Max Baucus

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. BAUCUS. Mr. President, I don't have prepared remarks, but I join the majority leader in praising Eric Ueland. He is a bright guy. Very intelligent, gracious, and straight, someone I trust. I got to know him with the leader over months, weeks, days, and hours. I thank him very much.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I want to recognize one key staff member whose last day in the Senate is today and that is Brian Pomper. He has worked in my Senate office since March 2003. He has served as my chief trade counsel over the past 2 years. In that time, Brian has been at the center of each and every trade initiative that has passed through this Congress. He has worked tirelessly and fairly with Members and staff of both parties in both Houses, and he has bridged gaps that have seemed insurmountable. He is very intelligent, very conscientious, and one of the most decent persons I have ever had the privilege to know. Brian Pomper will be sorely missed in the Senate.

Mr. BAUCUS

Mr. BAUCUS. I want to associate myself with the remarks of the chairman. This bill is so important, so vital to the lives of hundreds of thousands of children who need health coverage. I am so proud that the Senate and the House were able to get together and work out a deal to get this done this year. I was disappointed we weren't able to include this in the tax extenders package that Senator Grassley and I worked on, so it is very gratifying to know we were able to do this. I want to especially thank Chairman Grassley and his staff, Becky Shipp, for their dedication to this effort and commitment to the program. I would also like to thank Chairman Barton and his staff, Ryan Long, for their willingness to help in this process, and Congressman Dingell and his staff, Bridgett Taylor and Amy Hall, for their dogged determination to get this done. I also agree with Chairman Grassley in his view that the CHIP provisions in this bill will not set a precedent for reauthorization next year. Instead, this is a temporary fix--a downpayment toward addressing a long-term problem of increasing demand for CHIP and not enough Federal funds to go around. In an ideal world, Senator Grassley and I would have liked to put new money on the table to fully fund the shortfalls. However, we are operating under significant budget constraints. This package represents what we think we can do now, despite those constraints. We know we will need to revisit this issue next year, either as part of the reauthorization of the CHIP program, or apart from that, to address the remaining CHIP shortfalls so that no State has insufficient funds to provide health coverage for children. I am heartened by Senator Grassley's strong commitment to the program that we will be able to work together in this critical effort to shore up our Nation's safety net for low-income children.

Mr. BAUCUS. I expect the Finance Committee to have a deliberative process on CHIP reauthorization early next year, where we can hear from Members, Governors, CHIP directors, families and others about the CHIP financing structure, the allotment timeframe, populations covered and any other relevant issues of concern. As far as I'm concerned, we come to this process with a clean slate and we will have an honest dialogue about the future of this vital program. For right now, however, I hope that we can pass this legislation, so that no child loses coverage before we have a chance to reauthorize the program next year.

Mr. BAUCUS. No, it does not. In fact, I soundly rejected the proposal during the negotiations with our House colleagues. They were clearly informed of my position on the matter. Our final agreement did not include this provision.

Mr. BAUCUS. I thank my colleague and good friend from Iowa. I look forward to working with you next year on this and all of the business we will have before our committee. children's health insurance program

Mr. BAUCUS. I thank you for bringing this provision up for discussion. I have concerns as well.

Mr. BAUCUS. That is an understatement. This provision would allow some but not all types of Medicare Advantage plans to enroll individuals throughout the year. Only those plans that do not offer prescription drug coverage will be given this special treatment. This may sound like a small change because it only affects a certain type of Medicare Advantage plan. But it creates an unlevel playing field between plans with no drug coverage and Medicare Advantage plans that have decided to offer prescription drug coverage.

Mr. BAUCUS

Mr. BAUCUS. I would be happy to work with my colleagues to make this change. Let me add that I have spoken with the incoming chairman of the House of Representatives Committee on Ways and Means, Mr. Rangel, and he supports your requests as well.

Mr. BAUCUS. I thank the Senator from Iowa. I am familiar with this problem and it is unfortunate that this provision has not been included in one of the recent tax measures. It is my intention to include this measure in a tax bill to be considered. And I expect to see it become law in the coming year.

