Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Reserving the right to object, it is our understanding that the remarks by the Senator from West Virginia would not come out of the reconciliation.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, two weeks ago, the World Trade Organization's Appellate Body issued a decision affirming a Dispute Settlement Panel opinion from last December that ruled that the United States' imposition in July 1999 of restrictions on imports of lamb meat under Section 201 of the Trade Act of 1974 was inconsistent with our obligations under the WTO's Agreement on Safeguards. The December Panel decision was so obviously wrong in virtually every respect that one would have expected the Appellate Body to reverse the panel and recognize the U.S. International Trade Commission's decision for the well-reasoned and balanced determination that it was. Instead, the Appellate Body has once again taken it upon itself to substitute its judgment for the ITC's. This is a continuation of a troubling trend, in which WTO dispute settlement panels and the Appellate Body fail to give adequate deference to expert administrative bodies that have carefully reviewed the facts. This kind of decision risks eroding U.S. support for the WTO's dispute settlement procedures. While there is a lot not to like in the Appellate Body's decision, I am particularly outraged by the Appellate Body's conclusion that the ITC erred in concluding that lamb farmers, ranchers, and commercial feeders are properly part of the domestic industry for purposes of determining injury and threat of injury. The Appellate Body concluded that growers and feeders produce a product--live lambs--that cannot strictly be considered ``like'' lamb meat within the meaning of the WTO Safeguards Agreement, and by implication, under Section 201 of the Trade Act of 1974; according to the Appellate Body, only packers and processors produce a ``like'' product. Had this been an antidumping or countervailing duty decision, such a conclusion would have precluded lamb growers and feeders from petitioning for relief along with packers and processors--a notion that I find intolerable. Fortunately, Section 201 and the Safeguards Agreement give standing to producers of both ``like'' and ``directly competitive'' products, and the Appellate Body's opinion appears to leave open the possibility that lamb growers and feeders could properly be counted as part of the domestic industry on the grounds that live lambs are ``directly competitive with,'' as opposed to ``like,'' lamb meat. The WTO will lose all credibility if growers of agricultural products are disqualified from petitioning for relief when massive imports of food products create oversupplies and cause domestic price levels to plummet. Thousands of families in my home state have a long history of sheep ranching. Sheep ranchers and farmers are the very heart of the U.S. industry producing lamb meat, and the WTO needs to recognize such basic economic realities. Predictably, the government of Australia and New Zealand, which brought the WTO appeal, have already called for the United States to immediately terminate the U.S. import relief program in response to the Appellate Body's decision. As bad as the Appellate Body's decision is, I believe that it is clear that it does not require termination of the United States' import relief program for the lamb industry. I am today calling on U.S. Trade Representative Robert Zoellick to reject Australia and New Zealand's demands and instead invoke the procedure prescribed by Section 129 of the Uruguay Round Agreements Act. Ambassador Zoellick should promptly request the ITC to provide him with an advisory report on whether it believes that its original decision can be brought into compliance with the Appellate Body's decision. If that advice is affirmative, I hope and expect that Ambassador Zoellick will take the further prescribed step of asking the ITC to issue a revised determination in conformity with the Appellate Body's decision. The period of relief originally proclaimed by President Clinton is scheduled to run through July of next year, and I am confident that the ITC will be able to revise its original determination so that this badly needed relief can run its course. In the meantime, I call upon President Bush--whose own home state is the United States' largest producer of lamb--to direct USDA and other agencies to redouble their efforts to see that the industry gets the full measure of assistance that it was promised as part of the import relief package.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today in the Senate to offer a way out of the stalemate we have on trade policy. The trade agenda facing our nation is a long and important one: Approval of the U.S.-Jordan Free Trade Agreement and the U.S.-Vietnam Bilateral Trade Agreement; renewal of the Generalized System of Preferences and the Andean Trade Preferences Act; a fully revised and improved Trade Adjustment Assistance program; completion of negotiations on bilateral free trade agreements with Chile and Singapore; active negotiations on the Free Trade Area of the Americas. But, despite a strong feeling in the Congress that we need to continue the aggressive pursuit of trade liberalization and market opening around the world, we have made no progress at all this year. There are several hold-ups. First, we need to determine how to deal with the issues of trade- related environmental standards and internationally recognized core labor principles in trade agreements. Second, we need to reach agreement on America's trade priorities and our trade negotiating objectives. And, third, we have to determine how we will deal with the numerous elements of the trade agenda. The key to breaking loose this logjam and allowing us to start to build a consensus on trade lies with the U.S.-Jordan Free Trade Agreement. This was negotiated during the Clinton Administration, although it was completed too late to secure Congressional action last year. This agreement has wide support in the Congress, in the Administration, and throughout the country. I am confident that, once formally endorsed by the Administration, it will sail through easily. Yet the delay in approval continues because it has been linked to the rest of the trade agenda and the unresolved issues I mentioned a moment ago. We need to delink Jordan from the rest of our trade agenda. It is a good, solid trade agreement. Jordan is a key partner of the United States in the search for peace in the Middle East. This agreement will strengthen our relationship with Jordan, demonstrate how important we considered King Hussein, and now consider King Abdullah, in the peace process, and complete the set of free trade agreements that already apply to Israel and the Palestinian Authority. Majority Leader Lott summarized this eloquently when he wrote to President Bush: Jordan has been a reliable partner of the United States and has played an important role in America's efforts to achieve a lasting peace in the Middle East. The United States-Jordan Free Trade Agreement is an important and timely symbol of this critical relationship. This agreement serves America's vital national interest. The Jordan FTA contains provisions in which both our countries agree not to relax environmental or labor standards in order to enhance competitiveness. For the first time, these provisions are in the main body of the agreement. Although there has been some controversy about that, I think the issue has been put to rest, especially after King Abdullah explained to us during his recent visit about how difficult it would be to open up the text of the agreement. The controversy over the Jordan FTA now centers around one phrase: If there is no resolution at the end of the dispute settlement process, ``the affected Party shall be entitled to take any appropriate and commensurate measure.'' This includes trade sanctions, and therein lies the problem. Many Democrats welcome this because it puts enforcement of trade-related labor and environmental commitments on a par with other trade commitments. Many Republicans object because they believe trade sanctions should not be used in the case of labor or environmental disputes. So, let me make my proposal. The ``appropriate and commensurate'' phrase is flexible enough to encompass a variety of measures, including trade sanctions, fines, cuts in aid programs, and a variety of other options. Let's move ahead with the Jordan FTA as negotiated. We Democrats will note that the Jordan FTA is a breakthrough in how it addresses labor and environment. We will also note that ``appropriate and commensurate measure'' includes trade sanctions, without requiring them. After all, in our trade negotiations throughout the world, sanctions, of any kind, are the very last resort, and we work hard to avoid their imposition. And remember that trade sanctions in the context of the Jordan FTA simply means removing some of the concessions we make in the agreement itself. Across the aisle, Republicans can also correctly note that ``appropriate and commensurate measure'' does not require trade sanctions in the case of a dispute over trade-related labor or environmental issues. The President will decide what is an ``appropriate and commensurate measure.'' In other words, we will agree to take enforcement measures appropriate to the circumstances. This is not the best outcome, but it is a way to get past the current paralysis in trade policy. It would allow us to move forward on an agreement of strategic importance to the United States. It would demonstrate flexible and creative thinking on both sides. It would move us to work toward a compromise that can garner broad bipartisan support. And, let's be honest with ourselves. Given the very small volume of trade with Jordan, the very large strategic significance of our relationship with Jordan, and the importance Jordanians place on this free trade agreement, it is highly unlikely that any Administration, Democrat or Republican, present or future, will be forced to impose trade sanctions on Jordan. Disputes are likely to be settled amicably, as they have been with Israel which has a similar free trade agreement with the United States. Several weeks ago, I introduced legislation to implement the U.S.