Max Baucus

Mr. BAUCUS

Mr. BAUCUS. At this point.

Mr. BAUCUS. Yes.

Mr. BAUCUS. Mr. President, I will speak for just a minute. I very much appreciate the remarks of our very good friend from West Virginia. He is right. He is always right, especially on matters of procedure. It is my thought that we will have no more than four. In honor of the Senator's points, I deeply appreciate that sentiment. We won't go beyond the four. In an attempt to try to move the bill forward, we are trying to get floor speakers and, hopefully, get the amendments up so that there is enough opportunity to offer their amendments and we can vote on the amendments. But the Senator's basic point is absolutely correct.

Mr. BAUCUS. So the understanding is that the Senator from Vermont will speak for 10 minutes, the Senator from New Hampshire for 10, the Senator from Missouri for less than 10, and then Mr. Kyl for 10 minutes. I ask unanimous consent that the order of speakers be as just stated.

Mr. BAUCUS. For how long?

Mr. BAUCUS. And the Senator from Missouri?

Mr. BAUCUS. The Senator from Arizona wants to speak on the amendment?

Mr. BAUCUS. Mr. President, I ask what the Senators are going to speak on.

Mr. BAUCUS. Mr. President, for the interest of moving this along the rest of the day, there are two Senators who wish to speak, and it is my hope after they speak we can get some other amendments up and start voting. Mr. President, I ask unanimous consent that the Senator from Ohio, Mr. Brown, be allowed to speak for 10 minutes, and following Senator Brown, that the Senator from Vermont, Mr. Sanders, be allowed to speak for 10 minutes.

Mr. BAUCUS. Mr. President, I asked unanimous consent that the pending amendments be laid aside so Senator Kyl can offer his amendment.

Mr. BAUCUS. Mr. President, I say to my good friend from Arizona, there is always a Member on our side who would like to give some brief remarks. I ask, when might the Senator be ready to offer his amendment?

Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending amendments be temporarily laid aside and that Senator Kyl be recognized to offer an amendment.

Mr. BAUCUS

Mr. BAUCUS. Madam President, since the Fair Labor Standards Act of 1938, Congress has required employers to pay a minimum wage. Congress enacted the current general minimum wage of $5.15 an hour in 1996. That works out to be about $10,712 a year. Currently, about 2 million workers get paid the Federal minimum wage or less. A decade has passed since the last increase. That marks the longest period in history without an adjustment to the minimum wage. During that time, a majority of States have enacted minimum wages higher than the current Federal level. This includes my home State of Montana. Montanans recognized that the minimum wage must be increased. I am proud that in November our State voted to raise that State's minimum wage from $5.15 an hour to $6.15 an hour. It was a step in the right direction. An increase in the minimum wage would affect millions more than those who earn minimum wage because many workers earn slightly more than minimum wage and may also see an increase. Some worry that an increase in the minimum wage will burden small businesses. Small businesses create jobs, economic opportunity, and technological innovation. Smaller businesses employ a disproportionate share of workers earning the minimum wage. Representatives of small businesses have, therefore, argued that any increase should be accompanied by tax incentives targeted for small businesses in order to lower their costs. There are about 23 million small businesses in our country. Businesses with fewer than 500 employees represent more than 99.9 percent of all American businesses. They pay nearly half the total American private payroll. They have generated 60 to 80 percent of the new jobs annually over the last decade, and they employ 41 percent of high-tech workers. Small business is particularly important in rural States such as Montana. Rural communities generally do not have large employers. Rural families rely on small businesses for jobs. The Finance Committee has jurisdiction over taxes. The committee held a hearing on January 10 of this year entitled ``Tax Incentives for Businesses in Response to a Minimum Wage Increase.'' The committee heard from a variety of witnesses, including labor economists, small business owners, and tax experts. Following that hearing, the committee held a markup on January 17. The committee considered an original bill called the Small Business and Work Opportunity Act of 2007. That bill is a revenue-neutral bill containing a number of tax incentives for small businesses and businesses that hire minimum wage workers. The committee favorably reported that bill by unanimous voice vote, and the majority leader included that bill in its entirety in his amendment to the bill before us today. The substitute would help business owners to afford new equipment and property for their businesses by extending section 179 expensing for another year. In order to carry out day-to-day activities, small business owners are often required to invest significant amounts of money in depreciable property, such as machinery. While these large purchases are necessary to operate a business, they generally require depreciation across a number of years. But depreciation requires additional bookkeeping. Section 179 expensing allows for immediate 100 percent deduction of the cost of most personal property purchased for use in a business. In 2007, small business owners could deduct up to $112,000 of equipment expenses. When small business owners are able to expense equipment, they no longer have to keep depreciation records on that equipment. So extending section 179 expensing would ease small business bookkeeping burdens. The substitute would allow small business owners to quickly recover the cost of improvements to their establishments through extension and expansion of the 15-year straight line appreciation period for leaseholds and restaurant improvements. Allowing retailers and restaurants to use a 15-year straight line depreciation period means that when an entrepreneur opens a business and remodels the property, that investment could be recovered over a period of time more closely reflecting wear and tear. It used to be 39 years. In 2004, the American Jobs Creation Act shortened the cost recovery of certain leasehold improvements and restaurant property for 39 years to 15 years for the remainder of 2004 and 2005. The Tax Relief and Health Care Act of 2006 extended this provision to the end of 2007. At the Finance Committee minimum wage hearing held January 10, small business owners testified that a shorter 15-year recovery period for restaurant and building leasehold property reflects the true economic life of the improvements. And they testified that businesses put more money into their operations if they know they can recover their improvement costs over 15 years instead of 39. The substitute would extend the 15-year recovery period for leasehold and restaurant improvements and would also broaden the provision to allow retail owners and new restaurants to take advantage of this shortened depreciation period. These are changes that Senator Conrad, Senator Kerry, Senator Snowe, and Senator Kyl have championed. The substitute would simplify the way that small businesses keep records for tax purposes. The cash method of accounting is often the easiest method of accounting. Allowing small business to use the cash method reduces the administrative and tax compliance burden of these businesses. The substitute would let more businesses take advantage of this method. Businesses with gross receipts up to $10 million would be able to use the cash method. The substitute would also help businesses provide jobs for workers who have experienced barriers to entering the workforce by extending and expanding the work opportunity tax credit. WOTC, otherwise known as the work opportunity tax credit, encourages business to hire workers who might not otherwise find work. These employers teach workers new skills and how to be a good employee. The workers serve our food, sell us goods, paint our houses, and provide care to our sick and elderly. WOTC, the work opportunity tax credit, has been remarkably successful. By reducing expenditures on public assistance, WOTC is highly cost effective. The business community is highly supportive of these credits. Especially industries such as retail and restaurants that hire many low-skilled workers find it useful. The substitute would extend WOTC for 5 years, and the substitute would expand the credit to make it available to employers who hire veterans disabled after 9/11, something I think is very important for us to do. As of July 2006, nearly 20,000 members of our Armed Forces were wounded in action in Operation Iraqi Freedom and Operation Enduring Freedom. Many of these soldiers are now permanently disabled and do not know what they are going to do once they return home. We need to help these young men and women, and a modest tax incentive to get them back in the workforce is a good place to start. This is an issue the Senator from Colorado, Mr. Salazar, championed. I think we should make WOTC permanent. Senator Snowe and I introduced a bill to do just that. But to accommodate other Senators' priorities, the committee agreed to a 5-year extension in the bill that is now included in the substitute. The substitute helps small businesses by modifying S corporation rules. These modifications reduce the effect of what some call the sting tax; that is, these modifications improve the viability of community banks. These are changes that Senator Lincoln and Senator Hatch have championed. These are all important ways to help small businesses succeed. These provisions will spur investment and, thus, create jobs. They will provide greater opportunity for workers looking for a job. They all enjoy strong support. Senator Grassley, members of the Finance Committee, and I have worked to develop a balanced package, and I believe we have done just that. The language included in the substitute is a responsible package that will ensure the continued growth and success of small businesses. And we have also paid for it. Most of the offsets are proposals the Senate has supported several times before. The offsets include a proposal to end future tax benefits for abusive sale-in-lease-out tax shelters, known as SILOs. These deals are foreign tax-exempt entities to generate sham tax deductions. Even after Congress shut these deals down in 2004, some taxpayers continue to take excessive, unwarranted depreciation deductions on German sewer systems and the like. The Internal Revenue Service says it has 1,500 of these deals under audit involving billions--yes, billions--of dollars. At a minimum, it is time to shut these foreign deals down. There are domestic deals, too, but this provision only affects foreign deals. Another offset doubles fines, penalties, and interest on taxes owed as a result of using certain abusive offshore financial arrangements to avoid paying taxes. Taxpayers will hide their money from the IRS through offshore credit cards and other shady financial arrangements need to get the message that this Congress is serious about ending these abuses. The substitute closes a corporate loophole used by companies that reinvented themselves as foreign corporations to avoid paying taxes in our country. In March 2002, Senator Grassley and I made it clear to those who put profits ahead of patriotism did so at their own peril. The substitute would treat those who moved offshore after that date like a U.S. company, and the substitute would make those companies pay U.S. taxes. Further, under the substitute, companies that paid to settle Government investigations or that paid punitive damages ordered by the courts will be prohibited from taking tax deductions for those payments. Deducting these amounts can reduce the true cost of these settling by as much as a third. Deducting these amounts would effectively shift the tax burden onto the backs of other taxpayers who pay what they rightfully owe. Those deductions should, therefore, be prohibited. The hard-working American taxpayers we are trying to help in this substitute should not have to pay more taxes because some taxpayers are abusing the tax system through tax shelters. They also should not have to bear the burden of civil settlements and punitive damages paid by companies that engage in questionable behavior. Another offset would limit the annual amount of nonqualified deferred compensation for corporate executives. Rank-and-file workers generally have to pay taxes on their compensation when they earn it. The exception is deferred compensation provided through qualified retirement plans with statutory limits on contributions and benefits. A 401(k) is the best example. Management, on the other hand, has no limit on the amount that can be deferred to nonqualified arrangements--no limit. The substitute sets the annual limit at the lesser of 100 percent of taxable compensation or $1 million. These are sound changes. I urge my colleagues to support the substitute. I yield the floor.

