Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I think this is a very good development. I compliment the majority leader, as well as Senator Lott from Mississippi, for working together. I particularly compliment Senator Byrd for being very helpful in helping to break this impasse. I feel strongly that the outlines of putting together an agreement on an economic stimulus package are there. We need it. The White House knows we need it. Democrats know it and Republicans know it. The basic outlines are pretty clear, and I pledge my effort to work toward an agreed-upon solution that will pass both the House and Senate quite easily. I thank the leaders for the efforts.

Mr. BAUCUS

Mr. BAUCUS. This is not a Social Security private annuity program.

Mr. BAUCUS. Let me explain. So in that case, whereas the Social Security retirement age is 65 and scheduled to go up over time, those same people who work for a company, or did work for a company and have retirement benefits under their pension plan, receive earlier benefits and more benefits when the pension plan so provides. Is the Senator asking, what is the interchange between Social Security and the private pension plan? In the private sector, when a retirement plan provides for an earlier retirement age than age 65, a person receives benefits provided by the private pension. For the benefits the person does not receive from Social Security, those benefits are also paid for by the private pension part of the plan. That is what the railroad retirement reform legislation provides for railroad workers.

Mr. BAUCUS. That is correct.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I rise today to congratulate science students and science educators in my home State of Montana. Last week, newly released scores from the 2000 National Assessment of Educational Progress, NAEP, often referred to as ``Our Nation's Report Card,'' placed Montana's eighth grade science students atop the Nation. Our fourth grade students earned the 2nd highest score among States. These scores reflect the high quality science education that Montana's teachers provide. I am proud of the dedication and hard work of Montana's teachers and students; in our technologically-advanced, information-rich society, an understanding of scientific thought and an ability to use scientific methods to make new discoveries will be critical to improving our quality of life. We often lament our public education system and the challenges it faces. There can be no doubt that we can and must meet these challenges. The scores that I commend today, however, demonstrate two things. First, that dedicated, hard-working teachers are critical to the success of the education we provide. Second, that our public schools deliver a quality education, despite the financial challenges they face. These scores also underscore the importance of investing in our education system. In my State of Montana, teachers have demonstrated again and again their teaching skills, their commitment to delivering a solid education, and their ability to make creative improvements in their schools and classrooms, all this, despite low wages and ever- increasing responsibilities. Unfortunately, this level of commitment will not persevere if these trends continue. We are at a crossroads at the Federal level with respect to education policy and financial support. We know that a quality education is the key to future success as individuals and as a nation. We need to make a commitment to our students that the education they receive will provide them with the knowledge and skills they need to be successful. Let's match the commitment that Montana's teachers and students have made to science education excellence with a commitment from the Federal level to provide the resources and support that they need.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, along with my colleagues, Senators Hatch, Miller, and Grassley, I am pleased to introduce the Arrow Excise Tax Simplification Act of 2001. This bill will protect funding for the Wildlife Restoration Program, the Pittman-Robertson fund, by simplifying administration and compliance with the excise tax and closing an unintended loophole that allows arrows assembled outside the United States to avoid the excise tax imposed on domestic manufacturers. The creation of the Wildlife Restoration Program is one of the great success stories of cooperation among America's sportsmen and women, State fish and wildlife agencies, and the sporting goods industry. Working together with Congress, Americans who enjoy the outdoors volunteered to pay an excise tax on sporting arms and ammunition to be used for hunter education programs, wildlife restoration, and habitat conservation. Originally the archery industry did not participate in this program. However, the growth of bow hunting in the '60s and '70s led the archery industry to decide they would support the excise tax that funds State game agencies. As a result, the tax was extended to archery equipment in 1975. The tax on archery equipment was meant to parallel the tax that hunters were paying on firearms and ammunition. The archery industry and bow hunters are pleased to contribute to the success of the Wildlife Restoration Program. Because current law taxes components and not arrows, foreign manufacturers are selling arrows in the United States without paying the excise tax that is imposed on arrows made in the United States. Not only are these untaxed imports unfair to American workers, they threaten the integrity of the Wildlife Restoration Fund. This issue is important to companies in Montana. Mike Ellig, a manufacturer of archery products in Bozeman, MT, pays this tax. He supports the tax, but asks that it be fair. Mike's company, Montana Black Gold, and the archery industry want to support the Wildlife Restoration Program. But the way the tax works today, American manufacturers are at a competitive disadvantage. This legislation will close the loophole that allows imported arrows to avoid the excise tax paid by domestic manufacturers. While