Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I thank Senator Carper for those warm remarks about the Secretary-to-be, Governor Thompson. I say to the Senator--he may not know this--when Governor Thompson and the Amtrak board were trying to negotiate further funding for Amtrak, there was a proposal to take certain funds out of the highway trust fund. I had a somewhat tense meeting in the office of the Senator's predecessor, Senator Roth, with Governor Thompson and many others on how to handle all this. Frankly, I was adamant that money not come out of the trust fund. My point being, very much to his credit and to the Senator from Delaware, we worked out another solution as the bonding authority to provide resources to Amtrak. I am very grateful and appreciative of the way in which Governor Thompson handled that issue; that is, we both wanted to accomplish the same goals and objectives: Further funding for Amtrak, but not at the expense of the highway trust fund, money motorists paid in gasoline taxes which should go back to the States for highways. Rather, we saw another way and both sides were happy. I commend the Senator from Delaware, as well as Governor Thompson. This is an early example of this is a guy with whom we can work, who is straight, pragmatic, and looks for solutions. That made a positive impression upon me. Mr. President, I reserve the remainder of my time. The Senator from Wisconsin seeks the floor.

Mr. BAUCUS. Mr. President, I yield now to a new Senator. I look forward to hearing from the former Governor of the State of Delaware, Mr. Carper.

Mr. BAUCUS. Mr. President, first, I note the presence of the new Finance Committee chairman. This is the first appearance of our new chairman of the Senate Finance Committee. I know all Senators agree with me in saying we look forward to a very long, prosperous, productive period, and eagerly seek to work with the chairman in a bipartisan nature, noting the 50/50 composition of the Senate. It is a terrific opportunity we have. I know I speak for the chairman in saying he also shares my desire to do the same. I rise to give my enthusiastic support to the nomination of Governor Tommy Thompson of Wisconsin to be our nation's 19th Secretary of Health and Human Services. I think he will be a great Secretary. He has the energy, the spirit, creativity, enthusiasm, and he takes a bipartisanship approach. He is quite a guy. He has the spirit of his predecessor, another Badger, if I can use that term. Secretary Shalala also had a lot of energy and spirit. I think Governor Thompson, when he does retire from that job and looks back upon his term, will find that he feels good about his achievements, and the rest of the country will as well. In saying so, I do not mean to imply that I expect to agree with every position of our about-to-be-Secretary. There are clearly going to be some issues on which we disagree--for example, a woman's right to choose and some aspects of the upcoming Medicare debate. With that said, I think Mr. Thompson is the right person for a very tough job. It is not an easy job. But he is more than up to the task. He is known for many things, probably best of all for his work on welfare reform. He is the nation's leader on this issue, as Governor of Wisconsin where he took the lead on their welfare reform. In many ways, his efforts helped the Senate pass welfare reform legislation. And I was an early supporter of these efforts. Welfare reform has affected our nation very significantly, most particularly in my State of Montana. I credit Governor Thompson. I salute him for taking that initiative. Just as important, he has provided resources to the programs that are necessary to make Federal reform work for needy families. If we are going to have welfare reform, certainly the families on welfare need these resources. And he didn't call it welfare reform, but a workfare program. It was obviously the correct approach. Governor Thompson has also been a leader on health care issues. He has found innovative ways to ensure health care coverage for the working poor. We have heard reference to BadgerCare, a combination of increases in Medicaid and the CHIP program. I teased him a bit in the hearing when I was talking about the BadgerCare program. It is obviously named after the mascot of the University of Wisconsin. The mascot of the University of Montana is the grizzly. I am not so sure ``grizzly care'' makes much sense in Montana, but I mentioned that to him. Frankly, I am not sure BadgerCare really is that warm and comfortable either, but it gives Wisconsin a deep sense of pride. Governor Thompson has a reputation for work in other areas: Expanded job training, reform of Wisconsin law to allow women on welfare to keep more of the child support payments they receive. Those of us who know Governor Thompson and who are getting to know him better see him as someone with a reputation who is very honest, who tells you where he stands. An innovator, a risk taker. Perhaps most important of all, as my good friend Chairman Grassley said, he is someone who worked with both Republicans and Democrats to find bipartisan solutions. As the chairman mentioned during the confirmation hearings last week when Governor Thompson appeared before the Finance Committee, he was introduced not only by former majority leader Bob Dole, but also by his two Senators and by Secretary Shalala. Senator Kohl told us that Governor Thompson's ``methods reach across the aisle and his successes reach across the board.'' Senator Feingold said that he ``values innovation above partisan gridlock.'' And outgoing Secretary Shalala said that Thompson is a ``consensus builder'' rather than an ideologue. That, to my mind, is precisely what we need. A consensus builder, because the next Secretary faces challenges that defy partisan solutions. First and foremost, Congress must address the pressing need for Medicare to cover prescription drugs. The practice of medicine has changed dramatically since Medicare was created in 1965. Today, prescription drug therapies play a vital role in medical care. As we all know, drug prices are rising fast, and our seniors who do not have insurance coverage for prescription drugs pay the highest prices of anyone in the world. We need to fill this glaring gap in the Medicare program. Accordingly, it is my sincere hope that we can work together to enact a prescription drug program for all seniors, not just low-income seniors, and that we can do so quickly. In addition, we need to improve the Medicaid program and the CHIP program for low-income kids. We need to find ways to lend a hand to the 43 million Americans who do not have health insurance. We all call that a national disgrace, that so many Americans do not have health insurance. There is no other country in the modern industrialized world that has such a large percentage of people uninsured. We Americans have to fill that gap quickly. On each of these issues, I look forward to working with Secretary Thompson to find innovative and bipartisan solutions that improve the delivery of health and human services. He has my full support, and I urge colleagues to vote to confirm his nomination.

Mr. BAUCUS. Mr. President, I ask my good friend from Minnesota if this is a time he wishes to make his longer statement or to withhold. I ask that because the Senator from Delaware asked me some time ago to speak for about 5 minutes.

Mr. BAUCUS. I might say, if that is all right with the Senator from Delaware because he did ask me earlier if he could speak next.

Mr. BAUCUS. Mr. President, I do not know of any others on our side who wish to speak on this nomination. It is my understanding that there are no other Senators on the other side of the aisle who wish to speak on this nomination as well. I do not see other Senators who have special orders to speak.