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

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent the following fellows, interns, and detailees of the staff of the Committee on Finance be allowed on the Senate floor for duration of debate on the minimum wage bill: Mary Baker, Tom Louthan, Sarah Shepherd, David Ashner, Gretchen Hector, Molly Keenan, Sarah Butler, and Ryan Majerus.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to pay tribute to a Montanan who died Saturday night at his home in Libby, MT. Libby is a small town up in the northwest corner of my State. Les Skramstad was not only an outspoken advocate for his town, which was horribly wronged at the hands of W.R. Grace, but he was also my friend. I first met Les in Libby in the year 2000, shortly after news reports attributed hundreds of deaths to asbestos exposure from decades of vermiculite mining there. We sat down in Gayla Benefield's living room. There were about 25 people who were very ill. Over huckleberry pie and coffee, the group explained to me the horrific legacy Grace had left behind. And although I had read the reports and briefing papers on the situation, that was the first time I had seen asbestos exposure up close. And, it was gut wrenching. I will never forget it--as long as I live. They opened their hearts and poured out unimaginable stories of suffering and tragedy. I was absolutely stunned. It was at that moment that I vowed to myself that I'll do whatever it takes to help Libby become whole again. Entire families--fathers, mothers, uncles, aunts, sons and daughters are all sick. Hundreds are dead. They are bound together by one thing: their exposure to tremolite asbestos, mined by W.R. Grace. That night at Gayla's, when I first met Les, he watched me closely all evening. He was wary and came up to me after his friends and neighbors had finished speaking. Les said to me, ``Senator, a lot of people have come to Libby and told us they would help, then they leave and we never hear from them again.'' ``Max,'' he said, ``please, as a man like me--as someone's father too, as someone's husband, as someone's son, help me. Help us. Help us make this town safe for Libby's sons and daughters not even born yet.'' Les worked at the vermiculite mine starting in 1959. He told me about the dust he swept every day--off of three separate floors at the mine. And although company officials said the dust was harmless, that's what ultimately took his life. And that dust is what has made his wife and children sick, too. You see, that dust was laden with tremolite asbestos fibers. When he got home, he would hug his wife. His kids would jump up in his lap. I think he was less worried about his own fate. It was as if Les had accepted that he was going to die. But the thing that got to him most was that he brought that dust home with him. He wanted justice for his family and friends. That night I told him I would do all that I could. That I wouldn't back down. That I wouldn't give up. Les accepted my offer and then pointed his finger and said to me, ``I'll be watching Senator.'' I knew Les would. I also knew he didn't have to because I had already vowed to myself I would do all I could, even without Les' encouragement. Over the years Les and I worked together to help Libby. We became friends in the process. I counted on seeing him every time I went to Libby. I have been up to Libby almost 20 times since then. I talked to Les on the phone. I visited him in the hospital. Les is my inspiration in the fight to get Libby a clean bill of health and justice for its residents. He is the face of hundreds and thousands of sick and exposed folks in this tiny Montana community. Les--working with others in the community--became an outspoken advocate for Libby. He put a personal face on asbestos contamination. He provided a straightforward look into the lives of people hurt by Grace and the poisonous asbestos fibers they left behind. Les was a true Western gentleman. And he was very effective. It has been 8 years since this tragedy first came to light. We have made a lot of progress in Libby. We launched the Center for Asbestos Related Diseases, which has screened and provided health care to thousands of Libby residents. We kicked the EPA into gear and got Libby listed as a national Superfund site. We secured millions for cleanup, health care, and economic development in Libby. But sadly, there is still much more to do. Much more. Libby residents deserve compensation for their injuries. They deserve health care. They deserve to see those responsible go to prison for what they did. They deserve to know that their town is clean of asbestos. What I knew about Les makes this news very sad to me, personally. I am sad for his family. I am sad for his friends. I am sad for Libby. I am also angry at W.R. Grace, which knowingly poisoned its workers. I am angry that justice still has not been done in Libby. I am angry that we haven't been able to do more. But we won't give up. We will keep fighting for Les and Libby. Les' passing only furthers my resolve to try harder. To do more. We won't let up. We will not stop. When I get tired, I think of Les. And I can't shake what he asked me to do. In all of my years as an elected official, helping Libby is among the most personally compelling things I have ever been called on to do. I will keep the promise I made to Les that night at Gayla's house. Les was a fighter to the end. He recently minced no words about his feelings towards Grace. He told the Missoulian newspaper, quote: ``There's not a doubt in my mind that [they] are guilty of murder.'' ``I started in 1959 and I was as healthy as a horse,'' he said. ``I knew all the guys that worked there, 135 employees when I was there. And there's five of us left alive. Five. The rest of them are gone.'' Now, sadly, so is Les. The Book of Proverbs says: ``righteousness delivers from death.'' And if that is true, then Les will certainly be delivered. My prayers are with Les' wife Norita, his family and friends, and the people of Libby. I yield the floor and suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. Madam President, pursuant to rule XXVI, paragraph 2, of the Standing Rules of the Senate, I submit for publication in the Congressional Record the rules of the Committee on Finance for the 110th Congress, adopted by the committee on January 17, 2007. I ask unanimous consent that the rules be printed.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I want to engage the managers here. It is my understanding I will have time shortly to give a statement on Iraq. I don't want to interfere with the legislation on the floor, and I am asking whether this would be a good time for that statement to take about maybe 15, 20 minutes. I see no objection.

