Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, this amendment modifies the way retail pharmacies are paid for brand-name generic drugs under Medicaid. The underlying bill makes some important, positive changes but has the unintended consequence of forcing the independents--that is, the independent drugstores and the chains--in a disadvantaged position compared with mail-order drug companies and long-term care drug companies, the point being that the last category, because they are large-sized, have greater purchasing power to be able to acquire drugs on a discount basis, whereas the earlier category, the independent pharmacist and the chains themselves who do not have the same purchasing power, will be forced to pay higher prices compared to the larger. It is a complicated subject. This is an amendment designed to even the playing field so the smaller guys get a break. It will not be to the disadvantage of the larger guys, because with their larger size, they will be able to get discounts that will more than offset the amendment provided for the smaller guys.

Mr. BAUCUS. Senator Grassley, I think it is more than just a question of transparency. It is also a question of legality. In many cases, the content of the waivers that CMS is negotiating fundamentally alters the Federal guarantee of Medicaid benefits. This is not the intended purpose of Medicaid demonstration authority. Section 1115 waiver authority allows the Secretary of the Department of Health and Human Services to waive certain provisions of the Medicaid program if the changes are determined to ``promote the objectives'' of Medicaid. I am concerned that the current waivers being approved by CMS go well beyond CMS' authority and that Congress should be more vigilant in its oversight.

Mr. BAUCUS. I call up amendment 2383 and ask for its immediate consideration.

Mr. BAUCUS

Mr. BAUCUS. I do not know who is yielding the time.

