Lamar Alexander

Mr. ALEXANDER

Mr. ALEXANDER. I will conclude my remarks with a little bit of history. If you sense, in my voice, a heavy amount of disappointment, it is because this goes back a long ways. In 1983, when I was Governor of Tennessee, I proposed what then was the first statewide program to pay teachers more for teaching well. We called it the Master Teacher Program. I was astonished, after a term as Governor, to discover that not one State was paying one teacher one penny more for teaching well. I could not understand how we were going to keep outstanding men and women in the classrooms, particularly--this was 25 years ago, almost--now that women had many more employment opportunities. The math teacher was headed for IBM, the science teacher was going over here. One reason was because of the teacher pay scale. You could make more for staying around a long time, you could make more for getting another degree, but you couldn't make a penny more for being good. I went around to try to find out how do we reward outstanding teaching, and everybody said you can't do that. Not quite everybody. One person who did not say that was Albert Shanker, who was the head of the American Federation of Teachers, which is the second largest teachers union. Mr. Shanker said if we have master plumbers we can have master teachers, and maybe we need to get busy trying to think of a fair way to do that. He invited me to go to Los Angeles and speak to the convention of the American Federation of Teachers. They were very skeptical--which I understand, because professionals who are already working in their profession have a right to be skeptical of outsiders who would come in and say we are going to grade you. Even though these teachers are in the business of grading themselves. I spoke to the American Federation of Teachers. I worked with Mr. Shanker. I even raised taxes in Tennessee. Guess who was against doing what we eventually did? The National Education Association. Their President said we are going to send whatever we need into Tennessee to defeat Alexander's silly ideas, and we fought for a year and a half and finally I won, temporarily, and Tennessee established a career ladder program which eventually attracted 10,000 teachers with 10- or 11-month contracts who volunteered to go up the career ladder to a second or third level. They were called master teachers. We raised the pay for every teacher by $1,000, just if they took the basic teacher competency test. That was voluntary, too, but more than 90 percent did it. And 10,000 teachers did. That was quite a number. This was sort of the model T of the teacher compensation plans. Since then, a lot has happened across the country. Governor Jim Hunt and others, with the support of the teachers unions, have developed the National Board of Professional Teaching Standards Certified Teacher Program, which is one way of certifying a biology teacher in the same way you would certify an orthopedic doctor. This is helpful if you are on the school board in Providence, you can say: I don't have the means to evaluate if this teacher is better than that teacher, but if you are a board certified teacher we will pay you $10,000 more a year. That has worked pretty well. Some places around the country have found ways to do that, but it is not possible for a school board in the town to take on the whole mixture of difficulties that go with a fair way to reward teachers. We did it in 1983 and 1984, and we had to create a panel of teachers who were outside the district of the teacher who wanted to be a master teacher to avoid politics. We made sure one of those teachers was of that same subject. If it was an eighth grade U.S. history teacher, then somebody on the panel was an eighth grade U.S. history teacher. Principal evaluations were part of it and a teacher portfolio was part of it. One thing we did not know how to do then and we are just beginning to understand in our country is how to measure student achievement. Our common sense says a teacher makes a big difference, but how do we measure it? The challenge, as we work on schools that need help, is how do we make sure they have the best teachers and the best school leaders? It is a big challenge, but it is not impossible. We are learning, after 4 years of No Child Left Behind, that 80 percent of our schools I would call high-achieving schools are meeting all the adequate yearly progress requirements for No Child Left Behind. That means we have about 20 percent of our schools that aren't. In 5 percent of the schools, they are only behind in one category. So it is only 15 percent of the schools where children are chronically not learning and being left behind. The ugly fact was, before No Child Left Behind, we let that happen. Now we put the spotlight on it, and we have to do something about it. The best way to do something about it is what? Get a terrific school leader and help him or her be a good principal, move in some tremendous teachers or reward those who are there and keep them teaching. And the National Education Association says kill the program that is the most important Federal program to do that? I don't understand that; I don't understand. I say to my colleagues in the Senate of both parties, I hope this approach will have unanimous opposition in the Senate. I hope we say we want to reward efforts in Memphis, in New Mexico, DC, Chicago, Denver, Dallas, Houston, Philadelphia, Chattanooga, where they tackle the problem. No, we are not talking about a one-time bonus pay for people, or teacher of the year, who the principal might like. We are talking about a more professional system where we can say talented men and women who are teachers, we like to honor you. We want to work with you in your district to form a way to honor you and raise your pay. There is one reason I regret having to make this speech, I had a wonderful visit the other day. It came from six or seven members of the Tennessee Education Association. Earl Wiman, Guy Stanley, Paula Brown, Nita Jones, and Kristen Allen came to my office. We visited for a while. I am about to write a handwritten note to Earl Wiman to say how much I appreciated the visit. He was a career ladder teacher, making $75,000 extra dollars over his tenure. He said ``I want to thank you for that.'' We acknowledged there were problems with the master teacher program we had in Tennessee as there always are when you start up something new. It was a terrific visit from people I greatly respect. It reminded me, wherever I go in Tennessee, retired teachers or current teachers come up to me and say, thank you for the master teacher program. It paid for my child's education. It honored my work. It raised my retirement pay. It kept me teaching. You would be surprised how many times this happened, so I know this can be done. But it cannot be done if the largest educational association in America sends out letters such as this threatening Senators with, in effect, writing every teacher in their district, and saying you are a bad Senator because you voted against the NEA legislative report card. I would give them an F on a letter for another reason. They said that the Teacher Incentive Fund restricts the use of funds to only two possible uses: merit pay and tenure reform. That is not true, at least not according to the Department of Education. We called over there today. This is what they told me: The Department of Education says the words ``tenure'' or ``merit pay'' do not even appear in the application forms. The specific goals of the teacher incentive fund include: one, improving student achievement by increasing teacher and principal effectiveness; two, reforming teacher and principal compensation systems so that teachers and principals are rewarded for increases in student achievement; three, increasing the number of effective teachers teaching minority, poor, and disadvantaged students in hard-to-staff subjects; and finally, creating sustainable, performance-based compensation systems. Applicants must outline how they will utilize classroom evaluations that are conducted multiple times throughout the school year and provide incentives for educators to take on additional responsibilities and easy leadership roles. The Department also gives extra points to applications that demonstrate they have support from a significant proportion of teachers, the principal, and community. As I mentioned, in Philadelphia or Denver, that means the teachers' union. I know in this joint funding resolution it looks as though we are not going to have a chance to amend that. That is why I voted against cloture. I understand that. Both sides of our aisle did not get our work done so we have had to clean it up too quickly this year. The Teacher Incentive Fund took a big hit. I say earnestly to my colleagues in the Senate, I hope Senators will look at the Teacher Incentive Fund carefully. I hope you will think about what your ideas are for improving schools with low-performing students. I hope you will ask yourself whether what they are doing in Chicago, for example, to move in a new principal and to move in a team of teachers and to train them more and to pay them more might not be one way to do it. If Denver wants to do it this way, and Dallas wants to do it that way, and Philadelphia wants to do it that way, and Mayor Corker helped Chattanooga do it, why shouldn't we help them? We don't want the Federal Government to take over the local schools, but clearly one of the appropriate things for the Federal Government to do in support of elementary and secondary education and high school education is to help solve this tough problem of how do we fairly and effectively reward outstanding teaching and outstanding school leadership. If we don't do this in our current system, we are not going to be able to keep the best men and women in our classrooms, especially in the most difficult classrooms, which is where our spotlight is going. We know that 80 percent of our schools in America are high-achieving schools, they are making the advanced yearly progress under No Child Left Behind. Five percent more are just missing it, and in the 15 percent, don't we want to ignore this letter from the National Education Association? I will answer their letter from here. I am not going to vote against the Alexander amendment. I hope they will write me often. I hope it is not this kind of letter again. I say to my friends from Tennessee who were good enough to travel all the way up here and visit with me, I am going to work a little harder in communicating with them. I know there will be issues upon which we disagree--the Tennessee Education Association and I have proved in the past we can disagree. What I want to prove to them in the future is there are lots of ways we can agree. I know they are dedicated professionals, they are working hard every day under difficult circumstances--many with children whose parents don't feed them well, don't teach them before they come to school, and don't take care of them in the afternoon. I want to be sensitive to that. In my remarks today I want to send a clear message to the National Education Association: I am disappointed in their letter, I am disappointed in their attitude. I hope the Senate rejects their attitude. But I want to be as clear to my friends in the Tennessee Education Association that I greatly appreciate their visit. I look forward to redoubling my efforts to work with them. I look forward to talking with them over time about support. I encourage their ways to honor their professionals, including development of a compensation program that rewards outstanding teaching and schools. I ask unanimous consent the letter from the National Education Association be printed in the Record.