Mr. BAUCUS. Mr. President, I am concerned about the deteriorating situation in Iraq. We need to change course. Let me urge my colleagues to consider a few principles for where I believe we should go from here. Like my colleagues, I have received an outpouring of letters, e- mails, telephone calls. Montanans are split in how Americans should proceed, but one thing is clear: They all want to see an end to it. They want to see our men and women come home. On October 20, a man from Cutbank, MT wrote me to say: Yesterday was a very emotional day for me. I currently have a son serving in Iraq who does house-to-house raids and goes out on extended missions. My other son, who just joined the Army, informed me that he too will now be leaving for Iraq. As native Americans, my sons will be honored when they return home. We are proud of them. We are very proud of our native Americans who serve as warriors, but I am deeply concerned with what they face every day over there. Amber, a military wife from Great Falls, MT writes: I realize that my voice is a voice of millions that call for your assistance. However, I couldn't sleep at night knowing I didn't at least try to do what I think is right. My husband along with many others here in Montana is in Iraq right now, and just recently we lost a soldier from Billings. Help us bring the troops home where they belong with their families who miss them. In September, Tom Gignoux, from Missoula, MT, a Marine Corps veteran with a Purple Heart wrote me to say this: I no longer support the war in Iraq. I believe that mismanagement of the occupation and reconstruction has made the war unwinnable and is distracting us from the war on terrorism. Mr. President, I believe it is time for our combat troops to come home from Iraq. America entered into this war with motivations that were clearly honorable, but they were mistaken. As the 9/11 Commission found, there was no connection between Iraq and the attacks on 9/11. There were no weapons of mass destruction. And the theory that America could, through invading Iraq, establish democracy that would spread throughout the region has proven a cruel joke. If we knew then what we know now, I would not have voted for the war. If we knew then what we know now, I believe the results of that vote would have been different. Indeed, I doubt that we would even be asked to take that vote. The administration was not up front with us. They presented faulty intelligence and faulty information, especially about weapons of mass destruction. Unfortunately, the quality of congressional decisionmaking was no better than the quality of the information upon which we relied. Going into Iraq was a mistake. The premise was wrong. After September 11, 2001, we had international support to go after al-Qaida and to find Osama bin Laden. That is the mission we should be strongly pursuing-- more strongly. Our resources are incorrectly being exhausted in Iraq. I cannot go back and change that vote, but I can work in a new direction. I first commend our troops. They are wonderful. They have shown such courage, such exemplary strength. They are terrific. They removed the tyrant Saddam Hussein. They addressed the potential threat of weapons of mass destruction. They have done their job well. We are all proud of them. Their service has been outstanding. No one can argue against their contribution to our national security, and their dedication to their missions goes unmatched. I believe in giving our soldiers, sailors, and airmen the proper equipment and tools they need to stay safe and to succeed. A year ago, I spoke about our responsibility to get as much funding as possible for the troops. I have criticized spending on high-tech weapons systems at the expense of boots on the ground. I voted in favor of every Defense bill and war supplemental since the war began. I heard of families hosting bake sales to buy body armor. I have tried to do everything I could to protect our troops. But it is no longer enough. Now our brave troops stand in the crossfire of a civil war. We have lost more than 3,000 troops in the escalating conflict. Just this week, the Iraqi Health Ministry reported that more than 17,000 Iraqis died in the second half of 2006. That is more than three times as many who died in the first half of 2006. And now, America has spent more time fighting this war than we spent in World War II. I understand and sympathize with the Americans who continue to support this war because they do not want their family and friends to have died in vain. I know what they feel. I struggled with that last summer when my nephew Phillip died in Iraq. On July 29, Marine Cpl Phillip Baucus, my brother John's son, was killed during combat operations in the Al Anbar province. He was just 28 years old. Phillip was a bright and dedicated young man. He was like a son to me. He had a loving wife and a bright future. His death was devastating. I know what it is like to wait on the flight line at Dover Air Force Base. I know what it is like to weep over the body of a fallen soldier and family member. I know what it is like to escort Phillip back from Dover to Montana. I know what it is like to pray for a reason, and to become determined not to lose. I am not the only Montanan who has grieved. We are not a large State, but 14 Montanans have so far lost their lives in Iraq, and we grieve for them all. In fact, we in Montana send more troops to Iraq on a per capita basis than any other State in the Nation. Those men and women who have lost their lives have served a noble purpose. They have taught us lessons in courage, and we honor that courage by speaking out. We honor that courage by admitting that what we are doing is not working, and we honor that courage by finding a new direction. A change in strategy is not defeat. A change in strategy is a recognition that things are not working. Moving forward, I urge the President and the Congress to consider four principles. First, we must not escalate the conflict. Second, we must train Iraqis to stand up for themselves. Third, we must start bringing our troops home by the middle of this year. Fourth, we must engage Iraq's neighbors and the world community to find a more political solution. Let me explain in greater detail. First, I do not support the escalation in the number of American troops. Throwing more troops at the problem--especially a modest number, up to 20,000--is not a solution. Escalating the war is not a solution. We must not launch a strategy which has no benchmarks for its success. How long and at what cost do we add troops to the conflict? It is a mistake. The Iraq Study Group is a prestigious and well-respected group. Secretary of Defense Robert Gates was a member. The study group said the current strategy in Iraq is not working. That is what this study says. But to this date, the President has not implemented any of the group's recommendations. President Bush has stated numerous times that he listens to the commanders on the ground. American commanders on the ground have reported that al-Qaida has increasingly gained political influence among the Sunnis. General Abizaid told the Senate Armed Services Committee: I believe that more American forces prevent Iraqis from doing more, from taking responsibility for their own future. I urge the President to listen to what General Abizaid said and not just replace commanders who say things he does not want to hear. Second, we should not have an open-ended commitment in Iraq. America must make that clear to the Iraqi Government. The war is now costing us $2 billion a week. That is $2 billion a week that is not being devoted to health care, veterans' benefits, or education. There must be a more specific plan. The plan needs to outline how long our training efforts will continue, and the plan needs to show at what point the Iraqis will take over security of their own country. Last weekend, Iraq's Prime Minister, Nuri al-Maliki, reiterated the need and his commitment to getting the Iraqi security forces to stand up on their own two feet. America should support these efforts. In short, our forces should stand down so the Iraqi forces can stand up. Third, with a new focus on political solutions, the United States should start phased redeployment of combat troops in roughly 6 months, with the goal of having combat forces out of Iraq as soon as possible. Our troops are stretched too thin to address emerging threats around the world. There is something called opportunity cost. It is a technical term. But we are so focused on Iraq that we are not paying attention to other trouble spots in the world as much as we should. We must not focus solely on Iraq in blindness to the rest of the world. Our troops are serving their third and fourth tours in Iraq. Some deployments have been extended for 12 to 18 months. Some troops no longer have a year to spend at home between deployments. I have seen firsthand in Montana how the Guard and Reserves are deployed in record numbers. They have served honorably and with my great admiration. But we need them on U.S. soil for homeland defense missions. The Active- Duty troops must not be overextended. They need to be ready to deploy around the world. Finally, America must engage Iraq's neighbors more than we have. The Iraq Study Group named a peaceful solution to the Arab-Israeli conflict as a major potential contributor to the stability