Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, let me just recap briefly so Senators understand my amendment. I explained where we were before the break in the action. I am offering an amendment which would eliminate the reconciliation instruction to the budget resolution directing the Finance Committee to produce savings in mandatory programs within the Finance Committee's jurisdiction. The amendment, as I mentioned earlier, is based on the assumption in the resolution that the committee would cut Medicaid by $11 billion over 5 years and reduce the earned-income tax credit outlays by $3 billion. 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. Actually, the committee would have to produce savings of $21.6 billion, and that is basically because the resolution calls for extending the child tax credit and the marriage penalty relief, as the President has proposed, and as provided for in the budget resolution and which I support. I think the vast majority of the Members here support it. As a consequence of all that, the outlays have to be increased $18.2 billion over 5 years, and that is, again, because the earned-income tax credit is refundable. So you add it all together and it actually comes up to $21.6 billion that has to be cut, not the figure of $3.4 billion contained in the budget resolution. I might add that I think neither the earned-income tax credit cuts nor the Medicaid cuts make a lot of sense. Let me start with the earned-income tax credit. That is a feature in the Tax Code that President Reagan once hailed as--and let me give his quote: . . . the best anti-poverty, the best pro-family, the best yet creative measure to come out of Congress. I think he is right. The earned-income tax credit has done a lot to lift people out of poverty. President Bush has not proposed any reductions in the earned-income tax credit, and with good reason. The earned-income tax credit was created in 1975 as a bipartisan effort to reduce the tax burden on low- income Americans. It provides a powerful incentive for people to work. It has played a very large role in moving poor families from welfare to work. It has reduced poverty. Nearly 4.8 million people, including 2.6 million children, are lifted out of poverty each year because of the EITC. By all accounts, the earned-income tax credit has been successful, and it has been effective. While the earned-income tax credit has achieved its policy aims, and I might add with incredible success, a 1999 Treasury audit of EITC returns shows that noncompliance is a problem. And it is a problem. Noncompliance in the EITC has been a problem. I believe, however, that noncompliance on the earned-income tax credit is largely due to errors, not because of fraud. Both the complexity of the tax credit and the complex living situations are responsible for the high error rate. Let me give an example. There is an IRS publication called publication 596. That is the IRS instructions and forms for the earned- income tax credit. Guess what. It is 52 pages long. Can you imagine somebody sitting down at his or her kitchen table trying to figure out the earned-income tax credit? The IRS takes more pages to explain the earned-income tax credit than it does to explain the complicated alternative minimum tax. Guess how many pages are in that. Eight. They are eight terrible pages, but there are only eight of them. The EITC booklet has 52 pages. Obviously, it is unnecessary complexity. Senator Grassley and I fashioned a series of reforms that were enacted as part of the 2001 tax cut legislation. The Treasury expects those changes alone will reduce earned-income tax credit overpayments by about $2 billion a year. So we are doing something about it. We all recognize more needs to be done, and we will all work together to see that this work gets done. But the remaining work is administrative; it is not legislative. As this administration has indicated, finding ways to identify earned- income tax filers who were not compliant, and to save money by preventing losses to the Treasury, is primarily an administrative issue, not one that can be achieved through legislation. One can't simply wave a wand and pass a law mandating a lower error rate. That takes a lot of administrative work. The IRS and Treasury are working on it now. They are conducting a major pilot project to test new procedures which the agency hopes will reduce overpayments. I hope the Treasury reduces overpayments, and the IRS is also likely to conduct a second pilot this summer. I and other Senators want to see whether these procedures work, while making sure they don't cause honest, eligible working families to lose earned- income tax payments for which they qualify. But I believe administrative action is the proper course. Let me reiterate that no legislative remedies are at hand that the Joint Committee on Taxation has found will generate significant savings--no legislation. Reducing errors is primarily administrative, and the budget resolution's reconciliation instructions to the Finance Committee would unfortunately force the committee to cut the EITC itself. It doesn't really address the error rate. For hard-working, low-income families, the EITC offsets income, payroll, or Federal excise taxes. It would thus raise taxes for these working families; that is, if the EITC were cut. It is bad enough we continue to let the minimum wage erode. We should not be raising the taxes on the working poor on top of that by cutting the EITC. The Senate should take a firm stand against raising taxes on working Americans. The chairman's mark in the Budget Committee last week lays out two ways to achieve these so-called EITC savings. One way is a tax increase, pure and simple. The other way is administratively infeasible and would generate strong opposition from small business owners. The only way the second method could be designed so it would save money would be to make it, too, into a tax increase. Let me explain. The first of two options in the chairman's mark is to repeal the EITC for very poor workers, particularly workers without children. According to the IRS, some 3.7 million low-income workers received this credit in the year 2003 and secured an average tax credit of a little over $200 each. These workers are among the poorest, lowest paid workers in the country. Only single workers with incomes below $11,490, and married couples with incomes below $12,490, would even qualify. This credit equals a maximum of 7.65 percent of the first $5,000 in wages these workers earn. As a result, this credit simply offsets some or all of the employee share of the payroll taxes these workers pay. Repeal it and the net Federal tax burden on these workers rises. Furthermore, if this tax credit is repealed, poor, single workers will begin owing Federal income tax in addition to their payroll taxes when their earnings only reach $7,950. That is nearly $2,000 below the poverty line. We can't do that. Such a change would literally tax these low-paid workers deeper into poverty. The other option the chairman's mark lists for achieving these EITC savings is to require workers to get their EITC payments in their paychecks rather than in the refund when they file their tax returns at the end of the year. This is unworkable. First, some small employers will find it very difficult to do. They would have to have additional complexity to do it. Second, many workers will not want to do this because they believe their earnings or their spouse's earnings may rise during the year which would make them eligible for a smaller EITC or no EITC at all, and if they received EITC payments during the part of the year their family's income was lower, they would have to write the IRS a check paying back the EITC when they file their tax returns. Not everyone in this situation is likely to file a separate amended tax return or have the cash to pay the EITC back. As a result, this could actually increase errors. It could increase overpayments as well as causing many families considerable difficulty. It would not save money. Suppose you instituted this system starting in the tax year 2005. It means next year low-income workers would receive both their EITC tax refund for the tax year 2004 and their EITC payments for tax year 2005 which would be provided in their paychecks throughout the year. The result would be the earned-income tax credit costs would nearly double in 2005. That would increase costs, not reduce them. This is not the time to cut Medicaid. Medicaid provides a crucial health care lifeline to more than 50 million Americans. It is a critical player in our health care safety net. Medicaid pays for about 40 percent of all births in this country. It pays for almost half of all nursing home days. Its reach stretches throughout the health care system, and substantial costs will be felt in every corner of this Nation if this cut were to proceed. Even without these proposed cuts, Medicaid beneficiaries and providers are facing a very difficult year. Many States have not yet emerged from their worst financial crisis in several decades, and Medicaid programs have been cut in virtually every State in the past 2 years. In fact, over the past 2 years, States have instituted Medicaid changes that have resulted in between 1.2 million to 1.6 million low- income children, parents, elderly, and disabled people losing coverage and becoming uninsured. Benefits and provider payments have also been cut, resulting in beneficiaries' reduced access to needed services and greater cost shifting to individuals who are insured. The liability of our health care safety net is threatened. These cuts would have been significantly steeper had Congress not provided States with $20 billion in fiscal relief last year. Even after these Medicaid cuts and other budget cuts--and in many States tax increases--States still face a new round of deficits estimated at $40 billion in the coming year. Despite this news, the Federal fiscal relief is ending with the result that deeper Medicaid cuts are likely. The last thing we need to do now is to reduce Federal funding for Medicaid further and force deeper cuts in Medicaid. We should instead heed the bipartisan warnings of the National Governors Association. In a letter last week, the National Governors Association chair and vice chair, Governor Kempthorne of Idaho and Governor Warner of Virginia, had this to say: States are currently emerging from the most severe budget crisis since World War II. And nearly every State has enacted difficult cuts to its Medicaid program, including both eligibility levels and provider payments. Federal funding reductions would force States to implement even deeper cuts by restricting eligibility, eliminating or reducing critical health benefits, and cutting or freezing provider reimbursement rates. As a result, the Medicaid funding cuts could add millions more to the ranks of the uninsured and would harm our Nation's health care safety net. We should listen to the Governors. They are bipartisan. This is not a bipartisan issue. Opposition to the cuts extends beyond the Governors to hundreds of organizations of hospitals, doctors, nurses, veterans, disability advocates, patients' advocates, and nursing homes. Some have argued the savings could come--harmlessly, they seem to suggest--by merely cutting ``fraud and abuse,'' particularly in State financing arrangements. But this is a false premise. Not one, not the administration and not the chairman of the Budget Committee--not one-- has proposed a policy to limit State financing arrangements they decry. The administration's exhortations on this matter are so vague the Congressional Budget Office has not scored the administration's proposal as producing any savings in Medicaid. No one has even claimed any specific proposals could raise $11 billion as essentially called for in this reconciliation instruction. To be clear, Congress has addressed the fraud we hear about. The Finance Committee takes very seriously its oversight of the programs within its jurisdiction. The committee is dedicated to maintaining program integrity and ensuring taxpayer dollars are used wisely and efficiently. I am as strongly opposed to fraud as any Senator. But mandatory budget cuts are a blunt instrument unsuited to address this difficult, complex problem, particularly in the absence of specific administration proposals the Congressional Budget Office scores as producing savings. Some have argued this budget reconciliation instruction doesn't matter. They argue if the Finance Committee does not want to make these cuts, then it can simply not act. But I ask, What if the House committees of jurisdiction do act? If the House passes a reconciliation bill, any single Senator could then use rule XIV to put that bill on the calendar, bypassing the Finance Committee. The Senate could then be facing a fast-track vehicle to make unfair spending cuts that fall in the Finance Committee's jurisdiction without the committee ever having participated in the effort. I have high confidence in the chairman of the committee, Senator Grassley of Iowa. He will find a good way to deal with Medicaid and with Medicare. He is very fair. He works with all Senators. I think that is by far the preferable procedure rather than the fast-track procedure as I mentioned under rule XIV which bypasses the committee. It could well happen, if the House acts. Finally, I note the House budget is likely to reconcile much deeper cuts in these programs while acting as though all such savings can somehow be achieved by wishing away ``fraud, waste, and abuse.'' I am deeply concerned about conference deliberations on this matter. This reconciliation instruction is a very dangerous provision. It is one that could do real damage. My amendment to strike this reconciliation instruction enjoys widespread support from many Governors, many health care providers, and organizations dedicated to helping the Nation's children, among countless others. I urge my colleagues to join me in supporting the amendment. I yield 10 minutes to the Senator from Hawaii to also speak on this amendment.

