTEREST.—A 10-percent in- (2) 10-PERCENT INTEREST.—Section 6046A is tion described in subsection (a)(1) is deemed to terest in a partnership is an interest which amended by redesignating subsection (d) as sub- have been made, such contribution shall be would be described in subparagraph (B) if ‘10 section (e) and by inserting after subsection (c) treated for purposes of this section as having percent’ were substituted for ‘50 percent’ each the following new subsection: been made not earlier than the date specified by place it appears.’’. ‘‘(d) 10-PERCENT INTEREST.—For purposes of the Secretary.’’. (2) CLERICAL AMENDMENT.—The paragraph subsection (a), a 10-percent interest in a part- (c) MODIFICATION OF PENALTY APPLICABLE TO heading for paragraph (2) of section 6038(e) (as nership is an interest described in section FOREIGN CORPORATIONS AND PARTNERSHIPS.— so redesignated) is amended by inserting ‘‘OF 6038(e)(3)(C).’’. (1) IN GENERAL.—Paragraph (1) of section CORPORATION’’ after ‘‘CONTROL’’. (b) MODIFICATION OF PENALTY ON FAILURE TO 6038B(b) is amended by striking ‘‘equal to’’ and (c) MODIFICATION OF SANCTIONS ON PARTNER- REPORT CHANGES IN OWNERSHIP INTERESTS IN all that follows and inserting ‘‘equal to 10 per- SHIPS AND CORPORATIONS FOR FAILURE TO FUR- FOREIGN CORPORATIONS AND PARTNERSHIPS.— cent of the fair market value of the property at NISH INFORMATION.— Subsection (a) of section 6679 (relating to failure the time of the exchange (and, in the case of a (1) IN GENERAL.—Subsection (b) of section 6038 to file returns, etc., with respect to foreign cor- contribution described in subsection (a)(1)(B), is amended— porations or foreign partnerships) is amended to such person shall recognize gain as if the con- (A) by striking ‘‘$1,000’’ each place it appears read as follows: tributed property had been sold for such value and inserting ‘‘$10,000’’, and ‘‘(a) CIVIL PENALTY.— at the time of such contribution).’’. (B) by striking ‘‘$24,000’’ in paragraph (2) and ‘‘(1) IN GENERAL.—In addition to any criminal (2) LIMIT ON PENALTY.—Section 6038B(b) is inserting ‘‘$50,000’’. penalty provided by law, any person required to amended by adding at the end the following (d) REPORTING BY 10-PERCENT PARTNERS.— file a return under section 6035, 6046, or 6046A new paragraph: Subsection (a) of section 6038 is amended by who fails to file such return at the time provided ‘‘(3) LIMIT ON PENALTY.—The penalty under adding at the end the following new paragraph: in such section, or who files a return which does paragraph (1) with respect to any exchange ‘‘(5) INFORMATION REQUIRED FROM 10-PERCENT not show the information required pursuant to shall not exceed $100,000 unless the failure with PARTNER OF CONTROLLED FOREIGN PARTNER- such section, shall pay a penalty of $10,000, un- respect to such exchange was due to intentional SHIP.—In the case of a foreign partnership less it is shown that such failure is due to rea- disregard.’’. which is controlled by United States persons sonable cause. (d) EFFECTIVE DATE.— holding at least 10-percent interests (but not by ‘‘(2) INCREASE IN PENALTY WHERE FAILURE (1) IN GENERAL.—The amendments made by any one United States person), the Secretary CONTINUES AFTER NOTIFICATION.—If any failure this section shall apply to transfers made after may require each United States person who described in paragraph (1) continues for more the date of the enactment of this Act. holds a 10-percent interest in such partnership than 90 days after the day on which the Sec- (2) ELECTION OF RETROACTIVE EFFECT.—Sec- to furnish information relating to such partner- retary mails notice of such failure to the United tion 1494(c) of the Internal Revenue Code of ship, including information relating to such States person, such person shall pay a penalty 1986 shall not apply to any transfer after Au- partner’s ownership interests in the partnership (in addition to the amount required under para- gust 20, 1996, if all applicable reporting require- and allocations to such partner of partnership graph (1)) of $10,000 for each 30-day period (or ments under section 6038B of such Code (as items.’’. fraction thereof) during which such failure con- amended by this section) are satisfied. The Sec- (e) TECHNICAL AMENDMENTS.— tinues after the expiration of such 90-day pe- retary of the Treasury or his delegate may pre- (1) The following provisions of section 6038 are riod. The increase in any penalty under this scribe simplified reporting under the preceding each amended by striking ‘‘foreign corporation’’ paragraph shall not exceed $50,000. sentence. each place it appears and inserting ‘‘foreign ‘‘(3) REDUCED PENALTY FOR RETURNS RELAT- SEC. 935. EXTENSION OF STATUTE OF LIMITA- business entity’’: ING TO FOREIGN PERSONAL HOLDING COMPA- TION FOR FOREIGN TRANSFERS. (A) Paragraphs (2) and (3) of subsection (a). NIES.—In the case of a return required under (a) IN GENERAL.—Paragraph (8) of section (B) Subsection (b). section 6035, paragraph (1) shall be applied by 6501(c) (relating to failure to notify Secretary (C) Subsection (c) other than paragraph substituting ‘$1,000’ for ‘$10,000’, and paragraph under section 6038B) is amended to read as fol- (1)(B) thereof. (2) shall not apply.’’. lows: (c) EFFECTIVE DATE.—The amendments made (D) Subsection (d). ‘‘(8) FAILURE TO NOTIFY SECRETARY OF CER- by this section shall apply to transfers and (E) Subsection (e)(4) (as redesignated by sub- TAIN FOREIGN TRANSFERS.—In the case of any changes after the date of the enactment of this section (b)). information which is required to be reported to Act. (2) Subparagraph (B) of section 6038(c)(1) is the Secretary under section 6038, 6038A, 6038B, amended by inserting ‘‘in the case of a foreign SEC. 934. TRANSFERS OF PROPERTY TO FOREIGN 6046, 6046A, or 6048, the time for assessment of PARTNERSHIPS SUBJECT TO INFOR- business entity which is a foreign corporation,’’ any tax imposed by this title with respect to any MATION REPORTING COMPARABLE event or period to which such information re- after ‘‘(B)’’. TO INFORMATION REPORTING FOR (3) Paragraph (8) of section 318(b) is amended SUCH TRANSFERS TO FOREIGN COR- lates shall not expire before the date which is 3 by striking ‘‘6038(d)(1)’’ and inserting PORATIONS. years after the date on which the Secretary is ‘‘6038(d)(2)’’. (a) IN GENERAL.—Paragraph (1) of section furnished the information required to be re- (4) Paragraph (4) of section 901(k) is amended 6038B(a) (relating to notice of certain transfers ported under such section.’’. by striking ‘‘foreign corporation’’ and inserting to foreign corporations) is amended to read as (b) EFFECTIVE DATE.—The amendment made ‘‘foreign corporation or partnership’’. follows: by subsection (a) shall apply to information the (5) The table of sections for subpart A of part ‘‘(1) transfers property to— due date for the reporting of which is after the III of subchapter A of chapter 61 is amended by ‘‘(A) a foreign corporation in an exchange de- date of the enactment of this Act. striking the item relating to section 6038 and in- scribed in section 332, 351, 354, 355, 356, or 361, SEC. 936. INCREASE IN FILING THRESHOLDS FOR serting the following new item: or RETURNS AS TO ORGANIZATION OF ‘‘(B) a foreign partnership in a contribution FOREIGN CORPORATIONS AND AC- ‘‘Sec. 6038. Information reporting with respect to described in section 721 or in any other con- QUISITIONS OF STOCK IN SUCH COR- certain foreign corporations and tribution described in regulations prescribed by PORATIONS. partnerships.’’. the Secretary,’’. (a) IN GENERAL.—Subsection (a) of section (f) EFFECTIVE DATE.—The amendments made (b) EXCEPTIONS.—Section 6038B is amended by 6046 (relating to returns as to organization or by this section shall apply to annual accounting redesignating subsection (b) as subsection (c) reorganization of foreign corporations and as to periods of foreign partnerships beginning after and by inserting after subsection (a) the fol- acquisitions of their stock) is amended to read the date of the enactment of this Act. lowing new subsection: as follows: SEC. 933. MODIFICATIONS RELATING TO RE- ‘‘(b) EXCEPTIONS FOR CERTAIN TRANSFERS TO ‘‘(a) REQUIREMENT OF RETURN.— TURNS REQUIRED TO BE FILED BY FOREIGN PARTNERSHIPS; SPECIAL RULE.— ‘‘(1) IN GENERAL.—A return complying with REASON OF CHANGES IN OWNER- ‘‘(1) EXCEPTIONS.—Subsection (a)(1)(B) shall the requirements of subsection (b) shall be made SHIP INTERESTS IN FOREIGN PART- apply to a transfer by a United States person to by— NERSHIP. a foreign partnership only if— ‘‘(A) each United States citizen or resident (a) NO RETURN REQUIRED UNLESS CHANGES ‘‘(A) the United States person holds (imme- who becomes an officer or director of a foreign INVOLVE 10-PERCENT INTEREST IN PARTNER- diately after the transfer) directly or indirectly corporation if a United States person (as defined SHIP.— at least a 10-percent interest (as defined in sec- in section 7701(a)(30)) meets the stock ownership (1) IN GENERAL.—Subsection (a) of section tion 6046A(d)) in the partnership, or requirements of paragraph (2) with respect to 6046A (relating to returns as to interests in for- ‘‘(B) the value of the property transferred such corporation, eign partnerships) is amended by adding at the (when added to the value of the property trans- ‘‘(B) each United States person—

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‘‘(i) who acquires stock which, when added to (b) FINANCIAL SERVICES INCOME DETERMINED ‘‘(p) TREATMENT OF CERTAIN REIMBURSED EX- any stock owned on the date of such acquisi- WITHOUT REGARD TO HIGH-TAXED INCOME.— PENSES OF RURAL MAIL CARRIERS.— tion, meets the stock ownership requirements of Subclause (II) of section 904(d)(2)(C)(i) is ‘‘(1) GENERAL RULE.—In the case of any em- paragraph (2) with respect to a foreign corpora- amended by striking ‘‘subclause (I)’’ and insert- ployee of the United States Postal Service who tion, or ing ‘‘subclauses (I) and (III)’’. performs services involving the collection and ‘‘(ii) who acquires stock which, without re- (c) EFFECTIVE DATE.—The amendments made delivery of mail on a rural route and who re- gard to stock owned on the date of such acquisi- by this section shall take effect on the date of ceives qualified reimbursements for the expenses tion, meets the stock ownership requirements of the enactment of this Act. incurred by such employee for the use of a vehi- paragraph (2) with respect to a foreign corpora- TITLE X—SIMPLIFICATION PROVISIONS cle in performing such services— tion, RELATING TO INDIVIDUALS AND BUSI- ‘‘(A) the amount allowable as a deduction ‘‘(C) each person (not described in subpara- NESSES under this chapter for the use of a vehicle in graph (B)) who is treated as a United States performing such services shall be equal to the shareholder under section 953(c) with respect to Subtitle A—Provisions Relating to Individuals amount of such qualified reimbursements; and a foreign corporation, and SEC. 1001. BASIC STANDARD DEDUCTION AND ‘‘(B) such qualified reimbursements shall be ‘‘(D) each person who becomes a United MINIMUM TAX EXEMPTION AMOUNT treated as paid under a reimbursement or other States person while meeting the stock ownership FOR CERTAIN DEPENDENTS. expense allowance arrangement for purposes of requirements of paragraph (2) with respect to (a) BASIC STANDARD DEDUCTION.— section 62(a)(2)(A) (and section 62(c) shall not stock of a foreign corporation. (1) IN GENERAL.—Paragraph (5) of section apply to such qualified reimbursements). In the case of a foreign corporation with respect 63(c) (relating to limitation on basic standard ‘‘(2) DEFINITION OF QUALIFIED REIMBURSE- to which any person is treated as a United deduction in the case of certain dependents) is MENTS.—For purposes of this subsection, the States shareholder under section 953(c), sub- amended by striking ‘‘shall not exceed’’ and all term ‘qualified reimbursements’ means the paragraph (A) shall be treated as including a that follows and inserting ‘‘shall not exceed the amounts paid by the United States Postal Serv- reference to each United States person who is an greater of— ice to employees as an equipment maintenance officer or director of such corporation. ‘‘(A) $500, or allowance under the 1991 collective bargaining ‘‘(2) STOCK OWNERSHIP REQUIREMENTS.—A ‘‘(B) the sum of $250 and such individual’s agreement between the United States Postal person meets the stock ownership requirements earned income.’’. Service and the National Rural Letter Carriers’ of this paragraph with respect to any corpora- (2) CONFORMING AMENDMENT.—Paragraph (4) Association. Amounts paid as an equipment tion if such person owns 10 percent or more of— of section 63(c) is amended— maintenance allowance by such Postal Service ‘‘(A) the total combined voting power of all (A) by striking ‘‘(5)(A)’’ in the material pre- under later collective bargaining agreements classes of stock of such corporation entitled to ceding subparagraph (A) and inserting ‘‘(5)’’, that supersede the 1991 agreement shall be con- vote, or and sidered qualified reimbursements if such ‘‘(B) the total value of the stock of such cor- (B) by striking ‘‘by substituting’’ and all that amounts do not exceed the amounts that would poration.’’. follows in subparagraph (B) and inserting ‘‘by have been paid under the 1991 agreement, ad- (b) EFFECTIVE DATE.—The amendment made substituting for ‘calendar year 1992’ in subpara- justed for changes in the Consumer Price Index by this section shall take effect on January 1, graph (B) thereof— (as defined in section 1(f)(5)) since 1991.’’. 1998. ‘‘(i) ‘calendar year 1987’ in the case of the dol- (b) TECHNICAL AMENDMENT.—Section 6008 of Subtitle E—Determination of Foreign or lar amounts contained in paragraph (2) or the Technical and Miscellaneous Revenue Act of Domestic Status of Partnerships (5)(A) or subsection (f), and 1988 is hereby repealed. SEC. 941. DETERMINATION OF FOREIGN OR DO- ‘‘(ii) ‘calendar year 1997’ in the case of the (c) EFFECTIVE DATE.—The amendments made MESTIC STATUS OF PARTNERSHIPS. dollar amount contained in paragraph (5)(B).’’. by this section shall apply to taxable years be- (a) IN GENERAL.—Paragraph (4) of section (b) MINIMUM TAX EXEMPTION AMOUNT.—Sub- ginning after December 31, 1997. 7701(a) is amended by inserting before the period section (j) of section 59 is amended to read as SEC. 1004. TREATMENT OF TRAVELING EXPENSES ‘‘unless, in the case of a partnership, the Sec- follows: OF CERTAIN FEDERAL EMPLOYEES retary provides otherwise by regulations’’. ‘‘(j) TREATMENT OF UNEARNED INCOME OF ENGAGED IN CRIMINAL INVESTIGA- (b) EFFECTIVE DATE.—The amendment made MINOR CHILDREN.— TIONS. by subsection (a) shall apply to taxable years ‘‘(1) IN GENERAL.—In the case of a child to (a) IN GENERAL.—Subsection (o) of section 162, beginning after the date of the enactment of this whom section 1(g) applies, the exemption as added by title VII, is amended by adding at Act. amount for purposes of section 55 shall not ex- the end the following new paragraph: Subtitle F—Other Simplification Provisions ceed the sum of— ‘‘(3) TRAVELING EXPENSES OF CERTAIN FED- ‘‘(A) such child’s earned income (as defined in ERAL EMPLOYEES ENGAGED IN CRIMINAL INVES- SEC. 951. TRANSITION RULE FOR CERTAIN TRUSTS. section 911(d)(2)) for the taxable year, plus TIGATIONS.—Paragraph (1) shall not apply to (a) IN GENERAL.—Paragraph (3) of section ‘‘(B) $5,000. any Federal employee during any period for 1907(a) of the Small Business Job Protection Act ‘‘(2) INFLATION ADJUSTMENT.—In the case of which such employee is certified by the Attorney of 1996 is amended by adding at the end the fol- any taxable year beginning in a calendar year General (or the designee thereof) as traveling on lowing flush sentence: after 1998, the dollar amount in paragraph behalf of the United States in temporary duty ‘‘To the extent prescribed in regulations by the (1)(B) shall be increased by an amount equal to status to investigate, or provide support services Secretary of the Treasury or his delegate, a the product of— for the investigation of, a Federal crime.’’. trust which was in existence on August 20, 1996 ‘‘(A) such dollar amount, and (b) EFFECTIVE DATE.—The amendment made (other than a trust treated as owned by the ‘‘(B) the cost-of-living adjustment determined by subsection (a) shall apply to amounts paid or grantor under subpart E of part I of subchapter under section 1(f)(3) for the calendar year in incurred with respect to taxable years ending J of chapter 1 of the Internal Revenue Code of which the taxable year begins, determined by after the date of the enactment of this Act. 1986), and which was treated as a United States substituting ‘1997’ for ‘1992’ in subparagraph Subtitle B—Provisions Relating to Businesses person on the day before the date of the enact- (B) thereof. Generally ment of this Act may elect to continue to be If any increase determined under the preceding SEC. 1011. MODIFICATIONS TO LOOK-BACK METH- treated as a United States person notwith- sentence is not a multiple of $50, such increase OD FOR LONG-TERM CONTRACTS. standing section 7701(a)(30)(E) of such Code.’’. shall be rounded to the nearest multiple of (a) LOOK-BACK METHOD NOT TO APPLY IN (b) EFFECTIVE DATE.—The amendment made $50.’’. CERTAIN CASES.—Subsection (b) of section 460 by subsection (a) shall take effect as if included (c) EFFECTIVE DATE.—The amendments made (relating to percentage of completion method) is in the amendments made by section 1907(a) of by this section shall apply to taxable years be- amended by adding at the end the following the Small Business Job Protection Act of 1996. ginning after December 31, 1997. new paragraph: SEC. 952. REPEAL OF STOCK AND SECURITIES SEC. 1002. INCREASE IN AMOUNT OF TAX EXEMPT ‘‘(6) ELECTION TO HAVE LOOK-BACK METHOD SAFE HARBOR REQUIREMENT THAT FROM ESTIMATED TAX REQUIRE- NOT APPLY IN DE MINIMIS CASES.— PRINCIPAL OFFICE BE OUTSIDE THE MENTS. ‘‘(A) AMOUNTS TAKEN INTO ACCOUNT AFTER UNITED STATES. (a) IN GENERAL.—Paragraph (1) of section COMPLETION OF CONTRACT.—Paragraph (1)(B) (a) IN GENERAL.—The last sentence of clause 6654(e) (relating to exception where tax is small shall not apply with respect to any taxable year (ii) of section 864(b)(2)(A) (relating to stock or amount) is amended by striking ‘‘$500’’ and in- (beginning after the taxable year in which the securities) is amended by striking ‘‘, or in the serting ‘‘$1,000’’. contract is completed) if— case of a corporation’’ and all that follows and (b) EFFECTIVE DATE.—The amendments made ‘‘(i) the cumulative taxable income (or loss) inserting a period. by this section shall apply to taxable years be- under the contract as of the close of such tax- (b) EFFECTIVE DATE.—The amendment made ginning after December 31, 1997. able year, is within by subsection (a) shall apply to taxable years SEC. 1003. TREATMENT OF CERTAIN REIMBURSED ‘‘(ii) 10 percent of the cumulative look-back beginning after December 31, 1997. EXPENSES OF RURAL MAIL CAR- taxable income (or loss) under the contract as of SEC. 953. MISCELLANEOUS CLARIFICATIONS. RIERS. the close of the most recent taxable year to (a) ATTRIBUTION OF DEEMED PAID FOREIGN (a) IN GENERAL.—Section 162 (relating to which paragraph (1)(B) applied (or would have TAXES TO PRIOR DISTRIBUTIONS.—Subparagraph trade or business expenses), as amended by title applied but for subparagraph (B)). (B) of section 902(c)(2) is amended by striking VII, is amended by redesignating subsection (p) ‘‘(B) DE MINIMIS DISCREPANCIES.—Paragraph ‘‘deemed paid with respect to’’ and inserting as subsection (q) and by inserting after sub- (1)(B) shall not apply in any case to which it ‘‘attributable to’’. section (o) the following new subsection: would otherwise apply if—

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‘‘(i) the cumulative taxable income (or loss) ‘‘(b) ESTIMATES OF INVENTORY SHRINKAGE amended by striking ‘‘or’’ at the end of clause under the contract as of the close of each prior PERMITTED.—A method of determining inven- (vii), by adding ‘‘or’’ at the end of clause (viii), contract year, is within tories shall not be deemed not to clearly reflect and by adding at the end the following new ‘‘(ii) 10 percent of the cumulative look-back income solely because it utilizes estimates of in- clause: income (or loss) under the contract as of the ventory shrinkage that are confirmed by a phys- ‘‘(ix) section 110(d) (relating to qualified lessee close of such prior contract year. ical count only after the last day of the taxable construction allowances for short-term leases),’’. ‘‘(C) DEFINITIONS.—For purposes of this para- year if— (c) CROSS REFERENCE.—Paragraph (8) of sec- graph— ‘‘(1) the taxpayer normally does a physical tion 168(i) (relating to treatment of leasehold im- ‘‘(i) CONTRACT YEAR.—The term ‘contract count of inventories at each location on a reg- provements) is amended by adding at the end year’ means any taxable year for which income ular and consistent basis, and the following new subparagraph: is taken into account under the contract. ‘‘(2) the taxpayer makes proper adjustments to ‘‘(C) CROSS REFERENCE.— ‘‘(ii) LOOK-BACK INCOME OR LOSS.—The look- such inventories and to its estimating methods ‘‘For treatment of qualified long-term real back income (or loss) is the amount which would to the extent such estimates are greater than or property constructed or improved in connec- be the taxable income (or loss) under the con- less than the actual shrinkage.’’. tion with cash or rent reduction from lessor to tract if the allocation method set forth in para- (b) EFFECTIVE DATE.— lessee, see section 110(b).’’. graph (2)(A) were used in determining taxable (1) IN GENERAL.—The amendment made by (d) CLERICAL AMENDMENT.—The table of sec- income. this section shall apply to taxable years ending tions for part III of subchapter B of chapter 1 ISCOUNTING NOT APPLICABLE.—The ‘‘(iii) D after the date of the enactment of this Act. is amended by inserting after the item relating amounts taken into account after the comple- (2) COORDINATION WITH SECTION 481.—In the to section 109 the following new item: tion of the contract shall be determined without case of any taxpayer permitted by this section to regard to any discounting under the 2nd sen- change its method of accounting to a permissible ‘‘Sec. 110. Qualified lessee construction allow- tence of paragraph (2). method for any taxable year— ances for short-term leases.’’. ‘‘(D) CONTRACTS TO WHICH PARAGRAPH AP- (A) such changes shall be treated as initiated (e) EFFECTIVE DATE.—The amendments made PLIES.—This paragraph shall only apply if the by the taxpayer, by this section shall apply to leases entered into taxpayer makes an election under this subpara- (B) such changes shall be treated as made after the date of the enactment of this Act. graph. Unless revoked with the consent of the with the consent of the Secretary, and Subtitle C—Simplification Relating to Secretary, such an election shall apply to all (C) the period for taking into account the ad- Electing Large Partnerships long-term contracts completed during the tax- justments under section 481 by reason of such PART I—GENERAL PROVISIONS able year for which election is made or during change shall be 4 years. any subsequent taxable year.’’. SEC. 1014. QUALIFIED LESSEE CONSTRUCTION SEC. 1021. SIMPLIFIED FLOW-THROUGH FOR (b) MODIFICATION OF INTEREST RATE.— ALLOWANCES FOR SHORT-TERM ELECTING LARGE PARTNERSHIPS. (1) IN GENERAL.—Subparagraph (C) of section LEASES. (a) GENERAL RULE.—Subchapter K (relating 460(b)(2) is amended by striking ‘‘the overpay- (a) IN GENERAL.—Part III of subchapter B of to partners and partnerships) is amended by ment rate established by section 6621’’ and in- chapter 1 is amended by inserting after section adding at the end the following new part: serting ‘‘the adjusted overpayment rate (as de- 109 the following new section: ‘‘PART IV—SPECIAL RULES FOR ELECTING fined in paragraph (7))’’. ‘‘SEC. 110. QUALIFIED LESSEE CONSTRUCTION LARGE PARTNERSHIPS (2) ADJUSTED OVERPAYMENT RATE.—Sub- ALLOWANCES FOR SHORT-TERM ‘‘Sec. 771. Application of subchapter to electing section (b) of section 460 is amended by adding LEASES. large partnerships. at the end the following new paragraph: ‘‘(a) IN GENERAL.—Gross income of a lessee ‘‘Sec. 772. Simplified flow-through. ‘‘(7) ADJUSTED OVERPAYMENT RATE.— does not include any amount received in cash ‘‘(A) IN GENERAL.—The adjusted overpayment (or treated as a rent reduction) by a lessee from ‘‘Sec. 773. Computations at partnership level. rate for any interest accrual period is the over- a lessor— ‘‘Sec. 774. Other modifications. payment rate in effect under section 6621 for the ‘‘(1) under a short-term lease of retail space, ‘‘Sec. 775. Electing large partnership defined. and calendar quarter in which such interest accrual ‘‘Sec. 776. Special rules for partnerships holding ‘‘(2) for the purpose of such lessee’s con- period begins. oil and gas properties. ‘‘(B) INTEREST ACCRUAL PERIOD.—For pur- structing or improving qualified long-term real poses of subparagraph (A), the term ‘interest ac- property for use in such lessee’s trade or busi- ‘‘Sec. 777. Regulations. crual period’ means the period— ness at such retail space, ‘‘SEC. 771. APPLICATION OF SUBCHAPTER TO ‘‘(i) beginning on the day after the return due but only to the extent that such amount does ELECTING LARGE PARTNERSHIPS. date for any taxable year of the taxpayer, and not exceed the amount expended by the lessee ‘‘The preceding provisions of this subchapter ‘‘(ii) ending on the return due date for the fol- for such construction or improvement. to the extent inconsistent with the provisions of lowing taxable year. ‘‘(b) CONSISTENT TREATMENT BY LESSOR.— this part shall not apply to an electing large For purposes of the preceding sentence, the term Qualified long-term real property constructed or partnership and its partners. ‘return due date’ means the date prescribed for improved in connection with any amount ex- ‘‘SEC. 772. SIMPLIFIED FLOW-THROUGH. filing the return of the tax imposed by this cluded from a lessee’s income by reason of sub- ‘‘(a) GENERAL RULE.—In determining the in- chapter (determined without regard to exten- section (a) shall be treated as nonresidential come tax of a partner of an electing large part- sions).’’. real property by the lessor. nership, such partner shall take into account (c) EFFECTIVE DATE.— ‘‘(c) DEFINITIONS.—For purposes of this sec- separately such partner’s distributive share of (1) IN GENERAL.—Except as provided in para- tion— the partnership’s— graph (2), the amendments made by this section ‘‘(1) QUALIFIED LONG-TERM REAL PROPERTY.— ‘‘(1) taxable income or loss from passive loss shall apply to contracts completed in taxable The term ‘qualified long-term real property’ limitation activities, years ending after the date of the enactment of means nonresidential real property which is ‘‘(2) taxable income or loss from other activi- this Act. part of, or otherwise present at, the retail space ties, (2) SUBSECTION (b).—The amendments made by referred to in subsection (a) and which reverts ‘‘(3) net capital gain (or net capital loss)— subsection (b) shall apply for purposes of section to the lessor at the termination of the lease. ‘‘(A) to the extent allocable to passive loss lim- 167(g) of the Internal Revenue Code of 1986 to ‘‘(2) SHORT-TERM LEASE.—The term ‘short- itation activities, and property placed in service after September 13, term lease’ means a lease (or other agreement ‘‘(B) to the extent allocable to other activities, 1995. for occupancy or use) of retail space for 15 years ‘‘(4) tax-exempt interest, SEC. 1012. MINIMUM TAX TREATMENT OF CER- or less (as determined under the rules of section ‘‘(5) applicable net AMT adjustment sepa- TAIN PROPERTY AND CASUALTY IN- 168(i)(3)). rately computed for— SURANCE COMPANIES. ‘‘(3) RETAIL SPACE.—The term ‘retail space’ ‘‘(A) passive loss limitation activities, and (a) IN GENERAL.—Clause (i) of section means real property leased, occupied, or other- ‘‘(B) other activities, 56(g)(4)(B) (relating to inclusion of items in- wise used by a lessee in its trade or business of ‘‘(6) general credits, cluded for purposes of computing earnings and selling tangible personal property or services to ‘‘(7) low-income housing credit determined profits) is amended by adding at the end the fol- the general public. under section 42, lowing new sentence: ‘‘In the case of any insur- ‘‘(d) INFORMATION REQUIRED TO BE FUR- ‘‘(8) rehabilitation credit determined under ance company taxable under section 831(b), this NISHED TO SECRETARY.—Under regulations, the section 47, clause shall not apply to any amount not de- lessee and lessor described in subsection (a) ‘‘(9) foreign income taxes, scribed in section 834(b).’’. shall, at such times and in such manner as may ‘‘(10) the credit allowable under section 29, (b) EFFECTIVE DATE.—The amendment made be provided in such regulations, furnish to the and by subsection (a) shall apply to taxable years Secretary— ‘‘(11) other items to the extent that the Sec- beginning after December 31, 1997. ‘‘(1) information concerning the amounts re- retary determines that the separate treatment of SEC. 1013. USE OF ESTIMATES OF SHRINKAGE ceived (or treated as a rent reduction) and ex- such items is appropriate. FOR INVENTORY ACCOUNTING. pended as described in subsection (a), and ‘‘(b) SEPARATE COMPUTATIONS.—In deter- (a) IN GENERAL.—Section 471 (relating to gen- ‘‘(2) any other information which the Sec- mining the amounts required under subsection eral rule for inventories) is amended by redesig- retary deems necessary to carry out the provi- (a) to be separately taken into account by any nating subsection (b) as subsection (c) and by sions of this section.’’. partner, this section and section 773 shall be ap- inserting after subsection (a) the following new (b) TREATMENT AS INFORMATION RETURN.— plied separately with respect to such partner by subsection: Subparagraph (A) of section 6724(d)(1)(A) is taking into account such partner’s distributive

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00176 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6845 share of the items of income, gain, loss, deduc- graphs (1) and (2) of subsection (a), any net ‘‘(iv) Any other provision specified in regula- tion, or credit of the partnership. capital gain or net capital loss (as the case may tions. ‘‘(c) TREATMENT AT PARTNER LEVEL.— be), and any item referred to in subsection ‘‘(4) COORDINATION WITH OTHER PROVISIONS.— ‘‘(1) IN GENERAL.—Except as provided in this (a)(11), shall be excluded. Paragraphs (2) and (3) shall apply notwith- subsection, rules similar to the rules of section ‘‘(B) ALLOCATION RULES.—The net capital standing any other provision of this chapter 702(b) shall apply to any partner’s distributive gain shall be treated— other than this part. share of the amounts referred to in subsection ‘‘(i) as allocable to passive loss limitation ac- ‘‘(b) MODIFICATIONS TO DETERMINATION OF (a). tivities to the extent the net capital gain does TAXABLE INCOME.—In determining the taxable ‘‘(2) INCOME OR LOSS FROM PASSIVE LOSS LIMI- not exceed the net capital gain determined by income of an electing large partnership— TATION ACTIVITIES.—For purposes of this chap- only taking into account gains and losses from ‘‘(1) CERTAIN DEDUCTIONS NOT ALLOWED.—The ter, any partner’s distributive share of any in- sales and exchanges of property used in connec- following deductions shall not be allowed: come or loss described in subsection (a)(1) shall tion with such activities, and ‘‘(A) The deduction for personal exemptions be treated as an item of income or loss (as the ‘‘(ii) as allocable to other activities to the ex- provided in section 151. case may be) from the conduct of a trade or tent such gain exceeds the amount allocated ‘‘(B) The net operating loss deduction pro- business which is a single passive activity (as under clause (i). vided in section 172. defined in section 469). A similar rule shall A similar rule shall apply for purposes of allo- ‘‘(C) The additional itemized deductions for apply to a partner’s distributive share of cating any net capital loss. individuals provided in part VII of subchapter B amounts referred to in paragraphs (3)(A) and ‘‘(C) NET CAPITAL LOSS.—The term ‘net capital (other than section 212 thereof). (5)(A) of subsection (a). loss’ means the excess of the losses from sales or ‘‘(2) CHARITABLE DEDUCTIONS.—In deter- ‘‘(3) INCOME OR LOSS FROM OTHER ACTIVI- exchanges of capital assets over the gains from mining the amount allowable under section 170, TIES.— sales or exchange of capital assets. the limitation of section 170(b)(2) shall apply. ‘‘(A) IN GENERAL.—For purposes of this chap- ‘‘(5) GENERAL CREDITS.—The term ‘general ‘‘(3) COORDINATION WITH SECTION 67.—In lieu ter, any partner’s distributive share of any in- credits’ means any credit other than the low-in- of applying section 67, 70 percent of the amount come or loss described in subsection (a)(2) shall come housing credit, the rehabilitation credit, of the miscellaneous itemized deductions shall be be treated as an item of income or expense (as the foreign tax credit, and the credit allowable disallowed. the case may be) with respect to property held under section 29. ‘‘(c) SPECIAL RULES FOR INCOME FROM DIS- for investment. ‘‘(6) FOREIGN INCOME TAXES.—The term ‘for- CHARGE OF INDEBTEDNESS.—If an electing large ‘‘(B) DEDUCTIONS FOR LOSS NOT SUBJECT TO eign income taxes’ means taxes described in sec- partnership has income from the discharge of SECTION 67.—The deduction under section 212 for tion 901 which are paid or accrued to foreign any indebtedness— any loss described in subparagraph (A) shall not countries and to possessions of the United ‘‘(1) such income shall be excluded in deter- be treated as a miscellaneous itemized deduction States. mining the amounts referred to in section 772(a), ‘‘(e) SPECIAL RULE FOR UNRELATED BUSINESS for purposes of section 67. and TAX.—In the case of a partner which is an orga- ‘‘(4) TREATMENT OF NET CAPITAL GAIN OR ‘‘(2) in determining the income tax of any nization subject to tax under section 511, such LOSS.—For purposes of this chapter, any part- partner of such partnership— ner’s distributive share of any gain or loss de- partner’s distributive share of any items shall be ‘‘(A) such income shall be treated as an item scribed in subsection (a)(3) shall be treated as a taken into account separately to the extent nec- required to be separately taken into account long-term capital gain or loss, as the case may essary to comply with the provisions of section under section 772(a), and be. 512(c)(1). ‘‘(B) the provisions of section 108 shall be ap- ‘‘(f) SPECIAL RULES FOR APPLYING PASSIVE ‘‘(5) MINIMUM TAX TREATMENT.—In deter- plied without regard to this part. LOSS LIMITATIONS.—If any person holds an in- mining the alternative minimum taxable income ‘‘SEC. 774. OTHER MODIFICATIONS. terest in an electing large partnership other of any partner, such partner’s distributive share ‘‘(a) TREATMENT OF CERTAIN OPTIONAL AD- than as a limited partner— of any applicable net AMT adjustment shall be JUSTMENTS, ETC.—In the case of an electing ‘‘(1) paragraph (2) of subsection (c) shall not taken into account in lieu of making the sepa- large partnership— apply to such partner, and ‘‘(1) computations under section 773 shall be rate adjustments provided in sections 56, 57, and ‘‘(2) such partner’s distributive share of the made without regard to any adjustment under 58 with respect to the items of the partnership. partnership items allocable to passive loss limi- section 743(b) or 108(b), but Except as provided in regulations, the applica- tation activities shall be taken into account sep- ‘‘(2) a partner’s distributive share of any ble net AMT adjustment shall be treated, for arately to the extent necessary to comply with amount referred to in section 772(a) shall be ap- purposes of section 53, as an adjustment or item the provisions of section 469. of tax preference not specified in section The preceding sentence shall not apply to any propriately adjusted to take into account any 53(d)(1)(B)(ii). items allocable to an interest held as a limited adjustment under section 743(b) or 108(b) with ‘‘(6) GENERAL CREDITS.—A partner’s distribu- partner. respect to such partner. tive share of the amount referred to in para- ‘‘(b) CREDIT RECAPTURE DETERMINED AT ‘‘SEC. 773. COMPUTATIONS AT PARTNERSHIP PARTNERSHIP LEVEL.— graph (6) of subsection (a) shall be taken into LEVEL. ‘‘(1) IN GENERAL.—In the case of an electing account as a current year business credit. ‘‘(a) GENERAL RULE.— large partnership— ‘‘(d) OPERATING RULES.—For purposes of this ‘‘(1) TAXABLE INCOME.—The taxable income of section— an electing large partnership shall be computed ‘‘(A) any credit recapture shall be taken into ‘‘(1) PASSIVE LOSS LIMITATION ACTIVITY.—The in the same manner as in the case of an indi- account by the partnership, and ‘‘(B) the amount of such recapture shall be term ‘passive loss limitation activity’ means— vidual except that— ‘‘(A) any activity which involves the conduct ‘‘(A) the items described in section 772(a) shall determined as if the credit with respect to which of a trade or business, and be separately stated, and the recapture is made had been fully utilized to ‘‘(B) any rental activity. ‘‘(B) the modifications of subsection (b) shall reduce tax. For purposes of the preceding sentence, the term apply. ‘‘(2) METHOD OF TAKING RECAPTURE INTO AC- ‘trade or business’ includes any activity treated ‘‘(2) ELECTIONS.—All elections affecting the COUNT.—An electing large partnership shall as a trade or business under paragraph (5) or (6) computation of the taxable income of an electing take into account a credit recapture by reducing of section 469(c). large partnership or the computation of any the amount of the appropriate current year ‘‘(2) TAX-EXEMPT INTEREST.—The term ‘tax- credit of an electing large partnership shall be credit to the extent thereof, and if such recap- exempt interest’ means interest excludable from made by the partnership; except that the elec- ture exceeds the amount of such current year gross income under section 103. tion under section 901, and any election under credit, the partnership shall be liable to pay ‘‘(3) APPLICABLE NET AMT ADJUSTMENT.— section 108, shall be made by each partner sepa- such excess. ‘‘(A) IN GENERAL.—The applicable net AMT rately. ‘‘(3) DISPOSITIONS NOT TO TRIGGER RECAP- adjustment is— ‘‘(3) LIMITATIONS, ETC.— TURE.—No credit recapture shall be required by ‘‘(i) with respect to taxpayers other than cor- ‘‘(A) IN GENERAL.—Except as provided in sub- reason of any transfer of an interest in an elect- porations, the net adjustment determined by paragraph (B), all limitations and other provi- ing large partnership. using the adjustments applicable to individuals, sions affecting the computation of the taxable ‘‘(4) CREDIT RECAPTURE.—For purposes of this and income of an electing large partnership or the subsection, the term ‘credit recapture’ means ‘‘(ii) with respect to corporations, the net ad- computation of any credit of an electing large any increase in tax under section 42(j) or 50(a). justment determined by using the adjustments partnership shall be applied at the partnership ‘‘(c) PARTNERSHIP NOT TERMINATED BY REA- applicable to corporations. level (and not at the partner level). SON OF CHANGE IN OWNERSHIP.—Subparagraph ‘‘(B) NET ADJUSTMENT.—The term ‘net adjust- ‘‘(B) CERTAIN LIMITATIONS APPLIED AT PART- (B) of section 708(b)(1) shall not apply to an ment’ means the net adjustment in the items at- NER LEVEL.—The following provisions shall be electing large partnership. tributable to passive loss activities or other ac- applied at the partner level (and not at the ‘‘(d) PARTNERSHIP ENTITLED TO CERTAIN tivities (as the case may be) which would result partnership level): CREDITS.—The following shall be allowed to an if such items were determined with the adjust- ‘‘(i) Section 68 (relating to overall limitation electing large partnership and shall not be ments of sections 56, 57, and 58. on itemized deductions). taken into account by the partners of such part- ‘‘(4) TREATMENT OF CERTAIN SEPARATELY ‘‘(ii) Sections 49 and 465 (relating to at risk nership: STATED ITEMS.— limitations). ‘‘(1) The credit provided by section 34. ‘‘(A) EXCLUSION FOR CERTAIN PURPOSES.—In ‘‘(iii) Section 469 (relating to limitation on ‘‘(2) Any credit or refund under section determining the amounts referred to in para- passive activity losses and credits). 852(b)(3)(D).

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‘‘(e) TREATMENT OF REMIC RESIDUALS.—For ‘‘SEC. 776. SPECIAL RULES FOR PARTNERSHIPS ‘‘SEC. 6240. APPLICATION OF SUBCHAPTER. purposes of applying section 860E(e)(6) to any HOLDING OIL AND GAS PROPERTIES. ‘‘(a) GENERAL RULE.—This subchapter shall electing large partnership— ‘‘(a) COMPUTATION OF PERCENTAGE DEPLE- only apply to electing large partnerships and ‘‘(1) all interests in such partnership shall be TION.—In the case of an electing large partner- partners in such partnerships. treated as held by disqualified organizations, ship, except as provided in subsection (b)— ‘‘(b) COORDINATION WITH OTHER PARTNERSHIP ‘‘(2) in lieu of applying subparagraph (C) of ‘‘(1) the allowance for depletion under section AUDIT PROCEDURES.— section 860E(e)(6), the amount subject to tax 611 with respect to any partnership oil or gas ‘‘(1) IN GENERAL.—Subchapter C of this chap- under section 860E(e)(6) shall be excluded from property shall be computed at the partnership ter shall not apply to any electing large partner- the gross income of such partnership, and level without regard to any provision of section ship other than in its capacity as a partner in ‘‘(3) subparagraph (D) of section 860E(e)(6) 613A requiring such allowance to be computed another partnership which is not an electing shall not apply. separately by each partner, large partnership. ‘‘(f) SPECIAL RULES FOR APPLYING CERTAIN ‘‘(2) such allowance shall be determined with- ‘‘(2) TREATMENT WHERE PARTNER IN OTHER INSTALLMENT SALE RULES.—In the case of an out regard to the provisions of section 613A(c) PARTNERSHIP.—If an electing large partnership electing large partnership— limiting the amount of production for which is a partner in another partnership which is not ‘‘(1) the provisions of sections 453(l)(3) and percentage depletion is allowable and without an electing large partnership— 453A shall be applied at the partnership level, regard to paragraph (1) of section 613A(d), and ‘‘(A) subchapter C of this chapter shall apply and ‘‘(3) paragraph (3) of section 705(a) shall not to items of such electing large partnership ‘‘(2) in determining the amount of interest apply. which are partnership items with respect to such payable under such sections, such partnership ‘‘(b) TREATMENT OF CERTAIN PARTNERS.— other partnership, but shall be treated as subject to tax under this ‘‘(1) IN GENERAL.—In the case of a disqualified ‘‘(B) any adjustment under such subchapter C chapter at the highest rate of tax in effect under person, the treatment under this chapter of such shall be taken into account in the manner pro- section 1 or 11. person’s distributive share of any item of in- vided by section 6242. come, gain, loss, deduction, or credit attrib- ‘‘SEC. 775. ELECTING LARGE PARTNERSHIP DE- ‘‘SEC. 6241. PARTNER’S RETURN MUST BE CON- FINED. utable to any partnership oil or gas property SISTENT WITH PARTNERSHIP RE- ‘‘(a) GENERAL RULE.—For purposes of this shall be determined without regard to this part. TURN. part— Such person’s distributive share of any such ‘‘(a) GENERAL RULE.—A partner of any elect- ‘‘(1) IN GENERAL.—The term ‘electing large items shall be excluded for purposes of making ing large partnership shall, on the partner’s re- partnership’ means, with respect to any part- determinations under sections 772 and 773. turn, treat each partnership item attributable to nership taxable year, any partnership if— ‘‘(2) DISQUALIFIED PERSON.—For purposes of such partnership in a manner which is con- ‘‘(A) the number of persons who were partners paragraph (1), the term ‘disqualified person’ sistent with the treatment of such partnership in such partnership in the preceding partner- means, with respect to any partnership taxable item on the partnership return. ship taxable year equaled or exceeded 100, and year— ‘‘(b) UNDERPAYMENT DUE TO INCONSISTENT ‘‘(B) such partnership elects the application ‘‘(A) any person referred to in paragraph (2) TREATMENT ASSESSED AS MATH ERROR.—Any of this part. or (4) of section 613A(d) for such person’s tax- underpayment of tax by a partner by reason of To the extent provided in regulations, a partner- able year in which such partnership taxable ship shall cease to be treated as an electing failing to comply with the requirements of sub- year ends, and section (a) shall be assessed and collected in the large partnership for any partnership taxable ‘‘(B) any other person if such person’s aver- year if in such taxable year fewer than 100 per- same manner as if such underpayment were on age daily production of domestic crude oil and account of a mathematical or clerical error ap- sons were partners in such partnership. natural gas for such person’s taxable year in ‘‘(2) ELECTION.—The election under this sub- pearing on the partner’s return. Paragraph (2) which such partnership taxable year ends ex- of section 6213(b) shall not apply to any assess- section shall apply to the taxable year for which ceeds 500 barrels. made and all subsequent taxable years unless ment of an underpayment referred to in the pre- ‘‘(3) AVERAGE DAILY PRODUCTION.—For pur- ceding sentence. revoked with the consent of the Secretary. poses of paragraph (2), a person’s average daily ‘‘(b) SPECIAL RULES FOR CERTAIN SERVICE ‘‘(c) ADJUSTMENTS NOT TO AFFECT PRIOR production of domestic crude oil and natural YEAR OF PARTNERS.— PARTNERSHIPS.— gas for any taxable year shall be computed as ‘‘(1) CERTAIN PARTNERS NOT COUNTED.—For ‘‘(1) IN GENERAL.—Except as provided in para- provided in section 613A(c)(2)— graph (2), subsections (a) and (b) shall apply purposes of this section, the term ‘partner’ does ‘‘(A) by taking into account all production of not include any individual performing substan- without regard to any adjustment to the part- domestic crude oil and natural gas (including nership item under part II. tial services in connection with the activities of such person’s proportionate share of any pro- the partnership and holding an interest in such ‘‘(2) CERTAIN CHANGES IN DISTRIBUTIVE SHARE duction of a partnership), TAKEN INTO ACCOUNT BY PARTNER.— partnership, or an individual who formerly per- ‘‘(B) by treating 6,000 cubic feet of natural gas formed substantial services in connection with ‘‘(A) IN GENERAL.—To the extent that any ad- as a barrel of crude oil, and justment under part II involves a change under such activities and who held an interest in such ‘‘(C) by treating as 1 person all persons treat- section 704 in a partner’s distributive share of partnership at the time the individual performed ed as 1 taxpayer under section 613A(c)(8) or the amount of any partnership item shown on such services. among whom allocations are required under the partnership return, such adjustment shall be ‘‘(2) EXCLUSION.—For purposes of this part, such section. an election under subsection (a) shall not be ef- taken into account in applying this title to such ‘‘SEC. 777. REGULATIONS. fective with respect to any partnership if sub- partner for the partner’s taxable year for which ‘‘The Secretary shall prescribe such regula- stantially all the partners of such partnership— such item was required to be taken into account. tions as may be appropriate to carry out the ‘‘(A) are individuals performing substantial ‘‘(B) COORDINATION WITH DEFICIENCY PROCE- purposes of this part.’’. services in connection with the activities of such DURES.— (b) CLERICAL AMENDMENT.—The table of parts partnership or are personal service corporations ‘‘(i) IN GENERAL.—Subchapter B shall not for subchapter K of chapter 1 is amended by (as defined in section 269A(b)) the owner-em- apply to the assessment or collection of any un- adding at the end the following new item: ployees (as defined in section 269A(b)) of which derpayment of tax attributable to an adjustment perform such substantial services, ‘‘Part IV. Special rules for electing large part- referred to in subparagraph (A). ‘‘(B) are retired partners who had performed nerships.’’. ‘‘(ii) ADJUSTMENT NOT PRECLUDED.—Notwith- such substantial services, or (c) EFFECTIVE DATE.—The amendments made standing any other law or rule of law, nothing ‘‘(C) are spouses of partners who are per- by this section shall apply to partnership tax- in subchapter B (or in any proceeding under forming (or had previously performed) such sub- able years beginning after December 31, 1997. subchapter B) shall preclude the assessment or stantial services. SEC. 1022. SIMPLIFIED AUDIT PROCEDURES FOR collection of any underpayment of tax (or the ‘‘(3) SPECIAL RULE FOR LOWER TIER PARTNER- ELECTING LARGE PARTNERSHIPS. allowance of any credit or refund of any over- SHIPS.—For purposes of this subsection, the ac- (a) GENERAL RULE.—Chapter 63 is amended by payment of tax) attributable to an adjustment tivities of a partnership shall include the activi- adding at the end thereof the following new referred to in subparagraph (A) and such as- ties of any other partnership in which the part- subchapter: sessment or collection or allowance (or any no- nership owns directly an interest in the capital tice thereof) shall not preclude any notice, pro- ‘‘Subchapter D—Treatment of electing large and profits of at least 80 percent. ceeding, or determination under subchapter B. partnerships ‘‘(c) EXCLUSION OF COMMODITY POOLS.—For ‘‘(C) PERIOD OF LIMITATIONS.—The period purposes of this part, an election under sub- ‘‘Part I. Treatment of partnership items and ad- for— section (a) shall not be effective with respect to justments. ‘‘(i) assessing any underpayment of tax, or any partnership the principal activity of which ‘‘Part II. Partnership level adjustments. ‘‘(ii) filing a claim for credit or refund of any is the buying and selling of commodities (not de- ‘‘Part III. Definitions and special rules. overpayment of tax, scribed in section 1221(1)), or options, futures, or ‘‘PART I—TREATMENT OF PARTNERSHIP attributable to an adjustment referred to in sub- forwards with respect to such commodities. ITEMS AND ADJUSTMENTS paragraph (A) shall not expire before the close ‘‘(d) SECRETARY MAY RELY ON TREATMENT ON of the period prescribed by section 6248 for mak- ‘‘Sec. 6240. Application of subchapter. RETURN.—If, on the partnership return of any ing adjustments with respect to the partnership partnership, such partnership is treated as an ‘‘Sec. 6241. Partner’s return must be consistent taxable year involved. electing large partnership, such treatment shall with partnership return. ‘‘(D) TIERED STRUCTURES.—If the partner re- be binding on such partnership and all partners ‘‘Sec. 6242. Procedures for taking partnership ferred to in subparagraph (A) is another part- of such partnership but not on the Secretary. adjustments into account. nership or an S corporation, the rules of this

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00178 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6847 paragraph shall also apply to persons holding ending on the return due date for the partner- the date prescribed for filing the partnership re- interests in such partnership or S corporation ship taxable year in which such adjustment turn for such taxable year (determined without (as the case may be); except that, if such part- takes effect (or, if earlier, in the case of any ad- regard to extensions). ner is an electing large partnership, the adjust- justment to which subsection (a)(2) applies, the ‘‘(5) ADJUSTMENTS INVOLVING CHANGES IN ment referred to in subparagraph (A) shall be date on which the payment under subsection CHARACTER.—Under regulations, appropriate taken into account in the manner provided by (a)(2) is made). adjustments in the application of this section section 6242. Proper adjustments in the amount determined shall be made for purposes of taking into ac- ‘‘(d) ADDITION TO TAX FOR FAILURE TO COM- under the preceding sentence shall be made for count partnership adjustments which involve a PLY WITH SECTION.— adjustments required for partnership taxable change in the character of any item of income, ‘‘For addition to tax in case of partner’s dis- years after the adjusted year and before the gain, loss, or deduction. regard of requirements of this section, see year in which the partnership adjustment takes ‘‘(e) PAYMENTS NONDEDUCTIBLE.—No deduc- part II of subchapter A of chapter 68. effect by reason of such partnership adjustment. tion shall be allowed under subtitle A for any ‘‘(3) PENALTIES.—A partnership shall be liable ‘‘SEC. 6242. PROCEDURES FOR TAKING PARTNER- payment required to be made by an electing SHIP ADJUSTMENTS INTO ACCOUNT. for any penalty, addition to tax, or additional large partnership under this section. ‘‘(a) ADJUSTMENTS FLOW THROUGH TO PART- amount for which it would have been liable if ‘‘PART II—PARTNERSHIP LEVEL NERS FOR YEAR IN WHICH ADJUSTMENT TAKES such partnership had been an individual subject ADJUSTMENTS to tax under chapter 1 for the adjusted year and EFFECT.— ‘‘Subpart A. Adjustments by Secretary. ‘‘(1) IN GENERAL.—If any partnership adjust- the imputed underpayment determined under ment with respect to any partnership item takes paragraph (4) were an actual underpayment (or ‘‘Subpart B. Claims for adjustments by partner- effect (within the meaning of subsection (d)(2)) understatement) for such year. ship. during any partnership taxable year and if an ‘‘(4) IMPUTED UNDERPAYMENT.—For purposes ‘‘Subpart A—Adjustments by Secretary election under paragraph (2) does not apply to of this subsection, the imputed underpayment ‘‘Sec. 6245. Secretarial authority. such adjustment, such adjustment shall be determined under this paragraph with respect to any partnership adjustment is the under- ‘‘Sec. 6246. Restrictions on partnership adjust- taken into account in determining the amount ments. of such item for the partnership taxable year in payment (if any) which would result— which such adjustment takes effect. In applying ‘‘(A) by netting all adjustments to items of in- ‘‘Sec. 6247. Judicial review of partnership ad- this title to any person who is (directly or indi- come, gain, loss, or deduction and by treating justment. rectly) a partner in such partnership during any net increase in income as an underpayment ‘‘Sec. 6248. Period of limitations for making ad- such partnership taxable year, such adjustment equal to the amount of such net increase multi- justments. plied by the highest rate of tax in effect under shall be treated as an item actually arising dur- ‘‘SEC. 6245. SECRETARIAL AUTHORITY. section 1 or 11 for the adjusted year, and ing such taxable year. ‘‘(a) GENERAL RULE.—The Secretary is au- ‘‘(B) by taking adjustments to credits into ac- ‘‘(2) PARTNERSHIP LIABLE IN CERTAIN CASES.— thorized and directed to make adjustments at count as increases or decreases (whichever is If— the partnership level in any partnership item to ‘‘(A) a partnership elects under this para- appropriate) in the amount of tax. For purposes of the preceding sentence, any net the extent necessary to have such item be treat- graph to not take an adjustment into account decrease in a loss shall be treated as an increase ed in the manner required. under paragraph (1), in income and a similar rule shall apply to a net ‘‘(b) NOTICE OF PARTNERSHIP ADJUSTMENT.— ‘‘(B) a partnership does not make such an ‘‘(1) IN GENERAL.—If the Secretary determines election but in filing its return for any partner- increase in a loss. ‘‘(c) ADMINISTRATIVE PROVISIONS.— that a partnership adjustment is required, the ship taxable year fails to take fully into account ‘‘(1) IN GENERAL.—Any payment required by Secretary is authorized to send notice of such any partnership adjustment as required under subsection (a)(2) or (b)(1)(A)— adjustment to the partnership by certified mail paragraph (1), or ‘‘(A) shall be assessed and collected in the or registered mail. Such notice shall be sufficient ‘‘(C) any partnership adjustment involves a same manner as if it were a tax imposed by sub- if mailed to the partnership at its last known reduction in a credit which exceeds the amount title C, and address even if the partnership has terminated of such credit determined for the partnership ‘‘(B) shall be paid on or before the return due its existence. taxable year in which the adjustment takes ef- date for the partnership taxable year in which ‘‘(2) FURTHER NOTICES RESTRICTED.—If the fect, the partnership adjustment takes effect. Secretary mails a notice of a partnership adjust- the partnership shall pay to the Secretary an ‘‘(2) INTEREST.—For purposes of determining ment to any partnership for any partnership amount determined by applying the rules of sub- interest, any payment required by subsection taxable year and the partnership files a petition section (b)(4) to the adjustments not so taken (a)(2) or (b)(1)(A) shall be treated as an under- under section 6247 with respect to such notice, into account and any excess referred to in sub- payment of tax. in the absence of a showing of fraud, malfea- paragraph (C). ‘‘(3) PENALTIES.— sance, or misrepresentation of a material fact, FFSETTING ADJUSTMENTS TAKEN INTO AC- ‘‘(3) O ‘‘(A) IN GENERAL.—In the case of any failure the Secretary shall not mail another such notice COUNT.—If a partnership adjustment requires by any partnership to pay on the date pre- to such partnership with respect to such taxable another adjustment in a taxable year after the scribed therefor any amount required by sub- year. adjusted year and before the partnership tax- section (a)(2) or (b)(1)(A), there is hereby im- ‘‘(3) AUTHORITY TO RESCIND NOTICE WITH able year in which such partnership adjustment posed on such partnership a penalty of 10 per- PARTNERSHIP CONSENT.—The Secretary may, takes effect, such other adjustment shall be cent of the underpayment. For purposes of the with the consent of the partnership, rescind any taken into account under this subsection for the preceding sentence, the term ‘underpayment’ notice of a partnership adjustment mailed to partnership taxable year in which such partner- means the excess of any payment required under such partnership. Any notice so rescinded shall ship adjustment takes effect. this section over the amount (if any) paid on or not be treated as a notice of a partnership ad- ‘‘(4) COORDINATION WITH PART II.—Amounts before the date prescribed therefor. justment, for purposes of this section, section taken into account under this subsection for ‘‘(B) ACCURACY-RELATED AND FRAUD PEN- 6246, and section 6247, and the taxpayer shall any partnership taxable year shall continue to ALTIES MADE APPLICABLE.—For purposes of part have no right to bring a proceeding under sec- be treated as adjustments for the adjusted year II of subchapter A of chapter 68, any payment tion 6247 with respect to such notice. Nothing in for purposes of determining whether such required by subsection (a)(2) shall be treated as this subsection shall affect any suspension of amounts may be readjusted under part II. an underpayment of tax. the running of any period of limitations during ‘‘(b) PARTNERSHIP LIABLE FOR INTEREST AND ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For any period during which the rescinded notice PENALTIES.— purposes of this section— was outstanding. ‘‘(1) IN GENERAL.—If a partnership adjustment ‘‘(1) PARTNERSHIP ADJUSTMENT.—The term takes effect during any partnership taxable year ‘partnership adjustment’ means any adjustment ‘‘SEC. 6246. RESTRICTIONS ON PARTNERSHIP AD- JUSTMENTS. and such adjustment results in an imputed un- in the amount of any partnership item of an ‘‘(a) GENERAL RULE.—Except as otherwise derpayment for the adjusted year, the partner- electing large partnership. ship— ‘‘(2) WHEN ADJUSTMENT TAKES EFFECT.—A provided in this chapter, no adjustment to any ‘‘(A) shall pay to the Secretary interest com- partnership adjustment takes effect— partnership item may be made (and no levy or puted under paragraph (2), and ‘‘(A) in the case of an adjustment pursuant to proceeding in any court for the collection of any ‘‘(B) shall be liable for any penalty, addition the decision of a court in a proceeding brought amount resulting from such adjustment may be to tax, or additional amount as provided in under part II, when such decision becomes final, made, begun or prosecuted) before— paragraph (3). ‘‘(B) in the case of an adjustment pursuant to ‘‘(1) the close of the 90th day after the day on ‘‘(2) DETERMINATION OF AMOUNT OF INTER- any administrative adjustment request under which a notice of a partnership adjustment was EST.—The interest computed under this para- section 6251, when such adjustment is allowed mailed to the partnership, and graph with respect to any partnership adjust- by the Secretary, or ‘‘(2) if a petition is filed under section 6247 ment is the interest which would be determined ‘‘(C) in any other case, when such adjustment with respect to such notice, the decision of the under chapter 67— is made. court has become final. ‘‘(A) on the imputed underpayment deter- ‘‘(3) ADJUSTED YEAR.—The term ‘adjusted ‘‘(b) PREMATURE ACTION MAY BE ENJOINED.— mined under paragraph (4) with respect to such year’ means the partnership taxable year to Notwithstanding section 7421(a), any action adjustment, which the item being adjusted relates. which violates subsection (a) may be enjoined in ‘‘(B) for the period beginning on the day after ‘‘(4) RETURN DUE DATE.—The term ‘return due the proper court, including the Tax Court. The the return due date for the adjusted year and date’ means, with respect to any taxable year, Tax Court shall have no jurisdiction to enjoin

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any action under this subsection unless a timely ‘‘(d) DETERMINATION OF COURT REVIEW- ‘‘(b) SECRETARIAL ACTION.—If a partnership petition has been filed under section 6247 and ABLE.—Any determination by a court under this files an administrative adjustment request under then only in respect of the adjustments that are section shall have the force and effect of a deci- subsection (a), the Secretary may allow any the subject of such petition. sion of the Tax Court or a final judgment or de- part of the requested adjustments. ‘‘(c) EXCEPTIONS TO RESTRICTIONS ON ADJUST- cree of the district court or the Claims Court, as ‘‘(c) SPECIAL RULE IN CASE OF EXTENSION MENTS.— the case may be, and shall be reviewable as UNDER SECTION 6248.—If the period described in ‘‘(1) ADJUSTMENTS ARISING OUT OF MATH OR such. The date of any such determination shall section 6248(a) is extended pursuant to an CLERICAL ERRORS.— be treated as being the date of the court’s order agreement under section 6248(b), the period pre- ‘‘(A) IN GENERAL.—If the partnership is noti- entering the decision. scribed by subsection (a)(1) shall not expire be- fied that, on account of a mathematical or cler- ‘‘(e) EFFECT OF DECISION DISMISSING AC- fore the date 6 months after the expiration of ical error appearing on the partnership return, TION.—If an action brought under this section is the extension under section 6248(b). an adjustment to a partnership item is required, dismissed other than by reason of a rescission ‘‘SEC. 6252. JUDICIAL REVIEW WHERE ADMINIS- rules similar to the rules of paragraphs (1) and under section 6245(b)(3), the decision of the TRATIVE ADJUSTMENT REQUEST IS (2) of section 6213(b) shall apply to such adjust- court dismissing the action shall be considered NOT ALLOWED IN FULL. ment. as its decision that the notice of partnership ad- ‘‘(a) IN GENERAL.—If any part of an adminis- ‘‘(B) SPECIAL RULE.—If an electing large part- justment is correct, and an appropriate order trative adjustment request filed under section nership is a partner in another electing large shall be entered in the records of the court. 6251 is not allowed by the Secretary, the part- nership may file a petition for an adjustment partnership, any adjustment on account of such ‘‘SEC. 6248. PERIOD OF LIMITATIONS FOR MAKING partnership’s failure to comply with the require- ADJUSTMENTS. with respect to the partnership items to which ments of section 6241(a) with respect to its inter- ‘‘(a) GENERAL RULE.—Except as otherwise such part of the request relates with— est in such other partnership shall be treated as ‘‘(1) the Tax Court, provided in this section, no adjustment under ‘‘(2) the district court of the United States for an adjustment referred to in subparagraph (A), this subpart to any partnership item for any the district in which the principal place of busi- except that paragraph (2) of section 6213(b) partnership taxable year may be made after the ness of the partnership is located, or shall not apply to such adjustment. date which is 3 years after the later of— ‘‘(3) the Claims Court. ‘‘(2) PARTNERSHIP MAY WAIVE RESTRICTIONS.— ‘‘(1) the date on which the partnership return ‘‘(b) PERIOD FOR FILING PETITION.—A petition The partnership shall at any time (whether or for such taxable year was filed, or may be filed under subsection (a) with respect to not a notice of partnership adjustment has been ‘‘(2) the last day for filing such return for partnership items for a partnership taxable year issued) have the right, by a signed notice in such year (determined without regard to exten- only— writing filed with the Secretary, to waive the re- sions). ‘‘(1) after the expiration of 6 months from the strictions provided in subsection (a) on the mak- ‘‘(b) EXTENSION BY AGREEMENT.—The period date of filing of the request under section 6251, ing of any partnership adjustment. described in subsection (a) (including an exten- and ‘‘(d) LIMIT WHERE NO PROCEEDING BEGUN.—If sion period under this subsection) may be ex- ‘‘(2) before the date which is 2 years after the no proceeding under section 6247 is begun with tended by an agreement entered into by the Sec- date of such request. respect to any notice of a partnership adjust- retary and the partnership before the expiration The 2-year period set forth in paragraph (2) ment during the 90-day period described in sub- of such period. shall be extended for such period as may be section (a), the amount for which the partner- ‘‘(c) SPECIAL RULE IN CASE OF FRAUD, ETC.— agreed upon in writing by the partnership and ship is liable under section 6242 (and any in- ‘‘(1) FALSE RETURN.—In the case of a false or the Secretary. crease in any partner’s liability for tax under fraudulent partnership return with intent to ‘‘(c) COORDINATION WITH SUBPART A.— chapter 1 by reason of any adjustment under evade tax, the adjustment may be made at any ‘‘(1) NOTICE OF PARTNERSHIP ADJUSTMENT BE- section 6242(a)) shall not exceed the amount de- time. FORE FILING OF PETITION.—No petition may be termined in accordance with such notice. ‘‘(2) SUBSTANTIAL OMISSION OF INCOME.—If filed under this section after the Secretary mails ‘‘SEC. 6247. JUDICIAL REVIEW OF PARTNERSHIP any partnership omits from gross income an to the partnership a notice of a partnership ad- ADJUSTMENT. amount properly includible therein which is in justment for the partnership taxable year to ‘‘(a) GENERAL RULE.—Within 90 days after excess of 25 percent of the amount of gross in- which the request under section 6251 relates. the date on which a notice of a partnership ad- come stated in its return, subsection (a) shall be ‘‘(2) NOTICE OF PARTNERSHIP ADJUSTMENT justment is mailed to the partnership with re- applied by substituting ‘6 years’ for ‘3 years’. AFTER FILING BUT BEFORE HEARING OF PETI- spect to any partnership taxable year, the part- ‘‘(3) NO RETURN.—In the case of a failure by TION.—If the Secretary mails to the partnership nership may file a petition for a readjustment of a partnership to file a return for any taxable a notice of a partnership adjustment for the the partnership items for such taxable year year, the adjustment may be made at any time. partnership taxable year to which the request with— ‘‘(4) RETURN FILED BY SECRETARY.—For pur- under section 6251 relates after the filing of a ‘‘(1) the Tax Court, poses of this section, a return executed by the petition under this subsection but before the ‘‘(2) the district court of the United States for Secretary under subsection (b) of section 6020 on hearing of such petition, such petition shall be the district in which the partnership’s principal behalf of the partnership shall not be treated as treated as an action brought under section 6247 place of business is located, or a return of the partnership. with respect to such notice, except that sub- ‘‘(3) the Claims Court. ‘‘(d) SUSPENSION WHEN SECRETARY MAILS NO- section (b) of section 6247 shall not apply. ‘‘(b) JURISDICTIONAL REQUIREMENT FOR TICE OF ADJUSTMENT.—If notice of a partnership ‘‘(3) NOTICE MUST BE BEFORE EXPIRATION OF BRINGING ACTION IN DISTRICT COURT OR CLAIMS adjustment with respect to any taxable year is STATUTE OF LIMITATIONS.—A notice of a part- COURT.— mailed to the partnership, the running of the nership adjustment for the partnership taxable ‘‘(1) IN GENERAL.—A readjustment petition period specified in subsection (a) (as modified by year shall be taken into account under para- under this section may be filed in a district the other provisions of this section) shall be sus- graphs (1) and (2) only if such notice is mailed court of the United States or the Claims Court pended— before the expiration of the period prescribed by only if the partnership filing the petition depos- ‘‘(1) for the period during which an action section 6248 for making adjustments to partner- its with the Secretary, on or before the date the may be brought under section 6247 (and, if a pe- ship items for such taxable year. petition is filed, the amount for which the part- tition is filed under section 6247 with respect to ‘‘(d) SCOPE OF JUDICIAL REVIEW.—Except in nership would be liable under section 6242(b) (as such notice, until the decision of the court be- the case described in paragraph (2) of subsection of the date of the filing of the petition) if the comes final), and (c), a court with which a petition is filed in ac- partnership items were adjusted as provided by ‘‘(2) for 1 year thereafter. cordance with this section shall have jurisdic- the notice of partnership adjustment. The court ‘‘Subpart B—Claims for Adjustments by tion to determine only those partnership items to may by order provide that the jurisdictional re- Partnership which the part of the request under section 6251 quirements of this paragraph are satisfied where ‘‘Sec. 6251. Administrative adjustment requests. not allowed by the Secretary relates and those there has been a good faith attempt to satisfy items with respect to which the Secretary asserts ‘‘Sec. 6252. Judicial review where administra- adjustments as offsets to the adjustments re- such requirement and any shortfall of the tive adjustment request is not al- amount required to be deposited is timely cor- quested by the partnership. lowed in full. ‘‘(e) DETERMINATION OF COURT REVIEW- rected. ‘‘SEC. 6251. ADMINISTRATIVE ADJUSTMENT RE- ABLE.—Any determination by a court under this ‘‘(2) INTEREST PAYABLE.—Any amount depos- QUESTS. ited under paragraph (1), while deposited, shall subsection shall have the force and effect of a ‘‘(a) GENERAL RULE.—A partnership may file decision of the Tax Court or a final judgment or not be treated as a payment of tax for purposes a request for an administrative adjustment of of this title (other than chapter 67). decree of the district court or the Claims Court, partnership items for any partnership taxable as the case may be, and shall be reviewable as ‘‘(c) SCOPE OF JUDICIAL REVIEW.—A court year at any time which is— with which a petition is filed in accordance with such. The date of any such determination shall ‘‘(1) within 3 years after the later of— be treated as being the date of the court’s order this section shall have jurisdiction to determine ‘‘(A) the date on which the partnership return entering the decision. all partnership items of the partnership for the for such year is filed, or partnership taxable year to which the notice of ‘‘(B) the last day for filing the partnership re- ‘‘PART III—DEFINITIONS AND SPECIAL partnership adjustment relates and the proper turn for such year (determined without regard RULES allocation of such items among the partners to extensions), and ‘‘Sec. 6255. Definitions and special rules. (and the applicability of any penalty, addition ‘‘(2) before the mailing to the partnership of a ‘‘SEC. 6255. DEFINITIONS AND SPECIAL RULES. to tax, or additional amount for which the part- notice of a partnership adjustment with respect ‘‘(a) DEFINITIONS.—For purposes of this sub- nership may be liable under section 6242(b)). to such taxable year. chapter—

