Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, the Chair restated the agreement, as I understood it, correctly. But I don't think the chairman of the committee, Senator Roth from Delaware, was on the floor when that unanimous consent was propounded and agreed to. He was unaware of the time constraint. I think it is only fair, frankly, that the Senator from Delaware be able to present his views. I am willing to yield as much time as I have to the Senator. How much does the Senator need?

Mr. BAUCUS. Mr. President, I offer a unanimous consent request, if I may.

Mr. BAUCUS. I yield myself such time as I may consume. The so-called marriage penalty is not a penalty. It is the result of the code. Nobody in Congress decided we were going to penalize married couples by making changes in the Tax Code so that married couples would pay more than two singles would pay with their respective incomes. It is not a penalty in the sense of anyone ever thought of harming anybody. Rather, this is a consequence of the complexity of the Tax Code. It is a consequence of the mathematical impossibility of trying to do all things for all people. Most Americans want a progressive tax rate so married couples who have the same income, regardless of who earns the income, and how much, are taxed the same; in addition to that, have marriage neutrality so married couples do not have to pay more than singles. It is impossible to do all three. Therefore, the Congress has to make choices and judgments according to what it thinks makes the most sense. A little history would be instructive. When the income tax was first enacted, individuals were treated as a taxable unit, regardless of whether they were married or not. If a person had $50,000 in income, he or she paid taxes on that $50,000. If he or she married and that person had zero income, that individual who earned the income would still be treated as the taxable entity and his spouse would not, regardless how much the spouse earned. That was the rule for quite a few years. The problem arose in community property States when the couples could split the income because whatever the major wage earner earned was community property and therefore could be split. Courts upheld that. A little later, Congress thought if that was the case in community property States, it should be the case all around the country. Congress, in 1948, decided couples could split their incomes; that is, if the man earned $70,000 and his wife earned zero, they combined, and they each paid on $35,000. That was the law in 1948. That helped married couples. The trouble was, it hurt singles. In 1969, the disparity was so great, in some cases a single taxpayer could be paying 42 percent more in income taxes than a couple would pay with the same income. Congress thought that was not right. They came up with different rates--one set of rates for singles and another set of rates for married couples--and set the proportion of about 60 percent so that individuals would not have to pay up to twice as much as what they otherwise would pay. That has been the law ever since, although we have made some changes. In 1981, there was a deduction for the lower earner of a couple, to try to address the marriage penalty; that was changed, and another inequity came with the tax bill passed in 1993. We are trying to figure out today a solution to be fair to most people. There has been a big demographic shift in our country since 1969. There are a lot more couples who both earn income, many more now than was the case in 1969. It is important to note that although there is a marriage penalty, there is also a marriage bonus. More married couples receive a bonus when they get married than receive a penalty. It is pretty close. About 51 percent of Americans, because they are married, receive a bonus. Say the husband earns quite a bit more than his spouse, or vice versa; when they get married, they get a bonus. The penalty occurs when both incomes are about the same. Again, more Americans receive a bonus today--not a penalty--as a consequence of getting married. According to the Congressional Budget Office, $29 billion was incurred by married couples as a penalty and $33 billion was received by married couples as a bonus. That problem has emerged because of the shifting demographic characteristics of our country, with both man and wife now having earned income at equal levels. The more equal the earnings of the spouses, the more likely a marriage penalty will occur. The proportion of working-age married couples with two earners grew from 48 percent in 1969 to 72 percent in 1995. Also, we have seen a rise in the quality of income of married couples. In 1969, only 17 percent of the households of married couples had both spouses contributing at least one-third to the income of the household, but by 1995 that number increased to 34 percent. In the same period, the percentage of households where one or neither spouse has earnings decreased from 52 percent to 28 percent. Without these shifts, more married couples would receive marriage bonuses with few marriage penalties. The unintended problem which has emerged is that half of married couples incur this so-called penalty. The question is, what do we do? The Finance Committee bill reported out by the majority of the committee is a good-faith effort to try to address the problem. It is only fair to point out, there are significant, in my judgment, flaws with the bill that came out of committee. As a consequence, the Democrats will have an alternative which we think addresses a lot of the flaws. What are the flaws? First, one of the big flaws is it is very complex. It adds additional complexity to the code. We all know the code is complex enough as it is. This adds even more complexity. The standard deduction for married couples is double; the brackets are the 15-percent bracket, the 28-percent bracket, double for marrieds. That is a change in the code. The earned-income tax credit ``phased ins'' and ``phased outs'' are changed from current law. AMT personal credits are exempted in certain areas but not in others. It adds considerable new complexity to the code. I am not saying it is fatal to the proposal reported out by the Finance Committee, but it is a fact it adds additional complexities compared with current law. Second, I think it is important to point out there are real problems with the amount and size of the proposal. It is fiscally irresponsible. It is going to cost a lot of money at a time when I think most Americans want to pay down the national debt. When I talk to people around my State of Montana, and I talk to Senators from around the country, they tell me when they talk to their people at home they pose the choice: Do you want to use the surplus that we have, wonderfully, now, in the United States of America to pay down the debt or do you want to use the surplus to lower taxes? I will not say dramatically, but I will say overwhelmingly it is my experience, and I think it is the experience of most Members of the House and Senate when they ask that question, the answer is: Pay down the debt. Americans today would rather pay down the debt. Why? Because they are innately smart; they have a sense of things. We all trust the good faith and good common sense of the American people. There is a conservative element that says: Here we are in times of great national prosperity. We have big budget surpluses. It probably makes sense to start paying down that $7 trillion national debt. We may not have this opportunity again. We would like to think we will, and we hope we will, but we do not know we will. So first I think people want to pay down the debt. The proposal now on the floor is quite large. In fact, the costs for more than half the benefits of this bill go to married taxpayers who are already in a bonus situation. I will state that a different way. More than half of the costs of this bill do not address the marriage penalty problem at all because the lower tax is given to married couples who are already at a bonus situation. They get the bonus because they are married. This bill says: You already have a bonus. We are not going to give you more. The point, I thought, was to address the penalty situation; to try to correct the problem where people, when they get married, pay more taxes as a couple than they would pay