Mr. BAUCUS. Mr. President, actually it is not agreeable. I would like an hour. I may not use it all, but I would like an hour, equally divided.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, we are at a stage where we are hoping to get some action on some amendments. This is an extremely important bill. This bill will provide a very significant break to all companies manufacturing products in America. It is about a 9-percent deduction on the costs of manufacturing products in States. That translates to about a 3-percentage point reduction in their income tax returns. To a corporation paying the top rate of 35 percent, that means they are going to have a tax rate on that production of 32 percent. It is a very important bill. There are lots of different ideas about how this bill can be improved. We have already adopted an amendment by the Senator from Utah, Mr. Hatch, cosponsored by myself. In fact, this is a bill that Senator Hatch and I have introduced for many years. It will increase the research and development tax credit for at least 18 months and also modify it in a way to make it more attractive to more companies. We all know the real pursuit is how do we get more jobs in America, how do we create more jobs in America, how do we keep those jobs in America, and how do we train people who lose jobs in America. We are a wonderful and wealthy country. We are very lucky to be Americans. People from all over the world want to live in America. I will not say they all do but there are certainly an awful lot of people who want to live in the United States. That is why we have so many immigrants coming to our country. We do not see very many people heading for the door. Not very many people living in America want to go live in other countries. There is a real reason for that. I think the basic reason is because we are a country of great opportunity. We are a country of great mobility. We are a country where a person can pretty much do what he or she wants to do. Sure, there are some limitations that some people face, depending upon where they are born or where they grew up in America, but still, compared with any other country in the world, there are opportunities in the United States of America that are just wonderful. We are incredibly lucky to be Americans. We are now faced with a question, though, of jobs and job loss in America, particularly manufacturing job loss, and even some service industry job loss. We have lost close to 3 million jobs in the last several years. Those are manufacturing jobs. Those are good-paying jobs. It is also true that virtually every other country in the world is losing jobs, too. We are not the only country that is losing manufacturing jobs. I will not be callous about it, but those are problems that those countries face, and we wish them very well. We wish more people in the world had better incomes; that people who are not the most wealthy would be doing pretty well by themselves. But our goal is here in the United States. How are we going to get more job creation in the United States? How are we going to get more job retention in the United States? How are we going to retrain people? There is no silver bullet, no panacea, no magic answers that are going to solve this problem. There are lots of reasons why we are facing this, if we are totally honest with ourselves, and clearly we must be if we are going to solve it. One reason, frankly, is just the dramatic increase, to use a fancy word the economists use, in productivity in the last several years. That is, with ingenuity and with research and development and technology improvements, companies are able now to produce more widgets, more products, more cars, whatever it is, with fewer people. It is easier, then, for that company to sell products and make money, but unfortunately a byproduct of that is it is with fewer people, fewer jobs, so people are laid off. It is a huge problem. It is not only the shock of a person who loses his job, it is lost benefits, lost wages. But some of this is due to productivity increases. It is a fact. We just have to recognize it. But having recognized it doesn't mean we should look the other way. It means we should find some other way to deal with it. The job displacement that has occurred in America over the last several years has happened all over the world, in all developed countries, not just the United States. It is because of the general nature of economies moving a little more to services compared with manufacturing. Service industry jobs just don't pay as much. This movement to services--it is like health care services. It is professional services. It is doctors, lawyers, accountants. They are all great professions, and they are services. But by and large, service jobs don't pay quite as much as manufacturing jobs. Again, that is a worldwide phenomenon. I might say, too, one of the reasons for job loss is foreign competition. It is true in many countries that because of the lower wages it is cheaper to make a product than it is in the United States. There is no doubt about that. Benefits are a lot lower in other countries. There is no doubt about that either. It is true, American companies, as the case with companies in other countries, have to be competitive. They have to be competitive; otherwise, they go out of business. Having said that, there are other reasons, too, for the phenomenon we are facing. We have to find answers and, as I said, honest answers, not just glib answers. Frankly, I believe we have to focus on three major areas and be very positive. One is, How do we create new jobs. I would put a lot more effort into research and development than we now do. We should have more basic research in universities and companies than we now have. We have to figure out ways to develop new products. This is a bit corny and a bit dramatic, but it wasn't too many years ago--in the year 1900 nobody even dreamed of automobiles or airplanes. Yet somebody developed an automobile, somebody developed an airplane, and lately it is the Internet, it is broadband, it is fiber optics, it is a lot of new technologies nobody knew about. A lot of that is because of the dollars devoted to research and development. It is ingenuity and opportunity. Persons knew if they spent time developing those products they could sell them in the United States and overseas and they could make a go of it. They could make something happen. Just think of the joy of maybe inventing something and making it work and selling it. That is one way. We have to figure out ways to create new jobs. Another way is we have to keep the jobs we have. That is complex. Part of it is the much more vigorous enforcement of our trade laws. I have said it before and I will say it again: we hear of all these call centers going to India, Bangalore, other places in India. You pick up a telephone and try to order something, a credit card company or something, and find the call center is in India or someplace else. But we don't hear of American companies selling products to India. You don't hear of sales to India. Why is that? It is because India is a closed country. It is a very closed country. It is very hard for United States business people to sell their goods and their services and their products to India because India is a closed country. They also pirate intellectual property. Billions of dollars of intellectual property created by Americans is pirated by people overseas. Various countries either do not have intellectual property legislation or they don't enforce it. It is very difficult. So a way to keep jobs in America is to be much more vigorous as we enforce our trade laws, and this country is not enforcing our trade laws. We are not opening up markets overseas the way we should. It is more laissez faire, let things happen. If some country wants to close its market, fine. That is basically the attitude of this administration as I see it. I have spent a lot of years in trade policy and I cannot remember a time when an administration was so laissez faire, so ``who cares'' when it comes to whether a country opens up its market to American products. India is a good example. China is another example. There are so many examples. Rather, what does this administration do? I am not being critical here; I am just calling it as I see it. I am being objective in how I see this administration's trade policy to be operating. Still, we reach trade agreements with minuscule economies: Bahrain, Morocco. Those are wonderful countries. But why are we spending the limited resources we have in the United States Trade Representative Office reaching free trade agreements with countries that would have virtually no or very little commercial value to the United States? Why? Because it is easy. We should be taking the extra effort and going to countries, as I mentioned earlier, that are closed and have huge potential markets. We sell to India, a country of 1 billion people, half of what we Americans sell to Switzerland, a country of 7 million people. Wait a minute. I know the per-capita income in India is lower than it is in Switzerland, but not that much lower, not by such huge orders of magnitude. One way to keep jobs, again, is to enforce our trade laws. We have to tackle health care costs in the United States, which are much higher than they are in other countries. There are lots of efforts we could undertake. I will now focus on one aspect of this bill I think is very important. I think most Members of the Senate agree with me. It is further reason why we should move expeditiously and bring up amendments so we can pass this legislation. We will be doing a great disservice to the people of our country if we don't quickly pass this legislation. Already the World Trade Organization penalties levied on the United States amount to 5 percent of the $4 billion the WTO has said can be levied against the United States now because the United States has not repealed certain legislation which is the underlying part of this bill. WTO said that is illegal so we have to repeal a lot of it. That is $4 billion in penalties levied against the United States products we are trying to export to Europe. That is $200 million in this month alone, March, and there is going to be a 1-percent increase in each of the succeeding months. Why in the world aren't we passing legislation so we don't have to pay those penalties, so we don't have to penalize American companies, and therefore penalize American workers? One way to send jobs overseas is to not pass this bill. Every day we don't pass this bill means additional costs of doing business in America on products manufactured in America and exported to Europe. If we repeal this penalty, then that cost to American businesspeople will be much less, and that would help them keep producing and keep their employees. In drafting this bill which provides for a 9-percent deduction on domestic manufacturing, we believed it made good sense for that 9- percent deduction to apply not just to C corporations--that is the standard garden variety corporation--but also to virtually every other company in the United States, small