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‘‘(1) ELECTING LARGE PARTNERSHIP.—The term (b) TREATMENT AS INFORMATION RETURN.— cordance with the principles of section 6214(a). ‘electing large partnership’ has the meaning Section 6724 is amended by adding at the end Any such declaration shall have the force and given to such term by section 775. the following new subsection: effect of a decision of the Tax Court and shall ‘‘(2) PARTNERSHIP ITEM.—The term ‘partner- ‘‘(e) SPECIAL RULE FOR CERTAIN PARTNERSHIP be reviewable as such. ship item’ has the meaning given to such term RETURNS.—If any partnership return under sec- ‘‘(d) FAILURE TO FILE PETITION.— by section 6231(a)(3). tion 6031(a) is required under section 6011(e) to ‘‘(1) IN GENERAL.—Except as provided in para- ‘‘(b) PARTNERS BOUND BY ACTIONS OF PART- be filed on magnetic media or in other machine- graph (2), if the taxpayer does not file a petition NERSHIP, ETC.— readable form, for purposes of this part, each with the Tax Court within the time prescribed in ‘‘(1) DESIGNATION OF PARTNER.—Each electing schedule required to be included with such re- subsection (c), the determination of the Sec- large partnership shall designate (in the manner turn with respect to each partner shall be treat- retary set forth in the notice of adjustment that prescribed by the Secretary) a partner (or other ed as a separate information return.’’. was mailed to the taxpayer shall be deemed to be correct. person) who shall have the sole authority to act SEC. 1024. RETURNS MAY BE REQUIRED ON MAG- ‘‘(2) EXCEPTION.—Paragraph (1) shall not on behalf of such partnership under this sub- NETIC MEDIA. chapter. In any case in which such a designa- apply after the date that the taxpayer— Paragraph (2) of section 6011(e) (relating to ‘‘(A) files a petition with the Tax Court with- tion is not in effect, the Secretary may select returns on magnetic media) is amended by add- any partner as the partner with such authority. in the time prescribed in subsection (c) with re- ing at the end thereof the following new sen- spect to a subsequent notice of adjustment relat- ‘‘(2) BINDING EFFECT.—An electing large part- tence: nership and all partners of such partnership ing to the same taxable year, or ‘‘Notwithstanding the preceding sentence, the ‘‘(B) files a claim for refund of an overpay- shall be bound— Secretary shall require partnerships having ‘‘(A) by actions taken under this subchapter ment of tax under section 6511 for the taxable more than 100 partners to file returns on mag- year involved. by the partnership, and netic media.’’. ‘‘(B) by any decision in a proceeding brought If a claim for refund is filed by the taxpayer, under this subchapter. SEC. 1025. TREATMENT OF PARTNERSHIP ITEMS then solely for purposes of determining (for the OF INDIVIDUAL RETIREMENT AC- ‘‘(c) PARTNERSHIPS HAVING PRINCIPAL PLACE taxable year involved) the amount of any com- COUNTS. putational adjustment in connection with a OF BUSINESS OUTSIDE THE UNITED STATES.—For Subsection (b) of section 6012 is amended by purposes of sections 6247 and 6252, a principal partnership proceeding under this subchapter adding at the end thereof the following new (other than under this section) or the amount of place of business located outside the United paragraph: States shall be treated as located in the District any deficiency attributable to affected items in ‘‘(6) IRA SHARE OF PARTNERSHIP INCOME.—In a proceeding under section 6230(a)(2), the items of Columbia. the case of a trust which is exempt from tax- ‘‘(d) TREATMENT WHERE PARTNERSHIP CEASES that are the subject of the notice of adjustment ation under section 408(e), for purposes of this TO EXIST.—If a partnership ceases to exist be- shall be presumed to have been correctly re- section, the trust’s distributive share of items of fore a partnership adjustment under this sub- ported on the taxpayer’s return during the gross income and gain of any partnership to chapter takes effect, such adjustment shall be pendency of the refund claim (and, if within the which subchapter C or D of chapter 63 applies taken into account by the former partners of time prescribed by section 6532 the taxpayer shall be treated as equal to the trust’s distribu- such partnership under regulations prescribed commences a civil action for refund under sec- tive share of the taxable income of such partner- by the Secretary. tion 7422, until the decision in the refund action ship.’’. ‘‘(e) DATE DECISION BECOMES FINAL.—For becomes final). purposes of this subchapter, the principles of SEC. 1026. EFFECTIVE DATE. ‘‘(e) LIMITATIONS PERIOD.— ‘‘(1) IN GENERAL.—Any notice to a taxpayer section 7481(a) shall be applied in determining The amendments made by this part shall under subsection (a) shall be mailed before the the date on which a decision of a district court apply to partnership taxable years ending on or expiration of the period prescribed by section or the Claims Court becomes final. after December 31, 1997. 6501 (relating to the period of limitations on as- ‘‘(f) PARTNERSHIPS IN CASES UNDER TITLE 11 PART II—PROVISIONS RELATED TO TEFRA sessment). OF THE UNITED STATES CODE.—The running of PARTNERSHIP PROCEEDINGS ‘‘(2) SUSPENSION WHEN SECRETARY MAILS NO- any period of limitations provided in this sub- SEC. 1031. TREATMENT OF PARTNERSHIP ITEMS TICE OF ADJUSTMENT.—If the Secretary mails a chapter on making a partnership adjustment (or IN DEFICIENCY PROCEEDINGS. notice of adjustment to the taxpayer for a tax- provided by section 6501 or 6502 on the assess- (a) IN GENERAL.—Subchapter C of chapter 63 able year, the period of limitations on the mak- ment or collection of any amount required to be is amended by adding at the end the following ing of assessments shall be suspended for the pe- paid under section 6242) shall, in a case under new section: riod during which the Secretary is prohibited title 11 of the United States Code, be suspended ‘‘SEC. 6234. DECLARATORY JUDGMENT RELATING from making the assessment (and, in any event, during the period during which the Secretary is TO TREATMENT OF ITEMS OTHER if a proceeding in respect of the notice of adjust- prohibited by reason of such case from making THAN PARTNERSHIP ITEMS WITH ment is placed on the docket of the Tax Court, the adjustment (or assessment or collection) RESPECT TO AN OVERSHELTERED until the decision of the Tax Court becomes and— RETURN. final), and for 60 days thereafter. ‘‘(1) for adjustment or assessment, 60 days ‘‘(a) GENERAL RULE.—If— ‘‘(3) RESTRICTIONS ON ASSESSMENT.—Except as thereafter, and ‘‘(1) a taxpayer files an oversheltered return otherwise provided in section 6851, 6852, or 6861, ‘‘(2) for collection, 6 months thereafter. for a taxable year, no assessment of a deficiency with respect to ‘‘(g) REGULATIONS.—The Secretary shall pre- ‘‘(2) the Secretary makes a determination with any tax imposed by subtitle A attributable to scribe such regulations as may be necessary to respect to the treatment of items (other than any item (other than a partnership item or any carry out the provisions of this subchapter, in- partnership items) of such taxpayer for such item affected by a partnership item) shall be cluding regulations— taxable year, and ‘‘(1) to prevent abuse through manipulation of made— ‘‘(3) the adjustments resulting from such de- ‘‘(A) until the expiration of the applicable 90- the provisions of this subchapter, and termination do not give rise to a deficiency (as day or 150-day period set forth in subsection (c) ‘‘(2) providing that this subchapter shall not defined in section 6211) but would give rise to a for filing a petition with the Tax Court, or apply to any case described in section 6231(c)(1) deficiency if there were no net loss from part- ‘‘(B) if a petition has been filed with the Tax (or the regulations prescribed thereunder) where nership items, Court, until the decision of the Tax Court has the application of this subchapter to such a case the Secretary is authorized to send a notice of become final. would interfere with the effective and efficient adjustment reflecting such determination to the ‘‘(f) FURTHER NOTICES OF ADJUSTMENT RE- enforcement of this title. taxpayer by certified or registered mail. STRICTED.—If the Secretary mails a notice of ad- In any case to which this subchapter does not ‘‘(b) OVERSHELTERED RETURN.—For purposes justment to the taxpayer for a taxable year and apply by reason of paragraph (2), rules similar of this section, the term ‘oversheltered return’ the taxpayer files a petition with the Tax Court to the rules of sections 6229(f) and 6255(f) shall means an income tax return which— within the time prescribed in subsection (c), the apply.’’. ‘‘(1) shows no taxable income for the taxable Secretary may not mail another such notice to (b) CLERICAL AMENDMENT.—The table of sub- year, and the taxpayer with respect to the same taxable chapters for chapter 63 is amended by adding at ‘‘(2) shows a net loss from partnership items. year in the absence of a showing of fraud, mal- the end thereof the following new item: ‘‘(c) JUDICIAL REVIEW IN THE TAX COURT.— feasance, or misrepresentation of a material ‘‘SUBCHAPTER D. Treatment of electing large Within 90 days, or 150 days if the notice is ad- fact. partnerships.’’. dressed to a person outside the United States, ‘‘(g) COORDINATION WITH OTHER PROCEEDINGS SEC. 1023. DUE DATE FOR FURNISHING INFORMA- after the day on which the notice of adjustment UNDER THIS SUBCHAPTER.— TION TO PARTNERS OF ELECTING authorized in subsection (a) is mailed to the tax- ‘‘(1) IN GENERAL.—The treatment of any item LARGE PARTNERSHIPS. payer, the taxpayer may file a petition with the that has been determined pursuant to subsection (a) GENERAL RULE.—Subsection (b) of section Tax Court for redetermination of the adjust- (c) or (d) shall be taken into account in deter- 6031 (relating to copies to partners) is amended ments. Upon the filing of such a petition, the mining the amount of any computational ad- by adding at the end the following new sen- Tax Court shall have jurisdiction to make a dec- justment that is made in connection with a part- tence: ‘‘In the case of an electing large partner- laration with respect to all items (other than nership proceeding under this subchapter (other ship (as defined in section 775), such informa- partnership items and affected items which re- than under this section), or the amount of any tion shall be furnished on or before the first quire partner level determinations as described deficiency attributable to affected items in a March 15 following the close of such taxable in section 6230(a)(2)(A)(i)) for the taxable year proceeding under section 6230(a)(2), for the tax- year.’’. to which the notice of adjustment relates, in ac- able year involved. Notwithstanding any other

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law or rule of law pertaining to the period of (c) CLERICAL AMENDMENT.—The table of sec- apply to partnership taxable years with respect limitations on the making of assessments, for tions for subchapter C of chapter 63 is amended to which the period under section 6229 of the In- purposes of the preceding sentence, any adjust- by adding at the end the following new item: ternal Revenue Code of 1986 for assessing tax ment made in accordance with this section shall ‘‘Sec. 6234. Declaratory judgment relating to has not expired on or before the date of the en- be taken into account regardless of whether any treatment of items other than actment of this Act. (2) SUBSECTION (c).—The amendment made by assessment has been made with respect to such partnership items with respect to subsection (c) shall apply to agreements entered adjustment. an oversheltered return.’’. ‘‘(2) SPECIAL RULE IN CASE OF COMPUTATIONAL into after the date of the enactment of this Act. (d) EFFECTIVE DATE.—The amendments made ADJUSTMENT.—In the case of a computational by this section shall apply to partnership tax- SEC. 1034. EXPANSION OF SMALL PARTNERSHIP EXCEPTION. adjustment that is made in connection with a able years ending after the date of the enact- partnership proceeding under this subchapter ment of this Act. (a) IN GENERAL.—Clause (i) of section (other than under this section), the provisions of 6231(a)(1)(B) (relating to exception for small SEC. 1032. PARTNERSHIP RETURN TO BE DETER- paragraph (1) shall apply only if the computa- MINATIVE OF AUDIT PROCEDURES partnerships) is amended to read as follows: tional adjustment is made within the period pre- TO BE FOLLOWED. ‘‘(i) IN GENERAL.—The term ‘partnership’ shall scribed by section 6229 for assessing any tax (a) IN GENERAL.—Section 6231 (relating to not include any partnership having 10 or fewer under subtitle A which is attributable to any definitions and special rules) is amended by partners each of whom is an individual (other partnership item or affected item for the taxable adding at the end the following new subsection: than a nonresident alien), a C corporation, or year involved. ‘‘(g) PARTNERSHIP RETURN TO BE DETERMINA- an estate of a deceased partner. For purposes of ‘‘(3) CONVERSION TO DEFICIENCY PRO- TIVE OF WHETHER SUBCHAPTER APPLIES.— the preceding sentence, a husband and wife CEEDING.—If— ‘‘(1) DETERMINATION THAT SUBCHAPTER AP- (and their estates) shall be treated as 1 part- ‘‘(A) after the notice referred to in subsection PLIES.—If, on the basis of a partnership return ner.’’. (a) is mailed to a taxpayer for a taxable year for a taxable year, the Secretary reasonably de- (b) EFFECTIVE DATE.—The amendment made but before the expiration of the period for filing termines that this subchapter applies to such by this section shall apply to partnership tax- a petition with the Tax Court under subsection partnership for such year but such determina- able years ending after the date of the enact- (c) (or, if a petition is filed with the Tax Court, tion is erroneous, then the provisions of this ment of this Act. before the Tax Court makes a declaration for subchapter are hereby extended to such partner- SEC. 1035. EXCLUSION OF PARTIAL SETTLEMENTS that taxable year), the treatment of any part- ship (and its items) for such taxable year and to FROM 1-YEAR LIMITATION ON AS- nership item for the taxable year is finally de- partners of such partnership. SESSMENT. termined, or any such item ceases to be a part- ‘‘(2) DETERMINATION THAT SUBCHAPTER DOES (a) IN GENERAL.—Subsection (f) of section 6229 nership item pursuant to section 6231(b), and NOT APPLY.—If, on the basis of a partnership re- (relating to items becoming nonpartnership ‘‘(B) as a result of that final determination or turn for a taxable year, the Secretary reason- items) is amended— cessation, a deficiency can be determined with ably determines that this subchapter does not (1) by striking ‘‘(f) ITEMS BECOMING NONPART- respect to the items that are the subject of the apply to such partnership for such year but NERSHIP ITEMS.—If’’ and inserting the fol- notice of adjustment, such determination is erroneous, then the provi- lowing: the notice of adjustment shall be treated as a sions of this subchapter shall not apply to such ‘‘(f) SPECIAL RULES.— notice of deficiency under section 6212 and any partnership (and its items) for such taxable year ‘‘(1) ITEMS BECOMING NONPARTNERSHIP petition filed in respect of the notice shall be or to partners of such partnership.’’. ITEMS.—If’’, treated as an action brought under section 6213. (b) EFFECTIVE DATE.—The amendment made (2) by moving the text of such subsection 2 ems to the right, and ‘‘(4) FINALLY DETERMINED.—For purposes of by this section shall apply to partnership tax- (3) by adding at the end the following new this subsection, the treatment of partnership able years ending after the date of the enact- paragraph: items shall be treated as finally determined if— ment of this Act. ‘‘(2) SPECIAL RULE FOR PARTIAL SETTLEMENT ‘‘(A) the Secretary enters into a settlement SEC. 1033. PROVISIONS RELATING TO STATUTE AGREEMENTS.—If a partner enters into a settle- agreement (within the meaning of section 6224) OF LIMITATIONS. ment agreement with the Secretary with respect with the taxpayer regarding such items, (a) SUSPENSION OF STATUTE WHERE UNTIMELY to the treatment of some of the partnership items ‘‘(B) a notice of final partnership administra- PETITION FILED.—Paragraph (1) of section in dispute for a partnership taxable year but tive adjustment has been issued and— 6229(d) (relating to suspension where Secretary other partnership items for such year remain in ‘‘(i) no petition has been filed under section makes administrative adjustment) is amended by dispute, the period of limitations for assessing 6226 and the time for doing so has expired, or striking all that follows ‘‘section 6226’’ and in- any tax attributable to the settled items shall be ‘‘(ii) a petition has been filed under section serting the following: ‘‘(and, if a petition is filed determined as if such agreement had not been 6226 and the decision of the court has become under section 6226 with respect to such adminis- entered into.’’. final, or trative adjustment, until the decision of the (b) EFFECTIVE DATE.—The amendment made ‘‘(C) the period within which any tax attrib- court becomes final), and’’. (b) SUSPENSION OF STATUTE DURING BANK- by this section shall apply to settlements entered utable to such items may be assessed against the into after the date of the enactment of this Act. taxpayer has expired. RUPTCY PROCEEDING.—Section 6229 is amended by adding at the end the following new sub- SEC. 1036. EXTENSION OF TIME FOR FILING A RE- ‘‘(h) SPECIAL RULES IF SECRETARY INCOR- section: QUEST FOR ADMINISTRATIVE AD- RECTLY DETERMINES APPLICABLE PROCEDURE.— ‘‘(h) SUSPENSION DURING PENDENCY OF BANK- JUSTMENT. ‘‘(1) SPECIAL RULE IF SECRETARY ERRONEOUSLY RUPTCY PROCEEDING.—If a petition is filed nam- (a) IN GENERAL.—Section 6227 (relating to ad- MAILS NOTICE OF ADJUSTMENT.—If the Secretary ing a partner as a debtor in a bankruptcy pro- ministrative adjustment requests) is amended by erroneously determines that subchapter B does ceeding under title 11 of the United States Code, redesignating subsections (b) and (c) as sub- not apply to a taxable year of a taxpayer and the running of the period of limitations provided sections (c) and (d), respectively, and by insert- consistent with that determination timely mails in this section with respect to such partner shall ing after subsection (a) the following new sub- a notice of adjustment to the taxpayer pursuant be suspended— section: to subsection (a) of this section, the notice of ‘‘(1) for the period during which the Secretary ‘‘(b) SPECIAL RULE IN CASE OF EXTENSION OF adjustment shall be treated as a notice of defi- is prohibited by reason of such bankruptcy pro- PERIOD OF LIMITATIONS UNDER SECTION 6229.— ciency under section 6212 and any petition that ceeding from making an assessment, and The period prescribed by subsection (a)(1) for is filed in respect of the notice shall be treated ‘‘(2) for 60 days thereafter.’’. filing of a request for an administrative adjust- as an action brought under section 6213. (c) TAX MATTERS PARTNER IN BANKRUPTCY.— ment shall be extended— ‘‘(2) SPECIAL RULE IF SECRETARY ERRONEOUSLY Section 6229(b) is amended by redesignating ‘‘(1) for the period within which an assess- MAILS NOTICE OF DEFICIENCY.—If the Secretary paragraph (2) as paragraph (3) and by inserting ment may be made pursuant to an agreement (or erroneously determines that subchapter B ap- after paragraph (1) the following new para- any extension thereof) under section 6229(b), plies to a taxable year of a taxpayer and con- graph: and sistent with that determination timely mails a ‘‘(2) SPECIAL RULE WITH RESPECT TO DEBTORS ‘‘(2) for 6 months thereafter.’’. notice of deficiency to the taxpayer pursuant to IN TITLE 11 CASES.—Notwithstanding any other (b) EFFECTIVE DATE.—The amendment made section 6212, the notice of deficiency shall be law or rule of law, if an agreement is entered by this section shall take effect as if included in treated as a notice of adjustment under sub- into under paragraph (1)(B) and the agreement the amendments made by section 402 of the Tax section (a) and any petition that is filed in re- is signed by a person who would be the tax mat- Equity and Fiscal Responsibility Act of 1982. spect of the notice shall be treated as an action ters partner but for the fact that, at the time SEC. 1037. AVAILABILITY OF INNOCENT SPOUSE brought under subsection (c).’’. that the agreement is executed, the person is a RELIEF IN CONTEXT OF PARTNER- (b) TREATMENT OF PARTNERSHIP ITEMS IN DE- debtor in a bankruptcy proceeding under title 11 SHIP PROCEEDINGS. FICIENCY PROCEEDINGS.—Section 6211 (defining of the United States Code, such agreement shall (a) IN GENERAL.—Subsection (a) of section deficiency) is amended by adding at the end the be binding on all partners in the partnership 6230 is amended by adding at the end the fol- following new subsection: unless the Secretary has been notified of the lowing new paragraph: ‘‘(c) COORDINATION WITH SUBCHAPTER C.—In bankruptcy proceeding in accordance with regu- ‘‘(3) SPECIAL RULE IN CASE OF ASSERTION BY determining the amount of any deficiency for lations prescribed by the Secretary.’’. PARTNER’S SPOUSE OF INNOCENT SPOUSE RE- purposes of this subchapter, adjustments to (d) EFFECTIVE DATES.— LIEF.— partnership items shall be made only as pro- (1) SUBSECTIONS (a) AND (b).—The amend- ‘‘(A) Notwithstanding section 6404(b), if the vided in subchapter C.’’. ments made by subsections (a) and (b) shall spouse of a partner asserts that section 6013(e)

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00182 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6851 applies with respect to a liability that is attrib- to tax, and additional amounts that relate to (2) Paragraph (3) of section 6512(b) is amend- utable to any adjustment to a partnership item, adjustments to partnership items), or’’. ed by adding at the end the following new sen- then such spouse may file with the Secretary (3)(A) Subparagraph (A) of section 6230(a)(3), tence: within 60 days after the notice of computational as added by section 14317, is amended by insert- ‘‘In the case of a credit or refund relating to an adjustment is mailed to the spouse a request for ing ‘‘(including any liability for any penalty, affected item (within the meaning of section abatement of the assessment specified in such addition to tax, or additional amount relating to 6231(a)(5)), the preceding sentence shall be ap- notice. Upon receipt of such request, the Sec- such adjustment)’’ after ‘‘partnership item’’. plied by substituting the periods under sections retary shall abate the assessment. Any reassess- (B) Subparagraph (B) of such section is 6229 and 6230(d) for the periods under section ment of the tax with respect to which an abate- amended by inserting ‘‘(and the applicability of 6511(b)(2), (c), and (d).’’. ment is made under this subparagraph shall be any penalties, additions to tax, or additional (d) VENUE ON APPEAL.— subject to the deficiency procedures prescribed amounts)’’ after ‘‘partnership items’’. (1) Paragraph (1) of section 7482(b) is amend- by subchapter B. The period for making any (C) Subparagraph (A) of section 6230(c)(5), as ed by striking ‘‘or’’ at the end of subparagraph such reassessment shall not expire before the ex- added by section 14317, is amended by inserting (D), by striking the period at the end of sub- piration of 60 days after the date of such abate- before the period ‘‘(including any liability for paragraph (E) and inserting ‘‘, or’’, and by in- ment. any penalties, additions to tax, or additional serting after subparagraph (E) the following ‘‘(B) If the spouse files a petition with the Tax amounts relating to such adjustment)’’. new subparagraph: Court pursuant to section 6213 with respect to (D) Subparagraph (D) of section 6230(c)(5), as ‘‘(F) in the case of a petition under section the request for abatement described in subpara- added by section 14317, is amended by inserting 6234(c)— graph (A), the Tax Court shall only have juris- ‘‘(and the applicability of any penalties, addi- ‘‘(i) the legal residence of the petitioner if the diction pursuant to this section to determine tions to tax, or additional amounts)’’ after petitioner is not a corporation, and whether the requirements of section 6013(e) have ‘‘partnership items’’. ‘‘(ii) the place or office applicable under sub- been satisfied. For purposes of such determina- (4) Paragraph (1) of section 6230(c) is amended paragraph (B) if the petitioner is a corpora- tion, the treatment of partnership items under by striking ‘‘or’’ at the end of subparagraph tion.’’. the settlement, the final partnership administra- (A), by striking the period at the end of sub- (2) The last sentence of section 7482(b)(1) is tive adjustment, or the decision of the court paragraph (B) and inserting ‘‘, or’’, and by add- amended by striking ‘‘or 6228(a)’’ and inserting (whichever is appropriate) that gave rise to the ing at the end the following new subparagraph: ‘‘, 6228(a), or 6234(c)’’. liability in question shall be conclusive. ‘‘(C) the Secretary erroneously imposed any (e) OTHER PROVISIONS.— ‘‘(C) Rules similar to the rules contained in penalty, addition to tax, or additional amount (1) Subsection (c) of section 7459 is amended subparagraphs (B) and (C) of paragraph (2) which relates to an adjustment to a partnership by striking ‘‘or section 6228(a)’’ and inserting ‘‘, shall apply for purposes of this paragraph.’’. item.’’. 6228(a), or 6234(c)’’. (2) Subsection (o) of section 6501 is amended (b) CLAIMS FOR REFUND.—Subsection (c) of (5) So much of subparagraph (A) of section by adding at the end the following new para- section 6230 is amended by adding at the end the 6230(c)(2) as precedes ‘‘shall be filed’’ is amend- graph: following new paragraph: ed to read as follows: ‘‘(3) For declaratory judgment relating to ‘‘(5) RULES FOR SEEKING INNOCENT SPOUSE RE- ‘‘(A) UNDER PARAGRAPH (1) (A) OR (C).—Any treatment of items other than partnership items LIEF.— claim under subparagraph (A) or (C) of para- with respect to an oversheltered return, see sec- ‘‘(A) IN GENERAL.—The spouse of a partner graph (1)’’. tion 6234.’’. may file a claim for refund on the ground that (6) Paragraph (4) of section 6230(c) is amended (f) EFFECTIVE DATE.—The amendments made the Secretary failed to relieve the spouse under by adding at the end the following: ‘‘In addi- by this section shall apply to partnership tax- section 6013(e) from a liability that is attrib- tion, the determination under the final partner- able years ending after the date of the enact- utable to an adjustment to a partnership item. ship administrative adjustment or under the de- ment of this Act. ‘‘(B) TIME FOR FILING CLAIM.—Any claim cision of the court (whichever is appropriate) under subparagraph (A) shall be filed within 6 concerning the applicability of any penalty, ad- SEC. 1040. TREATMENT OF PREMATURE PETI- months after the day on which the Secretary TIONS FILED BY NOTICE PARTNERS dition to tax, or additional amount which re- OR 5-PERCENT GROUPS. mails to the spouse the notice of computational lates to an adjustment to a partnership item (a) IN GENERAL.—Subsection (b) of section adjustment referred to in subsection (a)(3)(A). shall also be conclusive. Notwithstanding the ‘‘(C) SUIT IF CLAIM NOT ALLOWED.—If the 6226 (relating to judicial review of final partner- preceding sentence, the partner shall be allowed claim under subparagraph (B) is not allowed, ship administrative adjustments) is amended by to assert any partner level defenses that may the spouse may bring suit with respect to the redesignating paragraph (5) as paragraph (6) apply or to challenge the amount of the com- claim within the period specified in paragraph and by inserting after paragraph (4) the fol- putational adjustment.’’. (3). lowing new paragraph: (c) EFFECTIVE DATE.—The amendments made ‘‘(D) PRIOR DETERMINATIONS ARE BINDING.— ‘‘(5) TREATMENT OF PREMATURE PETITIONS.— by this section shall apply to partnership tax- For purposes of any claim or suit under this If— able years ending after the date of the enact- paragraph, the treatment of partnership items ‘‘(A) a petition for a readjustment of partner- ment of this Act. under the settlement, the final partnership ad- ship items for the taxable year involved is filed ministrative adjustment, or the decision of the SEC. 1039. PROVISIONS RELATING TO COURT JU- by a notice partner (or a 5-percent group) dur- court (whichever is appropriate) that gave rise RISDICTION, ETC. ing the 90-day period described in subsection to the liability in question shall be conclusive.’’. (a) TAX COURT JURISDICTION TO ENJOIN PRE- (a), and (c) TECHNICAL AMENDMENTS.— MATURE ASSESSMENTS OF DEFICIENCIES ATTRIB- ‘‘(B) no action is brought under paragraph (1) (1) Paragraph (1) of section 6230(a) is amend- UTABLE TO PARTNERSHIP ITEMS.—Subsection (b) during the 60-day period described therein with ed by striking ‘‘paragraph (2)’’ and inserting of section 6225 is amended by striking ‘‘the prop- respect to such taxable year which is not dis- ‘‘paragraph (2) or (3)’’. er court.’’ and inserting ‘‘the proper court, in- missed, (2) Subsection (a) of section 6503 is amended cluding the Tax Court. The Tax Court shall such petition shall be treated for purposes of by striking ‘‘section 6230(a)(2)(A)’’ and inserting have no jurisdiction to enjoin any action or pro- paragraph (1) as filed on the last day of such ‘‘paragraph (2)(A) or (3) of section 6230(a)’’. ceeding under this subsection unless a timely pe- 60-day period.’’. (d) EFFECTIVE DATE.—The amendments made tition for a readjustment of the partnership (b) EFFECTIVE DATE.—The amendment made by this section shall take effect as if included in items for the taxable year has been filed and by this section shall apply to petitions filed after the amendments made by section 402 of the Tax then only in respect of the adjustments that are the date of the enactment of this Act. Equity and Fiscal Responsibility Act of 1982. the subject of such petition.’’. SEC. 1041. BONDS IN CASE OF APPEALS FROM SEC. 1038. DETERMINATION OF PENALTIES AT (b) JURISDICTION TO CONSIDER STATUTE OF CERTAIN PROCEEDING. PARTNERSHIP LEVEL. LIMITATIONS WITH RESPECT TO PARTNERS.— (a) IN GENERAL.—Subsection (b) of section (a) IN GENERAL.—Section 6221 (relating to tax Paragraph (1) of section 6226(d) is amended by 7485 (relating to bonds to stay assessment of col- treatment determined at partnership level) is adding at the end the following new sentence: lection) is amended— amended by striking ‘‘item’’ and inserting ‘‘item ‘‘Notwithstanding subparagraph (B), any per- (1) by inserting ‘‘penalties,’’ after ‘‘any inter- (and the applicability of any penalty, addition son treated under subsection (c) as a party to an est,’’, and to tax, or additional amount which relates to an action shall be permitted to participate in such (2) by striking ‘‘aggregate of such defi- adjustment to a partnership item)’’. action (or file a readjustment petition under ciencies’’ and inserting ‘‘aggregate liability of (b) CONFORMING AMENDMENTS.— subsection (b) or paragraph (2) of this sub- the parties to the action’’. (1) Subsection (f) of section 6226 is amended— section) solely for the purpose of asserting that (b) EFFECTIVE DATE.—The amendment made (A) by striking ‘‘relates and’’ and inserting the period of limitations for assessing any tax by this section shall take effect as if included in ‘‘relates,’’, and attributable to partnership items has expired the amendments made by section 402 of the Tax (B) by inserting before the period ‘‘, and the with respect to such person, and the court hav- Equity and Fiscal Responsibility Act of 1982. applicability of any penalty, addition to tax, or ing jurisdiction of such action shall have juris- SEC. 1042. SUSPENSION OF INTEREST WHERE additional amount which relates to an adjust- diction to consider such assertion.’’. DELAY IN COMPUTATIONAL ADJUST- ment to a partnership item’’. (c) TAX COURT JURISDICTION TO DETERMINE MENT RESULTING FROM CERTAIN (2) Clause (i) of section 6230(a)(2)(A) is OVERPAYMENTS ATTRIBUTABLE TO AFFECTED SETTLEMENTS. amended to read as follows: ITEMS.— (a) IN GENERAL.—Subsection (c) of section ‘‘(i) affected items which require partner level (1) Paragraph (6) of section 6230(d) is amend- 6601 (relating to interest on underpayment, non- determinations (other than penalties, additions ed by striking ‘‘(or an affected item)’’. payment, or extension of time for payment, of

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tax) is amended by adding at the end the fol- (1) FAILURE TO ISSUE SHAREHOLDER DEMAND ‘‘(ii) managing or operating such property. lowing new sentence: ‘‘In the case of a settle- LETTER NOT TO DISQUALIFY REIT.—Section 857(a) ‘‘(B) DISQUALIFICATION OF ALL AMOUNTS ment under section 6224(c) which results in the (relating to requirements applicable to real es- WHERE MORE THAN DE MINIMIS AMOUNT.—If the conversion of partnership items to nonpartner- tate investment trusts) is amended by striking amount described in subparagraph (A) with re- ship items pursuant to section 6231(b)(1)(C), the paragraph (2) and by redesignating paragraph spect to a property for any taxable year exceeds preceding sentence shall apply to a computa- (3) as paragraph (2). 1 percent of all amounts received or accrued tional adjustment resulting from such settlement (2) SHAREHOLDER DEMAND LETTER REQUIRE- during such taxable year directly or indirectly in the same manner as if such adjustment were MENT; PENALTY.—Section 857 (relating to tax- by the real estate investment trust with respect a deficiency and such settlement were a waiver ation of real estate investment trusts and their to such property, the impermissible tenant serv- referred to in the preceding sentence.’’. beneficiaries) is amended by redesignating sub- ice income of the trust with respect to the prop- (b) EFFECTIVE DATE.—The amendment made section (f) as subsection (g) and by inserting erty shall include all such amounts. by this section shall apply to adjustments with after subsection (e) the following new sub- ‘‘(C) EXCEPTIONS.—For purposes of subpara- respect to partnership taxable years beginning section: graph (A)— after the date of the enactment of this Act. ‘‘(f) REAL ESTATE INVESTMENT TRUSTS TO AS- ‘‘(i) services furnished or rendered, or man- CERTAIN OWNERSHIP.— agement or operation provided, through an SEC. 1043. SPECIAL RULES FOR ADMINISTRATIVE independent contractor from whom the trust ADJUSTMENT REQUESTS WITH RE- ‘‘(1) IN GENERAL.—Each real estate investment SPECT TO BAD DEBTS OR WORTH- trust shall each taxable year comply with regu- itself does not derive or receive any income shall LESS SECURITIES. lations prescribed by the Secretary for the pur- not be treated as furnished, rendered, or pro- (a) GENERAL RULE.—Section 6227 (relating to poses of ascertaining the actual ownership of vided by the trust, and administrative adjustment requests) is amended the outstanding shares, or certificates of bene- ‘‘(ii) there shall not be taken into account any by adding at the end the following new sub- ficial interest, of such trust. amount which would be excluded from unre- section: ‘‘(2) FAILURE TO COMPLY.— lated business taxable income under section 512(b)(3) if received by an organization de- ‘‘(e) REQUESTS WITH RESPECT TO BAD DEBTS ‘‘(A) IN GENERAL.—If a real estate investment scribed in section 511(a)(2). OR WORTHLESS SECURITIES.—In the case of that trust fails to comply with the requirements of ‘‘(D) AMOUNT ATTRIBUTABLE TO IMPERMIS- portion of any request for an administrative ad- paragraph (1) for a taxable year, such trust SIBLE SERVICES.—For purposes of subparagraph justment which relates to the deductibility by shall pay (on notice and demand by the Sec- (A), the amount treated as received for any serv- the partnership under section 166 of a debt as a retary and in the same manner as tax) a penalty of $25,000. ice (or management or operation) shall not be debt which became worthless, or under section less than 150 percent of the direct cost of the 165(g) of a loss from worthlessness of a security, ‘‘(B) INTENTIONAL DISREGARD.—If any failure under paragraph (1) is due to intentional dis- trust in furnishing or rendering the service (or the period prescribed in subsection (a)(1) shall providing the management or operation). be 7 years from the last day for filing the part- regard of the requirement under paragraph (1), the penalty under subparagraph (A) shall be ‘‘(E) COORDINATION WITH LIMITATIONS.—For nership return for the year with respect to purposes of paragraphs (2) and (3) of subsection which such request is made (determined without $50,000. ‘‘(C) FAILURE TO COMPLY AFTER NOTICE.—The (c), amounts described in subparagraph (A) regard to extensions).’’. shall be included in the gross income of the cor- (b) EFFECTIVE DATE.— Secretary may require a real estate investment trust to take such actions as the Secretary deter- poration, trust, or association.’’. (1) IN GENERAL.—The amendment made by SEC. 1053. ATTRIBUTION RULES APPLICABLE TO subsection (a) shall take effect as if included in mines appropriate to ascertain actual ownership if the trust fails to meet the requirements of TENANT OWNERSHIP. the amendments made by section 402 of the Tax Section 856(d)(5) (relating to constructive paragraph (1). If the trust fails to take such ac- Equity and Fiscal Responsibility Act of 1982. ownership of stock) is amended by adding at the tions, the trust shall pay (on notice and demand (2) TREATMENT OF REQUESTS FILED BEFORE end the following: ‘‘For purposes of paragraph by the Secretary and in the same manner as tax) DATE OF ENACTMENT.—In the case of that por- (2)(B), section 318(a)(3)(A) shall be applied an additional penalty equal to the penalty de- tion of any request (filed before the date of the under the preceding sentence in the case of a termined under subparagraph (A) or (B), which- enactment of this Act) for an administrative ad- partnership by taking into account only part- ever is applicable. justment which relates to the deductibility of a ners who own (directly or indirectly) 25 percent debt as a debt which became worthless or the de- ‘‘(D) REASONABLE CAUSE.—No penalty shall be imposed under this paragraph with respect to or more of the capital interest, or the profits in- ductibility of a loss from the worthlessness of a terest, in the partnership.’’. security— any failure if it is shown that such failure is due to reasonable cause and not to willful ne- SEC. 1054. CREDIT FOR TAX PAID BY REIT ON RE- (A) paragraph (2) of section 6227(a) of the In- TAINED CAPITAL GAINS. glect.’’. ternal Revenue Code of 1986 shall not apply, (a) GENERAL RULE.—Paragraph (3) of section (b) COMPLIANCE WITH CLOSELY HELD PROHI- (B) the period for filing a petition under sec- 857(b) (relating to capital gains) is amended by BITION.— tion 6228 of the Internal Revenue Code of 1986 redesignating subparagraph (D) as subpara- (1) IN GENERAL.—Section 856 (defining real es- with respect to such request shall not expire be- tate investment trust) is amended by adding at graph (E) and by inserting after subparagraph fore the date 6 months after the date of the en- the end the following new subsection: (C) the following new subparagraph: actment of this Act, and ‘‘(D) TREATMENT BY SHAREHOLDERS OF UNDIS- ‘‘(k) REQUIREMENT THAT ENTITY NOT BE (C) such a petition may be filed without re- TRIBUTED CAPITAL GAINS.— CLOSELY HELD TREATED AS MET IN CERTAIN gard to whether there was a notice of the begin- ‘‘(i) Every shareholder of a real estate invest- CASES.—A corporation, trust, or association— ment trust at the close of the trust’s taxable ning of an administrative proceeding or a final ‘‘(1) which for a taxable year meets the re- year shall include, in computing his long-term partnership administrative adjustment. quirements of section 857(f)(1), and capital gains in his return for his taxable year PART III—PROVISION RELATING TO CLOS- ‘‘(2) which does not know, or exercising rea- in which the last day of the trust’s taxable year ING OF PARTNERSHIP TAXABLE YEAR sonable diligence would not have known, falls, such amount as the trust shall designate WITH RESPECT TO DECEASED PARTNER, whether the entity failed to meet the require- in respect of such shares in a written notice ETC. ment of subsection (a)(6), mailed to its shareholders at any time prior to SEC. 1046. CLOSING OF PARTNERSHIP TAXABLE shall be treated as having met the requirement of subsection (a)(6) for the taxable year.’’. the expiration of 60 days after the close of its YEAR WITH RESPECT TO DECEASED taxable year (or mailed to its shareholders or PARTNER, ETC. (2) CONFORMING AMENDMENT.—Paragraph (6) holders of beneficial interests with its annual (a) GENERAL RULE.—Subparagraph (A) of sec- of section 856(a) is amended by inserting ‘‘sub- report for the taxable year), but the amount so tion 706(c)(2) (relating to disposition of entire ject to the provisions of subsection (k),’’ before includible by any shareholder shall not exceed interest) is amended to read as follows: ‘‘which is not’’. that part of the amount subjected to tax in sub- ‘‘(A) DISPOSITION OF ENTIRE INTEREST.—The SEC. 1052. DE MINIMIS RULE FOR TENANT SERV- paragraph (A)(ii) which he would have received taxable year of a partnership shall close with ICES INCOME. if all of such amount had been distributed as respect to a partner whose entire interest in the (a) IN GENERAL.—Paragraph (2) of section capital gain dividends by the trust to the hold- partnership terminates (whether by reason of 856(d) (defining rents from real property) is ers of such shares at the close of its taxable death, liquidation, or otherwise).’’. amended by striking subparagraph (C) and the year. (b) CLERICAL AMENDMENT.—The paragraph last sentence and inserting: ‘‘(C) any impermissible tenant service income ‘‘(ii) For purposes of this title, every such heading for paragraph (2) of section 706(c) is shareholder shall be deemed to have paid, for amended to read as follows: (as defined in paragraph (7)).’’. (b) IMPERMISSIBLE TENANT SERVICE INCOME.— his taxable year under clause (i), the tax im- ‘‘(2) TREATMENT OF DISPOSITIONS.—’’. Section 856(d) is amended by adding at the end posed by subparagraph (A)(ii) on the amounts (c) EFFECTIVE DATE.—The amendments made required by this subparagraph to be included in by this section shall apply to partnership tax- the following new paragraph: ‘‘(7) IMPERMISSIBLE TENANT SERVICE IN- respect of such shares in computing his long- able years beginning after December 31, 1997. COME.—For purposes of paragraph (2)(C)— term capital gains for that year; and such Subtitle D—Provisions Relating to Real Estate ‘‘(A) IN GENERAL.—The term ‘impermissible shareholders shall be allowed credit or refund as Investment Trusts tenant service income’ means, with respect to the case may be, for the tax so deemed to have SEC. 1051. CLARIFICATION OF LIMITATION ON any real or personal property, any amount re- been paid by him. MAXIMUM NUMBER OF SHARE- ceived or accrued directly or indirectly by the ‘‘(iii) The adjusted basis of such shares in the HOLDERS. real estate investment trust for— hands of the holder shall be increased with re- (a) RULES RELATING TO DETERMINATION OF ‘‘(i) services furnished or rendered by the trust spect to the amounts required by this subpara- OWNERSHIP.— to the tenants of such property, or graph to be included in computing his long-term

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capital gains, by the difference between the (b) REVOCATION OF ELECTION.—Paragraph (5) having held such property for at least 4 years amount of such includible gains and the tax of section 856(e) is amended by striking the last if— deemed paid by such shareholder in respect of sentence and inserting: ‘‘A real estate invest- ‘‘(i) the secured property is sold or otherwise such shares under clause (ii). ment trust may revoke any such election for a disposed of pursuant to a case under title 11 of ‘‘(iv) In the event of such designation, the tax taxable year by filing the revocation (in the the United States Code, imposed by subparagraph (A)(ii) shall be paid manner provided by the Secretary) on or before ‘‘(ii) the seller is under the jurisdiction of the by the real estate investment trust within 30 the due date (including any extension of time) court in such case, and days after the close of its taxable year. for filing its return of tax under this chapter for ‘‘(iii) the disposition is required by the court ‘‘(v) The earnings and profits of such real es- the taxable year. If a trust revokes an election or is pursuant to a plan approved by the court. tate investment trust, and the earnings and for any property, no election may be made by ‘‘(B) EXCEPTION.—Subparagraph (A) shall not profits of any such shareholder which is a cor- the trust under this paragraph with respect to apply if— poration, shall be appropriately adjusted in ac- the property for any subsequent taxable year.’’. ‘‘(i) the secured property was acquired by the cordance with regulations prescribed by the Sec- (c) CERTAIN ACTIVITIES NOT TO DISQUALIFY trust with the intent to evict or foreclose, or retary. PROPERTY.—Paragraph (4) of section 856(e) is ‘‘(ii) the trust knew or had reason to know ‘‘(vi) As used in this subparagraph, the terms amended by adding at the end the following that default on the obligation described in para- ‘shares’ and ‘shareholders’ shall include bene- new flush sentence: graph (5)(A) would occur.’’. ficial interests and holders of beneficial inter- ‘‘For purposes of subparagraph (C), property (b) CLARIFICATION OF DEFINITION OF SHARED ests, respectively.’’. shall not be treated as used in a trade or busi- APPRECIATION PROVISION.—Clause (ii) of section (b) CONFORMING AMENDMENTS.— ness by reason of any activities of the real estate 856(j)(5)(A) is amended by inserting before the (1) Clause (i) of section 857(b)(7)(A) is amend- investment trust with respect to such property to period ‘‘or appreciation in value as of any speci- ed by striking ‘‘subparagraph (B)’’ and insert- the extent that such activities would not result fied date’’. ing ‘‘subparagraph (B) or (D)’’. in amounts received or accrued, directly or indi- SEC. 1062. WHOLLY OWNED SUBSIDIARIES. (2) Clause (iii) of section 852(b)(3)(D) is rectly, with respect to such property being treat- Section 856(i)(2) (defining qualified REIT sub- amended by striking ‘‘by 65 percent’’ and all ed as other than rents from real property.’’. sidiary) is amended by striking ‘‘at all times that follows and inserting ‘‘by the difference be- SEC. 1058. PAYMENTS UNDER HEDGING INSTRU- during the period such corporation was in exist- tween the amount of such includible gains and MENTS. ence’’. the tax deemed paid by such shareholder in re- Section 856(c)(5)(G) (relating to treatment of SEC. 1063. EFFECTIVE DATE. spect of such shares under clause (ii).’’. certain interest rate agreements), as redesig- The amendments made by this part shall SEC. 1055. REPEAL OF 30-PERCENT GROSS IN- nated by section 1255, is amended to read as fol- apply to taxable years beginning after the date COME REQUIREMENT. lows: of the enactment of this Act. (a) GENERAL RULE.—Subsection (c) of section ‘‘(G) TREATMENT OF CERTAIN HEDGING INSTRU- 856 (relating to limitations) is amended— MENTS.—Except to the extent provided by regu- Subtitle E—Provisions Relating to Regulated (1) by adding ‘‘and’’ at the end of paragraph lations, any— Investment Companies (3), ‘‘(i) payment to a real estate investment trust SEC. 1071. REPEAL OF 30-PERCENT GROSS IN- (2) by striking paragraphs (4) and (8), and under an interest rate swap or cap agreement, COME LIMITATION. (3) by redesignating paragraphs (5), (6), and option, futures contract, forward rate agree- (a) GENERAL RULE.—Subsection (b) of section (7) as paragraphs (4), (5), and (6), respectively. ment, or any similar financial instrument, en- 851 (relating to limitations) is amended by strik- (b) CONFORMING AMENDMENTS.— tered into by the trust in a transaction to reduce ing paragraph (3), by adding ‘‘and’’ at the end (1) Subparagraph (G) of section 856(c)(5), as the interest rate risks with respect to any in- of paragraph (2), and by redesignating para- redesignated by subsection (a), is amended by debtedness incurred or to be incurred by the graph (4) as paragraph (3). striking ‘‘and such agreement shall be treated as trust to acquire or carry real estate assets, and (b) TECHNICAL AMENDMENTS.— a security for purposes of paragraph (4)(A)’’. ‘‘(ii) gain from the sale or other disposition of (1) The material following paragraph (3) of (2) Paragraph (5) of section 857(b) is amended any such investment, section 851(b) (as redesignated by subsection (a)) by striking ‘‘section 856(c)(7)’’ and inserting shall be treated as income qualifying under is amended— ‘‘section 856(c)(6)’’. paragraph (2).’’. (A) by striking out ‘‘paragraphs (2) and (3)’’ (3) Subparagraph (C) of section 857(b)(6) is SEC. 1059. EXCESS NONCASH INCOME. and inserting ‘‘paragraph (2)’’, and amended by striking ‘‘section 856(c)(6)(B)’’ and Section 857(e)(2) (relating to determination of (B) by striking out the last sentence thereof. inserting ‘‘section 856(c)(5)(B)’’. amount of excess noncash income) is amended— (2) Subsection (c) of section 851 is amended by SEC. 1056. MODIFICATION OF EARNINGS AND (1) by striking subparagraph (B), striking ‘‘subsection (b)(4)’’ each place it ap- PROFITS RULES FOR DETERMINING pears (including the heading) and inserting WHETHER REIT HAS EARNINGS AND (2) by striking the period at the end of sub- paragraph (C) and inserting a comma, ‘‘subsection (b)(3)’’. PROFITS FROM NON-REIT YEAR. (3) Subsection (d) of section 851 is amended by Subsection (d) of section 857 is amended by (3) by redesignating subparagraph (C) (as amended by paragraph (2)) as subparagraph striking ‘‘subsections (b)(4)’’ and inserting ‘‘sub- adding at the end the following new paragraph: sections (b)(3)’’. ‘‘(3) DISTRIBUTIONS TO MEET REQUIREMENTS (B), and (4) by adding at the end the following new (4) Paragraph (1) of section 851(e) is amended OF SUBSECTION (a)(2)(B).—Any distribution by striking ‘‘subsection (b)(4)’’ and inserting which is made in order to comply with the re- subparagraphs: ‘‘(C) the amount (if any) by which— ‘‘subsection (b)(3)’’. quirements of subsection (a)(2)(B)— (5) Paragraph (4) of section 851(e) is amended ‘‘(A) shall be treated for purposes of this sub- ‘‘(i) the amounts includible in gross income by striking ‘‘subsections (b)(4)’’ and inserting section and subsection (a)(2)(B) as made from with respect to instruments to which section ‘‘subsections (b)(3)’’. the earliest accumulated earnings and profits 860E(a) or 1272 applies, exceed (6) Section 851 is amended by striking sub- (other than earnings and profits to which sub- ‘‘(ii) the amount of money and the fair market section (g) and redesignating subsection (h) as section (a)(2)(A) applies) rather than the most value of other property received during the tax- subsection (g). recently accumulated earnings and profits, and able year under such instruments, and (7) Subsection (g) of section 851 (as redesig- ‘‘(B) to the extent treated under subparagraph ‘‘(D) amounts includible in income by reason nated by paragraph (6)) is amended by striking (A) as made from accumulated earnings and of cancellation of indebtedness.’’. paragraph (3). profits, shall not be treated as a distribution for SEC. 1060. PROHIBITED TRANSACTION SAFE HAR- (8) Section 817(h)(2) is amended— purposes of subsection (b)(2)(B).’’. BOR. (A) by striking ‘‘851(b)(4)’’ in subparagraph SEC. 1057. TREATMENT OF FORECLOSURE PROP- Clause (iii) of section 857(b)(6)(C) (relating to certain sales not to constitute prohibited trans- (A) and inserting ‘‘851(b)(3)’’, and ERTY. (B) by striking ‘‘851(b)(4)(A)(i)’’ in subpara- (a) GRACE PERIODS.— actions) is amended by striking ‘‘(other than foreclosure property)’’ in subclauses (I) and (II) graph (B) and inserting ‘‘851(b)(3)(A)(i)’’. (1) INITIAL PERIOD.—Paragraph (2) of section (9) Section 1092(f)(2) is amended by striking 856(e) (relating to special rules for foreclosure and inserting ‘‘(other than sales of foreclosure property or sales to which section 1033 ap- ‘‘Except for purposes of section 851(b)(3), the’’ property) is amended by striking ‘‘on the date and inserting ‘‘The’’. which is 2 years after the date the trust ac- plies)’’. (c) EFFECTIVE DATE.—The amendments made SEC. 1061. SHARED APPRECIATION MORTGAGES. quired such property’’ and inserting ‘‘as of the by this section shall apply to taxable years be- (a) BANKRUPTCY SAFE HARBOR.—Section close of the 3d taxable year following the tax- ginning after December 31, 1997. able year in which the trust acquired such prop- 856(j) (relating to treatment of shared apprecia- erty’’. tion mortgages) is amended by redesignating Subtitle F—Taxpayer Protections (2) EXTENSION.—Paragraph (3) of section paragraph (4) as paragraph (5) and by inserting SEC. 1081. REASONABLE CAUSE EXCEPTION FOR 856(e) is amended— after paragraph (3) the following new para- CERTAIN PENALTIES. (A) by striking ‘‘or more extensions’’ and in- graph: (a) INFORMATION ON DEDUCTIBLE EMPLOYEE serting ‘‘extension’’, and ‘‘(4) COORDINATION WITH 4-YEAR HOLDING PE- CONTRIBUTIONS.—Subsection (g) of section 6652 (B) by striking the last sentence and inserting: RIOD.— (relating to information required in connection ‘‘Any such extension shall not extend the grace ‘‘(A) IN GENERAL.—For purposes of section with deductible employee contributions) is period beyond the close of the 3d taxable year 857(b)(6)(C), if a real estate investment trust is amended by adding at the end the following following the last taxable year in the period treated as having sold secured property under new sentence: ‘‘No penalty shall be imposed under paragraph (2).’’. paragraph (3)(A), the trust shall be treated as under this subsection on any failure which is

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shown to be due to reasonable cause and not ‘‘(1) FEDERAL EMPLOYEES AND OTHER PER- (2) Clause (ii) of section 7431(c)(1)(B) is willful neglect.’’. SONS.—It shall be unlawful for— amended by striking ‘‘willful disclosure or a dis- (b) REPORTS ON STATUS AS QUALIFIED SMALL ‘‘(A) any officer or employee of the United closure’’ and inserting ‘‘willful inspection or BUSINESS.—Subsection (k) of section 6652 (relat- States, or disclosure or an inspection or disclosure’’. ing to failure to make reports required under ‘‘(B) any person described in section 6103(n) (3) Subsection (f) of section 7431, as redesig- section 1202) is amended by adding at the end or an officer or employee of any such person, nated by subsection (b), is amended to read as the following new sentence: ‘‘No penalty shall willfully to inspect, except as authorized in this follows: be imposed under this subsection on any failure title, any return or return information. ‘‘(f) DEFINITIONS.—For purposes of this sec- which is shown to be due to reasonable cause ‘‘(2) STATE AND OTHER EMPLOYEES.—It shall tion, the terms ‘inspect’, ‘inspection’, ‘return’, and not willful neglect.’’. be unlawful for any person (not described in and ‘return information’ have the respective (c) RETURNS OF PERSONAL HOLDING COMPANY paragraph (1)) willfully to inspect, except as au- meanings given such terms by section 6103(b).’’. TAX BY FOREIGN CORPORATIONS.—Section 6683 thorized in this title, any return or return infor- (4) The section heading for section 7431 is (relating to failure of foreign corporation to file mation acquired by such person or another per- amended by inserting ‘‘INSPECTION OR’’ be- return of personal holding company tax) is son under a provision of section 6103 referred to fore ‘‘DISCLOSURE’’. amended by adding at the end the following in section 7213(a)(2). (5) The table of sections for subchapter B of new sentence: ‘‘No penalty shall be imposed ‘‘(b) PENALTY.— chapter 76 is amended by inserting ‘‘inspection under this section on any failure which is ‘‘(1) IN GENERAL.—Any violation of subsection or’’ before ‘‘disclosure’’ in the item relating to shown to be due to reasonable cause and not (a) shall be punishable upon conviction by a section 7431. willful neglect.’’. fine in any amount not exceeding $1,000, or im- (6) Paragraph (2) of section 7431(g), as redes- (d) FAILURE TO MAKE REQUIRED PAYMENTS.— prisonment of not more than 1 year, or both, to- ignated by subsection (b), is amended by strik- Subparagraph (A) of section 7519(f)(4) is amend- gether with the costs of prosecution. ing ‘‘any use’’ and inserting ‘‘any inspection or ed by adding at the end the following new sen- ‘‘(2) FEDERAL OFFICERS OR EMPLOYEES.—An use’’. tence: ‘‘No penalty shall be imposed under this officer or employee of the United States who is (e) EFFECTIVE DATE.—The amendments made subparagraph on any failure which is shown to convicted of any violation of subsection (a) by this section shall apply to inspections and be due to reasonable cause and not willful ne- shall, in addition to any other punishment, be disclosures occurring on and after the date of glect.’’. dismissed from office or discharged from employ- the enactment of this Act. (e) EFFECTIVE DATE.—The amendments made ment. TITLE XI—SIMPLIFICATION PROVISIONS by this section shall apply to taxable years be- ‘‘(c) DEFINITIONS.—For purposes of this sec- RELATING TO ESTATE AND GIFT TAXES ginning after the date of the enactment of this tion, the terms ‘inspect’, ‘return’, and ‘return Act. SEC. 1101. GIFTS TO CHARITIES EXEMPT FROM information’ have the respective meanings given GIFT TAX FILING REQUIREMENTS. SEC. 1082. CLARIFICATION OF PERIOD FOR FIL- such terms by section 6103(b).’’. (a) IN GENERAL.—Section 6019 is amended by ING CLAIMS FOR REFUNDS. (b) TECHNICAL AMENDMENTS.— striking ‘‘or’’ at the end of paragraph (1), by (a) IN GENERAL.—Paragraph (3) of section adding ‘‘or’’ at the end of paragraph (2), and by 6512(b) (relating to overpayment determined by (1) Paragraph (2) of section 7213(a) is amend- inserting after paragraph (2) the following new Tax Court) is amended by adding at the end the ed by inserting ‘‘(5),’’ after ‘‘(m)(2), (4),’’. paragraph: following flush sentence: (2) The table of sections for part I of sub- ‘‘(3) a transfer with respect to which a deduc- ‘‘In a case described in subparagraph (B) where chapter A of chapter 75 is amended by inserting tion is allowed under section 2522, except that the date of the mailing of the notice of defi- after the item relating to section 7213 the fol- this paragraph shall apply with respect to a ciency is during the third year after the due lowing new item: transfer of property (other than a transfer de- date (with extensions) for filing the return of ‘‘Sec. 7213A. Unauthorized inspection of returns scribed in section 2522(d)) only if the entire tax and no return was filed before such date, or return information.’’. value of such property is allowed as a deduction the applicable period under subsections (a) and (c) EFFECTIVE DATE.—The amendments made under section 2522,’’. (b)(2) of section 6511 shall be 3 years.’’. by this section shall apply to violations occur- (b) EFFECTIVE DATE.—The amendment made (b) EFFECTIVE DATE.—The amendment made ring on and after the date of the enactment of by this section shall apply to gifts made after by subsection (a) shall apply to claims for credit this Act. or refund for taxable years ending after the date the date of the enactment of this Act. of the enactment of this Act. SEC. 1086. CIVIL DAMAGES FOR UNAUTHORIZED SEC. 1102. CLARIFICATION OF WAIVER OF CER- INSPECTION OF RETURNS AND RE- TAIN RIGHTS OF RECOVERY. SEC. 1083. REPEAL OF AUTHORITY TO DISCLOSE TURN INFORMATION; NOTIFICATION MENDMENT TO ECTION WHETHER PROSPECTIVE JUROR HAS (a) A S 2207A.—Para- OF UNLAWFUL INSPECTION OR DIS- graph (2) of section 2207A(a) (relating to right of BEEN AUDITED. CLOSURE. (a) IN GENERAL.—Subsection (h) of section recovery in the case of certain marital deduction (a) CIVIL DAMAGES FOR UNAUTHORIZED IN- property) is amended to read as follows: 6103 (relating to disclosure to certain Federal of- SPECTION.—Subsection (a) of section 7431 is ficers and employees for purposes of tax admin- ‘‘(2) DECEDENT MAY OTHERWISE DIRECT.— amended— Paragraph (1) shall not apply with respect to istration, etc.) is amended by striking paragraph (1) by striking ‘‘DISCLOSURE’’ in the headings (5) and by redesignating paragraph (6) as para- any property to the extent that the decedent in for paragraphs (1) and (2) and inserting ‘‘IN- his will (or a revocable trust) specifically indi- graph (5). SPECTION OR DISCLOSURE’’, and (b) CONFORMING AMENDMENT.—Paragraph (4) cates an intent to waive any right of recovery (2) by striking ‘‘discloses’’ in paragraphs (1) of section 6103(p) is amended by striking under this subchapter with respect to such prop- and (2) and inserting ‘‘inspects or discloses’’. ‘‘(h)(6)’’ each place it appears and inserting erty.’’. (b) NOTIFICATION OF UNLAWFUL INSPECTION ‘‘(h)(5)’’. (b) AMENDMENT TO SECTION 2207B.—Para- OR DISCLOSURE.—Section 7431 is amended by re- (c) EFFECTIVE DATE.—The amendments made graph (2) of section 2207B(a) (relating to right of designating subsections (e) and (f) as sub- by this section shall apply to judicial pro- recovery where decedent retained interest) is sections (f) and (g), respectively, and by insert- ceedings commenced after the date of the enact- amended to read as follows: ing after subsection (d) the following new sub- ment of this Act. ‘‘(2) DECEDENT MAY OTHERWISE DIRECT.— section: SEC. 1084. CLARIFICATION OF STATUTE OF LIMI- Paragraph (1) shall not apply with respect to OTIFICATION OF NLAWFUL NSPECTION TATIONS. ‘‘(e) N U I any property to the extent that the decedent in AND ISCLOSURE (a) IN GENERAL.—Subsection (a) of section D .—If any person is criminally his will (or a revocable trust) specifically indi- 6501 (relating to limitations on assessment and charged by indictment or information with in- cates an intent to waive any right of recovery collection) is amended by adding at the end spection or disclosure of a taxpayer’s return or under this subchapter with respect to such prop- thereof the following new sentence: ‘‘For pur- return information in violation of— erty.’’. poses of this chapter, the term ‘return’ means ‘‘(1) paragraph (1) or (2) of section 7213(a), (c) EFFECTIVE DATE.—The amendments made the return required to be filed by the taxpayer ‘‘(2) section 7213A(a), or by this section shall apply with respect to the (and does not include a return of any person ‘‘(3) subparagraph (B) of section 1030(a)(2) of estates of decedents dying after the date of the from whom the taxpayer has received an item of title 18, United States Code, enactment of this Act. income, gain, loss, deduction, or credit).’’. the Secretary shall notify such taxpayer as soon SEC. 1103. TRANSITIONAL RULE UNDER SECTION (b) EFFECTIVE DATE.—The amendment made as practicable of such inspection or disclosure.’’. 2056A. by this section shall apply to taxable years be- (c) NO DAMAGES FOR INSPECTION REQUESTED (a) GENERAL RULE.—In the case of any trust ginning after the date of the enactment of this BY TAXPAYER.—Subsection (b) of section 7431 is created under an instrument executed before the Act. amended to read as follows: date of the enactment of the Revenue Reconcili- SEC. 1085. PENALTY FOR UNAUTHORIZED INSPEC- ‘‘(b) EXCEPTIONS.—No liability shall arise ation Act of 1990, such trust shall be treated as TION OF TAX RETURNS OR TAX RE- under this section with respect to any inspection meeting the requirements of paragraph (1) of TURN INFORMATION. or disclosure— section 2056A(a) of the Internal Revenue Code (a) IN GENERAL.—Part I of subchapter A of ‘‘(1) which results from a good faith, but erro- of 1986 if the trust instrument requires that all chapter 75 (relating to crimes, other offenses, neous, interpretation of section 6103, or trustees of the trust be individual citizens of the and forfeitures) is amended by adding after sec- ‘‘(2) which is requested by the taxpayer.’’. United States or domestic corporations. tion 7213 the following new section: (d) CONFORMING AMENDMENTS.— (b) EFFECTIVE DATE.—The provisions of sub- ‘‘SEC. 7213A. UNAUTHORIZED INSPECTION OF RE- (1) Subsections (c)(1)(A), (c)(1)(B)(i), and (d) section (a) shall take effect as if included in the TURNS OR RETURN INFORMATION. of section 7431 are each amended by inserting provisions of section 11702(g) of the Revenue ‘‘(a) PROHIBITIONS.— ‘‘inspection or’’ before ‘‘disclosure’’. Reconciliation Act of 1990.

