Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, basically, this amendment offered by the Senator from Oklahoma is just unnecessary. In fact, he used my chart. My chart makes a case that is much worse than would occur under the bill. I am just trying to present the facts so people can make a reasonable judgment. I looked at the balance on a year-by-year basis. That is what that chart shows. Under the bill before us, there is a 10-year rolling average lookback which means that lower level on the chart would never get that low under the bill. The Senator from Oklahoma wants to change it from 10 to 5. Even 5 will not get that low. The main point is that many people have looked at this issue from different directions and have concluded that this legislation is a good way to deal with the excess balance in the railroad retirement trust fund. By increasing some benefits, by lowering taxes, and yet building in some automatic auditing devices, that comports with requiring the actuary to report whether the trust fund is actuarially sound in the current year and succeeding years under various economic assumptions. I do not know how much better we can do than that. It is very difficult to predict the future. I remind my colleagues that CBO, in trying to make 10-year estimates, let alone the 20 years we are talking about here, has varied its 10-year totals by $1 trillion over a 6-month period of time. It is because economic assumptions change so quickly, so often. We are in a more uncertain world than we were, say, 10, 15, 20, 30, 40 years ago. The actuaries have done the best they can with what they have. They made three different projections. One is pessimistic, one is intermediate, one is optimistic. The assumption we have been talking about is the intermediate. It is not the pessimistic, not the optimistic; it is the intermediate. I submit that with the annual reports from the actuaries coming to the Congress, we will know whether we are getting into trouble or not. This is the best solution we could come up with at this time, and it is done on a fair, reasonable basis. Taking a more pessimistic analysis than provided by the analysis of the Senator from Oklahoma, the worst case is about the year 2020, 2022, and that is when the ratio is 1 to two-thirds, balance to costs. The Social Security actuary says we can get as low as 1 to 1. We are not 1 to 1 today in Social Security. The Social Security actuary says that is the lowest benchmark with which he deals. Under our intermediate assumptions, we do not get that low. We get 1 to two-thirds, 1 to 1. I suggest we are even too pessimistic. I asked the question of the chief actuary how the economic estimates have been on employment levels, which is the most difficult estimate to make. His response is: Employment levels over the last 5 years-- railroad employment--have decreased an average of .9 percent per year. He said this decrease is better than assumption 1. Assumption 1 is the most optimistic assumption. He says for the last 5 years, the actual decrease in employment was .9 percent per year, which is better than provided for in assumption 1. We are talking about the intermediate, not assumption 1. He also says employment levels over the last 10 years have decreased an average of 1.8 percent which falls somewhere in between assumption 1 and assumption 2. We have been a little too conservative actually. The main point is, who knows what the world is going to be like in the year 2020? The Senator from Oklahoma takes the most pessimistic assumption and says we cannot have that. My Lord, if we are in that bad a shape in 18, 19 years, I can tell my colleagues we are going to be doing a lot of other things in this body in addition to railroad retirement. I have confidence in the Congress, in the system. We analyzed this thoroughly. We will do well.

Mr. BAUCUS. In just a second. I also say this measure before us has 73 cosponsors. It was considered last year in September in the Finance Committee. We had 20 amendments in the Finance Committee. It passed by a very large margin in the House. In sum, this amendment is unnecessary, and it is also mischievous because if it were to be adopted, this bill would have to go to conference. There would be no railroad retirement bill this session, and there could be no railroad retirement bill this Congress. I urge Members not to agree to this amendment.

Mr. BAUCUS. Yes.

