Max Baucus

Mr. BAUCUS

Mr. BAUCUS. That is a promise we made. We should live up to our promise. No. 2, we are coming nowhere near living up to our promise. No. 3, costs are going up dramatically in all our States for special education, and we are not helping address that. And No. 4 is the tremendous importance of education in this country. We are competing worldwide with elementary and high school students in Pusan, Korea, in Czechoslovakia, high schools and elementary schools all around the world. Education is going to be the key to America's economic success in the future. It is going to have to be education. It cannot be anything else. We need to educate our kids. We ought to set priorities for educating our kids rather than spending money elsewhere. We have a lot of programs on which I do not think money should be spent. I think most Americans think our priorities are a little askew and that we should spend more on education, helping our kids, than we are thus far. I heard the argument, well, gee, if it is mandatory, first, that is not necessary. That is the main argument to be made. I have shown how necessary it is. The second argument I hear is, well, it is illusory, that perhaps the discretionary portion will not be provided. That is a false statement. First, we are talking about the very worst case scenario. The mandatory portion will be provided for. It is possible that the discretionary portion may not be provided for by Congress. That is possible. The very worst possible situation is that we only get the mandatory increase under this amendment, but sure as I am standing here, my colleagues know doggoned well that Congress is not going to provide the discretionary money, too. We are talking about education, and with the mandatory increase provided for we are certainly going to provide for the discretionary portion, too. This amendment is a no-brainer. It is clear to this Senator this amendment must and should pass, for the sake of our kids. We have a duty on the face of this Earth, I believe a moral obligation, to leave this place in as good a shape or better shape than we found it. Clearly, that includes making sure our kids, special education students, are in as good a shape or better shape than we had when we were being educated, particularly given the competitive forces in the world. I strongly urge the passage of this amendment.

Mr. BAUCUS. Madam President, I thank my friend from Delaware. I agree with him. I believe we should have pay-go principles in the Senate. I hope the Budget Committee adopts pay-go. I think it would be a dereliction of duty not to. I also support his view on this amendment. For the last 10, 15 minutes I have heard a lot of complaints against the Clinton administration, against Democrats, how they have not really helped special education. One can use that argument and point the finger, playing one party against the other. I have all kinds of data that resoundingly refute the allegations made by the chairman of the committee. It is just not accurate. But I will not get into that. That is not why we are here. We are not here to blame and say who is doing a better job, Republicans or Democrats. People back home don't care two hoots about that. They care about whether we are doing our job as a body. I submit that we are not doing our job with respect to providing the dollars for special education. I don't know about you, Madam President, but when I am in my State, I hear constantly from school districts, school administrators, about how pressed they are and their inability to meet costs and the cost increases. As you well know, we have in America a system where elementary and secondary education is paid for basically by taxpayer dollars, property taxes. That is what it comes down to. People are stressed, with the economy not doing too well in our States. School levies are not going through. People cannot pay more property taxes to support anything. They would love to support their schools, but they cannot afford it. Costs for school districts in Montana have gone up over 1,000 percent in the last 20 years; that is for special education and elementary education in general. That is the cost increase. School districts in Montana--and I daresay most school districts across the country--are facing this. What do we do about it? As you know, Madam President, back in 1975, Congress passed a law-- IDEA--regarding special education. What did that law provide? It provided for ramping up 40 percent payment of IDEA, of special education costs. That was the law in 1975. Beginning in 1978, there would be a 5-percent increase; in 1979, 10 percent of the funding; in 1980, 20 percent would be paid; up to 1982 when 40 percent--the full amount--of special education costs would be provided for by Uncle Sam. That was back in 1975 when that statute was passed. Here we are in 2004, and I think we are only at 18 percent. We have not made good on our promise. We are way off base. So a lot of the data we have heard about a 365-percent increase is misleading. You can do anything with statistics. Those statistics start from a very low base, and I am just telling you what the law is. The law was that back in 1975 we would ramp it up to 40 percent by 1982. That is why it is our failure to do so. We are only at 18 percent; that is all we come up with. With costs going up so much at home, that is why I believe the Harkin approach makes sense. We need mandatory increases up to 2014-- not discretionary, because it has been discretionary. And when the President is given discretion what has happened? Virtually nothing. Sure, we are getting some increases, just a little bit, but it is virtually nothing. Congress always finds a way, Presidents always find a way, not to spend money on education. Other things seemingly are more important. If we do not pass the Harkin amendment, mark my words, there is no way we are ever going to get up even close to 40 percent. We are not going to get up to 25 percent by the year 2014. It is not going to happen. It is only going to happen if we keep our feet to the fire and force the President and the Congress to come up with the promise that we should fulfill. We should fulfill it because we made that promise. I ask for an additional 2 minutes.