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SEC. 1104. TREATMENT FOR ESTATE TAX PUR- SEC. 1108. TREATMENT OF FUNERAL TRUSTS. ‘‘(f) SIMPLIFIED REPORTING.—The Secretary POSES OF SHORT-TERM OBLIGA- (a) IN GENERAL.—Subpart F of part I of sub- may prescribe rules for simplified reporting of TIONS HELD BY NONRESIDENT chapter J of chapter 1 is amended by adding at all trusts having a single trustee.’’. ALIENS. the end the following new section: (b) CLERICAL AMENDMENT.—The table of sec- (a) IN GENERAL.—Subsection (b) of section ‘‘SEC. 684. TREATMENT OF FUNERAL TRUSTS. tions for subpart F of part I of subchapter J of 2105 is amended by striking ‘‘and’’ at the end of ‘‘(a) IN GENERAL.—In the case of a qualified chapter 1 is amended by adding at the end the paragraph (2), by striking the period at the end following new item: of paragraph (3) and inserting ‘‘, and’’, and by funeral trust— inserting after paragraph (3) the following new ‘‘(1) subparts B, C, D, and E shall not apply, ‘‘Sec. 684. Treatment of funeral trusts.’’. paragraph: and (c) EFFECTIVE DATE.—The amendments made ‘‘(2) no deduction shall be allowed by section ‘‘(4) obligations which would be original issue by this section shall apply to taxable years be- 642(b). discount obligations as defined in section ginning after the date of the enactment of this ‘‘(b) QUALIFIED FUNERAL TRUST.—For pur- 871(g)(1) but for subparagraph (B)(i) thereof, if Act. poses of this subsection, the term ‘qualified fu- any interest thereon (were such interest received SEC. 1109. ADJUSTMENTS FOR GIFTS WITHIN 3 neral trust’ means any trust (other than a for- by the decedent at the time of his death) would YEARS OF DECEDENT’S DEATH. eign trust) if— not be effectively connected with the conduct of (a) GENERAL RULE.—Section 2035 is amended ‘‘(1) the trust arises as a result of a contract a trade or business within the United States.’’. to read as follows: with a person engaged in the trade or business (b) EFFECTIVE DATE.—The amendment made ‘‘SEC. 2035. ADJUSTMENTS FOR CERTAIN GIFTS of providing funeral or burial services or prop- by this section shall apply to estates of dece- MADE WITHIN 3 YEARS OF DECE- erty necessary to provide such services, dents dying after the date of the enactment of DENT’S DEATH. ‘‘(2) the sole purpose of the trust is to hold, this Act. ‘‘(a) INCLUSION OF CERTAIN PROPERTY IN invest, and reinvest funds in the trust and to GROSS ESTATE.—If— SEC. 1105. DISTRIBUTIONS DURING FIRST 65 use such funds solely to make payments for such DAYS OF TAXABLE YEAR OF ESTATE. ‘‘(1) the decedent made a transfer (by trust or services or property for the benefit of the bene- otherwise) of an interest in any property, or re- (a) IN GENERAL.—Subsection (b) of section 663 ficiaries of the trust, (relating to distributions in first 65 days of tax- linquished a power with respect to any prop- ‘‘(3) the only beneficiaries of such trust are erty, during the 3-year period ending on the able year) is amended by inserting ‘‘an estate individuals who have entered into contracts de- or’’ before ‘‘a trust’’ each place it appears. date of the decedent’s death, and scribed in paragraph (1) to have such services or ‘‘(2) the value of such property (or an interest (b) CONFORMING AMENDMENT.—Paragraph (2) property provided at their death, therein) would have been included in the dece- of section 663(b) is amended by striking ‘‘the fi- ‘‘(4) the only contributions to the trust are duciary of such trust’’ and inserting ‘‘the execu- dent’s gross estate under section 2036, 2037, 2038, contributions by or for the benefit of such bene- or 2042 if such transferred interest or relin- tor of such estate or the fiduciary of such trust ficiaries, (as the case may be)’’. quished power had been retained by the dece- ‘‘(5) the trustee elects the application of this dent on the date of his death, the value of the (c) EFFECTIVE DATE.—The amendments made subsection, and by this section shall apply to taxable years be- gross estate shall include the value of any prop- ‘‘(6) the trust would (but for the election de- erty (or interest therein) which would have been ginning after the date of the enactment of this scribed in paragraph (5)) be treated as owned by Act. so included. the beneficiaries under subpart E. ‘‘(b) INCLUSION OF GIFT TAX ON GIFTS MADE SEC. 1106. SEPARATE SHARE RULES AVAILABLE ‘‘(c) DOLLAR LIMITATION ON CONTRIBU- DURING 3 YEARS BEFORE DECEDENT’S DEATH.— TO ESTATES. TIONS.— The amount of the gross estate (determined (a) IN GENERAL.—Subsection (c) of section 663 ‘‘(1) IN GENERAL.—The term ‘qualified funeral without regard to this subsection) shall be in- (relating to separate shares treated as separate trust’ shall not include any trust which accepts creased by the amount of any tax paid under trusts) is amended— aggregate contributions by or for the benefit of chapter 12 by the decedent or his estate on any (1) by inserting before the last sentence the an individual in excess of $7,000. gift made by the decedent or his spouse during following new sentence: ‘‘Rules similar to the ‘‘(2) RELATED TRUSTS.—For purposes of para- the 3-year period ending on the date of the dece- rules of the preceding provisions of this sub- graph (1), all trusts having trustees which are dent’s death. section shall apply to treat substantially sepa- related persons shall be treated as 1 trust. For ‘‘(c) OTHER RULES RELATING TO TRANSFERS rate and independent shares of different bene- purposes of the preceding sentence, persons are WITHIN 3 YEARS OF DEATH.— ficiaries in an estate having more than 1 bene- related if— ‘‘(1) IN GENERAL.—For purposes of— ficiary as separate estates.’’, and ‘‘(A) the relationship between such persons is ‘‘(A) section 303(b) (relating to distributions in (2) by inserting ‘‘or estates’’ after ‘‘trusts’’ in described in section 267 or 707(b), redemption of stock to pay death taxes), the last sentence. ‘‘(B) such persons are treated as a single em- ‘‘(B) section 2032A (relating to special valu- (b) CONFORMING AMENDMENT.—The sub- ployer under subsection (a) or (b) of section 52, ation of certain farms, etc., real property), and section heading of section 663(c) is amended by or ‘‘(C) subchapter C of chapter 64 (relating to inserting ‘‘ESTATES OR’’ before ‘‘TRUSTS’’. ‘‘(C) the Secretary determines that treating lien for taxes), (c) EFFECTIVE DATE.—The amendments made such persons as related is necessary to prevent the value of the gross estate shall include the by this section shall apply to estates of dece- avoidance of the purposes of this section. value of all property to the extent of any inter- dents dying after the date of the enactment of ‘‘(3) INFLATION ADJUSTMENT.—In the case of est therein of which the decedent has at any this Act. any contract referred to in subsection (b)(1) time made a transfer, by trust or otherwise, dur- SEC. 1107. EXECUTOR OF ESTATE AND BENE- which is entered into during any calendar year ing the 3-year period ending on the date of the FICIARIES TREATED AS RELATED after 1998, the dollar amount referred to para- decedent’s death. PERSONS FOR DISALLOWANCE OF graph (1) shall be increased by an amount equal ‘‘(2) COORDINATION WITH SECTION 6166.—An es- LOSSES, ETC. to— tate shall be treated as meeting the 35 percent of (a) DISALLOWANCE OF LOSSES.—Subsection (b) ‘‘(A) such dollar amount, multiplied by adjusted gross estate requirement of section of section 267 (relating to losses, expenses, and ‘‘(B) the cost-of-living adjustment determined 6166(a)(1) only if the estate meets such require- interest with respect to transactions between re- under section 1(f)(3) for such calendar year, by ment both with and without the application of lated taxpayers) is amended by striking ‘‘or’’ at substituting ‘calendar year 1997’ for ‘calendar paragraph (1). the end of paragraph (11), by striking the period year 1992’ in subparagraph (B) thereof. ‘‘(3) MARITAL AND SMALL TRANSFERS.—Para- at the end of paragraph (12) and inserting ‘‘; If any dollar amount after being increased graph (1) shall not apply to any transfer (other or’’, and by adding at the end the following new under the preceding sentence is not a multiple of than a transfer with respect to a life insurance paragraph: $100, such dollar amount shall be rounded to the policy) made during a calendar year to any ‘‘(13) Except in the case of a sale or exchange nearest multiple of $100. donee if the decedent was not required by sec- in satisfaction of a pecuniary bequest, an execu- ‘‘(d) APPLICATION OF RATE SCHEDULE.—Sec- tion 6019 (other than by reason of section tor of an estate and a beneficiary of such es- tion 1(e) shall be applied to each qualified fu- 6019(2)) to file any gift tax return for such year tate.’’. neral trust by treating each beneficiary’s inter- with respect to transfers to such donee. (b) ORDINARY INCOME FROM GAIN FROM SALE est in each such trust as a separate trust. ‘‘(d) EXCEPTION.—Subsection (a) shall not OF DEPRECIABLE PROPERTY.—Subsection (b) of ‘‘(e) TREATMENT OF AMOUNTS REFUNDED TO apply to any bona fide sale for an adequate and section 1239 is amended by striking the period at BENEFICIARY ON CANCELLATION.—No gain or full consideration in money or money’s worth. the end of paragraph (2) and inserting ‘‘, and’’ loss shall be recognized to a beneficiary de- ‘‘(e) TREATMENT OF CERTAIN TRANSFERS FROM and by adding at the end the following new scribed in subsection (b)(3) of any qualified fu- REVOCABLE TRUSTS.—For purposes of this sec- paragraph: neral trust by reason of any payment from such tion and section 2038, any transfer from any ‘‘(3) except in the case of a sale or exchange trust to such beneficiary by reason of cancella- portion of a trust during any period that such in satisfaction of a pecuniary bequest, an execu- tion of a contract referred to in subsection portion was treated under section 676 as owned tor of an estate and a beneficiary of such es- (b)(1). If any payment referred to in the pre- by the decedent by reason of a power in the tate.’’. ceding sentence consists of property other than grantor (determined without regard to section (c) EFFECTIVE DATE.—The amendments made money, the basis of such property in the hands 672(e)) shall be treated as a transfer made di- by this section shall apply to taxable years be- of such beneficiary shall be the same as the rectly by the decedent.’’. ginning after the date of the enactment of this trust’s basis in such property immediately before (b) CLERICAL AMENDMENT.—The table of sec- Act. the payment. tions for part III of subchapter A of chapter 11

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is amended by striking ‘‘gifts’’ in the item relat- (b) EFFECTIVE DATE.—The amendments made (2) by striking ‘‘or rendering unmerchantable’’ ing to section 2035 and inserting ‘‘certain gifts’’. by subsection (a) shall apply to installations on in subsection (d) (as so redesignated) and insert- (c) EFFECTIVE DATE.—The amendments made vehicles sold after the date of the enactment of ing ‘‘rendering unmerchantable, or receipt on by this section shall apply to the estates of dece- this Act. the bonded premises of a distilled spirits plant’’. dents dying after the date of the enactment of PART II—PROVISIONS RELATED TO (d) EFFECTIVE DATE.—The amendments made this Act. DISTILLED SPIRITS, WINES, AND BEER by this section shall take effect on the 1st day SEC. 1110. CLARIFICATION OF TREATMENT OF of the 1st calendar quarter that begins at least SURVIVOR ANNUITIES UNDER SEC. 1211. CREDIT OR REFUND FOR IMPORTED 90 days after the date of the enactment of this BOTTLED DISTILLED SPIRITS RE- QUALIFIED TERMINABLE INTEREST Act. RULES. TURNED TO DISTILLED SPIRITS PLANT. SEC. 1215. REPEAL OF REQUIREMENT FOR (a) IN GENERAL.—Subparagraph (C) of section WHOLESALE DEALERS IN LIQUORS (a) IN GENERAL.—Section 5008(c)(1) (relating 2056(b)(7) is amended by inserting ‘‘(or, in the TO POST SIGN. to distilled spirits returned to bonded premises) case of an interest in an annuity arising under (a) IN GENERAL.—Section 5115 (relating to sign is amended by striking ‘‘withdrawn from bonded the community property laws of a State, in- required on premises) is hereby repealed. premises on payment or determination of tax’’ cluded in the gross estate of the decedent under (b) CONFORMING AMENDMENTS.— section 2033)’’ after ‘‘section 2039’’. and inserting ‘‘on which tax has been deter- (1) Section 5681(a) is amended by striking ‘‘, (b) EFFECTIVE DATE.—The amendment made mined or paid’’. and every wholesale dealer in liquors,’’ and by by this section shall apply to estates of dece- (b) EFFECTIVE DATE.—The amendment made striking ‘‘section 5115(a) or’’. dents dying after the date of the enactment of by subsection (a) shall take effect on the 1st day (2) Section 5681(c) is amended— this Act. of the 1st calendar quarter that begins at least (A) by striking ‘‘or wholesale liquor establish- 90 days after the date of the enactment of this SEC. 1111. TREATMENT UNDER QUALIFIED DO- ment, on which no sign required by section MESTIC TRUST RULES OF FORMS OF Act. 5115(a) or’’ and inserting ‘‘on which no sign re- OWNERSHIP WHICH ARE NOT SEC. 1212. AUTHORITY TO CANCEL OR CREDIT EX- quired by’’, and TRUSTS. PORT BONDS WITHOUT SUBMISSION (B) by striking ‘‘or wholesale liquor establish- (a) IN GENERAL.—Subsection (c) of section OF RECORDS. ment, or who’’ and inserting ‘‘or who’’. 2056A (defining qualified domestic trust) is (a) IN GENERAL.—Section 5175(c) (relating to (3) The table of sections for subpart D of part amended by adding at the end the following cancellation of credit of export bonds) is amend- II of subchapter A of chapter 51 is amended by new paragraph: ed by striking ‘‘on the submission of’’ and all striking the item relating to section 5115. ‘‘(3) TRUST.—To the extent provided in regula- that follows and inserting ‘‘if there is such proof (c) EFFECTIVE DATE.—The amendments made tions prescribed by the Secretary, the term of exportation as the Secretary may by regula- by this section shall take effect on the date of ‘trust’ includes other arrangements which have tions require.’’. the enactment of this Act. substantially the same effect as a trust.’’. (b) EFFECTIVE DATE.—The amendment made SEC. 1216. REFUND OF TAX TO WINE RETURNED (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect on the 1st day TO BOND NOT LIMITED TO by this section shall apply to estates of dece- of the 1st calendar quarter that begins at least UNMERCHANTABLE WINE. dents dying after the date of the enactment of 90 days after the date of the enactment of this (a) IN GENERAL.—Section 5044(a) (relating to this Act. Act. refund of tax on unmerchantable wine) is SEC. 1112. OPPORTUNITY TO CORRECT CERTAIN SEC. 1213. REPEAL OF REQUIRED MAINTENANCE amended by striking ‘‘as unmerchantable’’. FAILURES UNDER SECTION 2032A. OF RECORDS ON PREMISES OF DIS- (b) CONFORMING AMENDMENTS.— (a) GENERAL RULE.—Paragraph (3) of section TILLED SPIRITS PLANT. (1) Section 5361 is amended by striking 2032A(d) (relating to modification of election (a) IN GENERAL.—Section 5207(c) (relating to ‘‘unmerchantable’’. and agreement to be permitted) is amended to preservation and inspection) is amended by (2) The section heading for section 5044 is read as follows: striking ‘‘shall be kept on the premises where amended by striking ‘‘unmerchantable’’. ‘‘(3) MODIFICATION OF ELECTION AND AGREE- the operations covered by the record are carried (3) The item relating to section 5044 in the MENT TO BE PERMITTED.—The Secretary shall on and’’. table of sections for subpart C of part I of sub- prescribe procedures which provide that in any (b) EFFECTIVE DATE.—The amendment made chapter A of chapter 51 is amended by striking case in which the executor makes an election by subsection (a) shall take effect on the 1st day ‘‘unmerchantable’’. FFECTIVE DATE.—The amendments made under paragraph (1) (and submits the agreement of the 1st calendar quarter that begins at least (c) E by this section shall take effect on the 1st day referred to in paragraph (2)) within the time 90 days after the date of the enactment of this of the 1st calendar quarter that begins at least prescribed therefor, but— Act. ‘‘(A) the notice of election, as filed, does not 90 days after the date of the enactment of this SEC. 1214. FERMENTED MATERIAL FROM ANY Act. contain all required information, or BREWERY MAY BE RECEIVED AT A ‘‘(B) signatures of 1 or more persons required DISTILLED SPIRITS PLANT. SEC. 1217. USE OF ADDITIONAL AMELIORATING MATERIAL IN CERTAIN WINES. to enter into the agreement described in para- (a) IN GENERAL.—Section 5222(b)(2) (relating (a) IN GENERAL.—Section 5384(b)(2)(D) (relat- graph (2) are not included on the agreement as to receipt) is amended to read as follows: ing to ameliorated fruit and berry wines) is filed, or the agreement does not contain all re- ‘‘(2) beer conveyed without payment of tax amended by striking ‘‘loganberries, currants, or quired information, from brewery premises, beer which has been gooseberries,’’ and inserting ‘‘any fruit or berry the executor will have a reasonable period of lawfully removed from brewery premises upon with a natural fixed acid of 20 parts per thou- time (not exceeding 90 days) after notification of determination of tax, or’’. sand or more (before any correction of such fruit such failures to provide such information or sig- (b) CLARIFICATION OF AUTHORITY TO PERMIT or berry)’’. natures.’’. REMOVAL OF BEER WITHOUT PAYMENT OF TAX FFECTIVE ATE (b) EFFECTIVE DATE.—The amendment made (b) E D .—The amendment made FOR USE AS DISTILLING MATERIAL.—Section 5053 by this section shall take effect on the 1st day by subsection (a) shall apply to the estates of (relating to exemptions) is amended by redesig- of the 1st calendar quarter that begins at least decedents dying after the date of the enactment nating subsection (f) as subsection (i) and by in- 90 days after the date of the enactment of this of this Act. serting after subsection (e) the following new Act. SEC. 1113. AUTHORITY TO WAIVE REQUIREMENT subsection: OF UNITED STATES TRUSTEE FOR SEC. 1218. DOMESTICALLY PRODUCED BEER MAY ‘‘(f) REMOVAL FOR USE AS DISTILLING MATE- QUALIFIED DOMESTIC TRUSTS. BE WITHDRAWN FREE OF TAX FOR RIAL.—Subject to such regulations as the Sec- (a) IN GENERAL.—Subparagraph (A) of section USE OF FOREIGN EMBASSIES, LEGA- retary may prescribe, beer may be removed from 2056A(a)(1) is amended by inserting ‘‘except as TIONS, ETC. a brewery without payment of tax to any dis- provided in regulations prescribed by the Sec- (a) IN GENERAL.—Section 5053 (relating to ex- tilled spirits plant for use as distilling mate- retary,’’ before ‘‘requires’’. emptions), as amended by section 1414(b), is rial.’’. (b) EFFECTIVE DATE.—The amendment made amended by inserting after subsection (f) the LARIFICATION OF REFUND AND CREDIT OF by this section shall apply to estates of dece- (c) C following new subsection: TAX.—Section 5056 (relating to refund and cred- dents dying after the date of the enactment of ‘‘(g) REMOVALS FOR USE OF FOREIGN EMBAS- it of tax, or relief from liability) is amended— this Act. SIES, LEGATIONS, ETC.— (1) by redesignating subsection (c) as sub- ‘‘(1) IN GENERAL.—Subject to such regulations TITLE XII—SIMPLIFICATION PROVISIONS section (d) and by inserting after subsection (b) as the Secretary may prescribe— RELATING TO EXCISE TAXES, TAX-EX- the following new subsection: ‘‘(A) beer may be withdrawn from the brewery EMPT BONDS, AND OTHER MATTERS ‘‘(c) BEER RECEIVED AT A DISTILLED SPIRITS without payment of tax for transfer to any cus- Subtitle A—Excise Tax Simplification PLANT.—Any tax paid by any brewer on beer toms bonded warehouse for entry pending with- PART I—EXCISE TAXES ON HEAVY TRUCKS produced in the United States may be refunded drawal therefrom as provided in subparagraph AND LUXURY CARS or credited to the brewer, without interest, or if (B), and SEC. 1201. INCREASE IN DE MINIMIS LIMIT FOR the tax has not been paid, the brewer may be re- ‘‘(B) beer entered into any customs bonded AFTER-MARKET ALTERATIONS FOR lieved of liability therefor, under regulations as warehouse under subparagraph (A) may be HEAVY TRUCKS AND LUXURY CARS. the Secretary may prescribe, if such beer is re- withdrawn for consumption in the United States (a) IN GENERAL.—Sections 4003(a)(3)(C) and ceived on the bonded premises of a distilled spir- by, and for the official and family use of, such 4051(b)(2)(B) (relating to exceptions) are each its plant pursuant to the provisions of section foreign governments, organizations, and indi- amended by striking ‘‘$200’’ and inserting 5222(b)(2), for use in the production of distilled viduals as are entitled to withdraw imported ‘‘$1,000’’. spirits.’’, and beer from such warehouses free of tax.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00188 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6857 Beer transferred to any customs bonded ware- drawn from customs custody and transferred in equal to the tax so paid. Amounts payable house under subparagraph (A) shall be entered, such bulk containers to the premises of a bonded under the preceding sentence with respect to stored, and accounted for in such warehouse wine cellar without payment of the internal rev- uses during the taxable year shall be treated as under such regulations and bonds as the Sec- enue tax imposed on such wine. The proprietor described in section 34(a) for such year unless retary may prescribe, and may be withdrawn of a bonded wine cellar to which such wine is claim thereof has been timely filed under this therefrom by such governments, organizations, transferred shall become liable for the tax on the paragraph.’’. and individuals free of tax under the same con- wine withdrawn from customs custody under SEC. 1233. SIMPLIFICATION OF IMPOSITION OF ditions and procedures as imported beer. this section upon release of the wine from cus- EXCISE TAX ON ARROWS. ‘‘(2) OTHER RULES TO APPLY.—Rules similar to toms custody, and the importer, or the person (a) IN GENERAL.—Subsection (b) of section the rules of paragraphs (2) and (3) of section bringing such wine into the United States, shall 4161 (relating to imposition of tax) is amended to 5362(e) shall apply for purposes of this sub- thereupon be relieved of the liability for such read as follows: section.’’. tax.’’. ‘‘(b) BOWS AND ARROWS, ETC.— (b) EFFECTIVE DATE.—The amendment made (b) CLERICAL AMENDMENT.—The table of sec- ‘‘(1) BOWS.— by subsection (a) shall take effect on the 1st day tions for such part II is amended by inserting ‘‘(A) IN GENERAL.—There is hereby imposed on of the 1st calendar quarter that begins at least after the item relating to section 5363 the fol- the sale by the manufacturer, producer, or im- 90 days after the date of the enactment of this lowing new item: porter of any bow which has a draw weight of Act. ‘‘Sec. 5364. Wine imported in bulk.’’. 10 pounds or more, a tax equal to 11 percent of SEC. 1219. BEER MAY BE WITHDRAWN FREE OF the price for which so sold. (c) EFFECTIVE DATE.—The amendments made TAX FOR DESTRUCTION. ‘‘(B) PARTS AND ACCESSORIES.—There is here- by this section shall take effect on the 1st day (a) IN GENERAL.—Section 5053 (relating to ex- by imposed upon the sale by the manufacturer, of the 1st calendar quarter that begins at least emptions), as amended by section 1418(a), is producer, or importer— 90 days after the date of the enactment of this amended by inserting after subsection (g) the ‘‘(i) of any part of accessory suitable for in- Act. following new subsection: clusion in or attachment to a bow described in ‘‘(h) REMOVALS FOR DESTRUCTION.—Subject to PART III—OTHER EXCISE TAX PROVISIONS subparagraph (A), and such regulations as the Secretary may prescribe, SEC. 1231. AUTHORITY TO GRANT EXEMPTIONS ‘‘(ii) of any quiver suitable for use with ar- beer may be removed from the brewery without FROM REGISTRATION REQUIRE- rows described in paragraph (2), payment of tax for destruction.’’. MENTS. a tax equivalent to 11 percent of the price for (b) EFFECTIVE DATE.—The amendment made (a) IN GENERAL.—Section 4222(b)(2) (relating which so sold. by subsection (a) shall take effect on the 1st day to export) is amended— ‘‘(2) ARROWS.—There is hereby imposed on the of the 1st calendar quarter that begins at least (1) by striking ‘‘in the case of any sale or re- sale by the manufacturer, producer, or importer 90 days after the date of the enactment of this sale for export,’’, and of any shaft, point, nock, or vane of a type used Act. (2) by striking ‘‘EXPORT’’ and inserting in the manufacture of any arrow which after its SEC. 1220. AUTHORITY TO ALLOW DRAWBACK ON ‘‘UNDER REGULATIONS’’. assembly— EXPORTED BEER WITHOUT SUBMIS- (b) EFFECTIVE DATE.—The amendments made ‘‘(A) measures 18 inches overall or more in SION OF RECORDS. by subsection (a) shall take effect on the date of length, or (a) IN GENERAL.—The first sentence of section the enactment of this Act. ‘‘(B) measures less than 18 inches overall in 5055 (relating to drawback of tax on beer) is SEC. 1232. REPEAL OF EXPIRED PROVISIONS. length but is suitable for use with a bow de- amended by striking ‘‘found to have been paid’’ (a) PIGGY-BACK TRAILERS.—Section 4051 (re- scribed in paragraph (1)(A), and all that follows and inserting ‘‘paid on such lating to imposition of tax on heavy trucks and a tax equal to 12.4 percent of the price for which beer if there is such proof of exportation as the trailers sold at retail) is amended by striking so sold. Secretary may by regulations require.’’. subsection (d) and by redesignating subsection ‘‘(3) COORDINATION WITH SUBSECTION (a).—No (b) EFFECTIVE DATE.—The amendment made (e) as subsection (d). tax shall be imposed under this subsection with by subsection (a) shall take effect on the 1st day (b) DEEP SEABED MINING.— respect to any article taxable under subsection of the 1st calendar quarter that begins at least (1) IN GENERAL.—Subchapter F of chapter 36 (a).’’. 90 days after the date of the enactment of this (relating to tax on removal of hard mineral re- (b) EFFECTIVE DATE.—The amendment made Act. sources from deep seabed) is hereby repealed. by subsection (a) shall apply to articles sold by SEC. 1221. TRANSFER TO BREWERY OF BEER IM- (2) CONFORMING AMENDMENT.—The table of the manufacturer, producer, or importer after PORTED IN BULK WITHOUT PAY- subchapters for chapter 36 is amended by strik- September 30 1997. MENT OF TAX. ing the item relating to subchapter F. SEC. 1234. MODIFICATIONS TO RETAIL TAX ON (a) IN GENERAL.—Part II of subchapter G of (c) OZONE-DEPLETING CHEMICALS.— HEAVY TRUCKS. chapter 51 is amended by adding at the end the (1) Paragraph (1) of section 4681(b) is amend- (a) CERTAIN REPAIRS AND MODIFICATIONS NOT following new section: ed by striking subparagraphs (B) and (C) and TREATED AS MANUFACTURE.—Section 4052 is ‘‘SEC. 5418. BEER IMPORTED IN BULK. inserting the following new subparagraph: amended by redesignating the subsection defin- ‘‘Beer imported or brought into the United ‘‘(B) BASE TAX AMOUNT.—The base tax ing a long-term lease as subsection (e) and by States in bulk containers may, under such regu- amount for purposes of subparagraph (A) with adding at the end the following new subsection: lations as the Secretary may prescribe, be with- respect to any sale or use during any calendar ‘‘(f) CERTAIN REPAIRS AND MODIFICATIONS drawn from customs custody and transferred in year after 1995 shall be $5.35 increased by 45 NOT TREATED AS MANUFACTURE.— such bulk containers to the premises of a brew- cents for each year after 1995.’’. ‘‘(1) IN GENERAL.—An article described in sec- ery without payment of the internal revenue tax (2) Subsection (g) of section 4682 is amended to tion 4051(a)(1) shall not be treated as manufac- imposed on such beer. The proprietor of a brew- read as follows: tured or produced solely by reason of repairs or ery to which such beer is transferred shall be- ‘‘(g) CHEMICALS USED AS PROPELLANTS IN ME- modifications to the article (including any modi- come liable for the tax on the beer withdrawn TERED-DOSE INHALERS.— fication which changes the transportation func- from customs custody under this section upon ‘‘(1) EXEMPTION FROM TAX.— tion of the article or restores a wrecked article release of the beer from customs custody, and ‘‘(A) IN GENERAL.—No tax shall be imposed by to a functional condition) if the cost of such re- the importer, or the person bringing such beer section 4681 on— pairs and modifications does not exceed 75 per- into the United States, shall thereupon be re- ‘‘(i) any use of any substance as a propellant cent of the retail price of a comparable new arti- lieved of the liability for such tax.’’. in metered-dose inhalers, or cle. (b) CLERICAL AMENDMENT.—The table of sec- ‘‘(ii) any qualified sale by the manufacturer, ‘‘(2) EXCEPTION.—Paragraph (1) shall not tions for such part II is amended by adding at producer, or importer of any substance. apply if the article (as repaired or modified) the end the following new item: ‘‘(B) QUALIFIED SALE.—For purposes of sub- would, if new, be taxable under section 4051 and paragraph (A), the term ‘qualified sale’ means the article when new was not taxable under this ‘‘Sec. 5418. Beer imported in bulk.’’. any sale by the manufacturer, producer, or im- section or the corresponding provision of prior (c) EFFECTIVE DATE.—The amendments made porter of any substance— law.’’. by this section shall take effect on the 1st day ‘‘(i) for use by the purchaser as a propellant (b) SIMPLIFICATION OF CERTIFICATION PROCE- of the 1st calendar quarter that begins at least in metered dose inhalers, or DURES WITH RESPECT TO SALES OF TAXABLE AR- 90 days after the date of the enactment of this ‘‘(ii) for resale by the purchaser to a 2d pur- TICLES.— Act. chaser for such use by the 2d purchaser. (1) REPEAL OF REGISTRATION REQUIREMENT.— SEC. 1222. TRANSFER TO BONDED WINE CELLARS The preceding sentence shall apply only if the Subsection (d) of section 4052 is amended by OF WINE IMPORTED IN BULK WITH- manufacturer, producer, and importer, and the striking ‘‘rules of—’’ and all that follows OUT PAYMENT OF TAX. 1st and 2d purchasers (if any) meet such reg- through ‘‘shall apply’’ and inserting ‘‘rules of (a) IN GENERAL.—Part II of subchapter F of istration requirements as may be prescribed by subsections (c) and (d) of section 4216 (relating chapter 51 is amended by inserting after section the Secretary. to partial payments) shall apply’’. 5363 the following new section: ‘‘(2) OVERPAYMENTS.—If any substance on (2) REQUIREMENT TO MODIFY REGULATIONS.— ‘‘SEC. 5364. WINE IMPORTED IN BULK. which tax was paid under this subchapter is Section 4052 is amended by adding at the end ‘‘Wine imported or brought into the United used by any person as a propellant in metered- the following new subsection: States in bulk containers may, under such regu- dose inhalers, credit or refund without interest ‘‘(g) REGULATIONS.—The Secretary shall pre- lations as the Secretary may prescribe, be with- shall be allowed to such person in an amount scribe regulations which permit, in lieu of any

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other certification, persons who are purchasing Subtitle C—Tax Court Procedures (b) EFFECTIVE DATE.—The amendment made articles taxable under this subchapter for resale SEC. 1251. OVERPAYMENT DETERMINATIONS OF by this section shall apply to proceedings com- or leasing in a long-term lease to execute a TAX COURT. menced after the date of the enactment of this statement (made under penalties of perjury) on (a) APPEAL OF ORDER.—Paragraph (2) of sec- Act. the sale invoice that such sale is for resale. The tion 6512(b) (relating to jurisdiction to enforce) SEC. 1254. PROCEEDINGS FOR DETERMINATION Secretary shall not impose any registration re- is amended by adding at the end the following OF EMPLOYMENT STATUS. quirement as a condition of using such proce- new sentence: ‘‘An order of the Tax Court dis- (a) IN GENERAL.—Subchapter B of chapter 76 dure.’’. posing of a motion under this paragraph shall (relating to proceedings by taxpayers and third (c) EFFECTIVE DATE.—The amendments made be reviewable in the same manner as a decision parties) is amended by redesignating section by this section shall take effect on January 1, of the Tax Court, but only with respect to the 7435 as section 7436 and by inserting after sec- 1998. matters determined in such order.’’. tion 7434 the following new section: SEC. 1235. SKYDIVING FLIGHTS EXEMPT FROM (b) DENIAL OF JURISDICTION REGARDING CER- ‘‘SEC. 7435. PROCEEDINGS FOR DETERMINATION TAX ON TRANSPORTATION OF PER- TAIN CREDITS AND REDUCTIONS.—Subsection (b) OF EMPLOYMENT STATUS. SONS BY AIR. of section 6512 (relating to overpayment deter- ‘‘(a) CREATION OF REMEDY.—If, in connection (a) IN GENERAL.—Section 4261 (relating to im- mined by Tax Court) is amended by adding at with an audit of any person, there is an actual position of tax on transportation of persons by the end the following new paragraph: controversy involving a determination by the air) is amended by redesignating subsection (h) ‘‘(4) DENIAL OF JURISDICTION REGARDING CER- Secretary as part of an examination that— as subsection (i) and by inserting after sub- TAIN CREDITS AND REDUCTIONS.—The Tax Court ‘‘(1) one or more individuals performing serv- section (g) the following new subsection: shall have no jurisdiction under this subsection ices for such person are employees of such per- ‘‘(h) EXEMPTION FOR SKYDIVING USES.—No to restrain or review any credit or reduction son for purposes of subtitle C, or tax shall be imposed by this section or section made by the Secretary under section 6402.’’. ‘‘(2) such person is not entitled to the treat- 4271 on any air transportation exclusively for (c) EFFECTIVE DATE.—The amendments made ment under subsection (a) of section 530 of the the purpose of skydiving.’’. by this section shall take effect on the date of Revenue Act of 1978 with respect to such an in- (b) EFFECTIVE DATE.—The amendment made the enactment of this Act. dividual, by subsection (a) shall apply to transportation SEC. 1252. REDETERMINATION OF INTEREST PUR- upon the filing of an appropriate pleading, the beginning after September 30, 1997. SUANT TO MOTION. Tax Court may determine whether such a deter- N ENERAL SEC. 1236. ALLOWANCE OR CREDIT OF REFUND (a) I G .—Subsection (c) of section mination by the Secretary is correct. Any such FOR TAX-PAID AVIATION FUEL PUR- 7481 (relating to jurisdiction over interest deter- determination by the Tax Court shall have the CHASED BY REGISTERED PRODUCER minations) is amended to read as follows: force and effect of a decision of the Tax Court OF AVIATION FUEL. ‘‘(c) JURISDICTION OVER INTEREST DETERMINA- and shall be reviewable as such. (a) IN GENERAL.—Subsection (l) of section 6467 TIONS.— ‘‘(b) LIMITATIONS.— (relating to nontaxable uses of diesel fuel and ‘‘(1) IN GENERAL.—Notwithstanding subsection ‘‘(1) PETITIONER.—A pleading may be filed aviation fuel) is amended by adding at the end (a), if, within 1 year after the date the decision under this section only by the person for whom the following new paragraph: of the Tax Court becomes final under subsection the services are performed. ‘‘(6) REFUND OF TAX-PAID AVIATION FUEL TO (a) in a case to which this subsection applies, ‘‘(2) TIME FOR FILING ACTION.—If the Sec- REGISTERED PRODUCER OF FUEL.—For purposes the taxpayer files a motion in the Tax Court for retary sends by certified or registered mail no- of this subsection, the term ‘nontaxable use’ in- a redetermination of the amount of interest in- tice to the petitioner of a determination by the cludes the taxable sale of aviation fuel by a pro- volved, then the Tax Court may reopen the case Secretary described in subsection (a), no pro- ducer of such fuel who is registered under sec- solely to determine whether the taxpayer has ceeding may be initiated under this section with tion 4101 if a prior tax imposed by section 4091 made an overpayment of such interest or the respect to such determination unless the plead- was paid (and not credited or refunded) on such Secretary has made an underpayment of such ing is filed before the 91st day after the date of fuel.’’. interest and the amount thereof. such mailing. ‘‘(2) CASES TO WHICH THIS SUBSECTION AP- (b) EFFECTIVE DATE.—The amendment made ‘‘(3) NO ADVERSE INFERENCE FROM TREATMENT PLIES.—This subsection shall apply where— by subsection (a) shall apply to sales by the pro- WHILE ACTION IS PENDING.—If, during the pend- ‘‘(A)(i) an assessment has been made by the ducer after September 30, 1997. ency of any proceeding brought under this sec- Secretary under section 6215 which includes in- tion, the petitioner changes his treatment for Subtitle B—Tax-Exempt Bond Provisions terest as imposed by this title, and employment tax purposes of any individual SEC. 1241. REPEAL OF $100,000 LIMITATION ON ‘‘(ii) the taxpayer has paid the entire amount whose employment status as an employee is in- UNSPENT PROCEEDS UNDER 1-YEAR of the deficiency plus interest claimed by the volved in such proceeding (or of any individual EXCEPTION FROM REBATE. Secretary, and holding a substantially similar position) to Subclause (I) of section 148(f)(4)(B)(ii) (relat- ‘‘(B) the Tax Court finds under section 6512(b) treatment as an employee, such change shall not ing to additional period for certain bonds) is that the taxpayer has made an overpayment. be taken into account in the Tax Court’s deter- amended by striking ‘‘the lesser of 5 percent of ‘‘(3) SPECIAL RULES.—If the Tax Court deter- the proceeds of the issue or $100,000’’ and insert- mines under this subsection that the taxpayer mination under this section. ing ‘‘5 percent of the proceeds of the issue’’. has made an overpayment of interest or that the ‘‘(c) SMALL CASE PROCEDURES.— Secretary has made an underpayment of inter- ‘‘(1) IN GENERAL.—At the option of the peti- SEC. 1242. EXCEPTION FROM REBATE FOR EARN- tioner, concurred in by the Tax Court or a divi- INGS ON BONA FIDE DEBT SERVICE est, then that determination shall be treated FUND UNDER CONSTRUCTION BOND under section 6512(b)(1) as a determination of sion thereof before the hearing of the case, pro- RULES. an overpayment of tax. An order of the Tax ceedings under this section may (notwith- Subparagraph (C) of section 148(f)(4) is Court redetermining interest, when entered standing the provisions of section 7453) be con- amended by adding at the end the following upon the records of the court, shall be review- ducted subject to the rules of evidence, practice, new clause: able in the same manner as a decision of the and procedure applicable under section 7463 if ‘‘(xvii) TREATMENT OF BONA FIDE DEBT SERV- Tax Court.’’. the amount of employment taxes placed in dis- ICE FUNDS.—If the spending requirements of (b) EFFECTIVE DATE.—The amendment made pute is $10,000 or less for each calendar quarter clause (ii) are met with respect to the available by this section shall take effect on the date of involved. construction proceeds of a construction issue, the enactment of this Act. ‘‘(2) FINALITY OF DECISIONS.—A decision en- tered in any proceeding conducted under this then paragraph (2) shall not apply to earnings SEC. 1253. APPLICATION OF NET WORTH RE- on a bona fide debt service fund for such QUIREMENT FOR AWARDS OF LITI- subsection shall not be reviewed in any other issue.’’. GATION COSTS. court and shall not be treated as a precedent for any other case not involving the same petitioner SEC. 1243. REPEAL OF DEBT SERVICE-BASED LIMI- (a) IN GENERAL.—Paragraph (4) of section TATION ON INVESTMENT IN CER- 7430(c) (defining prevailing party) is amended and the same determinations. TAIN NONPURPOSE INVESTMENTS. by adding at the end thereof the following new ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar Subsection (d) of section 148 (relating to spe- subparagraph: to the rules of the last sentence of subsection cial rules for reasonably required reserve or re- ‘‘(D) SPECIAL RULES FOR APPLYING NET WORTH (a), and subsections (c), (d), and (e), of section placement fund) is amended by striking para- REQUIREMENT.—In applying the requirements of 7463 shall apply to proceedings conducted under graph (3). section 2412(d)(2)(B) of title 28, United States this subsection. ‘‘(d) SPECIAL RULES.— SEC. 1244. REPEAL OF EXPIRED PROVISIONS. Code, for purposes of subparagraph (A)(iii) of this paragraph— ‘‘(1) RESTRICTIONS ON ASSESSMENT AND COL- (a) Paragraph (2) of section 148(c) is amended ‘‘(i) the net worth limitation in clause (i) of LECTION PENDING ACTION, ETC.—The principles by striking subparagraph (B) and by redesig- such section shall apply to— of subsections (a), (b), and (d) of section 6213, nating subparagraphs (C), (D), and (E) as sub- ‘‘(I) an estate but shall be determined as of section 6214(a), section 6215, section 6503(a), and paragraphs (B), (C), and (D), respectively. the date of the decedent’s death, and section 6512 shall apply to proceedings brought (b) Paragraph (4) of section 148(f) is amended ‘‘(II) a trust but shall be determined as of the under this section in the same manner as if the by striking subparagraph (E). last day of the taxable year involved in the pro- Secretary’s determination described in sub- SEC. 1245. EFFECTIVE DATE. ceeding, and section (a) were a notice of deficiency. The amendments made by this subtitle shall ‘‘(ii) individuals filing a joint return shall be ‘‘(2) AWARDING OF COSTS AND CERTAIN FEES.— apply to bonds issued after the date of the en- treated as separate individuals for purposes of Section 7430 shall apply to proceedings brought actment of this Act. clause (i) of such section.’’. under this section.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00190 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6859

‘‘(e) EMPLOYMENT TAX.—The term ‘employ- TITLE XIII—PENSION SIMPLIFICATION exceed the amount allowed under section 408 of ment tax’ means any tax imposed by subtitle SEC. 1301. MATCHING CONTRIBUTIONS OF SELF- the Internal Revenue Code of 1986 for the tax- C.’’. EMPLOYED INDIVIDUALS NOT able year. (b) CONFORMING AMENDMENTS.— TREATED AS ELECTIVE EMPLOYER (2) EMPLOYER PAYROLL DEDUCTIONS.— CONTRIBUTIONS. (A) IN GENERAL.—The system established (1) Subsection (d) of section 6511 is amended (a) IN GENERAL.—Section 402(g) (relating to under subsection (b) shall provide that an eligi- by adding at the end the following new para- limitation on exclusion for elective deferrals) is ble employee may establish and maintain an in- graph: amended by adding at the end the following: dividual retirement plan simply by— ‘‘(7) SPECIAL PERIOD OF LIMITATION WITH RE- ‘‘(9) MATCHING CONTRIBUTIONS ON BEHALF OF (i) completing a contribution certificate, and SPECT TO SELF-EMPLOYMENT TAX IN CERTAIN SELF-EMPLOYED INDIVIDUALS NOT TREATED AS (ii) submitting such certificate to the eligible CASES.—If— ELECTIVE EMPLOYER CONTRIBUTIONS.—Any employee’s employer in the manner provided ‘‘(A) the claim for credit or refund relates to matching contribution described in section under subparagraph (D). an overpayment of the tax imposed by chapter 2 401(m)(4)(A)) which is made on behalf of a self- (B) EASE OF ADMINISTRATION.—An eligible em- (relating to the tax on self-employment income) employed individual (as defined in section ployee establishing and maintaining an indi- attributable to Tax Court determination in a 401(c)) shall not be treated as an elective em- vidual retirement plan under subparagraph (A) proceeding under section 7435, and ployer contribution under a qualified cash or may change the amount of an employer payroll ‘‘(B) the allowance of a credit or refund of deferred arrangement (as defined in section deduction in the same manner as under sub- such overpayment is otherwise prevented by the 401(k)) for purposes of this title.’’. paragraph (A). operation of any law or rule of law other than (b) CONFORMING AMENDMENT FOR SIMPLE RE- (C) SIMPLIFIED CONTRIBUTION CERTIFICATE.— section 7122 (relating to compromises), TIREMENT ACCOUNTS.—Section 408(p) (relating The Secretary shall develop a model contribu- tion certificate for purposes of this paragraph such credit or refund may be allowed or made if to simple retirement accounts) is amended by which is written in a clear and easily under- claim therefor is filed on or before the last day adding at the end the following: standable manner. of the second year after the calendar year in ‘‘(8) MATCHING CONTRIBUTIONS ON BEHALF OF (D) USE OF CERTIFICATE.—Each employer which such determination becomes final.’’. SELF-EMPLOYED INDIVIDUALS NOT TREATED AS ELECTIVE EMPLOYER CONTRIBUTIONS.—Any electing to adopt a system under subsection (b) (2) Sections 7453 and 7481(b) are each amend- matching contribution described in paragraph shall, upon receipt of a contribution certificate ed by striking ‘‘section 7463’’ and inserting ‘‘sec- (2)(A)(iii) which is made on behalf of a self-em- from an eligible employee, deduct the appro- tion 7435(c) or 7463’’. ployed individual (as defined in section 401(c)) priate contribution as determined by such cer- (3) The table of sections for subchapter B of shall not be treated as an elective employer con- tificate from the employee’s wages in equal chapter 76 is amended by striking the last item tribution to a simple retirement account for pur- amounts during the remaining payroll periods and inserting the following: poses of this title.’’. for the taxable year and shall remit such (c) EFFECTIVE DATE.—The amendments made amounts for investment in the employee’s indi- ‘‘Sec. 7435. Proceedings for determination of em- by this section shall apply to years beginning vidual retirement plan not later than the close ployment status. after December 31, 1997. of the 30-day period following the last day of ‘‘Sec. 7436. Cross references.’’. SEC. 1302. CONTRIBUTIONS TO IRAS THROUGH the month in which such payroll period occurs. (E) FAILURE TO REMIT PAYROLL DEDUC- (c) EFFECTIVE DATE.—The amendments made PAYROLL DEDUCTIONS. TIONS.—For purposes of the Internal Revenue by this section shall take effect on the date of (a) DEFINITIONS.—For purposes of this sec- Code of 1986, any amount which an employer the enactment of this Act. tion: (1) CONTRIBUTION CERTIFICATE.—The term fails to remit on behalf of an eligible employee Subtitle D—Other Provisions ‘‘contribution certificate’’ means a certificate pursuant to a contribution certificate of such SEC. 1261. EXTENSION OF DUE DATE OF FIRST submitted by an eligible employee to the employ- employee shall not be allowed as a deduction to QUARTER ESTIMATED TAX PAYMENT ee’s employer which— the employer under such Code. BY PRIVATE FOUNDATIONS. (A) identifies the employee by name, address, SEC. 1303. PLANS NOT DISQUALIFIED MERELY BY ACCEPTING ROLLOVER CONTRIBU- (a) IN GENERAL.—Paragraph (3) of section and social security number, TIONS. 6655(g) is amended by adding at the end the fol- (B) includes a certification by the employee (a) IN GENERAL.—Section 401(a) (relating to lowing new sentence: ‘‘In the case of a private that the employee is an eligible employee, qualified pension, profit-sharing, and stock foundation, subsection (c)(2) shall be applied by (C) identifies the individual retirement plan to bonus plans) is amended by inserting after para- substituting ‘May 15’ for ‘April 15’.’’. which the employee wishes to make contribu- tions through payroll deductions, graph (34) the following: (b) EFFECTIVE DATE.—The amendment made (D) identifies the amount of such contribu- ‘‘(35) PLANS NOT DISQUALIFIED MERELY BY AC- by subsection (a) shall apply for purposes of de- tions, not to exceed the amount allowed under CEPTING ROLLOVER CONTRIBUTIONS.—A trust termining underpayments of estimated tax for section 408 of the Internal Revenue Code of 1986 which is part of a plan shall not fail to be a taxable years beginning after the date of the en- to an individual retirement plan for such year. qualified trust under this section solely because actment of this Act. (2) ELIGIBLE EMPLOYEE.— the plan accepts a contribution of an eligible SEC. 1262. CLARIFICATION OF AUTHORITY TO (A) IN GENERAL.—The term ‘‘eligible em- rollover distribution as described in section WITHHOLD PUERTO RICO INCOME ployee’’ means, with respect to any taxable 402(c)(4) from another plan without such a TAXES FROM SALARIES OF FEDERAL year, an employee whose employer does not qualified trust if, at the time of the transfer, the EMPLOYEES. sponsor a plan, contract, pension, account, or trustee of the other plan provided notice of the (a) IN GENERAL.—Subsection (c) of section trust described in section 219(g)(5) (A) or (B) of other plan’s intention to have such a qualified 5517 of title 5, United States Code, is amended the Internal Revenue Code of 1986. trust.’’. by striking ‘‘or territory or possession’’ and in- (B) EMPLOYEE.—The term ‘‘employee’’ does (b) EFFECTIVE DATE.—The amendment made serting ‘‘, territory, possession, or common- not include an employee as defined in section by this section shall apply to rollover contribu- wealth’’. 401(c)(1) of such Code. tions made after December 31, 1997. (b) EFFECTIVE DATE.—The amendment made (3) INDIVIDUAL RETIREMENT PLANS.—The term SEC. 1304. MODIFICATION OF PROHIBITION OF by subsection (a) shall take effect on January 1, ‘‘individual retirement plan’’ has the meaning ASSIGNMENT OR ALIENATION. 1998. given the term by section 7701(a)(37) of the In- (a) AMENDMENT TO ERISA.—Section 206(d) of ternal Revenue Code of 1986. the Employee Retirement Income Security Act of SEC. 1263. CERTAIN NOTICES DISREGARDED (4) SECRETARY.—The term ‘‘Secretary’’ means 1974 (29 U.S.C. 1056(d)) is amended by adding at UNDER PROVISION INCREASING IN- TEREST RATE ON LARGE COR- the Secretary of the Treasury. the end the following: PORATE UNDERPAYMENTS. (b) ESTABLISHMENT OF PAYROLL DEDUCTION ‘‘(4) Paragraph (1) shall not apply to any off- SYSTEM.—An employer may establish a system set of a participant’s accrued benefit in an em- (a) GENERAL RULE.—Subparagraph (B) of sec- under which eligible employees, through em- ployee pension benefit plan against an amount tion 6621(c)(2) (defining applicable date) is ployer payroll deductions, may make contribu- that the participant is ordered or required to amended by adding at the end the following tions to individual retirement plans. An em- pay to the plan if— new clause: ployer shall not incur any liability under title I ‘‘(A) the order or requirement to pay arises— ‘‘(iii) EXCEPTION FOR LETTERS OR NOTICES IN- of the Employee Retirement Income Security Act ‘‘(i) under a judgment of conviction for a VOLVING SMALL AMOUNTS.—For purposes of this of 1974 in providing for such a system. crime involving such plan, paragraph, any letter or notice shall be dis- (c) CONTRIBUTIONS TO INDIVIDUAL RETIRE- ‘‘(ii) under a civil judgment (including a con- regarded if the amount of the deficiency or pro- MENT PLANS.— sent order or decree) entered by a court in an posed deficiency (or the assessment or proposed (1) IN GENERAL.—The system established action brought in connection with a violation assessment) set forth in such letter or notice is under subsection (b) shall provide that contribu- (or alleged violation) of part 4 of this subtitle, or not greater than $100,000 (determined by not tions made to an individual retirement plan for ‘‘(iii) pursuant to a settlement agreement be- taking into account any interest, penalties, or any taxable year are— tween the Secretary and the participant, or a additions to tax).’’. (A) contributions through employer payroll settlement agreement between the Pension Ben- (b) EFFECTIVE DATE.—The amendment made deductions, and efit Guaranty Corporation and the participant, by subsection (a) shall apply for purposes of de- (B) if the employer so elects, additional con- in connection with a violation (or alleged viola- termining interest for periods after December 31, tributions by the employee which, when added tion) of part 4 of this subtitle by a fiduciary or 1997. to contributions under subparagraph (A), do not any other person,

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00191 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6860 CONGRESSIONAL RECORD — SENATE June 27, 1997 ‘‘(B) the judgment, order, decree, or settlement ‘‘(III) in such judgment, order, decree, or set- limited to, the latest summary plan description agreement expressly provides for the offset of all tlement, such spouse retains the right to receive (including any summaries of plan changes not or part of the amount ordered or required to be the value of the survivor annuity under a quali- contained in the summary plan description), paid to the plan against the participant’s ac- fied joint and survivor annuity provided pursu- and the bargaining agreement, trust agreement, crued benefit in the plan, and ant to section 401(a)(11)(A)(i) and under a contract, or other instrument under which the ‘‘(C) if the participant has a spouse at the qualified preretirement survivor annuity pro- plan is established or operated.’’. time at which the offset is to be made— vided pursuant to section 401(a)(11)(A)(ii), de- (B) PENALTY.—Section 502(c) of such Act (29 ‘‘(i) such spouse has consented in writing to termined in accordance with subparagraph (D). U.S.C. 1132(c)) is amended by redesignating such offset and such consent is witnessed by a A plan shall not be treated as failing to meet the paragraph (6) as paragraph (7) and by inserting notary public or representative of the plan, requirements of this subsection, subsection (k), after paragraph (5) the following: ‘‘(ii) such spouse is ordered or required in section 403(b), or section 409(d) solely by reason ‘‘(6) If, within 30 days of a request by the Sec- such judgment, order, decree, or settlement to of an offset described in this subparagraph. retary to a plan administrator for documents pay an amount to the plan in connection with ‘‘(D) VALUATION OF SURVIVOR ANNUITY.— under section 104(a)(6), the plan administrator a violation of part 4 of this subtitle, or ‘‘(i) IN GENERAL.—The value of the survivor fails to furnish the material requested to the ‘‘(iii) in such judgment, order, decree, or set- annuity described in subparagraph (C)(iii)(III) Secretary, the Secretary may assess a civil pen- tlement, such spouse retains the right to receive shall be determined as if— alty against the plan administrator of up to $100 the value of the survivor annuity under a quali- ‘‘(I) the participant terminated employment a day from the date of such failure (but in no fied joint and survivor annuity provided pursu- on the date of the offset, event in excess of $1,000 per request). No penalty ant to section 205(a)(1) and under a qualified ‘‘(II) there was no offset, shall be imposed under this paragraph for any preretirement survivor annuity provided pursu- ‘‘(III) the plan permitted retirement only on or failure resulting from matters reasonably be- ant to section 205(a)(2), determined in accord- after normal retirement age, yond the control of the plan administrator.’’. ance with paragraph (5). ‘‘(IV) the plan provided only the minimum-re- (d) CONFORMING AMENDMENTS.— A plan shall not be treated as failing to meet the quired qualified joint and survivor annuity, and (1) Section 104(b)(1) of the Employee Retire- requirements of section 205 solely by reason of ‘‘(V) the amount of the qualified preretirement ment Income Security Act of 1974 (29 U.S.C. an offset under this paragraph. survivor annuity under the plan is equal to the 1024(b)(1)) is amended by striking ‘‘section ‘‘(5)(A) The value of the survivor annuity de- amount of the survivor annuity payable under 102(a)(1)’’ each place it appears and inserting scribed in paragraph (4)(C)(iii) shall be deter- the minimum-required qualified joint and sur- ‘‘section 102(a)’’. mined as if— vivor annuity. (2) Section 104(b)(2) of such Act (29 U.S.C. ‘‘(i) the participant terminated employment on ‘‘(ii) DEFINITION.—For purposes of this sub- 1024(b)(2)) is amended by striking ‘‘the plan de- the date of the offset, paragraph, the term ‘minimum-required quali- scription and’’ and inserting ‘‘the latest up- ‘‘(ii) there was no offset, fied joint and survivor annuity’ means the dated summary plan description and’’. ‘‘(iii) the plan permitted retirement only on or qualified joint and survivor annuity which is (3) Section 104(b)(4) of such Act (29 U.S.C. after normal retirement age, the actuarial equivalent of a single annuity for 1024(b)(4)) is amended by striking ‘‘plan descrip- ‘‘(iv) the plan provided only the minimum-re- the life of the participant and under which the tion’’. quired qualified joint and survivor annuity, and ‘‘(v) the amount of the qualified preretirement survivor annuity is 50 percent of the amount of (4) Section 106(a) of such Act (29 U.S.C. survivor annuity under the plan is equal to the the annuity which is payable during the joint 1026(a)) is amended by striking ‘‘descriptions,’’. (5) Section 107 of such Act (29 U.S.C. 1027) is amount of the survivor annuity payable under lives of the participant and the spouse.’’. (c) EFFECTIVE DATE.—The amendments made amended by striking ‘‘description or’’. the minimum-required qualified joint and sur- by this section shall apply to judgments, orders, (6) Paragraph (2)(B) of section 108 of such Act vivor annuity. ‘‘(B) For purposes of this paragraph, the term and decrees issued, and settlement agreements (29 U.S.C. 1028) is amended to read as follows: ‘minimum-required qualified joint and survivor entered into, on or after the date of the enact- ‘‘(B) after publishing or filing the annual re- annuity’ means the qualified joint and survivor ment of this Act. ports,’’. (7) Section 502(a)(6) of such Act (29 U.S.C. annuity which is the actuarial equivalent of a SEC. 1305. ELIMINATION OF PAPERWORK BUR- 1132(a)(6)) is amended by striking ‘‘or (5)’’ and single annuity for the life of the participant and DENS ON PLANS. inserting ‘‘(5), or (6)’’. under which the survivor annuity is 50 percent (a) ELIMINATION OF UNNECESSARY FILING RE- (e) TECHNICAL CORRECTION.—Section 1144(c) of the amount of the annuity which is payable QUIREMENTS.—Section 101(b) of the Employee of the Social Security Act (42 U.S.C. 1320b–14(c)) during the joint lives of the participant and the Retirement Income Security Act of 1974 (29 is amended by redesignating paragraph (9) as spouse.’’. U.S.C. 1021(b)) is amended by striking para- paragraph (8). (b) AMENDMENT TO 1986 CODE.—Section graphs (1), (2), and (3) and by redesignating 401(a)(13) (relating to assignment and alien- paragraphs (4) and (5) as paragraphs (1) and SEC. 1306. MODIFICATION OF 403(b) EXCLUSION ation) is made by adding at the end the fol- (2), respectively. ALLOWANCE TO CONFORM TO 415 MODIFICATIONS. lowing: (b) ELIMINATION OF PLAN DESCRIPTION.— (a) DEFINITION OF COMPENSATION.— ‘‘(C) SPECIAL RULE FOR CERTAIN JUDGMENTS (1) IN GENERAL.—Section 102(a) of the Em- (1) IN GENERAL.—Section 403(b)(3) (defining AND SETTLEMENTS.—Subparagraph (A) shall not ployee Retirement Income Security Act of 1974 includible compensation) is amended by adding apply to any offset of a participant’s accrued (29 U.S.C. 1022(a)) is amended— at the end the following: ‘‘Such term includes— benefit in an employee pension benefit plan (A) by striking paragraph (2), and ‘‘(A) any elective deferral (as defined in sec- against an amount that the participant is or- (B) by striking ‘‘(a)(1)’’ and inserting ‘‘(a)’’. tion 402(g)(3)), and dered or required to pay to the plan if— (2) CONFORMING AMENDMENTS.— ‘‘(B) any amount which is contributed or de- ‘‘(i) the order or requirement to pay arises— (A) Section 102(b) of such Act (29 U.S.C. ‘‘(I) under a judgment of conviction for a 1022(b)) is amended by striking ‘‘The plan de- ferred by the employer at the election of the em- crime involving such plan, scription and summary plan description shall ployee and which is not includible in the gross ‘‘(II) under a civil judgment (including a con- contain’’ and inserting ‘‘The summary plan de- income of the employee by reason of section 125 sent order or decree) entered by a court in an scription shall contain’’. or 457.’’. action brought in connection with a violation (B) The heading for section 102 of such Act is (2) EFFECTIVE DATE.—The amendment made (or alleged violation) of part 4 of subtitle B of amended by striking ‘‘PLAN DESCRIPTION AND’’. by this subsection shall apply to years begin- title I of the Employee Retirement Income Secu- (c) FURNISHING OF REPORTS.— ning after December 31, 1997. rity Act of 1974, or (1) IN GENERAL.—Section 104(a)(1) of the Em- (b) REPEAL OF RULES IN SECTION 415(e).—The ‘‘(III) pursuant to a settlement agreement be- ployee Retirement Income Security Act of 1974 Secretary of the Treasury shall modify the regu- tween the Secretary and the participant, or a (29 U.S.C. 1024(a)(1)) is amended to read as fol- lations regarding the exclusion allowance under settlement agreement between the Pension Ben- lows: section 403(b)(2) of the Internal Revenue Code of efit Guaranty Corporation and the participant, ‘‘SEC. 104. (a)(1) The administrator of any em- 1986 to reflect the amendment made by section in connection with a violation (or alleged viola- ployee benefit plan subject to this part shall file 1452(a) of the Small Business Job Protection Act tion) of part 4 of such subtitle by a fiduciary or with the Secretary the annual report for a plan of 1996. Such modification shall take effect for any other person, year within 210 days after the close of such year limitation years beginning after December 31, ‘‘(ii) the judgment, order, decree, or settlement (or within such time as may be required by regu- 1999. agreement expressly provides for the offset of all lations promulgated by the Secretary in order to SEC. 1307. NEW TECHNOLOGIES IN RETIREMENT or part of the amount ordered or required to be reduce duplicative filing). The Secretary shall PLANS. paid to the plan against the participant’s ac- make copies of such annual reports available for (a) IN GENERAL.—Not later than December 31, crued benefit in the plan, and inspection in the public document room of the 1998, the Secretary of the Treasury and the Sec- ‘‘(iii) if the participant has a spouse at the Department of Labor.’’. retary of Labor shall each issue guidance which time at which the offset is to be made— (2) SECRETARY MAY REQUEST DOCUMENTS.— is designed to— ‘‘(I) such spouse has consented in writing to (A) IN GENERAL.—Section 104(a) of such Act (1) interpret the notice, election, consent, dis- such offset and such consent is witnessed by a (29 U.S.C. 1024(a)) is amended by adding at the closure, and time requirements (and related rec- notary public or representative of the plan, end the following: ordkeeping requirements) under the Internal ‘‘(II) such spouse is ordered or required in ‘‘(6) The administrator of any employee ben- Revenue Code of 1986 and the Employee Retire- such judgment, order, decree, or settlement to efit plan subject to this part shall furnish to the ment Income Security Act of 1974 relating to re- pay an amount to the plan in connection with Secretary, upon request, any documents relating tirement plans as applied to the use of new tech- a violation of part 4 of such subtitle, or to the employee benefit plan, including but not nologies by plan sponsors and administrators

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00192 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6861 while maintaining the protection of the rights of SEC. 1309. CLARIFICATION OF CERTAIN RULES the transition rules described in paragraph (2) participants and beneficiaries, and RELATING TO EMPLOYEE STOCK shall apply for any plan year beginning after (2) clarify the extent to which writing require- OWNERSHIP PLANS OF S CORPORA- 1996 and before 2010. TIONS. ments under the Internal Revenue Code of 1986 ‘‘(2) TRANSITION RULES.—The transition rules (a) CERTAIN CASH DISTRIBUTIONS PER- relating to retirement plans shall be interpreted described in this paragraph are as follows: MITTED.— to permit paperless transactions. (1) Paragraph (2) of section 409(h) is amended ‘‘(A) For purposes of section 412(l)(9)(A) of the (b) APPLICABILITY OF FINAL REGULATIONS.— by adding at the end the following new sub- Internal Revenue Code of 1986 and section Final regulations applicable to the guidance re- paragraph: 302(d)(9)(A) of the Employee Retirement Income garding new technologies described in sub- ‘‘(B) PLAN MAINTAINED BY S CORPORATION.— Security Act of 1974— section (a) shall not be effective until the first In the case of a plan established and main- ‘‘(i) the funded current liability percentage for plan year beginning at least 6 months after the tained by an S corporation which otherwise any plan year beginning after 1996 and before issuance of such final regulations. meets the requirements of this subsection or sec- 2005 shall be treated as not less than 90 percent SEC. 1308. EXTENSION OF MORATORIUM ON AP- tion 4975(e)(7), such plan shall not be treated as if for such plan year the funded current liability PLICATION OF CERTAIN NON- failing to meet the requirements of this sub- percentage is at least 85 percent, and DISCRIMINATION RULES TO STATE section or section 401(a) merely because it does ‘‘(ii) the funded current liability percentage AND LOCAL GOVERNMENTS. not permit a participant to exercise the right de- for any plan year beginning after 2004 and be- (a) GENERAL NONDISCRIMINATION AND PAR- scribed in paragraph (1)(A) if such plan pro- fore 2010 shall be treated as not less than 90 per- TICIPATION RULES.— vides that the participant entitled to a distribu- cent if for such plan year the funded current li- (1) NONDISCRIMINATION REQUIREMENTS.—Sec- tion has a right to receive the distribution in ability percentage satisfies the minimum per- tion 401(a)(5) (relating to qualified pension, cash.’’. centage determined according to the following profit-sharing, and stock bonus plans) is amend- (2) Paragraph (2) of section 409(h) is amend- table: ed by adding at the end the following: ed— ‘‘In the case of a plan The minimum ‘‘(G) GOVERNMENTAL PLANS.—Paragraphs (3) (A) by striking ‘‘a plan which’’ in the first year beginning in: percentage is: and (4) shall not apply to a governmental plan sentence and inserting the following: 2005 ...... 86 percent (within the meaning of section 414(d)).’’. ‘‘(A) IN GENERAL.—A plan which’’, and 2006 ...... 87 percent (B) by moving the text before subparagraph 2007 ...... 88 percent (2) ADDITIONAL PARTICIPATION REQUIRE- (B) 2 ems to the right. MENTS .—Section 401(a)(26)(H) (relating to addi- (b) CERTAIN SHAREHOLDER-EMPLOYEES NOT 2008 ...... 89 percent tional participation requirements) is amended to TREATED AS OWNER-EMPLOYEES.— 2009 and thereafter ..... 90 percent. read as follows: (1) AMENDMENT TO 1986 CODE.—The last sen- ‘‘(B) Sections 412(c)(7)(E)(i)(I) of such Code ‘‘(H) EXCEPTION FOR GOVERNMENTAL PLANS.— tence of section 4975(d) is amended by inserting and 302(c)(7)(E)(i)(I) of such Act shall be ap- This paragraph shall not apply to a govern- ‘‘, except that this sentence shall not apply for plied— mental plan (within the meaning of section purposes of any sale of stock by such a share- ‘‘(i) by substituting ‘85 percent’ for ‘90 per- 414(d)).’’. holder-employee to an employee stock ownership cent’ for plan years beginning after 1996 and be- (3) MINIMUM PARTICIPATION STANDARDS.—Sec- plan (as defined in subsection (e)(7))’’ after fore 2005, and tion 410(c)(2) (relating to application of partici- ‘‘owner-employee’’. ‘‘(ii) by substituting the minimum percentage pation standards to certain plans) is amended to (2) AMENDMENT TO ERISA.—The last sentence specified in the table contained in subparagraph read as follows: of section 408(d) of the Employee Retirement In- (A)(ii) for ‘90 percent’ for plan years beginning ‘‘(2) A plan described in paragraph (1) shall come Security Act of 1974 (29 U.S.C. 1108(d)) is after 2004 and before 2010. be treated as meeting the requirements of this amended by inserting ‘‘, except that this sen- ‘‘(C) In the event the funded current liability section for purposes of section 401(a), except tence shall not apply for purposes of any sale of percentage of a plan is less than 85 percent for that in the case of a plan described in subpara- stock by such a shareholder-employee to an em- any plan year beginning after 1996 and before graph (B), (C), or (D) of paragraph (1), this ployee stock ownership plan (as defined in sec- 2005, the transition rules under subparagraphs paragraph shall only apply if such plan meets tion 4975(e)(7) of the Internal Revenue Code of (A) and (B) shall continue to apply to the plan the requirements of section 401(a)(3) (as in effect 1986)’’ after ‘‘owner-employee’’. if contributions for such a plan year are made on September 1, 1974).’’. (c) EFFECTIVE DATE.—The amendments made to the plan in an amount equal to the lesser of— (b) PARTICIPATION STANDARDS FOR QUALIFIED by this section shall apply to taxable years be- ‘‘(i) the amount necessary to result in a fund- CASH OR DEFERRED ARRANGEMENTS.— ginning after December 31, 1997. ed current liability percentage of 85 percent, or (1) IN GENERAL.—Section 401(k)(3) (relating to SEC. 1310. MODIFICATION OF 10 PERCENT TAX ‘‘(ii) the greater of— application of participation and discrimination FOR NONDEDUCTIBLE CONTRIBU- TIONS. ‘‘(I) 2 percent of the plan’s current liability as standards) is amended by adding at the end the of the beginning of such plan year, or (a) IN GENERAL.—Section 4972(c)(6)(B) (relat- following: ing to exceptions) is amended to read as follows: ‘‘(II) the amount necessary to result in a ‘‘(G) The requirements of subparagraph (A)(i) ‘‘(B) so much of the contributions to 1 or more funded current liability percentage of 80 percent and (C) shall not apply to a governmental plan defined contribution plans which are not de- as of the end of such plan year. (within the meaning of section 414(d)).’’. ductible when contributed solely because of sec- For the plan year beginning in 2005 and for the (2) MATCHING CONTRIBUTIONS.—Section tion 404(a)(7) as does not exceed the greater of— 3 succeeding plan years, the transition rules 401(m)(2) is amended by adding at the end the ‘‘(i) the amount of contributions not in excess under subparagraphs (A) and (B) shall continue following new subparagraph: of 6 percent of compensation (within the mean- to apply to the plan for such plan year only if ‘‘(C) SPECIAL RULE FOR GOVERNMENTAL ing of section 404(a)) paid or accrued (during contributions to the plan equal at least the ex- PLANS.—A defined contribution plan which is a the taxable year for which the contributions pected increase in current liability due to bene- governmental plan (as defined in section 414(d)) were made) to beneficiaries under the plans, or fits accruing during such plan year.’’. shall be treated as meeting the requirements of ‘‘(ii) the sum of— (b) EFFECTIVE DATE.—The amendment made this paragraph.’’. ‘‘(I) the amount of contributions described in by this section shall apply to contributions due (c) NONDISCRIMINATION RULES FOR SECTION section 401(m)(4)(A), plus after December 31, 1997. 403(b) PLANS.—Section 403(b)(12) (relating to ‘‘(II) the amount of contributions described in TITLE XIV—TECHNICAL AMENDMENTS RE- nondiscrimination requirements) is amended by section 402(g)(3)(A).’’. LATED TO SMALL BUSINESS JOB PRO- (b) EFFECTIVE DATE.—The amendments made adding at the end the following: TECTION ACT OF 1996 AND OTHER LEG- by this section shall apply to taxable years be- ‘‘(C) GOVERNMENTAL PLANS.—For purposes of ISLATION ginning after December 31, 1997. paragraph (1)(D), the requirements of subpara- SEC. 1401. AMENDMENTS RELATED TO SMALL graph (A)(i) (other than those relating to sec- SEC. 1311. MODIFICATION OF FUNDING REQUIRE- MENTS FOR CERTAIN PLANS. BUSINESS JOB PROTECTION ACT OF tion 401(a)(17)) shall not apply to a govern- 1996. (a) FUNDING RULES FOR CERTAIN PLANS.—Sec- mental plan (within the meaning of section (a) AMENDMENTS RELATED TO SUBTITLE A.— 414(d)).’’. tion 769 of the Retirement Protection Act of 1994 is amended by adding at the end the following (1) AMENDMENT RELATED TO SECTION 1116.— (d) EFFECTIVE DATE.— new subsection: Paragraph (1) of section 6050R(c) is amended by (1) IN GENERAL.—The amendments made by ‘‘(c) TRANSITION RULES FOR CERTAIN PLANS.— striking ‘‘name and address’’ and inserting this section apply to taxable years beginning on ‘‘(1) IN GENERAL.—In the case of a plan that— ‘‘name, address, and phone number of the infor- or after the date of enactment of this Act. ‘‘(A) was not required to pay a variable rate mation contact’’. (2) TREATMENT FOR YEARS BEGINNING BEFORE premium for the plan year beginning in 1996; (2) AMENDMENT TO SECTION 1116.—Paragraphs DATE OF ENACTMENT.—A governmental plan ‘‘(B) has not, in any plan year beginning (1) and (2)(C) of section 1116(b) of the Small (within the meaning of section 414(d) of the In- after 1995 and before 2009, merged with another Business Job Protection Act of 1996 shall each ternal Revenue Code of 1986) shall be treated as plan (other than a plan sponsored by an em- be applied as if the reference to chapter 68 were satisfying the requirements of sections 401(a)(3), ployer that was in 1996 within the controlled a reference to chapter 61. 401(a)(4), 401(a)(26), 401(k), 401(m), 403 (b)(1)(D) group of the plan sponsor); and (b) AMENDMENT RELATED TO SUBTITLE B.— and (b)(12), and 410 of such Code for all taxable ‘‘(C) is sponsored by a company that is en- Subsection (c) of section 52 is amended by strik- years beginning before the date of enactment of gaged primarily in the interurban or interstate ing ‘‘targeted jobs credit’’ and inserting ‘‘work this Act. passenger bus service, opportunity credit’’.