Mr. BAUCUS. Right. I suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am pleased to join my colleague, Senator Grassley, in introducing legislation to expand the tax deduction for student loan interest. Under current law, student loan interest is only deductible for the first sixty loan repayments, which is equivalent to five years in addition to any deferrals. While this limitation was originally imposed due to revenue constraints, it has had unanticipated consequences. Most importantly, the limitation hurts some of our neediest borrowers. Students with the most limited means often are forced to borrow most heavily in order to afford a higher education. These are precisely the students who need the most help to succeed. The restriction also makes it more difficult for students who would like to pursue a career in public service, where loan repayment is made more challenging by salaries that tend to be lower than the private sector. We should not punish those who sacrifice in order to serve the greater good. Finally, the current sixty month limitation imposes costly and time- consuming reporting requirements on both borrowers and lenders. In supporting our nation's students, we will also be cutting costly bureaucracy. Mr. President, we currently are enjoying unprecedented budget surpluses, which allows us the luxury of deciding how best to allocate our nation's revenues. I believe there are some priorities we must emphasize, and one important one is our children's education. Investing in education is investing in our nation's future. Our best tool for ensuring long-term economic growth is to make sure our workforce is the most educated in the world. Eliminating this artificial restriction on student loan interest deductibility keeps us one small step closer to our goal. I urge my colleagues to support this effort.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, it is with great pleasure that I join with my colleague from Utah, Senator Hatch, and my other colleagues on the Senate Finance Committee, to introduce this bill, which is so vitally important to American businesses competing in the global marketplace. I am particularly pleased that this bill includes as original cosponsors a majority of members of the Senate Finance Committee. This legislation is bipartisan and bicameral. A companion bill was introduced--on the very first day of this Congress--in the House of Representatives by Congresswoman Nancy Johnson and Congressman Robert Matsui. Our nation is the world's undisputed leader in technological innovation, a position that would not be possible absent U.S. companies' commitment to research and development. Investment in research is an investment in our Nation's economic future, and it is appropriate that both the public and private sector share the costs involved, as we share in the benefits. The credit provided through the tax code for research and experimentation expenses provides a modest but critical incentive for companies to conduct their research in the United States, thus creating high-skilled, high-paying jobs for American workers. The R&D credit has played a key role in placing the United States ahead of its competition in developing and marketing new products. Every dollar that the Federal government spends on the R&D tax credit is matched by another dollar of spending on research over the short run by private companies, and two dollars of spending over the long run. Our global competitors are well aware of the importance of providing incentives for research, and many provide more generous tax treatment for research and experimentation expenses than does the United States. As a result, Japanese and German spending on non-defense R&D as a percentage of GDP has grown, while U.S. spending has remained relatively flat since 1985. The R&D credit is instrumental in keeping research dollars in the United States and we must do all we can to make sure it remains an effective incentive by eliminating the on-again, off-again treatment. The benefits of the credit, though certainly significant, have been limited over the years by the fact that the credit has been temporary. In addition to the numerous times that the credit has been allowed to lapse only to be extended retroactively, the 1996 extension left a 12- month gap during which the credit was not available. This unprecedented lapse sent a troubling signal to the U.S. companies and universities that have come to rely on the government's longstanding commitment to the credit. Let me be clear: companies are under-investing in research because there has been continued uncertainty about the credit's life. Much of the economic gains we enjoy now is the direct result of research, technology and innovation undertaken in prior decades. If current indicators are accurate in their warning of a slowdown in our economy, then now is appropriate time to send a strong signal to our research-intensive industries. We must demonstrate our long-term commitment to U.S.-based research by finally putting an end to all uncertainty and making the R&D credit permanent. Much research and development takes years to mature. Companies must make their commitment to research projects often five or ten years into the future. The more uncertain the future of the credit, the fewer additional research projects will be started. If companies evaluating research projects cannot rely on the seamless continuation of the credit, then they are less likely to invest on research in this country and less likely to put money into cutting-edge technological innovation that is critical to keeping us in the forefront of global competition. Our country is locked in a fierce battle for high-paying technological jobs in the global economy. As more nations succeed in creating educationally advanced workforces and join the U.S. as high- technology manufacturing centers, they become more attractive to companies trying to penetrate foreign markets. Multinational companies sometimes find that moving both manufacturing and basic research activities overseas is necessary if they are to remain competitive. The uncertainty of the R&D credit factors into their economic calculations, and makes keeping these jobs in the U.S. more difficult. According to a 1998 study conducted by Coopers & Lybrand, making the R&D credit permanent will provide a substantial positive stimulus to investment, wage-growth, productivity, and overall economic activity for this country. Payroll increases from gains in productivity are estimated to total $64 over the period 1998 through 2010. In the year 2010 alone, the payroll increase is estimated to total nearly $12 billion. Also according to the study, Gross State Product, which is the basic measure of economic activity in a state, will rise overall by nearly $58 billion between 1998 and 2010 as a result of a permanent credit. Nearly three-fifths of this increase nationally is attributable to additional value added by industries that generally do not perform R&D themselves, but benefit from the R&D done by companies in other industries. Gains in payroll and in Gross State Product are not limited to states regarded as centers for technological innovation. Although such regions of the country certainly benefit from the credit, each and every state will profit in some measurable way from the credit since all sectors of the economy--agriculture, mining, basic manufacturing, and high-tech services--benefit from productivity improvements resulting from the additional research and development caused by the credit. My own state of Montana is an excellent example of this economic activity. According to the 1998 study, the total increase in payroll due to the R&D credit for the years 1998-2010 is estimated to be just over $250 million. Neither of these increases place Montana in the top tier of states benefitting from the credit. However, looking beyond these numbers, the impact of the credit in Montana is substantial. In 1995, 12 of every 1,000 private sector workers were employed directly by high-tech firms in Montana. Almost 400 establishments provided high- technology services, at an average wage of $34,500 per year. These jobs paid 77 percent more than the average private sector wage in 1995 of $19,500 per year. Many of these jobs would never have been created without the assistance of the R&D credit. And many more jobs in Montana are dependent upon the growth and stability of the high-tech sector. Although the cumulative numbers may not be high in comparison with other states, the impact of the R&D credit on Montana's economy is clear. The American Bar Association Section of Taxation, the American Institute of Certified Public Accountants Tax Division, and the Tax Executives Institute urge making the credit permanent. In their view, uncertainty in the tax law breeds complexity. The constant need to extend the R&D credit and other Code provisions adds confusion to the law and, in many cases, undermines the policy reasons for enacting the incentives in the first place. This is so because the provisions are intended to encourage particular activities but uncertainty surrounding whether the provisions will be extended leaves taxpayers unable to plan for those activities. The on-again, off-again nature of these provisions, coupled in some cases with retroactive enactment (which often necessitates the filing of an amended return), contributes mightily to the complexity of the law. Senator Hatch and I are not newcomers to this issue. We have jointly introduced bills to make the R&D credit permanent in previous Congresses only to end up with short-term extensions. Last year, we came close. During consideration of the bill to repeal the estate tax (H.R. 8) last July, the Senate voted 98 to 1 in favor of making the R&D tax credit permanent. This year, we hope to be successful. The hard work we have done to bring our budget into balance is finally beginning to pay off, and the projected budget surpluses gives us an opportunity to think carefully about how best to allocate our resources. Making the R&D credit permanent is a wise use of budget dollars because of the direct positive impact on economic growth and productivity. This is not just a corporate issue. The real winners from past research investments have been the American people--in higher wage jobs, higher standards of living, and better health and lifestyle. This is a use of tax dollars that benefits all of us who are working to expand employment, increase wages and keep our Nation at the cutting edge of technological development. We were gratified to see that a permanent R&D credit was included in the tax plan on which President Bush campaigned, and I sincerely hope we can work together to finally make this year the year we fulfill our commitment to long-term, U.S.-based research. I urge my colleagues to support this important piece of legislation.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to introduce legislation to make permanent a temporary tax code provision that permits employers to pay for their employees' college tuition costs without the employee having to pay tax on the amount of the assistance. Senator Grassley joins me as an original co-sponsor of the legislation. Since its inception in 1979, section 127 of the tax code has enabled thousands of employers to promote continuing education among their employees and enabled millions of workers to advance their job skills without incurring additional taxes. Under current law, an employer may provide up to $5,250 per year in tuition assistance to its employees without any reduction in the employee's take-home pay. This simple rule applies regardless of whether the classes undertaken are necessary to maintain an employee's job or to qualify for a new job. Without section 127, only those courses that directly relate to the employee's current job can be subsidized without additional taxes. Section 127 has increased upward mobility for workers in an efficient manner that is supported by workers, educators and business. Workers can improve their job skills and prepare themselves for increased responsibility. Businesses can maintain qualified employees and help them advance within the organization. Educators and other students benefit from having students with real world experience participating in the classroom. Congress has recognized the strength of section 127. In 1997 the Senate voted to make the provision permanent. In the 106th Congress, all 20 members of the Finance Committee sponsored legislation to make section 127 permanent. So why hasn't the legislation been enacted? While it is difficult to be sure, bills including permanent extension always come back from a conference with the House of Representatives as a short extension with no coverage for graduate courses. Our hope is that this year will be different. There are two principal flaws in section 127. First, the benefit is scheduled to expire on December 31, 2001. The provision has been extended ten times since it original enactment. During 1995, the provision was expired and, even though reenacted in 1996, employers were not sure at the end of 1995 whether or not to report as income their employee-assistance program. We have had this provision in the Code long enough to know that it works and we should make it permanent. The bill Senator Grassley and I introduce today would do just that. The second flaw is that the program is limited to employer assistance for undergraduate courses. If an employer wants to provide funds for its employees to attend graduate school, then the employee has to increase his or her wages income and tax liability. For example, suppose a bank has an employee who wants to pursue an MBA. The employee earns $30,000 per year and pays $3,000 in federal income taxes. If the tuition costs $4,000, all of which is paid by the employer, then the worker has to pay 15 percent of the value of the assistance, or $600 in income taxes. This can be a strong disincentive for low and moderate income workers to accept an employer-sponsored tuition assistance offer. The importance of graduate education has increased dramatically in the past two decades. For an increasing number of positions, graduate coursework is essential. For an increasing number of employers, providing graduate education is necessary to retain employees who are capable of doing work at higher levels, for more compensation. The bill would permit exclusion of employer-provided tuition benefits for undergraduate and graduate education. Section 127 is one of the most successful education programs the federal government has ever undertaken. The legislation I am introducing today expands the program to graduate education and makes the provision permanent. I urge my colleagues to work with Senator Grassley and me as we seek to enact this legislation. Mr. GRASSLEY: Mr. President, today I am joining with Senator Max Baucus in introducing a bill that would make permanent the exclusion for employer-provided educational assistance under Sec. 127 of the Internal Revenue Code. Section 127 allows public or private employers to provide up to $5,250 per year to each of their employees in tax-free reimbursement for tuition, books and fees for job or non-job related education. Section 127 is a purely private-sector initiative and the one vehicle that encourages employer investment and assistance in providing educational assistance to its workers. There is no bureaucracy administering this program--it is run through the generosity of private sector employers who provide educational opportunities to their employees in the interest of raising workforce productivity and making their businesses more competitive. Like other types of benefits, Sec. 127 employer-provided educational assistance must be provided on a nondiscriminatory basis and may not favor highly- compensated employees. The Revenue Act of 1978 created Sec. 127 and established employer- provided educational assistance as excludable for any type of course, other than a hobby or a sport. Prior to 1978, only specific ``job- related'' education was excludable from taxable income. The provision has been extended numerous times since its inception. It is time for the exclusion to become permanent. I commend the leadership of Senator Max Baucus for bringing this bill before the Senate and I am proud to be a cosponsor of the bill. I hope the rest of our colleagues in the Senate will join in supporting the enactment of this bill.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today, as an original cosponsor of S. 29, the Self-Employed Health Insurance Fairness Act of 2001, to speak about the importance of making health insurance a more affordable option for self-employed Americans. The legislation moves forward--by two years--the effective date for making health insurance fully deductible for self-employed taxpayers. In the early 1990s, I authored bills to ensure that the deduction--then 25 percent--would not expire. We won that battle, and throughout the 1990s I consistently fought for increases in the deductible amount. Finally, in 1997, we enacted legislation to allow full, 100 percent deductibility of health insurance for the self-employed, phased in by 2003. Mr. President, in these times of surpluses, as we reap the benefits of our fiscal discipline, the self-employed farmers, ranchers, and entrepreneurs in Montana and across the country deserve this important tax relief today. My small business and self-employed constituents constantly tell me that purchasing health insurance is one of the things they would most like to be able to do at their business. It is simply unfair that large businesses are allowed to deduct 100 percent of their employees' health insurance costs, while the self-employed must wait until 2003 for this privilege. In this country, we have a system of health insurance that encourages Americans to purchase health insurance through their employer. Allowing self-employed purchasers of health insurance the same deduction permitted to large employers adheres to those concepts and adds a measure of tax equity. I thank Senators Durbin and Bond for so actively pursuing enactment of this legislation. I believe the time is right to allow full deductibility of health insurance for the hard-working self-employed.