Mr. ALEXANDER

Mr. ALEXANDER. Mr. President, later this afternoon, several of us will be introducing legislation to reauthorize Head Start. Senator Kennedy, Senator Enzi, Senator Dodd, and myself will be the cosponsors of the legislation. We have been working on it for a long time, all through the last Congress. We have heard from lots of parents, children, and Head Start operators. I wish to talk about that. The Head Start program is an enormously popular and successful Federal initiative. It began in the 1960s when Lyndon Johnson was President of the United States. In fact, I have always thought it was a part of the story of the American dream that President Johnson went back to Cotulla, TX, near the Mexican border, where he taught first grade, to announce the Head Start program. It exemplifies one of the great principles of what it means to be an American--that we believe in equal opportunity. For that President of the United States to go back to where he was a first grade teacher reminds us that other children could succeed, as he did, in becoming President. Today, Head Start has grown to a nearly $7 billion Federal program. That amount was spent last year. It served 900,000 children. In my State of Tennessee, 20,000 students or so were served. The funding was $118 million for Tennessee. This is a program that touches a lot of people. It deserves the Senate's attention, and it has had the Senate's attention. During the last Congress, I made clear, as did several other Senators, that we want to see Head Start serve more children. But first, we wanted to make sure the program is accountable, financially solvent, and meeting the purpose for which it was formed. President Bush, in his message to Congress, said much the same thing 2 years ago. ``Great program,'' he said. ``But let's make it more accountable. Let's recognize that now we expect children to learn more and be able to do more before they arrive at school.'' The President said we want to get the States more involved, which was a good suggestion because when Head Start was founded, it was almost the only program to help preschool children. Today, while it is a large $7 billion program, there are $21 billion more in Federal dollars being spent to help preschool children in one way or the other, and there are a great many State and local programs that are Head Start or preschool programs. The President's objective, as was ours, was to find a way to make all of these programs work well together. We listened carefully and I believe, as Senators Kennedy, Enzi, and Dodd believe, we have made significant improvements to the bill. For example, the bill will establish 200 new Centers of Excellence that will serve as model Head Start programs across the country. The Governors will be involved in this. Hopefully, we can learn over the next 5 years from the States how, from these models, we can put together State efforts, local efforts, Federal efforts, and Federal Head Start efforts in a more efficient way to help children who are of preschool age. Second, our legislation requires grant recipients to recompete for new grants every 5 years to help ensure a constant high level of quality. Third, we clearly define what we mean by deficiency. We don't aim to catch people doing things wrong; we would rather catch them doing things right. When there are things that are wrong, the Head Start providers deserve to know what the standards are so they can make sure they meet them. Fourth, this legislation provides clear authority to the governing boards to administer, and be held accountable for, local Head Start programs while ensuring that policy councils on which parents sit continue to play a crucial and important role. Finally, as I mentioned earlier, this legislation continues to encourage State standards especially that cause there to be more cognitive learning, more emphasis on what children should be able to know and be able to do before they get to first grade--make sure they are ready to learn. Americans uniquely believe that each of us has the right to begin at the same starting line and that, if we do, anything is possible for any one of us. We also understand that some of us need help getting to that starting line. Most Federal funding for social programs is based upon an understanding of equal opportunity in that way. Again, Head Start began in 1965 to make it more likely that disadvantaged children would successfully arrive at one of the most important of our starting lines--the beginning of school. Head Start, over the years, has served hundreds of thousands of our most at-risk children. The program has grown and changed, been subjected to debate; but it has stood the test of time because it is very important. We have made a lot of progress. Only a few professionals had studied early childhood education when it began. Even fewer had designed programs specifically for children in poverty with the many challenges. The origins of Head Start come from an understanding that success for these children wasn't only about their education. The program was designed to be certain that these children were healthy, got their immunizations, were fed hot meals and of crucial importance--that their parents were deeply involved in the program. From the beginning, comprehensive services, including medical, dental, and nutritional services--and parent and community involvement were a part of Head Start programs, and that is still true today. In the early days, teacher training and curriculum were seen as less important. Now we know a lot more about brain development and how children learn from birth, and we understand that even for these very young children, teacher training and curriculum are very important. Today, young children are expected to learn more and be able to do more in order to succeed in school. Many public schools now offer kindergarten. When this program started, Tennessee didn't have a public school kindergarten program. Now 40 States offer early childhood programs. As Congress prepares to reauthorize Head Start, it is important that we recognize the program's importance and work to make it stronger. But we need to recognize also that today it is not fulfilling its promise as well as we would like. It is not meeting the purpose of serving our children who are most at risk as well as we would hope. I am not satisfied with the current practices, which fall short of the standards the taxpayers should expect, and that is why there are some changes in the bill. We address this issue, first, by holding up successful local programs as models so others may follow their example, and by clarifying lines of accountability so any corrupt practices may be rooted out. The bill creates ways for States to help strengthen and coordinate Head Start, but would continue to send Federal funds directly to the nearly 1,700 grantees that provide services in over 29,000 Head Start centers that serve just over 900,000 disadvantaged children. Let me talk about the Centers of Excellence first, because this is one of the most hotly debated parts of the bill--or it was. I think it is pretty well accepted now. The bill authorizes the Secretary of Health and Human Services to create a nationwide network of 200 Centers of Excellence in early childhood built around exemplary Head Start programs. These Centers of Excellence would be nominated by the Governors. Each Center of Excellence would receive a Federal bonus grant of at least $200,000 in each of 5 years, in addition to base funding. The Centers' bonus grants could be used for some of the following: One, to work in their community to demonstrate the best of what Head Start can do for at-risk children and families, including getting the children ready for school and ready for academic success. Two, it can coordinate all early childhood services in the community. As I mentioned earlier, we are spending $21 billion in Federal dollars for these children. Many States and local governments are spending money. We need to spend it together. Three, we can offer training and support to all professionals working with at-risk children. Next, we can track Head Start families and ensure that their services are provided seamlessly to children, from prenatal to age 8. Next, they can be models of excellence held accountable for helping our most disadvantaged children. Finally, to have the flexibility to serve additional Head Start, or early Head Start children, or provide more full-day services to better meet the needs of working parents. Head Start centers are uneven in performance, but usually they excel in two areas critical to success for caring and educating children: No. 1, developing community support and, No. 2, encouraging parental involvement. Alex Haley, one of my closest friends, and the author of ``Roots,'' lived by these words: Find the good and praise it. For me, that was an invaluable lesson. My hope is these Centers of Excellence will find the good and praise what is best about Head Start and show it to the rest of us. It also helps to get the Governors involved. The President had suggested that we turn more of the funding over directly to the States. I and others are not willing to do that, at least at this stage. One of the beauties of Head Start is that it is very decentralized and for a long time it has worked well that way. So our compromise was that the Centers of Excellence, which will get the Governors involved, will help coordinate the programs more effectively and maybe we can learn something over the next 5 years that we can put then in the next reauthorization of Head Start. Also, this bill goes a long way to help make the spending of that $7 billion of taxpayers' money more accountable. First, it requires recipients to recompete for grants every 5 years. This ensures that after 5 years, each program is still meeting its standards. I recognize there are concerns about this recompete requirement. Some people say we need continuity and it will create anxiety among children, among teachers if they are afraid they may lose their right to continue serving after 5 years. Many Head Start grant recipients are doing a very good job, and rather than causing a disruption every 5 years, I hope this recompete process will highlight their success. To help streamline the process for successful programs, grant recipients that are neither deficient nor have been found to have an area of noncompliance left unresolved for more than 120 days will receive a priority designation during the recompetition process. Second, the bill defines what makes a local program deficient. Right now, the deficiency standard is very general and inconsistent across the Nation. But if an action threatens the health, safety, or civil rights of children and staff, denies the parents the exercise of their full roles and responsibilities, misuses funds, loses its legal status or financial viability, or violates other standards specified in the bill, those are the more specific standards that are now a part of the bill. It will help make it possible for grantees to have a clearer idea of what they are expected to do. Finally, the bill makes clear that the governing board shall be the body that is charged with running local programs and which will be held accountable for those programs. This may seem like a little bit of inside baseball, but it is actually not. It goes straight to the heart of several of the problems we have had in some Head Start grantees around the country. Perhaps the most effective witness I heard in any of our hearings was the mayor of Shelby County, TN--that is around Memphis--A.C. Wharton. A.C. Wharton testified, as did other witnesses, that the dual governance structure between the governing board and the policy council was inadequate and neither body had adequate decisionmaking authority. Here is what he told the committee: What we're faced with is not merely a benign situation in which an errant agency through no bad intent runs afoul of the guidelines. In many instances the wrongdoings and shortfalls are calculated to bring about the political empowerment or financial enrichment of those who profit from the wrongdoing. I believe we fix that problem based on the advice we received from Mayor Wharton and other witnesses. This bill gives governing boards direct authority and holds them accountable. That is an important element of the bill, and I think it is a necessary step. But Mayor Wharton and others reminded us that we need to be careful about how we handle this issue. Mayor Wharton said the governing body should not ``be allowed to ride roughshod over the dignity that should be accorded all participants in Head Start programs whether they are grantees, policy councils, policy committees, or certainly children and parents.'' I appreciate the mayor's concern, and I appreciate that note of caution. I thank him for his straightforward testimony. Perhaps he will know that long trip from Memphis to Washington was not in vain because his concerns are right in the middle of the bill that we will introduce later today. We all understand the importance of parental involvement and parental responsibility over the operation of the Head Start Program. We want to preserve that parental responsibility, but we also want to make sure we preserve fiscal accountability of the program at the same time, and we believe we have done that. We have crafted a careful balance. We give the governing board fiscal and legal responsibility, while ensuring policy councils on which parents sit continue to play an important role in the running and operation of local Head Start Programs within the framework the governing board sets. It is a fair compromise and one that will strengthen the program. I learned about the importance of preschool education in a very personal way. When I was growing up in Maryville, TN, at the edge of the Great Smokey Mountains, my mother operated the only preschool education program in our town--well, there may have been one other. I think Mrs. Pesterfield also had one. But she operated this program in a converted garage in our backyard. She had 25 3- and 4-year-olds in the morning and 25 5-year-olds in the afternoon. I think she charged $25 a month for this care for these children. This was before Head Start. This was before we understood very much about preschool education and the early development of the brain. But parents instinctively knew that was a good place for their children. When Alcoa moved executives to our little town, they usually would find a way to get their children into Mrs. Alexander's nursery school and kindergarten before they looked for a home because those parents knew then that preschool education was important to their children's success. We all understand that for all of our children. We understand that the earlier this starts--at home first--and then with all the extra help we can give that home, these children will be ready to get to the starting point. I am the only U.S. Secretary of Education, I think, Mr. President, who spent 5 years in kindergarten. The reason I did was that my mother had no other place to put me than the kindergarten she operated in our backyard. Looking back, there probably wasn't a better place for me to have been than that 5 years of intensive preschool education. It is something we should hope for virtually every child growing up in this country. We believe anything is possible. We believe in free enterprise, we believe in competition, and we believe in the starting line. But there is no Federal program that exists that does a better job of helping disadvantaged children get to the starting line than Head Start. I congratulate Senator Kennedy, Senator Enzi, and Senator Dodd, and the other Senators who have worked on this legislation. We look forward to introducing the legislation this afternoon. I thank all those who have taken time to come to the hearings, and I especially thank the mayor of Shelby County, Mayor Wharton, for his testimony because it has made its way directly into the legislation to help make sure Head Start not only helps children but that there is accountability to the taxpayers. Mr. President, I yield the floor, and I suggest the absence of a quorum.