Mr. BAUCUS. Mr. President, 9 weeks ago yesterday, Hurricane Katrina hit the gulf, killing over 1,000 people, displacing over 1 million people, leaving the region with a cleanup bill that might reach $200 billion. Katrina left a gaping need in health care in the affected States and those that are hosting States. I do not know how to say it any other way but that the devastation is biblical. I visited the area 5 or 6 weeks ago. Other Senators did, too. I do not think there is any Senator who actually visited who would come up with any other feeling or belief that it is biblical. Unfortunately, very few Members of this body have actually been there. Unfortunately, very few Members of this body have actually seen the area, seen what is left, and it is not much, whether it is in Louisiana, New Orleans or the Gulf States. It is incredible how much the area has been destroyed. People who are alive do not have jobs, do not have homes, do not have schools, do not have their lives. It is absolutely incredible, and it is devastating. It is biblical. I do believe firmly, if every Senator in this institution were to see the areas affected, see the people, see what is happening, there would be a different result. We have become too academic around here. We read too many memos. We talk too much among ourselves. There is too much sort of theory, not enough actual on the ground, what really is going on. If Senators were to see it, feel it, taste it, smell it, there is no doubt in my mind that this amendment offered by the Senator from Arkansas would pass, it would pass unanimously, and we would not be debating it. We would be probably asking how could we help some more. So in the meantime, how has this Congress responded? To be fair, it has not. Incredibly, it has not. In the hurricane's wake, the chairman of the Finance Committee and I drafted a bill to cover evacuees under Medicaid for a short period of time, 5 months, to help provide health care to low-income people who do not have their jobs anymore, who do not have health insurance anymore, who do not have a place to put their kids in school, do not have homes--just temporary health care, 5 months. That was the bill we offered, a bill that Senator Grassley and I put together. Who supported it? Everybody in the affected States, Republicans, Democrats, Senators, Governors, supported it. Did we get it passed? No. We cover evacuees below the poverty level of $9,500. Think of that. People who earn that low income need help, particularly in the circumstances faced by the people in the aftermath of this destruction of the hurricane. Our amendment also would cover pregnant women and kids at twice that income level. That is not a lot of money. That is about $19,000 a year. That is all. Pregnant women and kids with incomes above that much would not get covered by our amendment but up to that level, $19,000 a year, that is all, pregnant women who only earn $19,000 a year. We say let's help them out for 5 months but at least help them out. That bill did not pass. What else did Senator Grassley and I provide for? Well, an $800 million fund for health care providers' uncompensated care cost. What is that all about, uncompensated care? What does that mean? That means help to those hospitals, those doctors, who gave free medical care out of the goodness of their hearts. Free medical care to people, regardless of what it cost, they just gave it; it is uncompensated care. Because those folks did not have insurance coverage, they did not have ways to pay the bills. It was free care. So we are saying, those hospitals are Good Samaritans, those doctors are Good Samaritans. They were not compensated at all for their care, so let us give them a little bit, $800 million--that is all. I know that the true uncompensated care cost is many times that. We are saying, let's help those Good Samaritans and show them that we care. And who is ``we''? We are the American people who pay taxes. We are Members of the Senate saying, OK, we represent our people back home. Those of us offering this amendment say we believe that our people in our States want to help out. They want to help these people who do not have health care, who have lost their jobs, lost their health insurance, help people who are in desperate need of help. Indefinitely? No, for 5 months. For a long time? No. For a huge amount? No, a little bit. We think the American people want to help give some care to those people who need it and who are good Samaritans. But this body so far has said we are not going to help those good Samaritans. We are going to leave them out in the cold. Senator Grassley and I also suggested giving 16 months of full Federal funding to the beleaguered Federal programs of the affected States. What does that mean? That means for 16 months we, as Americans, are going to help those States meet their Medicaid bills--for 16 months. But our bill has been blocked. It has been blocked by a small group of Senators on the other side of the aisle. What do these Senators on the other side of the aisle say? What is their reason for blocking this bill, this little, small bill that helps some people for a short period of time? What do they say? That our bill provides an open-ended expansion of Medicaid. It is the camel's nose under the tent. It is a theoretical, ideological argument. They argue also that the Government, that is HHS, Department of Health and Human Services, can take care of this crisis without congressional action. They say you don't need that, Congress. We, the administration, can take care of this. That is what they say. They also argue that our legislation is unnecessary spending. They keep those same arguments in effect today. Let me take those points on one by one. On the first, the amendment before us provides, as did the bill Senator Grassley and I offered, temporary 5-month Medicaid coverage. It is not indefinite; it is temporary, 5 months. We also suggest the President can renew that coverage for an additional 5 months, but that is it. It is not an open- ended Medicaid expansion. It is getting help to those who need it; not down the road, not forever, but now, because people need health care now. That is not something they can postpone. When you need health care, you need it right now. What about the argument that the administration, HHS, can take care of this problem without congressional action, that the administration can take care of Katrina health needs through something called Medicaid waivers? Simply put, that is not true. It is simply not true. They cannot do that under the law. They need a change in the law to do that. They cannot do that on their own. Last week in the Finance Committee, HHS testified they do need legislation to provide additional funds for the States to meet Katrina health needs. They admitted it before the Finance Committee. They also said the plan to provide only $100 million for new funds for uncompensated care costs--that $100 million is a paltry pittance compared to what is needed in the State of Louisiana alone. I might say, too, legislation is needed to address these needs, but the President still has not asked Congress to pass the legislation to make that happen. We provide it in this amendment, but they do not. Finally, Senators on the other side of the aisle argue that this bill constitutes wasteful spending; since we have already appropriated $60 billion through FEMA, two-thirds unspent, we should use those funds first. These same Senators argue we should scale back the bill's pricetag. I have listened to my colleagues on the other side of the aisle. Senator Lincoln has listened to them. Senator Landrieu has listened to them. We want to get legislation passed. We want to help people in some way. Guess what. In the spirit of compromise we scaled back our bill, offsetting it with unspent FEMA funds. That is, we are doing what the Senators wanted us to do. The amendment before us reduces the cost of the Katrina health package by giving 12 months of State Medicaid relief instead of 16 months; it removes the reductions in 29 State Medicaid programs--that bothered them, we removed that part--and by using unspent FEMA funds to offset its costs, the amendment does what the White House advocated last week. As you know, last week the White House proposed redirecting $17 billion in unspent FEMA funds to help rebuild the gulf coast. Let's look at that $17 billion. Of that $17 billion, $3.3 billion would go to reconstruct military bases--not health care needs but military bases-- and $2.3 will be spent on highways and bridge construction. I am speaking perhaps out of place here, but I visited the military bases that have been the subject of this amendment here. Yes, there is damage there, but it does not begin to compare with the other damage, the damage to the homes and the roads and the bridges, the lost jobs and health care needs. There is no comparison. I don't know why we are spending $3.3 billion to reconstruct a military base but not spending the money to help people with their health care needs. Mr. President, $410 million would help farmers remove debris and rehabilitate the land. Those are good causes. But the President's request doesn't ask for increased health care funding. It does not help those hospitals or doctors who were Good Samaritans by providing uncompensated care relief. It does not help States care for evacuees through their overburdened health care programs, and it doesn't help patients now. As I say, this amendment, to remind my colleagues what one of the opponents on the other side argued for a moment ago--it does it. What is that? When trying to move this bill through the Senate, a Senator on the other side, on September 30, said, and I quote him: The question is not whether we should or want to provide assistance. But we want to make sure we do it in a way that ensures that resources get where they are most needed and in a way that takes advantage of the $45 billion or so that has already been appropriated but has not been committed yet. Guess what. That is what this amendment does. It uses unspent funds to meet the urgent health care needs of Katrina victims. More than 9 weeks after this major national disaster hit our shores, we are still waiting for this Congress and the President to act on Katrina health care needs. The reconciliation bill we are considering provides some help for victims, but the $1.8 billion in the bill is not enough. It has been called a downpayment. It is not a downpayment; it is an end payment in the minds of the administration and those on the other side of the aisle. It is a last payment; it is not a downpayment. Why is it not a downpayment? Because they are saying no to extra funds being suggested here. So it is not a downpayment. That is flat inaccurate. It sounds nice, but it is inaccurate. We need to provide more Federal funds to help the affected States. Louisiana is in very dire financial straits. It will have to cut its Medicaid program by an estimated 40 percent if that State doesn't get funds by the end of this year. Think of that. It has to cut Medicaid by huge amounts if it does not get the needed funds. We also need to provide the funds for uncompensated health care costs to ensure providers--doctors, hospitals, health centers, the Good Samaritans--are recognized. And we need to ensure that low-income survivors get the health care they need, whether or not they meet Medicaid's rigid eligibility rules. In Louisiana alone, half of those who have applied for Medicaid have been turned away because they don't meet those standards. Think of that. Half the people in Louisiana have been turned away. They have health care needs. It is diabetics, cancer patients, people with dire needs who are turned away. We are not talking about high-income levels. Currently, a single mom who makes more than $2,500 a year would not get covered. Think of that. We are raising that to $9,500 a year. Right now, in the view taken by the other side of the aisle, a single mom who makes more than $2,500 a year would not get coverage. She would not get any help. What are we saying? Let's raise it up to $9,500 at least. That is not a lot of money; $9,500 a year. That is not a lot of money. If she makes more than that, she doesn't get help, but if she makes up to that level, she does get some help. This is not right, that this amendment is not being passed. It will not be agreed to. It is clear by the tone of this debate here. The Senator from Louisiana said we are going to keep working until we get something passed. Why? Because it is the right thing to do. I see the chairman of the Budget Committee is sitting there, deeply pondering, his chin on his hand there. I am saying to the chairman: There is a way to do this. The way to do it is to pay for it out of unspent Katrina appropriated dollars. There is a way to do this. I know the chairman is very concerned about total costs. He should be concerned about total costs. That is his job. But there is a way to do this and that is through this amendment. It is through the already appropriated dollars that are unspent. It does not add to the deficit, does not add to the budget woes the chairman is worrying about. There is a way of doing this. I am calling upon all of us as Senators to find a way to do this. We all know it is the right thing to do. We all know it is the right thing to give temporary health care assistance to people in the affected areas. We all know that. We all know it is the right thing to do to help some of those hospitals and doctors who have been Good Samaritans get a little bit of help because all America wants to help. We all know that. All America wants to help those doctors and those hospitals a little bit. I say to my good friend from New Hampshire, find it in his head and in his heart to help make this thing work because it is so important to so many people who are counting on us to recognize them, give them a little bit of hope--that is the very least we can do--and support the amendment offered by the Senator from Arkansas. I yield the floor.

Mr. BAUCUS. Not yet. I plan to speak now.

Mr. BAUCUS

Mr. BAUCUS. Objection.