individually. That is the problem we are trying to address. The Finance Committee bill addresses a part of that, but more than half of the cost of that Finance Committee bill does not. It does something else. Even the other portion, which purports to address the marriage penalty, does not totally. There are lots of areas in the code where the marriage penalty would still exist. Where are they? In about 62 parts of the code. There are 65 provisions in our income Tax Code which today create the so-called inequities causing bonuses for families--65. The majority bill, Finance Committee bill, addresses only three. There are 62 other provisions in the code which cause a marriage penalty which are not addressed by the Finance Committee bill. What are they? They are things such as the child tax credit, Social Security benefits, savings bonds for education, IRA deductions, student loan interest deductions, and 56 others. The adoption expense credit, for example--there are couples who want to adopt kids. They get married and because of where they might be in the brackets, the progressive rates, they may find themselves paying a penalty because they are married as a consequence of the adoption expenses credit--or perhaps some of the others. So it is a fiscally irresponsible bill. More than half does not address the problem. Rather, it is given to people who already have a bonus--not a penalty but a bonus. The remaining part is skewed. A good part of it does go to address the problem, but in 62 cases inequities, disparities, and penalties still exist. In addition, about 5 million additional taxpayers will become subject to the alternative income tax as a consequence of the majority bill. I do not think we want that. We have all heard the problems created by the alternative minimum tax, the AMT. It is getting to be more and more of a problem as Americans earn a little more income and therefore they are more likely to be subject to that, the alternative minimum tax, which hits a lot of taxpayers pretty hard. As a consequence of the majority committee bill, about a million American taxpayers will now become subject to the alternative minimum tax. So what is a better approach? Speaking generally, we think a better approach is to do something very simple. It has the elegance of simplicity--people can understand it--and it is more fair. What is it? Essentially, we say to a married couple: You have your choice. File jointly or file separately. It is your choice. You just do whatever you want to do. Presumably, you will pick the choice that results in a lower income tax for you. What could be simpler? It is simple to the people of America to explain it to them so they can understand it. It does not add additional complexities that are in the majority bill, but rather it is something very simple. You say to a couple: We don't care what your total income is, we don't care how it is distributed, whether the wife makes 80 percent and the husband 20 percent--it makes no difference. You can have your choice. You file jointly or file separately. Obviously, you file the return that results in the lower income tax. I might add, this already is the case in many States around the country. There are about 10 States today which have just that, to attempt to address the marriage penalty in just that way. That is optional filing. It is optional to file jointly or you have the option to file separately in the States of Arkansas, Delaware, District of Columbia, Iowa, Kentucky, Mississippi, Missouri, my State of Montana, Tennessee, and Virginia. You see, the mix of States is varied. There are high-income States and some low-income States--that is per capita income. It is geographically dispersed. But 10 States decided, for the sake of simplicity, or whatever the reason, that was what they wanted to do, and we have heard no complaints. It is an approach that works. The second benefit of the Democratic alternative is this: It addresses all of the marriage penalties--not some of them, all of them. How? By addressing all of the 65 provisions in the Tax Code today which result in marriage bonus/penalty inequity. All of them. You say: How do you do that without additional complexity? It is very simple--because of the effect of optional filing. You just file optionally, individually, calculate your AMT, calculate your child adoption expense, whatever it is, or jointly. And you just choose. That way we address all of them. I might say, the Democratic alternative is also fiscally responsible. Why do I say that? Because we are focused only on the penalty part. As I mentioned earlier, the majority bill, the Finance Committee bill, gives more than half the benefits to people who already have a bonus, who do not need the help. They already have a bonus. In effect, more than half this bill is a general tax cut bill. That is fine. But then we should call it what it is, a general tax cut bill more than it is a marriage tax penalty reduction bill. It is a general tax cut. If that is the case, then we should have a debate on the code and what is the best way to lower taxes, to deal with taxes for all Americans. It is truth in labeling. It is what we purport to be doing, and that is focusing only on the marriage tax penalty. I might also say the minority bill, the Democratic alternative, does not exacerbate the singles penalty, whereas the majority bill does. Don't forget, we have widows, widowers, single people who need tax help, too. The majority bill in particular--but in all fairness, the minority bill, too--does not address singles, widows, and widowers. It basically deals with married people. Think for a moment; if you are married with no kids and you are receiving the so-called marriage bonus, you get a tax cut in the majority bill. On the other hand, if you are a single mom and you have three kids, you get no tax cut. Let me state that again. If you are married and have no kids, you are already receiving the so-called marriage bonus, you get a tax cut under the majority bill. On the other hand, under the majority bill, if you are a single mom and you have three kids, there is no tax cut. I do not think that is fair. I do not think that is fair at all. That is representative of the inequity of the bill coming out of the Finance Committee. It is not a marriage tax penalty bill; it is a tax cut. If they want a tax cut, then we should have that debate on what the distribution should be, what we should do with the brackets, what incentives do we want to create? What disincentives do we want to address? The Tax Code is pretty big. There are lots of provisions of the Tax Code that affect people on the corporate side and the income side. If we want to cut taxes, let's see how we want to focus that, how to manage it, and how to tailor it. Let's call this what it really is. We have other priorities we have to address. The majority bill costs about $248 billion over 10 years. The minority bill is $151 billion over 10 years. The projected on-budget surplus for the next 10 years is close to $900 billion. It is $893 billion. I will list some of the tax legislation that is pending: This one is $248 billion; the Patients' Bill of Rights will cost about $70 billion; the minimum wage bill in the House is about $122 billion; educational savings is about $22 billion; debt service costs about $100 billion. That means the total of the pending tax legislation is about $566 billion, and what remains is for debt reduction--not very much--and for Social Security and Medicare reform, which is probably not going to be enacted this year. What about prescription drug benefits? Where does that fit in? What about debt reduction and prescription drugs? There is not very much left. When we address the marriage tax penalty, I submit we focus on the problem, and the problem is the marriage tax penalty. The problem is not the marriage bonus; it is the marriage tax penalty. If we focus on the problem, we will solve the problem in a more fiscally responsible way. That is clear. Second, let's make sure the benefits go to those who are facing the problem. I know as this debate unfolds, some of these points will become more clear, but I urge Senators to think before they leap because this is a fairly complex problem. I reserve the remainder of my time. I believe neither side has any speakers. I yield back the remainder of my time.