partnerships, proprietorships, passthrough entities, and smaller companies that do not pay a corporate income tax. I would like to show a couple of charts to give us a little sense of how U.S. companies organize themselves and why that is important to this legislation. As this chart to my left demonstrates, about a quarter of American companies are C corporations. The other three-quarters of American companies are partnerships, sole proprietorships, somebody in business for themselves. Another entity called S corporations essentially means that the owners of the corporation are liable themselves and pay taxes themselves on the income of the organization. About one-quarter are corporations. They are the big guys. Going to the next chart, I point out that 99 percent of U.S. firms are actually small businesses. If you look at all the companies in America and you organize them according to whether they are a big or a small business, 99 percent are small businesses. By small business, we mean 500 or fewer employees. Virtually every company in the U.S. is not a big corporation but, rather, a small business. That is important because the legislation we were repealing gives a tax break only to big C corporations. We believed that if we repealed that--and we have to repeal it because WTO says we must--we must be sure we replace it with something much more broad-based. So not only the larger C corporations but the other, smaller, American companies also get the benefit of the provisions of this bill. I mentioned earlier that about a quarter of American companies are large companies, so-called C corporations. They have at lot of people working for them. About half of the employees in America work for small business; about half work for big business. It is an interesting statistic. Ninety-nine percent of all companies are small businesses. Still a full half of all employees in America work for small businesses. Why do I say that? Because basically most new jobs are created by small business. This chart shows that. Small businesses create jobs much more than big businesses. Even though half of all employees are in the category of small business, still three-quarters of the new jobs--this is a historical fact over the years with small business. Small business is more flexible; they can move more quickly; they see more opportunity right away; they can hire more, whereas big business takes time with all the decisions that have to be made going through all the various levels of hierarchy. But small business is where the job creation is. That is relevant because if you look at private sector jobs in America, you will see the United States since 1994 has had a huge creation of jobs, until the year roughly 2000. Since the year 2000, about 3 million jobs have been lost in America. That is a net figure. That is not gross. I mentioned earlier that half of those are small businesses. I mentioned earlier that job creation is generally through small business, not big business. I also mentioned before, to repeat myself, this bill says: OK. We don't care whether you are a big or small business; you can still get that 9-percent deduction. That is why I think this is a very good bill. I say that in part because there are other versions of this legislation in Washington that do not extend the same treatment to small business but essentially only to larger businesses. I hope when we move on this bill and pass it and take it to the next stages that we keep in mind the importance of small business and keep in mind that we must retain the small business provisions in this bill. I yield the floor. I suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I am just saying, we have a huge challenge here to help create jobs and to keep jobs in America and to retrain people who lose jobs. This phenomenon of job loss is huge. As the chart by the Senator from Michigan shows, we have lost about 3 million jobs since 2001; that is net loss. Those are manufacturing jobs; a net loss of 3 million manufacturing jobs in America. We have also lost a good number of service jobs, but on a net basis, not near as many service jobs lost as manufacturing jobs. Manufacturing just pays significantly more than service. I might also say, this is not just an American phenomenon. It is happening in countries worldwide. It is happening in virtually every country. The one country where it is not happening as much is Japan, interestingly. But it is happening in every other country. Why? I daresay part of the reason is due to just natural phenomena--not natural, but phenomena that are occurring worldwide, due largely to globalization, advances in technologies, communications technologies, which are forcing countries worldwide to compete even more aggressively, to cut their costs as much as they can, and producing wherever they can to get the best rate of return they possibly can. That is why it is happening worldwide, not just in America. It is happening worldwide. Part of that is because of increases in productivity. Obviously, as productivity increases, more products are produced with fewer employees per product. Just to state the problem does not mean we stop right there. We have to start finding answers to the problem; that is, how to get more employees, more workers, more Americans working in more good-paying jobs. One way is with this bill. This bill will help reduce the cost of production; that is, by deduction. This bill actually creates a 9- percent deduction for the cost of domestic manufacturing. That is important. For example, take a small business whose income tax would be $200,000 on domestic manufacturing, the 9-percent deduction calculates to roughly about a 3-percent reduction in the rate, so that is a $6,000 reduction in that company's income taxes. That helps. That is not a small matter to reduce one's income taxes by that amount. So that is one partial solution to job loss in America this bill addresses. Second, we adopted an amendment to this bill already. It is the Hatch-Murray amendment. Senator Murray very much knows, as does Senator Hatch from Utah, that Washington State is a State that a few years ago was called the ``Silicone Forest'' with all the sort of higher-tech companies developing in Washington State. The Washington Seattle Port trades a lot. Salt Lake City is not a huge seaport, by any stretch of the imagination, although they have the great salt lake--it is not small--but the point is, Senator Hatch from Utah also knows the importance of extending the research and development tax credit. It is a measure, frankly, he and I have introduced jointly many times over the years. But that provision now is also adopted as an amendment in this bill. The more we can encourage research and development, the more we are going to create jobs and keep jobs. We know, too, that where the research is, is where the jobs tend to be; that is, where the products develop is where the jobs tend to be. This is a research tax credit for American research and development. It is not overseas, but it is in America. So that, too, is going to help. Now we come with this amendment, the amendment offered by the Senators from Kentucky and Michigan. It is an additional stimulus because it accelerates the deduction very significantly. That is going to help. It is going to go a long way. There are lots of other things we need to do. I am not going to spend all night talking about them, but one is to adopt the second-degree amendment offered by the chairman of the committee; that is, the extenders provision. That is very important. Madam President, you know, as well as anyone in this body about the importance of predictability, the importance of certainty, as much as possible, that any businessperson may have or may not have--or, to state it differently, the uncertainty they may have. Every businessperson abhors uncertainty. You almost don't care what the problem is so long as the problem is pretty certain. If you know what the problem is, you can work around it. If the problem is always changing, it is pretty hard to work around it. We have had something called tax extenders, and they have been for very good purposes, as the Senator from Maine well knows. I think the Senator from Maine, as I recall, has one on education for teachers. It is to help teachers get their deduction for the supplies they purchase to help their students. That has expired. Well, if I am a teacher with very low pay--it would be a great job, actually, in many respects; that is, to be a teacher--I would want to know if that deduction is still available or not. So far, it is not available. It has expired. But in the extenders package we are adopting here, we are going to extend that deduction so teachers will know, at least until the end of 2005--18 months roughly; they are going to have that. There are a lot of other extenders, too. Senator Bayh, for example, is interested in the work opportunity tax credit and other similar tax credits which enable employers to get people off of welfare and hire people so they are doing work, so they can earn a living for themselves and their families. That tax credit has expired. Senator Santorum is also interested in extending that tax credit. We have that here in the extenders. There are a good number of others. For example, Senators Clinton and Schumer are very concerned about the liberty bonds for the development of New York City. That has expired. That is jobs. The more we can continue these extenders and get them back in the law, the more it enables those people in New York and others related to it to know whether or not they can depend upon those bonds and continue the reconstruction from the damage caused by 9/11. In addition, there are some provisions that help the District of Columbia. We don't have any Senators here representing the District of Columbia. We all are, in a certain sense. But those, too, are going to be available. I mentioned the one the Presiding Officer is interested in. What about computers in schools? We have a provision for companies to donate computers to schools. That has expired. I would think we would want to extend that. That is going to help kids, help companies. It is going to help America. It provides jobs. After that, there are a few others. I won't go into great detail. There are incentives for jobs, for health care, to clean up pollution and more. Essentially, we have a responsibility to pass these extenders. We have been derelict over the years. Everybody likes these provisions. Everybody wants them. They last maybe a year, a year and a half, then they expire. We let them lapse sometimes for 6 months, sometimes 7, sometimes 8. Sometimes we go back and reenact them retroactively. Sometimes we don't. It is just nuts. They are yo-yo extenders. How in the world are people going to be able to plan if we are yo-yos? We as Senators should put them permanently in the law because we always reenact them. My hope is over the not too distant future we will be able to do that. Another temporary extension is in the bill. That is going to help address some of the job loss this country is facing. I yield the floor.