Mr. ALEXANDER

Mr. ALEXANDER. Mr. President, I ask unanimous consent to speak for up to 15 minutes in morning business.

Mr. ALEXANDER

Mr. ALEXANDER. Mr. President, I ask unanimous consent to speak as in morning business.

Mr. ALEXANDER

Mr. ALEXANDER. Mr. President, I wish to speak about a casualty of the budget process. It is a very disheartening development, and I hope it is an oversight, not the first symbol of the new Democratic Congress's education agenda because I don't think it should be, and I cannot believe that it would be. I don't believe that the Senator from Massachusetts, the Senator from Iowa, the Senator from Rhode Island, and others who care about education would agree that killing the Teacher Incentive Fund should be held up and said here is the way the Democrats plan to approach education. But, in fact, that is what came over from the House of Representatives. What they did was kill a Federal program, passed in a bipartisan way in No Child Left Behind called the Teacher Incentive Fund. They reduced the Teacher Incentive Fund from $100 million a year to $200,000 in this current year. What does the program do? It helps reward outstanding teachers and principals of children who attend low-income, poor-performing schools. That is what it does. This cut threatens a crucial effort to improve the Memphis schools and also other schools all across our country in 16 major cities and States. It is a disheartening development and one I hope will change. The loudest criticism I hear of the No Child Left Behind bill is it is not properly funded. What kind of response is it to say we are going to knock $100 million out of the most important program that helps to train teachers and principals to help low-income children in poor- performing schools succeed? That doesn't make much sense to me. So I have submitted an amendment--it is on file--which would increase the teacher incentive fund from $200,000 this year to $99 million, which is the level that was approved in the appropriations bill. It is also the level President Bush requested for the current year. The funding comes out of funds available under the education title of the Labor, HHS, Education section of the joint funding resolution. Unlike a traditional appropriations bill, the resolution doesn't fully allocate all of the dollars under the education title. So as a result, I have been advised by the Legislative Counsel's Office that our amendment doesn't need an offset. I will add that President Bush, in the budget we received this week, has asked for $200 million for next year. So this would permit us to do what was intended to be done by the No Child Left Behind bill. I ask unanimous consent that my amendment be printed in the Record at the end of my remarks.

Mr. ALEXANDER. Mr. President, let me mention a few of the details of the Teacher Incentive Fund, so that we can understand what happened in the House of Representatives. The Democratic majority in the House reduced the teacher incentive fund from $99 million to $200,000. The proposed cut jeopardizes 5-year grants that were made to 16 grantees, largely serving big-city schools and low-income students with low academic achievement. The cut will take away funds from Chicago, Denver, Memphis, Houston, Dallas, and Philadelphia. The proposed cut will take away funds from State programs in New Mexico and South Carolina. Many of these programs were developed in full consultation with teachers and principals and with their unions. As an example, Philadelphia's grant application was written and endorsed by the local teachers union. So I am trying to figure out who is against this? It would not be the teachers, principals, or the districts. Neither Democrats nor Republicans. So how did it get cut from $100 million to $200,000? One of the most critical problems we have to solve today is how to retain outstanding teachers and principals. The more we understand about low-performing schools, the more we understand that, except for the parent, the most important people in that child's ability to succeed are the teacher and the principal. The quality of the teacher and the quality of the school leaders are the most important factors. The elimination of funding, as has been done by the joint funding resolution, could have a significant impact upon the Teacher Incentive Fund. As a result, for example, of the joint funding resolution, the Department of Education has already decided that they will have to delay the national evaluation of the Teacher Incentive Fund until 2008. So we have delayed, for a year, helping these children be exposed to teachers and principals who have more capacity, and we won't learn anything from that evaluation for another extra year. The proposed cut in funding in the current year will undermine the current grant competition that is going on. Applications are due on February 12, 2007. So say you are sitting in Providence, Knoxville or San Francisco, and you are in the midst of an application to bring in New Leaders for New Schools or some other group, they say to the school district: OK, we will train all your teachers, send them to the Wharton School in the summer and work with them for a year, and on a continuing basis we will help these principals and teachers; we will help the principals become better school leaders. But then the New Leaders for New Schools will say you have to give the principal some autonomy, let them hire and fire the best teachers, let them make decisions. So there is this alliance. In many cases, the teachers union is involved, as in the Philadelphia case. They make concessions. So everybody is working together to try to say: What can we do to help these low-performing schools succeed? Today, in a roundtable we had about No Child Left Behind, I suggested we are not talking about No Child Left Behind in the correct way. We are catching people doing things wrong instead of catching people doing things right. The truth of the matter is that across our country we have about 100,000 schools, more or less, and in about 75 percent of those schools, they are succeeding in what we call adequate yearly progress. Those schools are succeeding in adequate yearly progress. Now, those schools, I would say, are high-achieving schools. What we find is most of the schools I would call achieving schools. Any school that has succeeded in No Child Left Behind for a couple of years I would call a highest achieving school. One which has succeeded for 1 year would be a high-achieving school. One with only one subgroup of children who don't quite make the standards, I would call that an achieving school. So we have mainly 15, 20 percent of our schools where we need to go to work and do things differently. These children can succeed. Memphis has a large number of low- performing schools, as we call them, but it is not because the children cannot learn. I was there during spring break last year at one of the new public charter schools in Memphis. They go to school early in the morning and leave at 5 in the afternoon. They were in AP biology courses in the 10th grade. They can all learn. They needed extra help in a different way, and the difference it has made there starts with a good school leader and an excellent teacher. Memphis plans to take this money from the Teacher Incentive Fund and take every single one of its principals through this year-long training, the summer programs, the continuing education, and then Memphis decided to give those teachers autonomy. So that is what we are killing when we kill this program, not just in Memphis, but in many other school districts. The northern New Mexico network, the DC public schools, the Chicago public schools, Denver, Mare Island Technology Academy in California, Houston, Guilford County, NC, Alaska, the whole State of South Carolina, a couple of districts in Texas--they are all in the middle of this. They are making applications for more. They expect these to be 5-year grants. They are doing what we asked them to do, and then we come along and kill the program right in the middle of the year. I ask unanimous consent to print after my remarks a list of the current grantees and programs.