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(c) AMENDMENTS RELATED TO SUBTITLE C.— ‘‘(iii) GRACE PERIOD.—In the case of an em- at the end of clause (ii), and by adding at the (1) AMENDMENT RELATED TO SECTION 1302.— ployer who establishes and maintains a plan end the following new clause: Subparagraph (B) of section 1361(e)(1) is amend- under this subsection for 1 or more years and ‘‘(iii) for the minister described in section ed by striking ‘‘and’’ at the end of clause (i), who fails to meet any requirement of this sub- 415(e)(5)(A) by the minister or by an employer,’’. striking the period at the end of clause (ii) and section for any subsequent year due to any ac- (5) AMENDMENT RELATED TO SECTION 1462.— inserting ‘‘, and’’, and adding at the end the quisition, disposition, or similar transaction in- The paragraph (7) of section 414(q) added by following new clause: volving another such employer, rules similar to section 1462 of the Small Business Job Protection ‘‘(iii) any charitable remainder annuity trust the rules of section 410(b)(6)(C) shall apply for Act of 1996 is redesignated as paragraph (9). or charitable remainder unitrust (as defined in purposes of this subparagraph.’’. (6) CLARIFICATION OF SECTION 1450.— section 664(d)).’’. (G) Paragraph (5) of section 408(p) is amended (A) Section 403(b)(11) of the Internal Revenue (2) EFFECTIVE DATE FOR SECTION 1307.— in the text preceding subparagraph (A) by strik- Code of 1986 shall not apply with respect to a (A) Notwithstanding section 1317 of the Small ing ‘‘simplified’’ and inserting ‘‘simple’’. distribution from a contract described in section Business Job Protection Act of 1996, the amend- (2) AMENDMENTS RELATED TO SECTION 1422.— 1450(b)(1) of such Act to the extent that such ments made by subsections (a) and (b) of section (A) Clause (ii) of section 401(k)(11)(D) is distribution is not includible in income by rea- 1307 of such Act shall apply to determinations amended by striking the period and inserting ‘‘if son of section 403(b)(8) of such Code (determined made after December 31, 1996. such plan allows only contributions required after the application of section 1450(b)(2) of (B) In no event shall the 120-day period re- under this paragraph.’’. such Act). ferred to in section 1377(b)(1)(B) of the Internal (B) Paragraph (11) of section 401(k) is amend- (B) This paragraph shall apply as if included Revenue Code of 1986 (as added by such section ed by adding at the end the following new sub- in section 1450 of the Small Business Job Protec- 1307) expire before the end of the 120-day period paragraph: tion Act of 1996. (e) AMENDMENT RELATED TO SUBTITLE E.— beginning on the date of the enactment of this ‘‘(E) COST-OF-LIVING ADJUSTMENT.—The Sec- Act. retary shall adjust the $6,000 amount under sub- Subparagraph (A) of section 956(b)(1) is amend- (3) AMENDMENT RELATED TO SECTION 1308.— paragraph (B)(i)(I) at the same time and in the ed by inserting ‘‘to the extent such amount was Subparagraph (A) of section 1361(b)(3) is amend- same manner as under section 408(p)(2)(E).’’. accumulated in prior taxable years’’ after ‘‘sec- ed by striking ‘‘For purposes of this title’’ and (C) Subparagraph (A) of section 404(a)(3) is tion 316(a)(1)’’. (f) AMENDMENTS RELATED TO SUBTITLE F.— inserting ‘‘Except as provided in regulations amended— (1) AMENDMENTS RELATED TO SECTION 1601.— prescribed by the Secretary, for purposes of this (i) in clause (i), by striking ‘‘not in excess of’’ title’’. (A) The heading of section 30A is amended to and all that follows and inserting the following: read as follows: (4) AMENDMENTS RELATED TO SECTION 1316.— ‘‘not in excess of the greater of— ‘‘SEC. 30A. PUERTO RICO ECONOMIC ACTIVITY (A) Paragraph (2) of section 512(e) is amended ‘‘(I) 15 percent of the compensation otherwise by striking ‘‘within the meaning of section 1012’’ CREDIT.’’. paid or accrued during the taxable year to the (B) The table of sections for subpart B of part and inserting ‘‘as defined in section beneficiaries under the stock bonus or profit- 1361(e)(1)(C)’’. IV of subchapter A of chapter 1 is amended in sharing plan, or the item relating to section 30A by striking (B) Paragraph (7) of section 1361(c) is redesig- ‘‘(II) the amount such employer is required to nated as paragraph (6). ‘‘Puerto Rican’’ and inserting ‘‘Puerto Rico’’. contribute to such trust under section 401(k)(11) (C) Paragraph (1) of section 55(c) is amended (C) Subparagraph (B) of section 1361(b)(1) is for such year.’’, and amended by striking ‘‘subsection (c)(7)’’ and in- by striking ‘‘Puerto Rican’’ and inserting (ii) in clause (ii), by striking ‘‘15 percent’’ and ‘‘Puerto Rico’’. serting ‘‘subsection (c)(6)’’. all that follows and inserting the following ‘‘the (D) Paragraph (1) of section 512(e) is amended (2) AMENDMENTS RELATED TO SECTION 1606.— amount described in subclause (I) or (II) of by striking ‘‘section 1361(c)(7)’’ and inserting (A) Clause (ii) of section 9503(c)(2)(A) is clause (i), whichever is greater, with respect to ‘‘section 1361(e)(6)’’. amended by striking ‘‘(or with respect to quali- such taxable year.’’. (d) AMENDMENTS RELATED TO SUBTITLE D.— fied diesel-powered highway vehicles purchased (D) Subparagraph (B) of section 401(k)(11) is (1) AMENDMENTS RELATED TO SECTION 1421.— before January 1, 1999)’’. (A) Subsection (i) of section 408 is amended in amended by adding at the end the following (B) Subparagraph (A) of section 9503(e)(5) is the last sentence by striking ‘‘30 days’’ and in- new clause: amended by striking ‘‘; except that’’ and all serting ‘‘31 days’’. ‘‘(iii) ADMINISTRATIVE REQUIREMENTS.— that follows and inserting a period. (B) Subparagraph (H) of section 408(k)(6) is ‘‘(I) IN GENERAL.—Rules similar to the rules of (3) AMENDMENTS RELATED TO SECTION 1607.— amended by striking ‘‘if the terms of such pen- subparagraphs (B) and (C) of section 408(p)(5) (A) Subsection (f) of section 4001 (relating to sion’’ and inserting ‘‘of an employer if the terms shall apply for purposes of this subparagraph. phasedown of tax on luxury passenger auto- of simplified employee pensions of such em- ‘‘(II) NOTICE OF ELECTION PERIOD.—The re- mobiles) is amended— ployer’’. quirements of this subparagraph shall not be (i) by inserting ‘‘and section 4003(a)’’ after (C)(i) Subparagraph (B) of section 408(l)(2) is treated as met with respect to any year unless ‘‘subsection (a)’’, and amended— the employer notifies each employee eligible to (ii) by inserting ‘‘, each place it appears,’’ be- (I) by inserting ‘‘and the issuer of an annuity participate, within a reasonable period of time fore ‘‘the percentage’’. (B) Subsection (g) of section 4001 (relating to established under such an arrangement’’ after before the 60th day before the beginning of such termination) is amended by striking ‘‘tax im- ‘‘under subsection (p)’’, and year (and, for the first year the employee is so (II) in clause (i), by inserting ‘‘or issuer’’ after eligible, the 60th day before the first day such posed by this section’’ and inserting ‘‘taxes im- ‘‘trustee’’. employee is so eligible), of the rules similar to posed by this section and section 4003’’ and by (ii) Paragraph (2) of section 6693(c) is amend- the rules of section 408(p)(5)(C) which apply by striking ‘‘or use’’ and inserting ‘‘, use, or instal- ed— reason of subclause (I).’’. lation’’. (I) by inserting ‘‘or issuer’’ after ‘‘trustee’’, (3) AMENDMENT RELATED TO SECTION 1433.— (4) AMENDMENTS RELATED TO SECTION 1609.— (A) Subsection (l) of section 4041 is amended— and The heading of paragraph (11) of section 401(m) (i) by inserting ‘‘or a fixed-wing aircraft’’ (II) in the heading, by inserting ‘‘AND ISSUER’’ is amended by striking ‘‘ALTERNATIVE’’ and in- after ‘‘helicopter’’, and after ‘‘trustee’’. serting ‘‘ADDITIONAL ALTERNATIVE’’. (ii) in the heading, by striking ‘‘HELICOPTER’’. (4) AMENDMENTS RELATED TO SECTION 1461.— (D) Subsection (p) of section 408 is amended (B) The last sentence of section 4041(a)(2) is (A) Section 415(e)(5)(A) is amended to read as by adding at the end the following new para- amended by striking ‘‘section 4081(a)(2)(A)’’ and follows: graph: inserting ‘‘section 4081(a)(2)(A)(i)’’. ‘‘(8) COORDINATION WITH MAXIMUM LIMITA- ‘‘(A) CERTAIN MINISTERS MAY PARTICIPATE.— (C) Subsection (b) of section 4092 is amended TION UNDER SUBSECTION (a).—In the case of any For purposes of this part— by striking ‘‘section 4041(c)(4)’’ and inserting simple retirement account, subsections (a)(1) ‘‘(i) IN GENERAL.—A duly ordained, commis- ‘‘section 4041(c)(2)’’. and (b)(2) shall be applied by substituting ‘the sioned, or licensed minister of a church is de- (D) Subsection (g) of section 4261 (as redesig- sum of the dollar amount in effect under para- scribed in paragraph (3)(B) if, in connection nated by title X) is amended by inserting ‘‘on graph (2)(A)(ii) of this subsection and the em- with the exercise of their ministry, the min- that flight’’ after ‘‘dedicated’’. ployer contribution required under subpara- ister— (E) Paragraph (1) of section 1609(h) of such graph (A)(iii) or (B)(i) of paragraph (2) of this ‘‘(I) is a self-employed individual (within the Act is amended by striking ‘‘paragraph subsection, whichever is applicable’ for meaning of section 401(c)(1)(B), or (3)(A)(i)’’ and inserting ‘‘paragraph (3)(A)’’. ‘$2,000’.’’. ‘‘(II) is employed by an organization other (F) Paragraph (4) of section 1609(h) of such (E) Clause (i) of section 408(p)(2)(D) is amend- than an organization which is described in sec- Act is amended by inserting before the period ed by adding at the end the following new sen- tion 501(c)(3) and with respect to which the min- ‘‘or exclusively for the use described in section tence: ‘‘If only individuals other than employees ister shares common religious bonds. 4092(b) of such Code’’. described in subparagraph (A) or (B) of section ‘‘(ii) TREATMENT AS EMPLOYER AND EM- (5) AMENDMENTS RELATED TO SECTION 1616.— 410(b)(3) are eligible to participate in such ar- PLOYEE.—For purposes of sections 403(b)(1)(A) (A) Subparagraph (A) of section 593(e)(1) is rangement, then the preceding sentence shall be and 404(a)(10), a minister described in clause amended by inserting ‘‘(and, in the case of an S applied without regard to any qualified plan in (i)(I) shall be treated as employed by the min- corporation, the accumulated adjustments ac- which only employees so described are eligible to ister’s own employer which is an organization count, as defined in section 1368(e)(1))’’ after participate.’’. described in section 501(c)(3) and exempt from ‘‘1951,’’. (F) Subparagraph (D) of section 408(p)(2) is tax under section 501(a).’’. (B) Paragraph (7) of section 1374(d) is amend- amended by adding at the end the following (B) Section 403(b)(1)(A) is amended by striking ed by adding at the end the following new sen- new clause: ‘‘or’’ at the end of clause (i), by inserting ‘‘or’’ tence: ‘‘For purposes of applying this section to

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00194 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6863 any amount includible in income by reason of ‘‘(B) in the case of an expense paid or in- (2) Paragraph (3) of section 220(c) is amended section 593(e), the preceding sentence shall be curred during or after the taxable year in which by striking subparagraph (A) and redesignating applied without regard to the phrase ‘10- such adoption becomes final, for the taxable subparagraphs (B) through (D) as subpara- year’.’’. year in which such expense is paid or in- graphs (A) through (C), respectively. (6) AMENDMENTS RELATED TO SECTION 1621.— curred.’’. (3) Subparagraph (C) of section 220(d)(2) is (A) Subparagraph (A) of section 860L(b)(1) is (B) Subparagraph (B) of section 23(b)(2) is amended by striking ‘‘an eligible individual’’ amended in the text preceding clause (i) by amended by striking ‘‘determined—’’ and all and inserting ‘‘described in clauses (i) and (ii) striking ‘‘after the startup date’’ and inserting that follows and inserting the following: ‘‘deter- of subsection (c)(1)(A)’’. ‘‘on or after the startup date’’. mined without regard to sections 911, 931, and (4) Subsection (a) of section 6693 is amended (B) Paragraph (2) of section 860L(d) is amend- 933.’’. by adding at the end the following new sen- ed by striking ‘‘section 860I(c)(2)’’ and inserting (C) Paragraph (1) of section 137(b) (relating to tence: ‘‘section 860I(b)(2)’’. adoption assistance programs) is amended by ‘‘This subsection shall not apply to any report (C) Subparagraph (B) of section 860L(e)(2) is striking ‘‘amount excludable from gross income’’ which is an information return described in sec- amended by inserting ‘‘other than foreclosure and inserting ‘‘of the amounts paid or expenses tion 6724(d)(1)(C)(i) or a payee statement de- property’’ after ‘‘any permitted asset’’. incurred which may be taken into account’’. scribed in section 6724(d)(2)(X).’’. (D) Subparagraph (A) of section 860L(e)(3) is (D)(i) Subparagraph (C) of section 414(n)(3) is (5) Paragraph (4) of section 4975(d) is amend- amended by striking ‘‘if the FASIT’’ and all amended by inserting ‘‘137,’’ after ‘‘132,’’. ed by striking ‘‘if, with respect to such trans- that follows and inserting the following new (ii) Paragraph (2) of section 414(t) is amended action’’ and all that follows and inserting the flush text after clause (ii): by inserting ‘‘137,’’ after ‘‘132,’’. following: ‘‘if section 220(e)(2) applies to such ‘‘if the FASIT were treated as a REMIC and (iii) Paragraph (1) of section 6039D(d) is transaction.’’. permitted assets (other than cash or cash amended by striking ‘‘or 129’’ and inserting (b) AMENDMENT RELATED TO SECTION 321.— equivalents) were treated as qualified mort- ‘‘129, or 137’’. Subparagraph (B) of section 7702B(c)(2) is gages.’’. (i) AMENDMENTS RELATED TO SUBTITLE I.— amended in the last sentence by inserting ‘‘de- (E)(i) Paragraph (3) of section 860L(e) is (1) AMENDMENT RELATED TO SECTION 1901.— scribed in subparagraph (A)(i)’’ after ‘‘chron- amended by adding at the end the following Subsection (b) of section 6048 is amended in the ically ill individual’’. new subparagraph: heading by striking ‘‘GRANTOR’’ and inserting (c) AMENDMENT RELATED TO SECTION 322.— ‘‘(D) INCOME FROM DISPOSITIONS OF FORMER ‘‘OWNER’’. Subparagraph (B) of section 162(l)(2) is amended HEDGE ASSETS.—Paragraph (2)(A) shall not (2) AMENDMENTS RELATED TO SECTION 1903.— by adding at the end the following new sen- apply to income derived from the disposition Clauses (ii) and (iii) of section 679(a)(3)(C) are tence: ‘‘The preceding sentence shall be applied of— each amended by inserting ‘‘, owner,’’ after separately with respect to— ‘‘(i) an asset which was described in sub- ‘‘grantor’’. ‘‘(i) plans which include coverage for quali- section (c)(1)(D) when first acquired by the (3) AMENDMENTS RELATED TO SECTION 1907.— fied long-term care services (as defined in sec- FASIT but on the date of such disposition was (A) Clause (ii) of section 7701(a)(30)(E) is tion 7702B(c)) or are qualified long-term care in- no longer described in subsection (c)(1)(D)(ii), or amended by striking ‘‘fiduciaries’’ and inserting surance contracts (as defined in section ‘‘(ii) a contract right to acquire an asset de- ‘‘persons’’. 7702B(b)), and scribed in clause (i).’’. (B) Subsection (b) of section 641 is amended by ‘‘(ii) plans which do not include such cov- (ii) Subparagraph (A) of section 860L(e)(2) is adding at the end the following new sentence: erage and are not such contracts.’’. (d) AMENDMENTS RELATED TO SECTION 323.— ‘‘For purposes of this subsection, a foreign trust amended by inserting ‘‘except as provided in (1) Paragraph (1) of section 6050Q(b) is or foreign estate shall be treated as a non- paragraph (3),’’ before ‘‘the receipt’’. amended by inserting ‘‘, address, and phone (g) AMENDMENTS RELATED TO SUBTITLE G.— resident alien individual who is not present in number of the information contact’’ after (1) EXTENSION OF PERIOD FOR CLAIMING RE- the United States at any time.’’. ‘‘name’’. FUNDS FOR ALCOHOL FUELS.—Notwithstanding (4) EFFECTIVE DATE RELATED TO SUBTITLE (2)(A) Paragraph (2) of section 6724(d) is section 6427(i)(3)(C) of the Internal Revenue I.—The Secretary of the Treasury may by regu- amended by striking so much as follows sub- Code of 1986, a claim filed under section 6427(f) lations or other administrative guidance provide paragraph (Q) and precedes the last sentence, of such Code for any period after September 30, that the amendments made by section 1907(a) of and inserting the following new subparagraphs: 1995, and before October 1, 1996, shall be treated the Small Business Job Protection Act of 1996 ‘‘(R) section 6050R(c) (relating to returns re- as timely filed if filed before the 60th day after shall not apply to a trust with respect to a rea- lating to certain purchases of fish), the date of the enactment of this Act. sonable period beginning on the date of the en- ‘‘(S) section 6051 (relating to receipts for em- (2) AMENDMENTS TO SECTIONS 1703 AND 1704.— actment of such Act, if— ployees), Sections 1703(n)(8) and 1704(j)(4)(B) of the Small (A) such trust is in existence on August 20, ‘‘(T) section 6052(b) (relating to returns re- Business Job Protection Act of 1996 shall each 1996, and is a United States person for purposes garding payment of wages in the form of group- be applied as if such sections referred to section of the Internal Revenue Code of 1986 on such term life insurance), 1702 instead of section 1602. date (determined without regard to such amend- ‘‘(U) section 6053(b) or (c) (relating to reports (h) AMENDMENTS RELATED TO SUBTITLE H.— ments), of tips), (1) AMENDMENTS RELATED TO SECTION 1806.— (B) no election is in effect under section ‘‘(V) section 6048(b)(1)(B) (relating to foreign (A) Subparagraph (B) of section 529(e)(1) is 1907(a)(3)(B) of such Act with respect to such trust reporting requirements), amended by striking ‘‘subsection (c)(2)(C)’’ and trust, ‘‘(W) section 4093(c)(4)(B) (relating to certain inserting ‘‘subsection (c)(3)(C)’’. (C) before the expiration of such reasonable purchasers of diesel and aviation fuels), (B) Subparagraph (C) of section 529(e)(1) is period, such trust makes the modifications nec- ‘‘(X) section 408(i) (relating to reports with re- amended by inserting ‘‘(or agency or instrumen- essary to be treated as a United States person spect to individual retirement plans) to any per- tality thereof)’’ after ‘‘local government’’. for purposes of such Code (determined with re- son other than the Secretary with respect to the (C) Paragraph (2) of section 1806(c) of the gard to such amendments), and amount of payments made to such person, or Small Business Job Protection Act of 1996 is (D) such trust meets such other conditions as ‘‘(Y) section 6047(d) (relating to reports by amended by striking so much of the first sen- the Secretary may require. plan administrators) to any person other than tence as follows subparagraph (B)(ii) and in- (j) EFFECTIVE DATE.— the Secretary with respect to the amount of pay- serting the following: (1) IN GENERAL.—Except as provided in para- ments made to such person.’’. ‘‘then such program (as in effect on August 20, graph (2), the amendments made by this section (B) Subsection (e) of section 6652 is amended 1996) shall be treated as a qualified State tuition shall take effect as if included in the provisions in the last sentence by striking ‘‘section program with respect to contributions (and of the Small Business Job Protection Act of 1996 6724(d)(2)(X)’’ and inserting ‘‘section earnings allocable thereto) pursuant to con- to which they relate. 6724(d)(2)(Y)’’. (e) AMENDMENT RELATED TO SECTION 325.— tracts entered into under such program before (2) CERTAIN ADMINISTRATIVE REQUIREMENTS Clauses (ii) and (iii) of section 7702B(g)(4)(B) the first date on which such program meets such WITH RESPECT TO CERTAIN PENSION PLANS.—The are each amended by striking ‘‘Secretary’’ and requirements (determined without regard to this amendment made by subsection (d)(2)(D) shall inserting ‘‘appropriate State regulatory agen- paragraph) and the provisions of such program apply to calendar years beginning after the date cy’’. (as so in effect) shall apply in lieu of section of the enactment of this Act. (f) AMENDMENTS RELATED TO SECTION 501.— 529(b) of the Internal Revenue Code of 1986 with SEC. 1402. AMENDMENTS RELATED TO HEALTH (1) Paragraph (4) of section 264(a) is amended respect to such contributions and earnings.’’. INSURANCE PORTABILITY AND AC- by striking subparagraph (A) and all that fol- (2) AMENDMENTS RELATED TO SECTION 1807.— COUNTABILITY ACT OF 1996. lows through ‘‘by the taxpayer.’’ and inserting (A) Paragraph (2) of section 23(a) is amended (a) AMENDMENTS RELATED TO SECTION 301.— the following: to read as follows: (1) Paragraph (2) of section 26(b) is amended ‘‘(A) is or was an officer or employee, or ‘‘(2) YEAR CREDIT ALLOWED.—The credit by striking ‘‘and’’ at the end of subparagraph ‘‘(B) is or was financially interested in, under paragraph (1) with respect to any expense (N), by striking the period at the end of sub- any trade or business carried on (currently or shall be allowed— paragraph (O) and inserting ‘‘, and’’, and by formerly) by the taxpayer.’’. ‘‘(A) in the case of any expense paid or in- adding at the end the following new subpara- (2) The last 2 sentences of section curred before the taxable year in which such graph: 264(d)(2)(B)(ii) are amended to read as follows: adoption becomes final, for the taxable year fol- ‘‘(P) section 220(f)(4) (relating to additional ‘‘For purposes of subclause (II), the term ‘appli- lowing the taxable year during which such ex- tax on medical savings account distributions not cable period’ means the 12-month period begin- pense is paid or incurred, and used for qualified medical expenses).’’. ning on the date the policy is issued (and each

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00195 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6864 CONGRESSIONAL RECORD — SENATE June 27, 1997 successive 12-month period thereafter) unless the provisions of the Health Insurance Port- the Uruguay Round Agreements Act to which the taxpayer elects a number of months (not ability and Accountability Act of 1996 to which they relate. greater than 12) other than such 12-month pe- such amendments relate. (c) AMENDMENT RELATED TO TAX REFORM ACT riod to be its applicable period. Such an election SEC. 1403. AMENDMENTS RELATED TO TAXPAYER OF 1986.—Paragraph (3) of section 1059(d) is shall be made not later than the 90th day after BILL OF RIGHTS 2. amended by striking ‘‘subsection (a)(2)’’ and in- the date of the enactment of this sentence and, (a) AMENDMENT RELATED TO SECTION 1311.— serting ‘‘subsection (a)’’. if made, shall apply to the taxpayer’s first tax- Subsection (b) of section 4962 is amended by (d) AMENDMENT RELATED TO TAX REFORM able year ending on or after October 13, 1995, striking ‘‘subchapter A or C’’ and inserting ACT OF 1984.— and all subsequent taxable years unless revoked ‘‘subchapter A, C, or D’’. (1) Section 267(f) is amended by adding at the with the consent of the Secretary.’’. (b) AMENDMENTS RELATED TO SECTION 1312.— end the following new paragraph: (3) Subparagraph (B) of section 264(d)(4) is (1)(A) Paragraph (10) of section 6033(b) is ‘‘(4) DETERMINATION OF RELATIONSHIP RE- amended by striking ‘‘the employer’’ and insert- amended by striking all that precedes subpara- SULTING IN DISALLOWANCE OF LOSS, FOR PUR- ing ‘‘the taxpayer’’. graph (A) and inserting the following: POSES OF OTHER PROVISIONS.—For purposes of (4) Subsection (c) of section 501 of the Health ‘‘(10) the respective amounts (if any) of the any other section of this title which refers to a Insurance Portability and Accountability Act of taxes imposed on the organization, or any orga- relationship which would result in a disallow- 1996 is amended by striking paragraph (3). nization manager of the organization, during ance of losses under this section, deferral under (5) Paragraph (2) of section 501(d) of such Act the taxable year under any of the following pro- paragraph (2) shall be treated as disallow- is amended by striking ‘‘no additional pre- visions (and the respective amounts (if any) of ance.’’. miums’’ and all that follows and inserting the reimbursements paid by the organization during (2) EFFECTIVE DATE.—The amendment made following: ‘‘a lapse occurring by reason of no the taxable year with respect to taxes imposed by paragraph (1) shall take effect as if included additional premiums being received under the on any such organization manager under any of in section 174(b) of the Tax Reform Act of 1984. (e) CLERICAL AMENDMENTS.— contract after October 13, 1995.’’. such provisions):’’. (1) Clause (iii) of section 163(j)(2)(B) is amend- (g) AMENDMENTS RELATED TO SECTION 511.— (B) Subparagraph (C) of section 6033(b)(10) is ed by striking ‘‘clause (i)’’ and inserting ‘‘clause (1) Subparagraph (B) of section 877(d)(2) is amended by adding at the end the following: (ii)’’. ‘‘except to the extent that, by reason of section amended by striking ‘‘the 10-year period de- (2) Paragraph (1) of section 665(d) is amended 4962, the taxes imposed under such section are scribed in subsection (a)’’ and inserting ‘‘the 10- in the last sentence by striking ‘‘or 669(d) and not required to be paid or are credited or re- year period beginning on the date the individual (e)’’. loses United States citizenship’’. funded,’’. (3) Subsection (g) of section 1441 (relating to (2) Subparagraph (D) of section 877(d)(2) is (2) Paragraph (11) of section 6033(b) is amend- cross reference) is amended by striking ‘‘one- amended by adding at the end the following ed to read as follows: half’’ and inserting ‘‘85 percent’’. new sentence: ‘‘In the case of any exchange oc- ‘‘(11) the respective amounts (if any) of— (4) Paragraph (1) of section 2523(g) is amend- ‘‘(A) the taxes imposed with respect to the or- curring during such 5 years, any gain recog- ed by striking ‘‘qualified remainder trust’’ and ganization on any organization manager, or nized under this subparagraph shall be recog- inserting ‘‘qualified charitable remainder trust’’. nized immediately after such loss of citizen- any disqualified person, during the taxable year (5) Subsection (d) of section 9502 is amended ship.’’. under section 4958 (relating to taxes on private by redesignating the paragraph added by sec- (3) Paragraph (3) of section 877(d) is amended excess benefit from certain charitable organiza- tion 806 of the Federal Aviation Reauthorization by inserting ‘‘and the period applicable under tions), and Act of 1996 as paragraph (6). ‘‘(B) reimbursements paid by the organization paragraph (2)’’ after ‘‘subsection (a)’’. TITLE XV—CHILDREN’S HEALTH (4) Subparagraph (A) of section 877(d)(4) is during the taxable year with respect to taxes im- INSURANCE INITIATIVES amended— posed under such section, (A) by inserting ‘‘during the 10-year period except to the extent that, by reason of section SEC. 1501. ESTABLISHMENT OF CHILDREN’S HEALTH INSURANCE INITIATIVES. beginning on the date the individual loses 4962, the taxes imposed under such section are (a) IN GENERAL.—The Social Security Act is United States citizenship’’ after ‘‘contributes not required to be paid or are credited or re- amended by adding at the end the following: property’’ in clause (i), funded,’’. (B) by inserting ‘‘immediately before such (c) EFFECTIVE DATE.—The amendments made ‘‘TITLE XXI—CHILD HEALTH INSURANCE contribution’’ after ‘‘from such property’’, and by this section shall take effect as if included in INITIATIVES (C) by striking ‘‘during the 10-year period re- the provisions of the Taxpayer Bill of Rights 2 ‘‘SEC. 2101. PURPOSE. ferred to in subsection (a),’’. to which such amendments relate. ‘‘The purpose of this title is to provide funds (5) Subparagraph (C) of section 2501(a)(3) is SEC. 1404. MISCELLANEOUS PROVISIONS. to States to enable such States to expand the amended by striking ‘‘decedent’’ and inserting (a) AMENDMENTS RELATED TO ENERGY POLICY provision of health insurance coverage for low- ‘‘donor’’. ACT OF 1992.— income children. Funds provided under this title (6)(A) Clause (i) of section 2107(c)(2)(A) is (1) Paragraph (1) of section 263(a) is amended shall be used to achieve this purpose through amended by striking ‘‘such foreign country in by striking ‘‘or’’ at the end of subparagraph (F), outreach activities described in section 2106(a) respect of property included in the gross estate’’ by striking the period at the end of subpara- and, at the option of the State through— and inserting ‘‘such foreign country’’. graph (G) and inserting ‘‘; or’’, and by adding ‘‘(1) a grant program conducted in accordance (B) Subparagraph (C) of section 2107(c)(2) is at the end the following new subparagraph: with section 2107 and the other requirements of amended to read as follows: ‘‘(H) expenditures for which a deduction is al- this title; or ‘‘(C) PROPORTIONATE SHARE.—In the case of lowed under section 179A.’’. ‘‘(2) expansion of coverage of such children property which is included in the gross estate (2) Subparagraph (B) of section 312(k)(3) is under the State medicaid program who are not solely by reason of subsection (b), such prop- amended— required to be provided medical assistance under erty’s proportionate share is the percentage (A) by striking ‘‘179’’ in the heading and the section 1902(l) (taking into account the process which the value of such property bears to the first place it appears in the text and inserting of individuals aging into eligibility under sub- total value of all property included in the gross ‘‘179 or 179A’’, and section (l)(1)(D)). estate solely by reason of subsection (b).’’. (B) by striking ‘‘179’’ the last place it appears ‘‘SEC. 2102. DEFINITIONS. (h) AMENDMENTS RELATED TO SECTION 512.— and inserting ‘‘179 or 179A, as the case may be’’. ‘‘In this title: (1) Subpart A of part III of subchapter A of (3) Paragraphs (2)(C) and (3)(C) of section ‘‘(1) BASE-YEAR COVERED LOW-INCOME CHILD chapter 61 is amended by redesignating the sec- 1245(a) are each amended by inserting ‘‘179A,’’ POPULATION.—The term ‘base-year covered low- tion 6039F added by section 512 of the Health after ‘‘179,’’. income child population’ means the total num- Insurance Portability and Accountability Act of (4) The amendments made by this subsection ber of low-income children with respect to 1996 as section 6039G and by moving such sec- shall take effect as if included in the amend- whom, as of fiscal year 1996, an eligible State tion 6039G to immediately after the section 6039F ments made by section 1913 of the Energy Policy provides or pays the cost of health benefits ei- added by section 1905 of the Small Business Job Act of 1992. ther through a State funded program or through Protection Act of 1996. (b) AMENDMENTS RELATED TO URUGUAY expanded eligibility under the State plan under (2) The table of sections for subpart A of part ROUND AGREEMENTS ACT.— title XIX (including under a waiver of such III of subchapter A of chapter 61 is amended by (1) Paragraph (1) of section 6621(a) is amend- plan), as determined by the Secretary. Such striking the item relating to the section 6039F re- ed in the last sentence by striking ‘‘subsection term does not include any low-income child de- lated to information on individuals losing (c)(3))’’ and inserting ‘‘subsection (c)(3), applied scribed in paragraph (3)(A) that a State must United States citizenship and inserting after the by substituting ‘overpayment’ for ‘under- cover in order to be considered an eligible State item relating to the section 6039F related to no- payment’)’’. under this title. tice of large gifts received from foreign persons (2) Subclause (II) of section 412(m)(5)(E)(ii) is ‘‘(2) CHILD.—The term ‘child’ means an indi- the following new item: amended by striking ‘‘clause (i)’’ and inserting vidual under 19 years of age. ‘‘subclause (I)’’. ‘‘(3) ELIGIBLE STATE.—The term ‘eligible State’ ‘‘Sec. 6039G. Information on individuals losing (3) Subparagraph (A) of section 767(d)(3) of means, with respect to a fiscal year, a State United States citizenship.’’. the Uruguay Round Agreements Act is amended that— (3) Paragraph (1) of section 877(e) is amended in the last sentence by striking ‘‘(except that’’ ‘‘(A) provides, under section 1902(l)(1)(D) or by striking ‘‘6039F’’ and inserting ‘‘6039G’’. and all that follows through ‘‘into account)’’. under a waiver, for eligibility for medical assist- (i) EFFECTIVE DATE.—The amendments made (4) The amendments made by this subsection ance under a State plan under title XIX of indi- by this section shall take effect as if included in shall take effect as if included in the sections of viduals under 17 years of age in fiscal year 1998,

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and under 19 years of age in fiscal year 2000, re- States not otherwise appropriated, there is ap- ‘‘(1) IN GENERAL.—From the amount appro- gardless of date of birth; propriated for the purpose of carrying out this priated under section 2103(a)(1) for each fiscal ‘‘(B) has submitted to the Secretary under sec- title— year, determined after the reduction required tion 2104 a program outline that— ‘‘(A) for each of fiscal years 1998 and 1999, under section 2103(b), the Secretary shall, for ‘‘(i) sets forth how the State intends to use the $1,000,000,000; purposes of fiscal year 1998, reserve 85 percent funds provided under this title to provide health ‘‘(B) for each of fiscal years 2000 through of such amount for distribution to eligible States insurance coverage for low-income children con- 2002, $2,000,000,000; and through the basic allotment pool under sub- sistent with the provisions of this title; and ‘‘(C) for each of fiscal years 2003 through section (b) and 15 percent of such amount for ‘‘(ii) is approved under section 2104; and 2007, $0. distribution through the new coverage incentive ‘‘(iii) otherwise satisfies the requirements of ‘‘(2) AVAILABILITY.—Funds appropriated pool under subsection (c)(2)(B)(ii). this title; and under this section shall remain available with- ‘‘(2) ANNUAL ADJUSTMENT OF RESERVE PER- ‘‘(C) satisfies the maintenance of effort re- out fiscal year limitation, as provided under sec- CENTAGES.—The Secretary shall annually adjust quirement described in section 2105(c)(5). tion 2105(b)(4). the amount of the percentages described in ‘‘(4) FEDERAL MEDICAL ASSISTANCE PERCENT- ‘‘(b) REDUCTION FOR INCREASED MEDICAID EX- paragraph (1) in order to provide sufficient AGE.—The term ‘Federal medical assistance per- PENDITURES.—With respect to each of the fiscal basic allotments and sufficient new coverage in- centage’ means, with respect to a State, the years described in subsection (a)(1), the amount centives to achieve the purpose of this title. meaning given that term under section 1905(b). appropriated under subsection (a)(1) for each ‘‘(b) DISTRIBUTION OF FUNDS UNDER THE Any cost-sharing imposed under this title may such fiscal year shall be reduced by an amount BASIC ALLOTMENT POOL.— not be included in determining Federal medical equal to the amount of the total Federal outlays ‘‘(1) STATES.— assistance percentage for reimbursement of ex- under the medicaid program under title XIX re- ‘‘(A) IN GENERAL.—From the total amount re- penditures under a State program funded under sulting from— served under subsection (a) for a fiscal year for this title. ‘‘(1) the amendment made by section 5732 of distribution through the basic allotment pool, ‘‘(5) FEHBP-EQUIVALENT CHILDREN’S HEALTH the Balanced Budget Act of 1997 (regarding the the Secretary shall first set aside 0.25 percent for INSURANCE COVERAGE.—The term ‘FEHBP- State option to provide 12-month continuous eli- distribution under paragraph (2) and shall allot equivalent children’s health insurance coverage’ gibility for children); from the amount remaining to each eligible means, with respect to a State, any plan or ar- ‘‘(2) increased enrollment under State plans State not described in such paragraph the rangement that provides, or pays the cost of, approved under such program as a result of out- State’s allotment percentage for such fiscal health benefits that the Secretary has certified reach activities under section 2106(a); and year. ‘‘(3) the requirement under section 2102(3)A) are equivalent to or better than the services cov- ‘‘(B) STATE’S ALLOTMENT PERCENTAGE.— to provide eligibility for medical assistance ered for a child, including hearing and vision ‘‘(i) IN GENERAL.—For purposes of subpara- under the State plan under title XIX for all services, under the standard Blue Cross/Blue graph (A), the allotment percentage for a fiscal children under 19 years of age who have fami- Shield preferred provider option service benefit year for each State is the percentage equal to lies with income that is at or below the poverty plan offered under chapter 89 of title 5, United the ratio of the number of low-income children line. States Code. in the base period in the State to the total num- ‘‘(c) STATE ENTITLEMENT.—This title con- ‘‘(6) INDIANS.—The term ‘Indians’ has the ber of low-income children in the base period in stitutes budget authority in advance of appro- meaning given that term in section 4(c) of the all States not described in paragraph (2). priations Acts and represents the obligation of Indian Health Care Improvement Act (25 U.S.C. ‘‘(ii) NUMBER OF LOW-INCOME CHILDREN IN the Federal Government to provide for the pay- 1601 et seq.). THE BASE PERIOD.—In clause (i), the number of ment to States of amounts provided in accord- ‘‘(7) LOW-INCOME CHILD.—The term ‘low-in- low-income children in the base period for a fis- ance with the provisions of this title. come child’ means a child in a family whose in- cal year in a State is equal to the average of the ‘‘(d) EFFECTIVE DATE.—No State is eligible for come is below 200 percent of the poverty line for number of low-income children in the State for payments under section 2105 for any calendar a family of the size involved. the period beginning on October 1, 1992, and quarter beginning before October 1, 1997. ‘‘(8) POVERTY LINE.—The term ‘poverty line’ ending on September 30, 1995, as reported in the has the meaning given that term in section ‘‘SEC. 2104. PROGRAM OUTLINE. March 1994, March 1995, and March 1996 sup- 673(2) of the Community Services Block Grant ‘‘(a) GENERAL DESCRIPTION.—A State shall plements to the Current Population Survey of Act (42 U.S.C. 9902(2)), including any revision submit to the Secretary for approval a program the Bureau of the Census. required by such section. outline, consistent with the requirements of this ‘‘(2) OTHER STATES.— title, that— ‘‘(9) SECRETARY.—The term ‘Secretary’ means ‘‘(A) IN GENERAL.—From the amount set aside ‘‘(1) identifies, on or after the date of enact- the Secretary of Health and Human Services. under paragraph (1)(A) for each fiscal year, the ment of the Balanced Budget Act of 1997, which ‘‘(10) STATE.—The term ‘State’ means each of Secretary shall make allotments for such fiscal of the 2 options described in section 2101 the the 50 States, the District of Columbia, Puerto year in accordance with the percentages speci- State intends to use to provide low-income chil- Rico, Guam, the Virgin Islands, American fied in subparagraph (B) to Puerto Rico, Guam, dren in the State with health insurance cov- Samoa, and the Northern Mariana Islands. the Virgin Islands, American Samoa, and the erage; ‘‘(11) STATE CHILDREN’S HEALTH EXPENDI- Northern Mariana Islands, if such States are el- ‘‘(2) describes the manner in which such cov- TURES.—The term ‘State children’s health ex- igible States for such fiscal year. erage shall be provided; and penditures’ means the State share of expendi- ‘‘(B) PERCENTAGES SPECIFIED.—The percent- ‘‘(3) provides such other information as the tures by the State for providing children with ages specified in this subparagraph are in the Secretary may require. health care items and services under— case of— ‘‘(b) OTHER REQUIREMENTS.—The program ‘‘(A) the State plan for medical assistance ‘‘(i) Puerto Rico, 91.6 percent; outline submitted under this section shall in- ‘‘(ii) Guam, 3.5 percent; under title XIX; clude the following: ‘‘(iii) the Virgin Islands, 2.6 percent; ‘‘(B) the maternal and child health services ‘‘(1) ELIGIBILITY STANDARDS AND METHODOLO- ‘‘(iv) American Samoa, 1.2 percent; and block grant program under title V; GIES.—A summary of the standards and meth- ‘‘(v) the Northern Mariana Islands, 1.1 per- ‘‘(C) the preventive health services block grant odologies used to determine the eligibility of cent. program under part A of title XIX of the Public low-income children for health insurance cov- ‘‘(3) THREE-YEAR AVAILABILITY OF AMOUNTS Health Services Act (42 U.S.C. 300w et seq.); erage under a State program funded under this ALLOTTED.—Amounts allotted to a State pursu- ‘‘(D) State-funded programs that are designed title. ant to this subsection for a fiscal year shall re- to provide health care items and services to chil- ‘‘(2) ELIGIBILITY SCREENING; COORDINATION main available for expenditure by the State dren; WITH OTHER HEALTH COVERAGE.—A description through the end of the second succeeding fiscal ‘‘(E) school-based health services programs; of the procedures to be used to ensure— year. ‘‘(F) State programs that provide uncompen- ‘‘(A) through both intake and followup ‘‘(4) PROCEDURE FOR DISTRIBUTION OF UNUSED sated or indigent health care; screening, that only low-income children are FUNDS.—The Secretary shall determine an ap- ‘‘(G) county-indigent care programs for which furnished health insurance coverage through propriate procedure for distribution of funds to the State requires a matching share by a county funds provided under this title; and eligible States that remain unused under this government or for which there are intergovern- ‘‘(B) that any health insurance coverage pro- subsection after the expiration of the avail- mental transfers from a county to State govern- vided for children through funds under this title ability of funds required under paragraph (3). ment; and does not reduce the number of children who are Such procedure shall be developed and adminis- ‘‘(H) any other program under which the Sec- provided such coverage through any other pub- tered in a manner that is consistent with the retary determines the State incurs uncompen- licly or privately funded health plan. purpose of this title. sated expenditures for providing children with ‘‘(3) INDIANS.—A description of how the State ‘‘(c) PAYMENTS.— health care items and services. will ensure that Indians are served through a ‘‘(1) IN GENERAL.—The Secretary shall— ‘‘(12) STATE MEDICAID PROGRAM.—The term State program funded under this title. ‘‘(A) before October 1 of any fiscal year, pay ‘State medicaid program’ means the program of ‘‘(c) DEADLINE FOR SUBMISSION.—A State pro- an eligible State an amount equal to 1 percent of medical assistance provided under title XIX. gram outline shall be submitted to the Secretary the amount allotted to the State under sub- ‘‘SEC. 2103. APPROPRIATION. by not later than March 31 of any fiscal year section (b) for conducting the outreach activities ‘‘(a) APPROPRIATION.— (October 1, 1997, in the case of fiscal year 1998). required under section 2106(a); and ‘‘(1) IN GENERAL.—Subject to subsection (b), ‘‘SEC. 2105. DISTRIBUTION OF FUNDS. ‘‘(B) make quarterly fiscal year payments to out of any money in the Treasury of the United ‘‘(a) ESTABLISHMENT OF FUNDING POOLS.— an eligible State from the amount remaining of

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such allotment for such fiscal year in an ‘‘(C) FAILURE TO MAINTAIN SPENDING ON CHILD ‘‘SEC. 2107. STATE OPTION FOR THE PURCHASE amount equal to the Federal medical assistance HEALTH PROGRAMS.—A State that fails to meet OR PROVISION OF CHILDREN’S percentage for the State (as defined under sec- the condition described in subparagraph (A)(ii) HEALTH INSURANCE. tion 2102(4) and determined without regard to shall not receive funding under this title. ‘‘(a) STATE OPTION.— the amount of Federal funds received by the ‘‘(6) ADVANCE PAYMENT; RETROSPECTIVE AD- ‘‘(1) IN GENERAL.—An eligible State that opts State under title XIX before the date of enact- JUSTMENT.—The Secretary may make payments to use funds provided under this title under this ment of this title) of the Federal and State in- under this subsection for each quarter on the section shall use such funds to provide FEHBP- curred cost of providing health insurance cov- basis of advance estimates of expenditures sub- equivalent children’s health insurance coverage erage for a low-income child in the State plus mitted by the State and such other investigation for low-income children who reside in the State. the applicable bonus amount. as the Secretary may find necessary, and shall ‘‘(2) PRIORITY FOR LOW-INCOME CHILDREN.—A ‘‘(2) APPLICABLE BONUS.— reduce or increase the payments as necessary to State that uses funds provided under this title ‘‘(A) IN GENERAL.—For purposes of paragraph adjust for any overpayment or underpayment under this section shall not cover low-income (1), the applicable bonus amount is— for prior quarters. children with higher family income without cov- ering such children with a lower family income. ‘‘(i) 5 percent of the Federal and State in- ‘‘SEC. 2106. USE OF FUNDS. ‘‘(3) DETERMINATION OF ELIGIBILITY AND FORM curred cost, with respect to a period, of pro- ‘‘(a) SET-ASIDE FOR OUTREACH ACTIVITIES.— OF ASSISTANCE.—An eligible State may establish viding health insurance coverage for children ‘‘(1) IN GENERAL.—From the amount allotted any additional eligibility criteria for the provi- covered at State option among the base-year to a State under section 2105(b) for a fiscal year, sion of health insurance coverage for a low-in- covered low-income child population (measured each State shall conduct outreach activities de- come child through funds provided under this in full year equivalency) (including such chil- scribed in paragraph (2). title, so long as such criteria and assistance are dren covered by the State through expanded eli- ‘‘(2) OUTREACH ACTIVITIES DESCRIBED.—The consistent with the purpose and provisions of gibility under the medicaid program under title outreach activities described in this paragraph this title. XIX before the date of enactment of this title, include activities to— ‘‘(4) AFFORDABILITY.—An eligible State may but excluding any low-income child described in ‘‘(A) identify and enroll children who are eli- impose any family premium obligations or cost- section 2102(3)(A) that a State must cover in gible for medical assistance under the State plan sharing requirements otherwise permitted under order to be considered an eligible State under under title XIX; and this title); and ‘‘(B) conduct public awareness campaigns to this title on low-income children with family in- ‘‘(ii) 10 percent of the Federal and State in- encourage employers to provide health insur- comes that exceed 150 percent of the poverty curred cost, with respect to a period, of pro- ance coverage for children. line. In the case of a low-income child whose viding health insurance coverage for children ‘‘(b) STATE OPTIONS FOR REMAINDER.—A State family income is at or below 150 percent of the covered at State option among the number (as so may use the amount remaining of the allotment poverty line, limits on beneficiary costs gen- measured) of low-income children that are in ex- to a State under section 2105(b) for a fiscal year, erally applicable under title XIX apply to cov- cess of such population. determined after the payment required under erage provided such children under this section. ‘‘(B) SOURCE OF BONUSES.— section 2105(c)(1)(A), in accordance with section ‘‘(b) NONENTITLEMENT.—Nothing in this sec- ‘‘(i) BASE-YEAR COVERED LOW-INCOME CHILD 2107 or the State medicaid program (but not tion shall be construed as providing an entitle- POPULATION.—A bonus described in subpara- both). Nothing in the preceding sentence shall ment for an individual or person to any health graph (A)(i) shall be paid out of an eligible be construed as limiting a State’s eligibility for insurance coverage, assistance, or service pro- State’s allotment for a fiscal year. receiving the 5 percent bonus described in sec- vided through a State program funded under ‘‘(ii) FOR OTHER LOW-INCOME CHILD POPU- tion 2105(c)(2)(A)(i) for children covered by the this title. If, with respect to a fiscal year, an eli- LATIONS.—A bonus described in subparagraph State through expanded eligibility under the gible State determines that the funds provided (A)(ii) shall be paid out of the new coverage in- medicaid program under title XIX before the under this title are not sufficient to provide centive pool reserved under subsection (a)(1). date of enactment of this title. health insurance coverage for all the low-in- ‘‘(3) DEFINITION OF COST OF PROVIDING ‘‘(c) PROHIBITION ON USE OF FUNDS.—No come children that the State proposes to cover in HEALTH INSURANCE COVERAGE.—For purposes of funds provided under this title may be used to the State program outline submitted under sec- this subsection the cost of providing health in- provide health insurance coverage for— tion 2104 for such fiscal year, the State may ad- surance coverage for a low-income child in the ‘‘(1) families of State public employees; or just the applicable eligibility criteria for such State means— ‘‘(2) children who are committed to a penal in- children appropriately or adjust the State pro- ‘‘(A) in the case of an eligible State that opts stitution. gram in another manner specified by the Sec- to use funds provided under this title through ‘‘(d) USE LIMITED TO STATE PROGRAM EX- retary, so long as any such adjustments are con- the medicaid program, the cost of providing PENDITURES.—Funds provided to an eligible sistent with the purpose of this title. such child with medical assistance under the State under this title shall only be used to carry ‘‘SEC. 2107A. MENTAL HEALTH PARITY. State plan under title XIX; and out the purpose of this title (as described in sec- ‘‘(a) PROHIBITION.—In the case of a health ‘‘(B) in the case of an eligible State that opts tion 2101), and any health insurance coverage plan that enrolls children through the use of as- to use funds provided under this title under sec- provided with such funds may include coverage sistance provided under a grant program con- tion 2107, the cost of providing such child with of abortion only if necessary to save the life of ducted under this title, such plan, if the plan health insurance coverage under such section. the mother or if the pregnancy is the result of provides both medical and surgical benefits and ‘‘(4) LIMITATION ON TOTAL PAYMENTS.—With an act of rape or incest. mental health benefits, shall not impose treat- respect to a fiscal year, the total amount paid to ‘‘(e) ADMINISTRATIVE EXPENDITURES.— ment limitations or financial requirements on an eligible State under this title (including any ‘‘(1) IN GENERAL.—Not more than the applica- the coverage of mental health benefits if similar bonus payments) shall not exceed 85 percent of ble percentage of the amount allotted to a State limitations or requirements are not imposed on the total cost of a State program conducted under section 2105(b) for a fiscal year, deter- medical and surgical benefits. under this title for such fiscal year. mined after the payment required under section ‘‘(b) RULE OF CONSTRUCTION.—Nothing in this ‘‘(5) MAINTENANCE OF EFFORT.— 2105(c)(1)(A), shall be used for administrative section shall be construed— ‘‘(A) DEEMED COMPLIANCE.—A State shall be expenditures for the program funded under this ‘‘(1) as prohibiting a health plan from requir- deemed to be in compliance with this provision title. ing preadmission screening prior to the author- if— ‘‘(2) APPLICABLE PERCENTAGE.—For purposes ization of services covered under the plan or ‘‘(i) it does not adopt income and resource of paragraph (1), the applicable percentage with from applying other limitations that restrict cov- standards and methodologies that are more re- respect to a fiscal year is— erage for mental health services to those services strictive than those applied as of June 1, 1997, ‘‘(A) for the first 2 years of a State program that are medically necessary; and for purposes of determining a child’s eligibility funded under this title, 10 percent; ‘‘(2) as requiring a health plan to provide any for medical assistance under the State plan ‘‘(B) for the third year of a State program mental health benefits. under title XIX; and funded under this title, 7.5 percent; and ‘‘(c) SEPARATE APPLICATION TO EACH OPTION ‘‘(ii) in the case of fiscal year 1998 and each ‘‘(C) for the fourth year of a State program OFFERED.—In the case of a health plan that of- fiscal year thereafter, the State children’s funded under this title and each year there- fers a child described in subsection (a) 2 or more health expenditures defined in section 2102(11) after, 5 percent. benefit package options under the plan, the re- are not less than the amount of such expendi- ‘‘(f) NONAPPLICATION OF FIVE-YEAR LIMITED quirements of this section shall be applied sepa- tures for fiscal year 1996. ELIGIBILITY FOR MEANS-TESTED PUBLIC BENE- rately with respect to each such option. ‘‘(B) FAILURE TO MAINTAIN MEDICAID STAND- FITS.—The provisions of section 403 of the Per- ‘‘(d) DEFINITIONS.—In this section: ARDS AND METHODOLOGIES.—A State that fails sonal Responsibility and Work Opportunity ‘‘(1) MEDICAL OR SURGICAL BENEFITS.—The to meet the conditions described in subpara- Reconciliation Act of 1996 (8 U.S.C. 1613) shall term ‘medical or surgical benefits’ means bene- graph (A) shall not receive— not apply with respect to a State program fund- fits with respect to medical or surgical services, ‘‘(i) funds under this title for any child that ed under this title. as defined under the terms of the plan, but does would be determined eligible for medical assist- ‘‘(g) AUDITS.—The provisions of section 506(b) not include mental health benefits. ance under the State plan under title XIX using shall apply to funds expended under this title to ‘‘(2) MENTAL HEALTH BENEFITS.—The term the income and resource standards and meth- the same extent as they apply to title V. ‘mental health benefits’ means benefits with re- odologies applied under such plan as of June 1, ‘‘(h) REQUIREMENT TO FOLLOW STATE PRO- spect to mental health services, as defined under 1997; and GRAM OUTLINE.—The State shall conduct the the terms of the plan, but does not include bene- ‘‘(ii) any bonus amounts described in para- program in accordance with the program outline fits with respect to the treatment of substance graph (2)(A)(ii). approved by the Secretary under section 2104. abuse and chemical dependency.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00198 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6867 ‘‘SEC. 2108. PROGRAM INTEGRITY. sional Budget Act of 1974 is amended by insert- ‘‘(F) the estimated levels of tax expenditures ‘‘The following provisions of the Social Secu- ing ‘‘primary’’ before ‘‘duty’’. (the tax expenditures budget) by major items rity Act shall apply to eligible States under this (b) ELIMINATION OF EXECUTED PROVISION.— and functional categories for the President’s title in the same manner as such provisions Section 202 of the Congressional Budget Act of budget and in the concurrent resolution; and apply to a State under title XIX: 1974 is amended by striking subsection (e) and ‘‘(G) allocations described in section 302(a). ‘‘(1) Section 1116 (relating to administrative by redesignating subsections (f), (g), and (h) as ‘‘(3) ADDITIONAL CONTENTS OF REPORT.—The and judicial review). subsections (e), (f), and (g), respectively. report accompanying such concurrent resolution ‘‘(2) Section 1124 (relating to disclosure of SEC. 1603. AMENDMENT TO SECTION 300. may include— ownership and related information). The item relating to February 25 in the time- ‘‘(A) a statement of any significant changes in ‘‘(3) Section 1126 (relating to disclosure of in- table set forth in section 300 of the Congres- the proposed levels of Federal assistance to formation about certain convicted individuals). sional Budget Act of 1974 is amended by striking State and local governments; ‘‘(4) Section 1128 (relating to exclusion from ‘‘February 25’’ and inserting ‘‘Within 6 weeks ‘‘(B) an allocation of the level of Federal reve- individuals and entities from participation in after President submits budget’’. nues recommended in the concurrent resolution State health care plans). among the major sources of such revenues; ‘‘(5) Section 1128A (relating to civil monetary SEC. 1604. AMENDMENTS TO SECTION 301. ‘‘(C) information, data, and comparisons on penalties). (a) TERMS OF BUDGET RESOLUTIONS.—Section the share of total Federal budget outlays and of ‘‘(6) Section 1128B (relating to criminal pen- 301(a) of the Congressional Budget Act of 1974 is gross domestic product devoted to investment in alties). amended by striking ‘‘, and planning levels for ‘‘(7) Section 1132 (relating to periods within each of the two ensuing fiscal years,’’ and in- the budget submitted by the President and in which claims must be filed). serting ‘‘and for at least each of the 4 ensuing the concurrent resolution; and ‘‘(8) Section 1902(a)(4)(C) (relating to conflict fiscal years’’. ‘‘(D) other matters, relating to the budget and of interest standards). (b) CONTENTS OF BUDGET RESOLUTIONS.— fiscal policy, the committee deems appropriate.’’. ‘‘(9) Section 1903(i) (relating to limitations on Paragraphs (1) and (4) of section 301(a) of the (f) SOCIAL SECURITY CORRECTIONS.—Section payment). Congressional Budget Act of 1974 are amended 301(i) of the Congressional Budget Act of 1974 is ‘‘(10) Section 1903(m)(5) (as in effect on the by striking ‘‘, budget outlays, direct loan obliga- amended by— day before the date of enactment of the Bal- tions, and primary loan guarantee commit- (1) inserting ‘‘SOCIAL SECURITY POINT OF anced Budget Act of 1997). ments’’ each place it appears and inserting ORDER.—’’ after ‘‘(i)’’; and ‘‘(11) Section 1903(w) (relating to limitations ‘‘and budget outlays’’. (2) striking ‘‘as reported to the Senate’’ and on provider taxes and donations). (c) ADDITIONAL MATTERS.—Section 301(b) of inserting ‘‘(or amendment, motion, or conference ‘‘(12) Section 1905(a)(B) (relating to the exclu- the Congressional Budget Act of 1974 is amend- report on such a resolution)’’. sion of care or services for any individual who ed by— (g) REPEAL OF BUDGET RESOLUTION PROVI- has not attained 65 years of age and who is a (1) amending paragraph (7) to read as fol- SION.—Section 22 of House Concurrent Resolu- patient in an institution for mental diseases lows— tion 218 (103d Congress) is repealed. from the definition of medical assistance). ‘‘(7) set forth pay-as-you-go procedures in the SEC. 1605. AMENDMENTS TO SECTION 302. ‘‘(13) Section 1921 (relating to state licensure Senate whereby committee allocations, aggre- (a) ALLOCATIONS AND SUBALLOCATIONS.—Sub- authorities). gates, and other levels can be revised for legisla- sections (a) and (b) of section 302 of the Con- ‘‘(14) Sections 1902(a)(25), 1912(a)(1)(A), and tion if such legislation would not increase the gressional Budget Act of 1974 are amended to 1903(o) (insofar as such sections relate to third deficit or would not increase the deficit when read as follows: party liability). taken with other legislation enacted after the ‘‘(a) COMMITTEE SPENDING ALLOCATIONS.— ‘‘(15) Sections 1948 and 1949 (as added by sec- adoption of the resolution for the first fiscal ‘‘(1) HOUSE OF REPRESENTATIVES.— tion 5701(a)(2) of the Balanced Budget Act of year or the total period of fiscal years covered ‘‘(A) ALLOCATION AMONG COMMITTEES.—The 1997). by the resolution;’’; joint explanatory statement accompanying a ‘‘SEC. 2109. ANNUAL REPORTS. (2) in paragraph 8, striking the period and in- conference report on a budget resolution shall ‘‘(a) ANNUAL STATE ASSESSMENT OF serting ‘‘; and’’; and include allocations, consistent with the resolu- PROGRESS.—An eligible State shall— (3) adding the following new paragraph: tion recommended in the conference report, of ‘‘(9) set forth direct loan obligations and pri- ‘‘(1) assess the operation of the State program the appropriate levels (for each fiscal year cov- mary loan commitment guarantee levels.’’. funded under this title in each fiscal year, in- ered by that resolution and a total for all such (d) VIEWS AND ESTIMATES.—The first sentence cluding the progress made in providing health years) of— of section 301(d) of the Congressional Budget insurance coverage for low-income children; and ‘‘(i) total new budget authority; ‘‘(2) report to the Secretary, by January 1 fol- Act of 1974 is amended by inserting ‘‘or at such ‘‘(ii) total entitlement authority; and lowing the end of the fiscal year, on the result time as may be requested by the Committee on ‘‘(iii) total outlays; of the assessment. the Budget,’’ after ‘‘Code,’’. among each committee of the House of Rep- ‘‘(b) REPORT OF THE SECRETARY.—The Sec- (e) HEARINGS AND REPORT.—Section 301(e) of resentatives that has jurisdiction over legisla- retary shall submit to the appropriate commit- the Congressional Budget Act of 1974 is amend- tion providing or creating such amounts. tees of Congress an annual report and evalua- ed— O DOUBLE COUNTING.—Any item allo- tion of the State programs funded under this (1) by striking ‘‘In developing’’ and inserting ‘‘(B) N cated to one committee of the House of Rep- title based on the State assessments and reports the following: resentatives may not be allocated to another submitted under subsection (a). Such report ‘‘(1) IN GENERAL.—In developing’’; and such committee. shall include any conclusions and recommenda- (2) by striking the sentence beginning with ‘‘(C) FURTHER DIVISION OF AMOUNTS.—The tions that the Secretary considers appropriate.’’. ‘‘The report accompanying ’’ and all that fol- (b) CONFORMING AMENDMENT.—Section lows through the end of the subsection and in- amounts allocated to each committee for each 1128(h) (42 U.S.C. 1320a–7(h)) is amended by— serting the following: fiscal year, other than the Committee on Appro- (1) in paragraph (2), by striking ‘‘or’’ at the ‘‘(2) REQUIRED CONTENTS OF REPORT.—The re- priations, shall be further divided between end; port accompanying such concurrent resolution amounts provided or required by law on the (2) in paragraph (3), by striking the period shall include— date of filing of that conference report and and inserting ‘‘, or’’; and ‘‘(A) a comparison of the appropriate levels of amounts not so provided or required. The (3) by adding at the end the following: total new budget authority, total budget out- amounts allocated to the Committee on Appro- ‘‘(4) a program funded under title XXI.’’. lays, and total revenues as set forth in such priations for each fiscal year shall be further di- SEC. 1502. APPLICABILITY. concurrent resolution with those requested in vided between discretionary and mandatory If, on the date of enactment of this Act, the the budget submitted by the President; amounts or programs, as appropriate. Social Security Act contains a title XXI, the ‘‘(B) with respect to each major functional ‘‘(2) SENATE ALLOCATION AMONG COMMIT- amendments made to the Social Security Act by category, an estimate of total new budget au- TEES.—The joint explanatory statement accom- this title shall not take effect, except that thority and total outlays with the estimates di- panying a conference report on a budget resolu- amounts appropriated under such title XXI for vided between permanent authority and funds tion shall include an allocation, consistent with a fiscal year shall be increased by the amounts provided in appropriations Acts; the resolution recommended in the conference that would have been appropriated for such fis- ‘‘(C) the economic assumptions which underlie report, of the appropriate levels of— cal year under section 2103 of the Social Secu- each of the matters set forth in such concurrent ‘‘(A) total new budget authority; and rity Act, as added by this title. resolution and any alternative economic as- ‘‘(B) total outlays; among each committee of the Senate that has TITLE XVI—BUDGET ENFORCEMENT sumptions and objectives that the committee considered; jurisdiction over legislation providing or cre- Subtitle A—Amendments to the Congressional ‘‘(D) projections for the period of 5 fiscal ating such amounts. Budget and Impoundment Control Act of 1974 years beginning with such fiscal year, of the es- ‘‘(3) AMOUNTS NOT ALLOCATED.— SEC. 1601. AMENDMENTS TO SECTION 201. timated levels of total new budget authority, ‘‘(A) IN THE HOUSE.—In the House of Rep- Section 201 of the Congressional Budget Act of total outlays and total revenues and the surplus resentatives, if a committee receives no alloca- 1974 is amended by redesignating subsection (g) or deficit for each fiscal year; tion of new budget authority, entitlement au- (relating to revenue estimates) as subsection (f). ‘‘(E) information, data, and comparisons indi- thority, or outlays, that committee shall be SEC. 1602. AMENDMENTS TO SECTION 202. cating the manner in which, and the basis on deemed to have received an allocation equal to (a) ASSISTANCE TO BUDGET COMMITTEES.—The which, the committee determined each of the zero for new budget authority, entitlement au- first sentence of section 202(a) of the Congres- matters set forth in the concurrent resolutions; thority, or outlays.