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

Mr. BAUCUS. Mr. President, I ask unanimous consent that the time be extended to 10 minutes after 4 p.m. and that this side have 29 minutes--whatever it is--and the remainder of time be allotted to the Senator from Delaware.

Mr. BAUCUS. Ten minutes. Fine, Mr. President.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I have a sense-of-the-Senate amendment which has been cleared, No. 3014, that somehow was dropped from the list. Is the Senator aware of that?

Mr. BAUCUS. It is firefighters.

Mr. BAUCUS. A sense-of-the-Senate amendment No. 3014. My understanding is it has been cleared and inadvertently dropped.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that David Cross, a Fellow in my office, be afforded privilege on the floor during debate on Amendment No. 2955 and also during the vote, whenever it should occur.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise to support the Roth amendment, which expresses the sense of the Senate that we should maintain the longstanding ban on oil drilling in the Arctic National Wildlife Refuge. We have heard a lot of concern lately about the cost of gas at the pump. I share that concern. I represent Montana. The Big Sky State. Vast open spaces. We often drive long distances just to get to the grocery store. Prices at the pump in Billings have gone from $1.18 in April of 1999 to $1.59 today. We need to get the price down. The administration has made some progress, with the OPEC countries. We may need to do more. For example, we may need to use the Strategic Petroleum Reserve. But we should not respond to high gas prices by opening the Arctic National Wildlife Refuge. That would be shortsighted, ineffective, and environmentally harmful. Proponents of oil drilling make three main arguments. They imply it will lower the price at the pump. They argue that it will enhance our energy security. And they argue that it won't really pose a significant environmental risk to the refuge. I disagree. Let me take the arguments in turn. First, the cost at the pump. Opening the Arctic National Wildlife Refuge will have absolutely no impact on gas prices, now or in the foreseeable future. Think about it. Assume that we pass a law authorizing drilling. Assume the President signs it. First, companies will need to conduct exploration to determine where to drill. Next they will have to build the infrastructure, the roads, drill pads, drill rigs, pipelines, gravel pits, waste pits, and living and working quarters. This could include hundreds of miles of roads and pipelines, production facilities, increased traffic at loading ports, and housing and services for thousands of people. This work will take years and years. Senator Murkowski himself said, in 1998, that ``a future decision on ANWR is one which will take about 10 years to produce any results in the way of any increased production contribution to our current flow of domestic oil.'' Ten years, before we see any impact on the price at the pump. Let me turn to the longer term issue. Energy security. Let's look at what the potential oil of the Arctic National Wildlife Refuge means in the big picture. At best, the economically recoverable oil would represent 2 percent of our daily needs. As a result, oil drilling in the Arctic Wildlife Refuge has little, if anything, to do with long- term energy security. Another point. It does not make good strategic sense to use our reserves, which account for only 12 percent of the crude oil available in the world, while we have access to other sources. After all, once our reserves are used up, we will be totally at the mercy of OPEC. Instead of continuing our unhealthy dependence on OPEC, we should develop a comprehensive energy strategy. We should improve energy efficiency. We should diversify our energy sources. What are we doing here in Congress? Virtually nothing. We continue to prevent an increase in corporate average fuel economy. We routinely underfund the development of solar and renewable energy. And we fail to seriously consider tax legislation that rewards efficiency and increases our energy security. In the absence of a comprehensive national energy strategy, drilling the refuge is just a band-aid. A quick fix. It's no substitute for a real, comprehensive, strategy. Putting this all together, drilling in the Arctic Refuge will not reduce prices at the pump anytime soon, if at all. And it will not significantly enhance our energy security. Now consider the environmental impact. The Arctic National Wildlife Refuge is truly unique. It is the only refuge of its type in the world. I've been there. It has been referred to, for good reason, as ``America's Serengeti.'' It's the nation's largest and most northerly wildlife refuge. It includes a full range of arctic and subarctic habitats. Vast herds of caribou migrate to the refuge, bearing their young on the coastal plain. Muskox use the area year-round. The refuge is the most important polar bear land denning area in Alaska. One hundred eighty bird species migrate there, from throughout the hemisphere. Eighteen major rivers contain 36 species of fish. Let's look at what development might do. What happens when the construction of, say, a pipeline and road forces wildlife away? Take the caribou hers. Female caribou seek out the best foraging areas as calving areas. These areas change each year. If, in any given year, the best foraging and calving area is a site for development, the caribou won't use it and fewer calves will survive. Development can also force females into areas where there are more predators, or block them from climbing onto ridge tops to avoid swarms of insects. Again, fewer calves will survive. The Fish and Wildlife Service has concluded that the cumulative impacts of these effects could significantly reduce the size of the caribou hers. The Service has expressed similar concerns about muskoxen. What about disturbances from road building? There is not enough water to build only ice roads. You'd have to build gravel roads, even for exploration. Gravel roads will alter the natural flow of water during spring breakup, will melt permafrost, and will otherwise damage the environment. Taken together, this could harm the habitat for more than 100 species of birds. This, in turn, will have effects way beyond the refuge itself. All of these birds are migratory. They nest and rear their young in the Refuge in the summer, then migrate throughout the entire hemisphere, including virtually every state. Now, the proponents of drilling say that the environmental impacts have been exaggerated. They say that the ``footprint'' of development is no larger than Dulles Airport. In fact, the development will not be concentrated in a small area. This map, based on projections by the Fish and Wildlife Service, shows potential pipelines, drilling pads, roads, and other facilities. As you can see, the roads and pipelines stretch across the entire coastal plain, bisecting migration paths and stream channels. What's more, recent reports by the U.S. Geological Service show that the oil reserves in the Refuge are smaller and more widely dispersed than previously thought. As a result, oil development will require more, and more widely dispersed, roads, pipelines, and other infrastructure. Finally, accidents. If the Exxon Valdez taught us anything, it is that humans working in a cold, harsh environment can make mistakes, and that the environmental costs in a fragile ecosystem can be extraordinarily high. Our experience elsewhere on the North Slope confirms this. There has been a general increase in the number of spills. At least two well-blowouts have occurred. At least 76 areas have been contaminated by oil development from the Prudhoe Field. Things usually don't go as smoothly as we plan. That brings me to my final point. It may be that, someday, the need will be so great, and the technology so sophisticated, that we decide that the benefits of exploration and development of the Arctic National Wildlife Refuge are worth it. But we should only make that decision after careful deliberation, after exhausting all reasonable alternatives, and after assuring that this fragile ecosystem will, in fact, be protected. Because there's no margin for error. If we make a mistake, and allow development that destroys the unique character of this special place, the mistake will be permanent and, perhaps, unforgivable. Mr. President, pulling all of this together, the benefits of drilling simply are not worth it. They are not worth the environmental risks. Therefore, I urge Members to vote to maintain the longstanding ban on drilling in the Arctic National Wildlife Refuge, by voting for the Roth amendment.

