Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today in support of S. 74, The Paycheck Fairness Act. Over 30 years ago, President John Kennedy signed the Equal Pay Act into law. At that time women were making only 61 cents for every dollar that was earned by a man. Since that time, we have made significant strides to ensure equality in the workplace, however, the disparity in wages between men and women still exists. Today, as a nation, women earn 74 cents for every dollar that a man earns. In Montana, the difference is even more significant, women are earning only 69 cents for every dollar that is earned by a man. This translates into more than $5,000 a year. This is unacceptable. We must have pay equity. In our state, and the country as a whole, women work a variety of jobs, from minimum wage jobs, to women who run their own businesses. The work that women do is not adequately reflected in the wages that they earn. In Montana we are faced with a unique situation--we are ranked almost last in per capita income. The economic boom that has created tremendous wealth on Wall Street hasn't echoed on Main Street, Montana. It is necessary to invest our resources to maintain our quality of life while creating good jobs and boosting our working families standard of living. If women were paid equitably, Montana families would greatly benefit. Family incomes would rise and, poverty rates would fall. Mr. President, pay equity is not the entire solution to the economic development challenge. It is part of a package, we must also invest in and protect our small businesses. After all, small business is the backbone of our economy. In order to improve jobs and wages in Montana and in the nation, we must maintain our educational systems. When we make additional investments in education and job training, we can attract new businesses to our state, increase our wages, and prepare our children for the jobs of tomorrow. If we are willing to do these things, economic growth will improve the quality of life for all men and women of Montana.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, to summarize, obviously motorists do not like paying higher gasoline prices. As has been pointed out, it is a product, essentially, of supply and demand--in this case, short supply. That is what has happened. I must also point out the price of gasoline is starting to come down significantly. According to figures as of July 10, the national average price of gasoline has fallen 3 cents since last week, 8 cents since the recent high on July 12. That is not a lot, but it is better. In the Midwest, prices have fallen by 28 cents since their high on June 19, settling just below the national average, I might add. And for areas in the Midwest using reformulated gasoline, prices have fallen more than 34 cents since their high on June 19, settling just 4 cents above the national average. So prices are already coming down. No. 2, in real terms we are paying less, one-third less than we were in 1981. That is not an unimportant point. That is very important. In addition, this is an off-again, on-again tax. This is a yo-yo tax. On again, off again, that is no way for the Congress to conduct fiscal policy. It just is not. Pretty soon, if we do this, we will have off- again, on-again taxes on everything under the Sun. What in the world is going on here? The American people want stability. They don't like the charades, the sleights of hand. Here is a tax that is going to go off just before an election, go right back on right after the election. Come on, give me a break. Is that what we want to do here? I might add, this is expensive. The Senator says it is not going to come out of the highway trust fund. Let's put it this way: There is going to be at least $13 billion lost to revenue, and the Appropriations Committee has the authority to set the ceilings that are spent under the highway program. So it could lower those ceilings. It could come out of the highway trust fund, in effect. When we are out here trying to balance the budgets and figure out how to keep spending underneath the caps, there is a very good chance these dollars will come out of the highway trust fund and not go to the States. It is going to happen. Finally, this is a program that has the trust of the American people. When they go to the pump and pay that 18.4 cents, they know it goes to the highway trust fund and they know the dollars come back to their States for highway construction, bridges, urban programs, and so forth. Let's keep a little sanity around here and resoundingly reject this amendment.