Mr. BAUCUS. Mr. President, today I introduce legislation, along with Senator Daschle and our colleagues, to establish a universal prescription drug benefit program in Medicare. I am pleased to be part of this effort, because I believe Congress should enact a drug benefit this year. The lack of coverage for outpatient prescription drugs in Medicare has become a glaring gap in the program. The practice of medicine has changed dramatically since Medicare was created in 1965. Today, more often than not, a trip to the doctor results in a trip to the pharmacy, to fill a prescription as part of the therapy. In many cases, prescription drugs allow patients to avoid more expensive and invasive therapies such as hospitalization and surgery. Our increasing reliance on pharmaceutical products has also fueled drug spending. Pharmaceuticals are the fastest growing segment of national health expenditures. In 2000, national drug spending increased by an estimated 11 percent, compared with 7 percent for physician services and 6 percent for hospital care. Since 1990, national spending for prescription drugs has tripled. And as the role and expense of prescription drugs have grown, their absence from Medicare's outpatient benefit package has become increasingly problematic for beneficiaries. An estimated 35 percent of Medicare beneficiaries currently lack coverage for outpatient prescription drugs. But that figure may understate the problem. 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 or inadequate. In my home state of Montana, Medicare beneficiaries are even less likely to have coverage for prescription drugs than those living in other parts of the country. A National Economic Council study that I requested last year showed that rural Medicare beneficiaries are 50 percent less likely than their urban counterparts to have prescription drug coverage. And although rural Medicare beneficiaries use 10 percent more prescriptions than urban folks, they pay 25 percent more out-of- pocket for their drugs. These factors underscore the importance of this issue to folks back home. I intend to work hard this year to pass a Medicare drug bill for them and for the millions of other Medicare beneficiaries who lack coverage or are at risk of losing the coverage they currently have. It is time for Congress to act on this issue and pass legislation to provide prescription drugs for America's seniors. The Medicare Prescription Drug Coverage Act of 2001 is a good place to start. This legislation builds on the excellent work of Senator Graham and other members of the Finance Committee, including Senators Conrad, Jeffords, and Rockefeller. The benefit is universal, it is part of the Medicare program, it includes a deductible, and patient coinsurance decreases as drug expenditures increase. The proposal provides subsidies for low-income seniors to help them with their premiums and cost sharing. And the proposal relies on private sector entities to administer the benefit. Let me add--by no means does this legislation represent the end of the debate. Rather, it represents a beginning, a starting point. For example, the bill does not address many of the elements of Medicare reform that are currently on the table and, quite frankly, should be included. President Bush and others have emphasized that a new drug benefit must be added in the context of overall Medicare reform. As Senator Breaux is fond of saying, a prescription drug benefit is the dessert that we get when we take the medicine of reform. I expect that any prescription drug legislation we pass, and the President signs, will include provisions addressing solvency, competition, HCFA reform, and fee-for-service modernizations. These are areas, in addition to adding a drug benefit, where Medicare could also be updated and improved, and the bipartisan Medicare Commission has gone a long way toward putting these issues on the national agenda. I am encouraged that the new administration also recognizes that prescription drugs is an important issue. President Bush campaigned on a promise to address this issue early on, and I sincerely appreciate that it is one of the top priorities of the new administration. Likewise, I know that Senator Grassley also cares deeply about this issue. In closing, I want to reiterate that I am committed to working with Senator Grassley, with the other members of the Finance Committee, and with the new Administration to come up with a compromise solution. It is truly my hope that we can work together, build consensus, and forge compromise solutions on this issue. If we're creative, and if we listen to each other, I am confident that we can find balanced and bipartisan solution.