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‘‘(B) IN THE SENATE.—In the Senate, if a com- (1) by striking the center heading and insert- excess of social security revenues over social se- mittee receives no allocation of new budget au- ing the following: curity outlays in a fiscal year or years with thority, outlays, or social security outlays, that ‘‘REPORTS ON SPENDING AND REVENUE such an excess and social security deficits equal committee shall be deemed to have received an LEGISLATION’’; the excess of social security outlays over social allocation equal to zero for new budget author- (2) in paragraphs (1) and (2) of subsection (a), security revenues in a fiscal year or years with ity, outlays, or social security outlays. by striking ‘‘or new credit authority,’’ each such an excess. ‘‘(4) SCOPE OF ALLOCATIONS IN THE SENATE.— place it appears and insert ‘‘and’’ before ‘‘new ‘‘(2) TAX TREATMENT.—For the purposes of In the Senate, the allocations made pursuant to spending’’ each place it appears; this section, no provision of any legislation in- paragraph (2) shall be made for all committees (3) in subsection (b)(1), by striking ‘‘or new volving a change in chapter 1 of the Internal for the first fiscal year covered by the resolution credit authority,’’ and insert ‘‘and’’ before Revenue Code of 1986 shall be treated as affect- and for all committees other than the Committee ‘‘new spending’’; and ing the amount of social security revenues or on Appropriations for the period of fiscal years (4) in subsection (c), by inserting ‘‘and’’ after outlays unless such provision changes the in- covered by such resolution. the semicolon at the end of paragraph (3), strike come tax treatment of social security benefits. ‘‘(b) SUBALLOCATIONS BY APPROPRIATION ‘‘; and’’ at the end of paragraph (4) and insert ‘‘(c) EXCEPTION IN THE HOUSE OF REPRESENT- COMMITTEES.—As soon as practicable after a a period; and strike paragraph (5). ATIVES.—Subsection (a)(1) shall not apply in the concurrent resolution on the budget is agreed to, (b) CONFORMING AMENDMENT.—The item re- House of Representatives to any bill, resolution, the Committee on Appropriations of each House lating to section 308 in the table of contents set or amendment which provides new budget au- (after consulting with the Committee on Appro- forth in section 1(b) of the Congressional Budget thority or new entitlement authority effective priations of the other House) shall suballocate and Impoundment Control Act of 1974 is amend- during such fiscal year, or to any conference re- each amount allocated to it for the budget year ed by striking ‘‘or new credit authority’’ and by port on any such bill or resolution, if— under subsection (a)(1)(A) or (a)(2) among its ‘‘(1) the enactment of such bill or resolution subcommittees. Each Committee on Appropria- inserting ‘‘and’’ after the first comma. SEC. 1609. AMENDMENTS TO SECTION 311. as reported; tions shall promptly report to its House sub- ‘‘(2) the adoption and enactment of such allocations made or revised under this para- Section 311 of the Congressional Budget Act of 1974 is amended to read as follows: amendment; or graph.’’. ‘‘(3) the enactment of such bill or resolution in (b) POINT OF ORDER.—Section 302(c) of the ‘‘NEW BUDGET AUTHORITY, NEW SPENDING AU- the form recommended in such conference re- Congressional Budget Act of 1974 is amended to THORITY, AND REVENUE LEGISLATION MUST BE port; read as follows: WITHIN APPROPRIATE LEVELS would not cause the appropriate allocation of ‘‘(c) POINT OF ORDER.—After the Committee ‘‘SEC. 311. (a) ENFORCEMENT OF BUDGET AG- new discretionary budget authority or new enti- on Appropriations has received an allocation GREGATES.— pursuant to subsection (a) for a fiscal year, it tlement authority made pursuant to section ‘‘(1) IN THE HOUSE OF REPRESENTATIVES.—Ex- 302(a) for such fiscal year, for the committee shall not be in order in the House of Represent- cept as provided by subsection (c), after the atives or the Senate to consider any bill, joint within whose jurisdiction such bill, resolution, Congress has completed action on a concurrent or amendment falls, to be exceeded.’’. resolution, amendment, motion, or conference resolution on the budget for a fiscal year, it report providing new budget authority for that shall not be in order in the House of Represent- SEC. 1610. AMENDMENT TO SECTION 312. fiscal year within the jurisdiction of that com- atives to consider any bill, joint resolution, (a) IN GENERAL.—Section 312 of the Congres- mittee, until such committee makes the sub- amendment, motion, or conference report pro- sional Budget Act of 1974 is amended to read as allocations required by subsection (b).’’. viding new budget authority for such fiscal follows: (c) ENFORCEMENT OF POINT OF ORDER.—Sec- year, providing new entitlement authority effec- ‘‘POINTS OF ORDER tion 302(f)(2) of the Congressional Budget Act of tive during such fiscal year, or reducing reve- ‘‘SEC. 312. (a) DETERMINATIONS.—For pur- 1974 is amended to read as follows: nues for such fiscal year, if— poses of this title and title IV, the levels of new ‘‘(2) ENFORCEMENT OF COMMITTEE ALLOCA- ‘‘(A) the enactment of such bill or resolution budget authority, budget outlays, spending au- TIONS AND SUBALLOCATIONS.—After a concurrent as reported; thority as described in section 401(c)(2), direct resolution on the budget is agreed to, it shall ‘‘(B) the adoption and enactment of such spending, new entitlement authority, and reve- not be in order in the Senate to consider any amendment; or nues for a fiscal year shall be determined on the bill, joint resolution, amendment, motion, or ‘‘(C) the enactment of such bill or resolution basis of estimates made by the Committee on the conference report that would cause— in the form recommended in such conference re- Budget of the House of Representatives or the ‘‘(A) in the case of any committee except the port; Senate, as the case may be. Committee on Appropriations, the appropriate would cause the appropriate level of total new ‘‘(b) DISCRETIONARY SPENDING POINT OF allocation of new budget authority or outlays budget authority or total budget outlays set ORDER IN THE SENATE.— under subsection (a) to be exceeded; or ‘‘(1) Except as otherwise provided in this sub- ‘‘(B) in the case of the Committee on Appro- forth in the most recently agreed to concurrent section, it shall not be in order in the Senate to priations, the appropriate suballocation of new resolution on the budget for such fiscal year to consider any concurrent resolution on the budg- budget authority or outlays under subsection (b) be exceeded, or would cause revenues to be less et (or amendment, motion, or conference report to be exceeded.’’. than the appropriate level of total revenues set on such a resolution) that would exceed any of (d) SEPARATE ALLOCATIONS.—Section 302(g) is forth in such concurrent resolution except in the amended to read as follows: case that a declaration of war by the Congress the discretionary spending limits in section ‘‘(g) SEPARATE ALLOCATIONS.—The Commit- is in effect. 251(c) of the Balanced Budget and Emergency tees on Appropriations and the Budget shall ‘‘(2) IN THE SENATE.—After a concurrent reso- Deficit Control Act of 1985. make separate allocations under subsections (a) lution on the budget is agreed to, it shall not be ‘‘(2) This subsection shall not apply if a dec- and (b) consistent with the categories in section in order in the Senate to consider any bill, reso- laration of war by the Congress is in effect or if 251(c) of the Balanced Budget and Emergency lution, amendment, motion, or conference report a joint resolution pursuant to section 258 of the Deficit Control Act of 1985.’’. that— Balanced Budget and Emergency Deficit Con- SEC. 1606. AMENDMENTS TO SECTION 303. ‘‘(A) would cause the appropriate level of trol Act of 1985 has been enacted. (a) IN GENERAL.—Section 303 of the Congres- total new budget authority or total outlays set ‘‘(c) MAXIMUM DEFICIT AMOUNT POINT OF sional Budget Act of 1974 is amended— forth for the first fiscal year in such resolution ORDER IN THE SENATE.—It shall not be in order (1) by striking ‘‘NEW CREDIT AUTHOR- to be exceeded; or in the Senate to consider any concurrent resolu- ITY,’’ in the center heading; ‘‘(B) would cause revenues to be less than the tion on the budget for a fiscal year under sec- (2) by striking paragraph (4) of subsection (a) appropriate level of total revenues set forth for tion 301, or to consider any amendment to that and be redesignating paragraphs (5) and (6) as the first fiscal year covered by such resolution concurrent resolution, or to consider a con- paragraphs (4) and (5), respectively; or for the period including the first fiscal year ference report on that concurrent resolution— (3) in subsection (b)(1)(A), by inserting ‘‘ad- plus the following 4 fiscal years in such resolu- ‘‘(1) if the level of total budget outlays for the vanced, discretionary’’ before ‘‘new budget au- tion. first fiscal year that is set forth in that concur- thority’’; and ‘‘(3) ENFORCEMENT OF SOCIAL SECURITY LEV- rent resolution or conference report exceeds the (4) by striking subsection (c). ELS IN THE SENATE.—After a concurrent resolu- recommended level of Federal revenues set forth (b) CONFORMING AMENDMENT.—The item re- tion on the budget is agreed to, it shall not be for that year by an amount that is greater than lating to section 303 in the table of contents set in order in the Senate to consider any bill, reso- the maximum deficit amount, if any, specified in forth in section 1(b) of the Congressional Budget lution, amendment, motion, or conference report the Balanced Budget and Emergency Deficit and Impoundment Control Act of 1974 is amend- that would cause a decrease in social security Control Act of 1985 for such fiscal year; or ed by striking ‘‘new credit authority,’’. surpluses or an increase in social security defi- ‘‘(2) if the adoption of such amendment would SEC. 1607. AMENDMENT TO SECTION 305. cits derived from the levels of social security rev- result in a level of total budget outlays for that Section 305(a)(1) of the Congressional Budget enues and social security outlays set forth for fiscal year which exceeds the recommended level Act of 1974 is amended by inserting ‘‘when the the first fiscal year covered by the resolution of Federal revenues for that fiscal year, by an House is not in session’’ after ‘‘holidays’’ each and for the period including the first fiscal year amount that is greater than the maximum def- place it appears. plus the following 4 fiscal years in such resolu- icit amount, if any, specified in the Balanced SEC. 1608. AMENDMENT TO SECTION 308. tion. Budget and Emergency Deficit Control Act of (a) ELIMINATION OF REFERENCES TO CREDIT ‘‘(b) SOCIAL SECURITY LEVELS.— 1985 for such fiscal year. AUTHORITY.—Section 308 of the Congressional ‘‘(1) IN GENERAL.—For the purposes of sub- ‘‘(d) TIMING OF POINTS OF ORDER IN THE SEN- Budget Act of 1974 is amended— section (a)(3), social security surpluses equal the ATE.—A point of order under this Act may not

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00200 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6869 be raised against a bill, resolution, amendment, ‘‘(1) the discretionary spending limits as set recent President’s budget submitted to Congress. motion, or conference report while an amend- forth in the most recently adopted concurrent This includes the sale of loan assets, with or ment or motion, the adoption of which would resolution on the budget; without recourse, and the purchase of guaran- remedy the violation of this Act, is pending be- ‘‘(2) the allocations made pursuant to the teed loans. This also includes any action result- fore the Senate. most recently adopted concurrent resolution on ing from new legislation, or from the exercise of ‘‘(e) POINTS OF ORDER IN THE SENATE AGAINST the budget pursuant to section 302(a); and administrative discretion under existing law, AMENDMENTS BETWEEN THE HOUSES.—Each pro- ‘‘(3) the budgetary aggregates as set forth in that directly or indirectly alters the estimated vision of this Act that establishes a point of the most recently adopted concurrent resolution cost of outstanding direct loans (or direct loan order against an amendment also establishes a on the budget. obligations) or loan guarantees (or loan guar- point of order in the Senate against an amend- ‘‘(d) REPORTING REVISED SUBALLOCATIONS.— antee commitments) such as a change in collec- ment between the Houses. If a point of order Following the adjustments made under sub- tion procedures. The term ‘modification’ does under this Act is raised in the Senate against an section (a), the Committees on Appropriations of not include the routine administrative work- amendment between the Houses, and the point the Senate and the House of Representatives outs of troubled loans or loans in imminent de- of order is sustained, the effect shall be the same shall report appropriately revised suballocations fault. Work-outs are actions undertaken to as if the Senate had disagreed to the amend- pursuant to section 302(b) to carry out this sub- maximize the repayments to the Government ment. section. under existing direct loans or to minimize claims ‘‘(f) EFFECT OF A POINT OF ORDER ON A BILL ‘‘(e) DEFINITIONS.—As used in subsection under existing loan guarantees. The expected ef- IN THE SENATE.—In the Senate, if the Chair sus- (a)(1)(A), when referring to continuing dis- fects of such work-outs shall be included in the tains a point of order under this Act against a ability reviews, the terms ‘continuing disability original estimate of the cash flows. Insofar as bill, the Chair shall then send the bill to the reviews’, ‘additional new budget authority’, and the effects on cash flows are more or less than committee of appropriate jurisdiction for further ‘additional outlays’ shall have the same mean- originally estimated, the differences in cash consideration.’’. ings as provided in section 251(b)(2)(C)(ii) of the flows shall be included in a reestimate of the (b) CONFORMING AMENDMENTS.—Sections Balanced Budget and Emergency Deficit Con- cost. The term ‘modification’ does not include 302(g), 311(c), and 313(e) of the Congressional trol Act of 1985.’’. changes in loan or guarantee terms resulting Budget Act of 1974 are repealed. (b) TABLE OF CONTENTS.—The table of con- from the exercise by the borrower of an option SEC. 1611. ADJUSTMENTS. tents set forth in section 1(b) of the Congres- included in the loan or guarantee contract. The (a) IN GENERAL.—Title III of the Congres- sional Budget and Impoundment Control Act of expected effects of such changes in terms shall sional Budget Act of 1974 is amended by adding 1974 is amended by— be included in the original estimate of the cash at the end the following new sections: (1) striking the item for section 312 and insert- flow. Insofar as the effects on cash flow are ‘‘ADJUSTMENTS ing the following: more or less than originally estimated, the dif- ferences in cash flow shall be included in a re- ‘‘SEC. 314. (a) ADJUSTMENTS.—When— ‘‘Sec. 312. Points of order.’’; and ‘‘(1)(A) the Committee on Appropriations re- (2) adding after the item relating to section estimate of the cost; and’’. (b) SECTION 504.—Section 504 of the Federal ports an appropriation measure for fiscal year 313 the following new item: 1998, 1999, 2000, 2001, or 2002 that specifies an Credit Reform Act of 1990 is amended as follows: ‘‘Sec. 314. Adjustments.’’. (1) Amend subsection (b)(1) to read as follows: amount for emergencies pursuant to section SEC. 1612. AMENDMENTS TO TITLE V. ‘‘(1) new budget authority to cover their costs 251(b)(2)(A) of the Balanced Budget and Emer- (a) SECTION 502.—Section 502 of the Federal is provided in advance in appropriation Acts;’’. gency Deficit Control Act of 1985 or for con- (2) In subsection (b)(2), strike ‘‘enacted’’ and tinuing disability reviews pursuant to section Credit Reform Act of 1990 is amended as follows: (1) In the second sentence of paragraph (1), insert ‘‘provided in an appropriation Act’’. 251(b)(2)(C) of that Act; (3) In subsection (d)(1), strike ‘‘directly or in- ‘‘(B) any other committee reports emergency insert ‘‘and refinancing arrangements that defer payment for more than 90 days, including the directly alter the costs of outstanding direct legislation described in section 252(e) of that loans and loan guarantees’’ and insert ‘‘modify Act; sale of a government asset on credit terms’’ be- fore the period. outstanding direct loans (or direct loan obliga- ‘‘(C) the Committee on Appropriations reports tions) or loan guarantees (or loan guarantee an appropriation measure for fiscal year 1998, (2) In paragraph (5)(A), insert ‘‘or modifica- tion thereof’’ before the first comma. commitments)’’. 1999, 2000, 2001, or 2002 that includes an appro- (4) In subsection (e), strike ‘‘A direct loan ob- (3) In paragraph (5)(B)(iii), strike ‘‘and other priation with respect to clause (i) or (ii), the ad- ligation or loan guarantee commitment’’ and in- recoveries’’ and insert ‘‘, other recoveries, and justment shall be the amount of budget author- sert ‘‘An outstanding direct loan (or direct loan routine workouts of troubled loans or loans in ity in the measure that is the dollar equivalent, obligation) or loan guarantee (or loan guarantee imminent default when those workouts are to in terms of Special Drawing Rights, of— commitment)’’, after ‘‘unless’’ insert ‘‘new’’, and maximize repayments to the Government or to ‘‘(i) an increase in the United States quota as strike ‘‘or from other budgetary resources’’. part of the International Monetary Fund Elev- minimize claims on the Government’’. (c) SECTION 505.—Section 505 of the Federal enth General Review of Quotas (United States (4) In paragraph (5)(C), strike ‘‘, and’’ at the Credit Reform Act of 1990 is amended as follows: Quota); or end of clause (i), strike ‘‘the’’ in clause (ii) and (1) In subsection (c), by inserting before the ‘‘(ii) an increase in the maximum amount strike the period and insert ‘‘, and’’ at the end period at the end of the second sentence the fol- available to the Secretary of the Treasury pur- of that clause, and at the end add the following lowing: ‘‘, except that the rate of interest suant to section 17 of the Bretton Woods Agree- new clause: charged by the Secretary on lending to financ- ments Act, as amended from time to time (New ‘‘(iii) routine workouts of troubled loans or ing accounts (including amounts treated as Arrangements to Borrow); or loans in imminent default when those workouts lending to financing accounts by the Federal Fi- ‘‘(D) the Committee on Appropriations reports are to maximize the repayments to the Govern- nancing Bank (hereinafter in this subsection re- an appropriation measure for fiscal year 1998, ment or to minimize claims on the Govern- ferred to as the ‘Bank‘) pursuant to section 1999, or 2000 that includes an appropriation for ment.’’. 406(b)) and the rate of interest paid to financing arrearages for international organizations, (5) In paragraph (5), amend subparagraph (D) accounts on uninvested balances in financing international peacekeeping, and multilateral de- to read as follows: accounts shall be the same as the rate deter- velopment banks during that fiscal year, and ‘‘(D) The cost of a modification is the dif- mined pursuant to section 502(5)(E). For guar- the sum of the appropriations for the period of ference in cost that results from the modification anteed loans financed by the Bank and treated fiscal years 1998 through 2000 does not exceed of a direct loan or loan guarantee (or direct as direct loans by a Federal agency pursuant to $1,884,000,000 in budget authority; or loan obligation or loan guarantee commitment). section 406(b), any fee or interest surcharge (the ‘‘(2) a conference committee submits a con- This difference in cost is the difference between amount by which the interest rate charged ex- ference report thereon; the currently estimated net present value of the ceeds the rate determined pursuant to section the chairman of the Committee on the Budget of remaining cash flows under the terms of the di- 502(5)(E)) that the Bank charges to a private the Senate or House of Representatives (which- rect loan or loan guarantee contract assumed in borrower pursuant to section 6(c) of the Federal ever is appropriate) shall make the adjustments the most recent President’s budget submitted to Financing Bank Act of 1973 shall be considered referred to in subsection (c) to reflect the addi- Congress, and the currently estimated net a cash flow to the Government for the purposes tional new budget authority for such matter present value of the remaining cash flows under of determining the cost of the direct loan pursu- provided in that measure or conference report the terms of the contract, as modified. Except ant to section 502(5). All such amounts shall be and the additional outlays flowing from such for interest rates, the estimates shall be con- credited to the appropriate financing account. amounts for such matter. sistent with the economic and technical assump- The Bank is authorized to require reimburse- ‘‘(b) APPLICATION OF ADJUSTMENTS.—The ad- tions underlying the most recent President’s ment from a Federal agency to cover the admin- justments and revisions to allocations, aggre- budget submitted to Congress.’’. istrative expenses of the Bank that are attrib- gates, and limits made by the Chairman of the (6) Redesignate paragraph (9) as paragraph utable to the direct loans financed for that Committee on the Budget pursuant to subsection (10) and after paragraph (8) add the following agency. All such payments by an agency shall (a) for legislation shall only apply while such new paragraph: be considered administrative expenses subject to legislation is under consideration shall only per- ‘‘(9) The term ‘modification’ means any Gov- section 504(g). This section shall apply to trans- manently take effect upon the enactment of that ernment action that alters the estimated cost of actions related to direct loan obligations or loan legislation. an outstanding direct loan (or direct loan obli- guarantee commitments made on or after Octo- ‘‘(c) CONTENT OF ADJUSTMENTS.—The adjust- gation) or an outstanding loan guarantee (or ber 1, 1991.’’. ments referred to in subsection (a) shall consist loan guarantee commitment) from the estimate (2) In subsection (c), by striking ‘‘supercede’’ of adjustments, as appropriate, to— based on the cash flows contained in the most and inserting ‘‘supersede’’.

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00201 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6870 CONGRESSIONAL RECORD — SENATE June 27, 1997 (3) By amending subsection (d) to read as fol- ruling of the Chair on a point of order raised rect spending authority, and obligation limita- lows: under sections 305(b)(2), 305(c)(4), 306, 310(d)(2), tions.’’; ‘‘(d) AUTHORIZATION FOR LIQUIDATING AC- 313, 904(c), and 904(d) of this Act. (3) in paragraph (9), by striking ‘‘submission COUNTS.—(1) Amounts in liquidating accounts ‘‘(3) An affirmative vote of three-fifths of the of the fiscal year 1992 budget that are not in- shall be available only for payments resulting Members, duly chosen and sworn, shall be re- cluded with a budget submission’’ and inserting from direct loan obligations or loan guarantee quired in the Senate to sustain an appeal of the ‘‘that budget submission that are not included commitments made prior to October 1, 1991. ruling of the Chair on a point of order raised with that budget submission’’; These payments shall include— under sections 301(i), 302(c), 302(f), 310(g), (4) in paragraph (14), by inserting ‘‘first 4’’ ‘‘(A) interest payments and principal repay- 311(a), 312(b), and 312(c) of this Act and sections before ‘‘fiscal years’’ and by striking ‘‘1995’’ and ments to the Treasury or the Federal Financing 258(a)(4)(C), 258A(b)(3)(C)(I), 258B(f)(1), inserting ‘‘2006’’; and Bank for amounts borrowed; 258B(h)(1), 258(h)(3), 258C(a)(5), and 258C(b)(1) (5) by striking paragraphs (17) and (20) and ‘‘(B) disbursements of loans; of the Balanced Budget and Emergency Deficit by redesignating paragraphs (18), (19), and (21) ‘‘(C) default and other guarantee claim pay- Control Act of 1985.’’. as paragraphs (17), (18), and (19), respectively. ments; (c) EXPIRATION OF SUPERMAJORITY VOTING SEC. 1653. ENFORCING DISCRETIONARY SPEND- EQUIREMENTS ‘‘(D) interest supplement payments; R .—Section 904 of the Congres- ING LIMITS. ‘‘(E) payments for the costs of foreclosing, sional Budget Act of 1974 is amended by adding (a) EXTENSION THROUGH FISCAL YEAR 2002.— managing, and selling collateral that are cap- at the end the following: Section 251 of the Balanced Budget and Emer- italized or routinely deducted from the proceeds ‘‘(e) EXPIRATION OF CERTAIN SUPERMAJORITY gency Deficit Control Act of 1985 is amended— of sales; VOTING REQUIREMENTS.—Subsections (c)(2) and (1) in the side heading of subsection (a), by ‘‘(F) payments to financing accounts when re- (d)(3) shall expire on September 30, 2002.’’. striking ‘‘1991–1998’’ and inserting ‘‘1997–2002’’; quired for modifications; SEC. 1615. REPEAL OF SECTIONS 905 AND 906. (2) in subsection (a)(7), by inserting ‘‘(exclud- ‘‘(G) administrative expenses, if— (a) REPEALER.—Sections 905 and 906 of the ‘‘(i) amounts credited to the liquidating ac- Congressional Budget and Impoundment Con- ing Saturdays, Sundays, and legal holidays)’’ count would have been available for administra- trol Act of 1974 are repealed. after ‘‘days’’; tive expenses under a provision of law in effect (b) CONFORMING AMENDMENTS.—The table of (3) in the first sentence of subsection (b)(1), by prior to October 1, 1991; and contents set forth in section 1(b) of the Congres- striking ‘‘1992, 1993, 1994, 1995, 1996, 1997 or ‘‘(ii) no direct loan obligation or loan guar- sional Budget and Impoundment Control Act of 1998’’ and inserting ‘‘1997 or any fiscal year antee commitment has been made, or any modi- 1974 is amended by striking the items relating to thereafter through 2002’’ and by striking fication of a direct loan or loan guarantee has sections 905 and 906. ‘‘through 1998’’ and inserting ‘‘through 2002’’; been made, since September 30, 1991; and SEC. 1616. AMENDMENTS TO SECTIONS 1022 AND (4) in subsection (b)(1), by striking ‘‘the fol- ‘‘(H) such other payments as are necessary for 1024. lowing:’’ and all that follows through ‘‘in con- the liquidation of such direct loan obligations (a) SECTION 1022.—Section 1022(b)(1)(F) of cepts and definitions’’ the first place it appears and loan guarantee commitments. Congressional Budget and Impoundment Con- and inserting ‘‘the following: the adjustments’’ ‘‘(2) Amounts credited to liquidating accounts trol Act of 1974 is amended by striking ‘‘section and by striking subparagraphs (B) and (C); in any year shall be available only for payments 601’’ and inserting ‘‘section 251(c) the Balanced (5) in subsection (b)(1), as amended, by strik- required in that year. Any unobligated balances Budget and Emergency Deficit Control Act of ing the last sentence and inserting ‘‘Changes in in liquidating accounts at the end of a fiscal 1985’’. concepts and definitions may only be made after year shall be transferred to miscellaneous re- (b) SECTION 1024.—Section 1024(a)(1)(B) of consultation with the committees on Appropria- ceipts as soon as practicable after the end of the Congressional Budget and Impoundment Con- tions and the Budget of the House of Represent- fiscal year. trol Act of 1974 is amended by striking ‘‘section atives and the Senate and such consultation ‘‘(3) If funds in liquidating accounts are in- 601(a)(2)’’ and inserting ‘‘section 251(c) the Bal- shall include written communication to such sufficient to satisfy obligations and commit- anced Budget and Emergency Deficit Control committees that affords such committees the op- ments of said accounts, there is hereby provided Act of 1985’’. portunity to comment before official action is permanent, indefinite authority to make any SEC. 1617. AMENDMENT TO SECTION 1026. taken with respect to such changes.’’; payments required to be made on such obliga- Section 1026(7)(A)(iv) of the Congressional (6) in subsection (b)(2), by striking ‘‘1991, 1992, tions and commitments.’’. Budget and Impoundment Control Act of 1974 is 1993, 1994, 1995, 1996, 1997, or 1998’’ and insert- SEC. 1613. REPEAL OF TITLE VI. amended by striking ‘‘and’’ the second place it ing ‘‘1997 or any fiscal year thereafter through (a) REPEALER.—Title VI of the Congressional appears and inserting ‘‘or’’. 2002’’, by striking ‘‘through 1998’’ and inserting ‘‘through 2002’’, and by striking subparagraphs Budget Act of 1974 is repealed. Subtitle B—Amendments to the Balanced (A), (B), (C), (E), and (G), and by redesignating (b) CONFORMING AMENDMENTS.—Title VI of Budget and Emergency Deficit Control Act subparagraphs (D), (F), and (H) as subpara- the table of contents set forth in section 1(b) of of 1985 graphs (A), (B), and (C), respectively; the Congressional Budget and Impoundment SEC. 1651. PURPOSE. Control Act of 1974 is repealed. (7) in subsection (b)(2)(A), as redesignated, by This subtitle extends discretionary spending striking ‘‘(i)’’, by striking clause (ii), and by in- SEC. 1614. AMENDMENTS TO SECTION 904. limits and pay-as-you-go requirements. serting ‘‘fiscal’’ before ‘‘years’’; (a) WAIVERS.—Section 904(c) of the Congres- SEC. 1652. GENERAL STATEMENT AND DEFINI- (8) in subsection (b)(2)(B), as redesignated, by sional Budget Act of 1974 is amended to read as TIONS. striking everything after ‘‘the adjustment in follows: (a) GENERAL STATEMENT.—Section 250(b) of outlays’’ and inserting ‘‘for a fiscal year is the ‘‘(c) WAIVERS.— the Balanced Budget and Emergency Deficit amount of the excess but not to exceed 0.5 per- ‘‘(1) Sections 305(b)(2), 305(c)(4), 306, 310(d)(2), Control Act of 1985 is amended by striking the cent of the adjusted discretionary spending limit 313, 904(c), and 904(d) of this Act may be waived first two sentences and inserting the following: on outlays for that fiscal year in fiscal year 1997 or suspended in the Senate only by the affirma- ‘‘This part provides for the enforcement of a or any fiscal year thereafter through 2002; tive vote of three-fifths of the Members, duly balanced budget by fiscal year 2002 as called for (9) in subsection (b)(2)(C)(i), as redesignated— chosen and sworn. in House Concurrent Resolution 84 (105th Con- ‘‘(2) Sections 301(i), 302(c), 302(f), 310(g), (A) in subclause (III) by striking gress, 1st session).’’. ‘‘$245,000,000’’ and inserting ‘‘$290,000,000’’; 311(a), 312(b), and 312(c) of this Act and sections (b) DEFINITIONS.—Section 250(c) of the Bal- (B) in subclause (IV), by striking 258(a)(4)(C), 258A(b)(3)(C)(I), 258B(f)(1), anced Budget and Emergency Deficit Control ‘‘$280,000,000’’ and inserting ‘‘$520,000,000’’; 258B(h)(1), 258(h)(3), 258C(a)(5), and 258C(b)(1) Act of 1985 is amended— of the Balanced Budget and Emergency Deficit (1) by striking paragraph (4) and inserting the (C) in subclause (V), by striking Control Act of 1985 may be waived or suspended following: ‘‘$317,500,000’’ and inserting ‘‘$520,000,000’’; in the Senate only by the affirmative vote of ‘‘(4) The term ‘category’ means defense, non- (D) in subclause (VI), by striking three-fifths of the Members, duly chosen and defense, and violent crime reduction discre- ‘‘$317,500,000’’ and inserting ‘‘$520,000,000’’; and sworn.’’. tionary appropriations as specified in the joint (E) in subclause (VII), by striking (b) APPEALS.—Section 904(d) of the Congres- explanatory statement accompanying a con- ‘‘$317,000,000’’ and inserting ‘‘$520,000,000’’; and sional Budget Act of 1974 is amended to read as ference report on the Balanced Budget Act of (10) by adding at the end of subsection (b)(2) follows: 1997. New accounts or activities shall be cat- the following: ‘‘(d) APPEALS.— egorized only after consultation with the com- ‘‘(D) ALLOWANCE FOR IMF.—If an appropria- ‘‘(1) Appeals in the Senate from the decisions mittees on Appropriations and the Budget of the tions bill or joint resolution is enacted for fiscal of the Chair relating to any provision of title III House of Representatives and the Senate and year 1998, 1999, 2000, 2001, or 2002 that includes or IV or section 1017 shall, except as otherwise such consultation shall include written commu- an appropriation with respect to clause (i) or provided therein, be limited to 1 hour, to be nication to such committees that affords such (ii), the adjustment shall be the amount of budg- equally divided between, and controlled by, the committees the opportunity to comment before et authority in the measure that is the dollar mover and the manager of the resolution, con- official action is taken with respect to new ac- equivalent, in terms of Special Drawing Rights, current resolution, reconciliation bill, or rescis- counts or activities.’’; of— sion bill, as the case may be. (2) by striking paragraph (6) and inserting the ‘‘(i) an increase in the United States quota as ‘‘(2) An affirmative vote of three-fifths of the following: part of the International Monetary Fund Elev- Members, duly chosen and sworn, shall be re- ‘‘(6) The term ‘budgetary resources’ means enth General Review of Quotas (United States quired in the Senate to sustain an appeal of the new budget authority, unobligated balances, di- Quota); or

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00202 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6871 ‘‘(ii) any increase in the maximum amount ‘‘(B) for the violent crime reduction category: subsection (d) for the current year that are not available to the Secretary of the Treasury pur- $4,500,000,000 in new budget authority and reflected in the final OMB sequestration report suant to section 17 of the Bretton Woods Agree- $5,554,000,000 in outlays; for that year, other than any amounts included ments Act, as amended from time to time (New ‘‘(5) with respect to fiscal year 2001— in such estimates resulting from— Arrangements to Borrow). ‘‘(A) for the discretionary category: ‘‘(i) full funding of, and continuation of, the ‘‘(E) ALLOWANCE FOR INTERNATIONAL ARREAR- $537,677,000,000 in new budget authority and deposit insurance guarantee commitment in ef- AGES.— $558,460,000,000 in outlays; and fect under current law; and ‘‘(i) ADJUSTMENTS.—If an appropriations bill ‘‘(B) for the violent crime reduction category: ‘‘(ii) emergency provisions as designated or joint resolution is enacted for fiscal year 1998, $4,355,000,000 in new budget authority and under subsection (e).’’; 1999 or 2000 that includes an appropriation for $5,936,000,000 in outlays; (2) by amending subsection (d) to read as fol- arrearages for international organizations, ‘‘(6) with respect to fiscal year 2002— lows: international peacekeeping, and multilateral de- ‘‘(A) for the discretionary category: ‘‘(d) ESTIMATES.— velopment banks for that fiscal year, the adjust- $546,619,000,000 in new budget authority and ‘‘(1) CBO ESTIMATES.—As soon as practicable ment shall be the amount of budget authority in $556,314,000,000 in outlays; and after Congress completes action on any direct such measure and the outlays flowing in all fis- ‘‘(B) for the violent crime reduction category: spending or receipts legislation, CBO shall pro- cal years from such budget authority. $4,455,000,000 in new budget authority and vide an estimate to OMB of the legislation. ‘‘(ii) LIMITATIONS.—The total amount of ad- $4,485,000,000 in outlays; ‘‘(2) OMB ESTIMATES.—Not later than 5 cal- justments made pursuant to this subparagraph as adjusted in strict conformance with sub- endar days (excluding Saturdays, Sundays, and shall not exceed $1,884,000,000 in budget author- section (b).’’. legal holidays) after the enactment of any direct ity. (2) TRANSFERS INTO THE FUND.—On the first spending or receipts legislation, OMB shall ‘‘(F) ALLOWANCES FOR TRANSPORTATION.— day of the following fiscal years, the following transmit a report to the House of Representa- ‘‘(i) IN GENERAL.—If during the 105th Con- amounts shall be transferred from the general tives and to the Senate containing— gress, revenue increases or direct spending re- fund to the Violent Crime Reduction Trust ‘‘(A) the CBO estimate of that legislation; ductions creditable under section 252 are en- Fund— ‘‘(B) an OMB estimate of that legislation acted for transportation reserve funds as pro- (A) for fiscal year 2001, $4,355,000,000; and using current economic and technical assump- vided in sections 207, 207A, 208, or 209 of House (B) for fiscal year 2002, $4,455,000,000. tions; and Concurrent Resolution 84 (105th Congress), (3) REPEAL OF DUPLICATIVE PROVISIONS.—Sec- ‘‘(C) an explanation of any difference between OMB shall determine the amount of the budget tions 201, 202, and 206 of House Concurrent Res- the 2 estimates. authority adjustment for the applicable program olution 84 (105th Congress) are repealed. ‘‘(3) SCOPE OF ESTIMATES.—The estimates for each fiscal year through 2002. SEC. 1654. VIOLENT CRIME REDUCTION TRUST shall be prepared in conformance with ‘‘(ii) ADJUSTMENTS.—If for fiscal years 1998 FUND. scorekeeping guidelines and shall include the through 2002, discretionary appropriations are (a) SEQUESTRATION REGARDING VIOLENT amount of change in outlays or receipts, as the enacted for a fiscal year that designates funding CRIME REDUCTION TRUST FUND.—Section 251A case may be, for the current year (if applicable), for the applicable program, the adjustment is of the Balanced Budget and Emergency Deficit the budget year, and each outyear. the amount of the discretionary budget author- Control Act of 1985 is repealed. ‘‘(4) CONSULTATION.—OMB and CBO, after ity appropriated for such program in such fiscal (b) CONFORMING AMENDMENT.—Section 310002 consultation with each other and the Commit- year and the outlays in all years flowing from of Public Law 103–322 (42 U.S.C. 14212) is re- tees on the Budget of the House of Representa- such discretionary budget authority, but not to pealed. tives and the Senate, shall— exceed the amount available for such program SEC. 1655. ENFORCING PAY-AS-YOU-GO. ‘‘(A) determine scorekeeping guidelines; and pursuant to this subparagraph. ‘‘(B) in conformance with such guidelines, (a) EXTENSION.—Section 252 of the Balanced ‘‘(iii) LIMITATIONS.—(I) Revenue increases Budget and Emergency Deficit Control Act of prepare estimates under this subsection.’’; and and direct spending reductions credited under 1985 is amended— (3) in subsection (e), by striking ‘‘, for any fis- this subparagraph shall be so designated in stat- (1) by striking subsections (a) and (b) and in- cal year from 1991 through 1998,’’ and by strik- ute and shall not be credited under section 252. serting the following: ing ‘‘through 1995’’. ‘‘(II) The amount of the budget authority ad- ‘‘(a) PURPOSE.—The purpose of this section is SEC. 1656. REPORTS AND ORDERS. justment determined for a fiscal year under to assure that any legislation enacted prior to Section 254 of the Balanced Budget and Emer- clause (ii) shall not exceed the amount of the September 30, 2002, affecting direct spending or gency Deficit Control Act of 1985 is amended— revenue increase or direct spending reduction receipts that increases the deficit will trigger an (1) by striking subsection (c) and redesig- credited for a fiscal year under clause (i) and offsetting sequestration. nating subsections (d) through (k) as (c) shall meet the terms and conditions of sections ‘‘(b) SEQUESTRATION.— through (j), respectively; 207, 207A, 208, or 209 of House Concurrent Reso- ‘‘(1) TIMING.—For fiscal years 1998 through (2) in subsection (c)(2) (as redesignated), by lution 84 (105th Congress), as applicable. 2002, within 15 calendar days after Congress ad- striking ‘‘1998’’ and inserting ‘‘2002’’; (b) SHIFTING OF DISCRETIONARY SPENDING journs to end a session and on the same day as (3)(A) in subsection (f)(2)(A) (as redesig- LIMITS INTO GRAMM-RUDMAN.— nated), by striking ‘‘1998’’ and inserting ‘‘2002’’; (1) IN GENERAL.—Section 251 of the Balanced a sequestration (if any) under sections 251 and 253, there shall be a sequestration to offset the and Budget and Emergency Deficit Control Act of (B) in subsection (f)(3) (as redesignated), by 1985 is amended by adding at the end the fol- amount of any net deficit increase in the budget year caused by all direct spending and receipts striking ‘‘through 1998’’; and lowing: (4) by striking subsection (h), as redesignated, ‘‘(c) DISCRETIONARY SPENDING LIMIT.—As legislation (after adjusting for any prior seques- tration as provided by paragraph (2)) plus any and redesignating subsection (i), as redesig- used in this part, the term ‘discretionary spend- nated, as subsection (h). ing limit’ means— net deficit increase in the prior fiscal year ‘‘(1) with respect to fiscal year 1997, for the caused by all direct spending and receipts legis- SEC. 1657. EXEMPT PROGRAMS AND ACTIVITIES. discretionary category, the current adjusted lation not reflected in the final OMB sequestra- (a) VETERANS PROGRAMS.—Section 255(b) of amount of new budget authority and outlays; tion report for that year. the Balanced Budget and Emergency Deficit ‘‘(2) with respect to fiscal year 1998— ‘‘(2) CALCULATION OF DEFICIT INCREASE.— Control Act of 1985 is amended as follows: ‘‘(A) for the defense category: $269,000,000,000 OMB shall calculate the amount of deficit in- (1) In the item relating to Veterans Insurance in new budget authority and $266,823,000,000 in crease, if any, in the budget year by adding— and Indemnity, strike ‘‘Indemnity’’ and insert outlays; ‘‘(A) all applicable estimates of direct spend- ‘‘Indemnities’’. ‘‘(B) for the nondefense category: ing and receipts legislation transmitted under (2) In the item relating to Veterans’ Canteen $252,357,000,000 in new budget authority and subsection (d) applicable to the budget year, Service Revolving Fund, strike ‘‘Veterans’ ’’. $282,853,000,000 in outlays; and other than any amounts included in such esti- (3) In the item relating to Benefits under ‘‘(C) for the violent crime reduction category: mates resulting from— chapter 21 of title 38, strike ‘‘(36–0137–0–1–702)’’ $5,500,000,000 in new budget authority and ‘‘(i) full funding of, and continuation of, the and insert ‘‘(36–0120–0–1–701)’’. $3,592,000,000 in outlays; deposit insurance guarantee commitment in ef- (4) In the item relating to Veterans’ compensa- ‘‘(3) with respect to fiscal year 1999— fect under current law; and tion, strike ‘‘Veterans’ compensation’’ and in- ‘‘(A) for the defense category: $271,500,000,000 ‘‘(ii) emergency provisions as designated sert ‘‘Compensation’’. in new budget authority and $266,518,000,000 in under subsection (e); (5) In the item relating to Veterans’ pensions, outlays; ‘‘(B) the estimated amount of savings in direct strike ‘‘Veterans’ pensions’’ and insert ‘‘Pen- ‘‘(B) for the nondefense category: spending programs applicable to the budget year sions’’. $255,699,000,000 in new budget authority and resulting from the prior year’s sequestration (6) After the last item, insert the following $287,850,000,000 in outlays; and under this section or section 253, if any (except new items: ‘‘(C) for the violent crime reduction category: for any amounts sequestered as a result of any ‘‘Benefits under chapter 35 of title 38, United $5,800,000,000 in new budget authority and deficit increase in the fiscal year immediately States Code, related to educational assistance $4,953,000,000 in outlays; preceding the prior fiscal year), as published in for survivors and dependents of certain veterans ‘‘(4) with respect to fiscal year 2000— OMB’s final sequestration report for that prior with service-connected disabilities (36–0137–0–1– ‘‘(A) for the discretionary category: year; and 702); $532,693,000,000 in new budget authority and ‘‘(C) all applicable estimates of direct spend- ‘‘Assistance and services under chapter 31 of $558,711,000,000 in outlays; and ing and receipts legislation transmitted under title 38, United States Code, relating to training

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00203 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY S6872 CONGRESSIONAL RECORD — SENATE June 27, 1997 and rehabilitation for certain veterans with (T) In the item relating to the Federal pay- (A) Strike the following items: service-connected disabilities (36–0137–0–1–702); ment to the railroad retirement account, strike ‘‘Agency for International Development, ‘‘Benefits under subchapters I, II, and III of ‘‘account’’ and insert ‘‘accounts’’. Housing, and other credit guarantee programs chapter 37 of title 38, United States Code, relat- (U) In the item relating to the health profes- (72–4340–0–3–151); ing to housing loans for certain veterans and for sions graduate student loan insurance fund, in- ‘‘Agricultural credit insurance fund (12–4140– the spouses and surviving spouses of certain vet- sert ‘‘program account’’ after ‘‘fund’’ and strike 0–1–351);’’. erans Guaranty and Indemnity Program Ac- ‘‘(Health Education Assistance Loan Program) (B) In the item relating to Check forgery, count (36–1119–0–1–704); (75–4305–0–3–553)’’ and insert ‘‘(75–0340–0–1– strike ‘‘Check’’ and insert ‘‘United States Treas- ‘‘Loan Guaranty Program Account (36–1025– 552)’’. ury check’’. 0–1–704); and (V) In the item relating to Higher education (C) Strike ‘‘Community development grant ‘‘Direct Loan Program Account (36–1024–0–1– facilities, strike ‘‘and insurance’’. loan guarantees (86–0162–0–1–451);’’. 704).’’. (W) In the item relating to Internal revenue (D) After the item relating to the United (b) CERTAIN PROGRAM BASES.—Section 255(f) collections for Puerto Rico, strike ‘‘852’’ and in- States Treasury Check forgery insurance fund, of the Balanced Budget and Emergency Deficit sert ‘‘806’’. insert the following new item: Control Act of 1985 is amended to read as fol- (X) Amend the item relating to the Panama ‘‘Credit liquidating accounts;’’. lows: Canal Commission to read as follows: (E) Strike the following items: ‘‘(f) OPTIONAL EXEMPTION OF MILITARY PER- ‘‘Panama Canal Commission, Panama Canal ‘‘Credit union share insurance fund (25–4468– SONNEL.— Revolving Fund (95–4061–0–3–403);’’. 0–3–371); ‘‘(1) The President may, with respect to any (Y) In the item relating to the Medical facili- ‘‘Economic development revolving fund (13– military personnel account, exempt from seques- ties guarantee and loan fund, strike ‘‘(75–4430– 4406–0–3); tration or provide for a lower uniform percent- 0–3–551)’’ and insert ‘‘(75–9931–0–3–550)’’. ‘‘Export-Import Bank of the United States, age reduction than would otherwise apply. (Z) In the first item relating to the National Limitation of program activity (83–4027–0–1–155); ‘‘(2) The President may not use the authority Credit Union Administration, insert ‘‘operating ‘‘Federal deposit Insurance Corporation (51– provided by paragraph (1) unless he notifies the fund (25–4056–0–3–373)’’ before the semicolon. 8419–0–8–371); Congress of the manner in which such authority (AA) In the second item relating to the Na- ‘‘Federal Housing Administration fund (86– will be exercised on or before the date specified tional Credit Union Administration, strike ‘‘cen- 4070–0–3–371); ‘‘Federal ship financing fund (69–4301–0–3– in section 254(d) for the budget year.’’. tral’’ and insert ‘‘Central’’ and insert ‘‘(25–4470– 403); (c) OTHER PROGRAMS AND ACTIVITIES.—(1) 0–3–373)’’ before the semicolon. ‘‘Federal ship financing fund, fishing vessels Section 255(g)(1)(A) of the Balanced Budget (BB) In the third item relating to the National (13–4417–0–3–376); Emergency Deficit Control Act of 1985 is amend- Credit Union Administration, strike ‘‘credit’’ ‘‘Government National Mortgage Association, ed as follows: and insert ‘‘Credit’’ and insert ‘‘(25–4468–0–3– Guarantees of mortgage-backed securities (86– (A) After the first item, insert the following 373)’’ before the semicolon. 4238–0–3–371); new item: (CC) After the third item relating to the Na- tional Credit Union Administration, insert the ‘‘Health education loans (75–4307–0–3–553); ‘‘Activities financed by voluntary payments to ‘‘Indian loan guarantee and insurance fund the Government for goods or services to be pro- following new item: ‘‘Office of Thrift Supervision (20–4108–0–3– (14–4410–0–3–452); vided for such payments;’’. ‘‘Railroad rehabilitation and improvement fi- (B) Strike ‘‘Thrift Savings Fund (26–8141–0–7– 373);’’. (DD) In the item relating to Payments to nancing fund (69–4411–0–3–401); 602);’’. health care trust funds, strike ‘‘572’’ and insert ‘‘Rural development insurance fund (12–4155– (C) In the first item relating to the Bureau of ‘‘571’’. 0–3–452); Indian Affairs, insert ‘‘Indian land and water (EE) Strike ‘‘Compact of Free Association, ‘‘Rural electric and telephone revolving fund claims settlements and’’ after the comma. economic assistance pursuant to Public Law 99– (12–4230–8–3–271); (D) In the second item relating to the Bureau 658 (14–0415–0–1–806);’’. ‘‘Rural housing insurance fund (12–4141–0–3– of Indian Affairs, strike ‘‘miscellaneous’’ and ‘‘, (FF) In the item relating to Payments to social 371); tribal trust funds’’ and insert ‘‘Miscellaneous’’ security trust funds, strike ‘‘571’’ and insert ‘‘Small Business Administration, Business before ‘‘trust funds’’. ‘‘651’’. loan and investment fund (73–4154–0–3–376); (E) Strike ‘‘Claims, defense (97–0102–0–1– (GG) Strike ‘‘Payments to state and local gov- ‘‘Small Business Administration, Lease guar- 051);’’. ernment fiscal assistance trust fund (20–2111–0– antees revolving fund (73–4157–0–3–376); (F) In the item relating to Claims, judgments, 1–851);’’. ‘‘Small Business Administration, Pollution and relief acts, strike ‘‘806’’ and insert ‘‘808’’. (HH) In the item relating to Payments to the control equipment contract guarantee revolving (G) Strike ‘‘Coinage profit fund (20–5811–0–2– United States territories, strike ‘‘852’’ and insert fund (73–4147–0–3–376); 803);’’. ‘‘806’’. ‘‘Small Business Administration, Surety bond (H) Insert ‘‘Compact of Free Association (14– (II) Strike ‘‘Resolution Funding Corpora- guarantees revolving fund (73–4156–0–3–376); 0415–0–1–808);’’ after the item relating to claims, tion;’’. ‘‘Department of Veterans Affairs Loan guar- judgments, and relief acts. (JJ) In the item relating to the Resolution anty revolving fund (36–4025–0–3–704);’’. (I) Insert ‘‘Conservation Reserve Program (12– Trust Corporation, insert ‘‘Revolving Fund (22– (d) LOW-INCOME PROGRAMS.—Section 255(h) 2319–0–1–302);’’ after the item relating to the 4055–0–3–373)’’ before the semicolon. of the Balanced Budget and Emergency Deficit Compensation of the President. (KK) After the item relating to the Tennessee Control Act of 1985 is amended as follows: (J) In the item relating to the Customs Service, Valley Authority funds, insert the following (1) In the item relating to Aid to families with strike ‘‘852’’ and insert ‘‘806’’. new items: dependent children, strike ‘‘0412’’ and insert (K) In the item relating to the Comptroller of ‘‘Thrift Savings Fund; ‘‘1501’’. the Currency, insert ‘‘, Assessment funds (20– ‘‘United States Enrichment Corporation (95– (2) Amend the item relating to Child nutrition 8413–0–8–373)’’ before the semicolon. 4054–0–3–271); to read as follows: (L) Strike ‘‘Director of the Office of Thrift Su- ‘‘Vaccine Injury Compensation (75–0320–0–1– ‘‘State child nutrition programs (with the ex- pervision;’’. 551); ception of special milk programs) (12–3539–0–1– (M) Strike ‘‘Eastern Indian land claims settle- ‘‘Vaccine Injury Compensation Program Trust 605);’’. ment fund (14–2202–0–1–806);’’. Fund (20–8175–0–7–551);’’. (3) After the item relating to State child nutri- (N) After the item relating to the Exchange (2) Section 255(g)(1)(B) of the Balanced Budg- tion programs, insert the following new item: stabilization fund, insert the following new et and Emergency Deficit Control Act of 1985 is ‘‘Commodity supplemental food program (12– items: amended as follows: 3512–0–1–605);’’. ‘‘Farm Credit Administration, Limitation on (A) Strike ‘‘The following budget’’ and insert (4) Amend the item relating to the Women, in- Administrative Expenses (78–4131–0–3–351); ‘‘The following Federal retirement and dis- fants, and children program to read as follows: ‘‘Farm Credit System Financial Assistance ability’’. ‘‘Special supplemental nutrition program for Corporation, interest payment (20–1850–0–1– (B) In the item relating to Black lung benefits, women, infants, and children (WIC) (12–3510–0– 908);’’. strike ‘‘lung benefits’’ and insert ‘‘Lung Dis- 1–605).’’. (O) Strike ‘‘Federal Deposit Insurance Cor- ability Trust Fund’’. (e) IDENTIFICATION OF PROGRAMS.—Section poration;’’. (C) In the item relating to the Court of Fed- 255(i) of the Balanced Budget and Emergency (P) In the first item relating to the Federal eral Claims Court Judges’ Retirement Fund, Deficit Control Act of 1985 is amended to read as Deposit Insurance Corporation, insert ‘‘(51– strike ‘‘Court of Federal’’. follows: 4064–0–3–373)’’ before the semicolon. (D) In the item relating to Longshoremen’s ‘‘(i) IDENTIFICATION OF PROGRAMS.—For pur- (Q) In the second item relating to the Federal compensation benefits, insert ‘‘Special workers poses of subsections (b), (g), and (h), each ac- Deposit Insurance Corporation, insert ‘‘(51– compensation expenses,’’ before ‘‘Longshore- count is identified by the designated budget ac- 4065–0–3–373)’’ before the semicolon. men’s’’. count identification code number set forth in the (R) In the third item relating to the Federal (E) In the item relating to Railroad retirement Budget of the United States Government 1998– Deposit Insurance Corporation, insert ‘‘(51– tier II, insert ‘‘Industry Pension Fund’’ after Appendix, and an activity within an account is 4066–0–3–373)’’ before the semicolon. ‘‘tier II’’, and strike ‘‘retirement tier II’’. designated by the name of the activity and the (S) In the item relating to the Federal Housing (3) Section 255(g)(2) of the Balanced Budget identification code number of the account.’’. Finance Board, insert ‘‘(95–4039–0–3–371)’’ be- and Emergency Deficit Control Act of 1985 is (f) OPTIONAL EXEMPTION OF MILITARY PER- fore the semicolon. amended as follows: SONNEL.—Section 255(h) of the Balanced Budget

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00204 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — SENATE S6873 and Emergency Deficit Control Act of 1985 is re- Deficit Control Act of 1985 is amended as fol- penditures and net lending (budget outlays) of pealed. lows: the United States Government. SEC. 1658. GENERAL AND SPECIAL SEQUESTRA- (1) in paragraph (1), strike ‘‘other than a ‘‘(b) No provision of law enacted after the TION RULES. trust or special fund account’’ and insert ‘‘, ex- date of enactment of the Balanced Budget and (a) CONFORMING AMENDMENTS.— cept as provided in paragraph (5)’’ before the Emergency Deficit Control Act of 1985 (other (1) SECTION HEADING.—The section heading of period; and than a provision of an appropriation Act that section 256 of the Balanced Budget and Emer- (2) strike paragraph (4), redesignate para- appropriated funds authorized under the Social gency Deficit Control Act of 1985 is amended by graphs (5) and (6) as paragraphs (4) and (5), re- Security Act as in effect on the date of the en- striking ‘‘EXCEPTIONS, LIMITATIONS, AND spectively, and amend paragraph (5) (as redesig- actment of the Balanced Budget and Emergency SPECIAL RULES’’ and inserting ‘‘GENERAL nated) to read as follows: Deficit control Act of 1985) may provide for pay- AND SPECIAL SEQUESTRATION RULES’’. ‘‘(5) Budgetary resources sequestered in re- ments from the general fund of the Treasury to (2) TABLE OF CONTENTS.—The item relating to volving, trust, and special fund accounts, and any Trust Fund specified in paragraph (1) or section 256 in the table contents set forth in sec- offsetting collections sequestered in appropria- for payments from any such Trust Fund to the tion 250(a) of the Balanced Budget and Emer- tion accounts shall not be available for obliga- general fund of the Treasury.’’. gency Deficit Control Act of 1985 is amended to tion during the fiscal year in which the seques- SEC. 1660. TECHNICAL CORRECTION. read as follows: tration occurs, but shall be available in subse- Section 258 of the Balanced Budget and Emer- ‘‘Sec. 256. General and special sequestration quent years to the extent otherwise provided in gency Deficit Control Act of 1985, entitled rules.’’. law.’’. (b) AUTOMATIC SPENDING INCREASES.—Section ‘‘Modification of Presidential Order’’, is re- SEC. 1659. THE BASELINE. pealed. 256(a) of the Balanced Budget and Emergency (a) IN GENERAL.—Section 257 of the Balanced Deficit Control Act of 1985 is amended by strik- Budget and Emergency Deficit Control Act of SEC. 1661. JUDICIAL REVIEW. ing paragraph (1) and redesignating paragraphs 1985 is amended— Section 274 of the Balanced Budget and Emer- (2) and (3) as paragraphs (1) and (2), respec- (1) by striking subsection (b)(2)(A) and insert- gency Deficit Control Act of 1985 is amended as tively. ing the following: follows: (c) GUARANTEED STUDENT LOAN PROGRAM.— ‘‘(A)(i) No program with estimated current (1) Strike ‘‘252’’ or ‘‘252(b)’’ each place it ap- Section 256(b) of the Balanced Budget and year outlays greater than $50,000,000 shall be pears and insert ‘‘254’’. Emergency Deficit Control Act of 1985 is amend- assumed to expire in the budget year or the out- (2) In subsection (d)(1)(A), strike ‘‘257(l) to the ed to read as follows: years except as provided in clause (ii). extent that’’ and insert ‘‘256(a) if’’, strike the ‘‘(b) STUDENT LOANS.—For all student loans under part B or D of title IV of the Higher Edu- ‘‘(ii) If legislation eliminates direct spending parenthetical phrase, and at the end insert cation Act of 1965 made during the period when authority for a program for the budget year or ‘‘or’’. a sequestration order under section 254 is in ef- any outyear and such legislation provides that (3) In subsection (d)(1)(B), strike ‘‘new budg- fect, origination fees under sections 438(c)(2) the Federal Government has no legal authority et’’ and all that follows through ‘‘spending au- and 456(c) of that Act shall be increased by a or obligation to incur financial obligations for thority’’ and insert ‘‘budgetary resources’’ and uniform percentage sufficient to produce the such program, clause (i) shall not apply and strike ‘‘or’’ after the comma. dollar savings in student loan programs (as a re- CBO and OMB, as appropriate, may score such (4) Strike subsection (d)(1)(C). sult of that sequestration order) required by sec- legislation with the budget authority and outlay (5) Strike subsection (f) and redesignate sub- tion 252 or 253, as applicable.’’. effects resulting from terminating such program sections (g) and (h) as subsections (f) and (g), (d) HEALTH CENTERS.—Section 256(e)(1) of the as provided in such legislation and the baseline respectively. Balanced Budget and Emergency Deficit Con- may assume the expiration of that program as (6) In subsection (g) (as redesignated), strike trol Act of 1985 is amended by striking the dash provided in such legislation.’’; ‘‘base levels of total revenues and total budget and all that follows thereafter and inserting ‘‘2 (2) by adding the end of subsection (b)(2) the outlays, as’’ and insert ‘‘figures’’, and percent.’’. following new subparagraph: ‘‘251(a)(2)(B) or (c)(2),’’ and insert ‘‘254’’. (e) TREATMENT OF FEDERAL ADMINISTRATIVE ‘‘(D) If any law expires before the budget year EXPENSES.—Section 256(h)(4) of the Balanced or any outyear, then any program with esti- SEC. 1662. EFFECTIVE DATE. Budget and Emergency Deficit Control Act of mated current year outlays greater than (a) EXPIRATION.—Section 275(b) of the Bal- 1985 is amended by striking subparagraphs (D) $50,000,000 which operates under that law shall anced Budget and Emergency Deficit Control and (H), by redesignating subparagraphs (E), be assumed to continue to operate under that Act of 1985 is amended— (F), (G), and (I), as subparagraphs (D), (E), (F), law as in effect immediately before its expira- (1) by striking ‘‘Part C of this title, section’’ and (G), respectively, and by adding at the end tion.’’; and inserting ‘‘Sections 251, 252, 253, 258B, the following new subparagraph: (3) in subsection (c)(5), in the second sentence, and’’; ‘‘(H) Farm Credit Administration.’’. by striking ‘‘national product fixed-weight price (2) by striking ‘‘1995’’ and inserting ‘‘2002’’; (f) COMMODITY CREDIT CORPORATION.—Sec- index’’ and inserting ‘‘domestic product chain- and tion 256(j)(5) of the Balanced Budget and Emer- type price index’’; and (3) by adding at the end the following new gency Deficit Control Act of 1985 is amended to (4) by striking subsection (e) and inserting the sentence: ‘‘The remaining sections of part C of read as follows: following: this title shall expire September 30, 2006.’’. ‘‘(5) DAIRY PROGRAM.—Notwithstanding other ‘‘(e) ASSET SALES.—Amounts realized from the (b) EXPIRATION.—Section 14002(c)(3) of the provisions of this subsection, as the sole means sale of an asset shall not be counted for pur- of achieving any reduction in outlays under the Omnibus Budget Reconciliation Act of 1993 is re- poses of sections 251, 252, and 253 against legis- pealed. milk price support program, the Secretary of Ag- lation if that sale would result in a financial SEC. 1663. REDUCTION OF PREEXISTING BAL- riculture shall provide for a reduction to be cost to the Federal Government.’’. made in the price received by producers for all ANCES AND EXCLUSION OF EFFECTS (b) BUDGETARY TREATMENT OF CERTAIN TRUST milk produced in the United States and mar- OF THIS ACT FROM PAYGO SCORE- FUND OPERATIONS.—Section 710 of the Social keted by producers for commercial use. That CARD. Security Act (42 U.S.C. 911) is amended to read Upon the enactment of this Act, the Director price reduction (measured in cents per hundred as follows: weight of milk marketed) shall occur under sec- of the Office of Management and Budget shall— tion 201(d)(2)(A) of the Agricultural Act of 1949 ‘‘BUDGETARY TREATMENT OF TRUST FUND (1) reduce any balances of direct spending (7 U.S.C. 1446(d)(2)(A)), shall begin on the day OPERATIONS and receipts legislation for any fiscal year any sequestration order is issued under section ‘‘SEC. 710. (a) The receipts and disbursements under section 252 of the Balanced Budget and 254, and shall not exceed the aggregate amount of the Federal Old-Age and Survivors Insurance Emergency Deficit Control Act of 1985 to zero; of the reduction in outlays under the milk price Trust Fund and the Federal Disability Insur- and support program that otherwise would have ance Trust Fund and the taxes imposed under (2) not make any estimates of changes in di- been achieved by reducing payments for the sections 1401 and 3101 of the Internal Revenue rect spending outlays and receipts under sub- purchase of milk or the products of milk under Code of 1986 shall not be included in the totals section (d) of such section 252 for any fiscal this subsection during the applicable fiscal of the budget of the United States Government year resulting from the enactment of this Act or year.’’. as submitted by the President or of the congres- any Act enacted pursuant to section 104 or 105 (g) EFFECTS OF SEQUESTRATION.—Section sional budget and shall be exempt from any gen- of House Concurrent Resolution 84 (105th Con- 256(k) of the Balanced Budget and Emergency eral budget limitation imposed by statute on ex- gress).