keeping the current 12.4 percent tax on arrow components, the proposal will impose a tax of 12 percent on the first sale of an arrow assembled from untaxed components. U.S. manufacturers and foreign manufacturers will be treated equally. Since this loophole was inadvertently created in 1997, archery imports, mostly finished arrows, increased from $113,000 in 1997 to $2,600,000 in 2001 to date. If Congress does not act quickly to close this loophole, domestic manufacturers will be forced to relocate outside of the United States. They simply cannot afford to lose market share for a fifth year to competitors who do not pay the same tax they pay. If a few more move overseas, the rest will follow. The result will be a catastrophic loss of revenue for the Federal Wildlife Restoration Fund. Current law also taxes non-hunters, contrary to congressional intent. To relieve non-hunters from the requirement to pay for wildlife management, the legislation would eliminate the current-law tax on bows with draw weights of less than 30 pounds. Those bows are not suitable or, in many States, legal for hunting. To preserve the revenue for the Wildlife Restoration Fund, the bill would retain the current tax on bows that are suitable for hunting. The proposal would also clarify that broadheads are an accessory taxed at 11 percent rather than as an arrow component taxed at 12.4 percent. This will correct the ambiguity in the 1997 act that led to the misclassification of broadheads. In summary, the Arrow Excise Tax Simplification Act of 2001 would accomplish worthy objectives. It would close the loophole that allows foreign imported arrows to escape the tax and remove the tax on youth and recreational archery equipment that were never meant to be taxed. We will accomplish these goals while protecting the Wildlife Restoration Program by ensuring that there is no significant diminution of revenues collected by the archery excise tax. The Joint Committee on Taxation estimates the proposal will decrease revenues by $5 million over ten years resulting in small changes in outlays from the Federal Aid in Wildlife Fund. Failure to close the import loophole will eviscerate the archery tax base resulting in devastating losses to the fund.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I rise today to address an issue of the utmost importance. While I am deeply committed to increased safety and security at our Nation's airports and on airplanes, I am greatly concerned about how that security is paid for in this bill. While I commend Senators Hollings and McCain for this much-awaited, much-needed piece of legislation, I disapprove of putting the burden of this increased security on the passenger. It's critical to our Nation's economy that we restore the flying public's confidence in the safety of the aviation system. We need to get more planes in the air and we need to make sure they're full. Legislation that improves and expands security at our airports and on planes is essential to getting citizens back in the air. As chairman of the Senate Finance Committee I am deeply concerned about restoring our underwhelmed economy. And securing our flying public is a giant step closer to securing our economy. As important as that is, I am very unhappy to say that this otherwise excellent security bill as a ticket tax levied on airline passengers. A new tax. I don't believe that this is the time to raise taxes. Consumers need tax relief--not more taxes. We're trying to pass an economic stimulus bill. I note that we don't raise taxes in that bill, we give folks tax relief. We're taking one step forward and two steps back in this Congress. I enthusiastically supported the airline relief package Congress passed several weeks ago. We needed to assist the airlines for the good of our traveling public and the good of our economy. But relief to the airlines won't do anyone any good, if they don't have passengers to fly in their planes. Raising ticket prices surely won't help get people to fly. In my State of Montana, people believe they pay enough to fly around the country. Since we are relieving the airlines of the security responsibilities, if makes perfect sense that the $2.50 per passenger user fee be assessed to the airlines, not the passengers. I'd like to close by once again voicing my concern about how we pay for this much-needed security bill. We need increased security in our aviation system. That is clear. What we don't need is increased costs for our flying public.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, September 11, 2001, is a date that changed America forever. The Nation has endured a terrible tragedy. The human suffering is immense and our sense of invulnerability shattered. The terrorist strike on that date took the lives of thousands of U.S. civilians, and we will spend many months and years trying to come to grips with the magnitude of the day's attack on our freedom. We have been left with searing images of a horror that could not be contained--acts of terrorism that unfolded before our eyes, gripping this Nation and the world in raw and vivid devastation, touching all of us with feelings expressed in public and in private; from panic to helplessness; helplessness to anger; and anger to loss. Members of Congress have stood as one to condemn these attacks, comfort the victims and their families, and commit our full support to bring those responsible to justice. Our heartfelt thoughts and fervent prayers continue to go to those who have been lost. Today we bring before the Senate a bill to help those victims and their families through some of the financial crises they will face as a result of the terrorist's actions. Throughout our history, Congress has provided Federal tax relief to soldiers who die while serving in combat zones, and to service members and other individuals who have been affected by hostile actions outside of combat zones. But in the past, legislative relief bills have been limited in scope, because the actions they were intended to address were themselves limited. The terrorist