Mr. ALEXANDER. Mr. President, following that, I ask unanimous consent to print in the Record a letter from Secretary Margaret Spellings of the Department of Education pointing out what difficulty this decision by the House of Representatives will cause to the teacher incentive fund.

Mr. ALEXANDER. Mr. President, finally, let me make this observation. I was visited today by representatives of the Tennessee Education Association. I have not always gotten along well with the Tennessee Education Association because of the subject we are discussing today. In 1983, I proposed the first master teacher program in the country, the first attempt by a State to pay teachers more for teaching well and to reward principals in the same way. The National Education Association went apoplectic for over a year. We had a brawl for a year and a half. We finally passed a program and our Career Ladder Program lasted for several years, until I got out of office is really what happened, and then it gradually went away. Mr. President, 10,000 teachers were rewarded, paid more, their retirement pay was more, and we talked about that today. I appreciated very much their visit because this includes some teachers who were part of that Career Ladder Program. They are the leadership of the teachers' union, the teachers' association in Tennessee. They came to see me about it, and they were very honest. They said any program that picks one teacher out and rewards outstanding teaching or rewards an outstanding principal is difficult to do because it is hard to make it fair. But we must do it. Almost everyone agrees that if we make any progress in education, especially with low-income children in poor performing schools, we have to find a way to pay good teachers more and good principals more and keep them in those schools. We have to do it. So this teacher incentive fund is a real casualty here, and I hope the majority whip, the assistant Democratic leader--he is here--I know he cares deeply about education, about the program in Chicago which is part of this. Maybe it is an oversight. Maybe it is a casualty that both Republicans and Democrats have had to deal with over the past 2 months. What I hope is, if there are any amendments allowed to this joint funding resolution, this amendment will be one of them. If it is not, I hope we can work together in the Senate, as well as in the House, and do what President Bush has asked us to do, not only put $200 million in for next year, but send a signal to the big city school districts across America: Don't give up, we want to help you train and hire outstanding teachers and outstanding principals. Exhibit 1 (Purpose: To provide additional funds for the Teacher Incentive Fund) On page 72, line 20, strike ``of which not to exceed $200,000'' and insert ``of which $99,000,000''.

Mr. ALEXANDER

Mr. ALEXANDER. Mr. President, no Member of the Senate has more experience in various levels of government than the Senator from Ohio, Senator Voinovich, who just spoke. He was a commissioner, a mayor, a lieutenant Governor, a Governor, and a Senator. Since he has come here, no Senator has spent more time on the drudgery--some Senators would say--of understanding the operations of government, how the budget decisions we make affect different parts of the Federal Government, different parts of society, the State and local governments, and how the civil service system works, how employees are fairly treated. I salute the Senator for his work. I think we ought to hear him carefully when he reminds us of one of the most obvious solutions to that problem, the 2-year budget. That idea has broad support in this Chamber, and it is a very simple idea. It says we will make our budget every 2 years. If we have to make adjustments in the odd year, we can do that. We already do that from time to time, but then in the intervening year, we would have plenty of time to look over our programs, make sure they work, and perhaps repeal some of them and add some better ones and check the stacks of regulations. If you look at all of the regulations that small colleges in Ohio and Tennessee have to wade through every year, that stack is very high. I brought them down on the floor one time. Surely, we can get rid of those. On both sides of the aisle we would like to do that. Our process doesn't appear that way. As our Republican whip sometimes says, process is often substance in the Senate, and a 2-year budget would be a force for orderliness, a force for review of programs; it would cause us to repeal and change and revise laws. We have plenty of forces for adding laws or spending more money. We need forces for review and repeal. The people around America who elect us and depend upon us to provide the funds we provide in an orderly flow could then make their plans and spend the money more wisely. The example the Senator from Ohio gave is a good one, about the Nuclear Regulatory Commission. On this floor, what do we hear more often than anything else now? We hear let's stop the dependence upon foreign oil or at least let's reduce it, and let's deal with global warming. How do we do that? There are lots of different ways to try to do that, but in a country such as ours that produces and uses 25 percent of all of the energy in the world, we don't have many ways to produce large amounts of carbon-free energy; 70 percent of our carbon-free energy comes from nuclear power in the United States. So when we slow down the processing applications for new nuclear power plants--a process we invented, which our Navy used without incident since the 1950s, a process which France uses to produce 80 percent of its power--so when we slow ourselves down, we are delaying urgent action on global warming and on dealing with our dependence upon foreign oil. That was a very good example the Senator used. I salute his interest and his call for a biennial budget, a 2-year budget, and his focus on the practical problems our failure to deal with appropriations bills on time cause, and it can be shared all around the room.

Mr. ALEXANDER

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

Mr. ALEXANDER. Madam President, I ask unanimous consent that I may be permitted to speak for 60 seconds.

Mr. ALEXANDER. Madam President, I compliment Senator Kyl for his work. I expect a vote for the minimum wage with the small business tax adjustments that are with it. As I said on the floor of the Senate the other day, it is not the most efficient way for the Government to intervene help for the poorest people who are working. I think that would be an increase in the earned-income tax credit. It would be less expensive, more efficient, and all of us would pay the bill for that, not just small businesspeople. If we are going to raise the minimum wage, we ought to not impose the whole burden on just that small segment of society. I agree that extending these small business depreciation and expensing benefits would help small business men and women who are trying to compete in the world to be able to compete. And it gives all of us who pay taxes a chance to pay for this idea that we have called the minimum wage, which tries to help working people have more. I support the amendment of the Senator from Arizona, Mr. Kyl because it will do more to offset the increased costs imposed on small businesses through raising the minimum wage by making it easier for many small business owners to take advantage of the tax relief contained in this bill. In addition, the amendment will help create jobs by encouraging small business owners to grow their businesses and hire new employees. Under current tax law, small businesses can expense up to $100,000 of certain new property the year it is put in service. That figure is indexed to inflation, so small businesses will be able to expense up to $108,000 in 2006. After 2009, this expensing level will drop back down to $25,000 a year for these small businesses. The tax relief package included in the minimum wage bill would extend the $100,000 expensing limit--indexed for inflation--through the end of 2010. The Kyl amendment would add 2 years to that extension. In other words, the Kyl amendment would allow small businesses to expense the higher amount through the end of 2012. Last week, I spoke on the Senate floor about the burden imposed on the small business community by raising the minimum wage. Small businesses will bear the brunt of approximately 60 percent of the costs of a minimum wage increase. I applaud the Finance Committee including Chairman Baucus and Ranking Member Grassley for approving a tax relief package to help offset these costs. In particular, I am glad that tax relief package includes the expensing provision that we are talking about on the Senate floor today. The Kyl amendment would make the expensing provision even stronger by allowing for higher expensing limits through the end of 2012. This is important because continuing the higher expensing limits for an additional 2 years would give small businesses more time to plan and fully use this benefit. If small business owners can take greater advantage of the tax relief in this bill, that means more help in offsetting the added costs imposed on small business owners through a minimum wage increase. Not only does this particular tax provision help offset the costs of an increased minimum wage, but it will help create grow the economy and create jobs. Allowing small business owners to immediately expense critical investments encourages the purchase of new equipment, which helps to spur economic growth. New equipment for small businesses also usually leads to greater efficiency. And putting more money back into the hands of small business owners allows them to hire new workers. During this minimum wage debate, a lot of my colleagues have talked about the economic challenges facing working families. I can't think of a better way to help low-income Americans than passing legislation that helps grow the economy and create new jobs, and that's what this amendment would do. I applaud my colleague from Arizona for offering this amendment and urge my colleagues to support it.