Mr. BAUCUS. I stand corrected. Mr. President, most of his analysis was on the intermediate assumption. At one point, he was talking about the most pessimistic assumption. My response was to both.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to discuss the Lott amendment to the railroad retirement bill. In addition to other provisions, this amendment would enact a moratorium on a scientific process which holds the potential to save millions of human lives. I cannot support such a provision. The final chapter of the Lott amendment deals with an issue that cuts to the core of our moral and ethical beliefs: human cloning. I share the deep concerns that my colleagues and millions of Americans have with the prospect of cloning human beings. These concerns were born in 1997, when scientists in Great Britain announced that they had successfully cloned a sheep. They were stoked again last week, when a biotechnology company in Massachusetts announced that it had taken the first steps towards producing human embryos through cloning. Let me be perfectly clear on this issue. I am adamantly opposed to any scientific project aimed at creating a clone of a human being. The implications of human reproductive cloning are morally repugnant. I do not know of a single respected scientist, ethicist, or religious leader who disagrees with me on this point. The Lott amendment would impose a 6-month moratorium on this type of reproductive cloning, and I am fully supportive of this effort. Unfortunately, the Lott amendment would also place a moratorium on a scientific procedure called somatic cell nuclear transfer. This process is closely related to the subject of stem cell research, which we heard so much about this summer. As you know, stem calls have the unique potential to grow into any tissue or organ in the body. Because of this property, stem cells may finally offer scientists the tools they need to cure diseases that have plagued humankind for centuries. I strongly support scientific research into stem cells. I was heartened this summer, when President Bush and a bipartisan group of senators joined me in this support. But while stem cell research offers promising possibilities, it faces many obstacles. One of these obstacles is the problem of rejection. If the stem cells used to treat diseases contain genetic material that is different from the genetic material of the patient, they may be rejected by the patient's body--in much the same manner as organs that are transplanted from one human being to another are often rejected. Somatic cell nuclear transfer is a technique that may allow scientists to bypass this obstacle. In this process, stem cells are created using genetic material from a patient's own body. Because these new stem cells are genetically identical to a patient's own body, they would not be rejected. This technique promises to speed up research into the treatment of crippling diseases like juvenile diabetes, cancer, Alzheimer's and Parkinson's. I would venture to guess that all Americans have had friends or family who have struggled with these devastating diseases; and millions of Americans would benefit by medical research that might one day eradicate them. But the Lott amendment would stop this research in its tracks. It would bring a halt to research aimed at promoting life and relieving unspeakable suffering. For this reason, I cannot support this legislation--no matter how well-intentioned it is. A reasonable alternative to the Lott amendment would be to make the reproductive cloning of a human being a criminal offense, subject to severe penalties. Such a solution would prevent the cloning of human beings without standing in the way of promising research aimed at promoting human life.

Mr. BAUCUS

Mr. BAUCUS. Reserving the right to object.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise to comment on the words spoken earlier this morning by my very good friend and colleague from Rhode Island, Senator Reed. Earlier this morning, Senator Reed announced his intention to bring S. 767, the Gun Show Background Check Act, to the Senate floor this year. At the outset, I deeply respect the Senator from Rhode Island. I think he is a very fine public servant, one of the brightest and most dedicated with whom I have had the privilege to serve. I respect his concerns about guns generally and guns in America. I do not believe, as he stated, that instituting background checks at gun shows will correct the concerns he raised. The events of September 11 and the ensuing concerns about terrorist threats have led to a resurgence by some for stricter gun laws. But with all due respect, responding to terrorism by calling for background checks at gun shows is not an effective tool for making this country safer. The hijackers of September 11 were not armed with guns. The tragic deaths of thousands in New York didn't involve a single bullet. The anthrax that arrived in the office of my next door neighbor, Majority Leader Daschle, had nothing to do with background checks. The acts of the terrorism on America to date have not been related to guns in any form. I am not trying to deny the risks and dangers that we face from weapons in the hands of terrorists. But I do not believe that terrorist organizations are buying their weapons one pistol at a time from American gun shows, nor do I believe that closing the so-called gun show loophole will result in fewer guns in criminal hands. I strongly support the actions our law officials have taken to make our country a more secure place since September 11. And I thank them for their dedication and hard work. They have worked so hard and in many cases overtime, extra hours, no vacation. It is amazing and inspiring. But while we tighten our borders and patrol our country, we must remember the balance between protecting our safety and protecting our civil rights. Restricting our citizen's access to firearms chips away rights protected by the Constitution. Cloaked in the mantle of eliminating terrorism, bills such as ``The Gun Show Background Check'' restrict the second amendment and make it more difficult for law abiding citizens to purchase guns. My State of Montana has a heritage based on hunting and enjoying the great outdoors. Gun shows are events typically held in town meeting halls on weekends. They are very well attended. They are big events. You would be astounded at all the people there going to and fro and talking and exchanging information. People come together and meet neighbors and possibly purchase a rifle to be used on a hunting trip. In addition, gun shows simply are not set up with the technology to make background checks feasible. They are temporary events, and they are not able to be connected to the NICS system for background checks. It is technically impossible. I appreciate deeply my colleague's concerns, but I do not believe that gun show checks begin to address terrorism or gun violence. We have safeguards in place to keep guns from falling into the wrong hands and focusing on guns when talking about terrorism is missing the bigger picture. Let's move on to getting an economic recovery bill passed to boost our economy and prove to the terrorists that their actions cannot stop America's progress. Let's get our aviation security bill implemented so our citizens can get back up in the air with complete confidence. Right now, it is the big picture on which we must focus. Gun shows aren't part of the problem, and background checks at the gun shows are not part of the solution. I yield the floor and suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. The language is, if the parameters for the trust fund are enacted--we are only talking tier 2--if they are enacted, the scheduled reductions in taxes that the railroad companies pay would have to go back up if the trust fund investments are not performing well. If, on the other hand, the economy is doing so well that the taxes can go down, under this bill both employee and employer taxes will be reduced.

