Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Actually, the Senator is making another point, which is about 6 million kids are eligible today under the current law but just are not covered. So we are saying we are not increasing the eligibility, we just want to help give a little stimulus so those who are currently eligible but not covered--a few more of them will be covered by health insurance.

Mr. BAUCUS. About 3.3 million, roughly.

Mr. BAUCUS. Currently, there are about 6.6 million children covered.

Mr. BAUCUS. I say to my good friend, this is not a new program. We are just reauthorizing a current program. It is not new.

Mr. BAUCUS. Sure.

Mr. BAUCUS. Sure. How about 3 minutes?

Mr. BAUCUS. Mr. President, I don't know if we have much time left. I am trying to figure out how much time we have.

Mr. BAUCUS. Mr. President, I see the Senator from Texas is seeking recognition. I ask unanimous consent that she be allowed to speak next for--10 minutes?

Mr. BAUCUS. Mr. President, it is my understanding under the previous order Senator Clinton is the next to be recognized.

Mr. BAUCUS. I am sure he does.

Mr. BAUCUS. Yes--well, I struck some of those words you read and inserted ``the managers.'' The thought was, it gives more flexibility so the two managers of the bill could then work with the sponsors of the amendments to allocate time. Some may want to speak longer than others. I felt that was just a way to better organize the time.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the time until 4:30 p.m. today be for debate with respect to the amendments listed below, and that they be debated concurrently; that all time be between the managers; that no amendments be in order to any of the amendments covered in this agreement prior to the votes; that the votes with respect to the amendments occur in the order in which the amendments are listed here; further that after the first vote, the time for votes be limited to 10 minutes, and there be 2 minutes of debate prior to each vote; and that at 4:30, the Senate proceed to vote in relation to the amendments; that the Graham amendment No. 2558 be modified with the changes at the desk; that Senators Kyl and Graham be recognized respectively at 3:45 and 4 p.m. The amendments are Specter amendment No. 2557, Graham amendment No. 2558, Ensign amendment No. 2540, Thune amendment No. 2579, and Kyl amendment No. 2537.

Mr. BAUCUS. I might say to my good friend, we have noticed. I don't see the Senator from New York here yet, but she is on her way. In the meantime, I ask unanimous consent that the Senator from Georgia be recognized and, following the Senator from Georgia, Senator Clinton be recognized.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the Senator from Virginia, Senator Webb, be recognized for 1 minute; and then following him, the Senator from Oregon would like 3 minutes on the bill, and then Senator Vitter would be No. 3, with no time for Senator Vitter.

Mr. BAUCUS. Mr. President, this is a poison pill. The effect of it is to kill this legislation. The Senator is correct, no State can meet 95 percent. No state currently meets 95 percent. Driver's license participation, which is mandatory and not voluntary, is 85 percent. Participation in Medicare Part D, which is voluntary and not mandatory, is only 56 percent. There is no way in the world any State can meet a voluntary compliance rate of 95 percent, so this is a killer amendment. It kills the bill. It ostensibly applies to adults, but it kills the bill. I urge Senators not to kill the SCHIP program and vote against the amendment.

Mr. BAUCUS. Mr. President, the Senator clearly described his amendment. There is a slight problem that the cost of about $36 billion over 10 years is not paid for. I think we should adhere to the Budget Act and pay for provisions we enact. So, Mr. President, I raise a point of order that the pending amendment violates section 201 of Senate Concurrent Resolution 21, the concurrent resolution on the budget for fiscal year 2008.

Mr. BAUCUS. Mr. President, I very much share the concerns of the Senator from Pennsylvania, I think every Member of this body does. That is, no one wants the Americans who currently do not pay the alternative minimum tax to have to pay it next year. They will have to unless this body, this Congress, makes the appropriate change in the adjustment. I am fully committed to finding a solution so anybody who has not paid alternative minimum tax in 2006, when he or she files their tax returns next April, does not have to pay it for 2007. This is not a good solution. Frankly, with this solution by the Senator from Pennsylvania, many more Americans are going to have to pay the AMT; it is not paid for, it is at a cost of about $420 billion. Therefore, I raise a point of order that the pending amendment violates section 201 of the Senate Concurrent Resolution 21, the Concurrent Resolution on the Budget for fiscal year 2008.