attack of September 11, 2001, changed our perception, as a nation, of the nature of terrorist activity. Our Tax Code simply has no frame of reference for the unprecedented scope of destruction and the inconceivable loss of civilian life on American soil that resulted form the terrorist attacks. The events of September 11 have been characterized by the President as an act of war, and in the hearts and minds of most Americans, those who died in the attack should be treated like American soldiers who pay the ultimate price on the field of battle. Because of this, the House passed H.R. 2884, a bill which extends the benefits available to those who die in combat zones to all of the individual killed as a result of the September 11 attacks. It provides significant income tax and estate tax relief to the victims of the September 11 attacks. The bill before you builds on the House legislation, because we acknowledge that the overwhelming loss of life in the September 11 action was civilian, and civilian victims tend to have different tax issues than soldiers. This bill provides relief to all of the victims of the September 11 attacks--the brave firefighters who lost their lives trying to save those trapped in the destruction, employees who worked in the targeted buildings, tourists who were just visiting, as well as those on the airplanes converted into weapons by the terrorists. The bill also provides relief to the families of the victims of the post-September 11 anthrax attacks, and to those who died in the bombing of the Alfred P. Murrah Federal Building in Oklahoma City on April 19, 1995. Under this legislation, all of the victims will have their Federal income tax liability, and any self-employment tax liability, forgiven for the year of their death and at least 1 previous year. To achieve a measure of tax equity and recognize the different taxes paid by individuals, our bill also provides relief from payroll taxes that parallels the income tax relief. In the case of the estate tax, our bill modernizes the application of the statute and creates a special formula that shields the first $3 million in assets from both Federal and State estate taxes, and $8.5 million in assets from Federal estate tax for 2001. In the wake of the explosions, the Treasury Department quickly waived an extensive list of deadlines for those affected by the disaster. However, the Department was unable to extend all Federal deadlines, in some cases because they had no clear authority and in others because of the need to coordinate with other agencies. Those other agencies have themselves been confronted with a lack of clear authority in waiving deadlines under their jurisdiction. Our bill clarifies and expands upon the Government's ability to extend deadlines in case of any disaster, including the ability to waive interest for payments that are delayed. There are also special exclusions for some types of death benefits in current law. For example, worker's compensation benefits and life insurance proceeds to beneficiaries are not taxed, nor are payments from a government retirement plan for a public safety officer killed in the line of duty. The first $3,000 of death benefits paid to soldiers killed in combat are also not taxed. Our bill expands this nontaxable list to include all death benefits paid on account of a death resulting from this terrorist action. Current law also excludes disability benefits from income if they are made under workers compensation laws in certain limited circumstances. Our bill expands those eligible for the exclusion to include anyone injured in a terrorist attack. The Senate bill before us also includes provisions making it clear that payments made by FEMA to individuals affected by any disaster are not subject to income tax. In the wake of the attacks, a number of employers who had workers killed in the World Trade Centers, in the Pentagon, and in the airplanes used as weapons stepped up to the plate with generous offers of help to their lost colleagues' families. Under current law, payments such as these would typically be taxed, which would reduce the amount of help going directly to the surviving families. Our bill exempts these payments from Federal income tax liability. We are also aware that some financial institutions are considering forgiving outstanding credit card balances of those who died in the attacks. Our bill makes sure that any such debt forgiveness is not itself subject to tax. To protect those victims' families who elect structured settlements in order to ensure they have a stream of payments for as long as they need them, our bill makes sure anyone acquiring these payment streams goes through a court process designed to protect the families. And for those families who set up special disability trusts in the wake of the attacks, a personal exemption is provided. The charitable community has also responded overwhelmingly to the needs of the victims and their survivors. For example, in my home State of Montana, members of the higher education community, including the University of Montana, have helped to establish the ``September 11 College Fund.'' The money donated to this fund will provide assistance, based on need, to cover higher education expenses for dependents and survivors of those lost at the institution of their choice. One hundred percent of the donated funds will go directly to the students--none of the principal will be used for administrative expenses. The charitable community is playing an important role in helping our Nation recover from this tragedy. Our bill makes it easier for charitable organizations to make disaster relief payments to victims and their families. Our bill also makes it easier for companies to establish private foundations to help the survivors with both short-term and long-term needs, such as scholarships for the victim's children. In the days following this attack, as well as in the days following other natural disasters such as fires and floods, we have seen a great deal of confusion among our citizens about their responsibilities and