- Jordan Free Trade Agreement. The bill is a simple one. It merely gives the President authority to reduce tariffs with Jordan, outlines rules- of-origin requirements, deals with safeguards provisions, and eases non-immigrant visa requirements for Jordanian business people. It does not even mention ``appropriate and commensurate measures.'' U.S. law would not be changed at all by this phrase. Let's pass this bill. Let's create the U.S.-Jordan free trade area. And let's get on with the business of working together to develop a consensus on how we move forward on a lengthy and important national trade agenda.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, it is with great pleasure that I join my good friend and colleague, Senator Fred Thompson, today in introducing legislation that will repeal the Special Occupational Tax, SOT, on taxpayers who manufacture, distribute, and sell alcoholic beverages. The special occupational tax is not a tax on alcoholic products but rather operates as a license fee on businesses. The tax is imposed on those engaged in the business of selling alcohol beverages. This is an inequitable tax that has outlived it's original purpose and is a clear example of an antiquated approach to federal taxation. Believe it or not, this tax was originally implemented to help finance the Civil War. The SOT on alcohol was dramatically increased during a budget process in 1988 and has unfairly burdened business owners across the country. From Thompson Falls to Sidney, from Chinook to Billings, small businesses are burdened with yet another tax in the form of the (SOT). According to the AFT, there are 480,427 locations nationwide that pay SOT's every year, including 458,603 retailers. These retail establishments account for $114 million out of $126 million in SOT revenues. In Montana, there are 3,378 locations, including 3,172 retail businesses, which pay more than $1 million dollars in the SOT every year. Seasonal resorts in Whitefish and Yellowstone, ``mom and pop'' convenience stores in Butte, and bowling alleys, flower shops, and restaurants across Montana and the United States pay the Federal government almost $100 million per year for the privilege of running businesses that sell beer, wine, or alcoholic beverages. For example, a small business owner in Helena, Montana runs several convenience stores and a few restaurants. The SOT for each establishment is $250. As a result, he pays $1750 a year in SOT payments that are in the nature of business license fees. In fact, a chain of four neighborhood food stores pays the same annual tax as the nation's largest single site brewery or distillery $1,000. This is not what Congress had in mind 150 years ago, and I don't believe it is a situation we want today. Repeal of the SOT on alcohol is supported by a broad-based group of business organizations enjoys wide-spread bipartisan support on Capitol Hill. Similar legislation has been introduced in the House this year and bills have been considered in previous Congresses, but for one reason or another, the laws were not enacted. The GAO has examined the efficacy of the SOT several times and found it fundamental flawed. The staff of the Joint Committee on Taxation recommended in its recently released study on tax simplification that this special occupational tax be eliminated. It is time for us to move forward and enact legislation to repeal the SOT on alcohol. We urge our colleagues to join us in this endeavor.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, it is with great pleasure that I join my good friend and colleague, Senator Fred Thompson, today in introducing legislation that will repeal the Special Occupational Tax, SOT, on taxpayers who manufacture, distribute, and sell alcoholic beverages. The special occupational tax is not a tax on alcoholic products but rather operates as a license fee on businesses. The tax is imposed on those engaged in the business of selling alcohol beverages. This is an inequitable tax that has outlived it's original purpose and is a clear example of an antiquated approach to federal taxation. Believe it or not, this tax was originally implemented to help finance the Civil War. The SOT on alcohol was dramatically increased during a budget process in 1988 and has unfairly burdened business owners across the country. From Thompson Falls to Sidney, from Chinook to Billings, small businesses are burdened with yet another tax in the form of the (SOT). According to the AFT, there are 480,427 locations nationwide that pay SOT's every year, including 458,603 retailers. These retail establishments account for $114 million out of $126 million in SOT revenues. In Montana, there are 3,378 locations, including 3,172 retail businesses, which pay more than $1 million dollars in the SOT every year. Seasonal resorts in Whitefish and Yellowstone, ``mom and pop'' convenience stores in Butte, and bowling alleys, flower shops, and restaurants across Montana and the United States pay the Federal government almost $100 million per year for the privilege of running businesses that sell beer, wine, or alcoholic beverages. For example, a small business owner in Helena, Montana runs several convenience stores and a few restaurants. The SOT for each establishment is $250. As a result, he pays $1750 a year in SOT payments that are in the nature of business license fees. In fact, a chain of four neighborhood food stores pays the same annual tax as the nation's largest single site brewery or distillery $1,000. This is not what Congress had in mind 150 years ago, and I don't believe it is a situation we want today. Repeal of the SOT on alcohol is supported by a broad-based group of business organizations enjoys wide-spread bipartisan support on Capitol Hill. Similar legislation has been introduced in the House this year and bills have been considered in previous Congresses, but for one reason or another, the laws were not enacted. The GAO has examined the efficacy of the SOT several times and found it fundamental flawed. The staff of the Joint Committee on Taxation recommended in its recently released study on tax simplification that this special occupational tax be eliminated. It is time for us to move forward and enact legislation to repeal the SOT on alcohol. We urge our colleagues to join us in this endeavor.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, these past few weeks have been eventful ones in our relationship with China. President Bush announced a robust arms sale package for Taiwan. It included several major weapons systems and, of greater long-term significance, it provides for increased cooperation and coordination between our two military forces. He also announced the end of the annual review of arms needs, putting our support for Taiwan's defense on a more regular and less political setting. We secured the release of our reconnaissance plan's crew that was being held on Hainan Island. Subsequently, there were several important, albeit inconclusive, meetings with Chinese representatives about the return of the plane and about establishing future rules of engagement to ensure that there will not be a repeat of this irresponsible Chinese action. President Bush made a potentially dangerous gaffe in an interview where he seemed to reverse precipitously a two decade old policy that has resulted in relative stability across the Taiwan Strait. I believe that the trilateral relationship among the PRC, Taiwan, and the United States, and the ``One China'' policy must adapt and evolve. But change must be made with extreme care. The United States approved a visa for former Taiwan president Lee Teng-hui to visit for a month, and we have agreed to issue a transit visa for current Taiwan President Chen Shui-bian, although the conditions set on President Chen's visit are still under negotiations. China continues to hold as a prisoner Gao Zhan, an innocent scholar who is a permanent resident of our country with a U.S. citizen husband and son. They also hold several other American citizens of Chinese origin. Some of these developments are infuriating and frustrating. After our plane was downed, some in Congress called for revenge, retaliation, and retribution. Proposals include that congress reverse its approval of PNTR, Permanent Normal Trade Relations, for China; that the United States oppose holding the 2008 Summer Olympics in Beijing; and that we reduce or cease military-to-military relations with China. Our long-term interests with China require a carefully measured course of action. We cannot allow emotion to obscure our policy objectives. And we cannot determine China policy based on vague ideological images. Like all Americans, I am outraged by the behavior of the Chinese Government in holding the crew of our reconnaissance plane and demanding an American apology, when the blame was so clearly with a reckless Chinese pilot following reckless orders. I congratulate President Bush on his handling of the first foreign policy crisis of this administration. He kept emotions in check. He rejected the advice of those who wanted to take precipitous action. He secured the safe release of our crew without giving China the kowtowing apology they demanded. President Bush's decision last week on which defense items to transfer to Taiwan was also responsible and correct. It will provide Taiwan with the hardware and the ``humanware'' it needs to defend itself, while avoiding actions that would have been unnecessarily provocative vis-a-vis China. Unfortunately, he followed this measured decision with a ``shoot from the hip'' comment on a possible U.S. response to Chinese