in Iraq. I strongly agree with that. That will take so much of the terrorists' energy out of their sails, frankly, if we could find a meaningful solution to the Israeli-Palestinian conflict. The Iraq Study Group said: The United States cannot achieve its goals in the Middle East unless it deals directly with the Arab-Israeli conflict and regional stability. They continue: There must be renewed and sustained commitment by the United States to a comprehensive Arab-Israeli peace on all fronts. We have taken too many steps backward in that conflict. Our invasion of Iraq has simply stirred up things way too much. It has caused problems. America's presence has opened the doors to terrorism and sectarian violence. We must reengage and work toward peace and diplomatic solutions. We must seek increased participation of other nations both in a political way forward and also in reconstruction work. We should redouble our efforts to reach out to that nation and to our allies who also have an intense interest in peace in that region and work together toward a responsible exit. In March of 1919, the Emir of Iraq, Feisal ibn Hussein, wrote to Supreme Court Justice Felix Frankfurter. This is what he said: We feel that Arabs and Jews are cousins in race, having suffered similar oppressions at the hands of powers stronger than themselves, and by happy coincidence they have been able to take the first step toward the mutual attainment of their national ideals together. . . .Indeed, I think neither can be a real success without the other. . . .I look forward . . . to a future in which we will help you and you will help us, so that the countries in which we are mutually interested may once again take their places in the community of civilized peoples in the world. That is what the Emir of Iraq wrote in 1919. America must renew its commitment to peace in the Middle East. We must work to regain the fleeting sense of optimism that can lead to political resolution. We must be positive. We must be the leaders that we Americans are. We must work to stop the spilling of blood in the land of Abraham. I urge President Bush to listen to the Iraq Study Group. I urge him to listen to commanders such as General Abizaid. I urge him to listen to the American people. It is time for America to change its course. It is time for a new political effort. It is time to bring the troops home. I yield the floor. I suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. President, I am pleased to join my Colleague, Senator Snowe, in introducing legislation to improve and permanently extend the Work Opportunity and the Welfare-to-Work tax credits. Last year, I was pleased to help enact legislation that consolidated, streamlined, and extended these credits through the end of 2007. Now it is time to make these tax credits permanent. The current extension expires at the end of this year. So immediate action is needed to make these credits permanent and make several improvements to the programs to improve their effectiveness. Recurring lapses and extensions make administration of this credit burdensome both for the taxpaying employer, who cannot keep track of who is or is not qualified, and for the IRS, which needs to ensure that taxpayers are complying with the ever-shifting law. Last year, the program lapsed until late December, when Congress finally passed a retroactive extension. Over the past decade, the Work Opportunity Tax Credit, WOTC, and the Welfare-to-Work credits have helped more than 2.2 million public assistance dependent individuals to enter the workforce. These hiring tax incentives have demonstrated their effectiveness. They help to level the job selection playing field for low-skilled individuals. They provide employers with additional resources to help recruit, select, train and retain individuals with significant barriers to work. Many vulnerable individuals still need a boost in finding employment. And this is particularly important during periods of high unemployment. Without an extension of these programs, the task of transitioning from welfare-to-work will become even harder for individuals who reach their welfare eligibility ceiling. Because of the costs involved in setting up and administering a WOTC and Welfare-to-Work program, employers have established massive outreach programs to maximize the number of eligible persons in their hiring pool. The States, in turn, have steadily improved the programs through improved administration. WOTC has become an example of a true public-private partnership design to assist the most needy applicants. Without the additional resources provided by these hiring tax incentives, few employers would actively seek out this hard-to-employ population. The new combined WOTC and Welfare-to-Work credits provide employers with a graduated tax credit equal to 25 percent of the first $6,000 in wages for eligible individuals working between 120 hours and 399 hours and a 40-percent tax credit on the first $6,000 in wages for those working more than 400 hours. In the category of longterm welfare recipients, employers receive a maximum credit of $4,000, or 40 percent of qualified first year wages up to $10,000. Employers receive a maximum credit of $5,000, or 50 percent of qualified wages up to $10,000, for retaining for a second year individuals in the long-term welfare assistance category. In my home State of Montana, many businesses take advantage of this program, including large multinational firms and smaller family-owned businesses. Those who truly benefit from the WOTC and Welfare-to-Work program, however, are low-income families under the Food Stamp Program, the Aid to Families with Dependent Children, AFDC, and Temporary Assistance for Needy Families, TANF, programs, and also low income U.S. Veterans. In Montana, more than 1,000 people were certified as eligible under the WOTC program during an 18-month period, October 2001 through March 2003, including 476 Food Stamp recipients, 475 AFDC or TANF recipients, and 52 U.S. veterans. The bill that we are introducing today provides for a permanent program extension of the combined credits. After a decade of experience with WOTC and Welfare-to- Work, we know that employers do respond to these important hiring tax incentives. Permanent extension would provide these programs with greater stability, thereby encouraging more employers to participate, make investments in expanding outreach to identify potential workers from the targeted groups, and avoid the wasteful disruption of termination and renewal. A permanent extension would also encourage the state job services to invest the resources needed to make the certification process more efficient and employer- friendly. Finally, there are other changes in the bill that would extend these benefits to more people and help them find work. One change would increase the age of eligibility for those individuals seeking work who reside in enterprise zones or empowerment communities. Another change would include referrals from the Ticket to Work program in the Vocational Rehabilitation category. These two changes are modest improvements to the program. Further, this bill adds a new subcategory with an enhanced credit for employers who hire veterans with service-connected disabilities occurring on or after September 11, 2001. As of July 2006, nearly 20,000 members of our Armed Forces were wounded in action in Operation Iraqi Freedom and Operation Enduring Freedom. Many of these veterans are now permanently disabled. Of these brave men and women who have been wounded, nearly 5,000 are members of the National Guard and Reserves. Our National Guard and Reserves are carrying a huge burden in our current conflicts abroad. Many of these wounded veterans come from rural States such as my home State of Montana. In Montana, we have the highest proportion of veterans per capita of any state. According to the most recent census, veterans account for nearly one out of every six people in Montana. And veterans and families of veterans constitute a significant portion of the population in rural states throughout the country. When not deployed, many National Guardsmen and reservists in Montana support their families with second and even third jobs. At any time, they can be deployed overseas, to our borders, or even to aid with national disasters such as hurricanes or forest fires. If they are injured or disabled, however, many become unable to perform the jobs that they did before deployment. They will need to transition into a new job or career. It is our duty to provide the proper means for veterans to make that transition. It is our duty to help them to live as independent citizens. Since August 2002, the share of veterans collecting unemployment insurance has nearly doubled. During any given year, half a million veterans across the Nation experience homelessness. We are not providing enough resources for veterans looking for work. We are too often failing our injured and our disabled veterans. Many seriously injured and disabled veterans simply do not know what they are going to do once they return home. We need to help these young men and women. And a modest tax incentive to get them back into the workforce is one place to start. I look forward to working with Senator Snowe to get a permanent work incentive for these individuals. And I encourage our Colleagues to join us in this effort.