Mr. BAUCUS. Mr. President, what is at issue is very clear. I hope my colleagues pay attention. The issue is whether this Congress is going to break the trust the American people have in the highway trust fund. That is the issue. Dollars going into the Federal highway trust fund are locked in. There is a trust that those dollars are then distributed back to the States. The revenue in the trust fund goes back to the States. It is a trust, an understanding. That is why we have a highway trust fund. We cannot go down the slippery slope of opening up the trust fund and replenishing it with general revenue or using general revenue to pay for highway allocations because once we start down that slippery slope, we will then have broken the trust. We will have sprung a leak, which will grow into perhaps a creek or a river, and will drain the highway trust fund, as the trust is broken. It is that simple. I very much thank the Senator from West Virginia for drawing this to the Senate's attention. Not only is it the resolution before us, but it is also any potential revenue matters that might come up in this body. The essential point is the linkage. I strongly urge my colleagues to continue the trust this Congress made with the American people when it passed the last highway bill, TEA-21. That bill was heralded as a landmark piece of legislation, overwhelmingly passed by both bodies. We all touted it, not only because of the revenues and dedication to the infrastructure so desperately needed but also because of the trust; that is, the assurance that the gasoline tax and the diesel fuel tax people pay at the pump will come back to the States; that it will not be tampered with by the Congress; it will not be changed by the Congress. That is something on which the people could count, of which they could be assured. It is something that is certain, something they can trust. I very much hope we resist the temptation, we resist the siren song for a short-term political change, to jigger around with the 4.3 cents, repealing it and adding the difference to the surplus or revenue. It is an exercise that is not only futile; it is an exercise that is a misrepresentation of what we did in TEA-21, and it will be an exercise which begins to break the trust. Either we keep the trust or we do not. There is no halfway here. There is no little breaking of the trust. Either we keep it or we do not. I submit the American people want us to keep the trust. They will be very upset if we break it. Mr. President, I ask unanimous consent to print a letter in the Record from various organizations--the National Governors' Association, the National Conference of State Legislatures, the Council of State Governments, the U.S. Conference of Mayors, National League of Cities, National Association of Counties, International City/County Management Association, all in favor of the amendment offered by the Senator from West Virginia.

Mr. BAUCUS. Might I ask, what is the order?

Mr. BAUCUS. I would like about 5 minutes on the amendment.

Mr. BAUCUS

Mr. BAUCUS. To sum up, the budget resolution before us does not reflect the priorities of the American people. That is clear. The American people do not want 98 percent of the surplus to be allocated to tax cuts. I daresay the majority of Americans want a large part of it targeted to debt relief, paying off the national debt, something targeted for a marriage penalty, something targeted for prescription drugs, and just to do things right, not make a political statement. I thank my colleagues and yield the floor.

Mr. BAUCUS. Might I have 1 more minute?

Mr. BAUCUS. Apropos the discussion we just had about 15 minutes ago.

Mr. BAUCUS. How about 30 seconds?