Mr. BAUCUS. I am happy to yield. I yield the floor, Madam President, so my good colleague can have the floor.

Mr. BAUCUS. Madam President, I give my compliments to the yeoman efforts of the Senator from Michigan. She has done a wonderful job. She has many times come to me and asked: Max, can't we do more? I have an amendment to accelerate the deduction and many times it will be explained how important it is, particularly for her people in the State of Michigan. I compliment the Senator very much for her terrific work. Those in Michigan ought to know, she is persistent and steady in coming to this Senator and saying we have to do more; let's do this. And the same with the Senator from Kentucky, Senator Bunning. I have heard from him. But I must be honest and seek a full disclosure and say the Senator from Michigan has been very consistent and done a superb job. I also compliment her on the charts. They are good charts, explaining the situation very well. I thank the Senator for her statement. She is on target. Most Members in the Senate will vote for this amendment offered by the Senator from Kentucky and the Senator from Michigan. It is very important to do what we can to create and to retain jobs in America. The underlying bill goes a long way to accomplish that objective, but this amendment goes further; and that is, I think it costs about $6- point-some billion and accelerates the deduction, meaning that companies can get that deduction earlier. They can plan earlier. And it is for all size companies, not just big business, but all size business. We all know, as the Senator from Michigan pointed out, half of all employees in America work for small businesses, and three-quarters of all new jobs in America are created by small businesses. We often say small business is the backbone of America. Why do we say that? Because it is true. Small business is the backbone of America. A lot of these big companies can go offshore--and it is one of the problems we are trying to address--but the small business cannot go offshore in the main. If a big business goes offshore and takes contracts away, often small business bears the brunt of it. So it is very important we do what we can to keep jobs in America. This clearly is a complex problem; that is, offshoring, outsourcing. It requires a very dedicated, concentrated effort to solve it. It is quite complex. There are various ramifications, various parts of this. The Senator from Michigan mentioned a good number of them, including the high cost of health care in this country. One of the problems we are facing, too, is currency manipulation by various countries, including China and Japan, countries with huge reserves in currencies and having a great effect on the American economy; and it is not always good. In addition to that, it is trade policy. We are reaching trade agreements with minuscule economies--Morocco, Bahrain. Well, that is fine. Morocco is a great country, as is Bahrain, but the point being, those are small economies. Rather, there are huge economies where we are not enforcing trade agreements already reached. One is China, this WTO, another is India. We hear all the time about call centers moving to India. We do not hear about American companies selling to India, for a very good reason. India is a very closed country. It is very difficult to sell in India. If we, as a country, were to use much more of our efforts to enforce trade agreements and open up huge markets--that is India and China-- rather than using our efforts to reach trade agreements with smaller countries, we would be doing a much better job to help keep jobs in America. That is just one of the various things we can and should be doing.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I will be very brief. I am very happy to be supporting the pending amendment. This is an amendment that the author of the amendment, Senator Hatch, and I have introduced many times over many years. I have been a cosponsor of this amendment for years. Senator Hatch has been a cosponsor of this amendment for years. It is critically important that we finally get a major research and development tax stimulus enacted into law. This provision has been in law for various years, but it has always been extended--on and off again. It has been a yo-yo tax provision--a yo-yo incentive. Sometimes companies get it, sometimes they don't. Sometimes we enact it--all the way back to the expiration previous times-- sometimes we don't. It is very irresponsible, in my judgment, for this Congress not to give permanent research and development tax credit to American companies. Other countries do. The Government of Canada, for example, has a R&D tax credit which is much more generous than the one we give to American companies. There are other countries that also have stimulus incentives to research and development--more generous than we have in our country. I urge adoption of this amendment. I also agree with my good friend from Nevada. This provision should be permanently extended. It makes no sense not to be permanently extended. It should be a permanent fixture in the law. I say that because the stakes are getting so high. We are losing jobs to overseas companies in lots of ways. One way to create jobs in America is to have a very aggressive research and development tax credit for research and development in America. It is clear that jobs tend to be where the research is. The more research we have in America, the more likely it is we will have more jobs in America. It will also help to maintain jobs. We do not want jobs to go overseas. This will help us maintain jobs in America. We should not erect barriers to our companies going overseas. We should not stick our heads in the sand. That does not work. We are facing an immense challenge, and one good way is to pass this amendment. In addition to passing the underlying bill, this JOBS bill before the Senate is not going to be the silver bullet many would like but it will help significantly. With respect to the R&D credit, 62 percent of total industry research and development is performed in manufacturing industries. That includes computer and electronic products, transportation, equipment, and chemicals. It is disproportionately helpful to manufacturing jobs. We clearly want more manufacturing jobs in this country. Manufacturing jobs are important to the entire economy. The multiplier effect in manufacturing jobs is extremely high. For every 16 million manufacturing jobs in this country, another 9 million are created in retail, wholesale, finance, and other sectors. That is not as true in other sectors. Most of the R&D effect is manufacturing, and manufacturing has a very high multiplier effect, which is all the more reason to get this passed. Workers employed in manufacturing plants with more technologies also earn 63 percent more than workers in plants using lower level technologies. It is a question not only of the number of jobs but the wages the jobs pay, the amount of income those workers will receive. I can go on at great length as to why this is so important. I am not going to expand anymore on it because I think Senators realize how important it is. I expect this to pass by a very large margin, and well it should. Once we pass this amendment, it is incumbent upon us to start looking for other ways we can help give stimulus and help American companies keep jobs in America. I am certainly going to be a part of this. It is something we desperately have to do. What is the remaining time?