Mr. BAUCUS. Mr. President, this is an amendment to help people who are not now putting aside money for their retirement. It is combined with measures previously addressed by the Senator from Nebraska, Mr. Kerrey, with respect to KidSave. It is a combined amendment along with the Democratic estate tax alternative. So, like other Democratic amendments, this replaces the estate tax provisions in the House bill with the estate tax relief in the Democratic alternative. As I said before, there are two reasons we have our Democratic alternative. One, it provides more relief more quickly to the folks who really need it; that is, our family businesses, small businesses, ranchers and farmers; and the second part of the basic Democratic alternative amendment is it puts the $40 billion that is saved, compared with the House-passed bill, to better use. Instead of providing further estate tax relief for the few individuals who, by any measure, are very well off--that is, the top portion of the 2 percent-- we decided to encourage middle-class families to do more to provide for their own retirement. We give every child a stake in the American dream. Senator Kerrey mentioned the phenomenon of compounding interest. The rule of thumb is that, if you earn 7 percent interest, your money will double every 10 years, at 10 percent interest, your money doubles every 7 years. You can imagine the magic of compounding over a child's lifetime. Senator Kerrey has eloquently described that portion of the amendment. I will explain the portion that is the incentive for retirement saving. Why do we need an incentive? Let me start by pointing out that Social Security is the primary source of income for two-thirds of elderly Americans. We have to stop and think about that just a second. Social Security is the primary source of income for two-thirds of elderly Americans. That is, they do not have other sources of income that amount to very much. In fact, it is the only source of income for about 16 percent of the elderly. For 16 percent, it is the only source. Those of us who offer this amendment believe, of course, we must protect Social Security. I think everyone in this Chamber agrees with that statement. But I also believe that is not enough. We must complement Social Security by helping people set additional savings aside because Social Security is not enough. Otherwise, there are far too many Americans who will spend their retirement years just one step away from poverty. So our goal is to increase pension savings, retirement savings, in addition to the Social Security program. That is partly because America is not a nation of savers. We have seen all the statistics. Personal savings rates have continually declined in this country. One-half of all Americans have less than $10,000 set aside for retirement. Let me repeat that. One-half of all Americans have less than $10,000 set aside for retirement. Obviously, we need more. Part of the solution is pension and IRA reform. Senator Roth of Delaware has done wonderful work helping this Nation develop better IRA programs. In fact, we have an IRA program named after him, the Roth IRA. And I have worked with Senators Graham and Grassley on reform for employer-sponsored pension plans. But pension and IRA reform are not the complete solution. After all, pension reform encourages people who are already saving to save a little more. We also need to give people who are not saving anything now--middle- and lower-income people, an incentive to save as well. That is people who are working hard, playing by the rules, but still struggling to make ends meet--which is most Americans, if truth were known--those folks with less than $10,000 set aside for retirement. That is what our retirement savings amendment would do. It would help in two separate ways: First, it provides a refundable tax credit to match the savings of middle-income workers and spouses. It phases out once the income gets higher, but it is focused on lower and middle income--and I mean middle income, because it phases out with incomes about $75,000. Second, we provide tax incentives to encourage small business owners to start new pension plans for themselves and their employees. My State of Montana is a small business State. About 20 percent of employees have access to pension plans because it is very hard for a small business person to set up a pension plan. If you stop and think about it, when a person sets up his business or her business, that first day that business owner must meet a payroll tax, and it is big. It may take a while before the business starts making money, and even then, there is only so much money to go around. So the business owner has to prioritize. And most lower income workers are much more interested in getting health care coverage or other benefits than they are in a pension plan. Our amendment provides an incentive to help make it a good business decision for that small business person to offer a pension plan to his or her employees. I believe this amendment gets our priorities pretty right. In estate tax reform, it provides dramatic tax relief for 90 percent of the farmers and ranchers who are hit by an estate tax; three-quarters of family-held businesses who are otherwise paying estate tax, and about two-thirds of people overall who now pay tax. At the same time, it sets aside $40 billion to give incentives to small businessmen to start pension plans, and help them and their employees keep their pension plan going. It will help millions of Americans, particularly middle- income Americans, increase their wealth so they can have their stake in the economy and encourage them to save for retirement to supplement Social Security. Mr. President, I reserve the remainder of my time. Senator Kerrey spoke earlier on the KidSave portion of this amendment. I don't see anyone else wishing to speak, so I suggest the absence of a quorum.

Mr. BAUCUS. That is exactly right.