benefits under the Tax Code. For this reason, the Senate bill also requires the Internal Revenue Service to establish a permanent Disaster Response Team whose responsibility it will be to help taxpayers clarify and resolve Federal tax matters associated with any natural disaster or terroristic or military action. In addition, the bill clarifies a provision in the recently enacted Air Transportation Safety and System Stabilization Act relating to the dates certain excise tax deposits are due. I don't claim that this bill is perfect, I am sure there are specific tax situations that have arisen because of these attacks that we may not have addressed in this bill. If we took the time to identify and address all of them, we would never complete this legislation, so we believe the best course of action is to move forward with what we have, and continue to look for opportunities to provide more assistance in the future. I also am well aware of the fact that no legislation passed by this Congress can ever truly compensate the victims of this horrible attack and their families for everything they have lost--the love, warmth and companionship of those who have died. Nor can we ever replace the feeling of security we once had as a nation. But we can help make the road to recovery for the families of these victims a little smoother with the provisions of this bill, and make it easier to respond to other disasters in the future. This is a good piece of legislation, and it will help thousands of families facing an uncertain future. I urge my colleagues to support it.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, along with my colleagues, Senators Hatch, Miller, and Grassley, I am pleased to introduce the Arrow Excise Tax Simplification Act of 2001. This bill will protect funding for the Wildlife Restoration Program, the Pittman-Robertson fund, by simplifying administration and compliance with the excise tax and closing an unintended loophole that allows arrows assembled outside the United States to avoid the excise tax imposed on domestic manufacturers. The creation of the Wildlife Restoration Program is one of the great success stories of cooperation among America's sportsmen and women, State fish and wildlife agencies, and the sporting goods industry. Working together with Congress, Americans who enjoy the outdoors volunteered to pay an excise tax on sporting arms and ammunition to be used for hunter education programs, wildlife restoration, and habitat conservation. Originally the archery industry did not participate in this program. However, the growth of bow hunting in the '60s and '70s led the archery industry to decide they would support the excise tax that funds State game agencies. As a result, the tax was extended to archery equipment in 1975. The tax on archery equipment was meant to parallel the tax that hunters were paying on firearms and ammunition. The archery industry and bow hunters are pleased to contribute to the success of the Wildlife Restoration Program. Because current law taxes components and not arrows, foreign manufacturers are selling arrows in the United States without paying the excise tax that is imposed on arrows made in the United States. Not only are these untaxed imports unfair to American workers, they threaten the integrity of the Wildlife Restoration Fund. This issue is important to companies in Montana. Mike Ellig, a manufacturer of archery products in Bozeman, MT, pays this tax. He supports the tax, but asks that it be fair. Mike's company, Montana Black Gold, and the archery industry want to support the Wildlife Restoration Program. But the way the tax works today, American manufacturers are at a competitive disadvantage. This legislation will close the loophole that allows imported arrows to avoid the excise tax paid by domestic manufacturers. While keeping the current 12.4 percent tax on arrow components, the proposal will impose a tax of 12 percent on the first sale of an arrow assembled from untaxed components. U.S. manufacturers and foreign manufacturers will be treated equally. Since this loophole was inadvertently created in 1997, archery imports, mostly finished arrows, increased from $113,000 in 1997 to $2,600,000 in 2001 to date. If Congress does not act quickly to close this loophole, domestic manufacturers will be forced to relocate outside of the United States. They simply cannot afford to lose market share for a fifth year to competitors who do not pay the same tax they pay. If a few more move overseas, the rest will follow. The result will be a catastrophic loss of revenue for the Federal Wildlife Restoration Fund. Current law also taxes non-hunters, contrary to congressional intent. To relieve non-hunters from the requirement to pay for wildlife management, the legislation would eliminate the current-law tax on bows with draw weights of less than 30 pounds. Those bows are not suitable or, in many States, legal for hunting. To preserve the revenue for the Wildlife Restoration Fund, the bill would retain the current tax on bows that are suitable for hunting. The proposal would also clarify that broadheads are an accessory taxed at 11 percent rather than as an arrow component taxed at 12.4 percent. This will correct the ambiguity in the 1997 act that led to the misclassification of broadheads. In summary, the Arrow Excise Tax Simplification Act of 2001 would accomplish worthy objectives. It would close the loophole that allows foreign imported arrows to escape the tax and remove the tax on youth and recreational archery equipment that were never meant to be taxed. We will accomplish these goals while protecting the Wildlife Restoration Program by ensuring that there is no significant diminution of revenues collected by the archery excise tax. The Joint Committee on Taxation estimates the proposal will decrease revenues by $5 million over ten years resulting in small changes in outlays from the Federal Aid in Wildlife Fund. Failure to close the import loophole will eviscerate the archery tax base resulting in devastating losses to the fund.