Mr. BAUCUS

Mr. BAUCUS. I thank the Senator from Iowa. And I agree. So here is our view. We wish to clarify the operation of the proposed rule change related to limited tax benefits. We know that it is impossible to foresee every possible application of the proposed disclosure rule for limited tax benefits. But we hope that this discussion will provide a more complete explanation of how the rule will operate. For more guidance, we also recommend the interpretative guidelines developed by the staff of the Joint Committee on Taxation in response to the prior-law line item veto. These guidelines may also be applicable to the interpretation of the proposed earmark disclosure rules for limited tax benefits in this bill. The Joint Committee on Taxation documents are called, first, the ``Draft Analysis of Issues and Procedures for Implementation of Provisions Contained in the Line Item Veto Act, Public Law 104-130, relating to Limited Tax Benefits,'' that's Joint Committee on Taxation document number JCX-48-96, and second, the ``Analysis of Provisions Contained in the Line Item Veto Act, Public Law 104-130, relating to Limited Tax Benefits,'' that's Joint Committee on Taxation document number JCS-1-97. The proposed rule in this bill would require the disclosure of limited tax benefits. It would define a limited tax benefit to mean any revenue provision that, first, provides a Federal tax deduction, credit exclusion, or preference to a particular beneficiary or limited group of beneficiaries under the Internal Revenue Code of 1986; and second, contains eligibility criteria that are not uniform in application with respect to potential beneficiaries of such provision. The proposed rule would apply in most cases where the number of beneficiaries is 10 or fewer for a particular tax benefit. But the Finance Committee will not be bound by an arbitrary numerical limit such as ``10 or fewer.'' Rather, we will apply the standard appropriately within the unique circumstances of each proposal. For example, if a proposal gave a tax benefit directed only to each of the 11 head football coaches in the Big Ten Conference, we may conclude that the rule would nonetheless require disclosure of this benefit, even though the number of beneficiaries would be more than 10. We will not limit the application of the proposed rule to proposals that result in a reduction in Federal receipts relative to the applicable present-law baseline. We believe that the proposed rule would have application to limited tax benefits that provide a tax cut relative to present law for certain beneficiaries, like, for example, a tax rate reduction for certain beneficiaries. But we also believe that the rule would apply to limited tax benefits that provide a temporary or permanent tax benefit relative to a tax increase provided in the proposal, like, for example, exempting a limited group of beneficiaries from an otherwise applicable across-the board tax rate increase. For example, a new tax credit for any National Basketball Association players who scored 100 points or more in a single game would be covered by the rule. And the rule would also cover a new income tax surtax on players in the National Hockey League that exempted from the new income surtax any players who were exempted from the league's requirement that players wear helmets when on the ice. The rule defines a beneficiary as a taxpayer; that is, a person liable for the payment of tax, who is entitled to the deduction, credit, exclusion, or preference. Beneficiaries include entities that are liable for payroll tax, excise tax, and the tax on unrelated business income on certain activities. The rule does not define a beneficiary as the person bearing the economic incidence of the tax. For example, in some instances, a taxpayer may pass the economic incidence of a tax liability or tax benefit to that taxpayer's customers or shareholders. The proposed rule would look to the number of taxpayers. That number is easier to identify than the number of persons who might bear the incidence of the tax. In determining the number of beneficiaries of a tax benefit, we will use rules similar to those used in the prior-law line item veto legislation. For example, we will treat a related group of corporations as one beneficiary for these purposes. Without such a rule, a parent corporation could avoid application of the disclosure rule by simply creating a sufficient number of subsidiary corporations to avoid classification as a limited tax benefit under the proposed rule. For example, if a related group of corporations--like parent- subsidiary corporations or brother-sister corporations--owns a football team, then the related group will be considered one beneficiary. That treatment is analogous to the team being one entity, not separate entities, like the coaching staff, offensive unit, defensive unit, specialty unit, and practice squad. The time period that we will use for measuring the existence of a limited tax benefit will be the same time period that is used for Budget Act purposes. That is the current fiscal year and 10 succeeding fiscal years. Those are also all the fiscal years for which the Joint Committee on Taxation staff regularly provide a revenue estimate. For purposes of determining whether eligibility criteria are uniform in application with respect to potential beneficiaries of such a proposal, we will need to determine the class of potential beneficiaries. In the case of a closed class of beneficiaries--for example, all individuals who hit at least 755 career home-runs before July 2007--that class is not subject to interpretation, since only Henry Aaron satisfies this criteria. If, instead, the defined class of beneficiaries is all individuals who hit at least 755 career home-runs, then we will determine the class of potential beneficiaries by assessing the likelihood that others will join that class over the time period for measuring the existence of a limited tax benefit. Whether the eligibility criteria are not uniform in application with respect to potential beneficiaries will be a factual determination. To continue with the previous hypothetical, a proposal that provides a tax benefit to all individuals who hit at least 755 career home-runs may still not require disclosure if it is uniform in application. If the same proposal is altered so as to exclude otherwise eligible career home-run hitters who played for the Pittsburgh Pirates at some point in their career, then that kind of a limited tax benefit would require disclosure under the proposed rule. Some of the guidelines in the Joint Taxation Committee's reports numbered JCX-48-96 and JCS-1-97 would not be directly applicable, but may be helpful in determining the class of potential beneficiaries. For example, the same industry, same activity, and same property rules might provide useful analysis. So that is how we propose to apply the new rule.