Mr. BAUCUS

Mr. BAUCUS. President, I am pleased to join my Colleague, Senator Snowe, in introducing legislation to improve and permanently extend the Work Opportunity and the Welfare-to-Work tax credits. Last year, I was pleased to help enact legislation that consolidated, streamlined, and extended these credits through the end of 2007. Now it is time to make these tax credits permanent. The current extension expires at the end of this year. So immediate action is needed to make these credits permanent and make several improvements to the programs to improve their effectiveness. Recurring lapses and extensions make administration of this credit burdensome both for the taxpaying employer, who cannot keep track of who is or is not qualified, and for the IRS, which needs to ensure that taxpayers are complying with the ever-shifting law. Last year, the program lapsed until late December, when Congress finally passed a retroactive extension. Over the past decade, the Work Opportunity Tax Credit, WOTC, and the Welfare-to-Work credits have helped more than 2.2 million public assistance dependent individuals to enter the workforce. These hiring tax incentives have demonstrated their effectiveness. They help to level the job selection playing field for low-skilled individuals. They provide employers with additional resources to help recruit, select, train and retain individuals with significant barriers to work. Many vulnerable individuals still need a boost in finding employment. And this is particularly important during periods of high unemployment. Without an extension of these programs, the task of transitioning from welfare-to-work will become even harder for individuals who reach their welfare eligibility ceiling. Because of the costs involved in setting up and administering a WOTC and Welfare-to-Work program, employers have established massive outreach programs to maximize the number of eligible persons in their hiring pool. The States, in turn, have steadily improved the programs through improved administration. WOTC has become an example of a true public-private partnership design to assist the most needy applicants. Without the additional resources provided by these hiring tax incentives, few employers would actively seek out this hard-to-employ population. The new combined WOTC and Welfare-to-Work credits provide employers with a graduated tax credit equal to 25 percent of the first $6,000 in wages for eligible individuals working between 120 hours and 399 hours and a 40-percent tax credit on the first $6,000 in wages for those working more than 400 hours. In the category of longterm welfare recipients, employers receive a maximum credit of $4,000, or 40 percent of qualified first year wages up to $10,000. Employers receive a maximum credit of $5,000, or 50 percent of qualified wages up to $10,000, for retaining for a second year individuals in the long-term welfare assistance category. In my home State of Montana, many businesses take advantage of this program, including large multinational firms and smaller family-owned businesses. Those who truly benefit from the WOTC and Welfare-to-Work program, however, are low-income families under the Food Stamp Program, the Aid to Families with Dependent Children, AFDC, and Temporary Assistance for Needy Families, TANF, programs, and also low income U.S. Veterans. In Montana, more than 1,000 people were certified as eligible under the WOTC program during an 18-month period, October 2001 through March 2003, including 476 Food Stamp recipients, 475 AFDC or TANF recipients, and 52 U.S. veterans. The bill that we are introducing today provides for a permanent program extension of the combined credits. After a decade of experience with WOTC and Welfare-to- Work, we know that employers do respond to these important hiring tax incentives. Permanent extension would provide these programs with greater stability, thereby encouraging more employers to participate, make investments in expanding outreach to identify potential workers from the targeted groups, and avoid the wasteful disruption of termination and renewal. A permanent extension would also encourage the state job services to invest the resources needed to make the certification process more efficient and employer- friendly. Finally, there are other changes in the bill that would extend these benefits to more people and help them find work. One change would increase the age of eligibility for those individuals seeking work who reside in enterprise zones or empowerment communities. Another change would include referrals from the Ticket to Work program in the Vocational Rehabilitation category. These two changes are modest improvements to the program. Further, this bill adds a new subcategory with an enhanced credit for employers who hire veterans with service-connected disabilities occurring on or after September 11, 2001. As of July 2006, nearly 20,000 members of our Armed Forces were wounded in action in Operation Iraqi Freedom and Operation Enduring Freedom. Many of these veterans are now permanently disabled. Of these brave men and women who have been wounded, nearly 5,000 are members of the National Guard and Reserves. Our National Guard and Reserves are carrying a huge burden in our current conflicts abroad. Many of these wounded veterans come from rural States such as my home State of Montana. In Montana, we have the highest proportion of veterans per capita of any state. According to the most recent census, veterans account for nearly one out of every six people in Montana. And veterans and families of veterans constitute a significant portion of the population in rural states throughout the country. When not deployed, many National Guardsmen and reservists in Montana support their families with second and even third jobs. At any time, they can be deployed overseas, to our borders, or even to aid with national disasters such as hurricanes or forest fires. If they are injured or disabled, however, many become unable to perform the jobs that they did before deployment. They will need to transition into a new job or career. It is our duty to provide the proper means for veterans to make that transition. It is our duty to help them to live as independent citizens. Since August 2002, the share of veterans collecting unemployment insurance has nearly doubled. During any given year, half a million veterans across the Nation experience homelessness. We are not providing enough resources for veterans looking for work. We are too often failing our injured and our disabled veterans. Many seriously injured and disabled veterans simply do not know what they are going to do once they return home. We need to help these young men and women. And a modest tax incentive to get them back into the workforce is one place to start. I look forward to working with Senator Snowe to get a permanent work incentive for these individuals. And I encourage our Colleagues to join us in this effort.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am pleased today to introduce the Trade Adjustment Assistance Improvement Act of 2007 with my good friend and colleague, Senator Norm Coleman. In 2006, the United States passed, signed or concluded no fewer than five new free trade agreements. This June, the President's authority to negotiate trade agreements will expire. Congress should extend the President's authority to negotiate these deals. But when we do, we must raise the bar higher than before. Each deal must surpass the last, in order to take advantage of and adjust to changes in the global marketplace that affect American businesses and workers. Congress will consider these agreements on their merits. In most cases, these deals will mean more access for American producers and service providers. In some few cases, these agreements could mean more and fiercer competition for producers and providers here at home. Competition is the engine that drives market economies like ours. It spawns innovation and creates new jobs. But just as jobs are created in new sectors of our economy, jobs are also lost in other sectors which experience sudden or unfair competition from abroad. Whether and how effectively we help those firms and workers who feel the negative effects of our national trade policy will, in large part, determine whether and how effectively we can move a trade agenda forward this year. During the last several Congresses, we have experienced unprecedented change in the global marketplace and in our labor market at home. I have worked to raise the bar on our efforts to help workers affected by these changes. Today, I propose again, more urgently than ever, that Congress and the administration work together to adapt our national worker adjustment strategies to the challenges of globalization. The Trade Adjustment Assistance Improvement Act is a first and necessary step in that direction. The Trade Adjustment Assistance Improvement Act includes many proposals that Congress should consider before the program expires this September. The Act extends coverage to more of the workers who are affected by trade and globalization. And the Act will improve the overall efficiency and effectiveness of the program. For more than a century, the manufacturing sector drove the American economy. So, when President Kennedy decided to open the American economy to more trade, he established the Trade Adjustment Assistance program to help workers in the manufacturing sector adjust to change. Today, our economy depends upon service exports. More than 75 percent of the American labor force work in services. While many service sector jobs cannot be outsourced, technology change makes it possible to provide many services remotely, in such fields as accounting, healthcare, and computers and information technology. So when a large call center left Kalispell, Montana, three years ago for Canada, the Montana workers left behind did not have access to the same benefits that workers laid off from the Columbia Falls Aluminum manufacturing plant did. They should have. Last year, the Department of Labor agreed, for the first time ever, that workers who produce software, an intangible product, should be eligible for Trade Adjustment Assistance. That was a step in the right direction. We should take the next step this year. We should finally extend coverage to American service workers. That is what my bill proposes. Trade Adjustment Assistance certification takes place on a case-by- case, plant-by-plant basis. This means that while two factories producing the same products may both experience foreign competition that leads to layoffs, often only one of those factories' laid off workers gets certified as eligible for the program. Consider the softwood lumber industry. At least 12 out of 35 Trade Adjustment Assistance petitions filed by workers in Montana's softwood lumber industry over the last 7 years were denied by the Department of Labor. Yet, all of these mills were similarly affected by the same market conditions--dumped and subsidized Canadian imports. The International Trade Commission found that Canadian imports injured or threatened to injury the softwood lumber industry on a national scale. But the Department of Labor's certification process does not take into account the bigger--and often more meaningful--picture. It simply relies on data provided by