Mr. BAUCUS. No, no, not substantially.

Mr. BAUCUS. My colleague is pointing out the differences between Social Security and the railroad retirement. Under Social Security there are three or four employees for every retiree, and it is the opposite with the railroad retirement system.

Mr. BAUCUS. Madam President, I support the motion to take up H.R. 10 so we can consider the retirement bill as an amendment. Let me explain why this bill is necessary and then I will respond to some of the criticisms that were made yesterday. By way of background, the Federal railroad retirement system has served railroaders and their families for 65 years. Its roots reach back to the 1930s, in a struggle to find answers to the hardships that resulted from the Great Depression. Today, the system provides benefit payments to more than 673,000 retirees and other beneficiaries. The railroad retirement system actually has two components. Tier 1 is largely equivalent to Social Security. Tier 2 provides additional benefits and is equivalent to a private pension plan. Both are funded by taxes that are paid entirely by railroad companies and railroad workers. Let me stop here and stress a critical point. Every single change that we make in this bill applies only to tier 2. Again, tier 2 is equivalent to a private pension program. In other words, we are only addressing how railroad retirement operates as a private pension plan. We are not making any changes to the part of the program that is largely equivalent to Social Security. So where do things stand? At one point, the Railroad Retirement system was in deep trouble. Just like the Social Security system. In fact, in 1983, we had to permanently cut benefits and increase taxes, in order to get the system back on its financial feet. But there's good news. Today, the Railroad Retirement system is fiscally strong. There's a surplus, of $19 billion. On top of that, the most recent report by the Chief Actuary concludes that no cash-flow problems are expected to arise over next 75 years. In other words, the system is solvent. I'll say it again. The system is solvent. Over the short term, and over the long term. That's good news. Among other things, it gives us the opportunity to consider some basic improvements in the operation of the railroad retirement program. That's what this bill is all about. After years of careful deliberations between railroad companies and railroad unions, the bill is designed to make two basic reforms. First, the bill improves the investment returns of the Railroad Retirement Account. Currently, the taxes collected in the Railroad Retirement Account can only be invested in U.S. government securities. Actuarial projections assume an annual return of 6 percent on these investments. This bill would allow a portion of the assets to be invested in a diversified investment portfolio that includes private-sector securities. In other words, the portion of assets attributable to private industry contributions could be invested in the same way that the assets of private sector retirement plans can be invested. Over the long run, this would increase the rate of return on the investment of railroad retirement assets. I grant that this proposal may have seemed like an even better idea a year or two ago, when the stock market was on a roll. But that's short-sighted. As we all know, equity investments result in higher returns over the long term. In this case, the shift from Treasury bills to a mixed portfolio is estimated to increase the long term rate of return from six percent to eight percent. That's not some pie-in-the sky projection. That's the estimate of the chief actuary, who is charged by law with making objective estimates of these matters. In any event, I note that this provision would apply only to the portion of the program that is similar to a private pension plan, and that is funded entirely from industry sources. That's the first change that we make. Over the long run, it will put the system in even better shape than it is today. The second change is a needed adjustment in benefits and taxes. We have room to make these changes, because the system now is taking in significantly more in taxes than is necessary to pay current and projected benefits. Let me describe each set of changes, in turn. With respect to benefits, we reform survivor benefits, the retirement age, and vesting. With respect to survivor benefits, each month, about 700 new widows and widowers begin receiving Railroad Retirement survivor benefits. That's an average of one every hour, day and night. As it now stands, while a retired employee is alive, a couple receives a tier 2 benefit equal to 145 percent of the benefit for a single retiree. When the retiree dies, the spouse is left with a tier 2 benefit of only 50 percent of the retiree's benefit. That's a reduction of almost two-thirds. Under the bill, the surviving spouse would receive a tier 2 benefit equal to the benefit received by a single retiree. As a result, we would avoid a drastic reduction in the income of the survivor. Next, we lower the minimum retirement age, at which employees with 30 years of service are eligible for full tier 2 benefits, from age 62 to 60. This would return the age at which a railroad employee can retire with full benefits to what it was prior to 1984. It also moves the railroad retirement system closer into line with many private sector pension plans, particularly those in hazardous or physically demanding occupations. Even with this change, many private plans will still have earlier retirement ages than the railroad retirement system. Finally, we lower the vesting requirement for employees from 10 to 5 years. This aligns Railroad Retirement with current private industry pension practices. Those are the reforms to railroad retirement benefits. We also address the taxes paid by railroad companies. To put this in perspective, tier 1 and tier 2 benefits are funded primarily through payroll taxes on employers and employees. Taken together, the payroll tax rate is more than 36 percent. As a result, railroads and railroad workers pay disproportionate costs, compared to other industries, for retirement benefits. This, in turn, imposes a major financial burden and discourages employers from hiring new employees. In the bill, we reduce the taxes on railroad employers, over three years, to bring them a little closer to comparable private pension plans and bring them more in line with the actuarial needs of the system. Now, I understand that some have criticized the changes. They argue that the system will not be secure. Therefore, they continue, by improving benefits and reducing taxes, we reduce the overall surplus and increase the chances that the system will eventually go broke. There are two simple responses. First, again, the system is solvent, over both the short and the long terms. We have a $19 billion surplus right now, and the chief actuary projects that the system will take in more than it pays out, under both current law and this bill, over the next 75 years. But what if the projection is wrong? What if there are unforseen developments that increase benefit payments, reduce revenue, and drain away the surplus? Won't taxpayers, in effect, be left holding the bag? No, they won't. Under the explicit terms of the bill, employer taxes will be automatically adjusted in the future so that always will they fully cover benefits. In effect, the taxpayers are not put at risk. Pulling all of this together, we have a carefully balanced package that makes straightforward reforms. We allow the private portion of the fund to be invested the same way a private pension plan can be invested. We modernize benefits and we reduce taxes. We do this within the framework of a fully solvent system. One final point. Some colleagues may question why we are seeking to take up the railroad bill as an amendment to a House bill. In the first place, the majority leader sought consent to discharge the House bill from the Senate Finance Committee. There was an objection. In the second place, we need to move quickly. Passage of this legislation is long overdue. It has extraordinary support. Last Congress, the bill passed the House and was reported by the Senate Finance Committee. This Congress, the House bill received 384 votes. The Senate bill has 74 cosponsors. In light of this overwhelming bipartisan support, railroad retirees across the country are wondering why we don't get our act together, pass this bill, and get it to the President. They are right. In fact, every time I return home to Montana--I was there just a couple of days ago--I am asked: When is the Senate going to take up the railroad retirement bill? At this point, late in the session, there is only one good answer. Let's put all of the procedural maneuvering aside. Let's take up the bill. If Senators have serious amendments related to this bill, let's consider them. But let's vote. Let's do the people's business. They want us to work through these measures, take votes, and come up with the result, because that is what this process is all about. That is what people want. I will have some further comments in response to arguments that have been made against the specific provisions of the bill as this debate goes on. But at this point, I urge my colleagues to support cloture so that we can debate this important bill. Let's get going. The 10,000 railroad employees, retirees, widows, and survivors in Montana, and tens of thousands more across the country, are counting on us. I yield the floor.