Mr. BAUCUS. Madam President, I ask to speak for 5 minutes in favor of the amendment.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I raise an issue with regard to the car donation provision included in the JOBS bill. Under the provision donors are limited to deducting the actual sale price of the vehicle that is donated to charity, unless the charity uses the car, in which case donors a get fair market value deduction. This is a good rule. It will cut out abuse of this charitable giving device, and make it easier for donors to comply with the tax law. However, I am also concerned about the potential for charities that intentionally sell/transfer donated vehicles at a low or no cost to low-income recipients as part of a charitable program to be unintentionally hampered from doing so. I believe the law is written in such a way that if the car is given by the charity to a low income family, or used for parts to repair a different car, there is no sale that triggers the sales proceeds limit, and the donor gets a fair market value deduction. I agree with some folks' suggestions that the sales to needy families case does not fit within the ``use by the charity'' rules as presently drafted. But trying to modify the proposal to move away from the sale bright line rule can be tricky, and I fear we would be opening up the proposal to abuse. I pledge to charities that do sell cars to low-income or needy individuals at reduced prices as part of a charitable program, that we will expand regulatory authority during conference or a preconference period with the House to permit Treasury to issue rules excepting certain sales from the sales proceeds limit and certain reporting rules if the sale furthers a charitable purpose.

Mr. BAUCUS. I agree with the distinguished chairman of the Finance Committee, Senator Grassley. The disputes resulting from any uncertainty regarding the proper application of the income forecast method are extremely unproductive and wasteful. To avoid further waste, resolution of any disputes must be resolved in a manner consistent with the clarifications contained in the bill.

Mr. BAUCUS. I yield 3 minutes 22 seconds to the Senator from Delaware, and 3 minutes 22 seconds to the Senator from Alaska following the Senator from Delaware.

Mr. BAUCUS. I want to join my colleague from Oregon in support of this amendment, which cannot be considered for inclusion in the legislation at hand. I concur that action must be taken to ensure the integrity of the Chapter 19 Panel Process. There is a clear breakdown of due process with respect to Chapter 19. The decision by the NAFTA Panel to reject the UTC's injury analysis in the softwood lumber dispute between the U.S. and Canada proves to me that the credibility of the NAFTA Panel process is in serious jeopardy. By imposing an impossible standard for proving ``material injury'', this NAFTA Panel seems to be saying that it will reject any antidumping or counterveiling duty in any circumstance. If the ANFTA dispute panel process wants to maintain its credibility, the panelists themselves must respect the limits of their responsibility. No country will allow the dispute panel process to undermine the integrity of perfectly valid trade remedies. Action must be taken to address this situation, and I can give my colleague my assurance that I will work to find an opportunity for the Senate to consider his amendment in the near future.