Mr. BAUCUS. Objection.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to honor an outstanding Montanan. Today in the city of Butte, MT, citizens are taking to the streets in honor of Levi Leipheimer. In fact, October 20 is officially Levi Leipheimer Appreciation Day in Montana. To say that Levi Leipheimer is a competitive cyclist is an understatement. Levi is an established leader in the world of cycling. Under his belt, he has three top ten finishes in the world's biggest cycling race, the Tour de France. This year, he placed sixth in the Tour, and also won the Tour de Germany. This is an incredible accomplishment. I am proud that Levi grew up riding on the hills of Montana. Today, Levi is returning to Butte for the first time in roughly 4 years. The people of Butte are honoring him with a bike parade and street festival. Levi is an inspiration to the next generation of Montanans, and today by riding alongside in the streets of Butte, he will show them that through dedication and hard work, anything is possible. I am very proud of Levi Leipheimer and all that he has achieved. He has made both myself and the State of Montana very proud. We look forward to watching him compete in the years to come.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to express deep frustration over Japan's unwillingness to lift its ban on U.S. beef. My patience-- and the patience of many of colleagues in this chamber--has run out. The time for talk and empty promises is over. I have long been, and remain, a friend of Japan. I first visited that country many years ago as a student and was deeply touched by the kindness extended to me by the people of Japan. In over 30 years in Congress, I have worked hard to strengthen our trade and economic ties. I have watched proudly as the U.S.-Japan economic relationship has grown and prospered. Times have not always been easy. I have engaged closely on U.S.-Japan issues through good times and through periods of great strain. But even in the most difficult times, I have made every effort to roll up my sleeves and work through problems in order to ensure that our trade relationship with Japan works for the people of Montana and the United States. By and large, that relationship works, and it works well. In trade, one of our crowning achievements together has been the construction of a rules-based multilateral trading system--first through the General Agreement on Tariffs and Trade, and now through the World Trade Organization. Without Japan's leadership and cooperation during the Tokyo Round, the Uruguay Round, and now in the Doha Round, it would have been difficult--if not impossible--to craft the important rules that govern world trade. It is therefore with bitter disappointment that I stand here today on the Senate floor to draw attention to Japan's failure to play by the rules that it helped to create. Japan has banned U.S. beef from its market since December 2003. That ban--almost 2 years old--costs the U.S. cattle and beef industries hundreds of millions of dollars each month. That ban puts at risk jobs in American ranches. And that ban-- with absolutely no basis in science--is unsustainable under international trade law. In the 2 years since the ban was put in place, I have traveled to Japan to meet personally with Japan's trade and agriculture ministers to argue for lifting the ban on U.S. beef. I have met with the Japanese ambassador to press Japan to lift its ban. I have taken senior officials from Japan and other countries that ban U.S. beef to Montana, and fed them Montana beef on a Montana ranch, to encourage them to lift the ban. And I have urged President Bush, Agriculture Secretary Johanns, U.S. Trade Representative Portman, and other senior administration officials to make lifting the Japanese ban on U.S. beef a top priority. At first, I was encouraged by what appeared to be steps that Japan was taking to lift this ban. The United States and Japan even signed an agreement in October 2004 to remove the ban. At that time and since, I was repeatedly assured by Japanese officials that, under this agreement, the Japanese government would set up a ``scientific'' process to determine when and how to resume imports of U.S. beef products. It is now one year later, and still nothing. Instead, it now looks to me like that Japan's administrative process has become an exercise of smoke and mirrors. Japan says the right things. But its action--or actually inaction--has been far more telling. Let me assure my Japanese counterparts, there is no higher quality, safer, or better tasting beef in the world. I eat it. My family eats it. Japanese visitors to the United States eat it. Japanese students living in the United States eat it. Many beef eaters around the world prefer and consume U.S. beef. Yet, despite scientific proof of the safety of U.S. beef, there has been no quality Montanan or other American beef imported into Japan in almost 2 years. I can no longer accept assurances from the Japanese government that it will lift the ban. Montana's ranchers have heard enough vague promises during the last two years. We're fed up. The time for idle promises is over. It is now time for action. I therefore call upon the United States Trade Representative to sanction Japan for maintaining its ban on U.S. beef. The United States should impose sanctions on Japanese products imported into the United States in an amount equal to the losses suffered by the U.S. beef and cattle industries. This is a blunt instrument. But it appears to be the only recourse left. I will no longer sit by and watch Japan flout its international trade obligations behind the smokescreen that it is engaged in a lengthy ``process'' to lift the ban. Sanctioning Japan without resort to WTO dispute settlement is not ideal. It's not how the WTO is supposed to work. But U.S. beef producers should not be forced to wait the years it would take to complete a WTO case. They have waited long enough. I will not wring my hands over legal niceties when the livelihoods of ranchers in Montana and across the United States are at stake. In my experience, the only thing that will get the Japanese to act is leverage. And sanctions are leverage. We have been here before. In the late 1980s, Japan kept its market almost entirely closed to U.S. beef. U.S. beef producers were permitted to export only six ounces per Japanese citizen per year, a piddling amount. The excuse then was that Japanese intestines were somehow ``different'' and therefore unsuitable to digesting American beef. I didn't accept that ridiculous excuse. Instead, I pushed hard for legislation that would penalize Japanese imports. Soon thereafter, the Japanese opened their market to U.S. beef. And I don't accept this excuse.

Mr. BAUCUS

Mr. BAUCUS. I expect maybe 4 or 5 or 6 minutes.

Mr. BAUCUS. Madam President, I might also add, the primary sponsor of this legislation is the chairman of the Committee on Finance, Senator Chuck Grassley from Iowa. Senator Grassley is known in this Senate, probably more than any Member for doing the right thing. He is not a partisan. He is not political. He does what he thinks is right. It is clear to the chairman of the Senate Committee on Finance that this is right. I join with him to do something that is right. We have talked this out with all members of the committee, both sides, how to tailor this, modify it, make it work or not work, and I am quite confidence it would be agreed to unanimously by all members of the committee. I mentioned the States affected. The Senators of the States affected all want this. The Governors all want this--and there are more Republican than Democrat. And the mayors want it because they know it is the right thing to do. Again I make the request.