Mr. BAUCUS. Mr. President, the rule of thumb is that for every $10 billion in highway funds 42,000 jobs are created. Those are good paying jobs. These are not service industry jobs. Those are highway jobs. The effect of this amendment would be to cut the funding of the highway trust fund by $13 billion over 150 days--roughly 5 months. That is going to mean upwards of at least 50,000 American jobs cut--not there.

Mr. BAUCUS. I would love to yield, yes.

Mr. BAUCUS. I recall it very well.

Mr. BAUCUS. It is vivid in my mind.

Mr. BAUCUS. I think I had 1 minute more.

Mr. BAUCUS. Mr. President, a lot has been said about this issue on both sides, the bill offered by the majority and the Democratic alternative, how best to deal with estate taxes. As often is the case, there is a lot of rhetoric flying around here, a lot of claims, a lot of words. It is, I am sure, difficult for the American public who may be listening to this debate to try to ascertain the facts. Most people would like to know which bill does make more sense, after hearing all the debate and all the rhetoric. I would like to do what I can to give some honest facts and let the people decide for themselves. One is the statement made by the Senator from Arizona, Mr. Kyl, that the Treasury Department, in estimating the cost of their bill, did not look at the capital gains effect. That is just not true. The fact is the Treasury Department did look at the capital gains effect in the second 10 years of the bill. That figure, $750 billion in cost, is an accurate figure. That is a fact. Second, the point was made--and by other Senators--that the small business exemption in the Democratic bill is too complicated; farmers, ranchers, and small businesses just cannot qualify. The fact is, No. 1, there has to be some provision in the code which indicates who does and who does not qualify for an exemption. There has to be some set of guidelines. There are guidelines which were modified in 1997 on a bipartisan basis by both Republicans and Democrats. That is in the law today. I might say, too, we, in our bill, by raising the small business exemption for small businesses and family farms--and also, I might add, unified credit--do give great relief to farmers and ranchers, not only in the first year but the second year and all the years that are contained in this bill; whereas, in the House-passed bill, even though they might complain about the provision of the law which gives exemption, there is nothing advocated by the majority side which deals with anything that would help farmers and ranchers in the family-held exemption. Basically, the fact is, if you are a farmer or rancher or if you are a small business person and you are trying to decide which of these two bills is going to help you the most, it is clear; it is black and white. The Democratic alternative is going to help farmers and ranchers, small business people--family-held businesses--dramatically more in the first year, the second year, the third year, the fourth year, and forever; whereas, in the House-passed bill, there is virtually no help to farmers and ranchers and business people until the 10th year, when it is automatically repealed. I might also add, the cost is a matter of concern. Here we are in Congress, trying to give estimates as to what the budget surplus will be in the next 10 years, the next 20 years. That is a hard thing to do, but we do our best. Ironically, because we did not want the measures to be backloaded too much the second 5 years, we have now asked for 10- year estimates instead of 5-year estimates. The net effect of that is it blows up the surpluses so they look so large. The difficulty is those are only projections. That is all they are; they are just projections. At the same time, we are here today talking about law. We are discussing what a new law should be and how much taxes should be reduced. On the one hand, it is projections; on the other hand, it is the cold reality of law. I do not know if this is going to happen; nobody knows, but it could well be that 5 years from now, 10 years from now, the economy might not be doing so well; the projections might be off. I do not know if it is wise--I am only talking about wisdom here--to pass a tax reduction bill which does not take effect, in a sense, for another 10 years, which is so dramatic in its reduction of taxes at a time when we really do not know what the economic picture of the country will be.

Mr. BAUCUS. Will the Senator yield for a question?