Mr. BAUCUS. Mr. President, it is with great pleasure that I join with my colleague from Utah, Senator Hatch, and my other colleagues on the Senate Finance Committee, to introduce this bill, which is so vitally important to American businesses competing in the global marketplace. I am particularly pleased that this bill includes as original cosponsors a majority of members of the Senate Finance Committee. This legislation is bipartisan and bicameral. A companion bill was introduced--on the very first day of this Congress--in the House of Representatives by Congresswoman Nancy Johnson and Congressman Robert Matsui. Our nation is the world's undisputed leader in technological innovation, a position that would not be possible absent U.S. companies' commitment to research and development. Investment in research is an investment in our Nation's economic future, and it is appropriate that both the public and private sector share the costs involved, as we share in the benefits. The credit provided through the tax code for research and experimentation expenses provides a modest but critical incentive for companies to conduct their research in the United States, thus creating high-skilled, high-paying jobs for American workers. The R&D credit has played a key role in placing the United States ahead of its competition in developing and marketing new products. Every dollar that the Federal government spends on the R&D tax credit is matched by another dollar of spending on research over the short run by private companies, and two dollars of spending over the long run. Our global competitors are well aware of the importance of providing incentives for research, and many provide more generous tax treatment for research and experimentation expenses than does the United States. As a result, Japanese and German spending on non-defense R&D as a percentage of GDP has grown, while U.S. spending has remained relatively flat since 1985. The R&D credit is instrumental in keeping research dollars in the United States and we must do all we can to make sure it remains an effective incentive by eliminating the on-again, off-again treatment. The benefits of the credit, though certainly significant, have been limited over the years by the fact that the credit has been temporary. In addition to the numerous times that the credit has been allowed to lapse only to be extended retroactively, the 1996 extension left a 12- month gap during which the credit was not available. This unprecedented lapse sent a troubling signal to the U.S. companies and universities that have come to rely on the government's longstanding commitment to the credit. Let me be clear: companies are under-investing in research because there has been continued uncertainty about the credit's life. Much of the economic gains we enjoy now is the direct result of research, technology and innovation undertaken in prior decades. If current indicators are accurate in their warning of a slowdown in our economy, then now is appropriate time to send a strong signal to our research-intensive industries. We must demonstrate our long-term commitment to U.S.-based research by finally putting an end to all uncertainty and making the R&D credit permanent. Much research and development takes years to mature. Companies must make their commitment to research projects often five or ten years into the future. The more uncertain the future of the credit, the fewer additional research projects will be started. If companies evaluating research projects cannot rely on the seamless continuation of the credit, then they are less likely to invest on research in this country and less likely to put money into cutting-edge technological innovation that is critical to keeping us in the forefront of global competition. Our country is locked in a fierce battle for high-paying technological jobs in the global economy. As more nations succeed in creating educationally advanced workforces and join the U.S. as high- technology manufacturing centers, they become more attractive to companies trying to penetrate foreign markets. Multinational companies sometimes find that moving both manufacturing and basic research activities overseas is necessary if they are to remain competitive. The uncertainty of the R&D credit factors into their economic calculations, and makes keeping these jobs in the U.S. more difficult. According to a 1998 study conducted by Coopers & Lybrand, making the R&D credit permanent will provide a substantial positive stimulus to investment, wage-growth, productivity, and overall economic activity for this country. Payroll increases from gains in productivity are estimated to total $64 over the period 1998 through 2010. In the year 2010 alone, the payroll increase is estimated to total nearly $12 billion. Also according to the study, Gross State Product, which is the basic measure of economic activity in a state, will rise overall by nearly $58 billion between 1998 and 2010 as a result of a permanent credit. Nearly three-fifths of this increase nationally is attributable to additional value added by industries that generally do not perform R&D themselves, but benefit from the R&D done by companies in other industries. Gains in payroll and in Gross State Product are not limited to states regarded as centers for technological innovation. Although such regions of the country certainly benefit from the credit, each and every state will profit in some measurable way from the credit since all sectors of the economy--agriculture, mining, basic manufacturing, and high-tech services--benefit from productivity improvements resulting from the additional research and development caused by the credit. My own state of Montana is an excellent example of this economic activity. According to the 1998 study, the total increase in payroll due to the R&D credit for the years 1998-2010 is estimated to be just over $250 million. Neither of these increases place Montana in the top tier of states benefitting from the credit. However, looking beyond these numbers, the impact of the credit in Montana is substantial. In 1995, 12 of every 1,000 private sector workers were employed directly by high-tech firms in Montana. Almost 400 establishments provided high- technology services, at an average wage of $34,500 per year. These jobs paid 77 percent more than the average private sector wage in 1995 of $19,500 per year. Many of these jobs would never have been created without the assistance of the R&D credit. And many more jobs in Montana are dependent upon the growth and stability of the high-tech sector. Although the cumulative numbers may not be high in comparison with other states, the impact of the R&D credit on Montana's economy is clear. The American Bar Association Section of Taxation, the American Institute of Certified Public Accountants Tax Division, and the Tax Executives Institute urge making the credit permanent. In their view, uncertainty in the tax law breeds complexity. The constant need to extend the R&D credit and other Code provisions adds confusion to the law and, in many cases, undermines the policy reasons for enacting the incentives in the first place. This is so because the provisions are intended to encourage particular activities but uncertainty surrounding whether the provisions will be extended leaves taxpayers unable to plan for those activities. The on-again, off-again nature of these provisions, coupled in some cases with retroactive enactment (which often necessitates the filing of an amended return), contributes mightily to the complexity of the law. Senator Hatch and I are not newcomers to this issue. We have jointly introduced bills to make the R&D credit permanent in previous Congresses only to end up with short-term extensions. Last year, we came close. During consideration of the bill to repeal the estate tax (H.R. 8) last July, the Senate voted 98 to 1 in favor of making the R&D tax credit permanent. This year, we hope to be successful. The hard work we have done to bring our budget into balance is finally beginning to pay off, and the projected budget surpluses gives us an opportunity to think carefully about how best to allocate our resources. Making the R&D credit permanent is a wise use of budget dollars because of the direct positive impact on economic growth and productivity. This is not just a corporate issue. The real winners from past research investments have been the American people--in higher wage jobs, higher standards of living, and better health and lifestyle. This is a use of tax dollars that benefits all of us who are working to expand employment, increase wages and keep our Nation at the cutting edge of technological development. We were gratified to see that a permanent R&D credit was included in the tax plan on which President Bush campaigned, and I sincerely hope we can work together to finally make this year the year we fulfill our commitment to long-term, U.S.-based research. I urge my colleagues to support this important piece of legislation.