individual companies that lay off the workers to make its case-by-case determination. The legislation that I introduce today makes industry-wide certification automatic for workers anywhere in the United States if the President, the International Trade Commission, or another qualified Federal agency determines that imports are harming that industry. My bill also authorizes, but does not require, the Secretary of Labor to make industry-wide determinations if she receives three or more petitions in one industry within one 6-month period, or if the Senate Finance Committee and the House Ways and Means Committee pass a resolution requesting such an investigation. We can anticipate and in some cases even prevent displacements by renewing and expanding our commitment to small and medium-sized American companies looking to recapture their competitive edge. One key, yet small program that can help prevent displacements and shifts in production to overseas is the TAA for Firms program in the Department of Commerce. The Firms program reaches out to companies that have experienced decreasing sales or production due to import competition and have laid off or expect to lay off workers. This program is chronically under-funded, and it should also be available to service sector firms. This bill would authorize $50 million for this program to reach more small- and medium-sized businesses across the nation before they are forced to lay off their American workers and close their doors. This bill also moves the Firms program from the Economic Development Administration at Commerce back into the International Trade Administration. That's where it was previously. And frankly that's where it ought to have remained. Despite the Firms program's proven track record, proposals related to the program under the Economic Development Administration have sought to either defund the program altogether, or to limit eligibility by increasing the profit-loss margin required for participation and arbitrary termination of firms after 2 years. The Firms program is a trade program and should be administered by an agency whose primary mission is to help American companies to adjust to and benefit from trade. In 2002, with the passage of the Trade Adjustment Assistance Reform Act, I had great expectations for our first wage insurance demonstration project. In theory, wage insurance--or Alternative Trade Adjustment Assistance--encourages swift re-entry into the workforce by replacing a portion of a worker's lost wages when a worker accepts a lower paying job within 6 months of a layoff. Workers who choose wage insurance over traditional Trade Adjustment Assistance training and income assistance often have less access to good training or simply cannot afford to be out of work during their training. Wage insurance provides an incentive for employers to hire lower-skilled and older workers and train them on the job. In practice, I have been disappointed with the Department of Labor's implementation of the wage insurance proposal that we crafted in 2002. In a 2004 review by the Government Accountability Office, the Department of Labor's implementation of the benefit came up far short of the mark. Last year, the Government Accountability Office once again found that the Department needed to improve its implementation, focusing specifically on its outreach to and direction of state employment service offices. I hope to work with the Department of Labor on strategies that will improve its outreach. Wage insurance can help put people back to work, and can even save money over traditional Trade Adjustment Assistance. But it cannot do either of those things if no one knows about the benefit. This bill streamlines the process to qualify for wage insurance, and lowers the eligible age from 50 to 40. Wage replacement should be available to younger workers who would re-enter the workforce more quickly if they could afford the often steep wage cut. Another key component of the Trade Adjustment Assistance Reform Act was the health care tax credit to help displaced workers and some retirees maintain access to health insurance coverage. As health costs grow, losing health insurance can be as financially devastating to workers as losing a job. While I still believe that the TAA health care tax credit holds promise, this is clearly an area where reforms are needed to help the credit achieve its purpose. Today, the TAA health care tax credit helps only a fraction of the hundreds of thousands eligible for assistance. In its first 2 years, less than 6 percent of eligible workers and retirees enrolled. A GAO report released last year studying five major plant closings in 2003 and 2004 found that only 3 to 12 percent of eligible workers enrolled. More than half of the workers studied didn't sign up for the tax credit because the 65 percent subsidy was too low to make health coverage affordable. The tax credit also suffers from complexity and administrative red tape. More than half of eligible workers in GAO's recent study didn't even know about the benefit. About a third of workers who knew about the benefit decided not to enroll because it was too confusing. Even those who understand it have to navigate complex rules and requirements to get the benefit. We need to make this program simpler, more affordable, and more seamless so that more workers can take it up in the years ahead. We need to improve the information that workers and retirees get about the program and create systems to ensure that they get it. We need to cut down on the red tape. And we need to look at options to make this benefit more affordable so that we can truly reach the hundreds of thousands eligible for this benefit that Congress intended to help when we enacted these reforms 4 years ago. I plan to introduce a bill later in the year that will achieve these goals for reforming the health care tax credit and will look forward to working with Senator Coleman and other colleagues in this effort. The forces of globalization, like trade and technology change, have created tremendous opportunities for American businesses and workers, from cutting the cost of living to increasing the margin of profit. Trade accounts for a quarter of our gross domestic product. The adjustments we have made to maximize trade's benefits save the average American household $9,000 annually. But we must also make adjustments to respond to the challenges that come with globalization. American businesses in the 21st century face rapidly-changing consumer preferences and ever-swifter technological advances. Global competition is fierce. Innovation is the key to these companies' continued prosperity. The same holds true for American workers. They know that they must adjust to changes in the labor market if they are to maintain their place in it. Workers must be prepared for one or more career shifts before retirement. They must acquire more skills, and refresh their skills more often. We can help American companies adapt, and regain their competitive edge in the global marketplace. We can help more trade-displaced workers get back into the workforce. We should help these workers adapt not only to trade displacement, but to all the other aspects of globalization as well. American workers and the companies that employ them must each continually adjust to a changing world marketplace. So too should our worker adjustment strategies. Mr. President, I ask unanimous consent that the full text of the bill be printed in the Record.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, back in 1962, Marshall McLuhan wrote, ``The new electronic interdependence recreates the world in the image of a global village.'' Certainly, 40 years later, that concept is truer than ever. As we prepare for the future in this global village, we need to affirm America's leadership role in the world. The United States accounts for one-third of the world's spending on scientific research and development, ranking first among all countries. While this is impressive, relative to GDP, though, the United States falls to sixth place. And the trends show that maintaining American leadership in the future depends on increased commitment to research and science. Asia has recognized this. Asia is plowing more funding into science and education. China, in particular, understands that technological advancement means security, independence, and economic growth. Spending on research and development has increased by 140 percent in China, Korea and Taiwan. In America, it has increased by only 34 percent. Asia's commitment is already paying off. More than a hundred Fortune 500 companies have opened research centers in India and China. I have visited some of them. I was impressed with the level of skill of the workers I met there. China's commitment to research, at $60 billion in expenditures, is dramatic by any measure. Over the last few years, China has doubled the share of its economy that it invests in research. China intends to double the amount committed to basic research in the next decade. Currently, only America beats out China in numbers of researchers in the workforce. Today, I am pleased to introduce the Research Competitiveness Act of 2007. This bill would improve our research competitiveness in four major areas. All four address incentives in our tax code. Government also supports research through federal spending. But I am not addressing those areas today. First, my bill improves and simplifies the credit for applied research in section 41 of the tax code. This credit has grown to be overly complex, both for taxpayers and the IRS. Beginning in 2008, my bill would create a simpler 20 percent credit for qualifying research expenses that exceed 50 percent of the average expenses for the prior 3 years. And just as important: The bill makes the credit permanent. Because the credit has been temporary, it has simply not been as effective as it could be. Since its creation in 1981, it has been extended 11 times. Congress even allowed it to lapse during one period. The credit last expired in December of 2005. After much consternation and delay, Congress passed a two-year extension just last month, extending the credit for 2006 and 2007. These temporary extensions have taken their toll on taxpayers. In 2005, the experts at the Joint Committee on Taxation wrote: ``Perhaps the greatest criticism of the R&E credit among taxpayers regards its temporary nature.'' Joint Tax went on to say, ``A credit of longer duration may more successfully induce additional research than would a temporary credit, even if the temporary credit is periodically renewed.'' Currently, there are three different ways to claim a tax credit for qualifying research expenses. First, the ``traditional'' credit relies on incremental increases in expenses compared to a mid-1980s base period. Second, the ``alternative incremental'' credit measures the increase in research over the average of the prior 4 years. Both of these credits have base periods involving gross receipts. Under the new tax bill enacted last month, a third formula was created, which does not rely on gross receipts and is available only for 2007. My bill simplifies these credits by using this new credit only, known as the ``Alternative Simplified Credit,'' based on research spending without reference to gross receipts. The current