Mr. BAUCUS. They pay Social Security-like taxes and receive benefits similar to Social Security, both employees and employers.

Mr. BAUCUS. If this happens, you get tier 2 benefits at age 60. Part of that may eventually be like Social Security, but only the Social Security benefit allowed under current law. We don't change any law regarding tier 1, which is similar to Social Security. The additional benefit for early retirement is paid with additional funds from tier 2.

Mr. BAUCUS. That is the practice in the private sector with private pensions.

Mr. BAUCUS. For those who do not have pension plans, and many Americans do not have any pension retirement benefits, what you say is true. But many Americans do have private pension plans where they receive retirement income in addition to Social Security.

Mr. BAUCUS. Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. BAUCUS. You did raise a good issue. We have to somehow modernize retirement in this country. We have a patchwork system; but we have to somehow work with it.

Mr. BAUCUS. What others?

Mr. BAUCUS. What do you have in mind? Like what?

Mr. BAUCUS. That is an idea. The trouble is now, given where we are today, it would require too much money to make the switch. It is our judgment now that we need this legislation. It is $40 billion, frankly. We would need 40 billion extra dollars, and I don't think we have 40 billion extra dollars.

Mr. BAUCUS. If I may respond to that chart, if the current law is not changed, the tier 2 balances will keep rising from the current $15 billion, $16 billion, up to $20 billion, $27 billion; it will just keep going up, according to actuaries. Under the reform proposal, the railroad retirement account balance comes down, but there is a provision written in this bill which says there must be a certain level of reserves maintained in the tier 2 portion. The actuaries certify the investment and tax changes in the railroad retirement legislation will produce a system that achieves solvency over the next 75 years. CBO has looked at it, and they agree. The reason it is coming down is that so much excess payroll taxes have been paid in, the balances have been going up more than they need to. They are coming down because taxes are going to be reduced a little--I assume the Senator from Wyoming likes lower taxes; this Senator certainly does--and also because the benefits are increased to conform with the modern era and with other industries. One example is retirement age. This is tough work, that of a railroad worker. In industries where there is physical danger and demanding physical work, the age to retire with full benefits is usually earlier than age 65. The reform legislation makes that change for railroad retirement.