Mr. ALEXANDER

Mr. ALEXANDER. Mr. President, sometimes we like to say something so often and so vigorously that we believe it actually does what we say it will do, and I am afraid that is the case of the minimum wage arguments that have gone on since 1939. Perhaps it did in 1939, but I would suggest today that it doesn't do what we say it will do. I expect to vote for the minimum wage proposal the Senate produces if it includes the tax incentives and other measures that will help small business men and women pay the bill so they don't have to cut jobs as they compete with companies around the world, in China and in India and other places. I will talk for a few minutes this morning about whether the raising minimum wage does what we say it does. We are doing a fairly extraordinary thing here. The Government is intervening in the marketplace. We don't ordinarily do that. We are fixing prices. We are fixing the cost of labor. Let's say we were in a class at the University of Massachusetts, University of Wyoming, or University of Tennessee in economics 101, and the professor walked in and said, Good morning, students. We have an interesting problem here. Let's pose this: The Government wants to intervene in the marketplace to fix the price of labor--something it doesn't ordinarily do. So the problem for the students to solve would be this: The reason for the intervention is to help, as the Senator from Massachusetts said, those who are on the lowest rungs of poverty. Working people on the lowest rungs of poverty will be our target. We want to help them have more money in their pockets. Second, obviously we would like to do this in a way that most efficiently gets whatever money we have for this to them and doesn't miss the mark. Next, we want to do it at the lowest possible cost. We have lots of needs in the Government and in this country. Finally, we want to find the fairest way to pay the bill. If we are going to come up with this grand social objective that is presumably an objective for the whole country, then who pays the bill? All of us? Some of us? A few of us? The richest of us? Who pays the bill? So the challenge to the students is this: The Government is going to intervene. We are going to help, according to the Senator from Massachusetts, the lowest on the rungs of the economic ladder--people who are poor--people who are working. We want to do it in an efficient way. We want to make sure the money gets to the people we want to help, and we want to send the bill for all of this--hopefully as low as possible--to the fairest group of people who ought to pay for it. I think if the answer came back to that question that what we ought to do was raise the minimum wage, the professor would give it a D or an F, or he might even send it back to the students who sent him that answer and say, Maybe you didn't hear my question. My question was: How do we intervene in the marketplace to help the people who are on the lowest rungs of the economic ladder? How do we do that in the least expensive, most efficient way, and with the fairest way to pay the bill? Let's begin to critique the answer I posed that a student might have given to the professor in economics class 101. First, I think the professor might say, If you come back with a minimum wage idea, it is a very expensive way to go about it. A new study released by the Congressional Budget Office, which I ask unanimous consent to be included in the Record following my remarks--