Mr. BAUCUS. All time is yielded back. (At the request of Mr. Daschle, the following statement was ordered to be printed in the Record. Mr. KERRY. Mr. President, the continuing activation of military reservists to serve in Iraq and the war on terror has imposed a tremendous burden on many of our country's businesses, especially our small businesses. Too many small businesses, when their employees are asked to leave their jobs and serve the Nation, are unable to continue operating successfully and face severe financial difficulties, even bankruptcy. That is why I am pleased to join Senator Landrieu to provide all American businesses with a tax credit to help them continue to pay their employees who are called to active duty and to help small businesses temporarily replace reservists who are called up. This amendment expands upon the Small Business Military Reservist Tax Credit Act that I introduced last year which provides help to small businesses in paying the difference in salary for their reservist employees called up to active duty. My legislation, S. 1595, also provided a tax credit to help small businesses cover the cost of temporarily replacing that employee while he or she is serving our Nation. I worked with Senator Landrieu to develop this amendment which honors all patriotic employers who continue to pay the salaries of their employees who are members of the National Guard and Reserve and are called up to active duty in the war on terror in Afghanistan, Iraq and elsewhere. I believe this amendment will encourage all employers, especially small businesses, to pay their reservist employees when they face a reduction in salary due to their activation. Employers who continue to pay their reservists will be eligible to receive a tax credit up to $15,000 of the wages they pay to members of the Guard and Reserve for as long as the reservist is on active duty status. The JOBS Act, which we seek to amend, only provides a tax credit for reservists on active duty status for 1 year and does not provide any assistance for small businesses to help temporarily replace their reservists. I believe this approach is insufficient and that our amendment is needed to help reservists for each day of their service to our Nation and to provide important assistance to small businesses. I am very pleased that Senator Landrieu has included provision of my bill to help small businesses cover the cost of temporarily replacing the reservist employee while he or she is serving our Nation. Today, many small employers are currently having a difficult time hiring temporary workers to replace their employees who have been called up to active duty in the national Guard or Reserve. The United Sates Chamber of Commerce estimates that 70 percent of military reservists called to active duty work in small- or medium-size companies. The Landrieu-Kerry amendment will provide a tax credit of 50 percent up to $6,000 to help small employers defray the costs of hiring a worker to replace a guardsman or reservist who has been called up to active duty. Small manufacturers will be eligible for a tax credit of 50 percent up to $10,000 to assist in hiring a temporary worker. To fight our wars and meet our military responsibilities, the United States supplements its regular, standing military with reservists, citizen soldiers who serve nobly. Not since World War II have so many National Guard members been called to serve abroad. President Bush authorized the activation of up to 1 million military reservists for up to 2 years of active duty. Today, there are about 170,000 reserves on active duty in the war against terrorism--nearly half of the more than 350,000 called to duty since the attacks of September 11, 2001. Many are serving admirably around the world, performing critical wartime functions in Iraq, Afghanistan, and elsewhere. Our Nation does not go into battle without members of the National Guard and Reserve, and we are all grateful for their service. Just this week, the Bush administration authorized the activation of an additional 47,000 reservists. The extension will cause significant economic difficulties for the reservists, their families and their employers that are left behind. Beyond the hardship of leaving their families, their homes and their regular employment, more than 41 percent of military reservists and National Guard members face a pay cut when they are called for active duty in our Armed Forces. Many if these reservists have families who depend upon that paycheck to survive and can least afford a substantial reduction in pay. The large number of reservists being called up to active duty has hurt many small businesses across the Nation and may impact the number who are willing to re-enlist in the National Guard and Reserve in the future. In January, the Commission of the Army Reserve, Lt. General James R. Helmly, warned of a recruiting-retention crisis in the future for the National Guard and Reserve. A recent U.S. military questionnaire of returning Army National Guard soldiers projected a resignation rate of double what it was back in November 2001. From October to December 2003, almost one-quarter of the Guard members who have had the opportunity to re-enlist have opted not to do so. Recently, the U.S. Army developed a plan to pay reservists up to $10,000 to re-enlist to stop a developing problem. That is why the Federal Government must take action to help businesses weather the loss of an employee to active duty and protect employees and their families from suffering a pay cut to serve our Nation. It is imperative that we help families of reservists maintain their standard of living while their loved one serves our Nation. We must also ensure that the cost of that service does not force businesses into financial ruin. We must ensure that our great tradition of citizen soldiers does not fade or cease because of the effect that service has on work and family. The Landrieu-Kerry amendment will help achieve their important goals and I urge my colleagues to vote in favor of this amendment.