Mr. BAUCUS

Mr. BAUCUS. Madam President, who is controlling time?

Mr. BAUCUS. Madam President, I will try to make the best use of those 5 minutes. Madam President, I rise in support of a simple 2 year extension of the Internet Tax Freedom Act. In my judgment, a short-term extension represents a reasonable, bipartisan compromise. While I support a clean 2-year extension, we should be firm in our resolve that this will not be the first of an endless line of moratorium extensions. I make a strong plea that this be the last time we impose a moratorium without taking the meaningful steps needed to bring interstate tax rules into the 21st century. While progress has been made on the issue of sales tax simplification, State and local governments will certainly need more than 6, 12, or even 18 months to come up with a system that works. Moreover, we do not need a quick fix; we need a real solution. Let us continue to keep the parties at the table long enough to make a meaningful change that works. The debate and negotiations that occur from this point forward must be about resolving issues regarding taxation of the Internet and not about the length of any future extensions. More importantly, the focus must be on how the traditional tax rules should apply to ``new economy'' businesses. These are issues the Finance Committee has been and will continue to examine. The States have been working hard to create a model simplified sales and use tax system. A limited extension of the moratorium for 2 years is needed in order to provide an adequate time to assess their progress. More importantly, as chairman of the Finance Committee I represent the State of Montana, which does not have a sales tax. As a Senator from Montana, I will work to ensure that any simplification plan will not place a undue burden on Montana businesses. Sales tax simplification should also be truly simple, and easy for businesses to comply with. Hopefully, by making this a short 2-year extension, we can encourage the States and the business community to move expeditiously to resolve outstanding issues and design a truly simplified sales and use tax system. This debate is not only about the structure of State sales and use taxes. There is also concern with how States assert a direct tax liability on an out-of-State company. States impose business activity taxes--corporate income and/or franchise taxes--on corporations that have property or employees in the State. The businesses that pay these taxes receive some governmental benefits and protections afforded by that State. A similar situation exists internationally, where foreign jurisdictions impose a direct tax liability on businesses operating within in the country. Therefore, as the rules for sales and use taxes are simplified, it is also important that we pay special attention to the rules regarding business activity taxes. What we used to think of when we heard ``property,'' ``goods,'' or even ``employees,'' is now very different in a world of digital goods, bits of electrons, and telecommuters. I stress the need to sort through these issues because I am certain that the rules we establish for ``interstate'' commerce will be the model for ``international'' commerce. We need to be very careful we do not set up a system that makes U.S. companies a tax collector for every jurisdiction around the world. On Internet access taxes, I believe we should look for ways to reduce barriers to access, including taxes. If our intention is to make Internet access tax-free, we must be certain that an appropriate definition of access is developed. Moreover, it is important to ensure that otherwise taxable product provided over the Internet are not inappropriately shielded from tax. I appreciate the hard work of my friends, Senators Enzi, Graham, Dorgan. They have worked hard. They have a proposal which may have merit. But the devil is always in the details, and the details have not been examined by the Finance Committee, or any committee for that matter. In fact, there have been no hearings on the Dorgan-Enzi amendment to give interested parties, academics, and Members of the Senate the opportunity to discuss the consequences of this legislation and assess the workability of this bill. This amendment may be a reasonable starting point, but as with all legislation of this magnitude, the Senate, through its committees, should give it careful consideration. Some people may say that we have talked too much already. They say that the parties have already had three years to iron out their differences. That may be, but we must be very careful because this bill raises more questions than it answers. For example, how does this legislation make sure that the uniform rates among states stay uniform over time? Does the definition of ``Internet access'' allow nonincidental content, such as music and movies, to be provided tax free if bundled with Internet access? Are business activity taxes adequately addressed? These are difficult issues, and they deserve serious and deliberative consideration. It is for this reason, that I encourage my colleagues to support a short, 2-year clean extension of the Internet Tax Freedom Act. In my judgment, 2 years is adequate time to give the Finance Committee an opportunity to address these important, but difficult, tax issues. I emphasize that the work remaining involves tax issues that must be resolved by the Finance Committee. There is a long-term precedent of the Senate Finance Committee having jurisdiction over issues involving the taxation of the Internet. A 2-year extension of the Internet Tax Freedom Act is a reasonable compromise and deserves the support of the Senate.