Mr. BAUCUS. Mr. President, I will make a few points about the budget resolution. First of all, I am quite concerned that the budget fails to set the right priorities. At least when we listen to the American people as to what their priorities are, this budget resolution before us does not fit, does not manage. Once again, this budget resolution emphasizes massive tax cuts at the expense of most everything else. I don't think that is where most Americans are. It might not be readily apparent that this budget resolution emphasizes massive tax cuts. For example, last year's budget provided for a tax cut of $792 billion. This year's provides for a tax cut of only $150 billion. So at first glance, one might say the tax cut this year is a lot less than one-fifth of the one proposed last year and the one that was rejected last year. But that is only at first glance. One has to compare not apples with oranges but apples with apples. Last year's budget was based on 10-year projections; this year's is based on 5-year projections. So if you compare apples with apples, by looking at the 5-year projections, you see that last year's budget resolution would have cut taxes by $156 billion, almost precisely the same as this year's budget resolution. In other words, it is the same big tax cut, when extended out 10 years as opposed to five. In fact, 98 percent of the projected on-budget surpluses in this budget resolution would be used for tax cuts. But the authors of the resolution fiddled with the accounting periods to make it look a little bit smaller. I don't buy it. I think that is wrong. We should assume that a tax cut that has virtually the same effect over 5 years also would have virtually the same effect over 10 years. Therefore, it is the same old, excessive, unpopular, proposal in a new flashy suit, the one the American people rejected last year. Once they know what is in this budget resolution, I am sure they will have the same feeling; that is, not be in favor of it. It is the wrong priority. In other words, this is a tax cut of about $800 billion over 10 years which will make impossible other popular American priorities. Don't get me wrong. I believe there is room for a reasonable tax cut. I think most Americans think there is room for a reasonable tax cut. But it should be targeted and it should be one that provides relief to working families, people who really need the help. The budget resolution must leave room for other national priorities. In particular, we must take this wonderful opportunity we have to reduce the national debt. I don't know how many times we are going to have this opportunity again. We have it today with a very prosperous economy and with large projected budget surpluses. We should take advantage of this opportunity that we have during this year, and the next couple of years, to dramatically reduce our approximately $7 trillion national debt. That should be a higher priority. It is not a high priority in this budget resolution. The budget resolution should also clearly provide for full prescription drug coverage, as the Robb amendment would do. Prescription drugs are more effective than ever before in maintaining health. They are also much more expensive, leaving many seniors with a choice of either buying groceries or paying for prescriptions. I have seen it, Mr. President. I have worked at a drugstore, and I have seen seniors faced with this choice. It is a very unhappy sight. Our elderly need help now. We have heard comments from Senators who say, shouldn't prescription drug coverage be folded into general Medicare reform? Ideally, it should be, but we have to do the best we can with what we have. I say it is important because seniors need help now. We can't wait for an abstraction of help in the future. We need it now. Clearly, we should enact prescription drug benefits this year. While seniors make up 12 percent of our Nation's population, they account for only about 30 percent of all prescription drug spending. Twelve percent of our population are seniors, but they account for 30 percent of all drug spending. And while about a third of seniors lack drug coverage overall, that number increases to nearly 50 percent in rural areas. Thirty percent of Americans do not have coverage for prescription drugs, overall, in America. In rural America, it is closer to 50 percent. In Montana, there is very little employer-provided coverage. Medigap--the program which is insurance coverage to pay for the difference between Medicare and the cost--coverage is much too expensive in America, particularly in Montana, and there is no Medicare managed care in Montana. That is right. Until January of this year, my State of Montana had only one Medicare HMO, providing quality care and drug coverage to about 2,600 seniors in Billings, MT. But now that plan has pulled out, leaving those seniors without a drug benefit. So we have no managed care Medicare program in Montana because it is too expensive. We don't have the population to provide it. Our seniors are being left out in the cold. In my mind, providing seniors with a prescription drug benefit is a top priority, and it should be part of this budget resolution. I also want to make a point about the so-called marriage penalty. I support the Hutchison amendment. I agree that, as that amendment says, we should pass legislation which begins to reduce the marriage penalty. But I would like to add a word of caution. Listening to some of the debate here, it almost sounds as if the majority is for marriage and that anyone who questions their proposal is against marriage. Nothing could be further from the truth. Marriage is a great institution; I am all for it. It is one of the most wonderful institutions devised by the human race. But the proposal before us and the challenge before us is not quite as simple as some might like it to be. After all, the so-called marriage penalty is not something that was intentionally cooked up to penalize married people and reward sinners. Rather, it is an unintended offshoot of some very difficult, complex decisions that have to be made about our tax system, such as how to tax individuals compared with married couples, which is not an easy question to answer, and how to tax married couples who have a different distribution of income between spouses. Sometimes that is difficult to do. We have wrestled with this problem since virtually the inception of the Tax Code. The current system, which sets the ``break points''--that is, 15 percent, 21 percent, 28 percent--and the various brackets for individuals at about 60 percent of those for couples filing joint returns, was established in 1969 in the tax reform bill signed by President Nixon. So the basic concept we have was enacted in 1969, again, and signed in by President Nixon. It was set in response to a very legitimate concern at that time. That concern was that previous rates were unfair to individuals. So the current system, where we have to correct the mistake that was biased against individuals, now is the one we are dealing with to make sure marrieds are treated fairly as well. There is no easy, pat solution to this problem that doesn't create additional problems. For example, it is mathematically impossible to have a neutral marriage tax--or it is neutral to all married couples if at the same time we want a progressive tax system--and we do--and if at the same time we want all married couples who have the same total married income to be taxed equally, as we do. It is mathematically impossible to accomplish those objectives altogether. I could insert proof of that into the Record. That is to say, when you try to adjust the rates, you are going to cause inequities elsewhere, as to what the taxes might be on marrieds versus individuals. It is not an easy thing to do. In fact, the bill reported by the Finance Committee does not eliminate the marriage penalty; it merely reduces the penalty. At the same time, over half of the total relief the bill reported out by the Finance Committee goes to married couples who don't pay any marriage penalty today whatsoever. This bill is somewhat a marriage penalty relief bill, but the Democratic alternative proposed by the Finance Committee, particularly by our ranking member, Senator Moynihan, is a better approach. Why? First of all, it is less costly and much more targeted. It targets every dollar to the couples who actually are facing a marriage penalty. In other words, it is more targeted, in my judgment, and more responsible.