formulas hurt companies that have fluctuating sales. And it hurts companies that take on a new line of business not dependent on research. This new, simpler formula in my bill would not start until 2008. That start date would give companies plenty of time to adjust their accounting. The main complaint about the existing credits is that they are very complex, particularly the reference to the 20-year-old base period. This base period creates problems for the taxpayer in trying to calculate the credit. And it creates problems for the IRS in trying to administer and audit those claims. The new credit focuses only on expenses, not gross receipts. And it is still an incremental credit, so that companies must continue to increase research spending over time. Further, this bill adds a mandate for a Treasury study to look at substantiation issues and ensure that current recordkeeping requirements assist the IRS without unduly burdening the taxpayer. A tax credit is a cost-effective way to promote R&E. A report by the Congressional Research Service finds that without government support, investment in R&E would fall short of the socially optimal amount. Thus CRS endorses Government policies to boost private sector R&E. Also, American workers who are engaged in R&E activities benefit from some of the most intellectually stimulating, high-paying, high-skilled jobs in the economy. My own State of Montana has excellent examples of this economic activity. During the 1990s, about 400 establishments in Montana provided high-technology services, at an average wage of about $35,000 per year. These jobs paid nearly 80 percent more than the average private sector wage, which was less than $20,000 a year during the same period. Many of these jobs would never have been created without the assistance of the R&E credit. My research bill would also establish a uniform reimbursement rate for all contract and consortia R&E. It would provide that 80 percent of expenses for research performed for the taxpayer by other parties count as qualifying research expenses under the regular credit. Currently, when a taxpayer pays someone else to perform research for the taxpayer, the taxpayer can claim one of three rates in order to determine how much the taxpayer can include for the research credit. The lower amount is meant to assure overhead expenses that normally do not qualify for the R&E credit are not counted. Different rates, however, create unnecessary complexity. Therefore, my bill creates a uniform rate of 80 percent. The second major research area that this bill addresses is the need to enhance and simplify the credit for basic research. This credit benefits universities and other entities committed to basic research. And it benefits the companies or individuals who donate to them. My bill provides that payments under the university basic research credit would count as contractor expenses at the rate of 100 percent. The current formula for calculating the university basic research credit--defined as research ``for the advancement of science with no specific commercial objective''--is even more complex than the regular traditional R&E credit. Because of this complexity, this credit costs less than one-half of 1 percent of the cost of the regular R&E credit. It is completely underutilized. It needs to be simplified to encourage businesses to give more for basic research. American universities have been powerful engines of scientific discovery. To maintain our premier global position in basic research, America relies on sustained high levels of basic research funding and the ability to recruit the most talented students in the world. The gestation of scientific discovery is long. At least at first, we cannot know the commercial applications of a discovery. But America leads the world in biotechnology today because of support for basic research in chemistry and physics in the 1960s. Maintaining a commitment to scientific inquiry, therefore, must be part of our vision for sustained competitiveness. Translating university discoveries into commercial products also takes innovation, capital, and risk. The Center for Strategic and International Studies asked what kind of government intervention can maintain technological leadership. One source of technological innovation that provides America with comparative advantage is the combination of university research programs, entrepreneurs, and risk capital from venture capitalists, corporations, or governments. Research clusters around Silicon Valley and North Carolina's Research Triangle exemplify this sort of combination. The National Academies reached a similar conclusion in a 2002 review of the National Nanotechnology Initiatives. In a report, they wrote: ``To enhance the transition from basic to applied research, the committee recommends that industrial partnerships be stimulated and nurtured to help accelerate the commercialization of national nanotechnology developments.'' To further that goal, the third major area this bill addresses is fostering the creation of research parks. This part of the bill would benefit state and local governments and universities that want to create research centers for businesses incubating scientific discoveries with promise for commercial development. Stanford created the nation's first high-tech research park in 1951, in response to the demand for industrial land near the university and an emerging electronics industry tied closely to the School of Engineering. The Stanford Research Park traces its origins to a business started with $538 in a Palo Alto garage by two men named Bill Hewlett and Dave Packard. The Park is now home to 140 companies in electronics, software, biotechnology, and other high tech fields. Similarly, the North Carolina Research Triangle was founded in 1959 by university, government, and business leaders with money from private contributions. It now has 112 research and development organizations, 37,600 employees, and capital investment of more than $2.7 billion. More recently, Virginia has fostered a research park now housing 53 private-sector companies, nonprofits, VCU research institutes, and state laboratories. The Virginia park employs more than 1,300 people. The creation of these parks would seem to be an obvious choice. But it takes a significant commitment from a range of sources to bring them into being. To foster the creation and expansion of these successful parks, my bill will encourage their creation through the use of tax- exempt bond financing. Allowing tax-exempt bond authority would bring down the cost to establish such parks. Foreign countries are emulating this successful formula. They are establishing high-tech clusters through government and university partnerships with private industry. Back in 2000, a partnership was formed to foster TechRanch to assist Montana State University and other Montana-based research institutions in their efforts to commercialize research. But TechRanch is desperately in need of some new high-tech facilities. It could surely benefit from a provision such as this. I encourage my Colleagues to visit research parks in their states to see how my bill could be helpful in fostering more successful ventures. A related item is a small fix to help universities that use tax- exempt bonds to build research facilities primarily for federal research in the basic or fundamental research area. Some of these facilities housing federal research--mostly NIH and NSF funded projects--are in danger of losing their tax-exempt bond status. Counsel have notified some state officials that they may be running afoul of a prohibition on ``private use'' in the tax code, because one private party has a superior claim to others in the use of inventions that result from research. The complication comes from a 1980 law. In 1980, Congress enacted the Patent and Trademark Law Amendments Act, also known as the Bayh-Dole Act. The Bayh-Dole Act requires the Federal Government to retain a non- exclusive, royalty-free right on any discovery. In order to foster more basic research through Federal-state-university partnerships, we need to clarify that this provision of the Bayh-Dole act does not cause these bonds to lose their taxexempt status. And my bill directs the Treasury Department to do so. I understand that the Treasury Department is aware of this significant concern. Whether or not Congress enacts my legislation, I hope that the Treasury Department will clarify the situation soon. The fourth major area that my bill addresses is innovation at the small business level. Last year, representatives of a number of small nanotechnology companies came to visit me. They told me that their greatest problem was surviving what they called the ``valley of death.'' That's what they called the first few years of business, when an entrepreneur has a promising technology but little money to test or develop it. Many businesses simply do not survive the ``valley of death.'' I believe that Congress should find a way to assist these businesses with promising technology. Nanotechnology, for instance, shows much promise. According to a recent report, over the next decade, nanotechnology will affect most manufactured goods. As stated in Senate testimony by one National Science Foundation official last year, ``Nanotechnology is truly our next great frontier in science and engineering.'' It took me a while to understand just what nanotechnology is. But it is basically the control of things at very, very small dimensions. By understanding and controlling at that dimension, people can find new and unique applications. These applications range from common consumer products-- such as making our sunblocks better--to improving disease-fighting medicines--to designing more fuel-efficient cars. So, to help these small businesses convert their promising science into successful businesses, my bill would establish tax credits for investments in qualifying small technology innovation companies. These struggling start-up ventures often cannot utilize existing incentives in the tax code--like the R&E tax credit--because they have no tax liability and may have little income for the first few years. They need access to cheap capital to get through those first few research- intensive years. The credit in my bill would be similar to the existing and successful New Markets Tax Credit. The New Markets Credit has provided billions of dollars of investment to low-income communities across the country. In my bill, entities with some expertise and knowledge of research would receive an allocation from Treasury to analyze and select qualifying research investments. These investment entities would then target small business with promising technologies that focus the majority of their expenditures on activity qualifying as research expenses under the R&E credit. In sum, my bill would boost both applied and basic research. It would boost research by businesses big and small. And it would foster research by for-profit and non-profits alike. McLuhan's quote about the global village was taken by many at the time as a wake-up call to a changing world. Since then, many more leaders in this village have emerged. Let us work to see that the next big technological advance is discovered here in America. Only through continued commitment to research can We ensure that it is.