VerDate Mar 15 2010 22:28 Oct 24, 2013 Jkt 081600 PO 00000 Frm 00205 Fmt 0637 Sfmt 6333 E:\1997SENATE\S27JN7.REC S27JN7 mmaher on DSK5TPTVN1PROD with SOCIALSECURITY June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1337 EXTENSIONS OF REMARKS

IMMIGRATION ECONOMIC IMPACT will decline. But we cannot completely bar Some Americans believe that immigrants the door to newcomers. Immigrants bring vi- HON. LEE H. HAMILTON cause a drain on the economy, since they tality, freshness, and diversity that enriches benefit from social services such as welfare, the country. I believe that a well-regulated OF INDIANA education, and health care. However, there is system of legal immigration is in our na- IN THE HOUSE OF REPRESENTATIVES strong evidence that immigrants overall tional interest. Thursday, June 26, 1997 help the economy. A recent study by the Na- The motto that appears on our currency— ‘‘E Pluribus Unum’’, out of many, one—re- Mr. HAMILTON. Mr. Speaker, I would like to tional Academy of Sciences found that the average immigrant contributes $1800 more in minds us that maintaining the unity of our insert my Washington Report for Wednesday, taxes each year than he or she receives in nation of immigrants is one of America’s June 25, 1997 into the CONGRESSIONAL benefits. The study said this is because im- greatest historic achievements. It will also RECORD. migrants tend to be highly motivated and be one of our greatest challenges in the years A NATION OF IMMIGRANTS experience faster wage growth than native- ahead. Americans have long taken pride in our born Americans. Immigrants sometimes take jobs away heritage as a nation of immigrants. From its f from native-born Americans, with the great- beginnings as a nation, America has been a est impact on unskilled jobs in big cities. refuge for individuals fleeing persecution and TRIBUTE TO MICHAEL CARL KERN But it is also the case that immigrants have an opportunity for new beginnings. Immi- created many new jobs by spending their grants built our country. Southern Indiana, wages, establishing businesses, buying serv- HON. JAMES A. BARCIA for example, was largely settled by a wave of ices, and paying taxes. OF MICHIGAN German immigrants in the last century. We Immigration also helps shore up the Social IN THE HOUSE OF REPRESENTATIVES are now experiencing a new wave of immi- Security system, adding to the labor force at gration. a time when fewer workers will have to sup- Thursday, June 26, 1997 CURRENT SITUATION port more retirees. Europe and Japan, which Mr. BARCIA. Mr. Speaker, in addition to The U.S. Immigration and Naturalization take in fewer immigrants than we do, are providing for their families, volunteers spend Service predicts that in the 1990s the U.S. straining under the burden of aging popu- long tireless hours helping others while in re- will receive the largest number of immi- lations. grants of any decade in our nation’s history: Overall, the best available figures suggest turn they receive no financial compensation. 10 million people, almost twice the popu- that the government spends more per capita Volunteers selflessly sacrifice their free time to lation of Indiana. This surpasses the pre- for native-born Americans than for immi- improve the quality of life for others. One of vious record decade for immigration, 1901– grants, roughly $3800 versus $2200 per year. In my constituents, Michael Carl Kern, has prov- 1910, which had less than 9 million immi- short, immigrants on average put more into en his dedication to his Nation, his State and grants. the public coffers and take out less than na- his community time and time again by devot- However, because our population has tive-Americans. ing his efforts and energy to the citizens of grown greatly since the early 1900s, the per- SOCIAL IMPACT centage of foreign-born people is actually far this country. A Vietnam era veteran, he is a Those who wish to reduce immigration long time veterans advocate, an outstanding less than earlier in this century. Foreign- often claim that large-scale immigration is born people currently represents 9% of the associated with crime and social break- patriot and an effective community activist. American population, which is half the pro- down, especially in big cities with high con- Mike was born on May 13, 1942, and spent portion they made up in 1910. Indiana ranks centrations of newcomers such as New York, most of his life in my home town of Bay City, among states with fewest immigrants. Legal Los Angeles, and Chicago. Yet others point MI. He recently moved to Las Vegas, NV, but, and illegal immigrants are only about 1% of out that immigration seems to bring some his positive influence and efforts are sorely the state’s population, with a smaller per- social benefits, too. Experts believe that one centage in Southern Indiana. missed by Bay County's residents. Perhaps he reason for New York City’s economic renais- is best known and recognized for his 23 years THE ISSUE sance and falling crime rate is the influx of Views on immigration vary widely. Some with American Legion Youth Programs. hard-working, enterprising immigrants who Taking over in 1989, after the passing of believe we should be open to all who seek have helped rebuild formerly run-down new opportunities and hope to escape perse- neighborhoods. Leon ``Leo'' Malechi, Mike served as the gen- cution. Others believe that immigration A more serious problem is the cultural eral manager for 7 years. Mike had big shoes policies must be tempered to prevent new- challenge posed by the changing character of to fill as Leo was awarded the ``State Baseball comers from taking away American jobs. immigration. Modern transportation and Man of the Year'' Mike said. He learned and Some support immigration as a source of communications technology has made it implemented Leo's teachings effectively and low-wage labor. Others are concerned that easier for today’s newcomers—primarily efficiently. Mike was voted the 1997 American immigration is bringing about a cultural from Latin America and Asia—to keep their Legion Baseball man of the Year for his con- change in America. They often speak of a old language and culture. In addition, immi- total moratorium on immigration. gration from Mexico is concentrated in the tribution to the State Legion baseball program. Most Hoosiers favor decreasing legal immi- Southwest, which inhibits the full integra- American Legion baseball was established gration, and are upset about the presence of tion of this group into the broader society 77 years ago and is the oldest organized pro- illegal immigrants. Nationwide, polls show and culture. gram of its kind. Mike committed countless that 80% of Americans favor reduced immi- CONCLUSION hours to raising money to ensure its success gration levels. It is popular to blame immigrants, both in Bay County. He faithfully worked to improve WHO IS COMING legal and illegal, for many American prob- Legion baseball in the State of Michigan by In 1995, the U.S. took in about 720,000 legal lems. There is always the temptation for serving on the State American Legion Base- immigrants. Most (64%) were admitted be- politicians to demonize aliens. My conclu- ball Committee as 10th District Chairman and cause they are immediate family members of sion is that while immigration produces both 4th Zone Chairman. U.S. citizens. costs and benefits, on balance it strengthens The second-largest group (16%) was com- our nation. Not only did Mike work to provide children posed of refugees and asylum-seekers fleeing I believe that Congress must pay more at- with baseball opportunities, he also provided persecution in their homelands and seeking tention to immigration. Our responsibility is many services for his fellow veterans. Serving freedom in our country. A relatively small to set reasonable limits on numbers and re- as post commander at the American Legion number (12%) were admitted because they arrange preferences to maximize the positive Harding-Oak-Craidge Post 18, in Bay City, MI, possess special professional skills and high aspects of immigration. For example, I doubt he was the first person to be elected for three education which would significantly contrib- that it is in our interest to continue to em- terms. Mike has been a member of the post ute to our economy and society. The small- phasize family preferences to the detriment est category (7%) included people admitted of highly skilled applicants. for 25 years and has held several other influ- to bring about greater geographic diversity If we fail to reduce the rate of legal immi- ential positions. He is also a valuable member in the immigrant pool. Most were from West- gration, and do not crack down on illegal im- of the Vietnam Veteran Chapter 484, the Loyal ern European countries. migration, the quality of life in this country Order of Moose Lodge 164, and the Matt

