Max Baucus

Mr. BAUCUS

Mr. BAUCUS. There should be some discussion on this amendment. It is a very important amendment. This is an amendment that raises a point of order against any revenue measure which has the effect of an increase in the tax rate at the top bracket. I don't think that is something----

Mr. BAUCUS. Mr. President, this is not a small business amendment. It is purportedly a small business amendment. It is not. Why? As the able Senator from Arkansas stated, only 2 percent--only 2 percent--of small businesses are in the upper bracket. The remaining are not. They are not small businesses. More importantly, this is an amendment that makes it much more difficult to raise taxes on the wealthiest top bracket than it is in the effort to raise taxes on the middle-income taxpayers. It provides for a point of order on any revenue measure that would have the effect of raising taxes on the top bracket. It only applies to the top bracket. It wouldn't apply to any other bracket. We don't want that. I can't for the life of me understand why the Senator from Kentucky is on the floor even daring to offer that amendment. At the appropriate time, I am going to suggest that the amendment is not germane because it is not germane. I can only do so when all time is yielded.

Mr. BAUCUS. Mr. President, the pending amendment is not germane, and therefore I raise a point of order that the amendment violates section 305(b)(2) of the Congressional Budget Act of 1974.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I am going to have to oppose this amendment offered by the Senator from California, Mrs. Boxer, and I would like to take a moment to explain why. The spending proposed by the amendment is for a good purpose. We can and should find ways to fund this important goal. But I do not believe that we need to roll back tax relief that Congress enacted in 2001 to fund this amendment. I supported those 2001 tax cuts. Congress enacted them in a time of massive surpluses. Returning some of those surpluses to the taxpayer was the right thing to do. We can find other offsets to pay for the spending in this amendment. Offsets such as the closing of corporate tax shelters currently pending in the JOBS bill come readily to mind. Before we start rolling back the tax relief that we enacted in 2001, we should ensure that we have taken all reasonable steps to obtain revenues through closing down abusive tax shelters. And so, I shall reluctantly oppose this amendment, as I did the amendment offered by the Democratic leader, Mr. Daschle, the day before yesterday increasing veterans' funding--and for the same reason. I shall look forward to working with my colleagues to find other offsets for their amendments--offsets that as much as possible avoid rolling back the tax relief that we enacted in 2001.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, this amendment would eliminate the reconciliation instruction in the budget resolution directing the Finance Committee to produce savings in mandatory programs within the committee's jurisdiction. The amendment is based on an assumption in the resolution that our committee would cut Medicaid by $11 billion over 5 years, and reduce earned-income tax credit outlays by $3 billion. Let me begin by clearing up one common misconception. Some may think the budget calls for the Finance Committee to produce legislation that saves $3.4 billion over 5 years, since that is the figure in the reconciliation instruction. In fact, the Finance Committee would have to produce $21.6 billion in savings. Why? Because the budget resolution calls for extending the child tax credit and marriage penalty relief. Since a portion of the child tax credit and marriage penalty relief is refundable, these count as outlays in the budget process. So extending the child tax credit and marriage penalty relief, as the President has proposed and as the budget resolution provides, and which I support and I think the vast majority of Members of this body support, it will have the effect of increasing outlays also by $18.2 billion over 5 years. To produce legislation that generates net outlay reductions of $3.4 billion, and the additional $8.2 billion cost, the Finance Committee would have to draft legislation to reduce spending by $21.6 billion-- again, not the $3.4 billion over 5 years, which is the figure in the budget resolution. It would actually have to be $21.6 billion. The budget resolution assumes the Finance Committee will pass legislation that cuts Medicaid by $11 billion and cuts the earned- income tax credit by $3 billion and comes up with the remaining $7.6 billion by extending customs user fees.