Mr. BAUCUS. I thank my friend from Nevada. I will sum up because these are the facts. We have a choice: It is the House-passed bill or the Democratic alternative. The House-passed bill gives no relief, no estate is exempted under the House-passed bill, none, for 10 years--none. On the Democratic alternative, the vast majority of farmers and ranchers and small business people--family held--are exempt from paying estate taxes. That is a fact. Fact No. 2: The Democratic alternative is less expensive. Why? Because it does not totally repeal the estate tax, the effect being for the very wealthy taxpayers. That is a fact. Do we want to repeal the estate tax for the most wealthy taxpayers? I submit, because we are dealing with budget estimates, we do not know what the outyears are going to be. Because the House bill does not take effect for 10 years anyway, it makes sense to pass measures which do not repeal for the most wealthy, but, rather, save some of that for debt reduction, for education tax credits, or for other matters that, really, more American people really care more about than total tax relief for the most wealthy. That is really the question here. I think most Americans, when they look at the facts of the bill and ask themselves which of those two choices makes the more sense, would think discretion is the better part of valor here. We cannot have everything. There is moderation in everything. The most moderate, balanced way is to say: OK, let's address the problem we are most concerned with--small businesses, farmers, and ranchers--because that is what is most important; but let's not do everything because we live in a society where we have to work things out on a fair, balanced basis and take things a step at a time. Most Americans are very balanced, have common sense and lots of wisdom. That is the way we should go.

Mr. BAUCUS. Mr. President, I thank my very good friend from Utah for offering this amendment. It is high time that we make the R&D tax credit permanent. It is almost impossible to come up with a reason why it is not permanent. It is like a yo-yo--on for a year and off. Then they have to make it retroactive. It is nuts. Business abhors uncertainty. If we can make this permanent, that is one uncertainty that can be dispensed with. Obviously, the United States is going to remain the powerful economic engine in research and development, and the tax credit should be made permanent. It is a key part of that. I thank my good friend. I am proud to be a cosponsor of his amendment. I hope it passes. Unfortunately, it is on a bill that the President says he will veto. I hope some time between now and then we can find a vehicle and some way to pass this measure.

Mr. BAUCUS. Mr. President, how much time remains on both sides?

Mr. BAUCUS. Mr. President, I yield 7 minutes to the distinguished Senator from West Virginia, Mr. Byrd.

Mr. BAUCUS. Mr. President, I thank my good friend, Senator Byrd, for getting to the heart of the matter and explaining how devastating this amendment would be. I yield to my good friend from Ohio for 2 minutes.

Mr. BAUCUS. Mr. President, I yield 5 minutes to Senator Lautenberg. I urge him to be brief.

Mr. BAUCUS. I thank the Chair. Mr. President, for all the reasons indicated, I very strongly oppose this amendment. I point out that the opposition to this amendment is very strongly bipartisan. Senator Voinovich from Ohio spoke against the amendment and, in a few minutes, Senator Warner from Virginia, one of the key Senators in writing the TEA-21 program, will strongly oppose this amendment. There is very strong bipartisan opposition. The second point I want to make is that this is really, in some sense, kind of a disingenuous amendment. It would make Tammany Hall blush. This is an amendment that would lower taxes just before an election, to the effect that it would increase taxes right after election. I tell you, is that what the American public likes us to do? Lower taxes before an election and pop up automatically and increase it after election? Merry Christmas, a new tax. This goes back into effect in 150 days. Thank you, but I don't think that is something we want to do. In addition, I have heard it said that there is an ironclad guarantee that nothing comes out of the highway trust fund and the dollars will go for highways. Not true. If Congress meets today, tomorrow, or next week, Congress can always change this provision if it is adopted. There is no guarantee that dollars won't go to the States--none whatsoever, to be clear. Number 3, I find it ironic that here we are on an estate tax bill trying to help farmers and ranchers, and if this 18-cent Federal gasoline tax actually is passed on--I doubt it will be because the oil industry will take advantage--but if it is, what will be the effect? It will hurt farmers and ranchers. Why? It is going to make gasohol comparatively uncompetitive. Corn producers, wheat producers, and those who need current law to give them a competitive break to produce gasohol and ethanol from corn and from wheat will be severely disadvantaged if this amendment were to have the effect it purports to have. I don't think it is going to have that effect anyway. If it does, that means there is no help to our motorists. Rather, it all goes into the pockets of the oil companies or the jobbers and marketers. There are tons of reasons why this is a bad idea. I haven't the time to go into all of them. But I wanted to give a flavor of some of the problems that this causes. I hope Senators realize what the consequences would be. I yield whatever time I have remaining to my good friend from Virginia, Senator Warner.