Mr. BAUCUS. I appreciate the Senator's question. People are not going to get health care. The diabetics will be scrambling wondering where they are going to get their insulin shots. People getting chemotherapy will be wondering where in the world they are going to get their chemotherapy. For mentally affected people, where are they going to get their assistance? Particularly those who have lost their jobs and don't have any insurance anymore, where are they going to get their insurance? If they lost their jobs and they do not have money to even pay for basics, let alone health care, how are they going to pay for food? Where are they going to live? It is incredible. I wish all Members in this Senate would go to the gulf coast and walk around New Orleans, walk around the gulf coast of Mississippi, and feel, see, smell, taste how devastating this tragedy is. We would be rushing to pass this legislation if Senators would go down there to see what is going on.

Mr. BAUCUS. The Senator is correct. That is the situation we are in.

Mr. BAUCUS. The Senator is correct. That is the intent of the amendment. I thank the Senator for raising that point. This is not a partisan effort at all. This is just a compassionate effort on the part of both Republicans and Democrats. I might say that all Senators--Republicans and Democrats--in the States affected would like to see this bill passed. All the Governors in the States affected--Republicans and Democrats--would like to see this bill passed. The House delegations from the States affected would like to see this bill passed. It is very much bipartisan. The second point the Senator made is a very good one. A lot of evacuees have gone to a lot of States across the country--many in Illinois. Some have come to my State in Montana from New Orleans. We are very gracious and want to do all we can to help the people who are so dislocated. If we stop and think for a moment, the Senators lead pretty comfortable lives. For these people, it is incredible hardships they are going through. We forget all they have to go through. They don't have houses, anyplace to live, no way to pay bills, no job, their kids are out of school, or where they can go to school, health care needs-- they are incredibly affected. I do not know how many Members have gone down to the gulf coast. Raise your hand if you have gone down to the gulf coast and have seen it all. There are two. We have seen it. It is Biblical. There is not a word for it. It is a tragedy that is affecting people on the gulf coast. It is Biblical. My Lord, my God, why can't the Senate do something about it? Why are we here, Senators? To say no? That is not why we are here. We are here to do the right thing. We are not asking for the Moon. We are just asking for a little bit of help.

Mr. BAUCUS. I would love to yield to the Senator.

Mr. BAUCUS. Madam President, with all due respect, we have heard these lamentations before. We have heard it all, with due respect, before. Let me just clear the record a little bit. The Senator mentioned waivers. The Secretary has admitted that he does not have authority under the waiver system to do what needs to be done. He does not have authority to make these hospitals--not whole but to get some uncompensated care for these hospitals. He does not have authority to do so. He does not have authority to make other provisions that are necessary in this bill. I must say this is a temporary bill. It is only on an emergency basis. I am willing to--and I think a lot of my colleagues are willing and concerned about the costs--take it out of the unspent FEMA money. We appropriated in this body about $60 billion for FEMA. I understand that maybe roughly $40 billion of that has not been spent. If the Senator is concerned about the costs, we could take it out of FEMA and help people who really need help. The Secretary does not have the authority to do what needs to be done. And, second, the administration has not come up with any real plan to say where the money is going to come from. It is all just talk, words. If the Senator from New Hampshire is willing to take the money out of FEMA, or if he is willing to say trim back a little bit to come up with a deal with 29 States to immediately pass a bill that may be trimmed down a little bit and paid for out of FEMA, then we would be doing the country a great deal of service. But to stand here day in and day out for 27 weeks, for a Senator to stand on the floor and say we can't help people in Louisiana and the Gulf States, we could sure help New Yorkers after 9/11. We can help them, but we can't help the people on the gulf coast. These are the same Medicaid provisions that we gave the people in New York City as a consequence of 9/11--the same eligibility standards, the same. In other words, let us do it for the gulf coast people, if we can do it for New Yorkers. It is great for New Yorkers. We are all for it. Let us figure out a way to help the people in the Gulf States--help them a little bit. This administration does not want to do so, and the other side doesn't want to do so. I cannot believe it when the big rush right now is to cut Medicaid--cut Medicaid, cut Medicaid. We want to help the people.

Mr. BAUCUS. If the Senator is willing to take it out of FEMA, we are willing to do that.

Mr. BAUCUS. In answer to the question of my colleague, it is absolutely true. We came to the aid of people who needed aid in New York within a couple of weeks. That was the right thing to do. We are a passionate people, a country willing to help people in need, particularly when it is an emergency need.