Mr. BAUCUS. Mr. President, I ask my friend from Wyoming how much time he has. It is my understanding that there was an agreement before I came to the floor.

Mr. BAUCUS. Mr. President, I yield myself about 10 minutes.

Mr. BAUCUS. Madam President, I have a few more comments I would like to make about this bill. I hope, though, we can get an agreement put together, a list of several amendments that would then be in order. I know various Senators and leadership are now discussing that. It would be my hope we could reach that agreement fairly soon so we can get on with this bill. Let me just discuss for a few minutes what this JOBS bill is really all about. It is a bill which the Finance Committee reported last November. It is something we simply must pass due to the WTO decision. I hope we can get it enacted into law as soon as possible. I think this bill is important for three reasons. First of all, it will cut taxes for domestic manufacturers. That is important. The bill will also simplify taxes for American companies operating overseas. That, too, is important. And it will bring us into compliance with an unfavorable ruling of the World Trade Organization--no small matter. The JOBS bill, the bill before us, reduces the tax rate for domestic manufacturers by 3 percentage points. So if you are in the top bracket, it is 3 percentage points. If you are a company or corporation in a lower bracket, it is still about the same. Actually, it is a 9-percent deduction for the cost of producing or manufacturing products in the United States, which translates to about a 3-point reduction. Cutting taxes for domestic manufacturers will help prevent layoffs. It will help preserve jobs. As we all know, this country has lost 3 million-- think of that, 3 million--manufacturing jobs since July of 2000. That is net loss. We have lost a lot more and gained some, but the net loss is 3 million manufacturing jobs lost since July of 2000. When I talk to manufacturers in my home State, as I know the Presiding Officer does in her own State, they say the rising cost of doing business is one of the biggest impediments to business. It is a big problem business has. By cutting the cost of doing business, this bill will help alleviate the job loss. This bill will help companies do their job. This bill helps small businesses as well as larger businesses. The Tax Code treats different kinds of businesses differently, as we all know. C corporations, as you well know, are companies that exist as a separate entity from their owners, thus limiting the owners' liability. The corporations can be liable for various actions, but the stockholders themselves, the owners, are not. That is the reason why companies organize themselves, very often, in that manner. This chart shows about 26 percent of companies in the United States are organized as C corporations; that is, they limit their owners' liability, the shareholders themselves. The owners are not liable. Sole proprietorships and partnerships are businesses where the owners of the business are fully liable for its debts. S corporations are smaller businesses that are incorporated for liability purposes but taxed as a partnership. The S corporations, partnerships, and sole proprietorships are collectively known as passthrough entities. These are generally smaller businesses, while C corporations are larger concerns. Why do I mention all of that? I mention all that because, as I earlier stated, about a quarter of companies are organized as C corporations, but about three-quarters of American companies are organized differently, either as sole proprietorships, as partnerships, or as S corporations. We want to make sure that not just standard, garden-variety C corporations get the benefit of this bill but that all companies that manufacture domestically get the benefit of this bill, so we have changed the underlying bill. Currently, today, under the FSC/ETI regime, which has been declared illegal by the WTO, the C corporations are the ones that get the benefit of the tax break. It helps them export products overseas. But in the Finance Committee, we felt, not just big companies but all companies should get the benefit of reduced taxes. Nearly three-fourths of the manufacturers in this country are S corporations, partnerships, and sole proprietorships. About three- quarters of all new jobs that are created are by these small businesses. This chart shows that. About one-half of all employees in this country are employed not by big C corporations, they are employed by the other passthrough entities I mentioned. About three-quarters of all the jobs created and held in the United States are not by the big companies but by all the other smaller companies. That is why we have extended this bill to include so-called passthrough entities. Our smaller businesses are the backbone of my State's economy and certainly the backbone of the economy of the Presiding Officer's State. I think they deserve tax relief just as much as larger businesses do. In addition, by including partnerships and sole proprietorships, more of our agricultural producers will become eligible for this tax relief. The JOBS bill that is before us also includes long overdue international tax reform. We are not just talking about the domestic manufacturing reduction rate; we are also talking about international tax simplification. That is for bigger American companies that do operate overseas. We want to make sure our American companies are competing on equal ground with rivals from other countries. One way to do that is to limit double taxation. When our companies are taxed twice, that makes them less competitive. We have included international tax simplification and reform provisions that will help American companies compete with foreign companies overseas. A number of provisions will help companies better utilize their foreign tax credits. Foreign tax credits prevent income from being taxed twice. There is a repatriation provision that encourages companies to bring back overseas profits for investments in the United States. There is also a provision that will ease the tax compliance burden for small businesses looking to gain access to overseas markets. These are worthwhile, and they are measures that will help restore fairness and integrity to our American tax system. As I mentioned, the bill repeals the current FSC/ETI laws. Why? To bring us into compliance with WTO obligations. Our bill replaces a tax incentive that was dependent on exports with a tax incentive that is not dependent on exports. A company can utilize this tax benefit in this bill whether the product it manufacturers is exported. So long as it is manufactured in the United States, that company qualifies. We will partially offset the loss of tax benefits to U.S. exporting companies, therefore, by the repeal of the current law, which I said is inconsistent with WTO, and will also provide benefits to all American manufacturers, providing a needed boost to our economy. Another point: This legislation is completely paid for. Repealing the old FSC/ETI regime will cover most of the cost for the new tax incentive. By repealing the current law, that almost pays for what we are doing here. The international provisions are paid for; that is, the additional provisions of the bill are paid for with offsets that curb abusive tax shelters. We have offsets in this bill. They will not just create revenue, but they are also good provisions, good tax policy in and of themselves--clamping down on shelters, the inversions provisions, post- Enron reforms, something else called SILOs, which is a gimmick, frankly, that international American companies are using to shelter their income. All that is shut down, and that pays for the rest of the bill. Again, these shelter provisions are absolutely critical to be enacted. Let me mention in a little bit more detail the three reasons