Mr. BAUCUS. Mr. President, I would like to engage in a colloquy with the ranking Republican member of the Finance Committee about language in this bill regarding the disclosure of limited tax benefits. The ranking member and I have each been chairman of the committee in recent years. And we try whenever possible to work together. And nowhere is that more true than with regard to tax policy. We have worked together to try to join in a policy about how to interpret the provisions in this bill on limited tax benefits. We hope that by explaining this joint policy now, we can help observers of the tax process to know how we intend to apply this new rule. I believe that the policy that I am about to tribe reflects our jointly held views.

Mr. BAUCUS. Yes, I plan to provide such a list with regard to legislation in my committee's jurisdiction. disclosure of limited tax benefits

Mr. BAUCUS

Mr. BAUCUS. I don't mean to be condescending here, but has the Senator read the CBO analysis? I am sure he has. And, having read that, isn't it clear that a large share of the dollars in this bill from the tobacco tax are to maintain current coverage? That is, if we do not provide the $35 billion in this bill, that is the funds from the tobacco tax, that many kids are going to lose coverage? In fact, isn't it true that CBO says about 1.4 million children will lose coverage-- not just maintain, but lose coverage if we do not have this bill?

Mr. BAUCUS. Will the Senator yield for another question again, again on my time?

Mr. BAUCUS. Of course not.

Mr. BAUCUS. Mr. President, four quick points. No. 1, we clearly want to bring this program down for kids, and this legislation does that. No. 2, the current expansion--not to point fingers anywhere--is basically as a result of the waivers this administration has given to States. That is the main reason for others. That is the main reason we have expansion to cover adults in States. No. 3, we are addressing this in this bill. We cut back on adults in this bill. But No. 4 is, we want to draw the line here a bit, and not totally cut adults off cold turkey, but, rather, childless adults would be cut back and zeroed out after 2 years, but then parents are phased down. But CBO has said when you do not cover parents, then you are also not covering some kids. The goal is to cover kids. I think the legislation is a fair, good, solid way to restrict coverage of adults, and I urge my colleagues, do not support this amendment, which is too draconian and goes too far.

Mr. BAUCUS. Are there any States that cover 400 percent of poverty?