Mr. BAUCUS. Mr. President, there is a monster in the tax code. Like Frankenstein, the Alternative Minimum Tax brings back to life higher taxes. Higher taxes that families had been told not to worry about are brought back because of the Alternative Minimum Tax, or AMT. It is a monster that really cannot be improved. It cannot be made to work right. It is time to draw the curtain on this monster. That is why I am pleased to join with my friend Chuck Grassley, and our fellow Committee colleagues, Senators Schumer, Kyl, and Crapo to introduce legislation today that will repeal the individual AMT. Our bill simply says that beginning January 1, 2007, individuals will owe zero dollars under the AMT. Further, our bill provides that individuals with AMT credits can continue to use those credits up to 90 percent of their regular tax liability. If we don't act, in 2007, the family-unfriendly AMT will hit middle- income families earning $61,000 with three children. What was once meant to ensure that a handful of millionaires did not eliminate all taxes through excessive deductions is now meaning millions of working families, including thousands in my home State of Montana, are subject to a higher stealth tax. It is truly bizarre that we've designed a tax that deems more children ``excessive deductions'' and punishes duly paying your State taxes. Already, 5,000 Montana families pay a higher tax because of the AMT. But this number could multiply many times over if we don't act soon. Not only is the AMT unfair and poorly targeted, it is an awful mess to figure out. The National Taxpayer Advocate has singled out this item as causing the most complexity for individual taxpayers. Of course, repeal does not come without cost and that cost is significant even if we assume the 2001 and 2003 tax cuts aren't extended. We are committed to working together to identify reasonable offsets. Certainly, I don't think we want a tax system unfairly placing a higher tax burden on millions of middle-income families with children. But it doesn't serve those families either if our budget deficit is significantly worse. Like Frankenstein's monster, the AMT brings a most unpleasant reaction from those whom it encounters. It is time we end this drama and repeal the AMT.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, there is a monster in the tax code. Like Frankenstein, the Alternative Minimum Tax brings back to life higher taxes. Higher taxes that families had been told not to worry about are brought back because of the Alternative Minimum Tax, or AMT. It is a monster that really cannot be improved. It cannot be made to work right. It is time to draw the curtain on this monster. That is why I am pleased to join with my friend Chuck Grassley, and our fellow Committee colleagues, Senators Schumer, Kyl, and Crapo to introduce legislation today that will repeal the individual AMT. Our bill simply says that beginning January 1, 2007, individuals will owe zero dollars under the AMT. Further, our bill provides that individuals with AMT credits can continue to use those credits up to 90 percent of their regular tax liability. If we don't act, in 2007, the family-unfriendly AMT will hit middle- income families earning $61,000 with three children. What was once meant to ensure that a handful of millionaires did not eliminate all taxes through excessive deductions is now meaning millions of working families, including thousands in my home State of Montana, are subject to a higher stealth tax. It is truly bizarre that we've designed a tax that deems more children ``excessive deductions'' and punishes duly paying your State taxes. Already, 5,000 Montana families pay a higher tax because of the AMT. But this number could multiply many times over if we don't act soon. Not only is the AMT unfair and poorly targeted, it is an awful mess to figure out. The National Taxpayer Advocate has singled out this item as causing the most complexity for individual taxpayers. Of course, repeal does not come without cost and that cost is significant even if we assume the 2001 and 2003 tax cuts aren't extended. We are committed to working together to identify reasonable offsets. Certainly, I don't think we want a tax system unfairly placing a higher tax burden on millions of middle-income families with children. But it doesn't serve those families either if our budget deficit is significantly worse. Like Frankenstein's monster, the AMT brings a most unpleasant reaction from those whom it encounters. It is time we end this drama and repeal the AMT.