Mr. BAUCUS. I appreciate the comments of the Senator and share his commitment to the new markets tax credit. The Senator is correct. The intent of the economic substance provision in the JOBS bill is clearly to uphold and protect congressionally mandated tax benefits while curtailing unintended abuses of the tax code. I assure the Senator that the new markets tax credit would not be adversely affected by this provision. As the Senator knows, our intent in codifying the economic substance doctrine is to curtail the use of abusive tax shelters that have no economic substance or business purpose other than reducing the Federal tax liability of the taxpayer. This is clearly not the case of the new markets tax credit. We attempted to clarify the intent of this provision in the Finance Committee report, 108-192, in a footnote that states: If tax benefits are clearly contemplated and expected by the language and purpose of the relevant authority it is not intended that the tax benefit be disallowed if the only reason for the disallowance is that the transaction fails to meet the economic substance doctrine as defined in this provision. The report also specifically identifies the low income housing tax credit and the historic rehabilitation credit as examples of tax benefits that would not be taken into account in measuring potential tax benefits. These credits were noted as examples of the types of tax benefits that would not be considered in applying the economic substance doctrine. The new markets tax credit was authorized with the clear intent of using a tax subsidy to attract private investors to business and economic development opportunities in poor communities--investment opportunities that otherwise might not be able to secure such investment capital. It is our intent that the NMTC be treated like the LIHTC and the HRTC and protected as a congressionally mandated tax benefit. canadian softwood lumber dispute

Mr. BAUCUS. Mr. President, my colleague from New York and my colleague from Minnesota have filed a noteworthy amendment to the Jumpstart Our Business Strength Act, S. 1637. The amendment raises the very important issue of how in this global economy we can protect the privacy of personally identifiable information that is transmitted abroad. Senator Clinton and her staff have worked diligently with me and my staff to find a way for the Senate to address these issues. The amendment raises significant issues that I believe will benefit from being made part of any appropriate hearing this session in the Finance Committee. They have graciously recognized the importance of moving forward on the JOBS bill. That is why I have agreed to invite Senators Clinton and Dayton to testify on this issue during the Senate Finance Committee's hearing on offshoring. My hope is that we will schedule that hearing soon.

Mr. BAUCUS. How much time remains on our side?

Mr. BAUCUS. Madam President, I move to reconsider the vote on the previous two amendments en bloc.

Mr. BAUCUS. I call for regular order with regard to the Hutchison amendment.

Mr. BAUCUS. I believe there is no further debate.

Mr. BAUCUS. Mr. President, I ask for the yeas and nays on the bill.

Mr. BAUCUS. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. BAUCUS. Madam President, I compliment the Senator from Louisiana. This is a very important amendment. The reservists clearly, particularly under the current circumstances, deserve at least the provision suggested by the Senator from Louisiana. The Senator can be assured this Senator will fight vigorously for her amendment in conference. It is a very important amendment. Madam President, I believe there is no more debate on this amendment.

Mr. BAUCUS. Mr. President, I ask unanimous consent the amendment by the Senator from Texas be temporarily set aside so the Senator from Louisiana may offer her amendment.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask to be recognized for the time I have under the unanimous consent agreement.