military action against Taiwan. That remark has created unnecessary confusion uncertainty, and potential instability across the Taiwan Strait. We need to look at what is good for U.S. interests, not what is bad for China. There is no room for emotion as we defined the relationship we want with China and determine how to move them in the right direction. Last year Congress approved, by a wide margin, legislation granting Permanent Normal Trade Relations status to China once they join the World Trade Organization. The benefits of incorporating China into the world trade community were clear. American farmers, businesses, and workers would be well served by a growing and liberalized economy in China. Economic growth in China would, over the long term, lead to a larger middle class making its own demands on the government for greater accountability and personal choice, just as happened in South Korea and Taiwan. Membership in the WTO would bring international disciplines to the Chinese economy. And the reformers, led by Premier Zhu Rongji, would be strengthened. The events of the last few weeks have not changed this calculation. If anything, nurturing growth in our economic and trade relationship with China is more important than ever. Let's be clear about what happened in China while our crew was detained on Hainan Island. The delay in releasing our crew members was a reflection of a monumental struggle for China's future between reformers led by Premior Zhu Rongji and President Jian Zemin, on one side, and the old guard, including the People's Liberation Army, the managers of most state- owned enterprises, and many entrenched politicians, on the other side. That is, a battle between those who we hope will be China's future and those who should be made part of China's past. One manifestation of this struggle is political and perhaps increasing military friction with the United States. Taiwan remains the No. 1 flashpoint. Add disputes over human rights, political prisoners, arrest of American citizens and permanent residents of Chinese origin, Tibet, regional policies, weapons transfer. These issues will remain with us for years. if not decades. Our decisions must be measured through one optic: What are the core American strategic and economic interests vis-a-vis China? First, we want stability in the Asian region. We must ensure that China does not threaten this stability. That means committing the United States to being a full participant in Asia--economically, politically, and militarily. This includes ensuring peace across the Taiwan Strait, and that means providing Taiwan with the tools necessary for its defense and assisting with the peaceful resolution of the China-Taiwan issue. Second, we want to help in the transformation of China from a totalitarian state with a nonmarket economy toward a more liberalized political and economic regime. That means incorporating China into the world trade community while insisting on respect for basic human rights. Third, we want full access for American goods and services to the largest country in the world with the fastest growing economy. That means completing China's accession to the WTO, granting them PNTR, and supporting our businesses' efforts to penetrate the Chinese economy. It does not mean revoking China's established normal trade status. To isolate China and to seek retribution might feel good, but it would not do good. Even worse, it threatens our core long-term interests. We should responsibly protect our interests and confront China when situations warrant. But reason, not emotion, must guide our decisions.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today in support of S. 350, the Brownfields Revitalization and Environmental Restoration Act of 2001. I compliment the efforts of Senators Smith, Reid, Chafee, and Boxer. They have done a great job in moving this legislation forward. I was very disappointed that this bill was not enacted last year, it represents a lot of hard work and compromise. I think this bill is a win-win for the environment, for local communities and for local economies. More hazardous waste sites will be cleaned up, and we'll have more parks and open space, more economic redevelopment, and more jobs. This bill will make cleaning up polluted sites easier by reducing the many legal and regulatory barriers to brownfields redevelopment while providing much needed cleanup funds. The brownfields bill is important for rural areas, not just big cities. In Montana, we have hundreds of sites that have been polluted by mining, timber processing, railroad work, and other industrial activities that were part of our economic development. I worked hard on a very similar bill last year, together with many of my colleagues. Last year, it was the first bipartisan brownfields bill ever introduced in the Senate. I was thrilled to cosponsor the bill again this year, under the leadership of Senator Smith and Senator Reid. This bill has been endorsed by a wide range of groups, including the National Association of Realtors, the Conference of Mayors, and the Trust for Public Lands. It represents a hard-won, delicately balanced compromise. Superfund critics have long argued that the possibility that EPA could second-guess state-approved cleanups has discouraged brownfields remediation. At the same time, I and others have argued that we need to preserve the federal government's ability to use Superfund authorities to deal with dangerous situations at sites cleaned up under state programs in the rare case in which the cleanup is inadequate and there is a threat to human health or the environment. The tension between these two views has been one of the major obstacles to moving brownfields legislation in the past. This bill forges a new compromise on this issue, and it is a good compromise. Both sides came to the table and made some important concessions. The bill is not perfect, it is not everything I wanted. It is not everything some of my colleagues across the aisle wanted, either. But, as I have often said, let us not let the perfect be the enemy of the good. And this is a good bill that will do good things for the environment, for communities, for businesses and for the Nation. These sites need to be cleaned up, for the health and well-being of our citizens and our environment, and doing nothing is no longer an option. Hopefully, two other bills will come to the floor that would expand the abilities of the Economic Development Administration and the Department of Housing and Urban Development to help local communities physically develop and restore brownfields sites to productive use. Taken together, S. 350 and these two bills would make up a complete brownfields redevelopment package. They will provide critical economic and technical assistance to communities during all stages of brownfields redevelopment--from an initial site assessment to putting the finishing touches on a new apartment building or city park. I am happy to hear that the administration has expressed its support for S. 350. The brownfields bill is an outstanding example of a bipartisan effort to help communities across the nation. I hope we can all work together to make sure it is signed into law this year.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am very pleased to be joining my chairman, Senator Grassley, to introduce this bill today. I also want to express my particular appreciation to Senator Bob Graham and Senator Jeffords, without whose tireless work on pension issues this bill would not have been possible. We all know that our nation is facing a demographic shift of tremendous proportions in the coming decades. There are over 35 million people over the age of 65 today. By 2050, the number of people aged 65 and older is estimated to rise above 81 million. Yet we have watched the oncoming wave of retirements without adequately preparing for them, either as a nation, or as individuals. About three in every four workers say they have personally begun saving for retirement outside the Social Security system. But the amounts accumulated by workers as a whole are unimpressive. Most have accumulated less than $50,000 in their retirement accounts. One-half of all 401(k) accounts have balances of less than $10,000. Now some of these small amounts, not surprisingly, belong to younger workers who have more time for those assets to grow. But only one-fourth of those aged 35 and older have saved more than $100,000. Americans can already expect to live about a quarter of their lives in retirement. As advances in medicine conquer more and more life threatening diseases such as cancer and stroke, more of us will live to see our second century--spending a full one-third of our lives in retirement. Every dollar we save will need to be stretched further as we live longer. Our ability and willingness to save now will define whether those retirement years are spent in comfort or poverty. The American people have many wonderful qualities. But, these days, unfortunately, thrift isn't one of them. During the last twenty years, personal savings rates have consistently declined, from a peak of just under 11 percent of GDP in the 1970's and 1980's to today's absymal numbers. Personal saving as a percentage of disposable income have been in negative territory since last July, and the preliminary estimate for February is a negative 1.3 percent, the same as in January. What does this matter? A low savings rate means that people aren't putting their own money away for retirement. That makes them more dependent on Social Security. Sixteen percent of today's retirees rely exclusively on Social Security benefits for their retirement income, and two-thirds of all retirees rely on Social Security for over one-half of their retirement income. Yet Social Security only replaces an average of 40 percent of a worker's income, because the program was never designed to be a retiree's sole source of support. If retirees continue to rely so heavily