Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I call up my amendment and send a modification to that amendment to the desk.

Mr. BAUCUS. Mr. President, I ask unanimous consent my amendment be temporarily laid aside.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I see my friend from Oregon in the Chamber.

Mr. BAUCUS. I yield such time as my friend from Oregon would desire.

Mr. BAUCUS. Mr. President, this is a good example of how we should pass legislation; that is, working together. Senator Smith from Oregon and I have come together and crafted an amendment which directly meets concerns of Senators. We have done it together. Is it perfect in the minds of everyone on one side of the aisle? No. Is it perfect in the minds of all Senators on the other side of the aisle? No. But is it good? Is it basically a good idea? I believe the answer is yes. Essentially, we are going to provide for bonus depreciation for capital investment at 30 percent over a period of 2 years. The big question, I remind the Chair, is, should it be 1 year, 2 years, or 3 years? We have agreed on 30 percent for all intents and purposes. During private conversation on the floor on both sides of the aisle, somewhat presumptuously I will say that I heard, I believe, it should be 2 years. That is what it should be. We debated 3 years. That did not pass. We, in effect, debated 1 year. It did not quite reach fruition, but that certainly is not going to pass.

Mr. BAUCUS. Mr. President, I move to reconsider the vote, and I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. BAUCUS. Mr. President, on behalf of myself and also Senator Smith of Oregon, let me make a couple of quick points. No. 1, we know our country needs a boost, a shot in the arm. It is not totally clear, but it is far better to provide a little insurance because the economy might go south in the next couple of months or years--more than it has now. Various companies are going bankrupt. We all know about Enron, Kmart, and there will be other companies down the road. Many people are being laid off, particularly in the financial services industry, which we are going to find out about in February because they have 2- or 3-month contracts and they will be laid off a lot later. This is very important. Second, many States are losing revenue because their economies are down. They will also lose more revenue as a consequence of the 2-year bonus depreciation. It is only proper with the passage of the Medicaid reimbursement amendment States are made whole so they do not have to cut Medicaid payments, so they do not have to cut payments to hospitals, to providers. This amendment will allow States to refrain from making those cuts to doctors, to hospitals, other providers, and to Medicaid beneficiaries, and also prevent them from having to otherwise cut their budgets. At the same time, we get a 2-year shot in the arm with bonus depreciation. It is a very modest provision. We all know bonus depreciation should be somewhere between 1 year and 3 years. This is where we all know it makes the most sense, 2 years. It should definitely be enacted. I yield the remainder of my time to my friend from Oregon.

Mr. BAUCUS. Mr. President, on behalf of myself and Senator Smith of Oregon, pursuant to section 904 of the Congressional Budget Office Act of 1974, I move to waive the applicable sections of the act for the purposes of the pending amendment, and I ask for the yeas and nays.

Mr. BAUCUS. I thank my good friend. I have looked at the Senator's amendment. It is a good idea. I support it. There are a few little wrinkles that I want to look at to make sure the definitions coincide with the definitions for income taxes excluded for combat zones and make sure all those declarations are the same and equitable. That is just a minor matter. We will work that out. I commend the Senator for offering this amendment. It is a good idea.

Mr. BAUCUS. Mr. President, again, to remind all Senators, this is a compromise. It is an effort on the part of Senator Smith of Oregon and myself to find the proper number of years of bonus depreciation. It is an effort to find the proper amount of reimbursement to States for lost Medicaid dollars. All Senators agree this is not only in the ballpark, it is probably so close to filling up the ballpark that it really cannot be improved upon a heck of a lot. I think it is a good amendment. Further, I remind my colleagues, with the split in this body basically 50-50, this is the only way we are going to accomplish anything of consequence. That is, by sitting down and not engaging in rhetoric and preaching to people through the cameras, making them feel good, but, rather, working together to pass legislation that makes people's lives better and significantly better. That is what we are charged to do. If you were to ask voters, do you want your Senator to make speeches just for the sake of making speeches or do you want your Senator to get something done that really makes sense for us in the State, it may not be all we want but he has done a pretty good job, clearly the answer is the latter. They want us to do something that makes sense. That is what the Senator from Oregon and I are doing. I strongly urge my colleagues to take a good, strong look at it. It is a bipartisan amendment. It has bipartisan support. More than that, it has the support of the people of the country. I yield back the remainder of my time.