Mr. BAUCUS. Mr. President, I rise today to introduce legislation to make permanent a temporary tax code provision that permits employers to pay for their employees' college tuition costs without the employee having to pay tax on the amount of the assistance. Senator Grassley joins me as an original co-sponsor of the legislation. Since its inception in 1979, section 127 of the tax code has enabled thousands of employers to promote continuing education among their employees and enabled millions of workers to advance their job skills without incurring additional taxes. Under current law, an employer may provide up to $5,250 per year in tuition assistance to its employees without any reduction in the employee's take-home pay. This simple rule applies regardless of whether the classes undertaken are necessary to maintain an employee's job or to qualify for a new job. Without section 127, only those courses that directly relate to the employee's current job can be subsidized without additional taxes. Section 127 has increased upward mobility for workers in an efficient manner that is supported by workers, educators and business. Workers can improve their job skills and prepare themselves for increased responsibility. Businesses can maintain qualified employees and help them advance within the organization. Educators and other students benefit from having students with real world experience participating in the classroom. Congress has recognized the strength of section 127. In 1997 the Senate voted to make the provision permanent. In the 106th Congress, all 20 members of the Finance Committee sponsored legislation to make section 127 permanent. So why hasn't the legislation been enacted? While it is difficult to be sure, bills including permanent extension always come back from a conference with the House of Representatives as a short extension with no coverage for graduate courses. Our hope is that this year will be different. There are two principal flaws in section 127. First, the benefit is scheduled to expire on December 31, 2001. The provision has been extended ten times since it original enactment. During 1995, the provision was expired and, even though reenacted in 1996, employers were not sure at the end of 1995 whether or not to report as income their employee-assistance program. We have had this provision in the Code long enough to know that it works and we should make it permanent. The bill Senator Grassley and I introduce today would do just that. The second flaw is that the program is limited to employer assistance for undergraduate courses. If an employer wants to provide funds for its employees to attend graduate school, then the employee has to increase his or her wages income and tax liability. For example, suppose a bank has an employee who wants to pursue an MBA. The employee earns $30,000 per year and pays $3,000 in federal income taxes. If the tuition costs $4,000, all of which is paid by the employer, then the worker has to pay 15 percent of the value of the assistance, or $600 in income taxes. This can be a strong disincentive for low and moderate income workers to accept an employer-sponsored tuition assistance offer. The importance of graduate education has increased dramatically in the past two decades. For an increasing number of positions, graduate coursework is essential. For an increasing number of employers, providing graduate education is necessary to retain employees who are capable of doing work at higher levels, for more compensation. The bill would permit exclusion of employer-provided tuition benefits for undergraduate and graduate education. Section 127 is one of the most successful education programs the federal government has ever undertaken. The legislation I am introducing today expands the program to graduate education and makes the provision permanent. I urge my colleagues to work with Senator Grassley and me as we seek to enact this legislation. Mr. GRASSLEY: Mr. President, today I am joining with Senator Max Baucus in introducing a bill that would make permanent the exclusion for employer-provided educational assistance under Sec. 127 of the Internal Revenue Code. Section 127 allows public or private employers to provide up to $5,250 per year to each of their employees in tax-free reimbursement for tuition, books and fees for job or non-job related education. Section 127 is a purely private-sector initiative and the one vehicle that encourages employer investment and assistance in providing educational assistance to its workers. There is no bureaucracy administering this program--it is run through the generosity of private sector employers who provide educational opportunities to their employees in the interest of raising workforce productivity and making their businesses more competitive. Like other types of benefits, Sec. 127 employer-provided educational assistance must be provided on a nondiscriminatory basis and may not favor highly- compensated employees. The Revenue Act of 1978 created Sec. 127 and established employer- provided educational assistance as excludable for any type of course, other than a hobby or a sport. Prior to 1978, only specific ``job- related'' education was excludable from taxable income. The provision has been extended numerous times since its inception. It is time for the exclusion to become permanent. I commend the leadership of Senator Max Baucus for bringing this bill before the Senate and I am proud to be a cosponsor of the bill. I hope the rest of our colleagues in the Senate will join in supporting the enactment of this bill.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, today I introduce legislation, along with Senator Daschle and our colleagues, to establish a universal prescription drug benefit program in Medicare. I am pleased to be part of this effort, because I believe Congress should enact a drug benefit this year. The lack of coverage for outpatient prescription drugs in Medicare has become a glaring gap in the program. The practice of medicine has changed dramatically since Medicare was created in 1965. Today, more often than not, a trip to the doctor results in a trip to the pharmacy, to fill a prescription as part of the therapy. In many cases, prescription drugs allow patients to avoid more expensive and invasive therapies such as hospitalization and surgery. Our increasing reliance on pharmaceutical products has also fueled drug spending. Pharmaceuticals are the fastest growing segment of national health expenditures. In 2000, national drug spending increased by an estimated 11 percent, compared with 7 percent for physician services and 6 percent for hospital care. Since 1990, national spending for prescription drugs has tripled. And as the role and expense of prescription drugs have grown, their absence from Medicare's outpatient benefit package has become increasingly problematic for beneficiaries. An estimated 35 percent of Medicare beneficiaries currently lack coverage for outpatient prescription drugs. But that figure may understate the problem. 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 or inadequate. In my home state of Montana, Medicare beneficiaries are even less likely to have coverage for prescription drugs than those living in other parts of the country. A National Economic Council study that I requested last year showed that rural Medicare beneficiaries are 50 percent less likely than their urban counterparts to have prescription drug coverage. And although rural Medicare beneficiaries use 10 percent more prescriptions than urban folks, they pay 25 percent more out-of- pocket for their drugs. These factors underscore the importance of this issue to folks back home. I intend to work hard this year to pass a Medicare drug bill for them and for the millions of other Medicare beneficiaries who lack coverage or are at risk of losing the coverage they currently have. It is time for Congress to act on this issue and pass legislation to provide prescription drugs for America's seniors. The Medicare Prescription Drug Coverage Act of 2001 is a good place to start. This legislation builds on the excellent work of Senator Graham and other members of the Finance Committee, including Senators Conrad, Jeffords, and Rockefeller. The benefit is universal, it is part of the Medicare program, it includes a deductible, and patient coinsurance decreases as drug expenditures increase. The proposal provides subsidies for low-income seniors to help them with their premiums and cost sharing. And the proposal relies on private sector entities to administer the benefit. Let me add--by no means does this legislation represent the end of the debate. Rather, it represents a beginning, a starting point. For example, the bill does not address many of the elements of Medicare reform that are currently on the table and, quite frankly, should be included. President Bush and others have emphasized that a new drug benefit must be added in the context of overall Medicare reform. As Senator Breaux is fond of saying, a prescription drug benefit is the dessert that we get when we take the medicine of reform. I expect that any prescription drug legislation we pass, and the President signs, will include provisions addressing solvency, competition, HCFA reform, and fee-for-service modernizations. These are areas, in addition to adding a drug benefit, where Medicare could also be updated and improved, and the bipartisan Medicare Commission has gone a long way toward putting these issues on the national agenda. I am encouraged that the new administration also recognizes that prescription drugs is an important issue. President Bush campaigned on a promise to address this issue early on, and I sincerely appreciate that it is one of the top priorities of the new administration. Likewise, I know that Senator Grassley also cares deeply about this issue. In closing, I want to reiterate that I am committed to working with Senator Grassley, with the other members of the Finance Committee, and with the new Administration to come up with a compromise solution. It is truly my hope that we can work together, build consensus, and forge compromise solutions on this issue. If we're creative, and if we listen to each other, I am confident that we can find balanced and bipartisan solution.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today, as an original cosponsor of S. 29, the Self-Employed Health Insurance Fairness Act of 2001, to speak about the importance of making health insurance a more affordable option for self-employed Americans. The legislation moves forward--by two years--the effective date for making health insurance fully deductible for self-employed taxpayers. In the early 1990s, I authored bills to ensure that the deduction--then 25 percent--would not expire. We won that battle, and throughout the 1990s I consistently fought for increases in the deductible amount. Finally, in 1997, we enacted legislation to allow full, 100 percent deductibility of health insurance for the self-employed, phased in by 2003. Mr. President, in these times of surpluses, as we reap the benefits of our fiscal discipline, the self-employed farmers, ranchers, and entrepreneurs in Montana and across the country deserve this important tax relief today. My small business and self-employed constituents constantly tell me that purchasing health insurance is one of the things they would most like to be able to do at their business. It is simply unfair that large businesses are allowed to deduct 100 percent of their employees' health insurance costs, while the self-employed must wait until 2003 for this privilege. In this country, we have a system of health insurance that encourages Americans to purchase health insurance through their employer. Allowing self-employed purchasers of health insurance the same deduction permitted to large employers adheres to those concepts and adds a measure of tax equity. I thank Senators Durbin and Bond for so actively pursuing enactment of this legislation. I believe the time is right to allow full deductibility of health insurance for the hard-working self-employed.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to enthusiastically support the nomination of Mr. Paul Henry O'Neill to be the 72d Secretary of the Treasury. Mr. O'Neill is no stranger to policymaking, having served a number of years at the Office of Management and Budget. He has impressive credentials, both in and out of government, and an unchallenged reputation for hard work, straight talk and tough- mindedness. He is an extremely strong candidate and a very able individual. I am also pleased that the Senate will vote today to confirm his nomination. I believe it is important for our country to have a Treasury Secretary in place as the new administration takes over. The next administration will inherit the strongest economy in a generation, and the Treasury Department will face extraordinary challenges in keeping the economy going. Eight years ago, the nation's economic growth was low, interest rates and unemployment were high, and Federal budget deficit and national debt was growing at an unfathomable rate. Today, we have experienced the longest economic expansion in history, with record low unemployment, low interest rates, higher family incomes, and record budget surpluses. Inflation is in check, and we are beginning to pay down the national debt--something I know Mr. O'Neill has advocated. Putting the nation's fiscal house in order didn't happen overnight. Nor did it happen by chance--tough decisions were made and difficult votes taken. In light of this, I am concerned about how we handle the upcoming debate about the budget and taxes. We should proceed carefully, and make certain that our decisions do not put in jeopardy the accomplishments made over the past 8 years. In any event, with Mr. O'Neill, the President and the country have found the right person for the job. Mr. O'Neill has my support, and he has my vote. I look forward to working with Secretary O'Neill, and the new administration, to address the many challenges that lie ahead.