on Social Security, there will still be far too many Americans spending their retirement years one step away from poverty. On top of that, a low savings rate means that less capital is available for new investments today. Increased capital for investment is an essential element to our international competitiveness, and critical in a time of slow economic growth such as we have now. Helping more Americans save for their retirement will be a long-term economic stimulus for our country. The bill we are introducing here today represents a bi-partisan effort to reverse this trend. It will expand savings opportunities for those who are not saving enough, and provide incentives for those who are not saving at all. It is endorsed by a broad cross-section of groups representing the pension community, from the Retirement Savings Network to the AARP. The bill reforms the tax rules for pension plans. It makes pensions more portable, to make it easier for workers to take their pensions with them when they change jobs. It strengthens pensions security and enforcement. It expands coverage for small businesses. It enhances pension fairness of women. And it encourages retirement education. The bill also increases the contribution limits for Individual Retirement Accounts. IRAs have proven to be a very popular way for millions of workers to save for retirement, particularly for those who don't have pension plans available through their employers. The IRA limits haven't been increased since they were created almost two decades ago. They are long overdue for an increase. In addition to the IRA provisions, the bill increases contribution limits for employer- sponsored pension plans such as 401(k) plans. These are positive changes. However, by and large, they reinforce the conventional approach to retirement incentives. That approach can best be described as a ``top down'' approach. We create incentives for people with higher incomes, hoping that the so-called nondiscrimination rules will give the higher paid folks an incentive to encourage more participation by others, such as through employer matching programs. I don't have a problem with this approach, as far as it goes. But it doesn't do enough to reach out to middle and lower income workers. That's why I am particularly pleased that the bill goes further, by creating two new savings incentives. One creates new incentives to encourage small businesses to establish pension plans for their employees. The other creates a new matching program to help workers save their own money for retirement. Let me discuss each in turn. First, the incentives for small businesses. Unlike larger companies, most small business owners don't offer pension plans. While three out of every four workers at large companies are participating in some form of pension plan, only one out of every three employees of small businesses have pensions. This leaves over 30 million workers without a pension plan. It's not that small businesses don't want to provide pension plans. They simply can't afford to. In a recent survey of small employers by the Employee Benefit Research Institute, 65 percent of all small business owners said tax credits for start-up costs would be strong incentives for starting retirement plans. They said tax credits are second only to an increase in business profits as a motivation to small employers to offer a pension plan to their employees. The Grassley-Baucus bill provides this motivation by creating two new tax credits. The first is a tax credit of up to $500 to help defray the administrative costs of starting a new plan. The second is a tax credit to help employers contribute to a new plan on behalf of their lower paid employees. In effect, it is a match of amounts employers in small firms put into new retirement plans for their employees, up to a limit of 3% of the salaries of these workers. Taken together, these new incentives will make it easier for small businesses to reach out to their employees and provide them with a pension. In addition, the bill creates a new tax credit that's aimed primarily at workers who do not have a pension plan available to them, to encourage them to save for themselves. Only one-third of families with incomes under $25,000 are saving for retirement either through a pension plan or in an IRA. This compares with 85 percent of families with incomes over $50,000 who are saving for retirement. We clearly need to provide an incentive for those families who aren't saving right now, and the individual savings credit included in the Grassley-Baucus bill will provide that incentive. Here's how it works. A couple with a joint income of $30,000 is eligible for a 50% tax credit for the amount that they save each year, for savings of up to $2000. People with higher incomes get a smaller match, up to a joint income of $50,000. According to the Joint Tax Committee, over 8 million families will be eligible for the individual savings credit. This will provide a strong incentive for these families to begin setting aside money for their retirement. I understand pension incentives are not currently part of the President's tax plan. But I strongly believe this period of surpluses gives us a unique opportunity to help millions of individual Americans save for the future--an opportunity that we shouldn't pass up. Enacting the Grassley-Baucus bill also will help our economy grow by reducing the cost of capital, providing a long-term stimulus to economic growth. This bill will help those who are already thrifty and need the government to loosen limits on saving. But it will also help the many people who have been left behind. Good people, who are working hard to make ends meet, but having trouble also saving for a rainy day. This bill reaches out to all of them. It is a bipartisan effort to give every working person in this country a real stake in the American Dream. I urge my colleagues to join us as cosponsors.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I think it is useful to sit back and reflect, get a little perspective on this issue. I remind Members we have a Constitution. Under the Constitution there is an article I, an article II, and an article III. Article I is the legislative article; article II, the executive article; and article III, the judicial. Why is that important? It is important because we are separate branches of government: The legislative branch, the executive. Why is article I the legislative branch? Our Founding Fathers said because it is where laws are written, it is the most important. We are coequal branches, but article I is legislative, essentially because this is where the laws are made. We all run for office. We are elected or unelected by our people, the citizens of our States, the people for whom we work. It is a wonderful form of government. It works. We are not a parliamentary form of government. We are not a parliamentary form of government because we have a separate legislative branch. In the parliamentary form of government, the majority party that is elected in the elections is the Government. Under the Constitution, we are treated differently. We are separate. Of course, we have political parties. That complicates matters. I have the utmost respect for the President of the United States, whether he or she be Republican or Democrat. It is important to state, however, that we are Senators, with all that means, proudly doing what we think is right, representing the people of our States, which is no small matter. It is a tremendous burden, a tremendous responsibility, and a tremendous privilege. That is why we sought this office, that is why we like this job so much, and that is why most Members want to continue and seek reelection. The question tonight is very narrow. It is whether or not the tax legislation that will be contemplated this year should be within the narrow confines of reconciliation. It is conceded, it is agreed, that reconciliation and all its very narrow constraints is very proper in order to reduce deficits, to raise taxes, or cut spending. No one disputes that. Under reconciliation, the Senate is not the Senate; the Senate is a different institution with very narrow constraints on amendments, germaneness, and debate. Rather, the issue before the Senate is whether those extremely tight constraints should also apply to cutting taxes and increasing outlays. That is the question. It has been argued on the other side, yes, it should. It has been argued that reconciliation is policy neutral. If we do believe that, then we believe that anything can be in reconciliation that in any way affects outlays or revenues--anything: The highway bill, the former health care bill that has been mentioned. That is what that argument means. I ask my good friend from Iowa, the chairman of the Finance Committee, who enjoys the prerogatives of the chairman of the Finance Committee--I plead with him--to have a process where the Finance Committee has more opportunity to write more legislation in the committee and also on the floor. The central point is, we have an opportunity tonight to do what is right. There have been a lot of red herrings. For example, the point has been made that Senator Byrd should have made the argument 27 years ago. That is irrelevant. We are the Senate. We can vote on what we want to vote on. Tomorrow we can vote again on a different matter. It is up to us to decide what is right. What is right is to use reconciliation where it should be used, in reducing deficits. It should not be used to craft anything else under the sun. Because the latter approach disenfranchises, literally, a majority of Americans. The right to offer amendments on the floor of the Senate and the right of unlimited debate are essential. Under reconciliation, we have constraints on unlimited debate--which disenfranchises voters. It is wrong for this amendment to pass. It is undermining why we came here. I urge Senators to vote against the pending amendment.