Mr. BAUCUS. Mr. President, pursuant to section 904 of the Congressional Budget Act of 1974, I move to waive the applicable sections of the act for purposes of the pending amendment, and I ask for the yeas and nays.

Mr. BAUCUS. Mr. President, we have two amendments pending and at least two votes at approximately 5:45. We have discussed the amendment offered by the Senator from Virginia, which I support. I don't know whether the Senator wishes to discuss the amendment. If he doesn't, that is fine. Otherwise, I was going to ask my friend from Oregon, Senator Smith, if he wishes to say a few words before the other votes that will occur following the vote on the amendment offered by the Senator from Virginia. That, of course, is up to my good friends from Virginia and Colorado.

Mr. BAUCUS. Is the Chair about to put the question for a vote?

Mr. BAUCUS. That would be fine. I just have 2 minutes. That would be fine with me.

Mr. BAUCUS. Mr. President, what is the regular order?

Mr. BAUCUS. Mr. President, there was a vote earlier on a small business amendment offered by the Senator from Missouri, Mr. Bond. It was adopted. That shows we are starting to make progress toward an agreement on a bill to stimulate economic recovery. That was the small business expensing amendment which increased the ceiling amount available for business as to expense. We now have an opportunity to make even more progress by adopting the Baucus-Smith amendment. This amendment makes two important improvements: First, it strikes a balance on the bonus depreciation issue with a 2-year compromise provision. Second, it will help States by increasing the Federal matching payments for Medicaid. As a bonus depreciation, this assistance will be provided for 2 years. Essentially, I am offering an amendment, joined by my good friend from Oregon, Mr. Smith, to provide for a 2-year bonus depreciation, as well as a 2-year FMAP payment. I will speak first about bonus depreciation. I think we all agree that a strong stimulus bill must create tax incentives for business to invest in new equipment. I do not think there is much doubt about that. This amendment creates jobs, lifts the economy, and also increases productivity in the long run. Chairman Greenspan and others have talked a lot about productivity. There is not much doubt that this amendment will help us move in that direction. Everyone agrees on the concept. The debate, however, has been over the details. The proposal before us is a 10-percent bonus. We have agreed to increase that to 30 percent. The question now is how long should the incentive last. The Democratic proposal was 1 year; the Republican proposal was 3 years. Our bipartisan compromise amendment, that is the amendment of Senator Smith from Oregon and myself, is 2 years. This is not simply an effort to split the difference. Instead, if one steps back and thinks about it, a 2-year incentive makes good sense. Three years is too long. It will not encourage business to invest quickly enough. As a result, it will not stimulate businesses to act when we most need them to act. On the other hand, in the debate last week, Senator Smith and others made a very good point. They said that a 1-year bonus period might not be long enough because it does not give businesses enough time to make sound investment decisions. Let's not forget the investment to qualify has to be in place, in service within the requisite period. We have to assume this legislation will not be enacted before March. If we were to stick to the 1-year period, companies would only have a few months left at that point to make purchases and get assets in place, as we are dealing with the calendar year. That is not time enough, especially if we think about the kinds of investments we want to encourage, which is airplanes, heavy machinery, equipment used in manufacturing, locomotives, pipelines, and refineries. In many cases, these assets may take longer to build than 1 year, or the contracts for purchase may take some time to negotiate. This is a legitimate concern. To address it, our amendment gives companies until December 31, 2003, to make their purchases and get assets in place. Even after that, companies would have an extra year to put the assets in place if they take more than a year to build, so long as they meet a binding contract test. The amendment will provide economic stimulus. It will work quickly, and it recognizes business realities and gives companies the time they need to make sound investment decisions. That is the first part of the amendment. The second part relates to the States. The technical term is FMAP. What it is about is helping States by temporarily increasing the rate at which we match State payments under Medicaid. Let me explain why this is important. Rising Medicaid costs are already contributing to the States' fiscal crisis. Health care costs are increasing rapidly, while rising unemployment is increasing the number of people eligible for Medicaid services. Medicaid spending grew by 11 percent last year. It is likely to increase even faster this year if current economic and budgetary conditions persist. Many States have already implemented or are now considering implementing significant cuts in Medicaid and the State Children's Health Insurance Program, otherwise known as CHIP, in 2003. These cuts would affect thousands of children, elderly, and disabled people. For example, Oklahoma and New Mexico may eliminate their CHIP- funded Medicaid expansions to children entirely. CHIP--that is the State Children's Health Insurance Program--has been very popular. It helps low-income kids get health insurance, health insurance they did not previously have. I think it would be very unfortunate if, due to State budget constraints, they either choose to or believe they are forced to cut back and, in some cases, eliminate those programs that provide health insurance for children. Tennessee has proposed cutting Medicaid eligibility for 180,000 low- income people in its TennCare Program. Other States will no longer cover disabled workers returning to work or low-income women with breast and cervical cancer. These budget cuts and these tax increases are based on revenue forecasts that do not assume enactment of bonus depreciation provisions. Because most States tie their own tax collections to the Federal tax system, the additional loss of revenues in 2003 that would result from a lengthy bonus depreciation period would increase the likelihood and severity of State actions to cut programs and raise taxes. The underlying amendment would address this problem by providing a temporary 1-year increase in the Federal matching rate under Medicare. Our amendment goes a bit further by extending the period for 2 years to match the depreciation period. By doing so, the amendment ensures the amount of aid provided both to States generally and to individual States in particular, will grow if the recession proves deeper than currently projected. That is the second part of the amendment. All told, the amendment will help businesses, it will help workers, it will help States, and it will help families maintain Medicaid coverage.