Mr. ALEXANDER. So the student who suggested the minimum wage came up with a pretty expensive idea, an $11 billion price tag, or $18 billion, according to another study. But those estimates are about raising the cost of everyone's wages to $7.25 an hour. That is not how it works, because many workers are already paid a certain amount above the minimum wage and they will continue to earn more than the new minimum wage. So in effect, we are also legislating that a number of workers will receive a wage higher than $7.25, which means the cost is much higher than $11 billion or $18 billion. That is a lot of money. That is the first critique of the student's answer. The second one: How well does this money hit the mark? We heard Senator Kennedy say repeatedly: Those on the lowest rung of the economic ladder. We have visions of women and children who are poor, particularly single mothers. Senator Kennedy has great passion for this issue. I have heard him many times over the last 4 years talking about how this is a women's issue; this is a children's issue; this is an issue for Americans on the lowest rung of the ladder who are in poverty. Well, let's see if that is true. The studies show it is not true. Raising the minimum wage doesn't efficiently target the poor. Only one in five minimum wage workers live in households at or below the poverty line. So most of that $11 billion or $18 billion won't be going to the people who need it the most. It is more likely to be going, for example, to raise the salary of a teenager from a well-off family who has a part-time job at the mall. The Employment Policies Institute, the study I mentioned a little earlier by the professors from Cornell and the University of Georgia, said in their calculations that even less of the money would go to the workers in poor families--13 percent. Even if you look at households earning twice the rate of poverty, which was just under $40,000 in 2005, the Employment Policy Institute study found that less than half--43 percent of the minimum wage increase--would go to those families. Let me go directly to the professors' study of the minimum wage. They say: While the minimum wage is often promoted as a policy designed to help the poor, minorities, and single mothers, this analysis reveals that only 3.7 percent of the benefits from a $7.25 hour Federal minimum wage would go to poor African-American families. So 3.7 percent of the benefit of this $18 billion-plus cost will go to poor African-American families. Only 3.8 percent would go to poor single mother families. What we are about to do, if we do it, is spend $11 billion, $18 billion--more than that, probably--with the stated objective of helping the poor, especially single women, especially mothers with children, especially minorities, and what the professors' study shows is that only 3.8 percent goes to poor single mother households. Even more troubling, they go on: The majority of working poor families, families who are working but remain in poverty, receive no benefit from an increase to $7.25 an hour. The majority of families who are working but in poverty get no benefit from what we are about to do. These families don't benefit because they already earn more than the new Federal minimum wage and remain in poverty either because of a low number of hours worked or a large family size. Many of these individuals would benefit far more from an increase from the generous Federal and State earned-income tax programs. A couple more statements from the professor from Cornell and the professor from Georgia: Only 3.8 percent of the benefits from an increase to $7.25 an hour accrue to poor single mothers. One of the factors causing this low percentage of benefits is the fact that the majority of poor single mothers have hourly wages above this level. In addition, only 18.5 percent of the benefits going to single mothers will go to those in poverty, the majority of benefits going to single mothers will go to those earning more than twice the poverty line. So the authors conclude that only 12.7 percent, or 2.3 billion of their estimated $18 billion cost of this increase will go to poor families, and only 3.7 percent goes to poor African-American families. The authors say that the ability of the minimum wage to target poor families is weaker and decreasing over time. Contrary to the statements of its advocates, fewer and fewer low-wage employees are supporting a family on minimum wage, with only 9 percent of low-wage employees actually supporting a poor family. I think the professor so far, in grading the paper of the student who suggested an increase in the minimum wage, would say, well, you came up with something that is hugely expensive, $18 billion-plus. And second, you came up with something that almost entirely that misses its target, only 3 or 4 percent to poor African-American families out of this huge amount of money? So far that paper is not doing very well at the University of Massachusetts, Wyoming, or Tennessee. Then there would be another question that ought to be answered. Who pays the bill? The people who are to pay the bill under the proposal of the Senator from Massachusetts are the small businesspeople of America. They were described by the Senator from Wyoming because he used to own a shoe store. We stand in the Senate almost every day and talk about small business men and women and how they have health care costs, how they have taxes to pay, they have OSHA requirements to meet, they have Federal regulations added every year, and we say if we do not do something about this, more of these jobs are going to India and China, and we have a big outsourcing of jobs around the world. Even if we, as a Senate, were to decide that we wanted to take the most expensive and perhaps the most inefficient way to help the people lowest on the economic ladder, why would we send the bill to the small businesspeople of America? Why wouldn't we send it to Wall Street? Why wouldn't we send it to the big corporations? Why wouldn't we send it to the taxpayers at large? Why couldn't all of us pay the bill? We are very good in Washington, DC--I used to notice this as Governor of a State--some Senator or Congressman would come up with a good- sounding idea, pass it, hold a press conference, take credit for it, and come back down and make a statement at the Lincoln Day or Jefferson Day dinner about local control. What we do here all the time is come up with good ideas, take credit for them, and send the bill to someone else. That is what we are doing here: we are not paying for this. We are not saying: That is going to cost $18 billion so let's raise taxes on Americans to pay for it. We are saying it will cost $18 billion-plus, but, no worries, we will just send that on to the small businesspeople of America, not the big businesspeople. According to the National Federation of Independent Businesses, small businesses employ 61 percent of all minimum wage workers. That is a lot of mom-and-pop shops, family-owned businesses. Why should they pay the bill for this idea? One reason it might have been better to take this legislation through the committee that the Senator from Massachusetts and the Senator from Wyoming so ably lead is, we could have discussed this and there might have been a better way to reach this goal of taking whatever money we have--maybe a generous amount, maybe $18 billion--and sending it directly to people on the lowest rung of the economic ladder. We might have talked about the earned-income tax credit. The earned- income tax credit isn't always popular on this side of the aisle because it has had some fraud in it, but the idea is a good idea. I first heard about it when Pat Moynihan was in the Nixon White House in the early 1970s. He suggested instead of welfare programs we ought to have a negative income tax. He said rather than set up a lot of Government programs that tend to break down the family and spend money in bureaucracies, if people are working in America, and they are not making much money, let's give them some money. We are a rich country. We have 25 percent of all the money in the world every year for just 5 percent of the people in the world. And some people are really well off. They have more than one house. They have big incomes. We all know that. And so it tugs at us to think we are so wealthy and we still have people who are not just sitting on a bench, but we have people who are working every day, sometimes two jobs, and they are not making enough to help their families. That is what this debate is about. Pat Moynihan said in the early 1970s, and this Congress has said before: Let's try the earned-income tax credit. In other words, if you are working, and you are poor and you qualify, we will send you a check. The check comes from all of us. It doesn't come from this segment of society or that segment or just the small businesspeople. We all step up to the plate. The taxpayer pays the bill for earned-income tax credit. Why didn't we have a hearing to talk about that? The tax credit is targeted to help low-income workers. It is only available for families making up to between 175 to 200 percent of poverty. For example, in 2006, a single parent with two or more children could not receive the earned-income tax credit if he or she earned more than $36,000. That is not a lot of money when you are trying to raise two children. In comparison, according to the Congressional Budget Office, nearly 60 percent of a minimum wage increase would go to individuals living in families earning more than $36,000. So 60 percent of what we propose to do here goes to families earning more than $36,000, but an earned- income tax credit recipient could not receive money if they made more than $36,000. The CBO study released this month also looked at the potential impact of increasing the minimum wage to $7.25 as well as possible increases to the earned-income tax credit. I put that in the Record a few minutes ago. If we increase the minimum wage as has been proposed, CBO says it would cost $11 billion, the smaller number, but only $1.6 billion of that $11 billion would go to working families living below the poverty line. CBO is bipartisan, and works for all of us. They went on to say that to send nearly the same amount of money to working poor families, $1.4 billion in assistance, we would only need to increase the earned- income tax credit by $2.4 billion. So instead of a $11 billion or $18 billion pricetag for the minimum wage, we could have done the same thing through the earned-income tax credit by spending $2.4 billion. Increasing the earned-income tax credit would target the same amount of money to poor families as raising the minimum wage at one-fifth the cost. I have used my example of asking a professor at the University of Massachusetts or Wyoming or Tennessee, saying to his class: We have a large goal. We want to help people who are working and who are at the lowest rung of the economic ladder, as Senator Kennedy describes. What would be the best way to do it? Tell me, the professor would say, tell me how to get the largest amount of money to that group of people, how to do it at a reasonable cost, and tell me who should pay the bill. I think if the answer came back that we should spend $18 billion or more, and it costs five times as much to do it through the minimum wage as it would through the earned-income tax credit, and in addition to that, doing it through the minimum wage sends the bill to a struggling group of people disproportionately, the small businesspeople of America, and lets off all the rest of us, I think that person would get an F. And I think we ought to, as well. I am sure what is going to happen in this Congress is we are going to pass a minimum wage bill because we are a wealthy country and we want people who are working and who do not have as much to have more. That is our impulse. And I don't believe that bill will get out of this Senate without substantial assistance for the small businesspeople who are paying the bill, or disproportionately the bill. My hope is that Senator Kennedy and Senator Enzi, some time before we bring up this minimum wage idea again, will say: Let's give ourselves the same kind of examination that I just suggested for those college students. Let's ask ourselves how to do this in an efficient, fair way that gets the money to the right people, instead of going around the country saying ``minimum wage, minimum wage, minimum wage,'' only to find out some time later that we have a lot of disappointed, poor, working families around America who aren't helped by what we convinced ourselves was the right thing to do. Exhibit 1 Congressional Budget Office, U.S.Congress, Washington, DC, January 9, 2007. Hon. Charles E. Grassley, Chairman, Committee on Finance, U.S. Senate, Washington, DC. Dear Mr. Chairman: In response to your request, the Congressional Budget Office (CBO) analyzed some of the potential consequences of a hypothetical increase in the federal minimum wage rate from $5.15 per hour to $7.25 per hour and of several hypothetical expansions in the earned income tax credit (EITC). To provide the information, as