Mr. BAUCUS. Madam President, it has been more than 7 weeks since Hurricane Katrina hit the gulf coast--7 weeks. Nearly 1.5 million Americans have been displaced. Tens of thousands of these survivors have no health care coverage and no money to pay for care. It is high time for passage of the Grassley-Baucus Emergency Health Care Relief Act, S. 1716. On Monday, the Los Angeles Times ran a story on a 52-year-old schoolbus driver from New Orleans, Emanuel Wilson. Mr. Wilson survived Katrina, but his life is still at risk. Why? Because he has intestinal cancer and he has no health insurance. Mr. Wilson was getting monthly chemotherapy injections before the storm, but now he cannot get any health care. He lost his job and his health coverage because of Katrina, and he is ineligible to receive Medicaid. According to the New Orleans Times-Picayune, more than half of all hurricane evacuees still in Louisiana who sought Medicaid coverage since Katrina have been turned away. More than half were turned away. These are poor people. They aren't people with a lot of money. They are poor people. They can't get coverage because they do not meet the rigid eligibility guidelines under Federal Medicaid law. We need to relax those guidelines on a temporary basis, on an emergency basis, to help those survivors desperately in need. This morning, my staff met with Secretary Cerise, secretary of Louisiana's Department of Health and Hospitals. And Dr. Cerise reported that Louisiana's Medicaid Program has enrolled 60,000 new individuals because of Katrina, which would cost the State about $83 million if they were to pay for the care. Louisiana has just lost about one-seventh of its total expected State revenue this year, and they cannot bear these additional costs. They are likely to need to make dramatic cuts to the Medicaid Program if they don't get help soon. Dr. Cerise reports that Louisiana will have to cut all optional services to beneficiaries if they do not get help. What does that mean? That means ending their hospice programs, ending their pharmacy benefits, ending their institutional care for the mentally retarded, ending their dialysis and other benefits, cutting off care for their medically needy, breast and cervical cancer patients, as well as thousands of low-income children. We have spent far too long talking about this bill. Far too many times have we been asking unanimous consent to get this bill passed-- far too long. These are temporary provisions. America can do better. America can help its people in need in times of emergency. Where is America? Where is the Senate? My colleagues, Senator Grassley, Senator Landrieu, Senator Lincoln, and Senator Reid have all spoken passionately supporting moving this bill forward and moving it forward immediately. I hope we can get this bill passed and enacted into law without delay. We owe at least this much to our fellow Americans hit by Katrina and its aftermath. It ties in very much with the latest dialog on the floor with the Senator from Rhode Island about the need for LIHEAP money. Energy costs are going up around the country. They are going up so quickly, so high, and it is the kind of problem facing the people down on the gulf coast. I urgently ask our colleagues to support this bill. I ask unanimous consent that the Senate proceed to the consideration of Calendar No. 214, S. 1716, a bill to provide emergency health care relief for survivors of Hurricane Katrina; that the bill be read a third time and passed, and the motion to reconsider be laid upon the table.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, today my good friends Senators Grassley and McCain and I are introducing the ``Government Settlement Transparency Act of 2005'', a bill that will put a stop to tax deductions for fines and penalties paid by companies to government agencies in connection with civil settlements. Over the past several years, we have become increasingly concerned about the approval of various settlements that allow penalty payments made to the government in settlement of a violation or potential violation of the law to be tax deductible. Our concerns were heightened this week upon the release of a Government Accountability Office Report that confirmed many companies deduct these settlements notwithstanding the tax code's prohibition against deducting fines and penalties. This abuse shifts the tax burden from the wrongdoer onto the backs of the American people. This is unacceptable. Many government agencies enter into these settlement agreements after investigating companies for violations of the law. Every year thousands of violations are resolved with settlements totaling tens of billions of dollars paid to the Federal Government. Civil settlements serve to punish past wrongdoing and to deter future wrongdoing without protracted court proceedings. For example, in the past several years settlements of various SEC investigations into violations or potential violations of the securities laws have been front and center in the news. Through civil investigations, Federal and State regulators are working hard to hold these firms responsible for their actions. With these efforts to achieve greater accountability in the business community and ensure the integrity of our financial markets, it is important that the rules governing the appropriate tax treatment of settlements be clear and adhered to by taxpayers. Section 162(f) of the Internal Revenue Code provides that no deduction is allowed as a trade or business expense under section 162(a) for the payment of a fine or penalty to a government for violation of any law. The enactment of section 162(f) in 1969 codified existing case law that denied the deductibility of fines and penalties as ordinary and necessary business expenses on the grounds that ``allowance of the deduction would frustrate sharply defined national or state policies proscribing the particular types of conduct evidenced by some governmental declaration thereof.'' Treasury regulations provide that a fine or penalty includes an amount paid in settlement of the taxpayer's actual or potential liability for a fine or penalty. The legislation introduced today modifies the rules regarding the determination of whether payments are nondeductible payments of fines or penalties under section 162(f). In particular, the bill generally provides that amounts paid or incurred whether by suit, agreement, or otherwise, to, or at the direction of, a government in relation to the violation of any law or the investigation or inquiry in the potential violation of any law are nondeductible. The bill applies to deny a deduction for any such payments, including those where there is no admission of guilt or liability and those made for the purpose of avoiding further investigation or litigation. An exception applies to payments that the taxpayer establishes are either restitution, including remediation of property, or amounts required to come into compliance with any law that was violated, and that are so identified in the settlement agreement. It is intended that a payment will be treated as restitution only if the payment is required to be paid to the specific persons, or in relation to the specific property, actually harmed by the conduct of the taxpayer that resulted in the payment. Restitution does not include reimbursement of government investigative or litigation costs, or payments to whistleblowers. It is intended that a payment will be treated as an amount required to come into compliance only if it directly corrects a violation with respect to a particular requirement of law that was under investigation. Amounts paid to educate consumers or customers about the risks of doing business with the taxpayer or about the field in which the taxpayer generally does business, and which are not specifically required under the law, are not deductible if required under a settlement agreement. To ensure that companies do not take unallowable tax deductions for settlement payments, the bill requires government agencies to report to the IRS and to the taxpayer within thirty days of the settlement the amount of each settlement agreement, and to identify whether the payment is for fines, restitution, remediation or compliance, where the aggregate amount of the settlement is at least six hundred dollars, the Secretary of the Treasury will have the authority to adjust the amount and deadline for filing. Further, the IRS is encouraged to require taxpayers to separately identify such settlements on their tax returns. The bill would be effective for amounts paid or incurred on or after the date of enactment unless the amounts were under binding order or agreement before such date. I ask unanimous consent that the Joint Committee on Taxation Technical Description and the text of the bill be printed in the Record.