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am pleased to join Senator Hatch as a lead cosponsor of the Railroad Retirement and Survivors' Improvement Act of 2001. The intent of this legislation is quite simple: improve the benefits of Railroad Retirement and modernize the financing of system. Many would agree that the current railroad retirement system is archaic and inequitable. As an example, one need look no further than the severe reduction in benefit payments faced by the 178,000 widows and widowers under the current policy. This is something that must be addressed promptly and the legislation we are introducing today improves survivor benefits substantially. Montana has about 6,600 railroad retirement beneficiaries and about 3,200 active rail employees. Railroads are an important industry in Montana and many Montanans count on the railroad. I am cosponsoring this legislation to make sure railroad employees, retirees and their families receive adequate benefits from a system they can count on. This legislation has strong support from railroad companies, labor organizations, and retirees. When enacted, this legislation will provide earlier vesting and a lower minimum retirement age for railroad labor; improved benefits for widows and widowers of railroad retirees; and enhance the investment of pension contributions from rail companies and employees. Rail labor and rail management have come to the Congress to seek changes to their pension plan because Railroad Retirement is a unique system. It is the only private industry pension plan established in statute and administered by the federal government. As such, any changes in Railroad Retirement can be made only through legislative action. Historically, such legislation has reflected negotiated agreement by management and labor followed by Congressional consideration and enactment of necessary statutory changes. This legislation continues this practice and embodies reform principles agreed to by rail management and a majority of rail labor. I am pleased we have a significant bipartisan group of Senators joining us as original cosponsors, an indication of the broad support this legislation has earned. I also note that many of the original cosponsors are also members of the Senate Finance Committee, the committee that will receive the bill after its introduction today. I hope the committee will be able to take action on the bill soon.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am pleased to join Senator Hatch as a lead cosponsor of the Railroad Retirement and Survivors' Improvement Act of 2001. The intent of this legislation is quite simple: improve the benefits of Railroad Retirement and modernize the financing of system. Many would agree that the current railroad retirement system is archaic and inequitable. As an example, one need look no further than the severe reduction in benefit payments faced by the 178,000 widows and widowers under the current policy. This is something that must be addressed promptly and the legislation we are introducing today improves survivor benefits substantially. Montana has about 6,600 railroad retirement beneficiaries and about 3,200 active rail employees. Railroads are an important industry in Montana and many Montanans count on the railroad. I am cosponsoring this legislation to make sure railroad employees, retirees and their families receive adequate benefits from a system they can count on. This legislation has strong support from railroad companies, labor organizations, and retirees. When enacted, this legislation will provide earlier vesting and a lower minimum retirement age for railroad labor; improved benefits for widows and widowers of railroad retirees; and enhance the investment of pension contributions from rail companies and employees. Rail labor and rail management have come to the Congress to seek changes to their pension plan because Railroad Retirement is a unique system. It is the only private industry pension plan established in statute and administered by the federal government. As such, any changes in Railroad Retirement can be made only through legislative action. Historically, such legislation has reflected negotiated agreement by management and labor followed by Congressional consideration and enactment of necessary statutory changes. This legislation continues this practice and embodies reform principles agreed to by rail management and a majority of rail labor. I am pleased we have a significant bipartisan group of Senators joining us as original cosponsors, an indication of the broad support this legislation has earned. I also note that many of the original cosponsors are also members of the Senate Finance Committee, the committee that will receive the bill after its introduction today. I hope the committee will be able to take action on the bill soon.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, today I rise to express my strong support for adequately funding federal education initiatives. ``Education is,'' as historian Henry Steele Commager said, ``essential to change, for education creates both new wants and the ability to satisfy them.'' In this ever-changing world, it is vitally important that we make sound investments in education. The investments we make today will count every day in our kids' lives. We have a real opportunity to greatly assist our schools by providing them with additional resources to help them meet the challenges they face. In my home state of Montana, schools are faced with declining enrollments, teacher shortages, rising energy costs, and substantial infrastructure needs. These are real needs that we as a nation can help address. Providing additional resources to help schools educate students with special needs, to recruit the best teachers, to repair or renovate buildings, and to educate disadvantaged students will greatly help educators in Montana and around the country concentrate on delivering the best education they can to our students. Senator Harkin's ``Leave No Child Behind'' Amendment goes a long way towards providing for these needs, making comprehensive investments in education programs from pre-school to college. This bill will help ensure that all children start school ready to learn by investing additional resources in Head Start programs. In Billings, Montana, the Head Start facility is inadequate for the number of students it serves. In fact, they can only keep their doors open through April, when most Head Start programs are able to stay open throughout the school year. Providing additional Head Start funding will help give more kids in Billings a chance to start school ready to learn. This bill also provides for full funding for the Individuals with Disabilities Act (IDEA). Providing this additional funding, a share that we have repeatedly promised to states and schools, would free up local and state education funds that are currently used to cover the cost of educating students with disabilities. With this additional federal support, schools and districts will be able to better address local education priorities. This bill also substantially increases funding for professional development opportunities for teachers, allowing them to enhance their knowledge and skills. Providing teachers with these opportunities will help teachers help be even better teachers and will let them know that we care about their personal education needs. Montana schools and teachers have had to do too much with too little for too long. I want to make sure I am doing all I can to help Montana schools overcome their challenges and focus on providing the best possible education to our students. The price may seem high. But the price we're paying by not investing in our education system--by not equipping our students with the skills they will need to be successful--will be one we'll have to pay year after year. There can be no doubt that our education system plays a pivotal role in establishing our quality of life and the quality of life our children will enjoy. John F. Kennedy once said, ``Our progress as a nation can be no swifter than our progress in education.'' Strengthening our education system is a responsibility all of us share--as individuals and as a nation. Let's call on each other to offer our resources as we build a better, stronger country through our commitment to our education system.

Mr. BAUCUS

Mr. BAUCUS. Five minutes?

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

Mr. BAUCUS. Mr. President, I listened very closely to my good friend from Tennessee. I, first, want to make it very clear that the amendment I am offering does contemplate reform, because I do believe we need to move this year to begin Medicare reform at the same time we are providing prescription drug benefits. I want to clear the air on that. Second, I do not want to belabor this argument. We will be voting very soon. But just to remind Senators, there is a big difference between my amendment and the amendment on the other side. We have the same number of dollars $300 billion for a prescription drug benefit. But the amendment offered by Senator Graham and I is definite. It prescribes a prescription drug benefit. The other amendment says ``maybe,'' and maybe out of a contingency fund. I want to make this point because it is so glaringly true. We all know there ``ain't'' no money in the contingency fund. There just ``ain't.'' And the reason is because it has been called for so many times--whether for such reasonable things as agricultural provisions, disaster assistance or other provisions in the Tax Code. There isn't going to be a contingency fund by any stretch of the imagination. It is just a hope and a prayer at best. Or else it comes out of the hospital insurance trust fund. And, of course, that is not a great option. So essentially what it comes down to is this: You have a choice, Senators: You vote for a prescription for prescription drugs or you say: Call me in the morning. That is the choice. I yield the floor.