Mr. BAUCUS. Not only in Montana, but all across the country because this will cost $13 billion. I know the proponents like to claim that the $13 billion would be spent because we take it from other programs. But I point out that $13 billion translates per 150 days into about $30 billion a year. I ask my good friends rhetorically: Where are we going to cut $30 billion for other programs? I don't think that is going to happen. Second, even though, if this amendment were to pass--I pray that it does not, but if it were to pass--Congress would probably go into a big scramble. I know my good friend on the Appropriations Committee, Senator Byrd, and Senator Stevens would say: Where in the world are we going to find $30 billion in one year? It just isn't there.

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

Mr. BAUCUS

Mr. BAUCUS. Thirty seconds. I very much appreciate the situation we are in, with very few days left and lots of business to conduct. As far as I am concerned, I will do my part. I know others on this side will try to help maintain that schedule. For example, on the estate tax bill, I think there are a couple of amendments on your side that will be accepted by voice vote or agreed to by voice vote to help move this along. In that spirit, I remind the leader it is critical that PNTR come up and be disposed of this month. I thank the leader for his hard work.

Mr. BAUCUS. Mr. President, I ask the majority leader, I heard him speak about the desire to get the appropriations bills passed, which I am in favor of, but did I hear the majority leader say not only is it his intention to bring up appropriations bills this month, but did I hear him include PNTR? I think in the same spirit of compromise which we just passed the Defense authorization bill, as it has been referred to, we can work to get PNTR up this month and passed, along with the appropriations bills--as many as we can. I say to the majority leader, I will do my part in helping with the estate tax reform bill to try to limit the amount of time on that bill and also work on other appropriations bills. I think it is necessary that PNTR also be included in the list of measures that we will bring up and pass this month.

Mr. BAUCUS. Mr. President, I ask consent to speak for 2 minutes so I can ask the majority leader a question.