Mr. BAUCUS. I thank my good friend from Washington. Mr. President, I don't know what the debate is all about. This is a no-brainer. It is an absolute no-brainer. All of us, when we are home talking to our teachers and to our communities, to school boards, know this is the right thing to do. It is clear. There is no contest. There is no debate. Congress passed No Child Left Behind trying to set levels of accountability. But then Congress did not provide the money to implement No Child Left Behind. It is contributing to all the cutbacks in our elementary and secondary schools about which we are hearing. I hear this constantly at home. I daresay that every Member of the Senate, when he or she returns home, finds the same comments. Again, I don't know why we are debating this amendment. It is pretty clear. I highly compliment the Senator from Washington. I don't know anybody who believes more and has spent more personal time helping to educate our Nation's children than the Senator from Washington, who is a schoolteacher. She is right. We should take our cues from what she is telling us. There is another reason to vote for this amendment. How are we paying for it? Closing tax loopholes. That in and of itself should be enough to pass the amendment. Also, we are closing tax loopholes to do something that is good; that is, supporting education. Education truly is a means of developing our greatest assets. We have built the strongest, the most diverse economy on the planet, basically through education. There is more mobility, more opportunity in America, and one reason is our educational system. We have pushed the technology horizon. We have developed a quality of life that is the envy of much of the world. There is no doubt that we can further improve our economy and our quality of life. But it is important to note that it is the investment in education that has essentially brought us to where we are, and it is an ongoing investment. You cannot stop investing in education. You have to keep going for obvious reasons. Fully funding No Child Left Behind is a no-brainer. It is obvious we should do this. Our people back home want us to do it. If you took a poll at home, should No Child Left Behind be paid for, the results would be overwhelming because people at home know what a tight spot elementary and secondary education is in. We are not giving our children our best shot. We have a moral responsibility to leave this place in as good a shape or better than we found it. That applies to the environment, education, the general conditions in which the America public finds itself. It is unfortunate in a certain sense--we are kind of lucky in another--that we have to accelerate our support for education. Why? Because the world is changing so quickly. New technologies are developing worldwide so quickly. We, therefore, have an obligation to accelerate our emphasis on education generally, and that is at all levels. It is Head Start, elementary and secondary, continuing, 4-year colleges, graduate education. It is at all levels. Clearly, a key part of that is No Child Left Behind. So far this administration is giving words to the concept. It says vote for No Child Left Behind, but it has not backed it up with dollars. A Presidential candidate years ago once asked: Where is the beef? I will ask the same question: Where is the beef? Where is the support? Where is the funding? We have an opportunity to assist our children by providing them with the necessary resources to help them meet the challenge. Under No Child Left Behind, Montana was promised $71 million in 2005 to comply with the new educational standards. What does this budget include? Half of that, $46 million, and that is a shortfall. Add to that all the other pressures schools are facing. Again, this is a no-brainer. I compliment the Senators from Washington and Massachusetts. Both of them work very hard for education. Jack Kennedy once said: Our progress as a Nation can be no swifter than our progress in education. I think we all agree. Funding education is key to maintaining an American workforce that can compete in the world economy. Education is critical to keeping jobs and creating new jobs in the United States. A big problem we know is the offshoring of American jobs. It is very serious. We deserve to give it an answer. I don't believe the answer has been given to us thus far by this administration. We have heard nothing. It is laissez-faire: Let things happen. So what if people lose their jobs. It is good in the long term. That is essentially what the administration is saying. I believe in order to keep our country strong we have to do something positive. We have to take some action. We must advance policies to help create new jobs in the United States, undertake measures designed to keep good-paying jobs in the United States. Finally, when jobs are lost in trade, we need to retrain workers and help them get back in the workforce as quickly as possible. That is why I believe it is right that one of the priority amendments on this side of the aisle addresses jobs. It is why at the appropriate time I will offer an amendment that will set us as a country on the path to accomplishing those goals. We must begin where the jobs begin. We must adopt policies to create jobs in America. One of the best ways to do that is by supporting research. Most of the innovative research done in the United States is at universities and research institutes which attract students from across the globe. Over the last 20 years, Federal research funding in the physical sciences and engineering as a percentage of GDP has actually declined. It has declined by nearly one-third. I believe we should reverse that trend, increase Federal spending on basic research. The money we spend will come back to us many times over in the creation of new jobs and new industries making products yet to be invented. If we want to support Federal spending on research, we should support the National Science Foundation. The NSF funds research and education in science and engineering through a variety of successful programs. It accounts for roughly 20 percent of all Federal support to academic institutions for basic research, a crucial engine of innovation for our economy. NSF funds have helped discover new technologies that have led to multibillion-dollar industries and created countless new jobs. The list is astounding: fiber optics, radar, wireless communication, nanotechnology, plant genomics, magnetic resonance imaging, ultrasound, and, yes, the Internet. All were made possible by work in the basic sciences and engineering funded by the NSF. Each year, the NSF helps fund over 200,000 students, teachers, and researchers. Many of these people take their NSF-supported work into industry, where they found company startups selling new products and new technologies. That means one thing: jobs. Fully funding NSF will lead to more jobs. When the President signed the National Science Foundation Authorization Act of 2002, the intent was to double in 5 years the funding devoted to the NSF. Not fully funding NSF shortchanges America's future. The amendment I am offering will fulfill the promise of the NSF Act and restore funding to its fully authorized levels. That means providing $7.4 billion in fiscal year 2005, $8.5 billion in 2006, and $9.8 billion in 2007. All told, that is $7.4 billion above current levels--certainly money well spent. Our future depends upon our ability to continue to innovate, and that depends upon the support we give to America's innovators--our scientists and engineers. We should fully fund the NSF. At the same time, we must ensure America's families can afford higher education, which is an important part of the solution. This is the key to America's continued prosperity. Education provides the skills necessary to unleash the creativity of our citizens. We should improve, consolidate, and expand the educational tax incentives that already exist and make them more effective. There are many ways. We can expand and extend the deduction for tuition expenses, expand the Hope and lifetime learning credits, craft targeted incentives for student pursuing science and engineering careers, and focus on programs to make it possible for nontraditional students to obtain an education. These are all good options. We need to ensure that young Americans are not discouraged from obtaining postsecondary education because of costs. That is the American dream, to get an education. We should not discourage it. Tuition costs have risen considerably in recent years, and our Federal assistance programs have not kept up. Increasing tax incentives can help to lessen the burden on students, and allow students to attend the schools that best fit their needs, whether 4-year colleges or 2-year colleges, which can also provide vocational and technical training. I ask for an additional 2 minutes.