Mr. BAUCUS. The ancient Theban poet Pindar wrote: ``The test of any man lies in action.'' That was a very provocative, very prescient, and very wise statement. The test of any man, or woman, lies in action. Today that test will be for the Senate. Today we will test whether the Senate can act to create and keep good manufacturing jobs in America. Today we will test whether the Senate can act to end European tariffs that hobble American businesses, and today we will test whether the Senate can act to extend vital benefits to the nearly 1.5 million jobless Americans who have exhausted their unemployment benefits. The coming cloture vote is the defining test for the JOBS bill. If the Senate cannot vote today to complete action on this bill, then the majority leader will move on to other business. Yes, in a perfect world every Senator would have the opportunity to offer and debate every amendment. In a perfect world, every amendment would get a vote. In a perfect world, every Senator would get home for family dinner at 6. But by the standards of the modern Senate, I believe the Senate has given this bill fair consideration. Over the course of 5 separate weeks, we have considered 28 amendments and adopted 17 of them. I think that is a respectable record. The coming cloture vote is now the test of whether we can pass the JOBS bill. The coming cloture vote is also a test of whether Senators on this side of the aisle can take yes for an answer. We on this side demanded a vote on Senator Harkin's overtime amendment, and the Senate did consider that amendment. The Senate adopted that amendment. We demanded a vote on Senator Dodd's offshoring amendment, and the Senate did consider that amendment and the Senate adopted that amendment as well. We demanded a vote on Senator Wyden's trade adjustment assistance amendment, and the Senate did consider that amendment but regrettably did not adopt it. However, Senators Wyden, Coleman, and I intend to bring that effort back to the Senate on another day. And we demanded a vote on Senator Cantwell's unemployment insurance amendment. Under the unanimous consent agreement governing this bill, in order to get a vote on the unemployment insurance amendment the Senate needs to invoke cloture. If we invoke cloture, the Senate will consider that amendment, and I hope the Senate will also adopt it. I believe that invoking cloture to get a vote on the Cantwell amendment is now a fair deal for Democrats, and I think we should take it. We should say, yes, for an answer. We should vote to invoke cloture so that we may vote on unemployment benefits. After the cloture vote, the vote to waive the budget for Senator Cantwell's amendment will be a test for the entire Senate. Our vote on the Cantwell amendment is a test as to whether we can respond to the record number of jobless workers who have exhausted their benefits. America's free and open market economy has yielded unparalleled growth and vitality. Part of the genius of our economy is that we allow the private sector the freedom to adjust rapidly to changing circumstances. It helps our country grow. That freedom and vitality comes also with disruption and pain for workers who lose their jobs in hard economic times like those we have had in the last 4 years. When, nearly 70 years ago, Congress created the unemployment insurance program, our society struck a deal. American workers agreed to participate in open and volatile markets, and the Government agreed to cushion the blow when markets turned rough. Unemployment insurance is the result of a vital social compact. In past recessions, Congress has acted to extend those benefits, and the evidence is that in this recession more workers are remaining unemployed much longer than in previous recessions. The share of the unemployed who have been unemployed for more than 6 months has hit its highest level in more than 20 years. Federal Chairman Alan Greenspan said recently ``an exceptionally high number'' of unemployed are losing their unemployment benefits, and he supported resuming temporary Federal benefits, saying: I think it's a good idea largely because of the size of the degree of exhaustions. Thus, the coming vote on the Cantwell amendment will test whether the Senate can respond to this human need, keep our social compact, and extend these needed unemployment benefits. Finally, this coming cloture vote will be a test of whether the Senate can work. This bill began as a venture of Democrats and Republicans working together in the Finance Committee. Its major provision, the heart of the provision--tax cuts for American manufacturing--is really a Democratic priority. Democrats sought all along to create and keep good manufacturing jobs here in America. This bill advanced in the Finance Committee as a cooperative venture. The chairman of the Finance Committee and I, working together, included many of the provisions of the bill in response to the request of Senators on this side of the aisle--on both sides of the aisle, but especially on this side of the aisle. This bill reflects an open, democratic process. Once we came to the Senate floor, we tried to ensure the Senate consider the maximum number of amendments. Now the Senate has considered 28 amendments and adopted 17 amendments. Even after the Senate invokes cloture, the Senate may still consider germane amendments and there are going to be several of them, and I believe the Senate will be able to take them up and deal with them postcloture. The time for talk is coming to a close. Soon will be a time for action. The coming vote will be a test of whether the Senate can act. Let us act to advance this bill to create good manufacturing jobs here in America. Let us act to extend unemployment benefits to jobless workers who need them. Let us act to show we can at least work together in the spirit of that great poet Pindar, again, who said, ``The test of any man lies in action.'' I yield the floor and reserve the remainder of my time.

Mr. BAUCUS. I ask the Senator from Oklahoma if he wishes to speak. There are several speakers on this side. As I understand it, on the other side of the aisle, the time is divided between 10 and 15. If the Senator from Oklahoma has 15 minutes, now will be an appropriate time for him to speak.

Mr. BAUCUS. You have 9 minutes left. Now would be an appropriate time. We have a lot of speakers here--not a lot, three more.

Mr. BAUCUS. Maybe you can set a precedent here.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I yield 4 minutes to the Senator from Michigan, Ms. Stabenow.

Mr. BAUCUS. Mr. President, we have so many Members on this side who want to speak in opposition to the amendment, as well as Senators on the other side, but we are quite restricted as to the time to allocate. First, I will begin with Senator Bunning, 4 minutes.