Mr. BAUCUS. Essentially, I am trying to move this ball along. It is a pretty large bill and includes lots of different items. Not only is it PNTR but appropriations bills. I wonder if I could ask the majority leader if PNTR is included in the list of ``must-pass'' measures for July? We are all working together, particularly with the good meeting we had last evening in the majority leader's office with Senator Thompson and others, working out provisions of the Thompson amendment. There is a good chance we can move things along. I ask the Senator his views on the subject.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I will start by complimenting the two leaders. Yesterday at this time, we were facing a likely cloture petition which would have severely limited debate on different amendments. We finally reached agreement on a certain number of amendments. It is good we have crossed that bridge and are now on the bill. Some of the amendments that are going to be offered today may be adopted--some may not--but at least they will all improve the bill. We will have an open debate on them, and that allows the American people to have a better opportunity to determine what makes sense and what does not. Again, I congratulate the leaders. The House bill still raises many serious questions that deserve careful consideration. I will name a few. One is the impact of the House bill across various income levels, something that has really not been discussed. How does it affect one income level versus another income level versus the highest income levels in America? Another is the new rules that maintain the carryover basis of certain inherited assets. What is all that about? It is kind of technical. The fact is, under the House bill--remember, the House bill doesn't repeal the estate tax until 10 years after enactment--there is not much relief in the first 10 years. But after 10 years, after the estate tax is repealed, many assets will no longer have a stepped up basis but instead have a carryover basis. What does someone who inherits an asset and wants to then dispose of that asset have to do? He or she cannot just figure out how much tax is owed by using the ordinary market value when it was inherited, which presumably is quite a bit higher than when it was bought. Rather, he or she has to use the carryover basis from when the asset was first acquired with whatever adjustments were made in the meantime. This is usually much lower. And it is awfully technical. The net effect is twofold: One is that people who receive an inheritance, under the House bill, are going to suddenly face a much higher capital gains tax if and when they want to dispose of it than they would under current law. Under current law, again, it is called a stepped-up basis. The net effect is a much lower capital gains tax when the asset might otherwise be sold. All you folks who think, boy, this House bill is going to repeal the estate tax, beware. It does not really repeal the estate tax. What it does is say that 10 years later, when you get that asset, if you want to do anything with it, if you want to sell it, want to realize the value of it, you will pay a whopping capital gains tax, much higher than you would otherwise pay under current law. The second problem with that is the complexity of the paperwork. Let's assume the House bill passes. After 10 years --you are a person who receives inheritance from an estate. If you have to go back and figure out what the basis of all the assets are, some assets may have been acquired by the decedent 5 years earlier, 10 years earlier, maybe 20 years earlier, maybe 30 years earlier. The basis may have to be carried over for generations. If you have to stop and find the paperwork, find the data which determines what the cost was of that asset from who knows how many years ago, that is a huge change from current law. It will cause undue complexity. A lot of people in this body correctly complain about the complexity of the Tax Code. That is a valid complaint. If the House bill passes, the additional complexity that this body will impose on taxpayers is going to be beyond imagination. When this Congress did the same thing about 24 years ago, in 1976, guess what happened. Our own constituents raised a huge outcry. What did we do in the Congress? We agreed with our folks. We ended up repealing carryover basis before it even took effect. I don't think many people have focused on it, but that same provision is in the House bill right now, the bill we have before us. Then there is the effect of the House bill on charitable giving, when the estate tax is totally repealed on down the road after 10 years. I have talked to a lot of estate tax attorneys--reasonable people, good, solid estate tax attorneys. They say: Max, if you pass a total repeal, I guarantee you there will be a huge drop in charitable contributions in America--huge. It stands to reason. Think of some taxpayers who have been in the news a lot, some Americans who have huge estates. We see in the news that they are giving a lot to charity. I am sure a lot of those folks are giving to charity out of the goodness of their hearts, for good, solid altruistic reasons. I am also confident that a lot of people with wealth give to charity because under current law, it benefits them; those charitable contributions are deductible. They would far rather give to a charity than to Uncle Sam. They would rather give to their children first, but they would rather give to a charity than Uncle Sam. I think you are going to see a huge drop in charitable contributions if this House-passed bill the majority party is pushing is enacted into law. At the very least, we never had hearings on this. We really don't know what effect it will have on charitable contributions. We really don't know what real effect repeal of the stepped-up basis and moving over to the carryover basis can have either. We can surmise. I don't hear the majority talking about those issues much, which leads me to the conclusion that there is probably more of a problem with these issues than they want people to believe. What our best guess of the effect? We could determine it best if we had hearings, but there have been no hearings on Federal estate taxes in this Congress--none in the Senate. I won't belabor the point. I think it is just basic things we should be thinking about before we rush to passage of the House-passed bill. Let's move on to the substance. Remember, under current law, the estate tax applies to estates