Mr. BAUCUS. Different students will opt for different types of training. That is good. We need workers with different skills to fill all the new jobs that are constantly being created. One thing is sure: We need to train more engineers. Listen to this, Mr. President. We train only half as many engineers as does Japan. We train only half as many engineers as does Europe. We train only a third as many as does China. Think how many engineers China is going to train next year and the year after that and the year after that. Where will we be? Engineers play a critical role in the development of new jobs and new industries. We should encourage students to pursue training in this vital field. We need to help displaced workers to receive the retraining needed to succeed in a changing economy. There is one thing they can be sure of: Things will always change. Jobs will change. Workers should be equipped with the tools to change with these jobs. Education is certainly the key. The amendment I am going to offer will put a downpayment of $10 billion into our workforce. The U.S. economy is the most flexible, vibrant, dynamic in the world. We have to keep it that way. We owe that to the ingenuity of the American people and their relentless thirst to create and innovate. I urge my colleagues to join me in a positive response to offshoring. It should not be negative; it should not be protectionism. It has to be positive. I am offering a sound, positive approach. Create jobs in America by fully funding the National Science Foundation and support education. That is one of the keys to our long-term prosperity. I yield the floor.

Mr. BAUCUS. If the Senator will yield, the only way to close tax loopholes is by raising additional revenue. That is the only way you can do it. There is no way to close loopholes otherwise. Does the Senator agree that he will work with me in closing loopholes and if not by raising revenue in some other way? The purpose of the amendment is to raise revenue by closing tax loopholes. I assume the Senator agrees with me that is the best way we should raise the revenue, although technically we have to have the numbers in here; otherwise, the amendment serves no purpose.