for supporting this bill. I mentioned it is fully offset and the revenue goes to manufacturing. I think that is a principle we should maintain. We should not put incentives in this bill or change this bill in a way that deviates from that. We should also not change this bill in any way that reduces or diminishes stopping the abuses of tax shelters. That is a principle we should absolutely maintain. I might say something about our budget deficit. Our current budget deficit is projected at about $521 billion this year. We all know that is basically an understatement. It is going to be much worse. Why? Because the administration's budget, as well as the budget resolution pending in the Senate Budget Committee, does not include several factors which more accurately reflect the true deficit our country is facing. What are those? First, both the budgets of the administration and the Budget Committee, which will be coming before the floor on Monday, will not include the cost of the war in Iraq. It will not include war costs. In fact, defense spending is going to be cut a little bit. One might wonder why, when costs are going up. My guess is the administration will come back with a supplemental next year with a big increase in Iraq costs and war costs. This budget does not include that and it should. That would be more honest. Second, the budget does not include the cost of making expiring tax cuts permanent. That is the view of the administration, that they should be permanent. The budget does not include that. It doesn't include providing alternative minimum tax relief. We all know this Congress is going to have to enact alternative minimum tax relief soon, and it is very expensive. That also is not included, to say nothing of the cost of paying for the baby boomers when they start to retire in the not too distant future. Deficits are going to be a lot larger than contemplated in either the administration budget or the budget resolution that will come to the floor. I say that because it is all the more reason why this bill must be budget neutral. I say that also because there are other Members of Congress who have a different view about that. They would not like this to be budget neutral. They would like there to be further tax cuts but not paid for. I think that is not wise. Frankly, psychologically, as well as actually, the American people will appreciate us having a budget-neutral bill and trying to work toward a balanced budget. That means people around the country are saying those guys and gals in Washington maybe have their heads screwed on straight. Maybe they are doing something right back there. Maybe they are not frittering away taxpayer money. The more we do what is right, by keeping this budget neutral, not succumbing to the siren song of lowering taxes but not paying for them, the better off we will be in so many respects. Another point: We have a heck of a job ahead of us, a huge challenge. What is it? It is how to create more jobs in America, how to keep jobs in America, and how to help those who have lost jobs--no easy task. It is extremely difficult. We all know the statistics. Three million manufacturing jobs lost in the last several years. We have to do something about that. The real question is, what do we do? What is the right thing to do? Some say it is OK. That is the way things are. That is international competition. That is globalization. It just happens. In the long run we are all better off. Some say that. Essentially that was a statement of Mr. Mankiw the other day that has been bandied about so much. He said that is the way it is. There will be new technologies. Companies will be able to compete better. They have to lower their costs, and they can lower their costs if they can compete any place in the world. If that means jobs overseas, lowering costs, that makes American companies more competitive. I have a different view. I think we have to face up to the challenge of creating more jobs and retraining Americans so they can have jobs, and keeping those jobs in America. That is, we cannot be passive. We have two choices: try or do nothing. I say we try to create more jobs in America; we try to keep more jobs in America; we try to retrain people and help people who have lost jobs. We have to do something about it. The administration thus far has been passive. It has gone AWOL. It does not seem to really care. I do not see any affirmative programs to create jobs in America. We need them. It is a hugely complex problem in both the short term and long term. In the long term, it is education-- science, math, engineering. Did you know we don't graduate nearly as many engineers as does Japan, Europe? And China graduates about three times the number of engineers we do. Did you know that? How long can we continue that? In the long term, we cannot. It is unsustainable. I must also say the amount of financial aid or the amount of support in basic research has dropped tremendously in America. The number of engineers who graduate in America is now about 30 percent less than it was not too many years ago. The figure is worse than that. We are not going to be able to compete in the long run if we continue that. It can't be done. There are lots of other long-term measures we have to undertake. There are also in the midterm things we could be doing and we are not. What are they? No. 1, we are not opening foreign markets. Look at India, look at other countries in the world that are closed to America, particularly the country of India. We hear about all the call centers going to India. We don't hear about goods being exported to India for a very good reason: India is by and large closed. They are closed to intellectual property rights, closed to so many markets, so many products. India is closed. What are we doing about that? Not much. The same can be said for other countries--China. Remember the WTO? They are a member of the WTO. We gave them PNTR. China has a lot more to do. What are we doing in trade? Basically looking to countries--with no disrespect--such as Bahrain and Morocco. These smaller countries don't have huge commercial benefit to the United States. It is easier to reach trade agreements with those countries. It is much more difficult to go after where the real problem is. As I mentioned, this country is not doing that, and it should do that. It should start working more aggressively to open markets so we can sell products overseas. When we start selling products overseas, that means more jobs in America. It is pretty doggone simple, but it is not being done. I might also add that there are other things we could be doing that we are not doing. I mentioned education. We are cutting education in this country. We are not fully financing No Child Left Behind. How are we going to compete in the world if we don't give full due to education? We have all gone overseas and visited high schools in countries worldwide. I have. The graduates in Pusan, Korea, are bright as the dickens, and they are hungry. We have great schools and great teachers. But there is so much more we can do. In my State--and this may be true in other States--teachers are leaving because their salaries are so low. They cannot teach. A lot of schools in the country are cutting back on gifted children programs. They don't have any money. Why are we cutting back on gifted kids? That certainly helps all kids, including the underprivileged. Madam President, I will yield the floor because I see our Democratic leader in the Chamber. He has a lot to tell us. Certainly, it will add immensely to this discussion. I urge us to think critically about the real problem. We cannot close our borders and put our heads in the sand. We have to meet this challenge head on. This is part of that effort. I yield the floor.

Mr. BAUCUS. Absolutely.

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

Mr. BAUCUS. I yield the floor.