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to introduce the Home Health Payment Fairness Act. This bill will prevent a 15% cut to home health care agencies and allow them to continue their critical mission of caring for the chronically ill and the elderly. During the first 15 years of the Medicare program, home health spending accounted for one to two percent of all Part A expenditures. In 1997, home health expenditures reached 14 percent of Part A payments. Congress needed to respond to this growth. And we did so in the Balanced Budget Act of 1997. Congress decided to pay home health agencies under a Prospective Payment System. In the meantime, we established an interim payment system, or IPS, that would move agencies away from the old system. Since then, home care agencies have undergone deep budget cuts. Recent CBO projections show that reductions in home health care will be about $69 billion between 1998 and 2002--over four times the original estimate for the same time period. Clearly, home health care agencies have had their budgets cut much more severely than Congress ever intended. Congress has recognized the severity of the cuts and has twice postponed implementing the planned across-the-board 15% cut. Currently, the 15% cut is scheduled to take effect October 1, 2001. So what does the legislation I am introducing do? Simply put, this bill takes the necessary step of not postponing the cut, but eliminating it altogether. The planned cut must be eliminated because we have achieved--in fact, far surpassed--the savings targets set by the Balanced Budget Act. Efficient home health agencies in Montana and across the country have experienced acute financial difficulties and cash flow problems, inhibiting their ability to deliver much needed care. Over 2,500 home health agencies nationwide have closed or stopped serving Medicare patients, and, according to a study done by the Lewin Group for the American Hospital Association, these cutbacks have resulted in a 30.5 percent reduction in hospital-based home health services. Moreover, the Health Care Financing Administration estimates that 500,000 fewer home health patient received services in 1998 than in 1997 (the last year for which figures are available), which points to the most central and critical issue. The real losers in this situation are our seniors. Cuts of this magnitude simply cannot be sustained without ultimately affecting patient care. While patient care across the nation will be impacted if the planned cuts are implemented, rural areas will be especially had hit. If the planned cuts are implemented, rural health care providers will be forced to find ways to further cut costs. Such cost-cutting measures could include closing branches or limiting services. This means that rural patients could face difficulties accessing quality health care. This is especially significant because a high percentage of seniors over the age of 65 live in rural areas; in Montana, that figure is 77%. Thus, any reduction in home health care will directly impact our nation's seniors. Eliminating the 15% cut makes financial sense. If home health care budgets are cut further, costs will increase in other areas. If patients--especially in rural areas--are not receiving the care they need, they will turn to other resources, such as hospital emergency rooms, inpatient cares, and nursing homes. In the long run, this will be more expensive and less efficient. Above all, we must ensure that our nation's elderly and ill receive the care they need. We must not create a situation in which cash-strapped home health agencies have strong incentives to limit- or even deny-care to the sickest. This bill prevents such a scenario, while respecting Congress' original intention of reducing home health care spending, I think that most of us agree that our seniors and the ill deserve quality home health care. This is a common sense measure that will allow us to realize our original intention of reducing home health care spending, while at the same time protecting the right of our elderly and ill to quality care.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to address a concern I have about the way we run our trade policy. Over a quarter century ago, Congress passed the Trade Act of 1974. It was a monumental piece of legislation which laid the foundation for America's current trade policy operations. One of its features was a formal system of non-partisan advisory committees. These committees were designed to give the Executive Branch advice from the private sector on trade agreements. The Trade Act created two tiers of advisory committees. At the top is the Advisory Committee on Trade Policy and Negotiations (ACTPN), composed of 45 people serving for a 2-year term. The members are officers of corporations, trade associations and labor unions. A parallel committee known as TEPAC provides advice on trade and the environment. The next tier contains the Industry Sector Advisory Committees and the Industry Functional Advisory Committees, known as ISAC's and IFAC's. The Trade Act gives the Executive Branch substantial leeway in creating them, chartering them, and choosing their members. Today there are more than two dozen ISAC's and IFAC's. Mr. President, the Clinton Administration announced last month that it was taking a hard look at the advisory committee process. I support that. In the past year, we've witnessed some unwelcome developments in the advisory committee system that call into question whether its operating in the way Congress intended. In May 1999, the head of a prominent environmental group resigned from the TEPAC. He resigned after his committee was asked to comment on regulations only after, rather than before, they were proposed by the State Department. In November 1999, the U.S. District Court in Seattle ruled in favor of environmentalists who were seeking representation on two of the ISAC's for paper and wood products. They believed that the trade issues under discussion could have environmental consequences, and they wanted the ISAC's to consider those consequences when providing advice to the government. The Court agreed, and the Commerce Department took steps to comply. For reasons I don't understand, the Justice Department appealed the decision after the Commerce Department had taken these steps. I have already said that I will introduce legislation mandating environmental participation if the District Court decision is overturned. In January 2000, all three labor representatives resigned from the ACTPN, the top-tier committee. Their complaint was that they had no say in shaping the discussion agenda. So now nobody speaks on behalf of American workers on the ACTPN. Clearly, Mr. President, this process isn't working the way Congress intended. It is time for a fresh look. Let me focus on what I believe are the two main issues we should consider: trade agreement compliance and open participation. In the 1974 Trade Act, Congress gave the advisory committees two main tasks. The first task was to give advice on upcoming and ongoing trade negotiations. The advice they give helps set negotiating objectives and bargaining positions. The second task related to existing trade agreement. The ACTPN, the ISAC's and the IFAC's were to give advice and information on compliance with these existing trade agreements. We need more work on the second task. Over the past 20 years, the United States has entered into more than 400 trade agreements. Last month the GAO issued a report on how well we monitor and enforce them. The answer: not very well. The American Chamber of Commerce in Japan has just released an analysis of our bilateral trade agreements there. They examined over 50 separate agreements, testing them for effective implementation. Of the ones given a numerical grade, over half flunked the implementation test. That's miserable. What's the problem? The problem is two-fold. First, everyone wants to negotiate agreements, but nobody wants to implement them. That leads to the second problem: too few monitors. With respect to the first