Mr. BAUCUS. Mr. President, I congratulate those who voted for this amendment, because we have now established that we want a $300 billion prescription drug benefit plan over 10 years. Several hours ago, we were at $153 billion. According to the budget resolution, we are now at $300 billion. So there is agreement. The amendment now pending basically says, OK. Since we have agreement in theory on what the amount should be, let's now lock it in and make sure that the money is, in fact, there. The amendment offered by Senator Graham and I does that. It locks in the money by telling the Finance Committee to come up with a prescription drug bill, by taking just a small sliver $158 billion out of the $1.6 trillion tax bill for prescription drugs. That, with the $153 billion already in the budget resolution, provides $311 billion to give seniors what they need--a meaningful prescription drug benefit. Now that we have established $300 billion, let's make sure that we put our money where our mouth is. Let's lock the money away instead of providing a hope and prayer that the dollars are going to be there for the prescription drug benefit.

Mr. BAUCUS. I listened closely to my good friend, the Senator from Oklahoma, and his basic arguments against the pending amendment. As I heard him, he had a basic argument that the pending amendment would not provide benefits fast enough. I take it that he would rather follow the provisions contained in the budget resolution, which he believes will get benefits to seniors more quickly. I do not know if my good friend knows, whenever we have tried that in the past--that is, block grant programs like CHIP--it takes States a couple of years at least to implement the program. It is never something that comes up and is implemented right away. Second, a lot of States do not want the provision that is contemplated in the budget resolution. Why don't they want it? Because they cannot afford it. They do not have the matching funds. Furthermore, some State legislatures like Montana's meet every other year. Consequently, it would take a couple of years for those States to enact the measure that is contemplated by the ideas of the Senator from Oklahoma. I might also add, for those States that already do have a plan in place, they will just use the Federal money to substitute for the State money. It is a zero sum game. We are not adding anything. The evidence and testimony before our committee are clearly along those lines. I might also say that if the majority is thinking of getting a prescription drug benefit out of the contingency fund we hear so much about, they should just work out the numbers. I know these are the numbers the Senator from Oklahoma is working off of. They show that in the years 2005 to 2006, the contingency fund for those years will be in deficit by about $5 or $6 billion. That means that if there is any kind of meaningful prescription drug benefit program, it has to come out of the hospital insurance trust fund. There are only two places it can come from. We need to provide help for our States--particularly rural States-- and rural hospitals. It is difficult for them to makes ends meet under Medicare. It is important for all of us to remember that more than half of the income for some rural hospitals is from Medicare receipts. Raiding the hospital trust fund would hurt those rural hospitals, and that's not something we want to do. I also want to lay to rest a misconception that might exist. The amendment I am offering contemplates Medicare reform. It does not preclude Medicare reform. In fact, the chairman of the committee and I, my staff and the staff of the chairman of the committee, have been talking about different Medicare reform options to go with a prescription drug benefit. It is true that there are all kinds of different Medicare reform provisions. Obviously, the most extreme are not going to be passed this year. My amendment basically says, OK, there is probably not going to be enough money in the contingency fund. And if our only other option is the hospital insurance trust fund, we certainly don't want to do that. I suggest taking a very small sliver out of the President's tax cut proposal--about $158 billion--to fund a prescription drug benefit for our seniors. That $158 billion would supplement the $153 billion that is already contained in the budget resolution, providing $311 billion total for a prescription drug benefit that is going to work and that is paid for. I believe that when you do something, you should do it now, and do it right the first time. ``Right the first time'' for me is enough to come out to get the program started.

Mr. BAUCUS. Mr. President, I don't want to overdramatize this point, but I think it is accurate. If this amendment doesn't pass, an extremely modest amendment--and I mean extremely--there is a very good chance, more than a 50-percent probability, that this Congress will not pass a prescription drug benefit bill this year. Why do I say that? I say that because the amount in the resolution is so small that seniors won't use it. Why do I say that? I say that roughly the $153 billion in the budget resolution under earlier estimates would require a deductible of about $2,000. How many seniors are going to want to participate in a prescription drug program with a deductible of $2,000? This is voluntary. This is not a mandatory program under this amendment. It is all voluntary. Contrast that with catastrophic, years ago, which was mandatory; this is voluntary. Seniors will not use it. It is not worth it. We will be making a false promise if we attempt to pass something such as that. We won't pass it because too many seniors will already have exposed it for what it is. Instead, we are suggesting, by our amendment, take a very small sliver out of the $1.6, $2.6 trillion tax bill, however you want to categorize it. We know for sure it is a lot more than $1.6 trillion by definition. Frankly, $2.6 trillion is conservative. Take out a small sliver--$158 billion, that is all--and add it on to the $153 billion that is contained in the budget resolution. That adds up to $311 billion over 10 years for prescription drugs. That will be the beginning for a modest drug prescription benefit provision for seniors who now do not have prescription drug coverage because of where they live in the country because they are poor or because no plan offers it. Do not forget, health benefit plans today providing prescription drug coverage to seniors are every year dropping more and more people from their plans. Medicare+Choice last year dropped 900,000 seniors. The year before, 400,000. Why? Because costs are going up. So they are dropping people out, which forces them back to nothing or any Medicare we may have. I suggest taking a small sliver--it is small compared to the huge tax cut the President is proposing as contained in this budget resolution-- and giving it to the literally millions of seniors who do not have any prescription drug coverage, with the cost of drugs rising as fast as they are and utilization rising as fast as it is. Who is going to be hurt if we cut down one-sixth, two-sixths? It will probably come out of the most wealthy, maybe a sliver out of the estate tax, maybe a sliver out of the top rate. Who knows? Certainly, according to America's values, our country's priorities, who we think we are as Americans, this only makes sense. There are seniors who are so wonderful--our mothers, our fathers, our grandmothers, our grandfathers, many of whom gave so much to this country through the Depression. Why in the world can't we at least say to them, we will take a sliver out of this tax cut and give it to you, a senior citizen who today has no prescription drug coverage? Because that is what is right. Let me just say this as a reminder. Senior citizens in America who are not now covered under a prescription drug benefit plan, some company or whatnot, pay the highest prescription drug costs in the industrialized world. That is a fact. That is about 35 percent of American seniors. Up to 50 percent are just inadequately covered or intermittently covered. But 35 percent of American seniors, at least, pay more for prescription drug benefits today than do seniors in any other country in the industrialized world. Where is the United States of America? Where are we? Who do we think we are? We brag about ourselves and our values. Let's step up to the plate. It is a very modest amendment. I urge its adoption.