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, today my good friends Senators Grassley and McCain and I are introducing the ``Government Settlement Transparency Act of 2005'', a bill that will put a stop to tax deductions for fines and penalties paid by companies to government agencies in connection with civil settlements. Over the past several years, we have become increasingly concerned about the approval of various settlements that allow penalty payments made to the government in settlement of a violation or potential violation of the law to be tax deductible. Our concerns were heightened this week upon the release of a Government Accountability Office Report that confirmed many companies deduct these settlements notwithstanding the tax code's prohibition against deducting fines and penalties. This abuse shifts the tax burden from the wrongdoer onto the backs of the American people. This is unacceptable. Many government agencies enter into these settlement agreements after investigating companies for violations of the law. Every year thousands of violations are resolved with settlements totaling tens of billions of dollars paid to the Federal Government. Civil settlements serve to punish past wrongdoing and to deter future wrongdoing without protracted court proceedings. For example, in the past several years settlements of various SEC investigations into violations or potential violations of the securities laws have been front and center in the news. Through civil investigations, Federal and State regulators are working hard to hold these firms responsible for their actions. With these efforts to achieve greater accountability in the business community and ensure the integrity of our financial markets, it is important that the rules governing the appropriate tax treatment of settlements be clear and adhered to by taxpayers. Section 162(f) of the Internal Revenue Code provides that no deduction is allowed as a trade or business expense under section 162(a) for the payment of a fine or penalty to a government for violation of any law. The enactment of section 162(f) in 1969 codified existing case law that denied the deductibility of fines and penalties as ordinary and necessary business expenses on the grounds that ``allowance of the deduction would frustrate sharply defined national or state policies proscribing the particular types of conduct evidenced by some governmental declaration thereof.'' Treasury regulations provide that a fine or penalty includes an amount paid in settlement of the taxpayer's actual or potential liability for a fine or penalty. The legislation introduced today modifies the rules regarding the determination of whether payments are nondeductible payments of fines or penalties under section 162(f). In particular, the bill generally provides that amounts paid or incurred whether by suit, agreement, or otherwise, to, or at the direction of, a government in relation to the violation of any law or the investigation or inquiry in the potential violation of any law are nondeductible. The bill applies to deny a deduction for any such payments, including those where there is no admission of guilt or liability and those made for the purpose of avoiding further investigation or litigation. An exception applies to payments that the taxpayer establishes are either restitution, including remediation of property, or amounts required to come into compliance with any law that was violated, and that are so identified in the settlement agreement. It is intended that a payment will be treated as restitution only if the payment is required to be paid to the specific persons, or in relation to the specific property, actually harmed by the conduct of the taxpayer that resulted in the payment. Restitution does not include reimbursement of government investigative or litigation costs, or payments to whistleblowers. It is intended that a payment will be treated as an amount required to come into compliance only if it directly corrects a violation with respect to a particular requirement of law that was under investigation. Amounts paid to educate consumers or customers about the risks of doing business with the taxpayer or about the field in which the taxpayer generally does business, and which are not specifically required under the law, are not deductible if required under a settlement agreement. To ensure that companies do not take unallowable tax deductions for settlement payments, the bill requires government agencies to report to the IRS and to the taxpayer within thirty days of the settlement the amount of each settlement agreement, and to identify whether the payment is for fines, restitution, remediation or compliance, where the aggregate amount of the settlement is at least six hundred dollars, the Secretary of the Treasury will have the authority to adjust the amount and deadline for filing. Further, the IRS is encouraged to require taxpayers to separately identify such settlements on their tax returns. The bill would be effective for amounts paid or incurred on or after the date of enactment unless the amounts were under binding order or agreement before such date. I ask unanimous consent that the Joint Committee on Taxation Technical Description and the text of the bill be printed in the Record.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, in the 12th century, in the Bay of Biscay, Basque sailors began to hunt right whales. The Basques melted the whales' blubber into oil to fuel their lamps. When the whales died out in Spanish waters, the Basques sailed north to Iceland pursuing the source of their lamp oil. By the 16th century, whalers hunted extensively in Icelandic waters to find the fuel for light. As our former colleague Phil Gramm wrote in 1973, from American colonial times through the middle of the 19th century, whale oil provided the major source of artificial lighting in America and Europe. But in the middle of the 19th century, America faced an energy crisis. The price of whale oil was rising. From a low of 23 cents a gallon in 1832, it rose to $1.45 a gallon in 1865. But then in 1859, people discovered petroleum oil in western Pennsylvania. The rising price of whale oil encouraged an engineer to invent a process to convert that western Pennsylvania black oil into a new fuel, kerosene. The whale oil era was ending, and the petroleum era began. One hundred fifty years later, at the turn of the 21st century, gasoline prices are rising. As late as December 2002, Montana gasoline prices averaged a little more than $1.30 a gallon. On September 5 of this year, the average price hit about $2.90 a gallon. In the wake of Hurricane Katrina's disruption of oil refineries, many Montanans feel gouged by sky-high gasoline and diesel prices. High gas prices hit low-income Montanans particularly hard. Peggy Grimes, director of the Montana Food Bank Network, says: ``[P]eople are going without food more often and coming to visit local food pantries more often.'' Just think of people having to make choices such as that. Rising natural gas and fuel oil prices have many Montanans concerned about how they will heat their homes this winter. And rising fertilizer costs will hit many Montana farmers hard. In the short term, petroleum price increases are forcing painful adjustments. In the medium term, we need to invest in conservation, weatherization, and upgrading the efficiency of cars, appliances, and machines that use energy. And in the long term, we need to adjust intelligently to higher petroleum costs, systematically and purposefully diversifying our energy sources. In the middle of the 19th century, America led the way to the next energy era, leaving the whale oil era behind. Now, at the beginning of the 21st century, America must once again lead the way to another energy era, an era that severs the world's dependence on Middle Eastern oil. Domestic oil and gas production will remain a critical part of our energy security for some time. But to lead the world to a new era, we will have to make major investments in new innovative forms and uses of energy. Once again, we have cause to look again across the waters to Iceland. Iceland is leaving the petroleum era behind. Iceland is entering the hydrogen era. The government has announced its intention to become a hydrogen-based economy by 2030. In Iceland, icy water cascades down from massive glaciers. And in Iceland, boiling water bubbles up from just beneath the surface. Iceland already harnesses these renewable resources to generate virtually all of its electricity and heating from hydroelectric and geothermal sources. But with no fossil fuel resources, Iceland relies