problem, Mr. President, it is worth remembering that trade policy is carried out by human beings. Like people everywhere, they find that negotiating deals is exciting. Negotiating is high-profile work. What about implementation? Implementing deals is not nearly as exciting as negotiating them. Everyone signs up to negotiate. No one signs up to implement. With respect to the second problem, the GAO cited a widespread lack of personnel to monitor and enforce trade agreements. They pointed to staffing gaps at in the U.S. Trade Representative's office, the Commerce Department and other agencies. I don't doubt it. President Clinton and Vice President Gore have worked hard and successfully to slim down the federal bureaucracy. So there aren't many extra hands. I don't think this problem can be solved by hiring more people. In fact, given the number and complexity of modern trade agreements, I doubt that we even could hire enough government workers to do the job right. We've moved far beyond the old-style trade pacts that just covered tariffs, where it is easy to see whether everybody's charging the right rate. Nowadays these agreements cover highly specialized non- tariff issues. We have agreements on technical standards for high-tech electronic products. Agreements covering regulatory procedures, such as approving new drugs. Understanding these agreements takes very specific expertise. Even though these trade agreements differ widely in scope and in content, they have one feature in common. Their aim is opening markets for American exports. Who is in the best position to monitor whether or not they achieve that purpose? I submit, Mr. President, that the companies who are supposed to benefit from the agreements are in the best position, along with their trade associations. We have about 1,000 people from the private sector in the advisory committee system. They are all volunteers, working free of charge. They do an excellent job on their first task, advising the government on the negotiating end of trade policy. We should get them working on their second task, monitoring existing trade agreements. And they should do their monitoring out in the open. Every new trade agreement should be assigned to at least one advisory committee. That committee should be responsible for monitoring compliance with the agreement. That committee should report regularly on implementation. It should recommend specific action when it finds examples of non-compliance. Complicated agreements, such as NAFTA and the Uruguay Round, should be parceled out among several committees. Prospective members of trade advisory committees should all meet the following test: do they represent an organization willing and able to help monitor compliance with trade agreements? Only those who answer yes should be put on a committee. Mr. President, let me turn now to the second issue we should examine: public participation. I come from a state with a strong tradition of open government. A Montanan has the right to attend any meeting that a State official holds. No exceptions. The federal government has a tradition of openness too, especially with respect to advisory committees. Congress made openness a statutory requirement with the Federal Advisory Committee Act (FACA) of 1972. When we passed the Trade Act, we specified openness by requiring that all of these trade advisory committees follow FACA procedures. We left one exception. Meetings could be closed to the public if they covered matters which would seriously compromise U.S. Government trade negotiations. That's a quote from the law. ``Seriously compromise.'' And only with respect to ongoing active negotiations. Today there aren't many active trade negotiations underway. So there is not much to be seriously compromised. Nevertheless, too many advisory committees are still closed to interested observers. That's unacceptable. It's illogical. It's illegal. What are the advisory committees talking about in these meetings? I've heard from people who attend them that almost all of the information discussed is pretty straightforward. Nothing very secret. People who are barred from the meetings don't know that. They begin to suspect that something's going on in those rooms. Maybe somebody is trying to hide something from them. Closing off these meetings just feeds that feeling of mistrust. It's bad government. In the past, the Administration used to close all ISAC and IFAC meetings, until they lost a 1996 court challenge. It was a blanket closure policy. In arguing this case before the court, the Trade Representative's office said that Congress agreed with the blanket closure policy, because we never did anything about it. Let's do something about it. The Constitution gives Congress, not the Executive Branch, authority over international trade. I intend to introduce legislation designed to clear up any confusion about what Congress expects with regard to public participation in ISAC's and IFAC's. Finally, Mr. President, I have found one other feature of advisory committee that we should change. There is a ``consensus'' mentality. Some committees feel that they can only give advice if they reach a consensus. They say that this is why committees can't have members who come at issues in different ways. They'll never get consensus. I see nothing wrong with committees sending forward recommendations along with minority viewpoints. We're a democracy. We do this all the time. I look forward to working with my Senate colleagues and with the trade agencies of the Executive Branch to get the advisory committee system back on track. Mr. President, I have written to Secretary Daley and Ambassador Barshefsky outlining my thoughts on this issue. I ask unanimous consent that this letter be printed in the Record.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, this is an amendment to which the chairman of committee has graciously stated he agreed. This is a modification of an earlier amendment I provided. This amendment essentially provides that related signals, including high-speed Internet access and National Weather Service warnings, be included in the criteria when the board decides which loans to guarantee in providing for local-into-local service. One of the modifications, frankly, is as follows: Including noncontiguous States. I chuckled a little bit because that is Alaska, which is wonderful. But it also is a technical matter that makes it more likely it is not necessarily constrained by otherwise constraining language. The amendment basically says that, to the maximum extent practicable, the board should give additional consideration to projects which also provide related signals--again, including high-speed Internet access and National Weather Service warnings. The whole point is, we have an opportunity to help provide broad bandwidth Internet service to rural America while we are now passing legislation which gives incentives to provide more local-into-local television coverage to rural America. I believe we should take advantage of that opportunity and give a little boost and a little preference to those applicants who will provide that additional capability. I want to sort of chime in on the point the Senator from Texas was making about the floor looking as if we were not doing our work. There was a group of Montana high school students here about 2 or 3 hours ago. They asked me, Why aren't there more Senators on the floor and why are we not doing business? I explained to them, as the Senator from Texas essentially said, that a lot of work is not done directly in debate but there are negotiations and kind of behind-the-scenes work going on to work things out. I compliment the Senator for his work in helping us accomplish that objective. Before I finish, I also want to pay particular compliments to not only the Senator from Texas but to my colleague from Montana, Senator Burns. Senator Burns has been very active in helping provide both local coverage and satellite coverage. I want to particularly note that; in addition, certainly managing a bill of this size, Senator Johnson as well as Senator Leahy from Vermont. There are a lot of people who worked on this. We are making progress. Sometimes it is a little slow. It is not very expeditious, but that is the nature of our democracy. I thank them.