Mr. BAUCUS. Mr. President, my good friend from Iowa, my chairman, is attempting, in a good-faith way, to figure out how we are going to get a greater prescription drug benefit to our seniors. It is clear our seniors need it. The only question that is facing this body is simple: which of the two alternatives, the one offered by the chairman or the one offered by myself, is more likely to get them the benefit? The circumstance is a bit awkward, a bit difficult. My chairman and myself are offering competing amendments. In a real sense, they are very similar. It is about the same thing. We are both trying to get a prescription drug benefit, and in each case the amount is roughly the same, $300 billion. The amendment of the Senator says up to $300 billion over 10 years. The amendment I am offering says we will add $158 billion to the current $153 billion. That comes out to $311 billion. So we are both talking about $300 billion total in prescription drug benefits for the next 10 years for our senior citizens who, essentially, are currently not covered. The question really is, Why are we here? We are both talking about $300 billion. What is the big deal? Why don't we just agree and get on with the other amendments? The point is there is an honest, good-faith difference of opinion as to which of the two is more likely to provide the actual prescription drug benefits. The amendment I have offered very simply states we will take $158 billion out of the $1.6 trillion tax bill and add that to the budget resolution of $153 billion, which means a specific $311 billion for prescription drug benefits which includes reform. My amendment does not in any way preclude Medicare reform. Certainly, Medicare reform has to be addressed, and I think we should begin to address it this year in the Finance Committee. The amendment offered by my chairman--he is a great guy, I might add. He is a great Senator and great chairman of the committee. But I think we have a little bit of an honest difference of opinion as to which approach is more likely to get the result. His amendment, if I might read it, is very simple. I will cut out the useless words and just state the pertinent words: If the Committee on Finance of the Senate reports a bill or a joint resolution which reforms the Medicare program and improves the access of beneficiaries, the chairman of the Budget Committee may--underline the word ``may''--revise committee allocations that are appropriate. It goes on to say the total adjustment made may not exceed the Congressional Budget Office estimate of the President's Medicare reform and prescription drug plan. Basically, there are several soft phrases and soft words which raise questions as to the degree to which this is going to come to pass. The first soft word is ``if'' the Committee on Finance. It doesn't direct the Committee on Finance to report out a prescription drug bill. It just says ``if.'' Of course, who knows what the Committee on Finance is going to do if it is not mandatory. Second, it provides even if the Committee on Finance reports out this bill, the committee on budget ``may'' revise committee allocations. Not that it shall revise committee allocations, only that it may. I think there is probably a pretty good reason why the word is ``may'' and not ``shall.'' That is, to be honest, because we do not have the dollars. The contingency fund--everybody has a claim to it. It most likely will not be there. The only other alternative is to go into the hospital insurance trust fund. We certainly do not want to do that. The practical result of this amendment, it seems to me, from any fair reading, is that most likely--even though we intend to have the dollars there, intention is not enough--as a practical matter, the dollars are not going to be there so we will not have a meaningful prescription drug benefit. It also provides the chairman of the Budget Committee ``may'' provide this allocation only ``if'' it does not exceed the estimate of the President's plan in Medicare reform. So it really precludes us in the Senate from adopting any prescription drug plan or Medicare reform plan other than the President's. I think we should have a little leeway on what we are doing. So the alternative we face is very simple. It is a very simple alternative and Senators will differ about it. Clearly some Senators do not want to touch the tax cut. They think it is what it should be. Other Senators think it is maybe too much. But the choice is very simple. I think this is a fair statement and it is pretty hard for anybody to come up with anything very different than what I am going to say. The choice is to reduce the President's tax cut--or the Budget Committee tax plan--by about $158 billion over 10 years and add that to the prescription drug benefit called for in the budget resolution for a total of $300 billion, and specify that--which means roughly $311 billion for a prescription drug benefit along with reform--that is option 1--or option 2 is no reduction in the President's tax plan but hope that maybe the Finance Committee will report out a bill, the hope that maybe the chairman of the Budget Committee will come up with the reallocation, and that basically it must conform with the President's number. I love to think we have the money there under the contingency fund for Medicare prescription drugs that is not out of the hospital insurance trust fund but somewhere else. But this is all so simple. I do not have the list in front of me, but all of the claims on the contingency fund are just innumerable. Alternative minimum tax, it is the tax extenders, it is some business tax cuts, it is pension reform, it is emergency assistance, it is defense. Does anybody here think in the next 10 years the President of the United States is not going to, under NMD, offer a big significant boost in defense spending, say, next year or the following year? We know it is coming. There is nothing left in this contingency fund. It is just not there. I do not want to get too technical about this, but even under the budget resolution provided for on the floor, in years 5, 6, and 7, the amount of the contingency trust fund is negative, is $6 billion or $7 billion during that period. That means any plan has to come out of the hospital insurance trust fund. I made my point. It is a simple alternative. One is definite. It tells the Finance Committee to come up with $300 billion. The other is a big maybe. And the maybe is based on very shifting stands. It is just not solid enough to support the conclusion that the money is going to be there. I yield the floor.

Mr. BAUCUS

Mr. BAUCUS. I suggest, frankly, under the rules, each side has 30 minutes. This side has virtually used up 30 minutes, and none of the time has been used on the other side. My suggestion is during this debate we also use time off the amendment as well as time off the resolution, but we start first with the amendment and then the resolution so that is taken care of.

Mr. BAUCUS. I have 5 minutes.

Mr. BAUCUS. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. BAUCUS. Mr. President, reserving the right to object, my understanding is there are 7 minutes remaining on the amendment. I want to reserve 5 minutes on the amendment.

Mr. BAUCUS. Mr. President, this amendment is very simple. It provides the funds necessary to establish a good, solid prescription drug benefit in the Medicare program for our seniors and disabled. That is what it does. It is not excessive. It is not gold plated. It is not, frankly, the total benefit that some of our seniors would like. But it is a good, solid benefit--coverage that would meet the commitment that so many of us have made so many times to our seniors. To offset the cost of the new benefit, the amendment would make a very modest reduction in the size of the proposed $1.6 trillion tax cut. It would be very modest. Let me put this amendment in perspective. Medicare was enacted in 1965. Since then, the practice of medicine has changed dramatically. No one doubts that. Today, more often than not, medicine involves not only a trip to the doctor, but a trip to the pharmacy to pick up a prescription drug as part of therapy. At the same time, we all know that drug prices are rising very fast. In the year 2000, drug prices rose by 11 percent. Since 1990, prescription drug spending has more than tripled. Let's go beyond the statistics and look at the effect on real people. Take the drug Prilosec. It is used to treat ulcers and digestive problems. If you don't have health insurance, it might cost you $1,400 a year. If you are a senior citizen living on Social Security payments of about $10,000 a year--and many seniors are--that is more than 10 percent of your income on one prescription. I ask you, how many seniors have only one prescription? Virtually none. They have several. They have to. Or take Lipitor, which is used for diabetes. It costs $680 a year. For Procardia, which is for hypertension, it costs $900 a year. And the list goes on. The result is that Americans who do not have drug insurance coverage pay the highest prices for prescription drugs of anyone in the industrialized world. Let me repeat that statement. It is startling. Americans who do not have insurance coverage pay the highest prices for prescription drugs of anyone in the industrialized world. I think that is something we do not want to continue. We are not talking about relatively a handful of people. Over the years, as the importance and expense of prescription drugs has grown, more and more seniors have been affected. Today, about 35 percent of Medicare beneficiaries lack direct coverage for outpatient prescription drugs--35 percent. And that probably understates the problem. For example, one study has shown that only about 50 percent of seniors have drug coverage throughout the year, and for many who do have coverage, it is often limited, inadequate. In rural areas, it is even worse. There the problem is particularly severe. In my State of Montana, 76 percent of Medicare beneficiaries live in rural areas. A National Economic Council study of last