Mr. BAUCUS. Madam President, reserving the right to object----

Mr. BAUCUS. Madam President, I understand I have 5 minutes.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to discuss the just-concluded World Trade Organization Ministerial in Doha, Qatar. The administration has announced that WTO members reached an agreement to launch new negotiations on a number of international trade topics. Our trade negotiations hailed this as a major victory. I recognize the considerable efforts of our trade negotiators in this process. That said, I am unsettled by the results of this session in several areas. The agreement reached today in Doha makes it even more clear why Congress must have deeper involvement in our international trade policy. Without a doubt, there are positive items in the documents to launch the negotiation. I am pleased that the United States was able to negotiate forward-looking language on agriculture. There are some good things there--for example, goals of improving market access and reducing market distortions, particularly export subsidies. But these are vague commitments, and Europe and some of its allies have already demonstrated their strident opposition to meaningful progress in this area. The devil is in the details--and the details have yet to be worked out. On the other side of the ledger, I am extremely troubled by the decision to re-open the agreements reached just a few years ago on antidumping and anti-subsidy measures. Both Houses of Congress have made it clear that they oppose negotiations to further weaken U.S. trade laws. Let's be absolutely clear on this point. Our trading partners have only one goal here: to weaken our trade laws. That is something the administration should not tolerate--and that Congress will not tolerate. These problems demonstrate why Congress must take a hard look at trade negotiations. The Constitution assigns responsibility for international trade to the Congress. Yet the administration is now acting without a mandate from Congress. Congress must have a more prominent role in trade negotiations. As chairman of the Senate Finance Committee, I plan oversight hearings on these negotiations. The problems I have outlined also make clear why any new grant of fast track negotiating authority must address the concerns of Congress on issues like preservation of U.S. trade laws. It must also ensure that Congress has an active role in trade negotiations. I yield the floor. I suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I did not intend to speak on this subject, but since the Senator from North Dakota has raised it, it is important to put all of this in perspective. Matters could be much better, but they are not quite as bleak as outlined by my good friend from North Dakota, not in my judgment. It is clear that other countries still intend to take greater advantage of America in trade matters than we do of them. We are a country of the world. There are other countries of the world. We have our views. They have their views. We have our social structure. They have theirs. It is incumbent upon us to find a way to be effective in protecting our American interests. Because the Senator from North Dakota might find this interesting, I would like to talk about beef, and beef with Japan and Korea, for that matter. I have forgotten how many years ago --it must have been maybe 10, 12 years ago--Japan had a quota on foreign beef into Japan. It amounted to, if I recall, about 28,000 tons of hotel/restaurant-cut beef. That is a quota on all beef coming to Japan. That is American, Australian, and Argentine beef. That amounted to one 6-ounce steak per Japanese person per year--a very strong, tight quota against American beef sales in Japan. At the same time, we Americans imported considerably more pounds of beef than we exported worldwide. We imported far more beef worldwide-- lower cut grades for hamburgers and other things--than we exported. I decided I wanted to do something about the problem with Japan. I tried everything under the Sun. I remember in the Mike Mansfield Room-- Senator Mansfield was Ambassador to Japan, very highly regarded, very revered--I said: Why don't I invite the Japanese diplomatic corps up to the Mansfield Room and we will show to them how good Montana beef is. We will do all we can to get that quota reduced or eliminated. That was naive. Nothing happened. I might say, one member of the Japanese Parliament had the audacity to say the reason they have a quota on foreign beef is that their digestive system can't handle foreign beef. It is total nonsense. At the same time, maybe a few years earlier, we had a difficult time importing American skis into Japan, and their excuse then was: Well, Japanese snow is a little different. That is why we can't take American skis. They were totally ludicrous arguments. I decided I had had it with the Japanese on beef. So I had a press conference over in the Hart Building, and about 20 Japanese journalists showed up. I had a button on me. The button said, ``I have a beef with Japan.'' And I said to the Japanese, very respectfully, trade has to be a two-way street. I said: Japan, we take a lot of your products. We take your VCRs, we take your Hondas, we take your Seiko watches, and you don't take our beef. Trade has to be a two-way street. It can't be one way. As you can see, it is one way. It is not right, and I am going to do what I can to stop that. At about that time, there was legislation on the Senate floor called domestic content legislation. That legislation required a certain percentage of content, manufacture, and assembly of autos in America to be American content, not foreign. It was domestic content legislation. At that point, I did not favor that legislation. I thought it was too prescriptive. It was wage/price controls--too controlling--although I agreed with the purport and the direction it was going. I said: If you don't take American beef, I am going to go right to the Senate floor and do all I can to get that domestic content legislation passed because that will be two way; that will be fair. My gosh, I could see scribbling of all kinds of notes, cameras going on. The next day there was a big article about my statement in the Japanese newspapers. My photo was in the Japanese newspapers. I can't read Japanese, but I know basically what I had said. Guess what. Within a couple of weeks, the Japanese sat down at the bargaining table. Mike Armstrong was our trade negotiator at the time. They needed to negotiate, and they agreed to eliminate that quota entirely. But they did replace it with a 70-percent tariff. That is pretty high, but at least our industry said: That is great; the quota is eliminated. We can start importing beef into Japan. I go over to Japan a couple, three times. I know about two words in Japanese. I learned this one. It is ``Oishii,'' which means delicious. I would stand in front of the Japanese cameras and say: American beef is Oishii, delicious. At the same time, a Japanese polling company showed that the Japanese housewives and Japanese citizens of Tokyo wanted American beef by far. Under the Japanese constitution, because the rural districts have disproportionate voting power, they want to protect themselves. That is why they had that quota. The quota was eliminated, replaced with a 70-percent tariff. We also agreed to bring that tariff down. The Senator from North Dakota says it is now down to around 28 percent. That could well be. It is my recollection that eventually that tariff will be down at a lower rate. The point is that we have made progress with Japan. We now, by the way, export more beef overseas than we import. That line was crossed about 2 years ago. So there is progress. These things are more complicated than meets the eye. But we certainly have a lot more to do and further to go. As in the Korean situation, Korea had this provision--this was about 2 years ago--called the shelf life law. They wouldn't let boats unload beef products, canned beef, for over 2 weeks. Their distribution system wouldn't let foreign beef get to the grocery stores. That was bad beef under Korean law. The Korean Prime Minister was, for about 2 or 3 months, coming over to the United States. So I got ahold of him. I said: Mr. Ambassador, your Prime Minister is coming over. I have a letter signed, with many Senators cosigning who are opposed to this. I don't think you want your Prime Minister to come over when we are getting up on the Senate floor being critical of Korea. He got the message. Within 2 weeks, they repealed the provisions and allowed in American beef. So it is important for us to think of how we can get this job done and make sure these other countries play fair. If we work well in a concerted effort with the trade negotiators, we can get some things done. But I have also learned deeply that no country altruistically is going to lower a trade barrier. You need leverage. I urge that as we move forward to protect American interests, we find the proper persuasion to help each other. I see the assistant majority leader anxiously waiting to seek recognition. I yield the floor. (Ms. CANTWELL assumed the Chair.)

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I compliment the Senator from West Virginia as well as the Senator from Delaware. They as well as many others over the years have provided terrific service to our country, keeping their eye on this ball with respect to the former Soviet Union, current Russia, and the key question of nuclear proliferation. I thank them very much. On behalf of the American people, I thank them, too. The Senator has done a terrific job.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I say to my good friend from West Virginia, I intend to speak for only 2 or 3 minutes.

Mr. BAUCUS. On behalf of the Finance Committee, I withdraw the committee amendment.

Mr. BAUCUS. Mr. President, I send an amendment to the desk.