Mr. BAUCUS. Mr. President, the timber tax proposal has the support of some Senators, but it is not included in the Tax Relief and Health Care Act of 2006. I have concerns about the proposal. I am sympathetic with the basic policy concern motivating the bill's supporters--to make it more feasible for timber companies to remain in corporate form if that is the best way for them to maintain their competitiveness. However, I believe that we need to do further work to make sure that we have an appropriate long-term solution. I understand this may be a time-sensitive issue. As chairman of the Senate Finance Committee during the next Congress, I plan to work with interested Senators and with forest products companies to closely examine this issue and determine the appropriate long-term solution. It is my hope and expectation that this work can be concluded in a timely manner so that appropriate action can be taken to address the long-term competitiveness of the timber industry. haiti

Mr. BAUCUS. I believe the Senators' request can be accommodated.

Mr. BAUCUS

Mr. BAUCUS. The American Jobs Creation Act of 2004 authorized the IRS to hire private debt collection agencies to collect delinquent taxes. An IRS pilot program was initiated this year, and the IRS expects to expand the program in early 2007. It is important that the program be administered by the IRS in a fair and responsible manner. Senator Nelson has proposed legislation, already unanimously passed by the Senate, which would ensure 10 percent of the employees assigned to the IRS contract by the private agencies are persons with disabilities. This will not affect the ability of the private contractors to collect delinquent taxes, but it will greatly affect the ability of persons with disabilities to find gainful employment that will promote their independence and well-being. I commend Senator Nelson for his commitment to improve the quality of life for persons with disabilities. I pledge to work with both of my good friends, Senator Nelson and Senator Grassley, in the next session of Congress to support his efforts.