Mr. BAUCUS. Mr. President, I wish to address some of the remarks made by my good friend from Texas, Senator Gramm, with respect to railroad retirement. He is a great speaker. He uses words well, and I respect what he said. I think it is important to bring this issue down to its basics, to the essence of what this bill is, and what this bill is not. I will attempt to address that, and then in a few minutes I will answer some of the specific points the Senator made. Essentially, the situation is this: We have a railroad retirement system that pays benefits to railroad retirees and their widows. The amount of dollars in the railroad retirement trust fund is accumulating at a very rapid rate. I think it is about $19 billion now. Over time, if the law does not change, the trust fund balance is going to keep rising to a very high level. I think over the next 15 years it will be $32 billion. That is what the actuaries predict. That is not a politician. That is not a railroader. That is not a railroad executive making that projection. That is what our Federal actuaries project. Why is that? Why is that balance projected to go up to such a high level? Well, it is pretty simple. The reason is because the taxes the employers and the employees of the railroad pay are so high. The taxes are 21 percent total: 4.9 percent paid by the employees, and the balance paid by the employers. Now that is in addition to the 15 percent tax which is similar to Social Security payroll taxes. I think it totals out to about 36 percent total taxes paid by the employers and employees of the railroad industry. Some goes to Social Security, but I am talking about tier 2. Tier 2 is the private pension part of the railroad retirement. The tier 2 trust fund balance is going up at such a rapid rate because the benefits paid to widows is so meager, so paltry. It is an embarrassment. It is a tragedy. It is also going up at a rapid rate because railroaders must retire at a later age to get the full vesting. So this bill is very simple. It says take some of that money that is in the trust fund and invest it in private securities. Lower the taxes the railroaders pay into that trust fund while, at the same time, increase the benefits so a widower would not receive only 50 percent of what a single retiree would receive, but rather 100 percent of what a single retiree would receive, and lower the retirement age to 60. There are many industries where the retirement age actually is lower than 60, particularly in industries where the work is so demanding and the work is so physical. It only makes sense to have this retirement age at 60, which is comparable with the work that railroaders do. The Senator from Texas makes the point that this is pilfering. He likes that word, ``pilfer.'' He says by reducing the taxes railroaders pay under the trust fund and by increasing the benefits that would be paid, which lowers the trust fund balance by $15 billion over 17 years, that is pilfering. Then he goes on to say: Who is going to pay for the pilfering? He says the American taxpayer will. It is very clear, the trust fund balance is being lowered because it is too high. It is because too many dollars are going into it. The taxes are very burdensome to the companies and to the employees. That is why the trust fund balance is at such a high level. The actuaries at OMB and CBO agree with this. The actuaries say when this bill passes, when this bill becomes law, there will be more than enough money in the trust fund to make it actuarially sound for the next 75 years. That is not my judgment. That is the chief actuary's assessment, confirmed by CBO. So there is no pilfering. Taxpayers will not have to pay more. There is also a provision in this bill which says if by chance the projections are wrong, if by chance the actuaries are wrong, if by chance there is not enough money in the railroad retirement tier 2 trust fund, the taxes that are scheduled to come down under this bill will automatically go back up to their current level, if needed. That is in the law. The taxes which are to go up are those paid by the railroaders; not by other taxpayers, not by the rail employees, but by the railroad companies. The railroad companies and railroad workers agreed to this while developing the legislation. The railroad companies and the railroad employees want this bill. The railroad companies want it because, obviously, it looks like lower taxes at first, and it will probably always be lower taxes, but if it is not, they agree to let the taxes go back up. Clearly, the employees want it because the benefits are better. In addition, even if the projections are wrong, the taxes will go back up again and the railroad companies say that is fine. Now, why would they agree to that? Because there is another provision in this bill that says that in the private pension part of railroad retirement, that is tier 2, the investments do not have to be government securities. The railroad retirement investment board--it has a fiduciary duty to the railroad retirement system--could invest those securities in private securities, under a diversified mix, which is exactly what every other company pension plan allows and what trustees of company pension plans do in the private sector. This bill says what is good for most of the private sector ought to be at least as good for the railroad industry. Again, the actuaries say both under current law and under this bill, the fund will be solid for the next 75 years. There has been some confusion between Social Security, which