Mr. BAUCUS. Mr. President, the amendment I have offered makes several changes to the bill reported by the Finance Committee. It deletes the rural development provisions in sections 811 and 815 of the bill. These provisions generated considerable controversy, with some Senators questioning whether they provided economic stimulus. I support the provisions, and I think they are very important to the rural economy, but a similar set of provisions is being developed as part of a farm bill, and I think it is appropriate to defer to that debate at that time. I note that I have not deleted provisions providing agriculture disaster assistance to farmers and ranchers because I think they are critical provisions of the bill. My amendment also incorporates three Medicaid provisions which were filed in the committee but we did not have time to consider. One proposed amendment by Senator Bingaman temporarily increases the caps for States with extremely low disproportionate share hospitals. That is the so-called DSH cap. The second proposed amendment by Senator Lincoln establishes a 6- month moratorium on changes to the Medicare upper payment limit rules. The third proposed amendment by Senator Breaux revises and simplifies the transitional medical assistance program. I also have provisions relating to the taxation of life insurance companies. Senator Kerry proposed a committee amendment addressing section 809 of the code to maintain balance. The amendment I am offering also addresses section 815. There are also a few other corrections contained in the amendment. That is essentially a brief explanation of the amendment I am offering. At this point, we are on the bill. I might say neither side has enough votes to pass the bill. The Senator from Texas correctly said we might as well get to negotiations and get to the heart of the matter because the current bill probably does not have the sufficient 60 votes to get it passed and enacted. The same is true for the alternative bill proposed by the President and/or the minority party. There are not 60 votes for that either. So I agree very much with the main import of the point made by the Senator from Texas; namely, let us get on with it. Let us sit down. Let us start negotiating. We are doing the country a disservice by continuing a partisan, rhetorical harangue, one side against the other. It is something I do not like. It is something I know most Senators do not like. I hope the leadership of both bodies, both the House and the Senate, on both sides of the aisle, find a way for us to put together negotiations where the leadership of the Finance Committee and of the House Ways and Means Committee, in conjunction with the White House, can sit down and put together a good, solid economic stimulus package quickly so Americans are served in the way they deserve to be. Mr. President, I yield the floor.

Mr. BAUCUS. Mr. President, I move to waive section 205 of H. Con. Res. 290, the concurrent resolution on the budget for fiscal year 2001, for the purposes of the pending amendment. I ask for the yeas and nays.

Mr. BAUCUS. Madam President, I ask unanimous consent that at 5:15 p.m. today the Senate proceed to vote on the Baucus motion to waive the relevant sections of the Budget Act with respect to the emergency designation, without intervening action or debate; provided further that at 4:55 p.m., the following each receive 5 minutes of closing debate, and in the order listed: Senator Grassley, Senator Baucus, Senator Lott, and Senator Daschle, or their designees.