Mr. BAUCUS. I support Senator Nelson's efforts to create opportunities that will employ persons with disabilities and am hopeful that these efforts can be in place before the IRS issues the next Request for Quotes in March 2007. I look forward to working with my colleagues and with the relevant agencies on this important matter.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that the following fellows, law clerks, and interns of the staff of the Finance Committee be granted the privilege of the floor for the duration of the debate on tax extenders. David Ashner, Mary Baker, Robin Burgess, Leona Cuttler, Tory Cyr, Susan Douglas, Christal Edwards, Peggy Hathaway, Diedra Henry-Spires, John Lageson, Richard Litsey, Tom Louthan, Mary Lisa Madell, David Schwartz, Stuart Sirkin, Brett Youngerman, and Martin Soebel.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am honored to speak to you today about a school in my home State of Montana--the Winnett School. The Department of Education recently selected the Winnett School as 1 of only 200 schools across the country to receive a Blue Ribbon. Winnett School, with just 95 students, is a wonderful example of how dedication and effort can lead to success in education. To the students, teachers, parents, and administrators at Winnett, I congratulate you on receiving this award. Being named a Blue Ribbon School is one of the highest recognitions in our country. With 120,000 schools nationwide, less than one-tenth of 1 percent of all the schools are honored. Your school is a model of success. America today faces a world more intensely competitive than ever in our history. The coming decades will be a race for economic leadership. If we are to succeed in a global economy, we must make education our focus. Nothing is more important than providing every Montanan with a solid education and the tools needed to succeed in life. Winnett School should be an example to schools all over the country of what we can do if we make a real commitment to education. The students at Winnett have set the standard for excellence that we must encourage and expect at all schools. I have always said that our Montana schools are the best in the country. And this week, the Department of Education has formally recognized you as such. Winnett School has succeeded because of the investment that teachers, students, parents and administrators make in the importance of a high- quality education. I applaud the teachers for their dedication to making sure that every student can succeed. Your energy is impressive and should be an example of what we can do with the support and commitment from the entire community. Your teachers go above and beyond their curriculum requirements. Each Monday the teachers meet at 8 a.m. to talk about whether any student in the whole school is at risk of falling behind. If a student is struggling, the staff together prepares a plan for the student and enlists the parents' help and cooperation. This dedication to the entire student community is evident in your students' commitment to education and achievement in school. The school dropout rate is zero and has been for some time. The last student who dropped out of school was over 10 years ago. That is way below the national dropout rate. Not only do Winnett School students stay in school, but they excel in a rigorous curriculum. All students take 4 years of math, science, English, history, and government. Their test scores demonstrate a commitment to achievement--92 percent of sophomores scored advanced or proficient in reading and 90 percent rated advanced or proficient in math. Students at Winnett School--you deserve this award. With your excellent education, you have no boundaries to what you can accomplish. You are the leaders of tomorrow. Once again, congratulations on your Blue Ribbon Award.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am pleased to join my friend and chairman, Senator Grassley, in bringing this package of needed tax, health, and trade matters to the Senate floor. This is the last bill that Senator Grassley will manage as chairman for at least a couple of years. And I want to take this opportunity to recognize his leadership as chairman on the Finance Committee. He and I have worked together as partners and we will continue to work together as partners in the Congress to come. Mr. President, Goethe said: ``To rule is easy, to govern difficult.'' Surely, this bill is evidence of that. The vast bulk of this bill is simply the business of governing. It continues needed tax, health, and trade law. These are things that we must do if we are to govern effectively. But certainly this bill has been difficult to enact. Much of this bill has been more than a year in the making. It involved negotiations between several Committees, two Houses, and bipartisan leadership teams. It suffered many deaths. And it enjoyed a few resurrections. But through hard work and determination we are finally able to present today, this bipartisan, bicameral agreement. The provisions of this bill are overwhelmingly the business of governing. They reinstate tax laws that have been needlessly disrupted. They protect health care coverage. And they continue free trade arrangements that benefit consumers and the residents of some of the world's poorest countries. Let me first turn to the tax section of the agreement. The key tax provisions of this bill are a host of popular tax incentives that expired last December. They have languished all year. The Finance Committee and the Senate passed legislation to extend these credits on time. The Senate passed them in November of last year as part of the tax reconciliation bill. But the conference with the House kicked those tax cuts out. Folks told us that the tax cuts would travel on the next tax bill, the pension conference. But again , the conference committee with the House removed them to sweeten other bills. when coupled with other more controversial measures, they failed. This is an unfortunate history. And it is one that I hope we will not repeat. If this Senator has anything to say about it. This is not how we will govern, in the next Congress. Congress's delay in extending these tax provisions caused uncertainty. And the delay until now will have real consequences for taxpayers. Just this week, I received a report of the contingency plan at the IRS for the 2007 filing season. The IRS identified about 60 tax forms and products that will be affected by this delay. The Form 1040 has already gone to the printer. That happened back in November. More than 120 million taxpayers use that