Mr. BAUCUS

Mr. BAUCUS. Among the most pressing issues facing American senior citizens and persons with disabilities is the need for coverage of prescription drugs under Medicare. While we in Congress continue to work to reach consensus on a Medicare prescription drug benefit, I applaud the bipartisan efforts of my colleagues to restore and preserve Medicare coverage for certain injectable drugs and biologicals that are crucial to seniors and persons with debilitating chronic illnesses. To this end the Act contains a tremendously important provision which amends Section 1861(s)(2) of the Social Security Act relating to coverage under Medicare Part B of certain drugs and biologicals administered incident to a physician's professional service. Because it is expected that the Act will be passed without any accompanying Committee Report language, and due to its importance to thousands of citizens, I rise to explain this statutory language. The Medicare Carrier Manual specifies that a drug or biological is covered under this provision if it is ``usually'' not self- administered. Under this standard, Medicare for many years covered drugs and biological products administered by physicians in their offices and in other outpatient settings. In August 1997, however, the Health Care Financing Administration issued a memorandum that had the effect of eliminating coverage for certain products that could be self- administered. This changed policy interpretation resulted in thousands of patients who until that time had had coverage for drugs or biologicals for their illnesses, including intramuscular treatments for multiple sclerosis, being denied coverage for these same drugs and biologicals. At a time when the Congress and the Administration are seeking to expand Medicare prescription drug coverage, this HCFA policy has led to a reduction in coverage of many treatments. The Act's language clarifies the Medicare reimbursement policy to ensure that HCFA and its contractors will reimburse physicians and hospitals for injectable drugs and biologicals for illnesses such as multiple sclerosis and various types of cancer as they had been reimbursed prior to the 1997 memorandum. The new statutory language contained in the Act requires coverage of ``drugs and biologicals which are not usually self-administered by the patient,'' thus restoring the coverage policy that was in effect prior to the August 1997 HCFA memorandum. In carrying out this provision, HCFA should not narrowly define the word ``usually.'' Nor should HCFA make unsupported determinations that a drug or biological is usually self- administered. In addition, HCFA should assume, as it did for many years, that Medicare patients do not usually administer injections or infusions to themselves, while oral medications usually are self- administered. HCFA should also continue to take into account the circumstances under which the drug or biological is being administered. For example, products that are administered in emergencies should be covered even though self-administration is the usual method of administration, in a non-emergency situation. I believe that to implement Congressional intent on this provision, HCFA must promptly issue a memorandum to inform its contractors (e.g. carriers and intermediaries) of the change in the law. I commend the efforts of the bipartisan sponsors of this provision for correctly clarifying the intent of the Medicare reimbursement coverage policy for injectable drugs and biologicals. This issue is of vital importance to thousands of our citizens that are afflicted with debilitating illness such as multiple sclerosis. As Congress and the nation continue to engage in a discussion on expanding prescription drug coverage under Medicare, this is an important step to provide our seniors and persons with disabilities with the life-saving prescription drugs and biologicals that they deserve. I look forward to continue working with the Administration and HCFA to ensure that our seniors and persons with disabilities receive coverage for injectable drugs and biologicals.