is tier 1, and the private pension plan, which is tier 2. The argument has been made: Why lower the retirement age to 60 from 62, when the Social Security retirement age is increasing? The answer is, we are doing the same thing as is the case in the private sector. In the private sector, people pay Social Security. They may also pay into their company pension plan and/or their employer pays into the plan on their behalf. In many industries, the retirement age for the company pension is lower than 65. It can be lower than 62. Seventy-four percent of the eighty-five retirement plans studied by the Retirement Research Committee in the State of Wisconsin contain a similar provision that allowed for retirement with full benefits after achieving a certain number of service years. In fact, 30 years of service and reaching age 55-- not age 60--was the most common structure for retirement with full benefits. So how does the legislation make this adjustment? Social Security's retirement age is rising to 67, and the private pension plan part of railroad retirement is lowering the retirement age to 60. How do you mesh the two? In this bill, early retirement is handled the same way as in the private sector. How is that? It is called a ``social security'' bridge. In the private sector, additional benefits from the private pension plan may supplement the standard pension benefits until the beneficiary is eligible for their Social Security benefit. That is what the railroad retirement reform legislation does for railroad retirement. Tier 2 benefits provide the bridge. Tier 2 provides additional benefits to the railroad retiree so he or she can retire at age 60 instead of 62. The tier 1 portion of railroad retirement, which is similar to Social Security, is not touched. The Social Security system is not changed at all. The railroad retirement reform legislation does nothing to Social Security. Rather, the additional dollars come over from the private pension part, tier 2. Over the years, the Congress has not been fair to railroad retirement. Some railroad retirees could draw pensions from both Social Security and railroad retirement, a ``dual benefit,'' and the railroad retirement fund got stuck paying the cost of this extra entitlement. It was such a problem that Congress, in 1974, eliminated dual benefits for new retirees and agreed to pay for the post-1974 cost for all grand fathered employees. Guess what. Congress never reimbursed the railroad retirement fund for the $3.5 billion that had been paid out to dual entitlement beneficiaries before 1974. Had this reimbursement been made in full in 1974, the railroad retirement fund would have more than $31 billion in additional funds today. If you add it together, there is no pilfering or theft. We are making railroad retirement essentially the same as the private sector. It is actuarially sound. CBO agrees it is sound for the next 75 years. If we are wrong, there will be a scheduled tax increase, which the companies agree to. They say that is fine. The statement has been made that they may change their minds and will not accept the tax increase. That is possible. But the burden is on the Congress to undue this. The scheduled tax increase, if there is one, is in this bill and will be in the law. Again, the railroad companies agree. A final point that needs to be addressed is the scoring issue. The House of Representatives directed the scoring of this legislation to be not $15 billion, but zero. The reason is today the railroad retirement tier 2 has assets. They are Government securities as required by current law. For years, the usual rule of thumb under OMB scoring: When the Government purchases an asset, it is scored as an outlay. In this case, when converting the federal treasury securities to private sector securities, OMB also scores this an outlay because it would be purchasing a private asset. This is a grey area. There is no bright-line test. The railroad retirement system will still own the same amount of securities, although it will be a mix of government securities and private sector securities. Is the railroad retirement system less better off? Is the purchase of private sector securities an outlay or not? Because of the rules, it is called an outlay, so it is technically a $15 billion cost. But that is 1 year and does not affect future years. The question is: should the rule we have had on scorekeeping be applicable in all cases, including this one, or not? That is clearly a judgment call for the Senate. My view is that it is something we should debate and make a decision about. However, I do not think that this scoring issue alone should stop Congress from passing railroad retirement reform this year. Regardless of how it is scored, the legislation reforms the system in a way that is actuarially sound and does not pilfer one thin dime from the taxpayers. This carefully balanced legislation has been developed over several years. The bill has twice passed the House by a large margin and the Senate bill currently has 74 cosponsors. It is time to act. If any Senator has any amendment to offer, now is the time. We are debating whether to go to the bill. That takes a lot of time, and we don't have a lot of time left before we adjourn. Rather than preventing the offering of amendments, I urge my colleagues, if they have problems with the bill--offer amendments of their own. We can debate, count the votes, and proceed. That is far, far better than trying to stop this bill with the parliamentary maneuvers, claiming we can go