form. The IRS will not reprint those forms. Consequently, the IRS expects taxpayer confusion. IRS expects more phone calls to the IRS with questions. IRS expects delays in filing. IRS expects incorrect returns. And IRS expects more amended returns. Further, the IRS will need at least 6 weeks to reprogram its systems to accommodate the changes. It is simply too late for the IRS to implement the 2007 filing season on time. This means delays in starting to process and issue refunds. And it means money. It may cost the IRS millions in additional costs because of our delay. And the cost to taxpayers could be even greater. In September, I brought a display of the draft Form 1040 for next year. Already, the classroom teachers' deduction and the college tuition deduction were gone. Millions of families that normally take those deductions, and other popular incentives like the state sales tax deduction will wonder why those lines no longer appear on the Form 1040. And, unless taxpayers are willing to get on the Internet and search, they may never know that we extended these incentives in the nick of time. Governing may be difficult, but we must do better. We must do better by our business taxpayers. Twenty thousand businesses who hire the hard-to-employ have continued to hire these workers with only a hope that we would retroactively extend the Work Opportunity Tax Credit. I am pleased to report that the credit is retroactive to the beginning of this year and improvements will be effective beginning next year. For the 16,000 businesses in this country that create high-tech jobs for U.S. workers, we have retroactively extended the R&D credit to the beginning of this year. We have provided for a new, enhanced credit for next year. And, we have also provided a special rule for fiscal year taxpayers. That will ensure these businesses can access the credit even though their tax year has closed. The agreement also provides a one-year extension of certain energy tax incentives that were due to expire next year. This package includes the popular credit for electricity from alternative energy sources. And this agreement extends expired individual tax incentives for 2 years--2006 and 2007. These incentives include the college tuition deduction, the state sales tax deduction, and classroom teachers' deduction, among others. This bill also has a substantial health component. The main attraction is an adjustment to the Medicare physician payment rate. This will stave off a cut of more than 5 percent in what Medicare pays doctors in 2007. And we are going to reward doctors for reporting on their performance. This will help move us toward paying for quality in the Medicare program. The information collected when doctors report on quality measures will be the foundation for paying for performance. We will move toward rewarding outcomes rather than simply the number of procedures. This bill also extends important provisions from the 2003 Medicare Modernization Act that are scheduled to expire at the end of this month. These provisions will help rural clinical laboratories, physical and occupational therapy patient, and pathologists. The bill will ensure continued access to dialysis services for patients with kidney failure. And it will correct how vaccines are reimbursed under the new Medicare prescription drug benefit. This will make vaccines even easier for seniors to get. Fighting health care fraud and abuse is another important part of this bill. A special fund, known as the Health Care Fraud and Abuse Control fund, was established years ago to help the Department of Justice work together to identify, deter, and prosecute health care fraud. Unfortunately, Congress has frozen the program's resources since fiscal year 2003. This bill would increase funding for the program each year for the next 4 years to keep up with inflation. We also provide the administration with another tool in fighting erroneous payments in Medicare. It would expand a demonstration program that was included in the 2003 Medicare law to use recovery audit contractors to identify and collect overpayments in Medicare. In the Medicaid program, this bill codifies the maximum rate at which States can tax health care providers under their Medicaid plans. Another provision extends transitional medical assistance, or TMA, for up to a year. TMA makes sure that low-income families do not lose their Medicaid health insurance when they move from welfare to work. This bill has real benefits for real people. In my home state of Montana alone, the physician payment adjustment will make a difference of between $10 million and $13 million to Montana doctors in 2007. The clinical laboratories extension provision will mean an additional $900,000 for clinical laboratories in Montana. The therapy caps exception will mean an additional 1,700 Montanans will have access to physical and occupational therapy services in 2007. And the Medicaid provider tax provision means that Montana Medicaid nursing homes will get $112 million in additional revenues over the next 5 years, while the State will have $36 million. The provisions in this bill are good for beneficiaries. These are good policies and they will help Medicare and Medicaid continue to provide Americans with the kind of quality health care they deserve. This legislation also ensures that two important trade programs, the Generalized System of Preferences and the Andean Trade Preferences Act, will not expire at the end of this year. Thousands of people's jobs depend on these programs, both here and abroad. The Generalized System of Preferences has been a part of American trade policy for more than 3 decades. It has encouraged development in poor countries by granting duty-free access to the world's largest market. But developing countries are not the only beneficiaries.American businesses benefit from the program. It allows them to source inputs and components duty-free. They can pass these benefits on to their customers in the form of lower prices and greater product variety. Critics of the Generalized System of Preferences rightly point out that the largest beneficiaries are middle income countries with strong export sectors that may not need these preferences. With this in mind, we have given the President authority to scale back benefits under the program if he determines that a country has become a competitive exporter. The President can examine the circumstances unique to each beneficiary country and weigh them against foreign and economic policy priorities. This bill will extend benefits under the Andean Trade Preferences Act for