Mr. BAUCUS. Mr. President, all Members ought to think and reflect upon this amendment and how important this amendment is. First of all, let me explain what this amendment does and what it does not do. What does it not do? It does not prevent any of the middle-income tax cuts we all want to extend. It does not do that. It does not prevent those tax cuts. It does not prevent Congress from enacting an extension of those tax cuts that we all want to extend. This amendment has no effect on that. What does it do? It says we should not use the regular Senate rules in deciding whether to extend and how to extend the middle-income tax cuts; that is, the child tax credit, the marriage penalty, and the 10- percent bracket. It says no, create a special rule. Do not use the regular order, the regular standing rules of the Senate in determining how and in what way we extend those middle-income tax credits. This amendment does say do not do that. And Congress will extend those middle-income tax cuts. That is not the issue. We are going to do that. The issue is twofold. One is, should we pay for them or not? That is the issue. And there are lots of ways we could pay for it, lots of ways that are virtually painless. What are those virtually painless ways? Closing a lot of tax loopholes. There are countless tax loopholes that we can pass very quickly, shelters that are ripping off American taxpayers, post-Enron provisions. There are a host of them. We talk about SILOs, for example. We know we are about to find in the Finance Committee other shelters being used that are not widely known. That is why we are saying this is a two-for. We are saying to extend the middle-income tax credits, tax provisions, child tax cut, and the 10-percent bracket, and at the same time we are going to clamp down on some tax loopholes. I am not being facetious or joking about this. This is real. There are immense loopholes we can and should close down. I know the Presiding Officer agrees, as most Members would agree. This is a two-for. We are saying, let's get that two-for, get both of those passed. And we have to pass the amendment of the Senator from West Virginia to do that; otherwise, we are saying change the Senate rules, extend these tax cuts but do not pay for them, do not enact those shelters. I also add, we have a moral obligation. We have a moral obligation, I believe, as Senators, as representatives of our people, to leave this place in as good a shape or better shape than we found it. That pertains to the environment. That pertains to the budgets. That pertains to all we do. We are entrusted with such responsibility as U.S. Senators. And, my Lord, it seems to me, right off the top, at the very least, we could cut back on the irresponsible, large deficits and debts we are going to be leaving our children and our grandchildren. That is a moral obligation you have, I have, and each Member of this body has. By adopting the amendment of the Senator from West Virginia, we can make good on that moral responsibility, that moral obligation, by saying, sure, we are going to extend the tax cuts, as well we should, but we are going to do it in a responsible way; we are not going to add to the budget deficit; we are not going to add to the debt. It is the only right thing to do. I urge my colleagues, therefore, to pay very close attention to the Senator's amendment and to adopt it. I might add, there are other issues. I do not think these have been thought through very much. Let me just explain. The budget resolution instructs the Finance Committee to decrease revenues by $80.6 billion. This is intended to cover the extension, as I mentioned, of expiring middle-class tax cuts--the 10-percent bracket, the marriage penalty, and the child tax credit. The instruction for this tax bill does not, however, include any instructions to increase outlays. Why is that important? It is very important. It is an instruction for tax cuts. Why am I saying we need to also increase outlays? It is not called for in the budget reconciliation provision. I say so because these specific tax cuts also require outlays. That is because there is a refundable part of these tax cuts. Let me explain it. The child tax credit provides a $1,000 per child tax credit for low- and middle-income families. There are some working, low-income families that do not have income tax liability that this credit can be used to offset. Even so, they are out there working every day paying a good chunk of their paycheck in payroll taxes. For these families whose income does not qualify, we provide, in the law today, as you know, a refundable child tax credit. They do not have the income liability to offset, so they get a refund from the Treasury, and this scores for budget purposes as an outlay. These reconciliation instructions tell us to extend the child tax credit. But we know that if we extended the child tax credit for all the families that currently receive it, it would take about $20 billion in outlays. But the reconciliation instruction fails to include this. It does not even mention it. In fact, by definition, therefore, we cannot increase outlays. So what does this mean? The best I can figure it, it means we should extend the tax cuts for all families--except for the working poor. If middle-income families deserve to get the $1,000 child tax credit next year, then why not low-income families? We have heard many times this week: Families should not see their taxes increase next year. We should extend the current tax relief. So why does this budget leave the working poor families behind? There are about 26 million families that receive the child tax credit. About 8 million of these families receive some refundable credit. That is almost one-quarter of all child tax credit recipients, families making between $10,500 and $26,000. Three-quarters of families deserve an extension of the full child credit but not the remaining one-quarter? This does not make sense. Give me a break. Who are the families that will be left behind? Let's think about that a second. A single mother of one, making $17,000 a year is left behind. A couple, both working full time at minimum wage is left behind. What other type of family is going to be left behind? Military families. There are a couple reasons for this.

Mr. BAUCUS. Mr. President, I ask unanimous consent for 2 additional minutes.