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

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I understand that later in the day a point of order will be made against the bill under section 205 of the concurrent resolution on the budget for fiscal year 2001. The essence of the point of order will be to challenge the emergency designation contained in section 908 of the bill. I am not sure whether that is the correct ruling. It is debatable. But my expectation is the Parliamentarian will rule that the bill is subject to the Budget Act for that reason. My view, however, is that the point of order should be waived. Why? Because the bill clearly responds to an emergency. Indeed, my good friend from Kentucky just said: We are at war. He said: Let's get moving now. Let's pass a good stimulus bill. I don't want to put words in the mouth of my friend from Kentucky, but certainly he believes--and the rest of the Members of this body believe--that there is a very great need for us to act extremely quickly. We also know that many people are in very difficult straits, not to mention the huge tragedy of the thousands of people who were killed in the trade towers which were destroyed, the Pentagon destruction, the anthrax scares, other terrorism scares in the country. We need to move quickly. If that is not an emergency, I am hard pressed to say what is. There may be other emergencies that are even greater. I will not dispute that point. But this clearly is an emergency, too. These are not ordinary times. We are in a different era. It is very difficult. Let me provide a bit of information. When legislation is considered in the Senate, there are very strict rules to enforce budgetary discipline, as there should be. The embodiment of these rules is the annual budget resolution which is debated every spring. We have updates and so forth, but essentially we have a long debate on the budget resolution. The debate allows the Congress to look at all of its needs--taxes and spending--and construct a budget blueprint for the coming year. It is a guess, an anticipation, an estimate of what we will need for the coming year. The budget resolution sets a floor for revenues and ceilings for spending. And there are points of order that can be made against any legislation which reduces the revenues below the floor or increases spending above one of the ceilings. These points of order can only be waived with 60 votes. That is how the budget resolution is enforced. But, wisely, there is a safety valve. We cannot with certainty predict the future. Thank goodness. If Congress and the President agree that there is an unforeseen emergency that requires legislation that cuts taxes or raises spending, then there is a safety valve for getting the legislation enacted. The safety valve is simple. Congress must include language in the legislation which designates that the legislation is being enacted to cope with an emergency. Then the points of order enforcing the revenue floor and spending ceilings become inoperative. That makes sense. In an emergency, for the good of the country, we may need to respond in a way that was not contemplated when we wrote the budget resolution. But there is one final hurdle to face. In the Senate, the language in the bill that designates the legislation as an emergency is itself subject to a point of order. If the point of order is raised and there are not 60 votes to waive it, then the language designating the legislation as an emergency is deleted from the bill. This is very serious because without the emergency designation in the bill, the entire bill would be subject to a point of order that can only be waived by 60 votes. In that case, the entire bill can be killed with the votes of only 41 Senators. So it is important to keep the emergency designation in the legislation. Having presented the background, let me explain how the budget process unfolded this year. The budget resolution for this year, fiscal year 2002, was considered in the spring, many months ago. It was passed in early May. We voted on it in this body. At that time the economy was not too strong, but it did not appear to be facing an emergency. The economy had grown at a rate of 1.9 percent in the fourth quarter of the previous year, calendar year 2000. It grew at a slower rate, 1.2 percent, in the first quarter of 2001. These are somewhat weak growth rates, but they are not terrible ones. Manufacturing was hurting. May was the 10th consecutive month of job loss in manufacturing, but the national unemployment rate was still only 4.2 percent. American consumers were not in a downturn. Retail sales had grown at a 5.2-percent rate in the first quarter of this year and were continuing to grow at the same rate, 5.2 percent, in the second quarter this year. So the view at the time, at the time the budget resolution was passed, was that the economy needed a boost in fiscal year 2001, which ended on October 1, but the economy should be doing nicely as we progressed through the first two quarters of fiscal year 2002. It needed a short-term boost. But most of us thought--the economists thought, most people who spend their lives thinking about these things thought--that in the first two quarters of next year, January through the end of June, we would be doing a little better. The budget resolution that we passed last May made room for an $85 billion tax cut during the remainder of fiscal year 2001. This meant there were no 60-vote points of order that could be raised against a bill containing an $85 billion tax cut in that fiscal year. In contrast, the budget resolution made room for a smaller stimulus in fiscal year 2002 because there was an expectation that we would not need as much. It allowed approximately $50 billion for tax cuts in fiscal year 2002 as part of the President's 10-year tax cut plan. That was part of the deal, part of the understanding. That is what the expectations were. It allowed an additional stimulative tax cut of $15 billion in fiscal year 2002, but the $65 billion total was smaller than the $85 billion allowed for fiscal year 2001 because it was judged that more than that was not needed, and that was because no one expected the economy to be really weak in fiscal year 2002. That was then. This is now. Unfortunately, as we moved through the summer into September, there was a surprise. The economy became much weaker than anyone had predicted. Manufacturing continued to lose jobs. By the end of August, manufacturing had lost jobs for 13 consecutive months. Real GDP growth was almost zero in the second calendar quarter of this year. Many taxpayers were saving part or all of their tax rebates that went out last summer rather than spending them. They are starting to tighten up, getting more nervous, fearful, not spending, and that clearly means a weaker economy. The Federal Reserve was still cutting interest rates, but that seemed like it might not be enough to turn the economy around. And then disaster struck. It is not necessary to recount the horrors of September 11, but it is important to talk about what the events of September 11 did to the economy. Here are some of the main results: Airline travel declined precipitously. Airlines laid off thousands of employees post-September 11. Industries that depend on air travel--such as hotels and car rentals--also declined precipitously. They dropped off. Business confidence was shaken. Businesses cut back on investments even more than they had been doing. Consumer confidence began to drop precipitously, threatening consumer spending, which had been one bright spot in the economy. The results of all those blows to the economy became very clear when the unemployment figures for October were released early this month. Unemployment jumped from 4.9 percent to 5.4 percent. That is the largest jump in more than 20 years. Manufacturing fell to levels last seen in 1965. Now, non-manufacturing also took a hit. The slowdown in non- manufacturing industries was the most dramatic since the inception of a key report by the National Association of Purchase Managers in 1997. Agriculture producers are hurting too. Net farm business income was at the year low in 1999 and 2000. Unless Government assistance is continued, net farm income in 2001 is projected to be even lower. The most acute problems are faced by farmers whose operations have been hit by floods, drought, tornadoes, and other natural disasters. So that is why we are here today. Clearly, our economy is in an emergency situation. It needs emergency help. Both parties agree that we need some combination of tax cuts and spending increases right now to try to invigorate the economy. This is an important point. We are elected to serve our people, to make judgments--the best judgments on the best information that we have, given all the facts we can lay our hands on. We have to do it responsibly, with integrity, and we have to do it with due consideration and thoughtfulness. Remember, budget projections are merely estimates as to what the future will hold for us, even though we have virtually no idea of what, in fact, is going to be happening 2, 3, 4, 5 years from now. These budget estimates, prepared by the CBO and OMB, swing dramatically over very short periods of time--just little changes in projected inflation, growth, and unemployment have huge effects on the 10-year estimates. It is the best we can do given the information we have. Given all of that, I urge my colleagues not to be too hung up on technicalities, on provisions that are in the Budget Act. They are very good. Those provisions should be there, but we have to exercise our judgment as to whether those provisions should be enforced now or not. The world is watching us to see what we do in this situation--those businesspeople in the markets overseas. If we do too little, they are going to say America is not standing up. I think there is a fair expectation that our economy will continue to sink, or that it will not be picked up as much as it could. That is a point made by all the people I have talked to--economists and CEOs across the country--about what is the proper stimulus package. I urge us to exercise our independent judgment as the right thing to do. Mr. President, my time has about expired.

Mr. BAUCUS

Mr. BAUCUS. That is fine.