another 6 months, and would make a beneficiary country eligible for benefits for 6 more months if the United States and that country both complete their legislative processes to implement a free trade agreement. This extension means that the Andean countries' current preferences will not disappear abruptly at the end of this year. That would throw thousands of people out of work in the Andean region, and possibly drive thousands more to coca cultivation and trafficking. I continue to believe that a simple 1-year extension for both the Generalized System of Preferences and the Andean Trade Preferences Act--without changes--is the best policy. A 1-year extension would allow us to maintain the status quo. That would give us breathing space to evaluate all our preference programs next year and determine whether and how they mesh with out trade and competitiveness goals. That is not what this bill contains. but what this bill does contain on these important programs is far preferable to the disruption that expiration would engender for the thousands of people both here and abroad whose jobs rely upon these programs. In the next Congress, I intend to examine our trade preference programs, to explore whether and how they might be changed to address the valid criticisms some of my colleagues have made. We should understand the effect these programs have on the U.S. image around the world, our diplomatic efforts, and our trade priorities in the Doha Round and elsewhere. And we should give those in the United States who rely upon our trade preference programs an opportunity to suggest how those programs might be improved, and to explain how their interests might be affected by some of the changes that have been proposed. This bill also establishes a crucial 5-year trade preference program for a country much closer to home--Haiti. Haiti, just 600 miles from our shores, is the poorest country in our hemisphere. This program could help the people of Haiti to get back on a path to prosperity, opportunity, and long-term political stability. I commend the tireless efforts of Senators Bill Nelson and Mike DeWine, former Senator Bob Graham, and incoming House Ways and Means Committee Chairman Charlie Rangel to ensure that this Congress would extend this vital assistance. This legislation also extends expiring third-country fabric provisions for the least-developed African countries under the African Growth and Opportunity Act. That Act has contributed to the creation of thousands of jobs and investment in Sub-Saharan Africa. It has been credited with nearly tripling African apparel exports to the United States. These exports, around $1.4 billion in 2005, are just a fraction of the U.S. apparel market. But they are very significant to the companies and workers supplying them. This bill extends the third-country fabric provisions until 2012. I believe that if we give this program more time, more opportunities for investment and development will take root in southern Africa. The bill before the Senate today will also deliver some much-needed help for American manufacturers who import products they can't buy in the United States. This bill temporarily suspends duties charged on imported manufacturing inputs provided that no domestic company produces those goods. These duty suspensions mean jobs for American workers. They mean that Simms Fishing in Bozeman, MT can save money on the production of their world-class fishing waders. And Sun Mountain Sports in Missoula, MT, will get a break on the cost of manufacturing its high quality golf bags. While each duty suspension is worth less than $500,000, that money can mean a lot to small businesses around the country like Simms and Sun Mountain. The money they save can be reinvested in more jobs and further development right here at home. Today the Senate also stands poised to accomplish a goal that has eluded the United States for nearly 200 years-- normal economic relations with Vietnam. In April 1975, trade between America and Vietnam stopped. After the fall of Saigon, America imposed an economic embargo on the newly unified Vietnam. After years of painstaking diplomacy beginning with the first President Bush, relations between the United States and Vietnam improved. Trade between the two countries took off after the two sides began to implement a bilateral trade agreement in December 2001. Trade was just $1.4 billion in 2001. Four years later, trade flows were 5 times as large, hitting $7.7 billion in 2005. Vietnam's imminent accession to the World Trade Organization as its 150th member will accelerate this trend. Economically, Vietnam has become a critical market for the United States. Out of the rubble of a war that killed roughly a million of its citizens, Vietnam has re-emerged as a country with more than 83 million smart, energetic, hard-working men and women. The terms of Vietnam's WTO accession are first rate. Farmers and ranchers in Montana and across America will benefit from deep reductions in Vietnam's agricultural tariffs. Vietnam also committed to cut industrial tariffs to 15 percent or less for nearly all U.S. exports. And Vietnam has further opened its market to our most competitive sector--the services industry--which employs 3 out of 4 Americans. But to benefit from these and the rest of Vietnam's WTO accession commitments, the United States must grant Vietnam permanent normal trading relations. That is the small price that we have to pay: granting Vietnam, on a permanent basis, the normal trade relations that we already provide Vietnam on a renewable basis. Senator Smith and I introduced a bill to do so in June--with Senators McCain, Kerry, Lugar, Hagel, Murkowski, and Carper. If we do not grant Vietnam PNTR, then America will be shut out of Vietnam's market-opening commitments. If we do not, then the benefits of those commitments would instead flow to exporters in China, the European Union, Japan, and elsewhere. But Vietnam PNTR is not just about economics. As important, it makes history. It completes the process of normalization and reconciliation between two formerly bitter enemies. Let us make history today and pass this bill to grant Vietnam PNTR. Let us provide taxpayers with the tax relief they have been waiting for all year. Let us ensure that harsh cuts do not drive doctors away from seeing Medicare patients. And let us take some small steps to foster free trade. This year, governing has been difficult. But let us conclude this effort. Let us do this work that needs to be done. And let us conclude the work of this session of Congress so we can get on with next year.