back to the Finance Committee and rewrite this bill. There is not a lot of time left. This bill has been worked on for a long time. Going back to the Finance Committee will not help. Let me correct myself. The $3.5 billion I mentioned earlier as a consequence of changing the dual-benefit system was for years before 1974 and for pre-1974 retirees. For years after 1974, general revenues reimbursed tier 2. That was, again, the consequence of a mistake Congress made in earlier years by mandating dual benefits. So in 1974, Congress had to put money in the system to correct the mistake made earlier. We are now asking ourselves, given where we are today, what makes the most sense. I submit this bill makes the most sense. It is not perfect, but it is certainly very good. If Senators want to make changes, I urge them to offer amendments. I yield the floor.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I rise today as a cosponsor of the Medicare Appeals, Regulatory and Contracting Improvements Act of 2001. Medicare is one of the Federal Government's greatest successes. It provides health care for nearly 40 million seniors and disabled beneficiaries. Medicare is often considered the gold-standard of health insurance programs around the nation and the world. And it has lifted millions of individuals out of poverty since its enactment in 1965. Medicare's success is due to its public-private partnership, which is the foundation of the program. While Medicare is almost entirely federally financed, it relies on thousands of private hospitals, private physicians, and other health care providers and suppliers to deliver health care services. Moreover, it relies on more than 50 private health insurance companies to process millions of claims every year. Every so often Congress needs to evaluate this public-private partnership to see how its working. And this past year, Senator Kerry, Senator Murkowski, Senator Grassley, and I have undertaken this evaluation. I have heard from hundreds of health care providers who have levied legitimate complaints about the operation of Medicare. They argue that Medicare has become too complex. Changes to the claims payment systems are made every day, and health care organization simply cannot keep up. This is especially true for small rural hospitals and other health care providers in my state of Montana. They do not have the staff to stay abreast of the constant changes to the Medicare payment systems. I have also heard from providers about the current Medicare appeals process. The Medicare appeals process is broken. It takes too long to appeal an incorrect Medicare decision. Providers often have to file lengthy and expensive appeals, sometimes taking several years to settle. And finally, I have heard from health care providers about the aggressive tactics that are sometimes used by Federal Government and its contractors in collecting Medicare overpayments. Medicare needs to realize that mistakes happen, especially with this very complex program. When providers make honest mistakes, they should be treated as mistakes, not criminal fraud. Earlier this year, my colleagues Senators Kerry and Murkowski introduced a version of this bill, the ``Medicare Education and Regulatory Fairness Act of 2001.'' I commend Senators Kerry and Murkowski for their hard work on this bill; it made a very important contribution to our understanding of this issue and the need for reform. However, I had some concerns with their original bill, namely that it unintentionally created some new loopholes for truly dishonest providers to commit fraud. Rather than oppose their bill, I asked my staff along with Senator Grassley's staff to work with Senator Kerry and Senator Murkowki's office to redraft their bill to address some of my concerns. And I am proud to say that we have developed a bill that everyone can support. The Medicare Appeals, Regulatory and Contracting Improvements Act of 2001 will make necessary and overdue improvements to the Medicare public-private partnership. The bill does five things. First, it improves the CMS rule-making process, for example, by requiring CMS to publish its regulations on one business day of each month. Second, It provides new appeal protections for all Medicare fee-for-service providers and beneficiaries. Third, it grants new competitive administrative contracting authority to CMS. Fourth, it requires the Medicare administrative contractors and CMS to place a greater emphasis on provider education and outreach. And fifth, it reforms the Medicare overpayment collection and extrapolation process. The bill accomplishes all five of these important objectives without undermining the False Claims Act of current Medicare fraud enforcement efforts. We have received assurances from the Department of Justice, the HHS Office of Inspector General, and the CMS that this is so. This is a good bill, a bill that will receive the support of provider groups and the support of the Federal agencies that oversee the Medicare program. While this bill is primarily focused on health care provider issues, I agree with my colleagues in the Senate and House that Congress also needs to ensure that beneficiaries are able to navigate and understand Medicare. I commend current efforts in the House to include provisions that would guarantee that beneficiaries have the right to find out whether Medicare services are covered before they become financially liable for them. Currently, when a doctor informs a patient that a service may not be covered by Medicare, the patient has no way to verify if this is the case. I will work to include these provisions in any enacted legislation. I commend my colleagues Senator Kerry, Senator Murkowski, and Senator Grassley for their commitment and their hard work on this bill. As chairman of the Finance Committee, I remain committed to quick consideration of this bill in my committee. I urge all of my colleagues to support it.