requested, about the potential impacts on workers whose family income was below the federal poverty threshold, the analysis used data from the March 2005 Current Population Survey (CPS). The analysis is subject to a number of limitations and should not be interpreted as a cost estimate of the effects of implementing changes in the federal minimum wage or the EITC in future years. CBO simulated the impacts of those policy options as if they were in effect in 2004 and did not incorporate any effect on employment levels or the number of hours worked. Since that time, the number of workers with wage rates in the $5.15 to $7.25 range has fallen by almost 30 percent and is expected to continue to decline as increases in state minimum wage rates and other changes in the labor market occur. For simplicity, CBO assumed that an increase in the minimum wage rate would have affected only the wage rates of workers earning between the old and the new minimum rates. Some workers with wage rates outside that range might also be affected by an increase in the minimum wage. For example, employers are permitted to pay certain tipped workers as little as $2.13 per hour if their tips bring their total hourly earnings up to the federal minimum wage; thus, an increase in the federal minimum wage could cause some of those employers to raise their wage rates. Also, some employers of workers already paid at or just above the new minimum wage rate might increase those workers' wage rates as well. In addition, the CPS does not contain all of the information needed to compute the EITC, limiting the accuracy of those estimates. Based on the CPS, the estimated amount of EITC payments in 2004 was about 25 percent below the actual amount that year. CBO does not have a basis to infer whether that discrepancy would lead to an underestimate or an overestimate of the share of additional payments resulting from the hypothetical expansions of the EITC that would go to poor families. Moreover, the Joint Committee on Taxation produces the official estimates for any change in the EITC; its estimates may be different. As discussed more fully in the attachment to this letter, the major findings of the analysis are these: On the basis of data from the March 2005 CPS, about 18 percent of the 12 million workers who were paid an hourly wage rate between the federal minimum wage of $5.l5 and $7.24 were in families that had a total cash income below the federal poverty threshold in 2004. Had all of the workers in that wage range, instead, received $7.25 per hour, they would have gotten about $11 billion in additional wages in that year. About 15 percent of those additional wages ($1.6 billion) would have been received by workers in poor families. As requested, CBO examined the potential effects of hypothetical expansions in the EITC that would have provided additional payments to workers in poor families similar to the amount of additional earnings poor workers would have received by increasing the minimum wage rate to $7.25 per hour. One option was to increase the subsidy rate for childless workers by 50 percent. Another option was to increase the subsidy rate for workers with three or more children by 25 percent. On the basis of data from the CPS, combining those options would have increased total EITC payments by roughly $2.4 billion in 2004, with workers in poor families receiving $1.4 billion of that total. The analysis was prepared by Molly Dahl, Tom DeLeire, and Ralph Smith of CBO's Health and Human Resources Division and Ed Harris of CBO's Tax Analysis Division. If you or your staff have any questions or would like further details, please feel free to call me at (202) 226-2700 or Ralph Smith at (202) 226-2659. Sincerely, Donald B. Marron, Acting Director. Attachment. Response to a Request by Senator Grassley About the Effects of Increasing the Federal Minimum Wage Versus Expanding the Earned Income Tax Credit In response to a request from Senator Grassley, the Congressional Budget Office (CBO) used data from the Current Population Survey (CPS) to analyze the distributional effects of a hypothetical increase in the federal minimum wage rate and of several hypothetical expansions in the earned income tax credit (EITC). Although use of the CPS allows the production of results consistent with official poverty measures, the CPS is known to be inaccurate for measuring the EITC. CBO's estimates for a particular policy change could either understate or overstate the true cost of an expansion of the EITC, depending on how information available in the CPS differs from what taxpayers reported on their tax forms. CBO simulated the impacts of the hypothetical policy options as if they were in effect in 2004 and did not incorporate any effect on employment levels or the number of hours worked. The results are not estimates of the effects of implementing those options in future years. Furthermore, this analysis is not a cost estimate. For proposals that would amend the Internal Revenue Code, including changes in the EITC, official cost estimates are provided by the Joint Committee on Taxation; its estimates may differ from those presented here. Methodology CBO identified workers who would have been affected by a hypothetical increase in the federal minimum wage rate from $5.15 per hour to $7.25 per hour in 2004 as those who reported in the March 2005 CPS that they were paid on an hourly basis and whose wage rate was between $5.15 and $7.24 at the time of the survey. Also included were workers who reported that they were paid $5.00 per hour, under the assumption that most of them were actually paid $5.15 but had rounded their survey response. To estimate the impact of the hypothetical wage rate increase on the family income of workers, CBO assumed that all hourly workers whose wage rate was between $5.15 and $7.24 per hour would have been paid exactly $7.25 per hour had the hypothetical minimum wage rate been in effect. CBO further assumed that workers whose wage rate was $7.25 or higher would have been unaffected by the hypothetical increase in the minimum wage. For this tabulation, CBO assumed that no changes in employment or hours would have resulted from the higher minimum wage rate. The earnings gain attributed to the hypothetical increase in the minimum wage was calculated simply by multiplying the increase in the wage rate by the total number of hours that CBO estimated the affected people worked in 2004. A limitation of this analysis is that the estimates are based on wage rates reported for March 2005 and income reported for 2004 and, therefore, do not reflect changes that have occurred since then or that will occur before future changes in the federal minimum wage, if enacted, would be implemented. For example, increases in state minimum wage rates and other changes in the labor market have already lessened the potential impact of raising the federal minimum wage rate. CBO used information on family size and both before-tax cash family income and after-tax income, including certain noncash sources of income, in 2004 to place the affected workers into income categories relative to the poverty thresholds. As requested, CBO also examined different ways of expanding the EITC to achieve similar income gains for workers in otherwise-poor families. Note that the CPS does not contain all of the information necessary to compute the EITC, limiting the accuracy of CBO's estimates. For example, using the CPS, CBO estimates that taxpayers received about $29 billion in EITC in 2004, when they actually received about $40 billion. Estimates of the Effects of a Hypothetical Increase in the Minimum Wage in 2004 Table 1 provides CBO's estimates of the number of workers paid on an hourly basis in March 2005 who received a wage rate below $5.00, between that rate and $7.24, and at or above $7.25. It shows that 11.6 million workers reported that they received a wage rate in the affected range. Table 1 also provides a cross-tabulation by income-to-poverty ratio, based on the family cash income of those workers in 2004, as reported by the Census Bureau. It shows that 18.5 percent (2.1 million) of the workers who received a wage rate in the relevant range in March 2005 were living in families that were poor in 2004. Table 2 repeats the information from Table 1 but uses an after-tax measure of income that also includes the value of certain noncash sources of income. In the placement of people into income-to-poverty categories, the poverty thresholds themselves remain unchanged. On the basis of this alternative measure of income, a smaller portion of the workers in the relevant wage range were counted as poor (14.4 percent, rather than 18.5 percent). Tables 3 provides CBO's estimates of the income gains that would have resulted from raising the wage rates of everyone who reported that they were paid between $5.00 and $7.24 per hour up to an hourly rate of $7.25. For those figures, CBO simply added its estimates of the gains in earnings from the wage rate increase to estimates of families' cash income. CBO estimates that $1.6 billion (15 percent) of the $11 billion in increased earnings that resulted from the higher wage rate would have been received by workers who were in families with money income below the official poverty threshold in 2004. Estimates of the Effects of Hypothetical Increases in the EITC in 2004 Table 4 provides CBO's estimates of the distributional income effects of the changes in the EITC specified in the request. Again, the estimates are based on the CPS, not tax statistics, and do not take into account the many intricacies of actual tax provisions or the ways that people might alter their behavior in response to changes in the EITC. The Joint Committee on Taxation provides the official estimates of the potential effects of changes in the EITC. In 2004, eligible taxpayers with one qualifying child could claim a credit of 34 percent of their earnings up to $7,660, resulting in a maximum credit of $2,604; the credit phased down at a rate of 15.98 percent of earnings above $14,040 for nonjoint filers and $15,040 for joint filers. For eligible taxpayers with two or more qualifying children, the credit was 40 percent of their earnings up to $10,750, with a maximum credit of $4,300; the phase-out rate was 21.06 percent, beginning at earnings above $14,040 for nonjoint filers and $15,040 for joint filers. Taxpayers between the ages of 25 and 64 with no qualifying children could claim a credit of 7.65 percent of their earnings up to $5,100, resulting in a maximum credit of $390; beginning at earnings above $6,390 for nonjoint filers and $7,390 for joint filers, the credit phased out at a rate of 7.65 percent. All thresholds are higher now. Not only are they indexed for inflation, but the plateau for joint filers was increased by $1,000 in 2005 and is scheduled to increase again in 2008. The first column of Table 4 shows that, of the estimated $29 billion in EITC received in 2004, about 40 percent ($11 billion) was received by workers in poor families. (As explained, that CPS-based estimate of the total amount of EITC received is much lower than the actual amount that year, $40 billion.) The second column reports CBO's estimates of the effects of a hypothetical expansion in the EITC in which workers in families with three or more children would be eligible for an additional credit. The subsidy rate for that group was increased from 40 percent to 50 percent, the maximum credit available was increased from $4,300 to $5,375, and the phase- out rate was increased from 21.06 to 26.325 percent, representing a 25 percent increase over the credit available in 2004 to those in families with two or more children. (The difference between the maximum credit available to those in families with three children and those in families with two children is $1,075, as compared with the $1,696 difference in the maximum credit available to those in families with two children and those in families with one child.) Using CPS data, CBO estimates that this expansion would have increased EITC payments to poor families by $1.1 billion. The third column examines what the results of a hypothetical expansion of the EITC to childless individuals might have been. As requested, the subsidy rate, the maximum credit, and the phase-out rate to workers without children were increased by 50 percent. Under the hypothetical expansion, the maximum credit available to those workers would have been $585, and the subsidy and phase-out rates would have been 11.475 percent. This expansion would have increased EITC payments to poor families by an estimated $0.3 billion. The fourth column examines the effects of a hypothetical expansion of the EITC in which both the expansion for those in families with three or more children and the ex- pansion for childless individuals discussed above were implemented. Using CPS data, CBO estimates that the combination of the two would have resulted in increasing EITC payments to the poor by $1.4 billion, about 60 percent of the overall increase of $2.4 billion that CBO estimates would have occurred in 2004 if those expansions had been in place at the time.