Mr. BAUCUS

Mr. BAUCUS. Is the distinguished Senator from California aware of the need for a new veterans cemetery in Yellowstone County in Montana?

Mr. BAUCUS. On November 7 of this year the voters of Yellowstone County in my home State of Montana overwhelmingly approved a mill levy to provide $250,000 to the opening phase of the construction of the new Yellowstone County National Veterans Cemetery. However, the local mill levy only provides part of the funding needed and is to be used in conjunction with anticipated Federal funding as well as private donations because the first phase of the project has a preliminary cost estimate of over $1 million for roads, irrigation, and site improvements. Federal funds are needed for the project to begin. This funding is very important to Montana because we are out of burial space for our veterans. This new cemetery would provide burial spaces for our veterans for the next 20 to 30 years.

Mr. BAUCUS. I deeply appreciate the commitment of my distinguished colleague from California to the State of Montana's veterans. Child Care Center at Beale Air Force Base

Mr. BAUCUS. In Montana, we have the highest percentage of veterans per capita of any State in the country. Yellowstone County has 17.5 percent of all of the State's veterans, and when added to the surrounding counties, the greater Yellowstone area includes 25 percent of the State's veterans. The other national cemetery in the area--the Little Bighorn National Cemetery--is full. Eastern Montana faces a severe shortage in burial locations for Veterans.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I have filed an amendment to S. 2078, the proposed Indian Gaming Regulatory Act Amendments of 2006. The amendment would require the National Indian Gaming Commission, the NIGC, to utilize the well-accepted negotiated rulemaking process in promulgating any regulations required to implement the provisions contained in S. 2078. Let me take a moment to explain the amendment. Congress adopted the Negotiated Rulemaking Act in 1990. It appears at 5 USC, sections 561 and following. Congress permanently reauthorized the act in 1996. It provides an alternative to adversarial rulemaking. It saves time and reduces litigation. The Negotiated Rulemaking Act allows interested stakeholders and the Federal agency to be a part of the process. Negotiated rulemaking is a process by which tribes and Government agencies enter into negotiations in good faith and reach consensus on proposed rufts. All the legal requirements of notice, such as publication in the Federal Register, are employed. A negotiated rulemaking committee is employed. Thus there is transparency and accountability. If the negotiated rulemaking succeeds, it culminates in proposed rules that the Federal agency formally proposes. The Federal agency retains the ultimate authority, however, on any such proposed rule, as the agency retains responsibility in making final decisions and publishing the rule in the Federal Register. A variety of Federal agencies have successfully used the Negotiated Rulemaking Act in developing regulations. Among them are the Environmental Protection Agency, the Federal Aviation Administration, the National Park Service, the Department of Transportation, the Occupational Safety and Health Administration, and the United States Forest Service. As well, Federal agencies that have worked directly with Indian country have successfully used the negotiated rulemaking process. Among those are the Indian Health Service, the Bureau of Indian Affairs, and the Department of Housing and Urban Development when HUD developed the regulations under the Native American Housing and Self Determination Act. Some argue that it is not appropriate to require the NIGC to bring in tribes as a part of the negotiated rulemaking process because they are the entity being regulated. But we are dealing with sovereign Indian Nations that already have significant regulatory regimes in effect. The original Indian Gaming Regulatory Act already was a major intrusion into the status of tribes as units of government fully capable of managing their own affairs. To suggest that it is somehow problematic for tribal governments to have an institutionalized role in developing regulations is totally contrary to the very concept of our government- to-government relationship with tribes. That is a philosophy subscribed to by the chairman of the Indian Affairs Committee on many occasions. I urge my colleagues to support my amendment.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, will the Senator from Minnesota yield to me?