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I rise today as a cosponsor of the Medicare Appeals, Regulatory and Contracting Improvements Act of 2001. Medicare is one of the Federal Government's greatest successes. It provides health care for nearly 40 million seniors and disabled beneficiaries. Medicare is often considered the gold-standard of health insurance programs around the nation and the world. And it has lifted millions of individuals out of poverty since its enactment in 1965. Medicare's success is due to its public-private partnership, which is the foundation of the program. While Medicare is almost entirely federally financed, it relies on thousands of private hospitals, private physicians, and other health care providers and suppliers to deliver health care services. Moreover, it relies on more than 50 private health insurance companies to process millions of claims every year. Every so often Congress needs to evaluate this public-private partnership to see how its working. And this past year, Senator Kerry, Senator Murkowski, Senator Grassley, and I have undertaken this evaluation. I have heard from hundreds of health care providers who have levied legitimate complaints about the operation of Medicare. They argue that Medicare has become too complex. Changes to the claims payment systems are made every day, and health care organization simply cannot keep up. This is especially true for small rural hospitals and other health care providers in my state of Montana. They do not have the staff to stay abreast of the constant changes to the Medicare payment systems. I have also heard from providers about the current Medicare appeals process. The Medicare appeals process is broken. It takes too long to appeal an incorrect Medicare decision. Providers often have to file lengthy and expensive appeals, sometimes taking several years to settle. And finally, I have heard from health care providers about the aggressive tactics that are sometimes used by Federal Government and its contractors in collecting Medicare overpayments. Medicare needs to realize that mistakes happen, especially with this very complex program. When providers make honest mistakes, they should be treated as mistakes, not criminal fraud. Earlier this year, my colleagues Senators Kerry and Murkowski introduced a version of this bill, the ``Medicare Education and Regulatory Fairness Act of 2001.'' I commend Senators Kerry and Murkowski for their hard work on this bill; it made a very important contribution to our understanding of this issue and the need for reform. However, I had some concerns with their original bill, namely that it unintentionally created some new loopholes for truly dishonest providers to commit fraud. Rather than oppose their bill, I asked my staff along with Senator Grassley's staff to work with Senator Kerry and Senator Murkowki's office to redraft their bill to address some of my concerns. And I am proud to say that we have developed a bill that everyone can support. The Medicare Appeals, Regulatory and Contracting Improvements Act of 2001 will make necessary and overdue improvements to the Medicare public-private partnership. The bill does five things. First, it improves the CMS rule-making process, for example, by requiring CMS to publish its regulations on one business day of each month. Second, It provides new appeal protections for all Medicare fee-for-service providers and beneficiaries. Third, it grants new competitive administrative contracting authority to CMS. Fourth, it requires the Medicare administrative contractors and CMS to place a greater emphasis on provider education and outreach. And fifth, it reforms the Medicare overpayment collection and extrapolation process. The bill accomplishes all five of these important objectives without undermining the False Claims Act of current Medicare fraud enforcement efforts. We have received assurances from the Department of Justice, the HHS Office of Inspector General, and the CMS that this is so. This is a good bill, a bill that will receive the support of provider groups and the support of the Federal agencies that oversee the Medicare program. While this bill is primarily focused on health care provider issues, I agree with my colleagues in the Senate and House that Congress also needs to ensure that beneficiaries are able to navigate and understand Medicare. I commend current efforts in the House to include provisions that would guarantee that beneficiaries have the right to find out whether Medicare services are covered before they become financially liable for them. Currently, when a doctor informs a patient that a service may not be covered by Medicare, the patient has no way to verify if this is the case. I will work to include these provisions in any enacted legislation. I commend my colleagues Senator Kerry, Senator Murkowski, and Senator Grassley for their commitment and their hard work on this bill. As chairman of the Finance Committee, I remain committed to quick consideration of this bill in my committee. I urge all of my colleagues to support it.

Mr. BAUCUS

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