year showed that rural beneficiaries are 50 percent less likely than their urban counterparts to have drug coverage. Here is another way to look at it. Rural Medicare beneficiaries use 10 percent more prescriptions than the people in the cities, but they pay 25 percent more out of pocket for their drugs. They are more likely to use drugs but pay more than 25 percent out of pocket than people who live in cities. This lack of coverage is reflected in the letters I receive every day. And I am sure you, Mr. President, and every senator in this body receives letters very similar to what I am going to read. For example, a woman from Columbus, MT, a rural part of my State wrote: Senator Baucus, it is so vital to me and thousands of other senior citizens that prescription drugs be put entirely under Medicare. I drew $5,890 in Social Security in the Year 2000, and my prescription drugs cost me $7,514. . .so you can see it is a struggle to keep things paid. She paid a lot more in drugs than she got in Social Security benefits--a lot more, almost a couple thousand dollars more. And I heard this from a senior citizen in Havre, MT. She wrote: Senator Baucus, I am a senior citizen on a fixed income. I take medication to deal with anxiety. That medicine used to cost me $20; now it costs me almost $60. Something should be done about this. How right she is. In fact, I will bet virtually everyone in this Chamber agrees, something should be done about this. That is where the budget resolution comes in. Simply put, the budget resolution proposed by the Senator from New Mexico does not go far enough. It does not set aside funds that are needed, funds to support a solid prescription drug program. In other words, it sells our seniors short. I will be more specific. The budget resolution sets aside about $153 billion over 10 years for a new prescription drug program. That tracks with the President's proposal, the so-called ``immediate helping hand.'' I am not critical of the President, nor am I critical of the senator from New Mexico. Their proposal is a start. It acknowledges the need to expand prescription drug coverage. It makes a good-faith effort to get there. But even though it is a start, it has two very significant problems that have to be remedied. First of all, the budget resolution does not even cover the cost of the President's proposal. CBO now estimates the President's proposal would cost $207 billion over 10 years. So the budget resolution is more than $50 billion short. The chart behind me shows that; that is, the budget proposal offered by the Senator from New Mexico falls short and does not even do what the President's helping hand suggestion purports to cover. So it fails in that regard. Second, we probably all know that the President's proposal in and of itself isn't going anywhere. Even it is too short. It is not enough. When Secretary Thompson had his nomination hearing before the Finance Committee, there was a lot of talk about prescription drug proposals. But not a single member of the committee spoke up to support the President's proposal. Why? Because it was so inadequate. That is not surprising. The proposal has several defects. One, it requires States to implement a new program they do not want. It also delays many tough decisions on Medicare reform. Most significantly, it leaves half of all seniors behind, without coverage. Anyone with an income above $20,000, for example, if they do not have prescription drug coverage now--as I mentioned, about 35 percent of American seniors do not have a plan. They will not have it under the President's proposal. This chart behind me shows in the circle all of the seniors now not getting prescription drug coverage. On the left, is the helping hand provision. About half the seniors will be covered under the helping hand proposal. The black on the far right shows about half of the seniors would not get coverage under the proposal. Now, it could be argued that the budget resolution does not lock in the President's proposal. After all, it does not mandate any particular approach. It just establishes the overall funding. True. At the same time, it is clear that if we set aside only $153 billion over 10 years, we will not be able to write a prescription drug coverage bill that goes far enough to provide universal coverage to all our seniors. Here is what the head of the CBO told our committee two weeks ago: [A] universal benefit would be a pretty thin benefit . . . . If you're going to spread $150 to $160 billion over the entire population, it won't provide a great deal for any one person. He is commenting on the helping hand proposal offered by the President. So whether you focus only on the President's proposal or more broadly on what you could accomplish for $153 billion , the budget resolution is obviously much too short. The amendment that Senators Graham, Kennedy, and I have offered is designed to address this shortfall. How do we do it? We do it by providing more resources from the budget surplus for prescription drug coverage. It basically doubles the amount that is available from $153 billion to $311 billion. By doing so, the amendment gives us room to design a good, solid prescription drug program, something that is going to work. We don't want to pass something so inadequate that not only is it paltry, but it just won't work. It would be disingenuous. It would be a false promise to our seniors. We have to do enough that works. Not a gold-plated program, but a solid one. To offset the cost, our amendment reduces the size of the tax cut by $158 billion, or about 10 percent. Since $153 billion is already provided for in the budget, we take $158 billion out of the tax cut, totaling about $311 billion. That is our amendment. That still allows us plenty of room to cut tax rates, reform the estate tax, the marriage penalty, and other necessary changes to the code. Some will argue that a $1.6 trillion tax cut is the Holy Grail. It is sacrosanct. We can't touch it. It is locked in stone. It is almost in the Constitution. That is what we hear, that we must pass a tax cut that large at all costs, regardless of the consequences, regardless of the other important priorities that would have to be shunted aside. I disagree. The process of writing a budget resolution is a process of setting priorities. A large tax cut is an important priority, but so is the health and welfare of our senior citizens. So I ask the Senate to strike a balance, and that is precisely what our amendment does. Mr. President, we may hear a counterproposal, a second-degree amendment to accomplish some of the same objectives by taking the money out of the so-called contingency fund, rather than by reducing the proposed tax cut by $158 billion. This is an honest debate. Where do we get the money? Do we take it out of the contingency funds, or do we take it out of the tax cut? That is the question with which this body is confronted. We know that the contingency fund has been accounted for by as many times as there are Senators in this body and more than that, because each Senator has different ideas how to use that contingency fund. That contingency fund is not going to be there. Let me indicate why. If you take the final amendment in the contingency fund presented by the Senator from New Mexico, he said it is about $450 or $500 billion-- I am not sure exactly which--here are some of the claims against the contingency fund in various ways: uninsured benefits, people want to start providing a benefit for the 43 million Americans who are uninsured; the alternative minimum tax, what is that going to cost us? That is going to cost us $200 to $300 billion. We all know we are going to fix the alternative minimum tax defect. Extenders, tax extenders, not in the budget, another $200 billion. Already that is close to $600 billion. Business tax breaks, does anybody here think there are not going to be some business tax breaks in this bill, say $200 to $300 billion? Agriculture, that is not in here. Disaster assistance, that is not in here. That is about $100 billion over 10 years. Education, $150 billion; missile defense, possibly another $200 billion. There is just so much in here or not in here that if we honestly look at the tradeoffs, either reducing the tax cut by $158 billion or using the contingency fund for a prescription drug benefit, it is clear where the money is going to be and where the money is not going to be. I know many Senators in this body think they can't touch the $1.6 trillion tax cut. That it is just a given. But nothing is a given around here. We are here to make choices. We are here to represent our people. I will bet dollars to doughnuts that if you were to ask all of the people in your State, and if every senator were to ask all the people in their own States, what do you prefer, a $1.6 trillion tax cut with no prescription drug benefit, except a very modest one that won't work, or a tax cut reduced by $158 billion for a real honest-to- goodness prescription drug benefit that will work, we all know what the answer to that will be. People will say: Of course. That is such a modest nick in the tax reduction for something so good and so needed. There are so many seniors destitute and down and out who need prescription drug help. That is a no-brainer. Compare that with asking: Should we try to get the benefit out of the contingency fund? We all know, we are adults, we have been around here a while, that is kind of a phony issue, that contingency fund, because everybody knows the claims on it are more than the number of senators in this body. Let's do what is right. It is a very modest reduction in the President's proposed tax cut, a modest reduction that clearly makes sense. I ask senators to forget what the party ideology says for a moment. Maybe just for a nanosecond, someone might say: Gee, that is a good thing to do. In so saying, I urge senators to support the amendment offered by myself and Senators Graham and Kennedy, reserve the remainder of my time, and yield to the senator from Florida.

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