Mr. BAUCUS

Mr. BAUCUS. I ask unanimous consent that Dana Casterlin, Julius Shapiro, Charles Donefer, and Jonathan Seibald, interns with the Senate Finance Committee, be granted the privilege of the floor during the Senate's consideration of H.R. 622.

Mr. BAUCUS

Mr. BAUCUS. I thank the Senator.

Mr. BAUCUS. That is right.

Mr. BAUCUS. Mr. President, may I say how gracious my good friend from South Carolina has been today. Before we knew the Furman Purple Paladins and the Montana Grizzlies were going to be playing in the 1 AA playoff for the championship of the country, we made a little wager. The wager was whoever loses reads the other team's fight song on the floor of the Senate. I say to my good friend, I have no idea what the Purple Paladins' fight song is. Had the Grizzlies not won, I certainly would know their fight song. For many days, the Senator from South Carolina has been talking about this song. He said: Egads, is this your fight song? Is this what I have to read on the floor? I cannot thank him enough. It was a great game. I watched it on television as well.

Mr. BAUCUS. That is right.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I thank Senator Smith of Oregon on the success of the last amendment. Without his help, I doubt the amendment would have been successful. We joined together and, frankly, I urge more of reaching across the aisle and accomplishing objectives that are in the best interest of the country and putting partisan politics aside.

Mr. BAUCUS

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

Mr. BAUCUS. I call up my amendment.

Mr. BAUCUS. I thank my good friend from Illinois. The Senator is absolutely correct. Unfortunately, we are in a recession, and the data we have is based upon times when the economy was in better shape, a couple of years ago. As a consequence, the formula for distributing Medicaid payments from Uncle Sam to the States is based upon old data, and now the hospitals are hurting, more people have less income, they cross the Medicaid poverty index, they get lower payments--just the opposite of what they should receive. As a consequence, what the leader suggested is essentially about a $5 billion reimbursement to the States that have lost revenue as a consequence of the downturn. Revenue, in some respects, they will get. But with the tax provision passed and the lagging economic data, these States are losing significant revenues in the provisional help.