Mr. BAUCUS

Mr. BAUCUS. Although I am unable to vote for or against the omnibus legislation before the Senate today, I would like to comment on the process that brought us here. In an effort to improve the economy of my state and to facilitate trade between America and its East Asian trading partners, I have led a trade mission of Montanans to East Asia for the last several days, meeting with trade officials in Japan, China and Korea. Mr. President, I am extremely concerned about the process that has brought about this omnibus bill's passage. It is unfortunate that the Senate finds itself in virtually the same position as it did the last two years with appropriations matters. As my colleagues will recall, in 1998 we voted on a giant omnibus appropriations bill which contained eight appropriations bills, plus numerous other authorizing legislation. It ran on for nearly 4,000 pages and was called a ``gargantuan monstrosity'' by the distinguished Senator from West Virginia, Senator Byrd. Unfortunately, we did not learn our lesson in 1998. Last year Congress wrapped Medicare provider payments into appropriations for Commerce-State-Justice, Foreign Operations Appropriations, Interior and Labor-HHS, again passing it in omnibus fashion without time for senators to read through the bill and raise concerns about its contents. I voted against the 1998 and 1999 omnibus bills, not because they did not contain good provisions for the country and my State of Montana. They did. I opposed these bills because I believed--as I do now--that writing such legislation behind closed doors among a small group of people dangerously disenfranchises most senators, House members, and the American people. And here we are again, passing Labor-HHS along with Treasury-Postal and Legislative Appropriations--all in one bill, with the input of very few members of Congress. Despite statements in 1998 and 1999 that such a process would not happen again, we find ourselves in the same position as the last two years. Mr. President, we already face a population that is increasingly cynical of government and those who serve it, and the wrangling over the presidential election that just ended has not helped matters. People believe more and more that government does not look after their interests, but only after special interests. And the more we operate behind closed doors, without an open, public process, the more we feed that cynicism. That is not healthy for our democracy or our people, and it's why I cannot support this omnibus bill. That said, Mr. President, there is good news for Montana health care in this bill, provisions that I have fought for all year. In particular, I want to reiterate my support for year-long efforts to restore funding to health care providers negatively impacted by the Balanced Budget Act, BBA, of 1997. When the BBA was passed in 1997, it was heralded as landmark legislation to extend the life of Medicare's trust fund and impose some much-needed fiscal discipline on the program. Indeed, just eight years ago, estimates indicated that Medicare's hospital trust fund would run dry in 1999. But a strong economy and reductions in payments to Medicare providers through the BBA have extended the life of the Part A Trust Fund for probably a couple of decades. Unfortunately, access to quality health care may have been compromised in the process. For example, the BBA included new prospective payment systems for Medicare providers of hospital, skilled nursing and home health care. While these payment systems are intended to introduce efficiency to Medicare and ultimately increase the quality and availability of patient care, in some cases they may not make sense. I am concerned that PPSs may be ill-applied in the case of small, rural facilities, which do not have the patient volume to survive under a system of flat- rate payments. Consider home health care, for example. As costs for this important benefit spiraled out of control, and as reports circulated of fly-by- night home care agencies defrauding the government and harming patients, Congress passed a home health prospective payment system as part of the BBA. Payments were reduced drastically. While these cuts were justified in regions of the US with too many home care providers, they also took effect where there was not a redundancy of agencies. Now there are some Montana counties lacking home care providers altogether. Montana has lost seven home health agencies, and there are currently three counties in my state with no home care provider at all. Together these three counties--Rosebud, Treasure and Big Horn--have an area over 23,000 square miles, an area nearly the size of West Virginia. I believe BBA changes have gone too far in the area of hospital care as well. Last year I pushed legislation to spare small rural hospitals drastic cuts in Medicare reimbursement to their outpatient departments by exempting them from the negative impacts of the outpatient prospective payment system. Based on estimates from the Health Care Financing Administration, the effects of the outpatient PPS would have been devastating on small Montana hospitals. Madison Valley Hospital in Ennis, Montana, for example, would have lost an estimated 62 percent of its outpatient Medicare payments without an exemption from the outpatient PPS; Liberty County Hospital in Chester would have lost over 50 percent. I was pleased that Congress acted to prevent cuts to these outpatient facilities last year, through passage of the Balanced Budget Refinement Act of 1999, BBRA, legislation restoring $16 billion in Medicare and Medicaid payments over a five-year period. This year's budget bill has significant BBA relief as well. Although I believe too much of the funding is directed toward Medicare+Choice plans, there is significant help in the package for the well-being of Montana health care and Medicare in general. These provisions include increased reimbursement for telemedicine; special payments for rural home care agencies and rural disproportionate hospitals; correction of a mistake affecting Critical Access Hospitals' outpatient lab facilities; relief for community health centers and rural health clinics; and redistribution of unspent funding from the State Children's Health Program, SCHIP. In short, I am pleased that BBA relief is set for passage, and I commend the Administration and my colleagues for setting aside politics to get this bill done. I would also like to make a couple of comments about the tax legislation in this omnibus bill. In this area too, I object not so much to what is in this bill as I do to what is not. The tax title of the bill includes a number of provisions to encourage economic development in distressed communities, the so-called Community Renewal and New Markets provisions. I support these provisions because I believe they can help spur economic development in many areas in the country, including in my own home State of Montana. I also support the language that allows Indian tribes to be treated like state and local governments in their payment of Federal unemployment taxes. However, in this closed process of negotiation by the few, several good ideas that were in the Senate version of the Community Renewal bill somehow never made it into this conference report. There is not one single dollar in this bill to help Americans save for their retirement, which is a high priority of mine because I believe our country needs to begin preparing for the wave of baby boom retirements. The Senate bill included a wide-ranging farm package that is very important for rural areas that you won't see in this bill. It also included environmental and energy incentives that were designed to help us plan for the future. The loss of these provisions will become much more noticeable as our land and energy needs keep growing. The bottom line is that there is a reason that tax items should not be included in an appropriations omnibus bill at the last minute, particularly when the tax-writing committees are left out of the process of writing the bill. That is exactly what has happened again this year, and I again voice my objections to the process.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to bid farewell to a key member of my staff, Brian Kuehl. I will deeply miss Brian, both professionally and personally. Brian has worked for me for four years, most recently as my Legislative Director, and before that as Acting Chief of Staff and as a senior Legislative Assistant. He gave his heart and soul to me, to his colleagues, and, most importantly, to the people of Montana. During this time, he has proven himself to be a consensus builder--a tireless professional who brings together people with diverse points of view and who solves problems in innovative ways. He is fair-minded, balanced, creative, and a leader in every sense of the word. Wallace Stegner defined himself as a citizen of the West. Brian fits that mold. Brian came to me from Bozeman, Montana. He attended law school in Colorado and has family roots in Utah and throughout the northwest. His wife is a fifth generation Wyoming native and daughter of former Governor Mike Sullivan. In fact, they are moving to Sheridan, Wyoming, where they will soon have their first child. As a citizen of the West, Brian has chosen to tackle those issues that most often divide westerners--natural resources, energy, and the environment. Time and again, his ability to bring people together has demonstrated that the West need not be divided on these issues--that we can and must work together if we are to build a sustainable region with a society as inspiring as our landscape. Let me mention a few examples of the significant solutions that Brian has helped forge over the last four years. When Brian joined me in the spring of 1997, he had just helped broker a compromise among the White House, regional conservation organizations, and a large mining company, Battle Mountain Gold, that would conserve an area next to Cooke City, Montana, right on the doorstep of Yellowstone National Park. The proposed New World gold mine had been immensely controversial, with the project expected to generate millions of tons of acidic mine waste. Across the West, controversies such as this usually drag on endlessly, dividing communities and draining resources. Brian had worked closely with all the actors while he was in the non- profit sector. His first task in my office was to help secure approval of this agreement in the Congress. In the end, Congress funded the public commitment and also agreed to invest funds to rehabilitate the Going-to-the-Sun Road to compensate local communities for lost economic opportunities. What a great start to Brian's tenure here. In 1997 and 1998, Brian helped me pass legislation to complete the final phase of the Gallatin II Land Exchange--one of the most complex and multifaceted land exchanges ever completed by the Forest Service. Brian worked tirelessly with all of the interests in this exchange-- sportsmen, conservationists, the snowmobile community, the timber industry, local ranchers, and local homeowners. Ultimately, the Gallatin II Land Exchange became law. We secured a tremendous resource for our children and grandchildren. And every interest concerned supported the compromises that Brian helped forge. In 1998, Brian helped me with legislation on another series of land exchanges near Helena, Montana, at the Canyon Ferry Reservoir. Working with the cabin owners and local sportsmen, Brian helped me create a novel arrangement that was supported by everyone involved. These are just a few illustrations of the many significant contributions Brian Kuehl has made to me and to the people of Montana. I thank Brian for those contributions. I thank him for serving as role model for the younger staff in my office. I thank him for his service as a key advisor to me. Albert Einstein once said, ``Try not to become a man of success, but rather try to become a man of value.'' Well, Brian has demonstrated both success and value over the past four years. I wish the best for Brian, his wife Michelle, and their soon to be born child.

Mr. BAUCUS

Mr. BAUCUS. I am concerned that this legislation could be used to delay the EPA's chemical testing programs including the proposed Endocrine Disruptor Screening Program, the agency's children's health testing initiatives, and EPA's pesticide registration/re-registration process. Can my colleague from Ohio assure me that nothing in this bill is intended to prevent or slow the implementation of existing statutory mandates under the Food Quality Protection Act and the Safe Drinking Water Act for these important programs?