worth more than $675,000. That is the law. That amount is scheduled to rise to $1 million in the year 2006. In addition, we have special rules that increase the exemption for family- held businesses to $1.3 million. That is current law. To put this in perspective, next year it is expected that about 2.5 million Americans will die. Of those 2.5 million, roughly 50,000 will have estates that will pay an estate tax under current law. That is 2 percent. I will repeat that because it is worth remembering. Of the number of people who will die this year, about 2 percent of those people will have estates subject to estate tax. So 98 percent of Americans who die will not have estates that are subject to the estate tax. That is current law. With this basic picture in mind, today's debate presents two separate alternatives, two ways to reform the estate tax. There is the House- passed bill and there is the Democratic alternative. Let's look at the House bill. What does it do? It works in two steps. Over the first 9 years, it gradually reduces estate tax rates down to a top rate of about 40 percent. How does it do it? Really, it doesn't reduce taxes very quickly during that 9 years because the first year the only things that are actually repealed are the top rate, which is 55 percent, and the surtax. During that time other modest cuts are made. Then the next year, the 53 percent rate is repealed, and then on down. Then in the final year, you get total repeal. The bill waits a full 10 years after enactment before it completely repeals the estate tax. That is when the real effect of the House bill is felt. It is not in the first 10 years but after total repeal, after 10 years. At the same time, the House bill imposes a new requirement. When full repeal goes into effect, people who inherit estates worth more than certain amounts must maintain what tax lawyers call the ``carryover basis'' of inherited assets. I discussed that a few minutes ago. That, in a nutshell, is the House bill. The Democratic alternative takes a different approach. It does two things--very simple but effective. First, we dramatically increase the amount that is exempt from estate tax. Currently, as I mentioned, it is $675,000. We increase the per person exemption to $1 million per spouse right away. A few years later, we begin to increase it again, until it reaches $2 million. For a couple, that is a $4 million exemption right across the board. Second, we increase the family-owned business exclusion to $4 million per spouse. For a couple, it is $8 million. Those are the two alternatives. When you compare them, it should be pretty clear the Democratic alternative has two important virtues. First, the Democratic alternative provides dramatic relief, while the Republican bill does not. And it provides dramatic relief where it is needed the most--small businesses, family-held farms and ranches. In the first year, we would exempt over 40 percent of the estates that are currently subject to an estate tax. Not the House bill, the majority proposed bill; it actually would affect very few people in the first year and it wouldn't exempt anyone from the tax. The Democratic alternative would exempt 40 percent. In fact, ours contains much more relief for estates in this range than the House bill would begin to provide. Over the longer term, when the provisions take full effect, the Democratic alternative exempts more than two-thirds of all estates. Remember, of all the people who die in America, only 2 percent are subject to estate tax in the first place. The Democratic alternative exempts two-thirds of all those; that is, two-thirds of the 2 percent. It would also exempt three-quarters of all small businesses that might otherwise be paying tax, and 95 percent of all farms and ranches that would have to pay the estate tax under current law. In contrast, the House-passed bill doesn't go nearly that far. It provides very little relief to these estates for the first 10 years. Granted, eventually it provides total relief, but that is 10 years from now, not in the interim. In 2010 the Republican bill repeals the tax completely, including estates worth not only $2 million or $3 million, or family businesses up to $8 million, but it also repeals the estate tax for huge estates--$100 million estates, $1 billion estates, $5 billion estates. It totally repeals any tax whatsoever on estates of that size. Yesterday, I spoke in opposition to the House bill, and Senators Thomas and Inhofe expressed a little surprise. They said when they talk to ordinary folks in their home States, they hear a lot about the estate tax, and people want reform. They wondered whether I was hearing the same in my State of Montana. I sure am, all the time--in coffee shops, in grocery stores, lots of people talk to me. They think it hits too hard on farms, ranches, and small businesses. That is precisely the point. The House bill responds to these with an abstraction--repeal, 10 years from now. The Democratic alternative says, no, we are not going to wait 10 years; we are going to do it now. We respond with honest-to-goodness relief. I am sure there is somebody in Montana with an estate worth more than $8 million who will still have to pay some estate tax under the Democratic alternative. But there sure aren't many of them. Remember, the vast majority of the estates are either not affected by the tax now or, if they are, would be completely exempt under the Democratic alternative. One other virtue of the Democratic alternative is it costs much less than the House bill, $40 billion less over 10 years. After that, the savings are even greater. As a result, the Democratic alternative allows us not only to reform the estate tax in a way that helps where it is needed the most, but it also allows us to address other priorities that, frankly, are more important than total repeal of the estate tax, particularly for huge estates. For example, what about the national debt? The Democratic alternative leaves an additional $40 billion available to pay down the national debt. Or we could use the savings to provide tax cuts to meet other important needs; help average families save for retirement or their kids' college education, or help people meet long-term medical care costs; protect Social Security and Medicare. Believe me, these are good things that we hear about at home all the time. I believe that more people are more concerned about these matters than they are about total repeal of the estate tax, particularly for large estates.