heavily on imported oil to power cars, buses, and the fishing trawlers that provide 70 percent of Iceland's income. To break that dependency, and to reduce greenhouse gases, Iceland is turning to fuel cells. Fuel cells use hydrogen and oxygen to generate electricity to power engines. And the vehicles powered by those engines emit only water as exhaust. Iceland plans to use its cheap electricity to split water-- H2O--into its component parts--hydrogen and oxygen. Iceland uses the process of electrolysis. Electrolysis runs an electric current through bonded elements to separate the elements. Iceland's capital Reykjavik intends to replace its entire fleet of 80 buses with fuel cell buses. Next, Iceland hopes to convert private cars. And after that, Iceland hopes to switch the huge Icelandic fishing trawlers to hydrogen power. Iceland thus hopes to convert its renewable hydroelectric and geothermal energy into a form that can power its transportation system, and, in the process, Iceland hopes to slash emissions and end its dependence on fossil fuels. Maria Maack, the project director of Iceland New Energy, explained: We are so reliant on our fisheries, and the fisheries are totally dependent on oil. So we have a chance to be quite independent of this. . . [I]t's being independent and relying on ourselves to continue the way we live. Bragi Arnason, a chemistry professor at the University of Iceland and a leader in hydrogen technology, beamed: I think we could be a pilot country, giving a vision of the world to come. This is my sixth address to the Senate on competitiveness. Starting this summer, I spoke on competitiveness generally. I spoke on the role of education in meeting that challenge so we Americans can be more competitive in the future. Education at all levels--K through 12, continuing education, higher education, technology schools--is the long-term key for America to remain the biggest and strongest economic power in the world, given the challenges of China, India, and other countries that are taking advantage of the Internet and other technologies which are making other countries more competitive than they have been in the past. I spoke on the role of trade, how we have to be more aggressive in trade to market our products overseas better and knock down trade barriers. I spoke on the role of controlling health care costs which make us less competitive worldwide. Our health care costs per capita are twice that of the next expensive country, and I doubt we are twice as healthy. I spoke on the role of capital and savings. We are not a net savings country, we are basically a net deficit country. Other countries save so much more than we save. That means capital that is available to develop new technologies, both technical technologies and human technologies. Today I wish to speak about the role of energy in competitiveness. If we are to be a strong country and meet the foreign challenge, clearly, we need to be much more independent in energy production. Iceland's Professor Arnason is not alone in his vision of a hydrogen future. At the University of Montana, Missoula College of Technology, Dean Paul Williamson has a similar vision. He is working to use hydrogen as the focal point to build a state-of-the-art college of technology and futures park. He wants to create something that folks in Geneva will get on a plane to come to America to see. So we are not always going overseas to see what they are doing, they will come to see what we are doing. It is a laboratory of excellence, to serve as a gateway to alternative technology in a much larger community. Dean Williamson's vision is to marry Montana's resource base with the best trained workforce, and he is working to make the Missoula College of Technology a focal point to transform that vision into reality. Missoula College of Technology is creating the educational venue, and with it, they will match a business gateway to help to bring business and industry to the area, creating networks of microenterprises. All around Montana and the Nation, people are working on renewable and alternative energy research and industry. Rising energy prices, combined with smart Government incentives, have spurred innovation, and we are already beginning to reap the benefits. I have already talked about one example, hydrogen. Another example is coal conversion. Coal gasification can be used to help produce hydrogen, and coal gasification can also be used to produce fertilizers, other chemicals, and diesel fuel. Our State's Governor, Brian Schweitzer, and I have targeted a process to turn Montana's coal into clean-burning diesel and jet fuel. The process is called Fischer-Tropsch, or F-T for the German scientists who developed it in the 1920s. Energy technology firms in America and elsewhere are fine-tuning F-T to make it even cleaner. F-T fuels are relatively clean. The process can recover sulfur, mercury, and arsenic as marketable byproducts. Jack Holmes, president of Syntroleum, extols the cleanliness of F-T diesel. He says it can be burned straight or blended with regular diesel fuel. He says: It's like a single-malt scotch. Not quite, but we get the drift of it. Governor Schweitzer calculates: It would cost less than $1 per gallon to make that diesel. The break-even point for F-T comes when crude oil sells for more than $35 a barrel. These days, that looks like a pretty safe bet. To develop processes such as these in the just-passed Energy bill, I worked to include an investment tax credit for the coal gasification technology used by the F-T process. In the highway bill, I worked to include a 50-cent-a-gallon tax credit for companies that generate fuel using an updated version of the F-T process. I also included a Federal loan guarantee so that companies can finance these capital investments. We have real opportunity here. The coal-to-fuel technology can be a win for everybody if we do it right and if we make sure that any facility uses the cleanest and most advanced technology available-- again, if they do it right. It will help lessen our dependence on foreign sources of energy while creating thousands of jobs in America. I am proud to join our Governor in trying to bring a new investment in this technology to Montana and to the Nation. A third example is renewable and alternative energy in the form of wind energy. They may call Chicago ``the windy city,'' but many say Great Falls, MT, is the windiest city in America. ``Wind is like water flowing out of the mountains,'' says Bob Quinn, a farmer from Big Sandy, MT. Big Sandy is a little bit east of what we call the eastern front. It is the Rocky Mountains and the Continental Divide. The eastern front falls off similar to a big cliff. That is why we call it the front. By the time it gets to Big Sandy, which is not too far away, it is similar to water flowing out of the mountains. Closer to the mountains, the wind is turbulent, but across the prairie, it flows uniformly similar to a huge river, and that makes it attractive as a wind farm site. Five years ago, Bob traveled to Germany to research his ancestry. He visited a distant cousin who had developed a wind project and was contemplating others in Chile or South Africa. Bob asked him, Why are you thinking about going clear to Chile to build a wind farm when you can buy one in Montana, where we have this river of wind? The cousin reconsidered and chose Montana. Along with another partner and two cousins, they formed WindPark Solutions America and began looking for sites. They settled on Judith Gap, a town of about 150 people in central Montana. Eventually, WindPark sold the project to Invenergy Wind, a Chicago-based company that will own and operate the project. Invenergy is now building a $150 million facility, the Judith Gap wind farm. Billings resident Ludlow Howe manages the construction. His work crews erected 130 turbines in two phases. The wind farm will cover an area about 8 miles long and 5 miles wide, straddling Highway 191 between Judith Gap and Harlowton. So far, workers have assembled at least 27 towers, colored white-gray to blend with the sky. Each tower is 260 feet tall. On top of each tower sits a generator box the size of a motor home. Seven-ton rotors with 122-foot blades sweep up to 387 feet into the air. Each turbine weighs more than 400,000 pounds. A system of 140 bolts secures each tower to its base. The rotors come from Houston, the turbines come from North Carolina, and tower sections come from China, Korea, and Fargo, ND. Ludlow says of the wind turbines: They will actually seek out the wind at 9 miles per hour. They will pitch their blades, just like a sailboat. They will trim their sails. The plant should be in full operation soon. NorthWestern Energy will buy