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise to support the legislation before us today on Foreign Sales Corporations, FSC. However, I really object to the fact that we even have to address the issue of the FSC during this session of Congress. The European Union, despite rhetoric in support for the WTO, is taking action after action that raises real doubt about their commitment. Let's quickly review the history that brought us to this place today. The United States created the DISC in the early 1970s. Given the different nature of the U.S. and the European tax systems, the purpose was to put American exporters on an equal footing with their European competitors. In the 1980s, in response to a negative finding at the GATT, we replaced it with the FSC to make it GATT-compatible. The Europeans accepted this alteration. Fast forward to the 1990s. The EU lost cases to the United States on beef hormones and on bananas. These were difficult issues for Europe. Yet, the EU did not seek a negotiated solution. Nor did they try to take corrective action. Instead, the EU used every legal and procedural trick in the GATT and WTO book to weasel out. They lost at every turn. This behavior of the EU, honoring the letter of the WTO while ignoring its spirit, is inappropriate and irresponsible. The EU should be a leader in ensuring that the credibility and integrity of the WTO process is maintained. They shouldn't be taking cheap legal dodges. Why should other WTO members comply promptly with WTO decisions if the EU thumbs its nose at the system? Finally, the EU could no longer delay and circumvent implementation of these WTO decisions. The U.S. retaliates. Then, all of a sudden, we find ourselves challenged at the WTO on FSC. As far as I know, European companies did not beat a path to EU headquarters in Brussels insisting that they take us on over the FSC. Trade ministers in European capitals did not rush to Brussels with demands to file this case against us. Rather, the EU bureaucrats, angry at having lost two important cases to the United States, were going to fight back. So, we end up with the FSC case, and another example of the EU undermining the global trade system. Deputy Secretary of the Treasury Stu Eizenstadt has done yeoman's work in trying to resolve this problem. The legislation before us is the fruit of his labor. And we should all thank him for working so hard, with so many diverse interests, to craft a solution. Yet, from Europe, all we have heard is a series of denunciations. An insistence that this legislation violates the WTO. An apparent eagerness to move ahead with a massive multi-billion dollar retaliation list against the United States. What a travesty! I support this change in our law. And I express my appreciation to the other Senators who have allowed this legislation to move forward under unanimous consent, despite their interest in offering amendments to the bill. But I also call on the political leadership in Europe to step back and look at what their representatives in Brussels are doing. Please reflect on the danger to the integrity of the WTO of the actions that your EU bureaucrats have taken. The committee amendments were withdrawn.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to bring attention to the important issue of the Balanced Budget Act, BBA, of 1997, its revision in 1999, and the importance of providing further relief to the many patients and providers who have been negatively affected by its implementation. The BBA included a series of cuts to Medicare providers, including hospitals, nursing homes, and home health agencies. Though intended to cut about $112 billion from Medicare over the five-year period from 1998 to 2001, recent estimates indicate that over twice that amount will be cut by the BBA. And although Congress restored about $16 billion in funding to Medicare in 1999, much work remains to be done. Particularly in rural America, Congress should restore funding to Medicare programs for telehealth, hospital and home health care, among others. Nationwide, 25 percent of seniors live in rural areas. And though the BBA has hit all hospitals hard, rural facilities have suffered disproportionately from the 1997 legislation. According to a June report by the Medicare Payment Advisory Commission, small rural hospitals have significantly lower operating margins than rural facilities, on average 0.4 and 3.8 percent, respectively. Congress will do America's rural hospitals a great disservice by not enacting further BBA relief this year. With respect to telemedicine, a means of providing care for Medicare beneficiaries with the use of advanced telecommunications equipment, Congress can act this year to further the use of this important tool. Mr. President, in my state of Montana, where over 75 percent of seniors live in rural areas, there is no psychiatrist east of Billings--an area the size of the State of Florida. Telemedicine could work wonders toward providing rural beneficiaries with access to specialty care, including psychiatric care. Although Congress mandated telehealth reimbursement as part of the BBA, the scope of that reimbursement is very limited. We should also provide relief for home health care, one of the areas hit hardest by the BBA. Originally scheduled for a $16 billion cut, home health payments under Medicare were actually reduced by more than $68 billion, over four times the original amount intended. We need to preserve access to home care services by eliminating the scheduled 15 percent additional reduction in Medicare reimbursement. We should also provide 10 percent bonus payments to rural home care agencies, a provision that was included in both the Senate Finance and House Ways and Means BBA relief bills this year. Mr. President, Congress should not let politics and partisan priorities to interfere with providing a basic human need to the people of our country. I urge my colleagues join me by acting on further BBA relief this year.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, Mike Mansfield, Scoop Jackson, Richard Russell, Russell Long, Lyndon Johnson, Lloyd Bentsen, Bob Dole, John Chafee, Daniel Patrick Moynihan, who are these men? They were the giants in the Senate in the quarter of a century before and after our bicentennial. They are the models to whom we all aspire. They are the most recent generation of statesmen who helped lead our nation to the greatness of today. I was elected to the Senate 2 years after Pat Moynihan entered this body. I have had the honor, the pleasure, and the privilege of serving with Pat Moynihan for 22 years. In fact, I have spent two-thirds of my adult life working with Pat Moynihan--watching this intellectual giant, listening to this scholar and visionary, learning from this teacher, this social critic, this political master. Who is Pat Moynihan? University professor, diplomat, Cabinet Secretary, fighter of poverty, social analyst, distinguished and prolific author, defender of worker rights everywhere, U.S. Senator, mentor, humanist, citizen, friend. Pat published his first book in 1963. ``Beyond the Melting Pot'' looked at minority groups in New York City. Its conclusion was that the prevailing assumption at the time was wrong, that assumption being that minorities assimilated into the broader American culture. Pat wrote his most recent book in 1998. ``Secrecy, the American Experience'' explained how secrecy in government deformed American values in the 20th century. In between, he authored 16 other books--believe it or not; 16--on subjects that included poverty, family, ethnicity, and social policy. In 1963, with ``Beyond the Melting Pot,'' Pat was at the cutting edge, as we were beginning to struggle more honestly with the problems of minority groups in this country. Thirty-five years later, with the publication of ``Secrecy, the American Experience,'' Pat is still at the cutting edge. We are struggling to transform our institutions away from a culture that fought the cold war to a culture where the Internet thrives. Openness and transparency are valued again, and information is decentralized, distributed, and widely available. During those intervening three and a half decades, Pat was always at the cutting edge in forcing us to rethink our fundamental assumptions about poverty, family, Social Security, ethnicity, and a wide range of domestic and global issues. One area where Pat has made an enormous contribution to bettering our society--and yet is little recognized for it--is public architecture. He was one of the driving forces--in fact, the major driving force--to renovate Pennsylvania Avenue, to complete the Navy Memorial, Pershing Park, the Ronald Reagan Building, the restoration of Union Station, and the Thurgood Marshall Judiciary Building. We, and our descendants, who visit our Nation's capital will have our lives enriched because of Pat Moynihan's vision. Let me conclude with a quotation from Pat. In 1976, he said: ``The single most exciting thing you encounter in government is competence, because it's so rare.'' I would change that to read: ``The single most exciting thing you encounter in government is greatness, because it's so rare.'' And that exciting thing, that exciting person, that greatness, for me, has been Daniel Patrick Moynihan. There is no higher calling than public service. Pat Moynihan has been its embodiment for half a century. We will all miss you, Pat, miss you very much.

Mr. BAUCUS

Mr. BAUCUS. I echo the chairman's sentiment.