Mr. BAUCUS. Why are military families left behind under this reconciliation instruction? First, there are many military families that have incomes between $10,000 and $26,000 a year. Roughly, 200,000 military personnel fall within this income range. They all get the refundable child tax credit. But under the reconciliation provisions, which the Senator from West Virginia wishes to delete, they would be left behind. They do not get any help. Second, there are many military personnel with higher incomes who receive the refundable child tax credit. But why do the higher income people receive the refundable child tax credit? That is because they have been called to serve in combat zones. Why is that relevant? Well, the income military personnel receive when they are in a combat zone does not count for income tax purposes. That means it also does not count for purposes of determining the child tax credit. How many are those? At least 40,000. So even though these families make more than the $26,000, they are receiving the refundable child tax credit because they are in a combat zone. So roughly a quarter of a million military families are being cut out by the Budget Committee's reconciliation instructions. Families that receive the refundable credit simply because they are serving in a combat zone or simply because they are serving in the military--all these families will be left behind. We all agree, extending the child tax credit is critical. So why are so many families being excluded? This reconciliation instruction will not work the way it should. It is not right to cut so many low-income people off and out of the child tax credit. That is wrong. So let's work together. Let's use the regular order and the Senate rules so we can fix some of these discrepancies that exist in the current budget resolution. I urge my colleagues to support the amendment of the Senator from West Virginia. It is the right thing to do.

Mr. BAUCUS. I have an amendment at the desk and I ask for its immediate consideration.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. BAUCUS. Absolutely.

Mr. BAUCUS. Mr. President, I reserve the right to object, too.

Mr. BAUCUS. Mr. President, I want to address a couple of points that I think need to be addressed. They are a bit misleading. First, there is no language in the budget that specifically requires the Medicaid cuts. So why pass this? The fact is, with all due respect to the chairman of the Budget Committee, during markup the chairman said basically that we assumed the $11 billion in mandatory cuts was going to come from Medicaid. That is the chairman's assumption. He made that very clear. He wants it to come out of Medicaid. As we know around here, that is the general thrust of measures we pass that are in the budget resolution, and that is what is going to happen. As long as I have been here, and I have been here a long time, that is the way this place operates. There are clearly going to be cuts there. So the point that cuts in Medicaid are specifically required, that is not true. Are they effectively required? Clearly, yes. Also, it has been suggested there is a lot of fraud, waste, and abuse. That is a bit of a disingenuous statement. First, we never condone fraud and abuse. We don't need a statute to allow that. There are anti-fraud and anti-abuse laws. There are no specific fraud and abuse proposals. It just says cut. If there is no proposal, as I said earlier, Joint Tax has not scored anything that amounts to raising revenue. By logical conclusion, we are going to cut Medicaid; it is that simple. It sounds good, this fraud, waste, and abuse, but it is just going to be a straight cut. There is no specific proposal that addresses that. Also, we are already so-called cutting waste. There is a $2 billion savings, a cut in error rates, because the administration is looking at this more closely, which is good. There are a lot of error rates elsewhere in the code, not just for low-income people. It is in sole proprietorships and other categories of taxpayers as well. We are not cracking down on them; we are cracking down on poor people. That is the wrong thing to do. The main point is this is a cut in Medicaid. That is clearly what is intended. Second, this is not a fraud, waste, and abuse cleanup; it is a cut in Medicaid. Be honest. That is the effective result. Technically--it is a small point--some of the concern about error rates in Medicaid is because States controlling the Medicaid Programs are undertaking actions that are now being corrected by Uncle Sam. So it is not the fault of the low-income folks. It is not the earned- income tax credit or the refundability portion. That is a small part of the problem. Rather, it just changes the administration of it between Uncle Sam and the States. This is a good amendment. We should not cut Medicaid. We should not cut folks who get the advantage of the marriage penalty by $21.6 billion. That is the effect of the cut that is going to be required in the budget resolution. My amendment says, let's eliminate that requirement and deal with Medicaid and other programs as we normally do in the normal course of business. I yield back the remainder of my time.

Mr. BAUCUS. The purpose is to close tax loopholes.

Mr. BAUCUS. By closing tax loopholes.

Mr. BAUCUS. Does the Senator disagree that we should close tax loopholes?

Mr. BAUCUS. Yes.

Mr. BAUCUS. Above that, further up.

Mr. BAUCUS. Will the Senator read the first line of the description of this amendment?

Mr. BAUCUS. Will the Senator yield on that point?