Mr. BAUCUS. Mr. President, I would like to make a few remarks about the JOBS bill before the Senate. With this bill, we join in the work of improving the economic well-being of Americans. This bill is about creating good jobs in America. This bill is about improving the standard of living of all Americans. Let me begin with the economic context for this bill. In a series of statements over the coming week, I will address particular aspects of the legislation. We begin with the dignity and importance of work. Our jobs often define who we are. They are where we spend much of our waking hours. As the preacher teaches in the book Ecclesiastes, ``A man can do nothing better than to . . . find satisfaction in his work. This . . . I see, is from the hand of God. . . .'' Job creation is fundamental to our ability to live a good life. It is through the creation of good jobs that Americans have come to enjoy remarkable advancements in income and comforts. The American job creation machine makes our shores the shores to which immigrants swarm. We don't see people heading for the door. Rather, people from around the world want to live in America. Ours is a dynamic economy. This economic growth is the key to our Nation's success. I point out this chart. I will raise it up so people can see it. This chart shows the picture I have just basically described. In 1900, in the wake of the industrial revolution, America already stood at the pinnacle of the world economy. Already in 1900, believe it or not, we had the highest per capita income in the world, slightly more than Britain or Australia, and almost double that of France or Germany. But even adjusted for inflation in today's dollars, not 1900 dollars, America's per capita GDP--a rough measure of our average income--was only about $5,000 a year in today's dollars. Measured by today's standards, we lived in poverty: Walking and horseback was how one got around; electricity lit only 3 percent of homes in 1900; only one-third of Americans had running water; only 15 percent had flush toilets; life expectancy was 47 years. In 1900, America had one of the best educated populations in the world. But 1 in 10 were illiterate. The typical adult had left school after the eighth grade. There were only 382 Ph.Ds awarded in the entire country in 1900. Even though in 1900 our economy was at the top of the world, Americans had an average income then that the average person in Mexico has today. If our economy had not grown, our standard of living would be unacceptable by today's measures. Economic growth made a huge difference. Because of economic growth, inflation-adjusted, our per capita income today is roughly seven times now what it was 104 years ago. With economic growth, electricity became available across the country, and automobiles made us a mobile nation and made much more of the Nation within reach of work. It is incredible to see how much we have grown in real per capita GDP since 1900. You can see a dip on the chart in 1929. But we have grown at a rapid rate. The next chart is very interesting as well. This is private sector employment. American economic growth created 108 million new jobs, net, since 1900. In 1900, the American economy employed 27 million people in its civilian labor force. By January 2004, 104 years later, the American economy employed almost 140 million Americans. Two-thirds of Americans participate in the labor force--substantially higher rates than in Europe. That is up from 55.5 percent in 1900. Americans are hard-working people. We work. The American economy has, on average, created more than a million net new jobs every year since 1900. Since 1935, we have done better; America has created 1.5 million jobs every year. That is a net figure. America's economic growth springs from our people, our freedom, our unity. The American people are smart and as hard working as any in the world. Our free market has given this great people the freedom to achieve their best potential. Our unity has protected its huge internal market from robbers, foreign and domestic. We are lucky to be Americans, very lucky. Our Nation is still a magnet for immigrants. This country is still a beacon to countries around the world. We can pride ourselves in our independent judiciary, which helped make this country strong. We can be proud of our system of government-- this long-lived democracy. We have a dynamic, mobile society. In a number of ways, America has it right. More times than not, Americans have struck about the right balance between government protections and private freedoms, to contribute to economic growth. Our society provides an environment for success. Bill Gates, for example, might be a pauper in Sri Lanka. But America provides the environment and infrastructure and, of course, the political system and markets where a Bill Gates can succeed. We should not take this lesson for granted. This is not true in all countries. Our society, economy and, yes, the Government contributed to the successes of people such as Bill Gates. Government does have a role to play, for good or evil, either to foster or to impede this economic growth. Government can impede growth. By running large continuing budget deficits, the Government can suck vital capital out of the economy, robbing individuals and businesses of funds that can be used for investment. Thus, the record budget deficits that the Government is now running pose a threat to our Nation's economic growth. We have to recognize that. These deficits decrease national savings, decrease private sector investment, and raise interest rates. The resulting slower economic growth and increased cost of borrowing harm businesses, large and small. Foreign governments can impede our growth when they deny Americans access to their markets, when they don't let us sell products in their country, when they artificially depress the value of their currency, flooding our lands with their imports and denying our exports a fair opportunity to compete. Our Government can foster growth by investing in education, by opening markets at home and abroad, and by removing barriers to our economic greatness. We can foster growth in America. That is what this bill is about--removing barriers to economic growth and creating jobs. It is no secret that in the past few years the engine of American job creation has ground to low gear; manufacturing has been particularly hard hit. This next chart shows the story of private sector job creation in the American economy over the last decade. Beginning in March of 1993, here at the lower left, the American economy steadily created new jobs throughout the rest of the decade. The economy grew. People had jobs and families had more money in their pockets. In fact, from January of 1993 to January 2001, about 20 million--net jobs--were created in America. Private sector employment peaked at 111.6 million jobs in December of 2000. The Bureau of Labor Statistics reports that since the end of the year 2000, the private sector of the American economy lost 3 million jobs. You can see that on the chart. Our peak was here in 2000 and we have lost jobs--3 million. Three million jobs were lost in the American economy since that peak in December of 2000. In January of this year-- the month for which we have the latest statistics--the American economy employed 108 million private sector workers, which means 1 out of every 40 private sector jobs have disappeared since the end of 2000. The manufacturing sector has disproportionately borne the brunt of these job losses. This next chart shows the story. This is manufacturing jobs from 1993 to 2004. We can see the dramatic decline in roughly 2001, since July of 2000. Since July of 2000, the American economy has lost 3 million manufacturing jobs. That is a net loss. The Bureau of Labor Statistics reports that in January, America employed 14.3 million workers in manufacturing, and that is down from the 42nd straight month from the high of 17.3 million in July of 2000. That is a drop of 17.5 percent in manufacturing employment. More than one in every six American manufacturing jobs has disappeared since July of 2000. Again, one in every six manufacturing jobs in America has disappeared since July of 2000. Manufacturing jobs have disappeared in all 21 industries that constitute the manufacturing sector. It is in all sectors. We lost jobs in computer and electronics products. We lost jobs in transportation equipment. We lost jobs in machinery. We lost jobs in fabricated metals. We lost jobs across the board. My home State of Montana has suffered more than most. It has had a 19-percent reduction in manufacturing jobs since January of 2000. This next chart also shows job losses happening all across the country; not just across all manufacturing sectors but all across America. Every State in the Nation but one has lost manufacturing jobs since July 2000. The darker the shade, the greater the job loss; the lighter the shade--orange and yellow--there is less job loss. But every State in the Nation has lost jobs, except one. The manufacturing jobs we are losing are good jobs. This next chart shows manufacturing jobs pay more than service jobs on the average. We all know we are moving from a manufacturing society to a service job society. Regrettably, those new jobs, service jobs, pay quite a bit less than manufacturing jobs, and that has been true from 1994 all the way up through the current date. This next chart shows manufacturing employment is now at its lowest absolute level since July of 1950. Fewer Americans are employed in manufacturing today than at any time in more than half a century. We can see from the line from 1950 to today there is essentially the same number of jobs. Clearly, we are not doing very well. Why do I mention all this? First, it is fact. Second, we have to deal with it. We have to do something about it, and that brings us to the bill before us, the JOBS bill. We have targeted the provisions of this bill directly at manufacturing employment. Why? Because that has been the greatest problem. This bill will not be a complete solution. By no stretch of the imagination will this bill be a complete solution to job loss in America. To help create and keep manufacturing jobs, we also need to do many other things in addition to passing this bill. We need to open foreign markets to American goods much more aggressively than we have done in the last couple of years. We need to improve education, to preserve the comparative advantage of American workers. Clearly, we have to be the smartest--hopefully at least try to be the smartest--in the world. To do that, we have to educate our kids and keep education at all levels, and to retrain workers. We also need to make health care more affordable. Health care costs in the United States are too high. They place a big burden on employment, on businesses. The cost of health insurance and the cost of health care is way too high and should be lowered. We also need to provide assistance to displaced workers. They need to be retrained. This bill will do two things that will make an important contribution to creating and keeping manufacturing jobs in America. This bill will contribute to economic growth and increased demand. This bill will help reduce manufacturers' tax burdens. It will reduce the tax rate for domestic manufacturers by 3 percentage points. Basically, it is a 9- percent reduction for domestic manufacturing income, which translates to about a 3-percentage point break for corporations. The JOBS Act will thus help all manufacturers who produce goods in the United States. Cutting taxes for domestic manufacturers will help prevent layoffs. It will help. It will not solve the entire problem, but it is going to certainly help. It will help preserve jobs, and this bill is paid for. It will not contribute to the deficit. It thus will not raise interest rates. It thus will not levy that hidden tax of higher borrowing costs for business. This is an important bill. It comes none too soon. American manufacturing is calling out for help. This bill is part of the answer. To ensure continued prosperity and well-being, the American economy needs to start growing again, and this bill is part of that solution. This bill is an important first step to address the economic circumstances in which we find our country. Over the days to come, I look forward to working with my colleagues on this bill. I particularly thank the chairman of the committee, Chairman Grassley, who has done a terrific job in putting this bill together in a way that focuses directly on the problem. We know we are here in large respect because of the WTO ruling which says we must repeal the so-called FSC/ETI regime because it is WTO illegal and replace it with a system that helps our domestic manufacturers in a way that is legal under WTO. There are various ways to fashion a replacement bill, and the other body has a replacement bill which gives the break to American corporations, C corporations, big corporations. We have a different bill. Our bill says if you are a C corporation, if you are an S corporation, sole proprietorship, partnership--whatever--if you manufacture products domestically in the United States of America, whether you export is irrelevant. You get the same reduction in your tax rate. That is to help small business as well as big business. So business together across the board is helped, not just big business. We all know that is important because most new jobs are created by small businesses. There are many more small business people in this country than there are big business. Small business tends to be more creative in creating new jobs and expanding rather than big corporations. I will stop here. There is much more to say about this bill. One final point. I mentioned it is paid for. It is paid for by measures which in themselves should be good public policy and we should pass, anyway. What are they? They are corporate tax loophole closures. They are shelters legislation. They are post-Enron provisions that have not yet been enacted into law. There is something else called silos, to shut down another abusive international transaction. Not only is this bill paid for, it is paid for in ways that will help restore consumer and investment confidence in American business which, in and of itself, will help create and keep jobs in America. I yield the floor.