power from the 150-megawatt wind farm for customers in central and western Montana. Wheatland County Commissioner Tom Bennett says admiringly: It's environmentally friendly. It's renewable. It's something we'll have forever. You tell me any negative on this. We couldn't find any. A fourth example of renewable and alternative energy is biomass and ethanol. Energy competitiveness can also come from a clear commitment to the development of biomass and ethanol-based fuels. Currently, most alternative fuels are not profitable without a Federal subsidy, but if we continue to support the industry until it reaches profitability, much as with wind power, it will become a self-sustaining model in its own right. A Pentagon-sponsored study called ``Winning the Oil Endgame,'' projects that biomass and ethanol-based fuels can create 750,000 new jobs. This effort could revitalize rural and agricultural areas of America. It could add tens of billions of dollars to farmers' revenue every year. Rural America is at the center of the next age of domestic energy production. Rather than spending $50 billion a year overseas to buy oil from foreign countries, we could be buying into rural America. We must continue to support these new industries. The man who headed the research team that created the hybrid Toyota Prius tells his young researchers: Forget about concentrating on such things as trivial increments in performance or cost cutting. If you restrict yourself to refining the prevailing paradigm, you will never come up with an earth-shattering idea or technology. That is the guy who heads the team that formed the new hybrid Prius, which is doing very well. America needs to follow that sage advice. We need to move beyond trivial increments in refining the prevailing petroleum paradigm. We need to move on to the next Earth-shattering ideas and technologies. During World War II, America created the Manhattan Project in an effort to develop the first nuclear weapons and win the war against fascism. That important effort involved sites at Hanford, Los Alamos, Oak Ridge, and more than 30 locations in all. By 1945, the project employed more than 130,000 people. It cost nearly $2 billion, or $20 billion in 2004 dollars, that is, in current dollars. Today, America needs a new Manhattan Project. As Tom Friedman put it in his book, ``The World is Flat,'' we need ``a crash program to . . . develop clean alternative energies.'' On May 25, 1961, President John F. Kennedy told the Congress: I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the Moon and returning him safely to the Earth. Don't you remember that? That was a real challenge, an important and necessary challenge. It lifted us up, helped us develop technologies, and made America feel good about itself. Today, America needs a new challenge. As Friedman puts it, we need ``a similar legacy project . . . a crash program for alternative energy and conservation to make America energy-independent in 10 years.'' Developing new energy sources in America will contribute to energy independence. Energy independence will contribute to national security, and energy independence will contribute to the stability of energy sources, allowing business to go forward without the jolts of supply disruptions. People facing the jolt of supply disruptions is a huge additional part of the problem of dependence. As well, developing new energy sources in America has the potential to turn renewable and alternative energy development into comparative advantage for America, to gain an advantage for America. If we can figure out how to make clean, cheap energy before other countries, then those other countries will pay American companies to build energy production there. Because of our early investments in the 1970s, America had an opportunity to become the world leader of the fossil alternative energy. With lower energy prices and decreased Federal support, however, our advantage dwindled. Countries such as Denmark and Germany built on our initial research. Denmark and Germany have become the world leaders in wind generation. Danish companies are now the No. 1 provider of wind services in America, outnumbering even American companies. The Danish became world leaders in wind power production by first growing the industry at home. According to the Danish Wind Industry Association, the Danish wind industry has created 20,000 new jobs. It exports 90 percent of the wind turbines it creates, and it supplies 20 percent of Denmark's electricity. This is all because Denmark was the second country to reach the critical production level of 100 megawatts a year in 1987. That was 4 years after America. But we decided to end wind power subsidies for a time. That put them ahead. There is a silver lining, however. America still has the resources to create technologies that could be turned into comparative advantages. Because of our wind power penetration, we are still fairly advanced compared to other nations. With a concerted effort for research, development, and production of wind generation--or solar power or other energy programs that we have been working on--we could easily become the world leaders in those industries if we put our mind and effort to it. America has underinvested in research and development. This happens because firms invest in R&D based on the private return to their firms alone. The social rate of return to investment, however, exceeds the private return. As economists put it, positive externalities exist. These external benefits come from knowledge spillovers, the creation of public goods, and economies of scale. The existence of these externalities--an awful word, but it is so powerful--counsels that the Government needs to subsidize R&D until the private rate of return matches the social rate of return. Traditionally, governments have used a few different policy tools to subsidize R&D: the first as government research grants to industry and educational institutions but, second, to provide tax incentives for R&D. A third tool is the increasingly popular and effective technique of offering prizes to spur innovation. For example, in 1714, the British Government offered the longitude prize, a prize of 20,000 pounds, for precise determination of a ship's longitude. John Harrison solved the problem and eventually won the prize using precision clocks. A year ago, SpaceShipOne won the Ansari X Prize competition. The X Prize Foundation offered $10 million to the first private venture to send a privately funded craft into space twice in a week. The Clay Mathematics Institute of Cambridge, MA, offers a $1 million prize each for the solutions of seven Prize problems. The problems are classic mathematical questions that have resisted solution over the years. Prizes like these involve little risk for the Government. And these prizes provide a very efficient, market-based approach to subsidy. For every success, there will be numerous failures. It is extremely difficult to predict who the winner will be. America needs to invest in a basket of potential technologies. In 1874, it was a dream of science fiction: Jules Verne envisaged a world in which water would replace coal as the fuel of the future. Now Icelanders believe they can do just that; they can turn that dream into science fact. And they have taken steps to create the world's first hydrogen society. In old Icelandic sagas, whales were either good or evil. The evil whales swallowed boats and men. Just talking about such whales while on a boat would bring bad luck. In contrast, the blue whale protected both boats and men. Blue whales would scare away all the evil whales. According to old Icelandic sagas, blue whales would warn fishermen by circling a boat three times in a row. Sometimes energy sources can also appear to be good or bad. With hydrogen, Iceland hopes it has found the energy equivalent of a good blue whale. Certainly, with the 1970s oil shocks and now the Katrina-related price spikes, we have been warned at least three times in a row to seek out safer seas. In the 19th century, America plotted the course to a more productive energy future. In this new century, let us see that America once again leads the way. Let us once again chart a course to more secure energy waters. And let us once again explore the uncharted oceans of possibilities and bring the energy that we need safely home.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that the following detailees and interns with the Senate Finance Committee be granted the privileges of the floor during the Senate's consideration of the Transportation, Treasury, and HUD appropriations bill: Mary Baker, Jorlie Cruz, Brian Townsend, and Will Larson.

Mr. BAUCUS

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