∑ This ‘‘bullet’’ symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor. E1338 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 Urban AMVETS's Post 46. He also served as OPIC also generates U.S. exports and cre- nancing and insurance programs. Critics of the Bay County chairman of the Michigan vet- ates U.S. jobs. Where foreign investments OPIC often forget that other foreign govern- erans trust fund. start, U.S. exports soon follow. OPIC-backed ments have much more aggressive export pro- Mr. Speaker, every volunteer and veteran investments have generated $52.8 billion in motion programs, and this provision, I hope, deserves our thanks for all that they have U.S. exports and have created more than will bring the opponents and supporters of done for our country. We owe a special thanks 225,000 U.S. jobs. In 1996, OPIC-backed OPIC together in a common cause to multilat- to those, like Michael Carl Kern, who served projects generated $9.6 billion in U.S. exports erally reduce foreign government-sponsored our country in time of war and were able to and supported approximately 30,000 U.S. investment assistance. To let OPIC expire find a way to serve in peace. He has paved jobs. OPIC is specifically mandated in law that without addressing the massive export pro- the way for a bright future for our children and no project it supports costs U.S. jobs, and this motion spending by other countries would should be commended for all of his efforts. legislation keeps current law. amount to unilaterally disarmament by the f OPIC fills a commercial void in the private United States in the global trade wars. sector. The international trade playing field is Another key feature of the legislation is a re- PERSONAL EXPLANATION not level. All of our major trade competitors quirement that OPIC develop transparent and have OPIC-like national agencies providing public participation guidelines as part of its HON. CAROLYN C. KILPATRICK similar products. OPIC never provides all of policies to implement obligations relating to protection of the environment. OPIC has been OF MICHIGAN the financing required in a venture, which is a criticized in the past for supplying insufficient IN THE HOUSE OF REPRESENTATIVES risk shared with the private sector. However, in dealing with developing economics, only a information in a timely manner to the pubic Thursday, June 26, 1997 government agency can provide political risk about some of its projects. It is already part of Ms. KILPATRICK. Mr. Speaker, because I insurance, especially over the long term. OPIC policy that no project it supports can was unavoidably detained in the 15th Con- For those who advocate that we should sell harm the environment. Anyone can see the gressional District of Michigan, I was not OPIC to the private sector because it makes clear difference United States investment can present at rollcall vote numbers 225, 226, and money for the Government, privatization will make in places like Russia where a diamond 227. Had I been present for these votes, I cost the taxpayer money. According to a 1996 mine supported by OPIC is, in terms of envi- would have voted ``aye'' for all of these rollcall study by the respected J.P. Morgan Securities ronmental protection, light years ahead of their votes. firm, the taxpayer would have to put up be- Russian-owned counterparts. But this provi- f tween $700 and $900 million to privatize OPIC sion would ensure that adequate information is because the commercial banks and insurance provided to the public and to Congress on the HELP REFORM OPIC companies will not purchase OPIC's $2.7 bil- implementation of OPIC's environmental pro- tection obligations. lion in reserves dollar for dollar because of the The bill would also create a 12-member ex- HON. DONALD A. MANZULLO loss of Government backing. port promotion commission comprised of indi- OF ILLINOIS One key benefit of OPIC that cannot be du- viduals from both the private and public sec- plicated by the private sector is that OPIC also IN THE HOUSE OF REPRESENTATIVES tors to examine all Federal Government export advances U.S. foreign policy goals. OPIC mo- Thursday, June 26, 1997 promotion programs, including OPIC. The bilizes private sector activity in support of commission would be charged with making Mr. MANZULLO. Mr. Speaker, it is with a overarching U.S. foreign policy aims including recommendations to Congress as to which distinct privilege and honor that I introduced free market economic reform and democra- programs should be retained, terminated, or legislation yesterday designed to reform the tization in developing nations and in formerly merged with similar programs in other agen- Overseas Private Investment Corp. or OPIC. Communist countries while, at the same time, As we begin the appropriations process this cies. There are 19 different Federal agencies maintaining stringent environmental, health that are part of the Trade Promotion Coordi- year, one of the most hotly debated issues in and safety standards, and supporting inter- future funding for trade promotion agencies, nating Committee [TPCC]. Once and for all, nationally recognized worker rights. we will resolve the question of which export including OPIC. OPIC provides political risk in- There are still some legitimate concerns promotion programs are necessary to main- surance, in addition to project finance, for U.S. about OPIC, and this legislation attempts to taining our competitiveness and which pro- investments overseas in developing nations address the specific issues raised by construc- and emerging economies. OPIC's insurance grams deserve to end. tive critics of the agency. First, the legislation While this report is being prepared, the covers one of three broad areas of political authorizes a separate inspector general for TPCC would be charged in this legislation to risk: currency inconvertibility, expropriation, OPIC and for the Trade and Development develop a comprehensive strategic export plan and political violence. OPIC's project finance Agency [TDA]. This would provide for very to encourage more small- and medium-sized provides direct loans of between $2 million close oversight of these agencies to insure businesses to export. This has been an issue and $10 million for small businesses and loan that taxpayer money was fully protected. Even close to my heart, as chairman of the Small guarantees for businesses of any size, which though OPIC has written off only $11 million in Business Exports Subcommittee, where I have typically range between $10 to $75 million. losses over 25 years, an IG would be charged learned after holding 10 hearings on the sub- This legislation I introduced along with 34 bi- to continue this excellent track record to make ject of trade of the large number of small busi- partisan original cosponsors retains what is sure OPIC accounts adequately protect the in- nesses that do not know where to got to take best about OPIC and proposes to make a va- terests of the taxpayer. the first steps of finding customers overseas. riety of reforms to make it even a stronger The legislation also includes a safety net This strategic export plan would reorient Fed- agency. provision that ensures any OPIC project com- eral export promotion agencies to be more OPIC makes money for the U.S. Treasury. mitment of more than $200 million are sent to proactive in reaching out to small businesses. For 25 years, OPIC has operated at a surplus, Congress for a 35-day waiting period prior to The plan would also require more coordination accumulating more than $2.7 billion in re- final OPIC board action. This provision is simi- of export promotion programs at the Federal, serves and has written off only $11 million in lar to policies already in place at the Export- State, and local levels. losses over that same time period, which is a Import Bank of the United States [Ex-Im]. This The bill also abolishes the separate ceilings record no bank or insurance company can will give an opportunity for the appropriate on financing and investment insurance, com- match. These reserves are used by the U.S. congressional committees to become aware of bining the two in one overall ceiling and in- Treasury to reduce the budget deficit. In 1996, impending action of this magnitude and to be crease this combined ceiling by a total of $6 OPIC took in $209 million more than it spent able to comment to the OPIC Board regarding billion through 1999. This allows OPIC to man- through the collection of user fees from cor- their views on this proposal. While OPIC has age its resources more effectively and thus porations. This amount is considered a net never entered into any deal throughout its 25 does not require the higher ceiling level that contribution to the 150 or the International Af- year history that breached the $200 million was proposed in the previous OPIC reauthor- fairs Account. Even if OPIC was forced to put mark, there may be such opportunities in the ization bill that the House debated last yearÐ this money in a mattress and made no interest future. H.R. 3759. In addition, a 2-year authorization on these reserves, OPIC would still make The bill also requires the administration to also allows for more frequent congressional money for the taxpayer to more than cover its negotiate with other countries providing OPIC- input, as opposed to a 5-year authorization annual operating expense through user fees like services an arrangement that would pro- that was contained in H.R. 3759. imposed on corporations. Thus, by definition, vide greater transparency, better notification, Finally, the legislation would enable the ad- OPIC is not corporate welfare. and maximum common terms for all such fi- ministration to appoint the most skillful and June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1339 able officials and vice chairman of the OPIC 10,500 men and women at least 50 years old Last year, when the aviation excise taxes Board. Current law requires that the Adminis- from 48 States participated in 20 sports. We lapsed, the airline industry and the Congress trator of the Agency for International Develop- are very proud of our seniors and their basket- began to examine how to improve the way the ment [AID] and the U.S. Trade Representative ball abilities. Federal Aviation Administration is financed [USTR] or the Deputy USTR to serve on the I am a strong believer in sports, team par- and how to provide a more reliable funding board in these positions. This reform would ticipation and competition. I played basketball stream. As the ranking member of the House allow the executive branch to appoint individ- as a young girl growing up on Long Island and Subcommittee on Aviation, I decided to take uals who could best serve OPIC without hav- eventually played for Mineola High School. I the lead in developing a fair and equitable ing their time and attention devoted to their experienced what recent studies have dem- ``user fee'' funding mechanism that would other important duties. onstrated that participating in team sports is more closely align the funding of the FAA to Mr. Speaker, I urge my colleagues to join essential for developing self-esteem and social the costs imposed on the system by the air- me and the 34 other Members from both sides skills in young women. Self-confidence grows lines. In addition, Congress created the Na- of the aisle in helping to reform and reauthor- with each successful lay-up, jump shot and tional Civil Aviation Review Commission to ize OPIC by cosponsoring H.R. 2064. slam dunk. And for seniors, exercise is a prov- study and recommend a new financing sys- f en benefitÐit slows down the aging process tem. This Commission, which has a federal and helps people live longer and healthier budget of $1.2 million, is composed of rep- IN HONOR OF FATHER IBRAHIM lives. The Ladies of Long Island's excellent resentatives of all segments of the aviation in- IBRAHIM showing in the Senior Games clearly dem- dustry and is chaired by former Chairman of onstrates that we can all benefit from team the Committee on Transportation and Infra- HON. DENNIS J. KUCINICH sports. structure, Norm Mineta. However, a month be- OF OHIO Mr. Speaker, I join today with my fellow resi- fore the Commission's expected recommenda- IN THE HOUSE OF REPRESENTATIVES dents from Long Island in offering a hearty tions, the Ways and Means Committee congratulations to the Long Island Ladies of Thursday, June 26, 1997 stepped in and raised aviation revenues with- the Court and all participants at the U.S. Na- out even waiting to hear what the $1.2 million Mr. KUCINICH. Mr. Speaker, I rise to honor tional Senior Games. Great job to all of you! taxpayer financed Commission has to say Father Ibrahim of St. Elias Church in Cleve- f about aviation revenues and spending. Al- land, OH, on the 10th anniversary of his ordi- though I will continue to draft my user fee leg- nation into the priesthood. AVIATION TAX PROPOSALS BAD islation, and the Commission will continue its Father Ibrahim was born in a small village in FOR AVIATION important work, this aviation tax proposal will South Lebanon. There, he attended school make it extremely difficult to make the nec- and entered the Seminary of Saint Savior of HON. WILLIAM O. LIPINSKI essary changes in the aviation financing sys- the Basilian Salvatorian Order. He took his OF ILLINOIS tem. By raising aviation taxes to offset other first religious vows in 1980, then moved to IN THE HOUSE OF REPRESENTATIVES tax cuts, this proposal widens the existing gap Jiita to start his college education. Thursday, June 26, 1997 between aviation revenues and spending in In 1984, he was sent to Rome to continue the budget process. studying philosophy and theology. On Novem- Mr. LIPINSKI. Mr. Speaker, I rise today to In 1995 and 1996, the airline industry post- ber 3, 1985, he took his perpetual vows. After bring to my colleagues' attention the devastat- ed record profits. However, this success fol- returning to Lebanon to receive his deaconal ing impact this Taxpayer Relief Act will have lows years of economic hardship when the air- ordination on July 9, 1987, and his ordination on one single industryÐthe aviation industry. lines had to operate in the red, cutting service to the priesthood on July 18, 1987, he contin- It is impossible to balance the budget and give and eliminating jobs. If we take an additional ued his studies in Rome, specializing in moral taxpayers billions in tax cuts at the same time $5 billion from the airlines over the next five theology. without raising revenues. Therefore, through years, as we propose to do today, we will Father Ibrahim overcame the obstacles of massive tax increases, the Ways and Means completely eliminate their profit margin. We war and worked to educate future priests in Committee has decided to use the airlines, will kill the airlines that are already struggling Lebanon for 2 years as the director of the and the airline consumer, as the primary today and will dash all others' hope for future seminary of his order. In 1991, he was as- source of revenue. Of the total $48 billion in growth. Aviation is an integral part of our signed as pastor of St. Elias Church in Cleve- tax increases over the next five years, $34 bil- economy. Economic stimulus from aviation-re- land, OH. Since his arrival, he has been ap- lion, or 70 percent, will be raised from the lated activities is now estimated to be $700 pointed protopresbyter for the midwest region aviation industry. billion dollars annually and is expected to grow for the Diocese of Newton and was awarded The airline passenger will now have to pay to $900 billion by the end of the century. How- the Interfaith Commission Award by Bishop both a ticket tax and a new per flight segment ever, this tax package today will take the air Anthony Pilla. head tax of $2.00, which will progressively in- out of the aviation industry. This massive tax My fellow colleagues, please join me in rec- crease each year, yet the passenger will not increase will once again bring the dark skies ognizing Father Ibrahim in his efforts to pro- benefit from the increased revenues. This is of economic hardship over the aviation indus- mote Christian unity and interreligious dialog. because the revenue raised from increased try, effectively grounding it. The parishioners of St. Elias and the city of aviation taxes will be used to accomplish other f Cleveland are lucky to have such a positive unrelated tax cuts in this package. There is and dynamic force in their midst. absolutely no relationship between the addi- A TRIBUTE TO RABBI MICHEL f tional taxes and the programs that these taxes TWERSKI are supposed to support. The additional taxes TRIBUTE TO THE LONG ISLAND will not fund new safety and security meas- LADIES OF THE COURT HON. THOMAS M. BARRETT ures; they will not fund air traffic control mod- OF WISCONSIN ernization efforts; and, they will not fund criti- IN THE HOUSE OF REPRESENTATIVES HON. CAROLYN McCARTHY cal airport improvement projects. In fact, under Thursday, June 26, 1997 OF NEW YORK the budget agreement, federal funding of air IN THE HOUSE OF REPRESENTATIVES traffic control operations and airport develop- Mr. BARRETT of Wisconsin. Mr. Speaker, I ment will likely decline over the next five years pay tribute today to one of Milwaukee's truly Thursday, June 26, 1997 as these new taxes are increased. outstanding citizens, Rabbi Michel Twerski. On Mrs. McCARTHY of New York. Mr. Speaker, It is important to note that the increased rev- July 6, 1997, Congregation Beth Jehudah will I rise today to commend the women of the enues will be paid entirely by the airline pas- gather with friends from Milwaukee and Long Island Ladies of the Court. Recently, this senger. It is the consumer who pays the ticket around the world at Milwaukee's historic Pabst four woman basketball team from Nassau tax, the head tax, the departure and the arrival Theater to pay tribute to Rabbi Twerski. I County participated in the U.S. National Senior tax. However, the cargo waybill tax, which is would like to take a moment to reflect on Olympics in Tucson, AZ. I am pleased to an- paid by the profitable cargo airline industry, is Rabbi Twerski's contributions to Milwaukee, nounce that our Long Island team made up of simply extended in this tax package. Cargo the Chassidic community, and the world of women between 55 and 60 years of age, cap- companies, which fly hundreds of planes do- music. tured the Silver Medal at the gamesÐa very mestically and internationally each day at a Rabbi Twerski has been an inspirational strong showing in a competition where over profit, will not pay a cent more. force in the local and international Chassidic E1340 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 community for many years. He is both a spir- man with a twinkle in his eye and a tendency them. Baccalaureate, a graduation ceremony, itual leader and a renowned composer, whose to break up a long day of work or travel with is performed by the parish, so that students works have been listened to and enjoyed a midday nap. With these anecdotes we catch have a spiritual blessing to continue to guide throughout the world of Jewish music. Indeed, a glimpse through the mists of history of a real them through adulthood. on July 6, the Milwaukee Symphony Orchestra person, not merely a symbol of an ideal. Mr. Speaker, St. Anthony's Church will will be giving a concert in celebration of Rabbi Mr. Speaker, we in northern Michigan look strive to provide an invaluable base for the Twerski's music. at Bishop Frederic Baraga as more than just community, so I urge you and your colleagues In addition to his musical accomplishments, our native son. A man of Europe, later a man to join me in celebrating St. Anthony of Rabbi Twerski has been a leader in his com- of the native American people of the Great Pauda's centennial anniversary which truly is munity throughout his lifetime. With the values Lakes area, he may finally become a man of a journey in faith. instilled by his parents, he has reached out to the world, whose humility, dedication, commit- his community to share the teachings of his ment to learning, and qualities of character are f faith. He led efforts to create an elementary a model for all of mankind, yesterday, today, school and Kollel audit learning program in and tomorrow. IN HONOR OF WMZQ Milwaukee, both of which have been signifi- The nation of Slovenia has honored Bishop cant to the Orthodox life in the city. Both he Baraga with a commemorative stamp. I have HON. THOMAS M. DAVIS and his wife, Rebbetzin Feige Twerski, asked the U.S. Postal Service to give new OF VIRGINIA present programs throughout the world to consideration to a similar honor. I know this IN THE HOUSE OF REPRESENTATIVES those who want to learn more about traditional review process takes time, but I and the sup- Jewish life and have become known inter- porters of the efforts to honor Bishop Baraga, Thursday, June 26, 1997 nationally as counselors on difficult personal look forward to the day when we can send our Mr. DAVIS of Virginia. Mr. Speaker, it gives and religious matters. invitations to another birthday party for this me great pleasure to rise today to pay tribute Rabbi Twerski not only serves Milwaukee as very special individual with stamps bearing his to one of the top rated radio stations in the a religious leader but is a friend, counselor, visage. Washington area, WMZQ. June 22 marks their and teacher to his community and a leader to f 20th anniversary on the air as a country music the Milwaukee community as a whole. It gives PROVIDING HOPE BY FAITH station, serving the musical and community me great pleasure to congratulate Rabbi needs of our region. Twerski on his many accomplishments and On June 22, 1977, WMZQ 98.7 FM signed commend him on his service to Milwaukee HON. JAMES A. BARCIA on the air with the song ``Are You Ready for and people throughout the world. OF MICHIGAN the Country?'' Since that time, the Washington f IN THE HOUSE OF REPRESENTATIVES metropolitan area has benefited from the tal- IN HONOR OF BISHOP FREDERIC Thursday, June 26, 1997 ent and commitment of their staff. The Country BARAGA Mr. BARCIA. Mr. Speaker, I rise today to Music Association [CMA] has honored pay tribute to St. Anthony's Church as they WMZQ's contribution to country music by HON. BART STUPAK celebrate their centennial anniversary. For the naming WMZQ the CMA Station of the Year in past 100 years the church has been the foun- 1989. The radio industry has also recognized OF MICHIGAN WMZQ's programming excellence with several IN THE HOUSE OF REPRESENTATIVES dation that has allowed the congregation to serve as a bridge to the community, relent- Achievement in Radio [AIR] Awards. Thursday, June 26, 1997 lessly providing their unselfish services not WMZQ's staff is intertwined with the Greater Mr. STUPAK. Mr. Speaker, I have the op- only in times of hardship but also in daily life. Washington community. WMZQ has supported portunity this weekend to attend an unusual St. Anthony's Church was founded in a many charitable organizations like the Amer- birthday party in my congressional district in farming community to bring together friends ican Heart Association, the March of Dimes, Michigan for a very special individual. This and neighbors. The church has helped the Children's Hospital, the American Red Cross month we celebrate the birth of Frederic community by creating programs that assist and Toys for Tots through event participation Baraga, born 200 years ago in a town called those in need. One of the most outstanding and public affairs programming. WMZQ's loyal Mala vas in what is now the independent na- programs created by the church is the Center listeners' generous response to the Annual St. tion of Slovenia. for Families. This center provides emotional or Jude Children's Research Hospital Radiothon Frederic Baraga was a pioneer who wan- marriage counseling, day care, and a play- has raised over $2 million in just 5 years. Lis- dered in the wilds of the Great Lakes area in ground for their children. Families supporting tener's contributions during the Coats for Kids the early 1800's, braving the snows and bitter one another is the key to a flourishing commu- campaigns has kept thousands of children winters, the swamps, and swarms of insects of nity, and St. Anthony's has provided the as- warm during the winter months. WMZQ's Michigan, Wisconsin, and Minnesota. sistance that continues to create strong fami- Christmas in April home renovation projects Frederic Baraga was a teacher; a learned lies, who provide an excellent example for the has provided many elderly, low-income and man who mastered Slovenian, English, Latin, community as they reach out to their fellow handicapped neighbors with safer living condi- German, French, and Italian, he went on to neighbors. tions. speak the native American Ojibwa language, Throughout the past 100 years the con- On June 22 of this month, the WMZQ staff eventually writing a grammar and an Ojibwa gregation has been committed to helping and 15,000 of their most loyal fans celebrated dictionary that is still in use today. those who have nowhere to turn. For over 20 the radio station's 20th anniversary at the Bull Frederic Baraga was a missionary, whose years, St. Anthony's members have organized Run Country Jamboree. This year they were work was God's work. He left a family that had a food pantry that gives the less fortunate in proud to host Paul Brantly, LeAnne Rimes, gained a title of nobility in Europe, taking the the community not only food but hope for the Neil McCoy, and Wynonna. Over the last 7 vow of poverty and accepting the dangers of future. Since the first plank of the church was years this annual event has raised over a new world to bring the Christian faith to the nailed, the congregation has been providing $600,000 for the Northern Virginia Park Au- New World, America. assistance through the Emergency Need Pro- thority. This year, WMZQ general manager, Frederic Baraga was a man, with the afflic- gram. This program provides the payment of Charlie Ochs, rededicated the efforts of the tions and failings of a man, but he was unique past due electricity bills, rent payments, and WMZQ staff to better serve the country music in his dedication to his mission and to his heating bills for families who have fallen on listener and to continue to work to make the faith. The dedication of this man, who stood 5 hard times. Washington area a better place to live. feet, 4 inches tall and referred to himself as The congregation of St. Anthony's Church Mr. Speaker, I know my colleagues join me ``the little missionary,'' has earned the love pass along their strong Christian values to fu- in celebrating the special anniversary of and respect of the people of northern Michi- ture generations by maintaining a K±5 paro- WMZQ. Not only do they provide the region gan, who are supporting efforts to canonize chial school. The school is dedicated to teach- with good country music, but they have sup- him a saint in the Catholic Church. ing the Christian principles to students at an ported our community through many volunteer There are many details of his life which early age, so that they will have their faith to programs. They have enriched the lives of have been passed down to us, tales of his fall- guide them through life's many challenges. their listeners, have enhanced the quality of ing through thin ice in mid-winter on his reli- Once the youth in Fisherville move toward life in our region and have grown to be on the gious rounds, stories that paint a picture of a adulthood, St. Anthony's does not abandon of top rated country stations in the Nation. June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1341 PERSONAL EXPLANATION Americans can be proud of Ukraine today, and health. May Ukraine long serve as a for the role Americans played in Ukrainian haven for democracy and an example of cour- SPEECH OF independence is significant. Our democracy is age. HON. PHILIP M. CRANE one of the most durable in the world. Our Congratulations to the people of Ukraine on the anniversary of your constitution. OF ILLINOIS Constitution is clearly one of the strongest, and it has inspired more than Americans unit- f IN THE HOUSE OF REPRESENTATIVES ed in citizenship. It has indeed inspired free- Wednesday, June 25, 1997 dom seekers throughout the world to choose TRIBUTE TO ELIZA SIXKILLER PADGETT Mr. CRANE. Mr. Speaker, on rollcall No. liberty over bondageÐto risk their very lives 235, on agreeing to the Rohrabacher amend- for the prospect of their children' freedom. ment, had I been present, I would have voted The adoption of the Ukrainian constitution HON. STEVE LARGENT ``aye.'' on June 28, 1996 was one of the most signifi- OF OKLAHOMA f cant events in Ukraine since its declaration of IN THE HOUSE OF REPRESENTATIVES independence. The Ukrainian constitution is in Thursday, June 26, 1997 ON CHAD CHARLES EDWARD fact more than a government document, it is SMITH’S ATTAINMENT OF EAGLE a symbol of great progress and hope for all of Mr. LARGENT. Mr. Speaker, I rise today to SCOUT eastern Europe, in fact for all of the world. recognize Eliza Sixkiller Padgett as a full- The Ukrainian constitution is proof again blood Cherokee Indian. Eliza Sixkiller Padgett HON. DENNIS J. KUCINICH that freedom worksÐthat a democratic move- was the daughter of Jacob Sixkiller and OF OHIO ment can spring from the midst of totalitarian Winnie Walkingstick Sixkiller, both full-blood IN THE HOUSE OF REPRESENTATIVES occupation. The Ukrainian constitution is proof Cherokee Indians. Her five brothers and sis- that the captive can become leaders, and the ters are listed on the roll of the Cherokee Na- Thursday, June 26, 1997 oppressed can build prosperity. The Ukrainian tion as full-blood members. I would like to Mr. KUCINICH. Mr. Speaker, I rise to honor constitution drives the stake of freedom even honor and recognize Eliza Sixkiller Padgett as Chad Smith of Bay Village, OH, who will be deeper into the heart of communism, and fur- a full-blood member of the Cherokee Nation. honored this weekend for his attainment of ther dashes the hopes of the radical left, that f Eagle Scout. they might one day reoccupy Ukraine. The attainment of Eagle Scout is a high and Mr. Speaker, the American people should HONORING EUGENE L. MCCABE, rare honor requiring years of dedication to know that in celebration of the first anniversary PRESIDENT AND CHIEF EXECU- self-improvement, hard work, and the commu- of the Ukrainian constitution, that Ukrainian of- TIVE OFFICER, NORTH GENERAL nity. Each Eagle Scout must earn 21 merit ficials here in Washington are invoking the HOSPITAL badges, 12 of which are required, including name of our first president George Washing- badges in: lifesaving; first aid; citizenship in ton. Tonight, His Excellency Yuri Scherbak, HON. EDOLPHUS TOWNS the community; citizenship in the nation; citi- Ambassador of Ukraine will be speaking at a OF NEW YORK zenship in the world; personal management of special commemoration. At that ceremony, he IN THE HOUSE OF REPRESENTATIVES time and money; family life; environmental will open and dedicate the George Washing- Thursday, June 26, 1997 science; and camping. ton Memorial Room in the Embassy of In addition to acquiring and proving pro- Ukraine. The dedication is offered as a gift to Mr. TOWNS. Mr. Speaker, I rise today to ficiency in those and other skills, an Eagle the city of Washington and to the American honor Eugene L. McCabe, a dedicated advo- Scout must hold leadership positions within people. cate of social and economic empowerment. the troop where he learns to earn the respect The gesture is also a sign of the strong During his tenure as president and chief ex- and hear the criticism of those he leads. friendship and partnership between the Amer- ecutive officer of North General Hospital in The Eagle Scout must live by the Scouting ican people and the people of Ukraine. Harlem, the hospital became a model for pri- Law, which holds that he must be: trustworthy, George Washington, the Father of the Amer- mary health care and community development loyal, brave, helpful, friendly, courteous, kind, ican Constitution, the General, the Com- initiatives. A unique aspect of this model is an obedient, cheerful, thrifty, clean, and reverent. mander of the Revolution, War, the President, integrated computer network and innovative fi- And the Eagle Scout must complete an only dreamed of days like these when democ- nancing which Mr. McCabe played a key role Eagle project, which he must plan, finance, racies around the world rise from the clutches in marketing this future delivery system con- and evaluate on his own. It is no wonder that of tyranny, just as Washington led Americans cept. only 2 percent of all boys entering Scouting to do, 221 years ago, next week. Prior to joining North General, Mr. McCabe achieve this rank. Ambassador Shcherbak, on today's observ- was affiliated with Deleuw Cather/Parsons and My fellow colleagues, let us recognize and ance, said, ``Today we have to create a new, Associates. As the firm's regional director, Mr. praise Chad for his achievement. completely new legal system of independent McCabe directed the agency's New York staff f Ukraine, which main ideology should be the in activities to launch a $2 billion rail transpor- superiority of human rights and international tation joint venture involving seven private UKRAINIAN CONSTITUTION law; implementation of rule of law; absolute re- firms. Mr. McCabe has over 20 years of expe- spect to private property and its effective pro- rience in management consulting including HON. BOB SCHAFFER tection; orientation to Western legal standards; Booz, Allen & Hamilton, Inc., an international OF COLORADO as well as integration into the Western politi- consulting firm. IN THE HOUSE OF REPRESENTATIVES cal, legal and economic space.'' Mr. McCabe's board memberships and com- Mr. Speaker, as an American of Ukrainian munity affiliations parallel his commitment to Thursday, June 26, 1997 ancestry, I am very proud to celebrate this day economic and social progress. He is vice Mr. BOB SCHAFFER of Colorado. Mr. with the people of Ukraine. The fall of com- chairman of the Apollo Theater Foundation, Speaker, today is an important day to Ameri- munism in Eastern Europe is a tribute to the the operating entity for the world famous Apol- cans of Ukrainian descent, supporters of power of free people. In this regard America is lo Theater, vice chairman of the Manhattan Ukrainian democracy, and of course, to the proud to stand shoulder to shoulder with Empowerment Zone Development Corpora- Ukrainian people themselves. Today is the Ukraine to keep the torch of freedom burning tion, member of the Harlem Business Alliance, first anniversary of the Ukrainian constitution. bright. the National Executive Service Corps [NESC], Ukraine was one of he 15 republics that de- Indeed we should heed the words of Gen- and other organizations involved in rebuilding clared independence from the former U.S.S.R. eral Washington especially this day, ``Let us the community. After generations of soviet occupation, the therefore animate and encourage each other, As a Member of Congress, I salute Mr. people of Ukraine threw off the yoke of bond- and show the whole world that a Freeman, McCabe as a shining beacon of hope for the age and moved an entire nation closer and contending for liberty on his own ground, is community. His tireless efforts have blazed a closer to free-markets and democratic rule. superior to any slavish mercenary on earth.''Ð path for many to follow. Like our own Constitution, the Ukrainian George Washington, July 2, 1776. Mr. Speaker, I ask you to join me in saluting constitution is the pillar of law in the country. May the people of Ukraine enjoy the contin- Mr. Eugene L. McCabe for his outstanding Its objective is the fulfillment of individual free- ued blessings of liberty. May God abundantly contributions to the community and to the na- dom, liberty, and government of the people. bless Ukraine and her people with prosperity tion. E1342 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 HONORING BOB LENT votes 219 and 220, ``nay'' on vote 221, and expedite the reporting of large contributions to ``aye'' on rollcall votes 222, 223, and 224. principal campaign committees. The fourth bill HON. DALE E. KILDEE f would address the problem of push-polling, a practice by which unnamed persons conduct OF MICHIGAN IN MEMORY OF THE VERY REV. IN THE HOUSE OF REPRESENTATIVES smear campaigns against opponents by pro- STEPHEN HANKAVICH viding misleading or false information while Thursday, June 26, 1997 conducting a telephone poll. The bill would re- Mr. KILDEE. Mr. Speaker, it is an honor to HON. DENNIS J. KUCINICH quire the person or group supporting the push rise before you today to pay tribute to a loyal OF OHIO poll to identify themselves if the poll uses a friend and tireless advocate of America's IN THE HOUSE OF REPRESENTATIVES sample of over 1,200 people and is conducted working class citizens. On June 29, 1997, Thursday, June 26, 1997 during the final 10 days of a campaign. members and friends of the United Auto- Finally, the fifth bill would make a number of mobile, Aerospace, and Agricultural Implement Mr. KUCINICH. Mr. Speaker, I rise to honor changes to improve and remove flaws from Workers of America will honor Mr. Bob Lent, the memory of the Very Rev. Hankavich who the motor-voter law enacted in 1993. The bill as he retires from his position as director of was the pastor of St. Vladimir Ukrainian Ortho- would require proof of citizenship and/or a So- Michigan UAW's region 1 after many dedi- dox Cathedral in Parma, OH for 37 years. cial Security number to register for Federal cated years of service. Very Rev. Hankavich graduated from St. elections. It would also allow for the removal It is nearly impossible to imagine the State Andrew Ukrainian Orthodox Seminary in Win- of certain registrants from the official list of eli- of Michigan's labor movement without the ben- nipeg, Manitoba, Canada and was ordained in gible voters. It also permits States to require efit of the wisdom and leadership of Bob Lent. 1950. Hew was first assigned as pastor of As- individuals to produce a photo ID in order to His is a career that has spanned half a cen- sumption of the Blessed Virgin Mary Ukrainian vote in a Federal election. The bill also re- tury measured by time, but several lifetimes Orthodox Church in North Hampton, PA, peals the provisions of the Voter Registration based on those individuals throughout the where he remained until his transfer to St. Act of 1993 that mandate registration by mail. State, the country, and the world, who have Vladimir 10 years later. He also served as The bill would require a registrant's signature come into contact with Bob. dean of the Penn-Ohio Deanery of the Ukrain- at the time of voting which, if necessary, could Bob Lent's career began in 1949, when at ian Orthodox Church. eventually be compared to the signature on the age of 19 he was hired by Dodge Motor He is survived by his wife of 47 years, the registration card. Finally, the bill would re- Co. as a spray painter. He later left Dodge for Anne; daughters, Mary Ann O'Neill, of Balti- peal the provisions of the act that allows indi- the U.S. Army, serving as a paratrooper from more and Donna Kominko of Independence; viduals who have recently moved within a 1951 to 1953. Upon his return to civilian life, five grandchildren; and a brother. His lifetime county or district to vote at the voting location Bob found employment with Chrysler and re- of accomplishments are evident in his loving of either the new or former address. established his association with the UAW. As family, his parish and the community as a These bills face an uphill fight in the Con- a member of Local 869, Bob served in a num- whole. He will be greatly missed by the parish- gress. But, I believe they represent good ideas ber of capacities, including alternate chief ioners of St. Vladimir and by all who knew which bring real reform to a Federal Govern- steward, trustee chairman, vice president, and him. ment that often remains out of touch and un- a 4-year tenure as president. Bob was ap- f accountable to the American families and pointed as education representative of region businesses that we are supposed to be rep- THE INTRODUCTION OF THE COM- 1B in 1972, and became assistant director in resenting. Thank you. MON SENSE CAMPAIGN RE- 1982. When region 1 and region 1B merged to f FORMS OF 1997 form a larger, stronger region 1 in 1983, Bob was elected director, the position he has held HONORING ILLINOIS LAW EN- to this day. HON. BOB GOODLATTE FORCEMENT MEDAL RECIPIENTS In addition to his illustrious career with the OF VIRGINIA UAW, Bob has also developed a high degree IN THE HOUSE OF REPRESENTATIVES HON. J. DENNIS HASTERT of respect in the political, educational, and Thursday, June 26, 1997 OF ILLINOIS civic arenas as well. He has been a precinct IN THE HOUSE OF REPRESENTATIVES Mr. GOODLATTE. Mr. Speaker, when I ar- delegate, and serves on Labor Advisory com- Thursday, June 26, 1997 mittees at Oakland University in Rochester rived in this House back in 1993, I was and Wayne State University in Detroit. He is a amazed at how desperately Congress was in Mr. HASTERT. Mr. Speaker, I rise today to life member of the NAACP, serves on the need of fundamental reform. While we've honor the recent recipients of the Illinois Law board of directors of the United Way of Pon- come a long way since then, we still have a Enforcement Medal of Honor, for bravery and tiac-Oakland County, and the Detroit Area long way to go. Today, I am continuing the ef- performance above and beyond the call of United Foundation. fort I began in 1993 to bring fundamental duty. Mr. Speaker, we in the great State of Michi- changes to the way our Federal Government I want to particularly commend one of the gan are more than proud of our reputation as operates by introducing a package of five bills recipients of that honor from Illinois Governor, the automotive capital of the world, having re- to reform our flawed Federal election laws. Jim Edgar, an officer from my district, Officer cently celebrated the 100th anniversary of the These bills have been developed in coopera- Kevin Bretz of the Batavia, IL, Police Depart- automobile. Just as we are proud of the prod- tion with renowned political analyst Larry ment. uct, we are proud and grateful for the men Sabato, professor of government at the Uni- Mr. Speaker, on February 3, 1996, Officer and women who day in and day out work to versity of Virginia and the coauthor of ``Dirty Bretz was involved in the pursuit of a suspect provide these quality products and bolster our Little Secrets,'' a brilliant yet scathing indict- who was attempting to flee in his car. While pride. Bob Lent is one of those people. I ask ment of our political system and a blueprint for on foot on the grounds of the Kane County my colleagues to join me in wishing Bob, his how we can make the changes that are need- Correctional Complex, Officer Bretz put him- wife Earline, and their son, Steven all the best. ed to restore the public's faith in its system of self in danger by pulling another officer, Offi- f government. cer Jeff Burton of the Geneva, IL, Police, to The five bills are as follows: The first would safety and out of the path of the oncoming PERSONAL EXPLANATION FOR make it illegal to receive or solicit political con- suspect's vehicle. The suspect was arrested a JUNE 20, 1997 tributions in the White House, Camp David, or short time later, and has since been sen- any other official residence or retreat of the tenced to 12 years in prison, and has report- HON. GEORGE R. NETHERCUTT, JR. President or Vice President. This would ad- edly admitted that he would have struck Offi- OF WASHINGTON dress the ambiguity in current law that has led cer Burton with his car had Officer Bretz not IN THE HOUSE OF REPRESENTATIVES to the controversy surrounding the current ad- been there to pull Burton to safety. ministration. The second bill would clarify that For his heroic actions on that day, and for Thursday, June 26, 1997 House Members cannot pay their congres- putting himself at risk to save a fellow officer, Mr. NETHERCUTT. Mr. Speaker, due to sional staff to work on their reelection cam- Officer Kevin Bretz deserves to be com- prior commitments in my district, I was unable paigns while also on the congressional payroll. mended for his actions. I applaud Governor to vote on rollcall votes 219 through 224. Had The third bill would require the electronic filing Edgar for his selection of Officer Bretz for the I been present, I would have voted ``aye'' on of Federal Election Commission reports and Illinois Law Enforcement Medal of Honor, and June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1343 I thank him personally for his efforts on behalf Purple Heart and a Defense Meritorious Serv- HONORING HAZEL N. DUKES, of the American people and the citizens of my ice Medal. He has served his country well, PRESIDENT, NEW YORK STATE district. and will continue to do so in the future. He is CONFERENCE NAACP f a fine marine. HON. EDOLPHUS TOWNS TRIBUTE TO MAJ. GEN. DAVID A. f RICHWINE OF NEW YORK IN THE HOUSE OF REPRESENTATIVES A TRIBUTE TO LALO GUERRERO, HON. IKE SKELTON LEGENDARY MEXICAN-AMERICAN Thursday, June 26, 1997 OF MISSOURI SINGER AND COMPOSER Mr. TOWNS. Mr. Speaker, I rise today to IN THE HOUSE OF REPRESENTATIVES honor Hazel L. Dukes, president of the New Thursday, June 26, 1997 York State Conference of NAACP Branches. HON. ESTEBAN EDWARD TORRES Ms. Dukes is a great woman of courage and Mr. SKELTON. Mr. Speaker, on July 1, strength, dedicated to equality for all Ameri- OF CALIFORNIA 1997, Maj. Gen. David A. Richwine, U.S. Ma- cans. As an active champion of the commu- rine Corps, will retire after 32 years of faithful IN THE HOUSE OF REPRESENTATIVES nity, Ms. Dukes is known for her unselfish de- and dedicated service to his country. It is only votion to economic and social justice. fitting that his distinguished service record be Thursday, June 26, 1997 Ms. Duke's tremendous commitment is brought to the attention of the House of Rep- Mr. TORRES. Mr. Speaker, I rise today to shown by her involvement in numerous orga- resentatives and the American public. nizations including Delta Sigma Theta; State In June of 1965, Maj. Gen. Richwine was recognize the legendary Mexican-American singer and composer, Lalo Guerrero, inter- University of New York, Board of Trustees; commissioned a second lieutenant in the Ma- Stillman College, Board of Trustees; Phelps nationally regarded as the ``Father of Chicano rine Corps. He then attended the Basic School Stokes Institute, Board of Trustees; State of Music.'' On Sunday, June 29, 1997, Lalo at Quantico, Virginia following which, he joined New York Martin Luther King Commissions, Guerrero will perform a free concert for the the 3d Battalion, 4th Marines in Vietnam in Board of Directors; and Metro Manhattan January of 1966. There he served as platoon residents of Pico Rivera, in my congressional Links Chapter, Inc., Executive Committee, to commander, company executive officer, com- district. This concert will officially close a name a few. manding officer, and the battalion S±4 officer. month long exhibit, ``The Way We Were, Pico As a champion of justice, Ms. Dukes has Following Vietnam, and duty as the officer Rivera: 1900±1945,'' sponsored by the Pico been the recipient of numerous awards includ- selection officer in Indianapolis, IN, Captain Rivera Arts and Cultural Committee and the ing Academy of DistinctionÐAdelphi Univer- Richwine reported to Williams Air Force Base Pico Rivera Centre for the Arts. sity; Academy of Women Achievers AwardÐ in Chandler, Arizona to begin his pilot training. Declared a ``National Folk Treasure'' in 1980 YWCA City of New York; John La Farge He was designated as Naval Aviator in April of by the Smithsonian Institution, Lalo Guerrero Award for Interracial JusticeÐThe Catholic 1971. has received numerous awards and recogni- Interracial Council of New York; Distinguished After tours with FMFAT±201. VT±4. gradua- tions for his extraordinary career of more than Service AwardÐThe Federation of Negro Na- tion from Amphibious Warfare School, and fur- six decades. His career began with the classic tional Civil Service Organization; Women's ther tours with FMFA±531, VMFA±232, and Honor RollÐTown of Hempstead; Guy R. VMFA±212, Major Richwine was assigned as ``Cancion Mexicana'' which he composed as a teenager in his native and beloved Tucson, Brewer Humanitarian AwardÐNew York State Aide-de-Camp to the Commanding General at Black and Puerto Rican Caucus. Headquarters, Fleet Marine Force, Pacific. In Arizona. ``Cancion Mexicana'' remains the un- official anthem of Mexico. As a Member of Congress, I salute Ms. 1978 he attended Air Command and Staff Col- Dukes as a shining beacon of hope, and a lege in Montgomery, AL, graduated, and was He has been inducted into the Tejano Hall trailblazer in our community's struggle for jus- assigned to MAG±31, in Beaufort, SC. of Fame and honored with the lifetime tice. Beaufort provided a number of assignments achievement awards from the Mexican Cul- Mr. Speaker, I ask you to join me in saluting for Maj. Gen. Richwine. He served as the as- tural Institute, Luis Valdez's Teatro Ms. Hazel Dukes for her outstanding contribu- sistant group S±4 officer of MAG±31, the ex- Campesino, and Ricardo Montalban's tions to the community and to the nation. ecutive officer of Headquarters and Mainte- Nosotros organization. The City of Los Ange- f nance Squadron-31 and the commanding offi- les and Palm Springs, California, have de- cer of FMFA±251. He then joined MAG±15 in clared ``Laol Guerrero Day'' in honor of his dis- IN HONOR OF EDDIE BLAZONCZYK Iwakuni, Japan as the group operations officer tinguished career. In 1991, he received a Na- and then became the Group Executive Officer. tional Heritage Fellowship from the National HON. DENNIS J. KUCINICH In Washington, DC, Maj. Gen. Richwine Endowment for the Arts. And in 1995, was OF OHIO served as the assistant for Special Analyses nominated for a Grammy for his collaborative IN THE HOUSE OF REPRESENTATIVES to the Assistant Under Secretary of Defense work with rock band Los Lobos on a bilingual for Policy and Resources and then attended Thursday, June 26, 1997 children's album, ``Papa's Dream.'' the National War College. He was assigned as Mr. KUCINICH. Mr. Speaker, I rise to honor commanding officer of MCAS Beaufort in Presented by President Clinton and First Eddie Blazonczyk, whose name is synony- 1986. Lady Hilary Rodham Clinton in January 1997, mous with polka music. Returning to Washington, DC, Major Gen- Lalo Guerrero received the 1996 National Eddie Blazonczyk is an innovator, com- eral Richwine was assistant head and then Medal of the Arts at a White House ceremony poser, band leader, and virtuoso. Eddie's inno- head, Aviation Plans, Programs, Doctrine, in recognition for a lifetime of creative achieve- vation has been in combining his Polish polka Joint Matters and Budget Branch. He then ment. He regards this occasion as the pin- roots with `50's rock'n roll, Cajun flavor, and was the special assistant, Marine Corps Aide nacle of his career. country flair. The sound, known as Chicago to the Secretary of the Navy. He then was se- His extensive music collection has enter- hop or hop style, has reached new audiences lected as Commander, Marine Corps Bases, tained generations and has provided a voice around the country. Eastern Area, MCAS Cherry Point, NC. for the Mexican-American community. His Eddie has recorded 47 albums since he got Major General Richwine served his final tour songs, known as ``corridos,'' have told of the his start in 1963. In 1986, Eddie won a in Washington, DC as the Deputy for Expedi- Grammy award for his album, ``Another Polka triumphs and struggles of Mexican-American tionary Forces Programs, Office of the Assist- Celebration.'' Ten other albums have been heroes like Cesar Chavez and Ruben Salazar. ant Secretary of the Navy for Research, De- nominated for Grammy awards. His spirited music has brought their stories to velopment and Acquisition, and his final posi- Eddie and his band, the Versatones, have international audiences. tion of Assistant Chief of Staff, Command played all over the country. The founding Control, Communications, Computer and Intel- Mr. Speaker, on Sunday, June 29, 1997, Versatones were: Chet Kowalski and Jerry ligence (C41), director of Intelligence, Head- resident of Pico Rivera will gather to honor Chocholek on trumpet, Bob Sendra on drums, quarters, U.S. Marine Corps, Washington, DC. this exceptional entertainer. It is with pride that Ricj Sendra on accordion, and Jim Bagrowski Major General Richwine has earned all of I ask my colleagues to join me in saluting Lalo on clarinet and sax. the decorations he wears, among which are a Guerrero for his extraordinary career as a Mr. Speaker, Eddie Blazonczyk is a giant Silver Star, Legion of Merit with a gold star, singer and composer. among musicians and an ambassador to the E1344 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 world. As Eddie says, ``you don't have to be Mr. GINGRICH, has spoken about the need to when school is in session, and limits late Polish-American, Slovenian-American, encourage the development of a positive work hours on school days. Teenagers attending Ukranian-American, or German-American. All ethnic in this country. I concur. We must do all school would not be employed more than 4 you've gotta do is have ears!'' we can to help our children prepare for their hours per day while school is in session and f future in the Nation's work force. At the same they would not be permitted to work after 10 time, however, we must be certain that our p.m. on school nights. The law also has provi- INTRODUCTION OF H.R. 1870— children have safe and secure places to work sions to insure that schools are informed if YOUNG AMERICAN WORKERS when they do work as teenagers, and we students are working. BILL OF RIGHTS must be certain that the work experience does Mr. Speaker, as we enter the next century, not interfere with the education of our young we must modernize our Nation's child labor HON. TOM LANTOS people. Mr. Speaker, it is to address these laws. Our legislation amends the Fair Labor OF CALIFORNIA concerns that we have introduced H.R. 1870. Standards Act of 1938 to reflect conditions in IN THE HOUSE OF REPRESENTATIVES Mr. Speaker, the first matter that our legisla- today's world. We must remind ourselves that the romantic notion of an after school job of Thursday, June 26, 1997 tion addresses is the concern for our chil- dren's safety. A study covering the period the 50's and 60's is a thing of the past. Some Mr. LANTOS. Mr. Speaker, several days 1992±95 by the Bureau of Labor Statistics re- employers have for too long been able to write ago our colleagues in this House rose in sup- ported that during that four year period, 720 off the death of a child as merely the cost of port of the Flag Burning Amendment. We young people suffered work-related fatalities. doing business as they pay a modest fine. voted to protect our flag and all that it stands Other studies have concluded that an addi- The Young American Worker's Bill of Rights for in America's past as well as its future. tional 200,000 young people suffer serious will impose stricter civil as well as criminal Today, I rise to urge my colleagues in this work-related injuries each year. penalties for employers who willingly violate Congress to consider and adopt legislation Several provisions of our legislation are the law to assure protection for our young that will protect the children who live under crafted to deal with this serious matter of men and women. that flag. workplace safety. Our bill specifies that young Mr. Speaker, I never again want to stand I welcome the fact that a number of our col- people may not use or clean certain types of next to parents and listen as they tell of the leagues have begun to look at the problems particularly hazardous equipment and many senseless death of their children. I never American children are facing. Our colleague not work in certain hazardous occupations. again want to listen to the testimony of young from Texas, NICK LAMPSON, and our colleague The bill also specifies that children are not to workers as they sit before me missing arms or from Alabama, ROBERT E. (BUD) CRAMER, JR., work late hours, the times when the most seri- legs because they were asked to operate un- should be recognized for their efforts in estab- ous injuries and fatalities take place. It also safe equipment or machinery which they were lishing the Caucus on Missing and Exploited establishes new criminal sanctions for willful not trained to use. I never want to see the Children. We also owe particular gratitude for violations of child labor laws that result in the frustration on the faces of teachers who tell the bipartisan efforts of our colleague from death or serious injury of a child. Civil pen- me about their students falling asleep in class, Florida, ILEANA ROS-LEHTINEN, and our col- alties would be established for willfull and re- failing to hand in assignments, or who just league from Texas, SHEILA JACKSON-LEE, who peated violators of our child labor laws. drop out because they cannot keep up both have begun to set the agenda for the newly The second concern that our legislation ad- work and school. formed Children's Caucus. These two cau- dresses is the problem of work interfering with Mr. Speaker, I am delighted to announce cuses reflect the concern of Members of Con- our children's education. It is essential that we the support of the National PTA for H.R. 1870, gress and the concern of the American people send a message to these young workers that The Young American Workers Bill of Rights. for our children. education must be their number one priority. The PTA is celebrating its 100th anniversary Mr. Speaker, it is within this framework that Our legislation makes it clear that excessive this year. It is interesting to note that in their I am delighted to inform my colleagues that I work in unsafe environments will no longer be first year of existence they asked the Con- have introduced H.R. 1870, The Young Amer- tolerated. The Young American Worker's Bill gress to do something to protect our nation's ican Workers' Bill of Rights. I am pleased that of Rights will address the needs of children children in the workplace. It is a sad com- our distinguished colleague and my neighbor under the age of 18 or those who are eighteen mentary that today they are still asking us to in California, TOM CAMPBELL, has joined me as and still a full-time high school student. Stu- protect our teenagers. Some 50 other organi- the principal cosponsor along with another 30 dents need to spend much of their day in zations which focus on youth and education of our colleagues have joined us in introducing classrooms, libraries and involved in their have indicated their support for this legislation. this legislation. This bipartisan bill is an exam- school's activities. They need to experience Mr. Speaker, it is time that we took that ac- ple of the way all of us must work together to young adulthood, not make the quick leap tion. I invite my colleagues to join me and my make our children's lives safer and more se- from childhood to adulthood. By entering the colleagues to cosponsor this important legisla- cure as they enter the work force. No bill intro- world of adults before they are ready, many of tion. duced in the 105th Congress will have greater these young people become vulnerable to al- f potential for protecting and helping our na- cohol and drug abuse. They frequently fail to HONORING RUBY MOY, DIRECTOR tion's young people. hand in school assignments, if they bother at- OF U.S. CIVIL RIGHTS COMMISSION As the former chairman of the House Gov- tending school at all. ernment Operations Subcommittee on Em- Today many of our teenagers are working ployment and Housing for several years in more than many adults who are employed full HON. EARL F. HILLIARD previous Congresses, I learned first hand time. Many are working more than 40 hours OF ALABAMA about how exploitation, injuries and death per week in addition to attempting to attend IN THE HOUSE OF REPRESENTATIVES have taken their toll on America's young work- school. It is no wonder one of the most com- Thursday, June 26, 1997 ers. In hearings on child labor, I heard horror mon phrases heard by teachers from their stu- Mr. HILLIARD. Mr. Speaker, I stand before stories about young people losing their lives to dents today is, ``I am so stressed.'' Testimony you today to congratulate the President for his deliver pizza within a 30-minute time limit. I of many experts on education have alerted us wise choice of Ms. Ruby Moy as the new staff heard of others who lost their lives or suffered to the dangers of too much work. In addition director of the U.S. Commission on Civil permanent and crippling injuries because they to the substance abuse studies, other studies Rights. I am confident she will do a wonderful were using equipment which they were not have been done on the effect too many hours job in her new position. sufficiently trained or sufficiently experienced have on the grades our children are getting. A Before Ruby Moy was nominated for this to use. Unfortunately, the exploitation of child study of students in New Hampshire con- position, she was well known for the expertise labor in America, which I found during those cludes that there is a direct correlation be- and acumen of her position as the executive hearings of the Employment and Housing tween grades in English and the number of assistant to the Director of the White House Subcommittee, is not a thing of the past. It re- hours worked. The more hours a student Office of Public Liaison, now the Secretary of mains a serious problem, it is a growing prob- works, the slower the student's grade. Teach- Labor, the Honorable Alexis Herman. Ruby lem, and it continues to threaten the welfare ers often comment that a job is the reason Moy held this position for 4 years, and was in- and education of American teenagers. some students drop out. tricately involved in constituency outreach pro- At the same time, however, we recognize In order to assure that education is given grams and official White House events. the importance of work and the value of the proper priority, the legislation establishes limits Prior to working for the President, she work experience. The Speaker of the House, on the number of hours that children can work served as the chief of staff to Congressman June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1345 Frank Horton of New York from 1973 until Jack Evans served as mayor of Dallas for was nominated for the AWARE Foundation 1992. In this capacity, Ruby Moy was very in- one term from 1981 to 1983. He is cited by Award in 1995. volved in public policy, and the development many as a mayor who accomplished a great I've had the personal privilege of visiting Su- of legislation. deal during his short term. He believed in san's class and witnessing the fruits of her As the new staff director for the U.S. Com- building alliances, creating opportunities and labor in the bright, shining, energetic faces of mission on Civil Rights, Ruby Moy will bring solving problems, and he accomplished this by her children; I have no doubt that the founda- an understanding and dedication to a position working with people. Jack Evans truly was a tion which she gives those children puts them of extreme importance to the minority commu- mayor for all of Dallas. He rode with para- on very solid footing for all future educational nities of America. She will be shepherding a medics in ambulances, he helped patrol the endeavors. program whose purpose is freedom and streets with police and he picked up trash with For the last 6 or so years, Susan has had equality for all. As the vice chairman of the sanitation workers. He did this because he the full-time volunteer assistance of her hus- Congressional Black Caucus, I commend wanted a sense of what really made the city band, Jay Graham, and her students have President Clinton for his choice of Ruby Moy. work on a day-to-day basis, and it served him been doubly enriched by the dedication of this I expect her to be one of the finest Directors well in public service and as a businessman. remarkable couple. that the U.S. Commission on Civil Rights has Without Jack Evans, there would be no In a few weeks Susan will officially retire. ever had. I also direct her to be an advocate Downtown Dallas Art's District. He saw an However, it comes as no surprise that she, for the least, the last, and the lost of our soci- area of land next to downtown Dallas and has and Jay, plan to continue doing volunteer work ety. We are depending on her to walk the sec- the forethought to create a thriving area which at Roquemore, especially with their HOSTS, ond mile in this most important position. would allow everyone from the Metroplex to mentoring, program. On July 3d it will be my f experience the best of arts and entertainment pleasure to visit Susan's class for the last time through museums, galleries and city living. An- and talk with her students about our U.S. flag THE JONES ACT other major accomplishment, while Jack and the meaning of Independence Day. And, Evans was mayor in the 80's, was his strong I will extend to Susan and Jay my personal HON. JOHN JOSEPH MOAKLEY push to make sure that businesses invested in gratitude and best wishes for their well-de- OF MASSACHUSSETTS southern Dallas. He knew the value of contrib- served retirement. IN THE HOUSE OF REPRESENTATIVES uting to our community, and how the benefits f Thursday, June 26, 1997 would be received for many years after the ini- tial investment. IN HONOR OF THE RECIPIENTS OF Mr. MOAKLEY. Mr. Speaker, I rise today to Jack Evans' work ethic and commitment to THE NASA ADMINISTRATOR’S report to my colleagues on the continuing suc- public service was learned at an early age. As FELLOWSHIP PROGRAM cess of House Concurrent Resolution 65, a young man working in his family's east Dal- which endorses the Jones Act. As many of las grocery store, he learned the value of busi- HON. DENNIS J. KUCINICH you know, the Jones Act requires that water- ness and used his knowledge to work his way OF OHIO borne cargo moving between two points in the through the grocery business to eventually IN THE HOUSE OF REPRESENTATIVES United States must be transported on Amer- hold the position of president of the Tom Thursday, June 26, 1997 ican-built, American-owned, American-flagged, Thumb grocery store chain. and American-crewed vessels. During his years as the chairman of the Dal- Mr. KUCINICH. Mr. Speaker, I rise to honor In just 2 months, 178 Members have co- las Citizens Council, Mr. Evans carried the the accomplishments of the 1997-98 NASA sponsored this important resolution. Most strik- message of equal opportunity to the corporate Administrator's Fellows of Cleveland, OH. ing is the bipartisan nature of this support. Co- world. Also, he was awarded the Henry Cohn Four NASA employees of the Lewis Re- sponsors include Democrats and Republicans, Humanitarian Award from the Anti-Defamation search Center; Maria E. Perez-Davis, Jon C. liberals and conservatives. Support for the League for his unwavering commitment to Goldsby, Yolanda R. Hicks, and Mark D. Jones Act cuts across philosophical and stamping out bigotry and preserving human Kankam have received this award. partylines. The one thing these cosponsors rights. They plan to teach and conduct research at have in common is an understanding about Mr. Speaker, I ask all of my colleagues to various universities for a period of 6 months to the important national security, economic, rise with me in this tribute and take a moment 2 academic years. Their knowledge of NASA safety and environmental benefits of the act. to remember a great man and a good friend, programs and real world experience will assist The support among the Members of the Mr. Jack Evans, a man who truly exemplifies them in the teaching process. subcommittees of jurisdiction is particularly the best of Dallas. The Fellowship Program is designed to en- strong. Two House Subcommittees have juris- f hance the development of science, mathe- diction: the Merchant Marine panel of the Na- matics, and engineering faculty at historically tional Security Committee and the Maritime TRIBUTE TO SUSAN E. GRAHAM black colleges and universities, Hispanic-serv- Transportation Subcommittee of the Transpor- ing institutions and tribal colleges. tation and Infrastructure Committee. Of the 19 HON. MARTIN FROST Let us join NASA in acknowledging the ef- members of these two panels, 17 have shown OF TEXAS forts and accomplishments of Maria E. Perez- their clear commitment to the Jones Act by IN THE HOUSE OF REPRESENTATIVES Davis, Jon C. Goldsby, Yolanda R. Hicks, and signing dear colleague letters and opposing Mark D. Kankam. Thursday, June 26, 1997 changes to the Jones Act. f I am pleased to be the sponsor of House Mr. FROST. Mr. Speaker, I rise today to pay Concurrent Resolution 65 and I am delighted, tribute to an extraordinary woman who, over a TRIBUTE TO FRANK J. CARROLL although not particularly surprised, by its ex- span of almost three decades, has touched traordinary bipartisan support and success. the lives and helped to shape the futures of HON. ROSA L. DeLAURO f untold thousands of Texas children. As such, OF CONNECTICUT she is representative of a group of largely un- IN THE HOUSE OF REPRESENTATIVES TRIBUTE TO MAYOR JACK EVANS sung heroes and heroines, our public school teachers. Thursday, June 26, 1997 HON. EDDIE BERNICE JOHNSON Susan E. Graham, of Roquemore Elemen- Ms. DELAURO. Mr. Speaker, on Saturday, OF TEXAS tary School in Arlington, TX, will retire next June 28, the International Brotherhood of IN THE HOUSE OF REPRESENTATIVES month after devoting 28 years of her life to the Electrical Workers will honor Frank J. Carroll, education of elementary school children. Early Jr. for his recent appointment to the office of Thursday, June 26, 1997 in her career she taught various grade levels International vice president, 2d district, Ms. EDDIE BERNICE JOHNSON of Texas. at several different schools in Texas. Her last I.B.E.W. I am very pleased to rise today to Mr. Speaker, I rise today to honor and remem- eighteen years, however, have been at congratulate my good friend, Frank Carroll. ber a friend and one of the great mayors of Roquemore Elementary School, and the last As a proud member of I.B.E.W. for over 30 Dallas, Mr. Jack Evans. His vision and drive ten of those years were spent teaching and years, Frank has dedicated his life to advocat- have made Dallas a great place to live, and it nurturing a lot of very lucky first graders. She ing on behalf of workers. I have known and is illustrated by his civic achievements over his was named Teacher of the Year at worked with Frank for a number of years and lifetime for our city. Roquemore for the 1992±93 school year, and I consider him a great friend. His commitment E1346 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 to working people is extraordinary and his welfare, and pursued the high safety and Title IX services provide training for school work on behalf of I.B.E.W. is a testament to health standards of our area's restaurants, districts on sexual harassment in schools, his deeply held belief in the power of unions hospitals and clinics. In 1963, he started his identify and address gender bias in class- to make life better for workers. Frank has tenure as Hoboken's director of Public Works, rooms, support programs to infuse women's spent a lifetime working hard to ensure that Revenue and Finance. In 1979, Mr. Vitale history into school curriculums. They assist union members are guaranteed decent wages, began serving Hudson County, as its produc- young women in forming a strong identity, re- a safe workplace and fair conditions. He has tion coordinator. In this position, he was the ceiving support from peers and learning how long been a champion of electrical workers, county troubleshooter for numerous vital is- to interact effectively with others. coming from a family with a long history in the sues, particularly budgeting and allocation of Title IX and other programs supportive of profession. public funds. girls' education send a clear message to The best example I can offer to illustrate His 19 years of service to Hoboken and his American girls that their education and future Frank's commitment to protecting workers on 9 years to Hudson County are an example of is important. As a mother of four adult daugh- the job is his actions after the L'Ambiance commitment and loyal service. His record ters, I have seen the positive results. We are Plaza collapse on April 23, 1987. Twenty-eight stands on its own. He is a firm believer that seeing a generation of young women growing union members were killed in Bridgeport on hard work is the best way to meet the chal- in an environment that does not make them that terrible day after substandard building lenges of the future. limit themselves by identifying roles or oppor- conditions caused the building to collapse. Family has always played a major role in tunities as ``men's'' or ``women's''. Young This tragedy placed a national spotlight on the Mr. Vitale's life. This year Mr. Vitale's wife, women today believe than can do anything. need for strict standards to ensure the safety Lina, his three sons, Michael, William and Jo- And they can. And we have a great of workers. In response, Frank played an in- seph, and his two stepsons, Michael and Mat- repsonsibility to do all that we can to support strumental role in supporting legislation which thew Canarozzi, celebrated his 80th birthday them in that belief. would ban the lift-slab construction method on June 2, 1997. Raphael and Lina are the f used at L'Ambiance Plaza. Frank's testimony proud grandparents of nine grandchildren and was pivotal to passing this legislation and this the great grandparents of one child. TRIBUTE TO AMANDA BUCKNER method of construction is no longer in use. I Mr. Vitale epitomizes excellence in commu- applaud Frank's efforts on this and other safe- nity service, and has had a positive impact on HON. ROBERT B. ADERHOLT ty issues that are so crucial to our Nation's many lives. It is an honor and pleasure to OF ALABAMA workers. have such a remarkable individual residing in IN THE HOUSE OF REPRESENTATIVES Frank is the first person from Connecticut to my district. Thursday, June 26, 1997 assume the position of international vice presi- f dent, 2d district. This new position will provide Mr. ADERHOLT. Mr. Speaker, I rise to pay an opportunity for his experience and wisdom THE 25TH ANNIVERSARY OF TITLE tribute to Miss Amanda Buckner of Gadsden, to benefit all I.B.E.W. members throughout IX AL. Miss Buckner won statewide first place New England. I know that he will bring his ac- honors in the Veterans of Foreign Wars' Voice tivism, energy and enthusiasm to this new role HON. NANCY PELOSI of Democracy Contest and third place honors and his tenure will be creative and productive. OF CALIFORNIA in the national contest. I ask unanimous con- ECORD I am very pleased to join Frank's wife, Patty, IN THE HOUSE OF REPRESENTATIVES sent to have printed in the R her prize winning script. I am very proud of Miss and his children, Frank III, Raymond and Amy Thursday, June 26, 1997 Lynn in congratulating his on his new appoint- Buckner's accomplishments, and of the way ment. I feel confident that Frank will once Ms. PELOSI. Mr. Speaker, I join with my she represented Alabama in our Nation's cap- again, prove successful as he takes on these colleagues today in commemorating the 25th ital. new challenges. I wish him all the best. anniversary of a civil rights law that has DEMOCRACY ABOVE AND BEYOND f changed the way American girls and women Welcome fans, to the 49th Olympics. You think about themselves and their futures. are about to see the relay event. On Ameri- IN HONOR OF RAPHAEL VITALE Title IX prohibits gender discrimination in ca’s team we have five exceptional runners. FOR DISTINGUISHED AND DEDI- education programs. Title IX is not just about The first is George Washington. Next we CATED SERVICE TO HUDSON access to sports and it is an integral player in have Abraham Lincoln. On the third leg is COUNTY gender equity. Greater atheltic opportunity Franklin D. Roosevelt. Ronald Reagan takes does build leadership and teamwork skills that the fourth leg. The last leg is a bit different. serve every person throughout his or her life. America has a surprise runner. I will an- HON. ROBERT MENENDEZ nounce his name later. Ladies and Gentle- OF NEW JERSEY More women have received higher education men, this team should carry democracy IN THE HOUSE OF REPRESENTATIVES in the past 25 years through athletic scholar- above and beyond. ships. The ratio of high school girls playing The runners take their marks. One . . . Thursday, June 26, 1997 sports has gone from 1 in 27 to 1 in 3. Two . . . Three . . . Go! Washington holds his Mr. MENENDEZ. Mr. Speaker, I rise today With the recent success of women Olympic baton of democracy tight and begins the run. to pay tribute to a special gentleman, Raphael athletes and the unveiling of a new profes- Not only is he running, he is shaping this Vitale, who has distinguished himself through sional women's basketball league, we do not race for freedom. Washington is setting the pace for democracy with grace, authority, his continuous dedication to the residents of lack athletic role models for young girls. Wom- and peace. Earlier in an interview, Washing- my district. Mr. Vitale will be honored by his en's participation in collegiate sports has risen ton said he hopes this team prospers, focuses family and friends on June 29, 1997 at Antho- from 2 percent in 1972 to 35 percent in 1996. on their goals and sticks together. He wants ny's Restaurant in his hometown of Hoboken, But title IX has also provided more lasting to show everyone what a wonderful experi- NJ. Sunday's celebration recognizes his long academic results, increasing the participation ence freedom can be. And boy has he! Al- history of selfless service to his community. of girls and women in non-traditional edu- though the older, stronger countries are try- Throughout his long career, Mr. Vitale has cational and professional environmentsÐmath, ing to push him out of the way, he fights on. been a religious man, a model citizen and de- science, engineering and technology. Washington has carried democracy above and beyond, but now he must pass it along. voted family man. He entered the St. Francis Today we celebrate 25 years of women's Honest Abe takes control. At this point de- Seminary in New York at the age of 17. He achievement through sports and education. mocracy has fallen behind in the race. Slav- later joined the film and production industry as But we know that the progress we have made ery and economic unrest seem to be slowing a member of the Spotlight Production Co. in is not near enough. Today the National Coali- them down. Yes, it looks as if they are at New York. In 1941, he became the production tion of Girls and Women in Education ranked war with themselves. . . Wait, Lincoln re- coordinator for Koven's in Dover, NJ where he the United States with a grade of `C'' in gen- fuses to let the injury of ignorance and ra- supervised the production of military equip- der equity in education. Enforcement of title IX cial discord tear this team apart. He is hold- ment for our country's effort in World War II. has been inconsistent at best over the last 25 ing his own. He is showing the rest of the world that freedom will rise, and democracy Mr. Vitale embarked on his public career in years All but two states have eliminated or re- will continue above and beyond. Lincoln is 1959 when he took his first assignment as a duced title IX enforcement staff positions, de- brave to continue after such an injury. It park attendant, helping to ensure the safety of spite the federal law's requirement that each looks as if he still has the lead. Ladies and his community. In 1961, he assumed the re- state department of education must have a gentlemen, freedom may survive this trag- sponsibilities of deputy director of health and Title IX designee. edy after all. June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1347 Franklin Delano Roosevelt has the baton from Ball State University and moving back to received—680 acres of land in Bartow Coun- now. The crowd has fallen into despair and his hometown of Princeton, IN. Since becom- ty—on behalf of the Bagwell family. KSU lost all belief in team USA. But Roosevelt ing a member of the Princeton Jaycees, Mike subsequently named its College of Education still holds on. Social Security, the Works after Leland and Clarice Bagwell. Project Administration, and many other rev- has dedicated himself to bettering his commu- Mrs. Bagwell not only has given the uni- olutionary new programs bring this crowd nity through many worthwhile Jaycee projects versity monetary gifts, she has volunteered out of the depression. Many are saying Roo- such as the Needy Kids Christmas gift giving many hours of service as a member of the sevelt is the best runner yet. We got a program, the Annual Princeton Christmas pa- KSU Foundation Board of Trustees for 15 chance to speak with Roosevelt before he rade, the MDA Pledge Center, the Annual years, serving on the board’s Executive Com- started the race, and he told this reporter Community Easter Egg Hunt, and other worth- mittee and heading the Special Projects that America would not succumb to this while projects. His dedication to his community Committee. She maintains a busy schedule trial. Showing his astute leadership he told and his organization has led to him holding as the co-owner and chairman of the board of me, ‘‘There is nothing to fear but fear it- American Proteins and as a volunteer with self.’’ And his dedication will not allow any many distinguished positions in the Junior scouting organizations and an elementary of his fears to get in the way of his winning Chamber of Commerce, including President of school in Forsyth County, where she lives this race. FDR fights through all the turmoil the Indiana Jaycees, Chaplain of the U.S. Jun- today. and comes ahead. The crowd is on its feet ior Chamber of Commerce, and culminating in Back in 1991, the university honored its now. his election last year as President of the U.S. ‘‘good and faithful servant and steward’’ by Roosevelt passes the baton to Ronald Junior Chamber of Commerce. establishing the Clarice C. Bagwell Medal for Reagan. This is a man who stole America’s As a successful entrepreneur who founded Distinguished Service, awarded annually to heart with his lopsided grin and his opti- ``First Place Trophies & Awards'', Mike Mar- others who serve the institution well. Presi- mism. The crowd has hope for the future now dent Siegel said at commencement that Mrs. that Reagan has the stick. The American shall has shown that the American dream Bagwell ‘‘casts a long and splendid shadow in dream is alive and well. Reagan took democ- thrives in small communities around the coun- the history of our university.’’ We also ap- racy above and beyond anything we had en- try. Now, as U.S. Junior Chamber of Com- plaud Mrs. Bagwell for her exemplary exam- visioned. He revitalized the economy and merce President, Mike has been a shining ex- ple as a volunteer and philanthropist for the ended the cold war. After Reagan finished his ample of what is right with America and its benefit of education. end of the race, he told me the same thing he younger generation. Mike Marshall has rep- f said in his inaugural address, ‘‘We are too resented Gibson County, the State of Indiana, great a nation to limit ourselves to small and the United States honorably in his travels dreams.’’ EXPANDING FEHBP TO COVER Now, the last runner of the race for free- throughout the world during his year as Presi- MEDICARE-ELIGIBLE RETIREES dom. Are you wondering who it is?! Well, I’ll dent of the U.S. Jaycees. tell you. The runner of the last leg is . . . Mr. Speaker, I ask you and all Members to HON. CLIFF STEARNS you! That’s right, it’s all of you. America is join me in paying tribute to Mike Marshall. He ahead and thriving, but it all depends on how is an exemplary individual who has dedicated OF FLORIDA you run this race. Can you fight past the his life to making his state, and his country a IN THE HOUSE OF REPRESENTATIVES homeless, past the hatred, past the children better place. I applaud Mike Marshall's dedica- Thursday, June 26, 1997 who cry for a warm meal? It is up to you to tion and wish him continued success in his en- make the difference. If you don’t . . . who Mr. STEARNS. Mr. Speaker, because the will? deavors. need for expanded health care for military re- Run. Run for those who ran before you. f tirees is so important, I am reintroducing my Run for those who ache for the chance. If you KUDOS TO KSU bill to permit Medicare-eligible retired mem- run this race well, we should enter the 21st bers of the Armed Forces and their Medicare- century the powerful and thriving country eligible dependents to enroll in the Federal we have always been. All of America’s teams HON. BOB BARR Employees Health Benefits Program [FEHBP]. have done fine jobs. They have kept this OF GEORGIA country on the road to greatness. All democ- We made a commitment to those who racy needs now is a strong runner to bring IN THE HOUSE OF REPRESENTATIVES chose to serve in defense of our country. Mili- home the gold. Let’s watch and see how you Thursday, June 26, 1997 tary retirees were promised health care for life. finish this race. Will you win the race for However, there is a catch-22 situation for Mr. BARR of Georgia. Mr. Speaker, I would freedom? Will you carry democracy above Medicare-eligible retired military because once like to submit an extension of remarks into the and beyond? As you stand and hear the an- they either turn age 65 or qualify for disability CONGRESSIONAL RECORD ``Kudos to KSU,'' an them they are playing for you, you realize treatment, they lose their CHAMPUS benefits. that there are those who will die and never article that appeared in the Marietta Daily Unfortunately, they are placed last on the pri- know freedom. Run for them. Run for the Journal on June 24, 1997, congratulating Ken- ority for treatment at military treatment facili- country that swells you with pride. Run for nesaw State University for its selection of Cla- ties, and they are prevented from participating peace. And run for freedom. Hold your head rice C. Bagwell as its recipient of an honorary high as the flag is raised in your honor. Feel in the new TRICARE Program. doctorate of humane letters. This article quite it to the marrow of your soul . . . Run. This bill is identical to H.R. 3368, which I in- accurately reflects the tremendous work that troduced in the last Congress. I plan to press f Ms. Bagwell has accomplished over the years, for passage of this legislation because I be- in support of the Georgia and National Parent- TRIBUTE TO MIKE MARSHALL lieve we must fulfill our commitment to our Na- Teacher Association [PTA]. I lend my voice to tion's military retirees and veterans. that of this esteemed newspaper in congratu- HON. JOHN N. HOSTETTLER lating Ms. Clarice Bagwell on receiving Ken- f OF INDIANA nesaw State University's very first honorary RECOGNIZING SUSANNE STEIN- IN THE HOUSE OF REPRESENTATIVES degree. METZ FOR OUTSTANDING SERV- Thursday, June 26, 1997 KUDOS TO KSU ICE TO THE RESIDENTS OF CALI- Mr. HOSTETTLER. Mr. Speaker, I rise We applaud Kennesaw State University ad- FORNIA’S 16TH CONGRESSIONAL today to honor one of my most acccomplished ministration’s choice for its first honorary DISTRICT degree. constituents. On July 1, 1997, Mike Marshall KSU’s President Betty L. Siegel presented of Princeton, IN, will end his term as the presi- an honorary doctorate of humane letters to HON. ZOE LOFGREN dent of the U.S. Junior Chamber of Com- Clarice C. Bagwell. A longtime educator, OF CALIFORNIA merce. It is a distinct pleasure for me to join Mrs. Bagwell served as president of the Geor- IN THE HOUSE OF REPRESENTATIVES the residents of Gibson County in recognizing gia PTA for three years and on the PTA’s na- Mike Marshall for his endless work in helping tional board of directors for six years in the Thursday, June 26, 1997 to prepare future leaders as well as to bring to 1960s. Her late husband, Leland Bagwell, Ms. LOFGREN. Mr. Speaker, I rise today to the forefront of public debate such issues as taught high school chemistry in Canton be- recognize a woman whose record of public fore founding American Proteins, now the the future of Social Security, the fight against world’s largest producer of poultry by-prod- service spans over 4 decades. Ms. Susanne teen smoking, and the importance of small ucts. When he died in 1972. Mrs. Bagwell E. Steinmetz, a constituent of mine from business to the future of our country. helped their son take charge of the company. Gilroy, CA, has devoted over two thirds of her Mike Marshall first joined the Junior Cham- Early this year, American Proteins gave life to working for the city of Gilroy and will be ber of Commerce in 1984 after graduating Kennesaw State the largest gift it has ever retiring after 45 years of faithful service. E1348 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 Ms. Steinmetz began her career with the championship game they each won three. The ployment and training services to able-bodied city at age 15, working part-time after school men had fought hard to pull themselves back 18- to 50-year-old persons. and later, while attending college, she was of- from the loser's bracket and become contend- Second, none of the employment and train- fered a full-time position with the city at $300 ers once again for the title. In the second in- ing funds required to be spent on able-bodied a month. In 1960, Ms. Steinmetz was ap- ning of the final game the Mustangs pulled 18- to 50-year-old persons may be used for pointed City Clerk, a position she held until away with a 7 to 0 advantage. job search activities. her retirement. That was the last time they scored. I recognize that these discussions will con- Born and raised in Gilroy, Susanne's dedi- Their strong opponents capitalized on the tinue during our conference with the Senate. It cation to public service was perhaps inevi- men's fatigue and came back in the next five is my hope that the committee will be able to table. Her family has a long history of service innings to a too close for comfort score of 7 continue its emphasis on flexibility for Gov- to this small, close-knit community. Her mater- to 6, advantage Needles. These Mustang ernors and employment and training programs nal great-great grandfather, Jacob Kiether, men, with the support of teammates, friends, that actually result in jobs for able-bodied 18- was a city trustee before the city was incor- families, and fans held off and like the song to 50-year-old persons. porated in 1870, later serving on the city coun- goes: ``For it's one, two, three strikes, you're f cil, and as mayor. Her father, Ben Thomas, out at the old ball game.'' The Mustangs found WARTIME VIOLATION OF ITALIAN served three terms on the city council. themselves the 1997 men's baseball State AMERICAN CIVIL LIBERTIES ACT No matter how busy or stressful her work- champions. load was, Ms. Steinmetz was always willing to Mr. Speaker, these young men and women stop and answer questions from the public have gone above and beyond to exemplify the HON. RICK LAZIO OF NEW YORK and co-workers. She is a unique individual spirit of excellence. They played with the fire IN THE HOUSE OF REPRESENTATIVES who served her community extremely well, of champions and never faltered in their quest. and still found the time to raise not one but Their courage and determination provides an Thursday, June 26, 1997 two sets of twins, Jill and Jayne, age 28, and example for all of us to admire and emulate. Mr. LAZIO of New York. Mr. Speaker, today Tym and Thom, age 25. To all the people who make Needles their I am introducing a resolution to draw attention Mr. Speaker, I would like to congratulate home, it was truly a championship year. to a seldom remembered episode in America's Susanne Steinmetz on her many years of f past. During World War II, shortly after the dedicated public service and invite my col- bombing of Pearl Harbor, thousands of Italian- leagues in the U.S. House of Representatives FOOD STAMP PROGRAM AND THE Americans were deprived of their basic civil to join me in thanking her and wishing Ms. 1998 BUDGET AGREEMENT liberties. We must acknowledge this terrible Steinmetz and her family many years of con- tragedy to pay tribute to those who suffered, tinued success and happiness. HON. ROBERT SMITH and to ensure that such a breach of liberties f OF OREGON will never happen again. In 1942, Italians, numbering close to 23 mil- TRIBUTE TO THE NEEDLES IN THE HOUSE OF REPRESENTATIVES lion people, were the largest foreign-born MUSTANGS Thursday, June 26, 1997 group in the United States. While thousands of Mr. SMITH of Oregon. Mr. Speaker, the Italian-Americans were fighting for our country HON. JERRY LEWIS Committee on Agriculture reported bipartisan in Europe and the Pacific, Italian-Americans OF CALIFORNIA legislation increasing spending in the Food who had not attained citizenship were deemed IN THE HOUSE OF REPRESENTATIVES Stamp Program by $1.5 billion over 5 years, in enemy aliens. Whole Italian-American commu- Thursday, June 26, 1997 accord with the 1998 budget agreement. nities on the West Coast were evacuated. Mr. LEWIS of California. Mr. Speaker, I am The committee provided a total of $1.1 bil- Shopkeepers, fishermen, and farm workers proud to bring to your attention, once again, lion, over 5 years, for food stamp employment were ordered to move inland. As a result, fam- the avid pursuit and spirit of excellence from and training programsÐ$680 million in new ilies were separated. Jobs, homes, busi- the young women and men of Needles, CA. I moneyÐand provided States the authority to nesses, even some lives were lost. So many am speaking of the Needles High School Lady grant waivers from the work rule for an addi- Italian-Americans suffered. Yet 50 years later, 'Stangs softball and Mustang baseball teams. tional 75,000 people. theirs is a largely untold story. These individuals will be remembered for their Also, the committee required a maintenance My resolution calls for the President to ac- talent, hard work, perseverance, and commit- of effort by States, at the request of the ad- knowledge the injustices suffered by Italian- ment to work as a team. To me, and the ministration and committee Democrats. Main- Americans during World War II. Furthermore, proud friends, families, and citizens of Nee- tenance of effort was not part of the budget the resolution calls on the Justice Department dles, CA, they are winners in every sense of agreement. Therefore, a State, as a condition to publish a report, documenting the specific the word. of receipt of the new employment and training violations of their basic civil rights during this The Lady 'Stangs who entered their cham- funds, must continue its State funding for em- period. In order to heighten public awareness pionship tournament undefeated, approached ployment and training programs. of these events, this resolution urges Federal their most worthy opponents with the faces of The administration maintained the commit- agencies, such as the Department of Edu- optimism and true strength. Although their op- tee bill did not meet the 1998 budget agree- cation and the National Endowment for the position had a very impressive record of 24± ment. I disagree. Nevertheless, extensive dis- Humanities, to sponsor conferences, semi- 4, the young women of Needles answered the cussions were held with White House and nars, and exhibits detailing this chapter of our challenge by outplaying their competitors in other administration officials. Nation's history. Italian-Americans are proud and loyal Amer- every game. Over the three game tournament The administration wants all employment icans. The impact of this wartime experience the Lady 'Stangs blew out the competition by and training funds dedicated to workfare slots, has had a devastating impact on their commu- outscoring them 40 to 3. which do not lead to gainful employment but A unique feature of this year's team was the only serve to keep able-bodied 18- to 50-year- nities. As we work for equality and justice in winning contributions on all levels. From the old persons eligible for food stamps. They ob- America today, we cannot ignore the mistakes new first year head coach and coaching staff, jected to the policy adopted by the committee of our past. Italian-Americans deserve to have to the outstanding seasoned veteran seniors, because they preferred that all of the employ- their story told. the vital energy of the younger teammates, ment and training fundsÐas opposed to the f and the enduring support from parents and 75 percent included in the committee billÐbe TRIBUTE TO MARION KIRBY AND fans, these women had the winning combina- dedicated to able-bodied 18- to 50-year-old MAC MORRIS tion for the State championship. persons with no dependents. Additionally, the The city of Needles celebrated not one but administration objected to the inclusion of job HON. HOWARD COBLE search as an allowable activity for use of food two State championships that hot Saturday OF NORTH CAROLINA stamp employment and training funds. afternoon. I must mention an equally impres- IN THE HOUSE OF REPRESENTATIVES sive Mustang baseball team whose battle to Therefore two changes were made to the take the championship was a true fight to the committee bill to address the objections raised Thursday, June 26, 1997 end. by the administration. Mr. COBLE. Mr. Speaker, I rise today to It was the Mustangs seventh time facing First, 80 percent of the total employment recognize and honor two distinguished gentle- their AA Conference rivals and going into the and training funds will be used to provide em- men from the Sixth District of North Carolina. June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1349 Mr. Marion Kirby and Mr. Mac Morris of for Los Angeles County and the State of Cali- Had I been here I would have voted for the Greensboro, NC, have dedicated themselves fornia. Dellums-Kasich amendment to reduce funding to educating America's youth and to striving Mr. Haskvitz has led the children he has for the B±2 bomber. for excellence in high school athletics. Coach taught to a remarkable number of achieve- f Morris was head coach of the Page High ments. His students have developed plans to TRIBUTE TO SISTER DOROTHY School Pirates' basketball teams for 25 years end graffiti in schools and the community, ANN KELLY and Coach Kirby was head coach of the Pi- sponsored seeing eye dogs, and created a rates' football teams for 23 years. Feed the Homeless garden that uses all recy- Mr. Speaker, it is my honor to announce cle materials and water. HON. NITA M. LOWEY that on September 17, 1997, the football sta- Mr. Haskvitz has made a valuable contribu- OF NEW YORK dium and the gymnasium at Walter Hines tion to the lives of hundreds of students. His IN THE HOUSE OF REPRESENTATIVES Page High School will be named and dedi- teaching and leadership benefit not only the Thursday, June 26, 1997 cated after Marion Kirby and Mac Morris, re- school in which he works, but also the com- Mrs. LOWEY. Mr. Speaker, I rise to honor spectively. munity in which he lives. Both Walnut and Alta Sister Dorothy Ann Kelly, OSU, who on July 1 Coach Morris won three State basketball Loma benefit from Alan Haskvitz's efforts to will complete 25 years of outstanding service championships over 3 decades with Page energize and mobilize students to embrace as president of the College of New Rochelle. High School, but more important than these learning and give back to their communities. I I am privileged, as the Member of Congress victories is Mr. Morris' genuine concern for his am proud to represent Mr. Haskvitz in Con- who represents the college, to have worked students and players. Mac could always be gress and offer my warmest congratulations with Sister Dorothy Ann. I know her to be a counted on to push his athletes to work just a on a job, and a career, well done. widely respected and admired national leader little bit harder, and to urge his students to set f in the areas of higher education and women's their goals just a little bit higher. Through his issues, who also has found the time to play an CONGRATULATING KAHUKU HIGH rigorous work ethic, Coach Morris earned the active role in community organizations and SCHOOL’S ‘‘WE THE PEOPLE’’ respect of his students, both on the court and events. TEAM in the classroom. Innovative, insightful, instrumentalÐthese Coach Kirby won four State football cham- are merely a few words that can be used to pionships for the Pirates, and has always set HON. PATSY T. MINK characterize Sr. Dorothy Ann Kelly, who has an example for his players and students. Mar- OF HAWAII served as president of the College of New Ro- ion always seemed to be a miracle worker. He IN THE HOUSE OF REPRESENTATIVES chelle for the past 25 years. Under her deter- took teams which seemed to have mediocre Thursday, June 26, 1997 mined leadership, the college has grown from one school of 800 students in 1972 to four talent and somehow turned them into contend- Mrs. MINK of Hawaii. Mr. Speaker, I rise to ers for a State championship. Coach Kirby has schools with seven campuses and a current offer my warmest congratulations to Kahuku student population of over 6,500. always led by example, taught from experi- High School on the outstanding performance ence, and listened to the students with genu- Sr. Dorothy Ann played a vital role in the of their team in the recent ``We the Peo- establishment of three of the college's four ine concern. ple...The Citizen and the Constitution'' com- Both of these men are role models in the schoolsÐthe graduate school, now offering petition held in Washington, DC, April 26±28, programs in art, communication arts, edu- teaching and coaching communities. These 1997. These students from the Island of Oahu, gentlemen have earned the respect of every cation and human services, the School of New State of Hawaii, held their own against 50 Resources, an international model in adult student who has entered their classrooms, other competing classes from across the Na- and every athlete who has set foot upon the education, and the School of Nursing, which tion during this annual event, displaying a remains on the cutting edge in preparing basketball court or the football field. They keen comprehension about the basics of our nurses to meet today's health care needs. The have always conducted themselves with the country's Constitution and its government. School of Arts and Sciences, the original unit highest integrity and they insisted that their Congratulations to students Melodie Akoi, of the college, still enrolls only women stu- teams played within the rules. Marc Allred, Brooke Barnhill, Paul Brewer, dents as it did when founded in 1904. This honor is truly befitting of these two Josh Cameron, Jodeen Enesa, Daniel Evans, Throughout her 40-year career in education gentlemen. Their dedication to America's Akiko Jackson, Hazel Keil, Joshua Lee, as associate professor of history, academic youth and their perserverance in striving for Moana Minton, Kupa'a Oleole, Paul Rama, dean, acting president, and now president, Sr. excellence are examples to us all. We are cer- Kristal Williams, Julie Wrathall, and Steven Dorothy Ann has demonstrated a deep devo- tainly proud of Mr. Kirby and Mr. Morris. We Yuh, and to their teacher Sandra Cashman. It tion to providing equal rights and access to thank them for their dedication, and we wish was quite an accomplishment for this group of education for all, regardless of general or eth- them the best of luck in the future. young people to rise above other teams on nic background. This commitment is particu- f the State level and have the opportunity to larly evident in the School of New Resources' TRIBUTE TO ALAN PAUL compete at the national finals in this renowned innovative baccalaureate degree program de- signed specifically for adults and the college's HASKVITZ—1997 INDUCTEE NA- contest. bold act of bringing the new resources pro- TIONAL TEACHERS HALL OF I had the pleasure to meet this team when gram directly into the community, crossing all FAME they visited Washington, DC, and found it a pleasure to talk with them about their ideas re- perceived barriers of geography and socio- lating to the Federal Government and the economic background. The school now main- HON. GEORGE E. BROWN, JR. Constitution. I am delighted that these stu- tains seven branch campuses in the New York OF CALIFORNIA dents are thinking about the role that govern- metropolitan area, including in the South IN THE HOUSE OF REPRESENTATIVES ment has in their lives and contemplating Bronx, Harlem, and Brooklyn. Thursday, June 26, 1997 ways to fix and improve it, in order to better Sr. Dorothy Ann is no stranger to being the first or only woman to achieve a particular Mr. BROWN of California. Mr. Speaker, I their own lives. Congratulations once again, Kahuku High goal or status. In 1995, she was the only rise today to recognize the outstanding School! Hawaii is proud to have had you as its women's college president appointed by the achievement of Mr. Alan Paul Haskvitz who representative to the ``We the People...'' com- President of the United States to be a member will be inducted into the Teacher's Hall of petition. of the official U.S. delegation to the United Na- Fame this Saturday, June 28, 1997. f tions Fourth World Conference on Women, Mr. Haskvitz, a sixth grade teacher at Su- held in Beijing, China. In recognition of her zanne Middle School in Walnut, CA, who lives PERSONAL EXPLANATION leadership role in independent higher edu- in Alta Loma, CA, has spent a total of 23 cation, in 1994, Sr. Dorothy Ann became the years in the classroom. His distinguished ca- HON. CHARLES E. SCHUMER first woman to receive the Henry D. Paley Me- reer has earned him numerous awards, includ- OF NEW YORK morial Award from the National Association of ing Professional Best Teacher, Learning Mag- IN THE HOUSE OF REPRESENTATIVES Independent Colleges and Universities azine; Hero in Education, Reader's Digest; the [NAICU] and in 1978, Sr. Dorothy Ann be- President's Award for Environmental Edu- Thursday, June 26, 1997 came the first woman chair of the New York cation; the Christa McAuliffe National Award; Mr. SCHUMER. Mr. Speaker, I was unable State Commission on Independent Colleges and the Outstanding Social Studies Program to be in Washington on Monday, June 23d. and Universities. E1350 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 She currently serves on the boards of the DISAPPROVAL OF MOST-FAVORED- tled ``Una Storia Segreta,'' (A Secret History) Teachers Insurance and Annuity AssociationÐ NATION TREATMENT FOR CHINA that recounts the lives of Italian-Americans College Retirement Equities Fund [TIAA- from 1939 to 1945. Many of its findings are CREF] Community of the Peace People, SPEECH OF disturbing. For example, on December 7, U.S.A.; The Catholic University of America; HON. WILLIAM D. DELAHUNT 1941, Federal agents, without regard for the basic constitutional right of due process, de- the Commission on Higher EducationÐMiddle OF MASSACHUSETTS tained hundreds of Italian-Americans, classi- States Association; the Advisory Board of The IN THE HOUSE OF REPRESENTATIVES fied them as ``dangerous aliens'' and shipped National Museum of Women in the Arts; Tuesday, June 24, 1997 them to internment camps. By 1942, all Italian- Sound Shore Hospital Medical Center in West- Mr. DELAHUNT. Mr. Speaker, this vote is Americans were forbidden to travel beyond a chester County, NY; and The Ursuline School about many things. Human rights. Global se- 5-mile radius of home and required to carry a in New Rochelle, NY. curity. FreeÐand fairÐtrade. But most impor- photo ID. What was their crime? Suspicion For these, and many other reasons, Sister tantly, it's about American credibility. that they might be dangerous in time of war Dorothy Ann Kelly truly deserves our thanks Yesterday, a bill was on the calendar to pro- because they were of Italian ancestry. and congratulations, as she moves on to the hibit financial transactions with terrorist nations Our Government owes it to the Italian-Amer- newly created position of chancellor of the like Iran, Libya, and Syria. It would have ican community to heighten public awareness College of New Rochelle. passed without debate. of this unfortunate chapter in our Nation's his- How ironic. China has provided Iran with ad- tory. This story needs to be told in order to ac- f vanced missile and chemical weapons tech- knowledge that these events happened, to re- nology. Sent missile-related components to member those whose lives were unjustly dis- TRIBUTE TO THE MEN OF Syria. And sold Libya materials to produce nu- rupted and whose freedoms were violated, COMPANY ‘‘B’’ clear weapons. and to help repair the damage to the Italian- I suggest we have a credibility problem. American community. This legislation calls for And what of human rights? Last year Con- the formation of an advisory committee to as- HON. PETER J. VISCLOSKY gress enacted the Helms-Burton Act to tighten sist in the compilation of relevant information the screws on the Castro government. Why? and urges the President and Congress to pro- OF INDIANA Because we decry the human rights abuses vide direct financial support for the education IN THE HOUSE OF REPRESENTATIVES perpetrated by the Castro regime. Some of of the American public through such initiatives our staunchest allies threatened economic re- as the production of a film documentary. Thursday, June 26, 1997 prisals if this law were implemented. But that Most importantly, this bill requests the De- didn't stop us. partment of Justice to prepare and publish a Mr. VISCLOSKY. Mr. Speaker, it is my dis- Yet when it comes to China, we ignore our report detailing the United States Govern- tinct honor to recognize Carl B. Stankovic and own State Department report that the human ment's role in this tragic episode. The purpose the men of the Eighth Armored Division Asso- rights situation actually got worse in 1996. of this report would be to compile facts and ciation. These brave men served in Company I suggest we have a credibility problem. figures associated with the Italian-American ``B'' of the 78th Medical Battalion during World Then, of course, there's trade. We rant and community during the early 1940's including War II. rave about the unfair trade practices of the names of all Italian-Americans who were The men of Company ``B'' will be celebrat- Japanese. Yet, to quote from Sunday's Los forced into custodial detention, prevented from working or arrested for curfew or other minor ing their 48th Annual Convention Reunion in Angeles Times, ``China has developed a lab- yrinth of tariff and non-tariff barriers against violations, and those prevented from working. King of Prussia, PA. Along with their families, United States goods and services that would Furthermore, the report would illustrate our they will be engaging in a week of festivities, make the Japanese blush.'' Government's unfortunate policies and prac- taking them through the Fourth of July week- That's why the Wall Street Journal reported tices during this period, including an examina- end. The 78th Medical Battalion acquired the this week that our trade deficit with China will tion of the Government's apparent denial and reputation for excellence in their assistance soon surpass our deficit with Japan. Our trade disregard of due process and adequate legal and treatment of the wounded during World relationship with China means a net loss of protection to a large segment of its citizenry. War II. The battalion is proud that not one life thousands of American jobs, and a projected Mr. Speaker, our legislation calls upon the was lost while tending to the injured and evac- deficit of fifty billion dollars this year. President to formally acknowledge our Gov- uating them from the front lines. And we complain about the Japanese. ernment's systemic denial of basic human rights and freedoms to Italian-Americans. By This unique group of veterans should take I suggest we have a credibility problem. In fact, I submit that this vote is fundamen- bringing to light this unfortunate episode we pride in their versatility at having been able to tally about American credibility. Whether our help to ensure that similar injustices and viola- transfer their successes from country-to-coun- policies will be consistent with our principles: tions of civil liberties do not occur in the future. try, as they traveled through England, France, On human rights. Global security. Free and Mr. Speaker, I have attached the opening Belgium, Holland, Germany, and Czecho- fair trade. remarks by Hon. Dominic R. Massaro, Justice slovakia. They coined themselves ``The Thun- If, in fact, these are our principles, then we of the Supreme Court of New York, during the dering Herd,'' which undoubtedly refers to their cannot demand compliance from the rest of opening ceremony of the Storia Segreta ex- unfaltering strength while traversing vast coun- the world and set a different standard for hibit in New York. His remarks accurately por- try sides. China. Vote yes on the resolution. tray the injustices done to the Italian-Ameri- The great sacrifices made by those who f cans during World War II. I ask you to read the Honorable Massaro's statement and urge served in World War II have resulted in the WARTIME VIOLATION OF ITALIAN- you to cosponsor this important piece of legis- freedom and prosperity of our country and in AMERICAN CIVIL LIBERTIES ACT lation. countries around the world. The responsibility rests within each of us to build upon the val- NOVEMBER 6, 1995: OPENING REMARKS BY HON. HON. ELIOT L. ENGEL DOMINIC R. MASSARO, JUSTICE OF THE SU- iant efforts of these soldiers, so that the Unit- OF NEW YORK PREME COURT OF NEW YORK, OPENING CERE- ed States and the world will be a more free IN THE HOUSE OF REPRESENTATIVES MONY, ‘‘UNA STORIA SEGRETA: WHEN ITAL- and prosperous place. To properly honor the IAN AMERICANS WERE ‘ENEMY ALIENS,’ ’’ Thursday, June 26, 1997 heroism of our troops, we must make the most GRADUATE SCHOOL AND UNIVERSITY CENTER, of our freedom secured by their efforts. Mr. ENGEL. Mr. Speaker, I rise today with CITY UNIVERSITY OF NEW YORK [CUNY], my colleague from New York, Congressman NEW YORK, N.Y. We will be forever indebted to our veterans LAZIO, to introduce a bill that calls on the Dr. Scelsa, director of the Calandra Insti- and their families for the sacrifices they made President, on behalf of the United States Gov- tute, our distinguished Consul General in for our freedom. Mr. Speaker, I ask you and ernment, to formally acknowledge that the civil New York, Minister Mistretta, the Gov- my colleagues to join me in saluting the men ernor’s representative, Ms. Massimo-Berns, liberties of Italian-Americans were violated President Horowitz and Provost Zadorian of of the 78th Medical Battalion, Company ``B'' as during World War II. CUNY, our Curator Ms. Scherini, friends. they observe the 48th anniversary of their bat- In 1994, the American Italian Historical As- We are gathered to pay tribute to those tles for freedom. sociation released a historical document enti- who have suffered injustice, and to recognize June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1351 that our community, in many ways, contin- would end the hateful ‘‘enemy alien’’ status questionably one of the most shameful in the ues to suffer because of their plight. To Mar- on Columbus Day, 1942, Molinari was not history of our Republic. This grave and fun- tini Battistessa, age 65, who threw himself in alone on that fateful night. Within 72 hours damental injustice of treatment of those of front of a passing railroad train. To Giuseppe of war, thousands of community leaders, Italian ancestry has yet to be acknowledged; Micheli, age 57, who cut his throat with a newspaper editors and teachers of the lan- in point of fact, it is truly unknown or pur- butcher knife. To Giovanni Sanguenetti, age guage were similarly arrested; and during posely ignored, or even worse, flatly denied. 62, who hanged himself. To Stefano the course of the year, Government edicts The exhibit informs the public about this Terranova, age 65, who leaped to his death would be directed nationwide at all those of wartime tragedy. Not only does it pay trib- from a three story building. Terranova left a Italian ancestry. Italian language schools ute to those who were victimized and stig- chilling note: ‘‘I believe myself to be good, were closed; Italian American organizations matized, but it testifies in significant re- but find myself deceived. I don’t know why.’’ were harrassed; Italian American meetings spects to the contemporary state of Italian The ‘‘why?’’ reverberates even today. Each became suspect. Curfews, residence restric- Americana. Most important, perhaps, it con- man, by Executive Order of the President of tions and travel curtailments were put in tributes to a better understanding of how the the United States, had been declared an place; searches and seizures of personal prop- venom of intolerance can give rise to the ‘‘enemy alien’’; and directed by the Depart- erty were conducted without the color of maelstrom of persecution to make for such ment of Justice to evacuate his California law—not to speak of the paranoia, bigotry events; and how respect for the rule of law home. and military policy that conspired on the can prevent such occurrences vis-a-vis any Few readers of morning newspapers that West Coast to arrest, relocate and intern minority group, regardless of race, creed, February in 1942 probably paid much atten- some 10,000 of our people. And in community color or national origin. tion to the scant reportage of these last des- after community across the nation, Italian The American Italian Historical Society is perate acts, dwarfed as they were by news of immigrants were required to register and to be commended for organizing a presen- global warfare. But these four deaths—in carry identification cards. tation that sheds new light on an histori- Richmond, Vallejo, Stockton and San Fran- Archibald McLeisch, the poet, tells us that cally and socially relevant experience, as is cisco—incidental as they might have seemed ‘‘America was promise.’’ ‘‘America’’ is im- the Calandra Institute of this great Univer- in the rush of momentous events in the early precise as a descriptive geographical term, sity for bringing it to the spiritual capital of months of World War II, were nonetheless standing neither for a particular country nor the Italian in America—the City of New important pieces in a larger mosaic of an a clearly defined land mass. But it perfectly York. I thank both these distinguished aca- American tragedy. defines a state of expectation. And this ex- demic entities for having invited me to open ‘‘Una Storia Segreta: When Italian Ameri- pectation, this promise has always equated it here today. cans Were ‘Enemy Aliens’ ’’ memorializes with fundamental rights. We were the first that tragedy. I first viewed this exhibit in people to found a nation on the basis of f Sacramento with the lawyer, Bill Cerruti, rights, and individual rights are the founda- who has done so much to make these long- tion of the American identity. No society DISAPPROVAL OF MOST-FAVORED- buried events find their rightful place as his- recognizes a greater range of individual NATION TREATMENT FOR CHINA torical reality. It is a bold exhibit, as well as rights entitled to fulfillment under its laws a strong refusal by Americans of Italian de- than the United States. Even our failures as SPEECH OF scent to keep silent about a largely unknown a nation are measured in terms of rights. HON. GEORGE R. NETHERCUTT, JR. story of arrest, relocation and internment The Declaration of Independence offered the during World War II. It is a story that has re- promise of a Government based on rights, OF WASHINGTON mained hidden for a half century because of and the Constitution not only enumerated IN THE HOUSE OF REPRESENTATIVES the silence first imposed by Government, them, but guaranteed them as ‘‘inalienable,’’ Tuesday, June 24, 1997 then adopted as a protective cover of shame pre-existing rights anterior to and superior by those scarred. The exhibit documents and to the state. Mr. NETHERCUTT. Mr. Speaker, I want to records a painful episode of the Italian expe- Yet these inalienable rights were violated express my support for normal trade relations rience in America. It is a moving portrayal with impunity in the early days of World with China, which is our best option for pro- of the enormity of human deprivation and War II, on the flimsiest of accusation, with- moting long-term progress in Chinese society. suffering brought about by Government ef- out any finding of wrongdoing or basis in I am deeply concerned by the efforts of the forts that violated basic civil rights, efforts fact. It would be correct to say that the Chinese Government to interfere with the motivated largely by ethnic bias, wartime crime was merely being of Italian ancestry. basic human rights of Chinese citizens, includ- hysteria and a failure of political leadership. This on the heels of a zenophobic, then exist- Most Americans know about the intern- ing national origins quota system that had ing freedom of faith and religious practice, ment of Japanese Americans during the Sec- discriminatorily sought to exclude our freedom of speech and thought and the free- ond World War, but few, even in our commu- grandparents as immigrants for two previous dom to assemble and petition the government nity, are aware that the Federal Govern- decades. without being crushed by tanks. I believe that ment, also without adequate security rea- A powerful message was sent and received every government, every leader has the duty sons, restricted the freedom of 600,000 Ital- in Italian American communities nation- to respect basic human rights, and that no ians, legal residents of the United States for wide: Italian language and culture, and those government may use tradition as an excuse who prompted either or both, were not desir- decades, many of whom had lived here since for oppressing its own citizens. the turn of the century and, in fact, were able, and represented an inimical danger to also American citizens. the American way. The language was si- I support MFN status for China because I At the time World War II broke out in 1941, lenced; the culture was suppressed. And the deplore the repressive tactics of the Chinese Americans of Italian descent were the larg- effects remain: the decimation of great na- Government. I believe in the appeal of the est immigrant group residing in the United tional organizations, the loss of Italian lan- United States and the values of freedom this States. In addition to the 600,000 foreign- guage facility by succeeding generations, the country represents. Engagement with China born, millions more were American born. cultural amnesia of many Italian Americans, means a continuation of the trade, investment They resided thoughout the country. That the super-patriotism of many others. and personal interaction which breaks down more Italian Americans were affected by Thousands were forced from their homes, wartime restrictions than Japanese Ameri- denied the opportunity to pursue their liveli- the tyranny of the Chinese state. While en- cans is not of the moment, for injustice can hoods, their businesses closed, their assets gagement has not improved human rights con- never be quantified; each instance is abso- dissipated, their lives disrupted. And the ar- ditions in China as rapidly as any of us would lute. rests, the relocations, the internments— like, I believe interaction with the world econ- I am pleased to see that the Order Sons of these were accomplished without due process omy and American values will help the Chi- Italy in America’s Commission for Social of law, notwithstanding the fact that not a nese people create the conditions necessary Justice is a co-sponsor of this noteworthy ef- single instance was ever documented of an for social change. By increasing access to fort. For it was late in the night of December individual of Italian ancestry aiding the 7, 1941, a day that will indeed live in infamy, enemy, committing an act of espionage, sab- phones, faxes, the Internet and Western and only hours after the bombing at Pearl otage or fifth column activity. On the con- media, American engagement has helped the Harbor, that Filippo Molinari, a founding trary, upwards of one half million Italian Chinese people circumvent government con- member of the Order in San Francisco, was American men-at-arms, the greatest number trols over information. By spurring stupendous confronted at home by three policemen. He of any American ethnic group, were at that growth in China's coastal regions, trade has was arrested on unspecified charges, de- moment battling on two war fronts to pre- helped break down government controls over tained at the Santa Clara County jail, and serve liberty and justice for all. Clearly, migration from province to province. By intro- thereafter shipped to a detention center in Government claims of military necessity at ducing western ideas, engagement has far off Fort Missoula, Montana. the time have since been demolished by a And while it was the Order that later was generation of scholars; indeed, by the graph- spurred a growing ``home-church'' movement to galvanize Italian American opposition and ic illustrations presented by this exhibit. of Chinese who refuse to entrust their souls to political clout, first on the East Coast and The conduct of the Federal Government to- state-sanctioned, state-controlled churches. then throughout the nation that eventually ward persons who had done no wrong is un- This is real progress. E1352 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 Severing normal trade relations with China 1996. This expense translates into a burden dential birthright of all citizens who revel in our would disrupt the process of social change. averaging $13,500.00 for every man, woman glorious independence. This action would hurt the people we really and child. f want to help, like the citizens of Hong Kong If that's not enough to make your sparkler and the Chinese who now owe their livelihood fizzle, think about this: Even with the cele- IN HONOR OF THE PHILIPPINE not to the mercy of the Chinese state but to brated balanced budget Congress is forgoing, AMERICAN SOCIETY OF OHIO their own contribution to the free market sys- the Federal Government will spend $19.2 tril- tem. Now is not the time to walk away from lion over the next 10 years and after that, HON. DENNIS J. KUCINICH our ability to promote change. spending for the following ten years is pro- OF OHIO Severing normal trade relations with China jected to surge to $29.3 trillion. IN THE HOUSE OF REPRESENTATIVES would also harm American workers, American Many people think their April 15th tax pay- Thursday, June 26, 1997 unions and American businesses. I have re- ment satisfies their civic toll. Unfortunately, it's cently spoken with aerospace workers and just the beginning. In addition to taxes, there Mr. KUCINICH. Mr. Speaker, I rise to honor union leaders who disagree with the anti-trade is a plethora of regulations and government the Philippine American Society of Ohio position of their national organizations and programs which only increase consumer [PASO] as the group inaugurates the PASO who support continued trade with China. They costs, reduce job opportunities, waste valuable Cultural and Civic Center on June 29, 1997. PASO was founded in 1967 with the pur- fear that, if Congress chooses to raise trade time, suppress productivity, and control our pose of uniting all Filipinos in the Cleveland barriers, American businesses will lose the lives. The estimated total cost of government area. The handful of pioneers has grown over China airplane market to Airbus and thou- regulations for 1997 is $688 billion which is a the past 30 years into a solid organization sands of good, hard-working Americans will 25 percent increase since 1988. which embraces cultural, civic, social, and hu- lose their jobs without any real change in Chi- What would Thomas Jefferson, or John manitarian programs. nese policy. The union workers' arguments Adams say about the government they helped Since World War II, Filipinos, mostly profes- are persuasive. In 1980, the farmers of Wash- design if they could see it today? Suppose sionals, emigrated to America in the thou- ington State were devastated by a futile at- you were to observe the pair discussing the sands. The Filipino population in the Cleve- tempt to change Soviet policy with a unilateral matter over dinner at your favorite neighbor- land area is estimated to be close to 3,000 grain embargo. I hope we will not be destruc- hood eatery. According to the Americans for families. The rich traditions of Philippine cul- tive and short-sighted as we once again con- Tax Reform Foundations, $11.00 of their ture in Cleveland continue to flourish with the template unilateral trade sanctions. We owe it $40.00 restaurant bill goes directly to taxes. help of PASO. In 1985, PASO purchased a to the workers and farmers of Washington The remaining $29.00 covers all other costs of 4.9 acre piece of land on which these vision- State and this Nation to learn from the painful, preparing and serving the meal. aries hoped to build a Cultural Center. On embarrassing experience of 1980 and refrain The taxes on meals includes federal, state, June 29, after many years of hard work and from adopting more unilateral sanctions. and local income taxes, Social Security taxes, fundraising, the organization will celebrate the Finally, severing normal trade relations with property taxes, unemployment insurance groundbreaking for its Cultural and Civic Cen- China would impose costs on American con- taxes, workers compensation taxes, utility ter in Parma, OH. sumers. The Congressional Research Service taxes, licensing fees, and possibly other taxes With the completion of the Cultural Center, has recently estimated that denying China depending on the state. PASO will be able to hold more events and MFN status would cost American families 27 In addition to taxes, the restaurant has to activities in order to better accomplish the to 29 billion dollars in higher prices. This reso- deal with various regulatory agencies like goals and objectives of the organization. My lution of disapproval represents a hidden tax OHSA, EPA, IRS, USDA, BATF, NLRB, the fellow colleagues, please join me in honoring on my constituents, fewer jobs for my State local health department, zoning and licensing PASO in its efforts to keep the Philippine cul- and, most important, less freedom for the peo- boards, and more. After that, the proprietor ture alive in Cleveland. ple of China. I support normal trade relations pays his suppliers, his staff, the mortgages, with China and I hope to work with my col- and if he's lucky, he'll have a little left over for f leagues to develop constructive policies which himself. TESTIMONY OF PETE STARK expand freedom in China and convince Chi- Surely the Signers of the Declaration of na's leaders to change their behavior. Independence has something much different HON. FORTNEY PETE STARK f in mind on July 4, 1776, when they affirmed, OF CALIFORNIA ``Prudence, indeed will dictate that Govern- REGARDING COST OF IN THE HOUSE OF REPRESENTATIVES GOVERNMENT DAY ments long established should not be changed for light and transient causes; and accordingly Thursday, June 26, 1997 SPEECH OF all experience hath shown, that mankind are Mr. STARK. Mr. Speaker, I would like to HON. BOB SCHAFFER more disposed to suffer, while evils are suffer- submit for the ='04'>Record recent testimony I able, than to right themselves by abolishing presented to President Clinton's Advisory OF COLORADO the forms to which they are accustomed. Commission on Consumer Protections and IN THE HOUSE OF REPRESENTATIVES ``But when a long train of abuses and Quality in the Health Care Industry. The need Thursday, June 26, 1997 usurpations, pursuing invariably the same ob- for consumer protections in managed care is Mr. SCHAFFER of Colorado. Mr. Speaker, jective evinces a design to reduce them under greatÐI urge my colleagues to pass legisla- it's ironic, the proximity of the Fourth of July absolute Despotism, it is their right, it is their tion to protect the millions of patients in man- and Cost of Government Day. Of course the duty, to throw off such Government, and to aged care plans: provide new Guards for their future security.'' national celebration recalling our independ- TESTIMONY OF CONGRESSMAN PETE STARK BE- ence is a day to ponder the blessings of lib- Fortunately, our founding heroes designed a FORE THE ADVISORY COMMISSION ON erty. system allowing us to throw off the yoke of CONSUMER PROTECTION AND QUALITY IN THE Cost of Government Day, however, is quite bondage peaceably, at the ballot box. For this HEALTH CARE INDUSTRY the opposite, a dramatic reminder of just how reason, the Fourth of July is a festive celebra- Secretary Shalala, Secretary Herman, and much freedom Americans have relinquished to tion overshadowing Cost of Government Day. Members of the Commission: Thank you for the excesses of big government and profligate Taken together, the back-to-back occasions this opportunity to present testimony con- spending. This year, Cost of Government Day should serve as a clarion call to those of us cerning critically needed consumer protec- falls on July 3d. who still believe the America dream is worth tions for the millions of Americans in man- A somber event, Cost of Government Day preserving. Indeed, our Forefathers waged a aged care plans. occurs later and later each year. The date is revolution against far less than American tax- BACKGROUND determined by calculating the number of days payers are willing to tolerate today. Health care consumers who entrust their Americans must work in order to earn enough Independence Day should be our parapet, a lives to managed care plans have consist- money to pay for the government. This year, demarcation beyond which the cost of govern- ently found that many plans are more inter- ested in profits than in providing appropriate it will take 183 days of work to afford to pay ment must not intrude. Our objective in Con- care. In the process of containing costs pa- for Federal, State, and local taxes and regu- gress, should be to dramatically relieve the tax tients are often harmed. My constituent latory costs. burden on American families so as to increase mail has been full of horror stories explain- The total cost of government in 1997 is esti- economic freedom and to honor life, liberty ing the abuses that occur at the hands of mated at $3.52 trillion, up from $3.38 trillion in and the pursuit of happiness as the provi- HMOs and other forms of managed care. June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1353 For example, David Ching of Fremont, Many Members testifying today have in- care. The managed care industry is facing a California had a positive experience in a Kai- troduced legislation with similar provisions. weekly drumbeat of ridicule in the one place ser Permanente plan and then joined an em- In that light, I will focus on only a few is- that truly has the pulse of the American ployer sponsored HMO expecting similar sues. public—the nation’s comic strips and politi- service. He soon learned that some plans A PLEA TO REVISIT THE PHYSICIAN FINANCIAL cal cartoons. The last page of my testimony would rather let patients die than authorize INCENTIVE ISSUE attaches two cartoons from just the Wash- appropriate treatment. His wife developed ington Post of the last week. What would it I am the author of the law limiting physi- colon cancer, but went undiagnosed for 3 be worth to the HMO industry for these car- cian financial incentives to withhold care. I months after the first symptoms. Her physi- toons to go away? They will go away when am very disappointed in the regulation im- cian refused to make the appropriate special- the public no longer things they are funny plementing this law. ist referral because of financial incentives The regulation allows a plan to place a and when they no longer resonate. An inde- and could not discuss proper treatment be- pendent, pro-consumer Commission is the doctor 25 percent at risk. cause of the health plan’s policy. Mrs. Ching How many of you flew here on an airline single best answer to ending the ridicule and is now dead. that gave 25 percent bonuses to its airplane bad press. This tragedy and others like it might have mechanics NOT to spend too much time THE IMPENDING CRISIS IN RURAL MANAGED been avoided if the patient had known about checking the plane’s safety? Good luck going CARE the financial incentives not to treat, or if home. I urge the Commission to take a special the physicians had not been gagged from dis- What is particularly disappointing about look at what I believe is an impending crisis cussing treatment options, or if there had the 25 percent figure is that there is some in rural health care. been legislation forcing health plans to pro- data that the industry average is closer to 19 In the Medicare Reconciliation bill, Con- vide timely grievance procedures and timely percent. The 25 percent figure should be low- gress is preparing to place a very high floor access to care. It is too late for some vic- ered. I urge you to recommend that it be on payments to managed care plans in rural tims, but it is not too late to provide these phased down over a period of years to a level counties—a floor far above their cost of serv- protections for the millions of people in ing the beneficiaries who live in those com- managed care today. where the average patient would not be of- fended or suspicious. munities. At the same time, we are making A few years ago, Congress recognized a cri- it easy for local doctors and hospitals to sis in the health care industry. Expenditures If you think the 25 percent figure is okay and won’t change behavior in strange ways, form Provider Sponsored Organizations or were soaring and overutilization was the ‘‘baby HMOs’’ that serve as few as 500 enroll- rule. At that time, I chose to address this I refer you to a Wall Street Journal article of two weeks ago, which talked about doc- ees. PSOs in rural America, where there is problem with laws that prohibited physi- already a shortage of providers, will cer- cians from making unnecessary referrals to tors selling Amway products to their pa- tients to make extra money on the side. The tainly look like monopolies. health organizations or services that they The combination of the high managed care owned. doctor featured in the article had seen his in- come from $400,000 a year to $300,000, so he payments and the new PSOs will work to Others responded by pushing Americans force most rural Americans into brand new into new managed care plans that switched was selling soap to everyone in sight. Think about it. HMO-type organizations. The good news is the financial incentives from a system that that the payment floors will be so high that overserves to a system that underserves. NEED TO REFORM GOVERNMENT OVERSIGHT (if the ACRs are calculated honestly) rural They got what they asked for. The current STRUCTURE Americans will be offered a wide range of system rewards the most irresponsible plans HCFA has an impossible task: to promote extra benefits. The bad news is that it may with huge profits, outrageous executive sala- managed care and at the same time to try to be hard for rural Americans to get referrals ries, and a license to escape accountability. regulate it on behalf of consumers. The two to urban or out-of-area providers who can Unfortunately, patients are dying unneces- missions are inconsistent: you can’t do both provide better quality care than their local sarily in the wake of this health care deliv- well. Note the current controversy over the rural PSO. ery revolution. It must stop. Grijalva case, where HCFA has come down I believe we will need some special meas- Several states have already addressed the on the side of the HMO companies, much to urements of these new rural PSOs to ensure managed care crisis. In 1996, more than 1,000 the anger of every consumer group in the na- that we are not trapping millions of rural pieces of managed care legislation flooded tion. residents in monopolistic low-quality plans. state legislatures. As a result, HMO regula- We need a new structure of governance as MANAGED CARE AND ANTI-FRAUD tions were passed in 33 states addressing is- managed care grows. The HHS Inspector General, in cooperation sues like coverage of emergency services, I urge the Commission to recommend a re- utilization review, post-delivery care and in- with the GAO, has undertaken a system-wide structuring of government to address this audit of Medicare. Their report will be issued formation disclosure. Unfortunately, many problem. Let HCFA be the promoter and states did not pass these needed safeguards in about three weeks. payer of managed care plans. That is cer- According to press reports, they will find resulting in a piecemeal web of protections tainly their bureaucratic culture and his- that in fee-for-service Medicare last year we that lacks continuity. The states have spo- tory. lost about $23 billion to fraud, waste, and ken; now it is time for federal legislation to For the public and the consumer, we need abuse. Over five years that would be about finish the job and provide consumer protec- a new, independent consumer commission $115 billion—the exact size of the Medicare tions to all Americans in managed care. that will make coverage, consumer appeals Budget cuts the House passed yesterday. H.R. 337—THE MANAGED CARE CONSUMER and grievance, and quality measurement de- Some will say that this proves we need to PROTECTION ACT OF 1997 cisions. I recommend to you the SEC-type move faster to managed care. I submit there I have introduced a bill—H.R. 337—The model suggested in several books and arti- is substantial fraud in managed care as well. Managed Care Consumer Protection Act of cles by Professor Marc Rodwin of Indiana I urge the Commission to encourage HCFA 1997 which includes a comprehensive set of University. This Commission should be com- to do a better job of rooting out managed protections that will force managed care posed of consumers and must be structured care fraud. plans to be accountable to all of their pa- so it is never captured by the industry. There is the fraud of under-service and de- tients and to provide the standard of care We need an independent consumer commis- nial of care—the fraud that can kill. they deserve. sion now. We will need it more each passing There is the fraud of the Adjusted Commu- This legislation includes measures to pro- day. I do not believe that HCFA has yet nity Rates (ACR) that companies tell us tect patients from the abuses of managed made Medicare coverage decisions on the equal the cost of serving their commercial care on several fronts. One particular provi- basis of cost to the program. But as the Baby business. Time after time an HMO does not sion in the bill would require the managed Boom generation retires and the financial provide extra benefits and says that its ACR care plan to at least see the patient and per- pressures on the program become more in- does not require such extra benefits. Then form some form of preventive health screen- tense, will people be able to trust their gov- when a second or third managed care plan ing before the Federal government pays the ernment to make medically honest coverage enters the market, all of a sudden the plan monthly capitated dollar amount. We should decisions? Will HCFA become a rationing finds that it can offer zero premiums, drug not continue to pay plans a monthly fee system that controls costs but may not be benefits, and eyeglasses. On its face, the plan when many times, the plan has never seen good for our health? Various right-to-life that for years offered no or few extra bene- the beneficiary face-to-face. If one of the groups are already questioning the program. fits was committing a type of fraud. goals of managed care is to focus on preven- An independent consumer commission that I’ve attached an exchange of correspond- tive care, the patient must—at the very would address coverage issues would prevent ence with the OIG that makes the point that least—first be seen by the managed care this government rationing issue from becom- if fee-for-service Medicare has a 10 to 14 per- plan. ing a future divisive issue in our aging soci- cent fraud, waste, and abuse factor built into I am pleased that many of the provisions ety. its rates, we certainly should not base man- in my bill were included in the recent Medi- A wise industry would support such a Com- aged care payment rates on that fraudulent, care proposals in both the Ways and Means mission: it is their only hope to show the inflated base. It is a mathematical fact that and the Commerce Committees. I have at- public that there is an independent, honest the payment rate to HMOs should be less tached a summary of the bill for your re- ombudsmen whom families can turn to in than 90 percent of the current fee-for-service view. matters of life and death concerning health rate—unless you want to pay twice for fraud. E1354 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 Thank you for this opportunity to present like to congratulate all of the participants in the graduating, he joined the Thomas, Fregiato, my ideas about much needed consumer pro- Congressional Art Competition this year, and Myser, Hanson, & Davies law firm in Bridge- tections in managed care. all the people who helped make it possible. port, OH. Since beginning his work in private f Mr. Speaker, what a wonderful ``Artistic Dis- practice, Judge Fregiato has been an active covery.'' FOR MARY JO TRIMBELL AND member in the legal community. He is a mem- f SUSAN SMITH’S DEDICATION TO ber of the Ohio State Bar Association and Bel- mont County Bar Association, which he has COMMUNITY SERVICE THE INTRODUCTION OF THE PUB- LIC SAFETY OFFICERS MEMO- served as president. In addition, he is a mem- RIAL SCHOLARSHIP ACT ber of the St. Clairsville Rotary, the Knights of HON. GLENN POSHARD Columbus, and the Sons of Italy. OF ILLINOIS IN THE HOUSE OF REPRESENTATIVES HON. SUE W. KELLY The Ohio Valley is fortunate to have Judge Fregiato as a member of the Belmont County Thursday, June 26, 1997 OF NEW YORK IN THE HOUSE OF REPRESENTATIVES Court. I am sure that Judge Fregiato will con- Mr. POSHARD. Mr. Speaker, this week we tinue to serve the court and the citizens of recognized the winners of the annual Con- Thursday, June 26, 1997 Belmont County honorably, and will show the gressional High School Art Competition. I Mrs. KELLY. Mr. Speaker, I rise today to in- same dedication to the bench as he has served as honorary chairman in the event in troduce legislation which seeks to support the shown throughout his career. I ask my col- my congressional district, which took place family members of public safety officers who leagues to join me today in recognizing Judge April 20, 1997. This art competition, known as are killed in the line of duty. Fregiato's achievement and to wish him fur- ``An Artistic Discovery,'' is a tribute to the Police officers and firefighters lay their lives ther success. boundless creativity of our many young peo- on the line on a daily basis, Mr. Speaker, and ple. This program was launched in 1982, and sadly, all too often they make the ultimate sac- f the nationwide art competition has already rifice in the service of their communities. This produced thousands of local competitions tragic fact was illustrated most recently in my THE HAMPTON JAZZ FESTIVAL which involve over 500,000 high school stu- district in New York when a volunteer fire- dents. The winners have their works displayed fighter, Michael Neuner, who was also a police in the Capitol complex for the next year, so we officer, was killed while fighting a fire in the HON. ROBERT C. SCOTT can all enjoy the fruits of their talents. This town of Southeast. contest depends on the efforts of many at the This unfortunate story is repeated around OF VIRGINIA local level. I want to recognize both Mary Jo the country, Mr. Speaker. These are our IN THE HOUSE OF REPRESENTATIVES Trimbell, president of the Little Egypt Arts As- friends, our neighbors, our loved ones, and sociation, and Susan Smith, Decatur Area Arts they leave behind families who must continue Thursday, June 26, 1997 Council executive director, and the members on. The death of a father or mother takes an Mr. SCOTT. Mr. Speaker, I rise today to of these organizations for co-chairing the 16th obvious emotional toll, but it also impacts the draw the attention of my colleagues to the Annual Congressional High School Art Com- financial security of the family, particularly 30th anniversary of the Hampton Jazz Fes- petition. Arranging an event of this caliber re- when it comes to meeting educational ex- tival, which takes place from June 26th quires much time, energy, personal sacrifice, penses. and many dedicated long hours. The Public Safety Officers Memorial Schol- through June 29th. In what has now become Mr. Speaker, Decatur and Marion, IL, may arship Act seeks to address this particular known as the ``Festival of Legends,'' the not be towns that come to mind when you problem. Specifically, the bill authorizes the Hampton Jazz Festival is clearly one of the think of art, but they are representative of Secretary of Education to award education greatest gatherings of musicians in the Nation. many areas in my district and across the Na- scholarships to the spouse or dependent child This year once again, when over 10,000 jazz tion that recognize the importance of art in our of a public safety officerÐpolice or fire- fans come together each night in the Hampton lives. The people in the 19th Congressional fighterÐwho is killed in the line of duty. These Coliseum, they will be treated to some of the District recognize this need and this event is scholarships may be used to cover education finest, most enduring examples of this most an appreciation of our gifted, young artists. It expenses associated with elementary and sec- American of music forms. I only scratch the is always nice to see so many people volun- ondary education (K±12), or to attend a post surface when I list a few of the luminaries who teer and make this event fun, as Michael Bry- secondary institution as a full-time or part-time will be appearing on stage this week: George ant, Marie Samuel, and John Yack didÐthey student. Benson, Peabo Bryson, Patti LaBelle, Gladys took time out to judge the entries. Last year, Congress adopted similar legisla- Knight, Robert Cray, and the incomparable The overall winner of the Congressional Art tion to award education assistance to family B.B. King. Although a few of our perennial fa- Competition in the 19th Congressional District members of Federal law enforcement officers vorites can no longer appearÐgreats like was Amber Droste, a recent Robinson High killed in the line of duty. I was pleased to sup- Count Basie, Earl ``Fatha'' Hines, Dizzy Gilles- School Graduate. The two winners of the Peo- port that legislation, and even more pleased to pie, and Duke EllingtonÐI am thrilled at the ple's Choice Awards were Toby Grubb of introduce this bill, which takes the next logical new artists who continue to keep the Hampton MacArthur High School in Decatur and James step and extends this benefit to the families of Jazz Festival fresh, innovative, and absolutely Moseman of Marion High School, who was a all public safety officers who are killed while entertaining. winner of two awards. Joining Grubb and serving their communities. Moseman as finalists were Ginnie Gessell of It was 30 years ago when the Hampton I urge my colleagues to join me in support Jazz Festival was born on the campus of Benton, Kenna Funneman and Elizabeth of this important legislation. Hampton University, in part as the result of the Ordner from Teutopolis High School, Kevin f Edwards of Stewardson-Strasburg High hard work of a student committee headed by School, Kranston Kincaid of Herrin High TRIBUTE TO FRANK FREGIATO John Scott. A few years later the city of School, and Brad Maynor of Pope County Hampton got involved, offering its new coli- High School. HON. ROBERT W. NEY seum as the home of the annual event. This unique partnership has helped make our fes- Mr. Speaker, this event helps to acknowl- OF OHIO tival such a success. Today, John Scott is the edge the many talented youngsters who have IN THE HOUSE OF REPRESENTATIVES dedicated countless hours to their art. It takes local organizer and George Wein the producer a fine mind to transfer the artists' interpretation Thursday, June 26, 1997 of what has evolved into one of America's of art onto paper, or express it through some Mr. NEY. Mr. Speaker, I ask my colleagues greatest jazz get-togethers. I, like the thou- other medium. Southern and central Illinois, to join me today in congratulating Frank sands of fans who will throng to the Hampton according to world standards, may not be con- Fregiato, Belmont County Court judge. Judge Jazz Festival later this week, look forward to sidered artistic meccas, but they certainly Fregiato, who began serving the Belmont another great festival of legends and com- were on April 20, 1997. This competition pro- County Court on January 1, 1997, is the first mend the city of Hampton, the festival organiz- vides an opportunity for our youth all to shine, Italian judge in Belmont County History. ers, and the great artists who will share their and I am grateful for the help and encourage- Judge Fregiato began his career in law at talent to help make this 4-day event music to ment provided by those who helped. I would the Ohio State University College of Law. After our ears. June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1355 BLAIR SCOLDS BRITISH ‘‘WORK- Blair said, the Government would ask a sim- [From the Heterodoxy, April/May, 1997] LESS CLASS’’ IN OUTLINE OF ple question about all of Britain’s benefits: CLINTON AND THE AMERICAN EXPERIENCE IN WELFARE PLAN ‘‘Do they give people a chance to work? Or CHINA—ARMING THE ENEMY do they trap them on benefits for the most (By Dr. Stephen Bryen and Michael Ledeen) productive years of their lives?’’ At the end of the Cold War, the U.S. tow- HON. JAMES A. LEACH ** * But Mr. Blair warned that young peo- ered over the world, the sole surviving super- OF IOWA ple would have responsibilities of their own. power, the source of inspiration for a global IN THE HOUSE OF REPRESENTATIVES ‘‘There will be and should be no option of an democratic revolution that had destroyed Thursday, June 26, 1997 inactive life on benefit,’’ he said. ‘‘Where op- tyrannies ranging from Spain and Portugal portunities are given, for example, to young in the ’70s, to virtually all of Latin America Mr. LEACH. Mr. Speaker, I urge my col- people, for real jobs and skills, there should and then Central and Eastern Europe in the leagues to read excerpts from the attached ar- be a reciprocal duty to take them up.’’ ’80s culminating in the fall of the Soviet Em- ticle from the June 3, 1997, edition of the New Mr. Blair called for an ‘‘ethic of mutual re- pire itself. Washington became the Mecca of York Times. The article recounts a recent sponsibility’’ in Britain. ‘‘It is something for a new democratic faith, and the prophets and speech given by British Prime Minister Tony something,’’ he said. ‘‘A society where we followers of democracy, from Havel and Blair regarding what he describes as a culture play by the rules. You only take out if you Walesa to Pope John Paul II and Nelson Mandela, came in a sort of democratic hajj of dependency on government. In the speech, put in. That’s the bargain.’’ * * * Mr. Blair said: ‘‘In the 1960’s, people to pay reverent tribute. They all went to given outside a notoriously neglected housing Congress and gave thanks to America for project in South London, Prime Minister Blair thought Government was always the solu- tion. In the 1980’s people said Government having made it all possible, and continued to called for an ``ethic of mutual responsibility,'' was the problem. In the 1990’s, we know that the White House to pay their respects. Any other nation in such a position would where government institutions are re-fash- we cannot solve the problems of the workless have extended its dominion over others, and ioned. class without Government, but that Govern- many nations in the rest of the world fully During the House's consideration of H.R. 2, ment itself must change if it is to be part of expected us to do just that. They were the solution.’’ the Housing Opportunity and Responsibility stunned to learn that America was not inter- Act of 1997, I urged my colleagues from the ested in greater dominion. Indeed, America other side of the aisle to abandon the policies f was barely interested in them at all. Having of extreme liberalism and consider the recent won the third world war of the twentieth electoral success of the new, pragmatic Labor CHINA=RELATED CHALLENGES century, we were about to repeat the same Party in Britain. Many of the concepts ex- error we had made after the first two: with- pressed by Prime Minister Blair in his speech draw from the world as quickly as we could, HON. TILLIE K. FOWLER bring the boys home, cut back on military are surprisingly similar to the ideals contained power, and worry about our own problems. in the House's public housing reform bill. OF FLORIDA Americans are the first people in the history Much like Prime Minister Blair's ``New Labor'' IN THE HOUSE OF REPRESENTATIVES of the world to believe that peace is the nor- philosophies, H.R. 2 creates a mutuality of ob- mal condition of mankind, and our leaders ligation between public housing residents and Thursday, June 26, 1997 were eager to return to ‘‘normal.’’ And they the Federal Government. The approach con- Mrs. FOWLER. Mr. Speaker, although were encouraged to define this word in a way tained in the House bill is intended to help end that included truckling to China and helping China policy is in the news right now, most it emerge as a major threat to U.S. interests. the cycle of property, where generation follows Americans remain unaware of one of the most Thus was born a policy of criminal irre- generation in an environment devoid of hope serious China-related challenges our nation sponsibility, a policy that has not only failed and opportunity, and instead encourage self- facesÐthe Clinton administration's dramatic to protect us and our allies against the inevi- sufficiency and the process of moving people loosening of export controls on sensitive mili- table rise of new enemies, but actually facili- from welfare to work. tarily-related technology. Much of that tech- tated, indeed even encouraged, the emer- gence of new military threats. It began with In anticipation of House consideration of the nology is going to the People's Republic of conference report on the House and Senate George Bush, Jim Baker, Brent Scowcroft, China, which could spell trouble for our na- and Dick Cheney and continued at a far more housing bills later this year, I commend the at- tional security and interests abroad. rapid rate with Bill Clinton, Warren Chris- tached article to Members' attention. The Clinton policy has resulted in the trans- topher, Ron Brown, William Perry, and An- [From the New York Times, June 3, 1997] fer to the Chinese of devices and technology thony Lake. All of them have helped disman- tle the philosophy and apparatus created by BLAIR SCOLDS BRITISH ‘‘WORKLESS CLASS’’ IN ranging from telecommunications equipment Ronald Reagan and his team—most notably OUTLINE OF WELFARE PLAN that is impervious to eavesdropping, to highly Defense Secretary Caspar Weinberger—to de- (By Sarah Lyall) sophisticated machine tools needed to build feat the Soviet Union by denying it access to LONDON.—Appearing at a notoriously ne- fighter aircraft, strategic bombers and cruise advanced technology and thus protect Amer- glected housing project in South London, missiles. The policy has also resulted in the ican military superiority for years to come. Prime Minister Tony Blair today denounced decontrol of high-speed supercomputers, lead- To understand our current plight with the culture of dependency on government ing to the sale of 46 of them to the PRC over China, it is necessary to understand what we that he said had created a ‘‘workless class’’ the last 15 months, as revealed in a recent unilaterally dismantled under Bush and Clin- of people who live off the state and have no ton. motivation to find jobs. congressional hearing. It is widely believed that the fall of the So- Mr. Blair, who has resolutely moved his The United States should remain engaged viet Empire was a great ‘‘implosion’’ pro- party away from its old working-class roots with China, which is an emerging superpower. duced by the failure of the Soviet economic and remodeled it as a centrist movement However, we must not forget that it is a Com- system and the visionary policies of Mikhail that he calls ‘‘New Labor,’’ said one of the munist country that has undertaken a large- Gorbachev. This is the leftwing view of re- cornerstones of his Government would be cent events, a view intended to deny credit getting people off welfare and putting them scale defense buildup with the clear intent of to democracy and America in forcing the back to work. increasing its ability to project military power. outcomes. Western policies are rarely cred- In doing so, he called for a ‘‘radical shift in The U.S. should not be contributing to that ited with a key role in this drama, but in our values and attitudes’’ and said that the goal. As I said yesterday during the debate on fact they were the crucial ingredients. The welfare state, long associated with the old MFN, free trade is something to be desired, Soviet economic system, for example, had Labor Party, had to change along with the but commerce at all costs is notÐespecially failed long ago. In fact, it had failed from the times. when it provides a more level battlefield, which very beginning, as each disastrous ‘‘plan’’ ‘‘Earlier this century, leaders faced the no American wants. was replaced with another. Russia was the challenge of creating a welfare state that world’s greatest grain exporter before World could provide security for the new working I would like to request that two items be in- War I, and half a century later had become class,’’ he said. ‘‘Today the greatest chal- cluded in the RECORD following my remarks: the world’s greatest grain importer. That is lenge for any democratic government is to first, an article detailing the history and details not an easy accomplishment, and testifies to refashion our institutions to bring this new of the current policy of decontrolÐand its the shambles created by the Communist re- workless class back into society and into many flawsÐwhich recently appeared in the gime. useful work.’’ Things were not much better in the indus- * * * The Prime Minister’s speech came as independent newspaper Heterodoxy; and sec- trial complex, even the vaunted military sec- his Labor Government, which swept into ond, the text of a resolution passed by the tor. The Soviets were rarely able to design power with an overwhelming majority a Board of Directors of the Jewish Institute for and manufacture advanced technologies on month ago, prepares a major overhaul of the National Security Affairs [JINSA] regarding the their own. Without exception, when the So- country’s welfare system. In its review, Mr. sale or transfer of supercomputers. viets needed to modernize an assembly line, E1356 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 they went back to the original source and well-known weaknesses: poor reliability, me- worst enemies; Iraq, Iran, Syria, and Libya. asked the Western company to build them a diocre performance, and outdated tech- We know China is a totalitarian regime. And new one. They were especially dependent on nology. Russian arms lack the electronics we know that the stronger China becomes Western technology in areas like electronics, found in Americas systems; the computers the easier it will be for Peking to maintain computers, and advanced machine tools. are more than one generation behind, and its evil regime. This gave the West a great opportunity to the radars and ‘‘com’’ links are old-fash- There are some extraordinary cases in get a stranglehold on Soviet military tech- ioned. The Chinese now all too well how eas- which it might make sense to sell a limited nology, and, under Reagan, the opportunity ily American stealth and smart bombs over- amount of advanced military technology to was exploited. An international organization whelmed what the Russians supplied Iraq. In China, but there aren’t many of them. (It Combat Command (COCOM) was created to need of a ‘‘quick fix’’ to be able to bully its might make sense to sell them devices for control the flow of military useful tech- neighbors, China has been taking the Rus- nuclear safely, or for certain military sys- nology from West to East. A list of dan- sian technology, but it needs much more. tems with important civilian applications— gerous technologies was agreed upon, and all A second source of armaments and mili- satellite launchers, for example.) But that is members of COCOM undertook to embargo tary technology is Western Europe. Euro- not what is going on. The American govern- all of them for sale to the Soviets, or to any pean weapons are better than Russian, and ment is allowing massive sales of highly ad- country willing to resell to the Soviet Union come close to American standards. But Euro- vanced military technology to China, and or its allies. Unanimous agreement was re- pean systems are frightfully expensive, and, the policy has reached dimensions and quired for any exception. for extras, the Europeans have generally achieved a momentum that make clear that Despite predictions that such a system been unwilling to sell the manufacturing we are not doing so on a limited, special-case could not possibly work, it proved to be dev- technology for weapons. They want to sell basis. It is a deliberate policy that appears astating, as shown by the behavior of Gorba- the systems, and then supply the spare parts to have full approval from the highest levels chev himself. Hardly a week went by without in the future. The Chinese want their own of the Clinton Administration, despite Gorbachev or Shevardnadze or other Soviet manufacturing capacity. Like any country strong objections from government agencies leaders begging the West to treat the USSR preparing seriously for war, China doesn’t or from individual officials outraged at what like a ‘‘normal’’ country, and thus dismantle want to be dependent on others for weapons. is happening. The Clinton Administration COCOM. Their cries of pain were fully justi- A third source is Israel. Israel has been has not done this openly and honestly, by fied, for the gap between Soviet and Western willing to sell arms and arms technology to going to Congress and asking for a change in military technology grew relentlessly during China, and has done so for a number of years. legislation. It has, for the most part, acted the Reagan years. So much so that when the Starting with air-to-air missile technology, secretly, resorting to clever bureaucratic Soviet crisis arrived, the Kremlin could not Israel appears to have sold Lavi 3rd-genera- maneuver. Take the case of the aircraft en- even dream of solving it by a successful mili- tion fighter aircraft technology to China and gines for the Lavi, for example. its now trying to get the Chinese to buy an tary action against us. Powerful aircraft engines contain special It does not require an advanced degree in Israeli version of the advanced early warning technology that greatly enhances their international relations to understand the radar aircraft. AWACS, which played such a thrust, and this technology has long been on great value of such a system of export con- big role in the Gulf war by providing early the so-called ‘‘Munitions List’’ of goods and trols in a hostile world, and it should have warning and vectoring allied aircraft against services that would endanger American secu- been maintained after the Cold War, espe- Iraqi planes, operating at stand-off ranges in rity if they were sold to hostile or poten- cially if we were going to dramatically re- excess of one hundred miles. tially hostile countries. It is illegal to sell duce our research and development of new But Israel’s assistance to China is limited anything on that list to anyone, anywhere, weapons systems and technologies to up- in a number of ways. Because China sells without formal approval from the State De- grade existing systems. The one thing we arms to Iran and Iraq, and has sold missiles partment, which in practice almost always should not have wanted was to see potential to Saudi Arabia and Syria, Israel has to ex- clears its decisions with the military serv- enemies acquiring the very technologies that ercise extreme caution about what it sells to ices. Moreover, hard on the heels of the had given us such great military superiority. China. The Chinese suspect—and they are Tiananmen Massacre in Peking, Congress And of all the countries we should have wor- surely right—that Israel is not going to sell passed laws forbidding the sale of anything ried about, China was Number One, with Iran China a system that Israelis cannot defeat. on the list to China, unless the president felt a distant second. Another difficulty for China buying from it so important that he were willing to issue There were, and are, two main reasons to Israel is that Israel is not a one-stop solu- a formal waiver. In the eight years since think long and hard about China. The first is tion. The Lavi is a good example. The Lavi is Tiananmen, this has happened just once, size: China has the world’s largest popu- a modern, lightweight, single-engine, high- when a waiver was issued for technology lation, and can therefore put into the field performance fighter plane with an advanced having to do with the launch of commercial the largest army. And the likelihood of con- engine, composite structures, advanced com- satellites on the Long March rocket (a mili- flict with China stems from reason number puters and electronics, ECM pods, and mis- tary rocket). two for thinking long and hard about this sile and weapons launch capabilities. But threat: China is the last major Communist China wants to manufacture the aircraft, The administration was unwilling to open- dictatorship, and the history of the twenti- and many of the parts come from the U.S. ly issue any other waivers, knowing there eth century is one of repeated aggression by and were provided to Israel under carefully would be a political firestorm. So Clinton dictators. Simple prudence dictated that, controlled munitions export licenses. In and his people did it slickly, by taking the until and unless China joined the society of most cases the manufacturing knowhow was engine technology off the Munitions List and democratic nations, we should have tried to not even released to Israel, and other valu- shifting control from State to Commerce, maintain a decisive military advantage. Call able design and manufacturing secrets were where the president’s buddy Ron Brown held it deterrence. also withheld. The engine is an even graver court. Within days, Commerce issued li- Instead, for reasons that will intrigue the problem: the only two sources for a suitable censes permitting U.S. engine producers to psychohistorians for many years to come, we Lavi engine are American companies, Pratt sell the technology to China. And since the have not only bent over backwards to be gen- & Whitney and General Electric. There is no sales have the explicit approval of the gov- erous to Coins (our enormous trade deficit other engine with the performance and ernment, we can be sure that American cor- leaves no doubt about our largesse), but we weight to match it. While some have sug- porations will do everything they can to help have been busily arming the People’s Repub- gested the Russians could soon give the Chi- set up the manufacturing facilities. The re- lic so that it can give us grief. nese an acceptable engine, none has yet ap- sult of all this maneuvering is that China For China to effectively project power in peared. The U.S. engines are a generation will soon have the world’s finest engines in the future, it would have to get the tech- ahead of anything the Russians have. So the its fighter aircraft. nologies for its army that the U.S. used to Chinese have been able to acquire some of The story is repeated elsewhere. Super- rout the Iraqi forces—actually superior to the technology from Israel. But to get the computers, for instance, are the crown jewels China’s in many regards—during Desert rest they need the United States. of computers, and are in use at some of our Storm. But from where? It is often said that, in the world of ad- best national laboratories such as Lawrence China has four main sources of supply. The vanced technology, embargoes or export con- Livermore, Sandia, and Los Alamos. The most prominent in Russia. Russia has been trols cannot possibly work, because it they U.S. National Security Agency uses super- able to offer China important help in aero- don’t get it from us, they’ll get it from some- computers to keep track of our adversaries. space, missiles, and submarine technology. body else. This is false. To compete with the The Defense Department, and leading de- China has bought Surkhoi fighter aircraft U.S. militarily. China has to get our tech- fense contractors, use supercomputers to de- and Kilo-class diesel submarines from Rus- nology, and, most of the time, that means velop stealth technology and simulate test- sia, and the Russians have provided assist- getting it directly from us. ing of precision guided weapons, advanced ance to many other Chinese Army projects. It’s easy to understand why the Chinese weapons platforms, and delivery systems. But the Russian connection is only a stopgap want our technology, it’s far more difficult Only two countries, the United States and for China, not a solution, because, while Rus- to comprehend why the American govern- Japan, build competent supercomputers. And sian technology is, in most cases, better ment would let them get it. We know that both countries, recognizing that the random than China’s, it is not the equal of the Unit- the Chinese routinely sell advanced weapons sale of supercomputers would constitute a ed States. Russian military systems have to ‘rogue nations’’ that rank among our grave risk to Western security, agreed in 1986 June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1357 to cooperate and coordinate sales of super- As America downsizes its defense pro- munist countries. (COCOM, the Paris-based computers. This agreement made it impos- grams, many defense factories are being shut Coordinating Committee on Export Controls sible to sell supercomputers to China. But down. Some produced state-of-the-art fighter was controlling sensitive exports to the com- that was then, and this is now, and Clinton aircraft for the Air Force and Navy. Others munist countries.) However, in 1993, after the & Co. have sabotaged any effective control were involved in building intercontinental demise of COCOM, the U.S. massively liber- over supercomputer sales to China. ballistic missiles. Still others were develop- alized its controls on supercomputers with- The first move was to change the defini- ing advanced electronics. One building at a out consulting Japan. For the most part, the tion of supercomputers. In the Bush adminis- Defense site contained sophisticated spec- Clinton administration has decided that only tration, it was generally agreed that a com- trometers, clean rooms, special plasma fur- a very limited subset of supercomputers puter with a speed of 195 million theoretical naces and lasers, and special measurement would qualify as strategic. And even those operations per second (MTOPS) was a antennas operating at very high radar fre- are under a weak control system that cannot ‘‘supercomputer,’’ and therefore strategic. quencies. It was a laboratory for testing effectively safeguard against the transfer of Two years later, the Clinton administration ‘‘stealth’’ technology, and everything in it these machines to third countries. lifted the ceiling to 2,000 MTOPS. This ten- was sold, for a pittance, to the Chinese. So Some argue that supercomputers are not fold increase wasn’t nearly enough, though, we have not only guaranteed that the Chi- strategic systems, noting that many of and shortly thereafter the administration nese will have superb fighter planes, we have America’s nuclear weapons and delivery sys- unilaterally renounced the existing regu- ensured that we won’t be able to ‘‘see’’ them tems such as ballistic missiles and long- latory controls, such that China could get in combat. range bombers were built on computers supercomputers up to 7,000 MTOPS. This Defense factories being ‘‘decommissioned’’ whose performance is inferior to the super- drastic move provoked violent protests from have provided a bonanza for the PRC. For ex- computers of today. But, America needs many of our allies, including several that did ample, a multi-axis machine tool profiler supercomputers to design the next genera- not even manufacture such computers, and (measuring hundreds of feet long), designed tion of defense systems, reduce costs and im- hence had no commercial interest in the to build main wing spans for the F–14 fighter prove performance ensuring our strategic se- matter. We thumbed our nose at them. plane, which originally cost over $3 million, curity. Furthermore, supercomputers make But even this was not enough, because it was gobbled up by the Chinese—for under it possible to do effective design engineering would still have been possible for the Depart- $25,000. There is more: Global Positioning with less risk taking, and less expensive and ment of Defense to oppose supercomputer System manufacturing know-how, which will dangerous testing to increase the safety of sales to China on strategic grounds. The so- make Chinese cruise missiles uncannily ac- nuclear weapons and other systems including lution was to redefine the computers for ‘‘ci- curate, was licensed for sale by the adminis- ballistic missiles and smart weapons. There- vilian use,’’ and within the past 15 months. tration, as were small jet engines for a fore, their acquisition by hostile countries U.S. companies including IBM, Convex ‘‘training aircraft’’ that doesn’t exist. The would vastly enhance the capabilities of (later, Hewlett Packard), and Silicon Graph- Chinese are working to copy those jet en- those countries. ics (and perhaps others) have sold the Chi- gines to modernize their Silkworm cruise The landmark government study on nu- nese at least 46 supercomputers, many of missiles, and substantially extend their clear weapons design concluded that, ‘‘The them going into China’s defense industry, or range and payload. use of high-speed computers and mathemati- being put to use in nuclear weapons design. There are so many scandals swirling cal models to simulate complex physical This represents a truly terrifying hemor- around Washington these days that it is dif- process has been and continues to be the cor- rhage, for supercomputers are the central ficult to get anyone to pay attention to an- nerstone of the nuclear weapons design pro- nervous system of modern warfare. The sales other one. Yet the policy of arming China in- gram [of the United States].’’ The study also of 46 supercomputers give the Chinese more volves more than punishing people who stole considered the ‘‘efficiency’’ of the process. of these crucial devices than are in use in the from the public trough, or lied to Congress, With supercomputers, a new nuclear weapons Pentagon, the military services, and the in- or destroyed the lives of innocent public design or concept involves exponentially telligence community combined. They en- servants. This criminality could threaten fewer explosive tests. For example, in 1955 a able the Chinese to more rapidly design the lives of our children in years to come by new concept would require 180 tests; in 1986 state-of-the-art weapons, add stealth capa- forcing them to fight the largest army in the the number of tests required was reduced to bility to their missiles and aircraft, improve world, equipped with the finest weapons 5. As even more powerful machines are avail- their anti-submarine warfare technology, American technology could design. able today, it is highly probable that the and dramatically enhance their ability to de- A great deal of the damage done to our se- number of tests may be reduced even further, sign and build smaller nuclear weapons suit- curity by the Clinton Administration—and or testing altogether eliminated. able for cruise missiles. Thanks to the folly to a lesser degree by the Bush Administra- This means that a country that gets super- of the Clinton Administration, the Chinese tion before—is irreversible, and ultimately computers can develop nuclear weapons cov- can now conduct tests of nuclear weapons, we will undoubtedly have to spend a lot of ertly, and have plausible deniability if chal- conventional explosives, and chemical and money and effort to ensure that we have lenged. It means that we may totally mis- biological weapons by simulating them on military technology even better than what judge the capabilities of a hostile country or supercomputers. Not only can they now we’ve given the Chinese. But it is long past potential adversary, as we did in the case of make better weapons of mass destruction, time for Congressional leaders to stop the Iraq. It also means that the cost of develop- but they can do a lot of the work secretly, hemorrhage. Export controls must be en- ing nuclear weapons can be significantly re- thus threatening us with an additional ele- forced; the Munitions List must be tight- ment of surprise. duced if supercomputers are available. This ened; we must once again try to piece to- is important because many countries lack Finally, since supercomputers are the key gether workable agreements with our allies. both the requisite technical experts and the to encryption, we have now made it easier Above all, our politicians have to start earn- for the People’s Republic to crack commer- infrastructure to develop nuclear weapons. ing their money. Is there not a single com- For Russia and China the acquisition of cial and, perhaps, even government secret mittee in the House and Senate capable of codes. supercomputers is of great importance in al- holding hearings on this madness? Is there lowing them to develop a viable nuclear There are many other areas where the not a single ‘‘news’’ organization that judges American public has been told almost noth- strike capability. Russia has been seeking this scandal worthy of daily coverage? Or supercomputers for more than two decades ing about our arming of China, and reports must we wait for another Pearl Harbor? indicating major problems with the Chinese after the investment of billions of rubles try- have been suppressed or buried. In the past ing to design their own supercomputers re- two years, for example, the Customs Depart- JINSA BOARD OF DIRECTORS RESOLUTION: sulted in failure. Consequently, the Soviet ment has interdicted 15 shipments of mili- SUPERCOMPUTERS AND U.S. EXPORT CON- government and then the Russian govern- tary parts going from the United States to TROL POLICY ment sought to get such machines from the China. Some of these were parts from our U.S. policy regarding the sale or transfer West, and pressed hard for disbanding latest air-to-air missiles and from fighter of supercomputers is a sensitive national se- COCOM in order to remove export restric- aircraft like the F–15. These parts were curity issue which may ultimately help to tions. ‘‘scrapped’’ by the U.S. military, but were determine which countries are able to de- China has gone down a similar path. Last never demilitarized. At much less than a velop nuclear capabilities and which are sty- year, when China carried out aggressive penny on the dollar, Chinese agents were mied in their attempt. military exercises in the Taiwan strait, ef- buying the parts and shipping them back to In 1986, the U.S. Japan Supercomputer fectively closing the strait to both shipping China. Customs acted in the belief that the Agreement set up a system whereby the two and air traffic, the United States—sensing sales were illegal, yet not a single charge has major producers of supercomputers agreed to China might turn the exercise into a full been filed against the exporters. carefully monitor and regulate sales to third scale invasion of Taiwan—moved two carrier Worse still, China has been buying up countries. This cooperation demonstrated task forces into the area. As the tension whole defense factories in the United States, that two highly competitive countries could rose, a high ranking Chinese official threat- and the administration, fully aware of what work out an effective means to regulate ened to launch nuclear ballistic missiles is going on (in fact, the Defense Intelligence trade in this sensitive equipment, and take against Los Angeles. Such threats, and the Agency has sent some of its top Washington it out of the realm of ‘‘national discretion.’’ willingness to make such threats, should experts to witness some of these trans- The Agreement was primarily to guard make it clear that there are serious dangers actions), let it happen. against nuclear proliferation in non-com- today, and we should not want to exacerbate E1358 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 them by providing technology that will in- However, there are still those who want I understand that the young people hon- crease the risk and danger, as supercomput- even more liberalization of export controls ored here tonight were in foster care for a ers will. on supercomputers. long time. Thankfully, you were able to In light of these issues, it is hard to imag- Supercomputers are a critical tool for de- reach out on your own to private organiza- ine how the administration decided to make veloping defense systems for the next cen- tions like the Orphan Foundation to find it easy to export and buy supercomputers. tury. Making such machines freely available mentors and parents that have been more For most transactions, the administration’s to the world under the flawed system we now helpful in brightening your future than any supercomputer export controls are no more have will help erode both our technology government bureaucracy. burdensome than export controls on personal leadership and our national security. If the For example, David DiBernardo, now a computers. United States wants to retain its superiority freshman at Slippery Rock University in Put simply, the regulation says that high in an era of collapsing defense budgets, it is Pennsylvania survived twenty-nine foster performance computers can be exported critical to hold the line on these sensitive care placements before he found the Orphan without individual validated licenses, but exports and keep these machines out of the Foundation. This illustrates the fact that in- there are some restrictions based generally hands of potential adversaries or vesting in our youth and strengthening per- on the country and end user—with countries proliferators. At the same time, we must manent families is not accomplished by any organized into three groups or ‘‘tiers.’’ The make sure that the military departments government program—it happens one child makeup of each tier is, to a certain extent, and research activities of the Department of at a time. bizarre. Defense have access to the best computing It is essential that we learn from organiza- For example, the middle tier (Tier 2) coun- technology. tions like The Orphan Foundation and spe- tries that can receive supercomputers less Therefore, the Board of Directors of JINSA cifically the OLIVER Project, which honors than 10,000 Millions of Theoretical Oper- urges Congress to: foster youth attending college. Their goal is ations Per Second (MTOPS)—includes Anti- 1. Suspend the current regulations on High to replicate the OLIVER Project in the gua and Barbuda, Bangladesh, Belize, Equa- Performance Computers, restoring the pre- states for high school students. torial Guinea, Haiti, Liberia, Nicaragua, Po- vious validated licensing requirements for As we pursue these endeavors to brighten land, the Slovak Republic, Somalia and supercomputers. the future of every young American, it is im- Togo, as examples. Keep in mind that the en- 2. Demand a full accounting of supercom- portant that we listen and learn from the tire Defense Department owns only two com- puter sales under the current export regime. real experts: the young people here with us puters more powerful than these and hardly 3. Conduct a full assessment of the impact tonight. For example, Elizabeth DeBroux, a any computers in this middle category. of computer sales on national security and senior at Oglethorpe University in Atlanta, Israel resides in Tier 3, a motley collection on weapons proliferation. and her friends can advise us in Georgia on of countries including Angola, Belarus, 4. Assess, using the CIA and Defense Intel- the most effective policies to help young India, Oman, Saudi Arabia and Tajikistan. ligence Agency, who is seeking supercomput- people. They can get computers in the range of 2,000 ers and why they are wanted. The Orphan Foundation has the right idea to 7,000 MTOPS. Israel, a staunch U.S. ally 5. Develop and propose an effective multi- and is the right model: It saw a need and and country with which our Defense Depart- lateral export licensing system. chose to provide an opportunity. You have ment and defense industries cooperate on an Passed unanimously 2 June 1997. seen what these young people have managed ongoing basis, is lumped in with Angola, to accomplish so far. You have faith in them f Belarus and India, hardly traditional friends that they will be achievers. You have as- of the U.S. ORPHAN FOUNDATION DINNER sisted them in helping them make their Tier 1 includes our allies and a few others dreams come true. You have given them a whose presence is hard to understand. For precious opportunity to now have the tools example, it includes Iceland, which was HON. J.C. WATTS, JR. to exercise their Creator-endowed right to never a COCOM member and never cooper- OF OKLAHOMA pursue happiness. In your eyes, there is no black or white or any other color. There is ated with the U.S. on export controls. The IN THE HOUSE OF REPRESENTATIVES same holds for Liechtenstein and Luxem- only a genuine need and the possibility to bourg, from which technology diversions Thursday, June 26, 1997 offer an opportunity. What you are doing is were common in the 1970’s and 1980’s. San Mr. WATTS of Oklahoma. Mr. Speaker, last uniquely American—in more ways than you may realize. When we look around this room, Marino is there. Tier 1 countries can receive week I was honored to be a part of the Or- any level of performance supercomputer. and we see children of many, many hues, we The caveats in the regulation are applied phan Foundation dinner which gives private learn, frankly, that it is the common bonds only where the end use or end user is nu- dollar college scholarships to parentless foster of experience which truly bring us together. clear, chemical, biological, or missile relat- youth. These kids have achieved against the These bonds have as much influence on our ed. This sounds good, but in practice it is oddsÐmany of them growing up in poor rural lives, our successes and our ultimate futures meangingless because it requires the selling and urban centers. than something that is as ultimately super- company to ‘‘know’’ whether or not the At that event, the Congressman from Geor- ficial as race. Consider the experience of the orphan: ‘‘buyer’’ falls into a restricted category. giaÐthe Speaker, Mr. GINGRICH gave a Whether because of war, famine, accident, ir- Burt since there are no licenses and scant speech that is a great example of the route we record keeping is required, even these mini- responsibility or illness, a child is suddenly mal restrictions are hard to enforce. need to take for positive race relations and the alone in the world. The obstacles that child The 1996 sale of supercomputers by Silicon urban agenda that could reshape the land- has to overcome and the opportunities that Graphics that somehow’’ ended up in a nu- scape of this great nation. I commend this organizations such as the Orphan Founda- clear design installation in Russia is a case speech to the RECORD and thank you for al- tion provide for that child—those experi- in point. Exactly how it happened is still lowing us to share these words. ences shape them in a particular way. And so under investigation and Silicon Graphics one orphan—black, white, Asian, Muslim, says it would never knowingly have made a ADDRESS BY SPEAKER NEWT GINGRICH TO THE Christian or whatever combination of those sale to the Russian Scientific Research Insti- ORPHAN FOUNDATION OF AMERICA characteristics you can imagine—can look to tute for Technical Physics. But there is no Thank you, Jim Taylor, for that very nice another and say, ‘‘Yes, I’ve been down the doubt the computers now serve Russia’s nu- introduction. Even more, thank you and the same road that you’ve traveled and regard- clear weapons industry. This is the first time Gateway 2000 Foundation for underwriting less of how you may look or how you may any supercomputer has been lost or gone to the scholarships for these remarkable young worship, I can see that you and I share the a nuclear weapons designer. people. I would also like to thank Eileen same experience.’’ Part of the problem clearly is that once a McCaffrey as President of the Orphan Foun- This is a particularly apt metaphor for supercomputer is delivered it can be retrans- dation of America for her leadership in orga- America writ large. America is a nation of ferred and the U.S. government and the com- nizing the 4th Annual OLIVER Project in immigrants. In certain ways, the experience pany are, in fact, out of the loop. For exam- support of foster youth attending college. of the immigrant and the experience of the ple, a supercomputer sold to a shoemaker in The Orphan Foundation is but one part of orphan mirror one another. We have, in Iceland can be resold to a Chinese missile a worldwide movement toward helping peo- America, people who have, for various rea- factory. Because there is no international li- ple. We are a movement of people who be- sons come to America for a better oppor- censing system or other mechanism, it is lieve that combining the wisdom of the tunity. Before there was a nation called the reasonable to conclude that there is next to founding fathers, with the opportunities of United States, Pilgrims, fleeing religious nothing we can do about such a re-export the Information Age and the world market, persecution, landed in a place they called the transaction. will help each person exercise their Creator- New World. In the 1800’s the Irish came to The United States needs supercomputers, endowed right to pursue happiness and will these shores fleeing a famine which had dev- particularly in this era of restricted budgets; eventually lead to freedom, prosperity, and astated their country. As recently as the they will be the keystones for future defense safety everywhere. It seems to me that that 1970s, Vietnamese fled a homeland wounded systems which, more and more, will be based is a good description of what Eileen, Jim and by decades of war. These and so many others on high technology—and less and less on po- everyone associated with the success of this saw hope and opportunity in America. They litically sensitive testing. year’s OLIVER Project hope to achieve. came here for a chance to succeed. They June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1359 made the conscious decision to become part needed assistance because you were a par- hood who opens a small business, it of a new family—to become Americans. And ticular race or gender. You are being re- shouldn’t shock you that we end up with cy- becoming an American is a unique experi- warded for your hard work as individuals. cles of despair which repeat for generations. ence, which comes with certain responsibil- That is the way we must approach the issue What we’ve done is artificially create, both ities, certain habits that one has to absorb of opportunity. We will not be successful in on Indian reservations and in the inner city, and accept to successfully finish the process. moving our society forward if we submerge zones of despair and depression where people An American is not ‘‘French’’ the way the individuals into groups. have no hope. So we need to talk about a French are or ‘‘German’’ the way Germans Unfortunately, government policy has con- very different model. The President’s com- are. You can live in either of those countries centrated on groupings over the last thirty mission needs to begin with this new, more for years and never become French or Ger- years. The results of the group-think ap- powerful approach. In America everyone is man. I think one of the reasons Tiger Woods proach are in and they have proven tragic. an individual. Everyone in America has the has had such a big impact is because he is an Let me draw a distinction. I was an Army creator-endowed right to pursue happiness. American. He defines himself as an Amer- brat. I was born in Harrisburg, PA. I grew up In America, we pragmatically solve problems ican. I think we need to be prepared to say, in an integrated institution. I went to the by asking, ‘‘Why isn’t this happening?’’ For the truth is we want all Americans to be, South as a teenager and was in Columbus, example, ‘‘Why aren’t children learning in a quite simply, Americans. That doesn’t de- Georgia when there was still legal segrega- particular neighborhood?’’ Then systemati- prive anyone of the right to define further tion. Segregation was the legal imposition cally break the problem into components define their heritage—I go to celebrations by the state of a set of unfair rules. Ending and solve it. In many cases, a solution will such as the Greek festival in may district segregation was an inherently political fight. require a replacement rather than a repair. every year. It doesn’t deprive us of the right It made perfect sense for people who wanted That’s why we developed a replacement for to have ethnic pride, to have some sense of to advance the cause of freedom and end gov- the failed welfare system. You couldn’t re- our origins. But it is wrong for some Ameri- ernment-imposed segregation to focus on pair the old welfare system of passivity and cans to begin creating subgroups to which politics and government. Since the results of lifetime dependency. It had to be replaced they have a higher loyalty than to America segregation were focused on a specific group, with a different model that emphasized at large. The genius of America has always it made sense that the focus was on remov- training work and self-help. I would argue been its ability to draw people from every- ing the impediments at the group level. the same is true with much of the public where and to give all of them an opportunity Having ended segregation, however, the housing rules. You can’t repair them. You to pursue happiness in a way that no other next struggle, frankly, is and has been eco- have got to replace them with a different society has been able to manage. nomic and educational achievement. Govern- model. That is a particularly useful way of dis- ment is a peculiarly ineffective institution If you do create a replacement system at a cussing the question of race which I raised at in those areas. This is a lesson we now tell practical level, what behaviors are you try- the beginning of the year, when I was re- the Chinese, we tell the Russians, we say ev- ing to encourage among large numbers of elected Speaker, and which the President ad- erywhere around the planet. Centralized, bu- people? You want to make it easy to open a dressed this past weekend in California. This reaucratic, command-and-control systems small business. Most big cities make it hard. question of race is at the heart of America’s don’t work. Well, guess what? They don’t Hernando DeSoto fifteen years ago wrote darkest moments—slavery, the Civil War, work very well in the inner cities of Wash- ‘‘The Other Path.’’ It is based on anti-job segregation—and yet dealing with it in the ington, D.C., New York or Detroit, either. rules in Lima, Peru. It applies as well to public sphere also produced two of our most And they have proven tragically not to work Washington, D.C., Atlanta, Miami, New brilliant and influential leaders—Abraham on Indian reservations. York, Los Angeles and virtually all large Lincoln and Martin Luther King, Jr. Such We need to treat individuals as individuals American cities. So the very place we want has been the tragedy and the triumph of race and we need to address discrete problems for more business—we’re going to face this prob- in America. As W.E.B. DuBois observed, the the problems they are—and not presume lem of local anti-job taxes and rules now. I’m 20th century has in some ways been defined them to be part of an intractable racial issue the leading advocate for tax breaks for by the ‘‘color line’’. As we move into a new which will never be torn out. Washington, D.C. We have nearly $580 mil- century, we have to look at what has worked Consider education as an example. Follow- lion in tax breaks (over ten years) in the tax when it comes to race, what hasn’t and what ing the removal of racial quotas in the Uni- bill for our nation’s capital. We have fought lessons we should learn. Because, as the old versity of California system, Berkeley expe- hard to protect these tax breaks. Yet D.C. adage goes, there is no surer sign of insanity rienced a precipitous drop in accepted black city taxes are one-third higher than the sur- than doing the same thing over and over students for their fall classes. The old way of rounding counties’ taxes. Now, it is not hard again—and expecting a different result each thinking assumes this to be a racial problem for any student of Adam Smith to figure out time. that must be addressed in a race-specific why, if you are a rational small Looking to the new rather than repeat a manner. That is exactly the wrong kind of businessperson, you go to Prince George’s failed pattern is a very American truth. To thinking. If in fact, enough young people are County. It’s safer, it’s cheaper and the local those who doubt whether America holds not being educated well enough to get into government doesn’t make it so difficult for promise even in the most hostile of cir- Berkeley, the focus should be on what’s the entrepreneur to succeed. cumstances, we need only turn to the ‘‘Nar- wrong with the schools that are producing It doesn’t matter how many quotas you rative of the Life of Frederick Douglass, An them and how we improve those schools. And have. If you’re not willing to confront the American Slave’’—his autobiograph. While if the need is for more tutoring . . . and if central need to reform and replace the sys- the question of a federal apology for slavery the need is for better education . . . if the tems that have failed, they will continue to can be discussed by reasonable people of all need is for a way to dramatically overhaul fail. I would hope the President’s commis- persuasions, let us not forget someone like the schools—then let’s overhaul the schools. sion will have the moral courage to erase the Douglass who didn’t wait for an apology. He Similarly, if there are not enough young assumption that we are a ‘‘group’’ society. If allowed bonds neither physical nor mental to blacks in particular—young Hispanics to a they will look to Canada right now, they will prevent him in one lifetime to go from being lesser extent—going out and creating small see profound reasons for Americans to want a slave to becoming an adviser to the Presi- businesses, then let’s look at what are the to avoid our decaying into a series of groups. dent. That is quintessentially an American inhibitions to creating small businesses. All I hope this commission will decide that its story. That is a story like many others in of the set-asides in the world will not change goal must be to have every American suc- this unique nation. It stands as one of many Anacostia or other such pockets of poverty. ceed as an individual within the framework historic lessons which all Americans can We have to have a profound fundamental re- of their Creator-endowed rights. benefit from learning. Slavery was an awful thinking of the assumptions that have failed We must focus on individuals and their period in this country’s existence—one which for thirty years. personal educational and economic achieve- we as a country—must never forget. That’s As you look at the success of West Indian, ments. Obsessing on race will not allow us to why I was glad that J.C. Watts introduced first-generation immigrants or of Koreans or move beyond race. We must follow the exam- his ‘‘June Teenth’’ resolution yesterday, ob- you look at the success, for that matter, of ple of the Orphan Foundation and recognize serving the day many African-Americans people who have come here from Africa in specific needs and provide principles that celebrate as the traditional end of slavery. the last thirty years, the fact is a surprising will allow Americans of all backgrounds to The more Americans learn about America— number of people of color rise surprisingly open the doors of opportunity. the triumphs and the tragedies—the more we rapidly. And by rising I mean get wealthier, We have to start with the development of mature as a nation. But while Americans buy property, have freedom and go on nice a solid foundation—with an economic and so- must respect the past, part of being an vacations. They rise very rapidly. They rise cial pillar—which will allow us to build a American is about looking forward. because they have the right habits, skills true opportunity society. We must empha- The scholarships being awarded here to- and networking ability. But if you trap peo- size continuing economic growth with low night are a good place to continue the dia- ple into public housing with anti-work and inflation and rising take-home pay. Within logue on race—because they are awards of anti-achievement regulations, send them to this economic growth we must emphasize pure achievement, pure merit rewarding in- schools that fail, teach them a set of habits creating opportunities for minorities to cre- dividuals for their superior work as individ- about not working, create an environment ate new small businesses. Our goal should be uals. They are not being granted because where no one near them gets up on Monday to encourage at least a three-fold growth in somebody felt sorry for you or thought you to go to a job, have nobody in the neighbor- black-owned small businesses over the next E1360 CONGRESSIONAL RECORD — Extensions of Remarks June 27, 1997 few years. This will require reductions in mission needs to focus on practical, doable, outlined in the Housing Opportunity and Re- taxation, litigation and regulation to make immediate action steps that can solve Amer- sponsibility Act). We must also expand faith- it dramatically easier to launch small busi- ica’s problems. If Americans get busy enough based charities such as Habitat for Human- nesses. It also will require an aggressive out- working together to achieve real goals, rac- ity, which grow families as well as build reach program to encourage minority indi- ism will recede. Perspiration and teamwork homes. viduals to create their own business as an al- will dissolve racism faster than therapy and 8. Violent crime: We must make our cities ternative to working for others. dialogue. safe and secure places to live and work In addition to expanded economic oppor- I’m sure most of you saw the Bulls-Jazz through community policing, tougher sen- tunity we should insist on solving other championship game last week. In the closing tences for violent criminals, and innovative challenges which affect all Americans but moments, when Michael Jordan looked to anti-crime programs (as outlined in the Ju- bear particularly harshly on minority popu- find an open man for a winning shot, he venile Crime Control Act of 1997). We must lations. I imagine it is January 1, 2001, the didn’t look for the closest black player. He also dramatically expand the community- first day of a new century and a new millen- looked for the nearest jersey. That happened based anti-drug coalition efforts and insist nium. It is a Monday morning. Imagine wak- to be Steve Kerr who is white. This is the ex- on a victory plan for the war on drugs. ing up to an America that was virtually ample for society to follow: A group of indi- 9. Economic growth: We must expand eco- drug-free, in which practically every child viduals so focused on a common goal of win- nomic opportunities for all Americans by was learning at their best rate, and in which ning—that they don’t have time to worry promoting continued economic growth with almost all children were born into or adopted about what color the other is. I will also re- low inflation and rising take-home pay, into families that could nurture and raise mind everyone here and watching on C- through tax cuts, tax simplifications, litiga- them. SPAN that Michael Jordan tragically lost tion reform, less regulation and overhaul of I am not describing a utopia. This is the his father a few years ago. Steve Kerr, while the burden of government on small busi- America I went to high school in in 1960. a college freshman, lost his father to Middle nesses. After all, for welfare-to-work to be Drug use was marginal. There was an expec- East violence. They are also good examples successful, work needs to be available. tation you could read the diploma before of overcoming adversity and triumphing in 10. Welfare reform: We must take the next they gave it to you. Self-esteem was earned the face of it. step in welfare reform by fostering and pro- not given. Young males knew that father- We thank the President for wishing to con- moting innovative local job training, and hood was a responsibility not just a biologi- tinue the dialogue on race last weekend. But entry-level employment programs to move cal side effect of hedonism. frankly, there has been much talk on this welfare recipients into the workforce (as All of America will be better off if we cre- issue and very little action of the sort which outlined in the Personal Responsibility Act ate a drug-free, learning-oriented America of will dramatically change people’s lives. Let of 1996 and the welfare-to-work initiatives of children growing up in families—minority me now suggest 10 practical steps which, Governor George Bush of Texas and others). Americans in general and black Americans started today can build a better America These ten steps are examples of the kind of in particular—would find their lives dra- and, in the process, close the racial divide. practical, down-to-earth, problem-solving ef- matically improved by these changes. 1. Learning: We must create better oppor- forts which will improve the lives of all Stopping drug addiction, drug-related vio- tunities for all children to learn by breaking Americans, but have an especially important lence, and drug-generated wealth will do the stranglehold of the teachers’ unions and and dramatic impact on the lives of poor more to improve the lives of young blacks giving parents the financial opportunity to Americans and minority communities. and the prospects of poor neighborhoods choose the public, private, or parochial I hope the President’s commission will es- than all of the quotas and set-asides com- school that’s best for their children (as out- tablish a goal of practical reforms and prac- bined. When neighborhoods are drug-free and lined in Majority Leader Armey’s Edu- tical changes and will hold hearings designed crime free, businesses will return, jobs will cational Opportunity Scholarships for Dis- to elicit pragmatic, down-to-earth proposals reappear and economic opportunity will be trict of Columbia students). for real change. re-established. 2. Small business: We must set a goal of True learning is infinitely more powerful The commission would do well to start tripling the number of minority-owned small than social promotion combined with quotas right here with the Orphan Foundation. This businesses by bringing successful small busi- and set-asides. Every child of every back- is a uniquely American institution—in your ness leaders together to identify—and then ground in every neighborhood deserves their generosity of spirit, in your inner strength full rights to pursue happiness as their Cre- eliminate—the government-imposed barriers and in your boundless optimism. But most of ator endowed them. Recently, I attended an to entrepreneurship. all, you are uniquely American because in 8th grade graduation at St. Augustine pri- 3. Urban renewal: We must create 100 Re- giving these and many other young people vate School here in Washington. 98% of the newal Communities in impoverished areas the rarest of treasures—a sense of hope, a private school children will graduate. The through targeted, pro-growth tax benefits, sense of place and a sense of possibility—you public schools which cost three to four times regulatory relief, low-income scholarships, are in fact helping show them what it means as much will graduate less than half as many savings accounts, brownfields clean-up, and to be citizens and part of the American fam- of their entering children. Saving the chil- home-ownership opportunities (as outlined ily. And those are the greatest gifts of all. dren who are dropping out requires new ap- in Jim Talent and J.C. Watts’ American You are part of a worldwide movement of proaches not new quotas. Community Renewal Act). freedom and faith. You are all making our We know we can dramatically reduce sin- 4. Civil rights: The Equal Employment Op- jobs a little bit easier. I thank the Founda- gle teen pregnancy because it is being done. portunity Commission should clear its exist- tion for its work; I salute this year’s scholar- Kay Granger, former mayor of Forth Worth ing backlog of discrimination cases by en- ship winners and I thank you for allowing and now a freshman member of Congress, forcing existing civil rights laws, rather than me to join you this evening. trying to create new ones by regulatory de- worked on a YWCA project for 800-at-risk f teenage girls. Statistically 70% should have cree. become pregnant. The program taught these 5. Equal opportunity: We must make BALANCED BUDGET ACT OF 1997 young girls ambition, integrity, and motiva- America a country with equal opportunity for all and special privilege for none by tion. Instead of 560 becoming pregnant, only SPEECH OF two did. We can break the cycles of depend- treating all individuals as equals before the ency and despair in our poor neighborhoods. law and doing away with quotas, preferences, HON. DARLENE HOOLEY and set-asides in government contracts, hir- This is not a proposal for a massive new OF OREGON government program. If centralized bureauc- ing, and university admissions (as outlined racies in Washington could have stopped in the Canady-McConnell-Hatch Civil Rights IN THE HOUSE OF REPRESENTATIVES drugs, guaranteed learning and ended single Act of 1997). Wednesday, June 25, 1997 teen pregnancy, the job would have been 6. Racial classification: We must break done—we have created the bureaucracy and down rigid racial classifications. A first step Ms. HOOLEY of Oregon. Mr. Speaker, I rise spent the money. It was just the wrong could be to add a ‘‘multiracial’’ category to today to express my support for this historic model. the census and other government forms to budget agreement. We have a remarkable op- America is a great country filled with good begin to phase out the outdated, divisive, portunity to balance the budget while protect- people. Tocqueville pointed out in the 1840s and rigid classification of Americans as ing our values, and I believe we should do ev- that volunteerism, local leadership and faith ‘‘blacks’’ or ‘‘whites’’ or other single races. erything we can to craft a budget plan that will based charities were the unique attributes Ultimately, our goal is to have one classi- be good for all Americans. that gave America its dynamic character. fication—‘‘American’’. Balancing the budget and putting our fiscal Marvin Olasky recaptured these principles of 7. Home ownership: We must ease the path American success in his 1994 book ‘‘The toward home ownership by giving local com- house in order is the single most important Tragedy of American Compassion.’’ munities and housing authorities the flexi- thing we can do for our children, and for our Instead of focusing on broad sweeping gen- bility and authority to more effectively and future. We have made important strides to- eralizations about race, the President’s com- efficiently house low-income Americans (as ward balancing the budget and shrinking the June 27, 1997 CONGRESSIONAL RECORD — Extensions of Remarks E1361 deficit while maintaining a healthy, growing Until this morning, the House welfare legis- also allows the Secretary of Health and economy. But there is still a long way to go. lation would have allowed States to pay wel- Human Services to waive the 50-50 rule for While I am voting in support of the measure, fare recipients less than the minimum wage managed care plans. This rule traditionally en- the bill is far from perfect. In the past 2 days for publicly sponsored work programs. This sured that managed care plans provided qual- important improvements have been made to isn't right. Work is work. Everybody should ity care to Medicare beneficiaries. It is not cer- the legislation. The leadership should be com- earn a living wage. States should not be per- tain that other, more comprehensive, meas- mended for continuing negotiations. However, mitted to treat individuals on welfare differently ures of quality will be established before the further changes are needed in key areas in- from other workers. Afraid of the political re- 50-50 rule is waived. In short, this legislation cluding children's health care, reproductive percussions of such a patently unfair policy, does not ensure that Medicare's managed choice and medical savings accounts. the majority has modified its legislation in the care beneficiaries will receive the highest qual- I am very concerned about the inclusion of Rules Committee. While I am pleased that the ity of medical care. the Hyde amendment restrictions in the chil- House leadership has conceded that welfare In addition, the bill does not allow graduate dren's health initiative. I believe the inclusion workers ought to be paid at least the minimum medical education [GME] and disproportionate of this anti-choice rider is an inappropriate in- wage, I think that the changes that were made share hospital [DSH] payments to go directly fringement on reproductive rights. to this legislation do not go far enough. Wel- to the institutions that train medical residents I am pleased that the bill includes the $16 fare workers still will not be ensured of ade- and take care of Medicare beneficiaries. In- billion in funding for the children's health care quate protection from sexual harassment, dis- stead, these payments will continue to go to initiative, as outlined by the budget resolution. crimination, or health and safety violations in managed care companies, middlemen who do Making health care affordable and accessible the workplace. Welfare workers also will not not perform these critically important functions, to our country's 10 million uninsured children be assured that they will receive the same but whom many people believe often fail to must remain a core budget priority. Even benefits and working conditions as other work- pass the full GME and DSH payments on to though I believe we should provide States with ers doing the same type of work for the same the hospitals. It is only fair that these pay- much-needed flexibility in implementing the ini- employer. ments go to those institutions that incur the tiative, we must ensure that States use the The House bill would allow States to pri- costs of GME and DSH. The GME and DSH new funds to expand health services for chil- vatize their Medicaid and food stamps eligi- provisions of this bill desperately need to be dren in need. bility processes. I believe that making eligibility changed. Many States have already acted in very ag- determinations is an inherently governmental The bill also includes some unwarranted gressive and innovative ways to expand health function that should not be privatized, and that weakening of our medical malpractice laws. coverage to uninsured kids. Unfortunately, the the privatization of eligibility determinations The malpractice provisions in the legislation formula included in this bill is structured so it could lead to many unfair and inappropriate way weaken the ability of our legal system to penalizes States like Oregon that have already eligibility determinations. deter medical malpractice. taken action to provide health care to more The welfare portion of the House bill also Finally, the bill does not include some im- children. The distribution of funds is unfair and overturns an appeals court ruling mandating portant protections against waste, fraud and it is bad policy. We should be rewarding Or- that States use alternative base periods for abuse in the Medicare program that were of- egon, and other States that have already in- determining unemployment compensation eli- fered by the Democrats on the House Ways vested in creative policies for expanding cov- gibility. By overturning the court's ruling, the and Means Committee when this bill was erage. Instead, the bill rewards inaction and bill denies many low-wage, intermittent work- marked up. It has been estimated that waste, punishes innovation. ers access to unemployment insurance bene- fraud and abuse cost the Medicare program Finally, I must express some deep reserva- fits at the times when they need them most. about $23 billion last year alone. The Repub- tions over the inclusion of a large medical sav- It seems to me that states should use workers' lican majority refused to incorporate several ings account demonstration project for Medi- most recent earnings history to determine eli- provisions that would have helped the Medi- care beneficiaries. I am very concerned about gibility for unemployment compensation bene- care program to avoid rampant waste, fraud the effects MSA's could have on Medicare fits. and abuse. This bill should be changed to in- beneficiaries. In my view, a 500,000-person Finally, the welfare portion of the reconcili- clude those provisions. demonstration project is much too large to test ation bill breaks both the spirit and the letter the impact of MSAs on Medicare. Because of of the budget agreement in its treatment of I am also opposed to several of the Medic- the uncertainties associated with MSA's, any legal immigrants. The budget agreement stipu- aid provisions contained in this legislation. demonstration project must proceed with cau- lated that legal immigrants in the United Specifically, I am very concerned that the level tion. States by August 22, 1996, but who become of disproportionate share hospital payments Today is another step in this important disabled after that date would be eligible. that go to hospitals who treat large numbers of budget process. I support this step, and urge Under the House bill, only legal immigrants the poor will render these facilities unable to my colleagues and the administration to con- who were on the SSI rolls as of August 22, continue providing services to this vulnerable tinue our hard work for budget legislation that 1996 would continue to be eligible for SSI population. will best serve the American people. payments. Further, I am opposed to repeal of the f In addition to the welfare provisions of this Boren amendment, which requires states to legislation, I object to a number of the bill's pay hospitals and nursing homes a reasonable BALANCED BUDGET ACT OF 1997 Medicare provisions as well. The Medicare and adequate rate for treating and taking care portion of the reconciliation legislation includes of Medicaid recipients. It is only fair that health SPEECH OF a provision authorizing a demonstration project care institutions charged with caring for Medic- HON. WILLIAM J. COYNE of 500,000 medical savings account [MSA's]. aid recipients be assured that they receive OF PENNSYLVANIA At a time when we are fighting to preserve the adequate compensation for doing so. I believe that repeal of the Boren amendment could IN THE HOUSE OF REPRESENTATIVES Medicare program, we should not be giving hand-outs to the healthiest and wealthiest have disastrous consequences for many hos- Thursday, June 26, 1997 Medicare beneficiariesÐespecially when these pitals and nursing homes that care for the Mr. COYNE. Mr. Speaker, I rise today in op- hand-outs cost the Medicare program money. poor. position to the portion of the 1997 reconcili- The Medicare portion of the legislation falls Mr. Speaker, these are the main reasons ation bill that we are considering today. I op- short with regard to managed care consumer that I have decided to oppose this legislation. pose this bill because there a number of provi- protection provisions as well. It does not in- I urge my colleagues to work with me to sions contained in it that are so objectionable clude some critically important managed care produce a reconciliation bill that we can all that I cannot support this legislation in its cur- consumer protection provisions, like the ability supportÐone that provides for the neediest, rent form. Let me outline my objections to this of beneficiaries to obtain expedited appeals of most vulnerable members of our society in a bill. denied claims in urgent situations. The bill fiscally responsible fashion Friday, June 27, 1997 Daily Digest