Mr. ALEXANDER. Mr. President, I compliment the Senator from Alabama and ask unanimous consent to be added as a cosponsor to his legislation.

Mr. ALEXANDER. Of course.

Mr. ALEXANDER. A new study by CBO estimated that raising the minimum wage to $7.25, which is the proposal here, would cost $11 billion. A study done by the Employment Policies Institute put the cost at $18 billion. I ask unanimous consent that this study by Professors Burkhauser of Cornell and Sabia of the University of Georgia be included in the Record following my remarks.

Mr. ALEXANDER

Mr. ALEXANDER. Will the Chair please let me know when I have a minute remaining?

Mr. ALEXANDER. Mr. President, I ask unanimous consent to be allowed to speak for 10 minutes in morning business.

Mr. ALEXANDER

Mr. ALEXANDER. I thank the Senator.

Mr. ALEXANDER. One final question, Mr. President. Does the Senator from New Hampshire believe that Federal spending is one of the most difficult challenges we have here and is a matter that will need a bipartisan approach? And that we need to employ all the reasonable tools that we can to try to bring Federal spending under control? Otherwise, we are going to create a massive crisis for our children and our grandchildren, and this proposal would be one such reasonable tool.

Mr. ALEXANDER. If the President sends a package of proposals back and asks: Do you really want to spend this money, and if a majority of the Senate decides that it did, and a majority of the House decides that it didn't, what happens then?

Mr. ALEXANDER. Mr. President, the Senator from New Hampshire was Governor, as I was, and my sense of this amendment is that it understands human nature pretty well. Is it not the Senator's experience as Governor, and as a member of the Appropriations Committee for a long time, that sometimes items slip through, and that the idea here would be for the President to be able to just send it back to Congress and say: Don't you want to take a second look at this before you actually spend taxpayers' money? Is that not the general idea that is expressed by this amendment?

Mr. ALEXANDER. Mr. President, I wonder if the Senator from New Hampshire would allow me to ask him a question or two.

Mr. ALEXANDER

Mr. ALEXANDER. Mr. President, I wish to talk about two things this morning: No. 1, the President's State of the Union Address last night, and No. 2, Senator Gregg's proposal to reduce wasteful spending. I appreciate the comments of the Senator from Colorado, who has been a leader on renewable energy and energy independence. I want to point this out. The President last night did his job. It was a truly Presidential speech, in my opinion. I used to work in the White House, and a wise man there told me: Lamar, our job here on the White House staff is to consider everything that comes to the White House as important. We need to push those things out and reserve for the President those things which are truly Presidential. The President talked about truly Presidential issues last night, and he did what Presidents are supposed to do. He did not give us a laundry list. He talked about Iraq, terrorism, energy independence, and health care costs. He said: Pick up immigration and deal with it. He said reduce the budget in 5 years. He gave us a strategy in each case, he tried to persuade us that he is right, and then he handed the ball to us. We are independent of the President. We have a Democratic Congress, closely divided, and a Republican President, so I don't think we can criticize the President. I think we should applaud the President and say: Mr. President, you did your job. You identified the issues, you gave us a strategy, and you handed the ball to us. The biggest news last night, it seemed to me, was on energy independence and health care costs. Starting with energy independence, the President said let's set a goal to reduce our use of gasoline 20 percent in 10 years. That is a big, serious proposal. This country uses 25 percent of all the energy in the world. If we reduce our use of gasoline by 20 percent in 10 years, it will help clean the air, it will help reduce dependence on foreign oil, it will create a big market for agricultural products in this country to help create biodiesel alternative fuels, and it will force innovation in such things as electric batteries. The President's proposals will require a change in the so-called fuel efficiency CAFE standards. It will require these new technologies. It is a big step, and it is the kind of thing that Democrats as well as Republicans can take, improve, and pass. We don't need to be saying to the President: Mr. President, you walk the walk. He talked. Now it is up to us to act. The same with health care. His proposal on health care is a big, serious proposal. There is probably no subject Tennesseans talk to me about more in their daily lives than: How do I pay for my health care costs? The President had an answer last night. He said: For 80 percent of working Americans, I will give you an average of $3,600 in savings from your taxes which you can spend to buy yourself health care insurance. That means if you are a family of four, making $60,000 a year, you might have $4,000 or $5,000 in tax savings to use to pay for health care costs. Now, 20 percent of us would pay a little more for health care. Mine would go up. But 80 percent of all of us who work would get significant savings to pay for health care insurance. This would help us afford it. This would help more people who do not have it pay for it. This would help hospitals whose emergency rooms fill up with people who cannot pay for health care. It is a big, serious proposal. The President has done his job. It is up to us now to have a hearing, improve it, and enact it. I salute the President for doing his job last night with what I felt was a truly Presidential speech. Much of it was about Iraq. Iraq is being talked about today in many different bodies, but much of it is about what is happening at home. If we take up immigration and don't stop until we are finished, if we balance the budget in 5 years, if we reduce the amount of oil we are using by 20 percent in 10 years, if we give 80 percent of working Americans several thousand dollars to help pay for health care insurance, that will be a great big step forward. So it is up to us, now, to pick up the ball and run with it. He has handed it to us. Let's go. Let's talk about it. Let's do it. If we have a better idea, fine; if not, let's just pass his proposal. Second, I wish to speak for just a moment about the proposal of Senator Gregg that would give the President a new tool for cutting wasteful spending. I believe it should have been enacted with our reforms last week on lobby reform because it would help rein in wasteful spending and earmark abuse. But I commend Senator McConnell and Senator Gregg, and I thank Senator Reid for working it out so we can have a vote on this important amendment. We need to get our fiscal house in order. Yesterday, 25 of us attended a breakfast. The Chair and I were there. It wasn't a breakfast where we talked about how Democrats could beat Republicans and vice versa; we talked about how we can put our fiscal house in order. The Presiding Officer had some very good ideas to express, but the whole 40 minutes was about the unsustainable growth of Federal spending here, especially in the entitlement area. There are several things we need to do about it, but this amendment by Senator Gregg is one. It is not the same thing as a line-item veto, but it goes in that direction. I would support amending the Constitution to give the President a line-item veto. I don't think that is in derogation of our authority to appropriate. The Supreme Court thinks it does that, so we have to respect that. But this is a little different way to let the President have a way of letting us take a second look at appropriations we passed which may not have been wise. Under current law, the President has the power, for example, to propose cuts in spending after appropriations bills have been passed by Congress. Then we can pass those cuts in the same form and send them back or we can ignore them. So the idea would be, under the Gregg amendment, that the President could submit four packages of rescission proposals each year. We couldn't ignore the proposals. We would have to vote on them in a short period of time, if any Member wanted us to. If the majority of the Senate and the House agreed with the President's recommendations for cutting spending, then the spending or targeted tax breaks would get cut and the money would be used to reduce the deficit. But if a simple majority of either House disagreed, then the cuts would not go into effect. It is pretty much the same amendment Senator Daschle and Senator Byrd offered in 1995, which was supported by 21 of my Democratic colleagues who are still serving in the Senate. It is not the same thing as the traditional line-item veto, but it is an opportunity to put the spotlight on wasteful spending. Senator Gregg went one step further to make his amendment more closely reflect the Daschle-Byrd proposal. Senator Gregg's amendment allows us in the Congress, if the President makes a rescission proposal, to strike out an individual part of his proposal. There are plenty of forces here in this city for increasing spending. There are not enough forces that push to reduce spending. The Gregg proposal would be one tool the President and the Congress can use to reduce spending. I know when I was Governor I had this authority and 43 Governors currently have the line-item veto. In Tennessee, it is not much of a line-item veto because the Governor's veto can be overridden by a majority of the legislature. But just because I had the veto and the fact that I might have used it, and occasionally did use it, helped me put the spotlight on wasteful spending and gave the legislature a chance to reconsider or think twice about what they might do. As a new member of the Senate Appropriations Committee, I can assure my colleagues, I don't take lightly proposals to alter the Congress's power of the purse. For Congress to appropriate is as natural as for Johnny Cash to sing or for the President to nominate Supreme Court Justices. But I don't think this interferes with that because both the Senate and House must vote to adopt the President's proposed cuts; second, we can strike portions of his proposed cuts; and third, the power to do all this would sunset after 4 years, giving us in the Congress a chance to evaluate how well it is working. There are some other things I think we can do. A biennial budget would help. Passing a 2-year budget, so we can focus all of the first year on the budget and all the next year on oversight over programs to help them work better, avoid duplication, and get rid of some programs--all of that would help control spending. We also ought to have a commission on accountability and review of Federal agencies, which would help reorganize duplicative and unnecessary programs. I am honored to sponsor the Gregg second look at waste amendment because it gives the President and the Congress one tool to reduce wasteful spending at a time when we urgently need to do that and the country knows that. Mr. President, I yield the floor.