Mr. BAUCUS. I ask for the yeas and nays.

Mr. BAUCUS. We are going to give you a Nobel Prize for that.

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

Mr. BAUCUS. Mr. President, with this amendment, we are moving along on this bill. I very much appreciate the Senator's generosity in suggesting a time agreement. At this point, apparently, that is not advisable. But I thank the Senator for making his generous offer and for proceeding nevertheless.

Mr. BAUCUS. The point I am trying to make is, we Americans pride ourselves on being fair and open, but I don't know that other countries are as fair and open when it comes to trade. We are not pure. We do not wear a white hat. Other countries are not necessarily Darth Vaders and wear black hats. But I think it is also true the shade of gray of our hat is a lot lighter shade of gray than the shade of gray of their hats. They do not agree to fair trade in the main. I am talking about the bigger countries. India is the best example, the most blatant example.

Mr. BAUCUS. My good friend from New Jersey has to leave the floor. I compliment the Senator for what he is trying to do. This clearly is the issue, the problem that faces our country as it will certainly for the rest of the year and probably for the indefinite future. I am wondering, in addition to the approach suggested today--and there probably are additional proposals, too. This is a complex problem and requires a complex solution. It reminds me of a quote I am fond of making. H.L. Mencken once said: For every complicated problem there is a simple solution, and it is usually wrong. In my judgment, this administration not only is sort of laissez-faire but kind of going AWOL on this issue. I don't see a plan. I don't see a way to deal with job loss that passes the smell test. In addition, wouldn't it help to be much more aggressive in enforcing our trade laws? One thing that bothers me, frankly, is that we are going about getting trade agreements with minuscule economies. The big bang for the buck is enforcing our trade laws, say, with respect to India or China or maybe the European Union. There are lots of examples. We hear about all the call centers in India. We don't hear much about many products by American companies being sold in India, and the Indians are very much violating the intellectual property agreements. Billions of dollars are being lost to American companies that could be spent in America because other countries are not living up to their international obligations. I was wondering if the Senators agree that is one of the additional ways we can take to keep more jobs in America? Let's open up markets in other countries so we can export more.

Mr. BAUCUS. Absolutely.

Mr. BAUCUS. Usually that is true.

Mr. BAUCUS. Let me ask the Senator a question on that same point. Would the Senator agree that in the main, most of the countries we are talking about--we are talking about environmental standards and labor standards in these countries--generally do not most of those countries want to sign free trade agreements with the United States because it adds to their prestige; it helps them market their products and helps them gain standing in the world? Would the Senator agree with that?

Mr. BAUCUS. I do not know how much time the Senator has, but I might ask, if the Senator does not mind, to address another subject with respect to jobs. Would the Senator agree, as we try to find a solution to this problem, that one of the issues we have to face and have to focus on is high health care costs that American companies pay and face? It is a very complex problem, clearly, but a lot of companies unfortunately are lowering their employee health benefits or their retiree health benefits because they say it is necessary in order to do business; the world is just so competitive. The first casualty is those who lose their health benefits. They are scared to death, frankly, about lowered health benefits or no health benefits. On top of that, it is partly, it seems to me, because we do have high health care costs in America. In fact, the last study I saw is that we pay twice as much per capita on health than does the next highest country. I do not know if we are twice as healthy as people in other countries, but we pay a lot, and that has to be the cost of doing business. What I am getting at, is part of the solution of this some way to address efficiencies in health care and quality of health care, recognizing that employees of companies in other countries have their health covered by the government, where that is not true in our country; that that, too, is a part of the problem here? If we are honest with ourselves, we are going to have to figure out some way to get our hand on that one, too.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that the following interns and fellows of the Finance Committee be granted the privileges of the floor for the remainder of the debate on S. 1637, the JOBS Act: Shannon Augare, Jane Bergeson, Simon Chabel, Tyson Hill, Jeremy Seidlitz, Trace Thaxton, Steve Beasley, Justin Bonsey, Jodi George, Scott Landes, Pascal Niedermann, Matt Stokes, and Chris Knopes.