HIGHLIGHTS Senate passed Revenue Reconciliation. Senate Biden Amendment No. 539 (to Amendment No. Chamber Action 537), to provide for the transfer of funds from the Routine Proceedings, pages S6669–S6873 general fund to the Violent Crime Reduction Trust Measures Introduced: Eleven bills and six resolu- Fund. Pages S6670, S6672 tions were introduced, as follows: S. 975–985, S.J. Subsequently, a motion to waive the Congres- Res. 32–34, S. Res. 104 and 105, and S. Con. Res. sional Budget Act with respect to consideration of 35. Pages S6727±28 Amendment No. 537, listed above, was agreed to by unanimous-consent. Page S6673 Measures Reported: Reports were made as follows: By 92 yeas to 8 nays (Vote No. 148), Byrd S. 621, to repeal the Public Utility Holding Com- Amendment No. 572, to extend the number of pany Act of 1935, to enact the Public Utility Hold- hours for debate on a reconciliation bill and make ing Company Act of 1997, with amendments. (S. other improvements. Pages S6680±81 Rept. No. 105–41) Page S6727 Jeffords Modified Amendment No. 522, to pro- Measures Passed: vide for a trust fund for District of Columbia school Revenue Reconciliation: By 80 yeas to 18 nays renovations. Pages S6670, S6681±82 (Vote No. 160), Senate passed H.R. 2014, to provide By 59 yeas to 41 nays (Vote No. 150), Coverdell for reconciliation pursuant to subsections (b) (2) and Amendment No. 574, to allow tax-free expenditures (d) of section 105 of the concurrent resolution on the from an education individual retirement account for budget for fiscal year 1998, after striking all after elementary and secondary school expenses and to ad- the enacting clause and inserting in lieu thereof the just the modifications to the minimum tax. text of S. 949, as amended, and after taking action Pages S6683±84 on further amendments/motions proposed thereto: Kohl Amendment No. 575, to provide a credit against tax for employers who provide child care as- Pages S6670±S6720, S6786, S6792 sistance for dependents of their employees. Adopted: Page S6685 By a unanimous vote of 98 yeas (Vote No. 138). Torricelli/Landrieu Amendment No. 578, to ex- Nickles Modified Amendment No. 551, to provide clude certain severance payment amounts from in- for an increase in deduction for health insurance come and to modify the time periods for carryback costs of self-employed individuals, and to modify and carryforward of unused credits. Pages S6686±87 rules for allocating interest expense to tax-exempt Roth (for Graham) Amendment No. 583, relating interest. Page S6670 to the exception of certain coins, the increase in cer- By 98 yeas to 2 nays (Vote No. 141), Domenici/ tain liability funding limit, and to classify certain Lautenberg Amendment No. 537, to implement the ministers for participation. Pages S6393±96 enforcement provisions of the Bipartisan Budget Roth (for Nickles/Bond) Amendment No. 584, to Agreement, enforce the Balanced Budget Act of express the sense of the Senate with respect to the 1997, extend the Budget Enforcement Act of 1990 proposed regulations of the Internal Revenue Service through fiscal year 2002, and make technical and with respect to self-employment income for limited conforming changes to the Congressional Budget and partners. Pages S6393±96 Impoundment Control Act of 1974 and the Balanced Roth (for Specter) Amendment No. 585, to allow Budget and Emergency Deficit Control Act of 1985. penalty-free IRA withdrawals for adoption expenses. Pages S6670, S6672±73 Pages S6393±96 D693 D694 CONGRESSIONAL RECORD — DAILY DIGEST June 27, 1997 Roth (for Faircloth) Amendment No. 586, to per- During consideration of this measure today, Senate mit the current refunding of certain tax-exempt also took the following action: bonds. Pages S6393±96 By 39 yeas to 60 nays (Vote No. 140), three-fifths Roth (for Gorton) Amendment No. 587, relating of those Senators duly chosen and sworn not having to repeal of bad debt reserve method for thrift sav- voted in the affirmative, Senate rejected a motion to ings associations. Pages S6393±96 waive the Congressional Budget Act with respect to Roth (for Santorum) Amendment No. 588, to ex- consideration of Kerry Amendment No. 554, to press the sense of the Senate that America’s middle- allow payroll taxes to be included in the calculation class taxpayers shoulder the biggest tax burden and of tax liability for receiving the children’s tax credit. that only those who pay Federal income taxes should Subsequently, a point of order that the amendment benefit from the federal income tax cuts contained in was in violation of section 302(b) of the Congres- the Revenue Reconciliation Act of 1997. sional Budget Act was sustained, and the amend- Pages S6393±96 ment thus fell. Pages S6670±72 Roth (for Burns) Amendment No. 589, to allow By 37 yeas to 63 nays (Vote No. 142), three-fifths farmers to income average over 3 years. of those Senators duly chosen and sworn not having Pages S6393±96 voted in the affirmative, Senate rejected a motion to Roth (for Enzi) Amendment No. 591, to allow waive the Congressional Budget Act with respect to non-Amtrak states to provide alternative intercity consideration of Gramm Amendment No. 566, to transport assistance. Pages S6696±97 guarantee a balanced Federal budget and expand tax Wellstone Amendment No. 592, to provide for relief options. Subsequently, a point of order that the full mental health parity with respect to health plans amendment was in violation of section 313(b)(1)(A) purchased through the use of amounts provided of the Congressional Budget Act was sustained, and under a block grant to States. the amendment thus fell. Pages S6673±74 Rejected: By 48 yeas to 52 nays (Vote No. 143), three-fifths By 46 yeas to 54 nays (Vote No. 139), Gramm of those Senators duly chosen and sworn not having Amendment No. 552, to allow families to decide for voted in the affirmative, Senate rejected a motion to themselves how best to use their child tax credit. waive the Congressional Budget Act with respect to Pages S6670±71 consideration of Bumpers Amendment No. 568, to By 33 yeas to 67 nays (Vote No. 151), Bingaman prohibit the scoring, for budget purposes, of reve- Amendment No. 541, to strike provisions establish- nues associated with the sale of certain federal lands. ing IRA Plus Accounts. Page S6684 Subsequently, a point of order that the amendment Moseley-Braun Amendment No. 581, to provide for a tax credit for public elementary and secondary was in violation of the Congressional Budget Act was sustained, and the amendment thus fell. school construction. Pages S6688±89 By 30 yeas to 69 nays (Vote No. 155), McCain Pages S6674±75 Amendment No. 548, to strike the provision relat- By 42 yeas to 58 nays (Vote No. 144), three-fifths ing to the extension and modification of subsidies of those Senators duly chosen and sworn not having for alcohol fuels. Pages S6689±90 voted in the affirmative, Senate rejected a motion to By 41 yeas to 57 nays (Vote No. 159), Allard waive the Congressional Budget Act with respect to Amendment No. 577, to provide for the indexing of consideration of Craig Amendment No. 569, to assets to determine capital gain. Page S6696 modify the pay-as-you-go requirement of the budget Wellstone Amendment No. 590, to make the process to prohibit the use of tax increases to pay for HOPE credit refundable. Page S6696 mandatory spending increases. Subsequently, a point Withdrawn: of order that the amendment was in violation of sec- Dorgan Amendment No. 515, to authorize the tion 313(b)(1)(A) of the Congressional Budget Act Secretary of the Treasury to abate the accrual of in- was sustained, and the amendment thus fell. terest on income tax underpayments by taxpayers lo- Pages S6675±76 cated in Presidentially declared disaster areas if the By 57 yeas to 43 nays (Vote No. 145), three-fifths Secretary extends the time for filing returns and pay- of those Senators duly chosen and sworn not having ment of tax (and waives any penalties relating to the voted in the affirmative, Senate rejected a motion to failure to so file or so pay) for such taxpayers. waive the Congressional Budget Act with respect to Pages S6670, S6684±85 consideration of Brownback/Kohl Amendment No. Dorgan Amendment No. 516, to provide tax re- 570, to establish procedures to ensure a balanced lief for taxpayers located in Presidentially declared Federal budget by fiscal year 2002. Subsequently, a disaster areas. Pages S6670, S6684±85 point of order that the amendment was in violation June 27, 1997 CONGRESSIONAL RECORD — DAILY DIGEST D695 of section 313(b)(1)(A) of the Congressional Budget Budget Act was sustained, and the amendment thus Act was sustained, and the amendment thus fell. fell. Pages S6685±86 Pages S6676±77 By 51 yeas to 48 nays (Vote No. 154), three-fifths By 59 yeas to 41 nays (Vote No. 146) three-fifths of those Senators duly chosen and sworn not having of those Senators duly chosen and sworn not having voted in the affirmative, Senate rejected a motion to voted in the affirmative, Senate rejected a motion to waive the Congressional Budget Act with respect to waive the Congressional Budget Act with respect to consideration of Harkin Amendment No. 579, to consideration of Frist Amendment No. 571, to es- improve health care quality and reduce health care tablish a 60 vote point of order against any legisla- costs by establishing a National Fund for Health Re- tion that increases the budget deficit after the year search that would significantly expand the nation’s 2002 and to require the President to submit bal- investment in medical research. Subsequently, a anced budgets. Subsequently, a point of order that point of order that the amendment was in violation the amendment was in violation of section of the Congressional Budget Act was sustained, and 313(b)(1)(A) of the Congressional Budget Act was the amendment thus fell. Pages S6687±88 sustained, and the amendment thus fell. By 39 yeas to 59 nays (Vote No. 156), three-fifths Pages S6677±78 of those Senators duly chosen and sworn not having By 53 yeas to 47 nays (Vote No. 147), three-fifths voted in the affirmative, Senate rejected a motion to of those Senators duly chosen and sworn not having waive the Congressional Budget Act with respect to voted in the affirmative, Senate rejected a motion to consideration of Landrieu Amendment No. 532, to waive the Congressional Budget Act with respect to allow taxpayers with income tax liability to take the consideration of Abraham Amendment No. 538, to child tax credit before the earned income tax credit. ensure that future revenue windfalls to the federal Subsequently, a point of order that the amendment Treasury are reserved for tax or deficit reduction. was in violation of section 302(f) of the Congres- Subsequently, a point of order that the amendment sional Budget Act was sustained, and the amend- was in violation of the Congressional Budget Act ment thus fell. Pages S6690±91 was sustained, and the amendment thus fell. By 77 yeas to 21 nays (Vote No. 157), three-fifths Pages S6678±80 of those Senators duly chosen and sworn having By 30 yeas to 70 nays (Vote No. 149), three-fifths voted in the affirmative, Senate agreed to a motion of those Senators duly chosen and sworn not having to waive the Congressional Budget Act with respect voted in the affirmative, Senate rejected a motion to to consideration of section 702(d) of the bill, regard- waive the Congressional Budget Act with respect to ing intercity passenger rail funding. Pages S6691±93 consideration of Kennedy/Daschle Amendment No. By 37 yeas to 61 nays (Vote No. 158), three-fifths 573, to increase the excise tax on cigarettes by 43 of those Senators duly chosen and sworn not having cents per pack and increase the tax on other tobacco voted in the affirmative, Senate rejected a motion to products by a proportionate amount, and direct waive the Congressional Budget Act with respect to $12,000,000,000 of the resulting revenues be ap- consideration of Feingold/Bumpers Amendment No. plied to the children’s health initiative. Subse- 582, to eliminate the percentage depletion allowance quently, a point of order that the amendment was for certain minerals. Subsequently, a point of order in violation section 302(f) of the Congressional that the amendment was in violation of section Budget Act was sustained, and the amendment thus 305(b)(2) of the Congressional Budget Act was sus- fell. Pages S6682±83 tained, and the amendment thus fell. Page S6693 By 72 yeas to 28 nays (Vote No. 152), three-fifths Senate insisted on its amendment, requested a of those Senators duly chosen and sworn having conference with the House thereon, and the Chair voted in the affirmative, Senate agreed to a motion appointed the following conferees: from the Commit- to waive the Congressional Budget Act with respect tee on Finance: Senators Roth, Lott, and Moynihan; to consideration of Kohl Amendment No. 575, list- and from the Committee on the Budget: Senators ed above. Page S6685 Domenici, Grassley, Nickles, Lautenberg, and By 57 yeas to 42 nays (Vote No. 153), three-fifths Conrad. Page S6786 of those Senators duly chosen and sworn not having Subsequently, S. 946 was returned to the Senate voted in the affirmative, Senate rejected a motion to calendar. Page S6792 waive the Congressional Budget Act with respect to Law Enforcement Canines Donation: Senate consideration of Jeffords Amendment No. 555, to passed H.R. 173, to amend the Federal Property and encourage improvements in child care services and Administrative Services Act of 1949 to authorize do- options for meeting employment-related child care nation of Federal law enforcement canines that are needs. Subsequently, a point of order that the no longer needed for official purposes to individuals amendment was in violation of the Congressional with experience handling canines in the performance D696 CONGRESSIONAL RECORD — DAILY DIGEST June 27, 1997 of law enforcement duties, clearing the measure for sources—Senators Murkowski, Craig, and Bumpers; the President. Page S6788 from the Committee on Finance—Senators Roth, Energy Conservation Extension: Senate passed S. Lott, and Moynihan; from the Committee on Gov- 417, to extend energy conservation programs under ernmental Affairs—Senators Thompson, Collins, and the Energy Policy and Conservation Act through Glenn; from the Committee on Labor and Human September 30, 2002, after agreeing to a committee Resources—Senators Jeffords, Coats, and Kennedy; amendment in the nature of a substitute. and from the Committee on Veterans’ Affairs—Sen- Pages S6788±90 ators Specter, Thurmond, and Rockefeller. Pages S6786±87 DOE Standardization Act: Senate passed H.R. 649, to amend sections of the Department of Energy Committee Authority: All committees were author- Organization Act that are obsolete or inconsistent ized to file executive and legislative reports during with other statutes and to repeal a related section of the adjournment of the Senate on Tuesday, July 1, the Federal Energy Administration Act of 1974, 1997, from 10 a.m. until 2 p.m. Page S6790 clearing the measure for the President. Page S6790 Appointments: Hong Kong Transition: Senate agreed to S. Res. Advisory Committee on the Records of Congress: 105, expressing the sense of the Senate that the peo- The Chair announced, on behalf of the Secretary of ple of the United States wish the people of Hong the Senate, pursuant to Public Law 101–509, his ap- Kong good fortune as they embark on their historic pointment of James F. Blumstein, of Tennessee, to transition of sovereignty from Great Britain to the the Advisory Committee on the Records of Congress. People’s Republic of China. Page S6790 Page S6724 DOD Authorization—Cloture Motion Filed: A Nominations Confirmed: Senate confirmed the fol- motion was entered to close further debate on S. lowing nominations: 936, to authorize appropriations for fiscal year 1998 Richard J. Tarplin, of New York, to be an Assist- for military activities of the Department of Defense, ant Secretary of Health and Human Services. for military construction, and for defense activities of Alan S. Gold, of Florida, to be United States Dis- the Department of Energy, and to prescribe person- trict Judge for the Southern District of Florida. nel strengths for such fiscal year for the Armed Kathryn O’Leary Higgins, of South Dakota, to be Forces and, by unanimous-consent agreement, a vote Deputy Secretary of Labor. on the cloture motion will occur on Tuesday, July 1 Air Force nomination in the rank of general. 8, 1997, at 2:15 p.m. Page S6786 60 Army nominations in the rank of general. Budget Reconciliation—Conferees: Senate insisted 2 Marine Corps nominations in the rank of gen- on its amendment to H.R. 2015, to provide for rec- eral. onciliation pursuant to subsections (b)(1) and (c) of 25 Navy nominations in the rank of admiral. section 105 of the concurrent resolution on the Routine lists in the Air Force, Army, Coast budget for fiscal year 1998, requested a conference Guard, Marine Corps, Navy. Pages S6787±88 with the House thereon, and the Chair appointed the Nominations Received: Senate received the follow- following conferees: from the Committee on the ing nominations: Budget—Senators Domenici, Grassley, Nickles, James S. Ware, of California, to be United States Gramm, Lautenberg, Conrad, and Boxer; from the Circuit Judge for the Ninth Circuit. Committee on Agriculture, Nutrition and Forestry— Nancy-Ann Minn Deparle, of Tennessee, to be Senators Lugar, Helms, and Harkin; from the Com- Administrator of the Health Care Financing Admin- mittee on Banking, Housing, and Urban Affairs— istration. Senators D’Amato, Shelby, and Sarbanes; from the David A. Lipton, of Massachusetts, to be an Committee on Commerce, Science, and Transpor- Under Secretary of the Treasury. tation—Senators McCain, Stevens, and Hollings; Routine lists in the Army, Marine Corps. from the Committee on Energy and Natural Re- Pages S6792±93 June 27, 1997 CONGRESSIONAL RECORD — DAILY DIGEST D697

Communications: Pages S6726±27 Adjournment: Senate convened at 9 a.m. and, pur- Petitions: Page S6727 suant to H. Con. Res. 108, adjourned at 6:56 p.m., until 12 noon, on Monday, July 7, 1997. Statements on Introduced Bills: Pages S6728±61 Additional Cosponsors: Pages S6761±62 Committee Meetings Amendments Submitted: Pages S6763±77 Notices of Hearings: Page S6777 (Committees not listed did not meet) Authority for Committees: Page S6777 BUSINESS MEETING Additional Statements: Pages S6777±86 Committee on Governmental Affairs: Committee met to Record Votes: Twenty-three record votes were discuss matters with regard to the committee’s spe- taken today. (Total—160) cial investigation on campaign financing. Pages S6670±81, S6683±86, S6688, S6690±93, S6696, S6719 Committee recessed subject to call. h House of Representatives Chamber Action Committee Meetings The House was not in session today. Pursuant to No committee meetings were held. the provisions of H. Con. Res. 108, the House stands adjourned until 12:30 p.m. on Tuesday, July 8. D698 CONGRESSIONAL RECORD — DAILY DIGEST June 27, 1997

Next Meeting of the SENATE Next Meeting of the HOUSE OF REPRESENTATIVES 12 noon, Monday, July 7 12:30 p.m., Tuesday, July 8

Senate Chamber House Chamber Program for Monday: Senate will resume consideration Program for Tuesday: To be announced. of S. 936, DOD Authorizations.

Extensions of Remarks, as inserted in this issue

HOUSE Hilliard, Earl F., Ala., E1344 Menendez, Robert, N.J., E1346 Hooley, Darlene, Ore., E1360 Mink, Patsy T., Hawaii, E1349 Aderholt, Robert B., Ala., E1346 Hostettler, John N., Ind., E1347 Moakley, John Joseph, Mass., E1345 Barcia, James A., Mich., E1337, E1340 Johnson, Eddie Bernice, Tex., E1345 Nethercutt, George R., Jr., Wash., E1342, E1351 Barr, Bob, Ga., E1347 Kelly, Sue W., N.Y., E1354 Ney, Robert W., Ohio, E1354 Barrett, Thomas M., Wisc., E1339 Kildee, Dale E., Mich., E1342 Pelosi, Nancy, Calif., E1346 Brown, George E., Jr., Calif., E1349 Kilpatrick, Carolyn C., Mich., E1338 Poshard, Glenn, Ill., E1354 Coble, Howard, N.C., E1348 Kucinich, Dennis J., Ohio, E1339, E1341, E1342, E1343, Schaffer, Bob, Colo., E1341, E1352 Coyne, William J., Pa., E1361 E1345, E1352 Schumer, Charles E., N.Y., E1349 Crane, Philip M., Ill., E1341 Lantos, Tom, Calif., E1344 Scott, Robert C., Va., E1354 Davis, Thomas M., Va., E1340 Largent, Steve, Okla., E1341 Skelton, Ike, Mo., E1343 Delahunt, William D., Mass., E1350 Lazio, Rick, N.Y., E1348 Smith, Robert, Ore., E1348 DeLauro, Rosa L., Conn., E1345 Leach, James A., Iowa, E1355 Stark, Fortney Pete, Calif., E1352 Engel, Eliot L., N.Y., E1350 Lewis, Jerry, Calif., E1348 Stearns, Cliff, Fla., E1347 Fowler, Tillie K., Fla., E1355 Lipinski, William O., Ill., E1339 Stupak, Bart, Mich., E1340 Frost, Martin, Tex., E1345 Lofgren, Zoe, Calif., E1347 Torres, Esteban Edward, Calif., E1343 Goodlatte, Bob, Va., E1342 Lowey, Nita M., N.Y., E1349 Towns, Edolphus, N.Y., E1341, E1343 Hamilton, Lee H., Ind., E1337 McCarthy, Carolyn, N.Y., E1339 Visclosky, Peter J., Ind., E1350 Hastert, J. Dennis, Ill., E1342 Manzullo, Donald A., Ill., E1338 Watts, J.C., Jr., Okla., E1358

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