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

Mr. BAUCUS

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

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I will address the pending subject, local- into-local broadcasting. At the end of the last session of Congress, there was some talk that in this session of Congress, this year, we would take up financing to help guarantee local-into-local television coverage in rural areas. Frankly, I wasn't happy with the way we were about to leave the last session of Congress, so I stood up on the floor and tossed a little bit of obstruction around until we got a firmer commitment that by a certain date we would bring up legislation in this body directed toward financing satellites or other entities so that we could provide local-into-local coverage throughout our country. I am very happy now that this bill is before us. As a consequence of the deference of myself and others, we are now here. Very simply, the need for this is extremely important. This chart shows markets that aren't now covered and will be covered under the basic bill to be passed. There aren't very many of them. The red dots depict areas where people can get local-into-local coverage. There are 210 TV markets in our country. You can tell that the red dots don't number 210. In fact, they number something much less than that. I might say that number 210 happens to be right up here--Glasgow, MT. Butte, I think, is 167, and there is Billings. We have a bunch of TV markets in our State, but they are nowhere near where the read dots are. With the passage of last year's bill, 67 markets will have coverage. Only 67 of the 210 markets will eventually get coverage and have local- into-local television coverage. Thirty-five percent of the homes in my State would receive video programming through satellite. Our State flower is the bitterroot, but we have a new State flower now, the satellite dish, because we in Montana have the highest per capita utilization of satellite dishes--more than any other State in the Nation. Montanans per capita have more satellite dishes. It is because Montana is so big. We are a rural State. There are only about 900,000 people in our State, with about 147,000 square miles. You can see why satellite dishes are so important. But because we are so rural and because so many other States are so rural, we are not getting local satellite coverage. It stands to reason because the satellite companies are going to give the coverage to the greatest markets where they will make the most money, as well they should. Companies are there to get the highest rate of return. So they are going to go where they can make the greater returns, and that is going to be the cities. It is only fair that the rest of America also be wired in. That is why I think this bill is so important. It will take a few years to accomplish it, but at least we will get there. What are the reasons for having it? One is to find out what your local team is doing. Here is a chart. This is the University of Montana Grizzlies. Most folks like to know how the home team did. If you don't get local-to- local satellite coverage, it is pretty hard to know. You might be able to find out for New York, Denver, or Florida. But when you are from a smaller community and a smaller town, you only care about the local team. You can't get it now with satellite coverage in my State of Montana and in most places. Maybe it is not the local team. Maybe it is weather conditions. Is a storm coming? What is the weather report? Our State sometimes has blizzards. Sometimes it snows--not very often. Most people think Montana is awfully cold; that we have a lot of snow. Montana is really not very cold. It doesn't snow that much. But every once in a while it snows. We kind of like to know every once in a while when it is going to happen. So we need local notice. Local-to-local is critical throughout our country. The final point I will make is demonstrated by this chart. This shows how well the Rural Utilities Service, a branch of USDA, is already serving America--the telephone cooperatives, and with the power cooperatives around the State. RUS is a loan guarantor. It guarantees loans for wastewater proposals, for electric distribution, transportation, telecommunications, telephone, and distance learning. It guarantees loans to finance operations to build these infrastructures all over the country. The basic point is a very simple one. We have an organization in place. It is serving America well. Why not allow the Rural Utilities Service to, essentially, be the agency that provides the additional loan guarantees for satellites and to give assistance to rural areas? The underlying bill before us sets up a board to do all of this. I submit that another board and another level of bureaucracy does not make sense. We already have an organization that is doing it. Also, this RUS organization has a very good record. In fact, in the last 50 years, the Rural Utilities Service has not had one loan loss in its telecommunications program--not one. That is indicated by the green dots scattered throughout the country. When we finally pass this legislation, remember that we already have an agency doing a good job. I also urge adoption of the pending amendment offered by Senator Johnson, which adds the National Rural Utilities Cooperative Finance Corporation as another lender in addition to FDIC-insured banks. I think it is helpful to have that availability. We are more likely to get the financing. I must also say that I hope we include in the underlying legislation a provision which encourages the loan guarantors at the lending institutions to finance new satellite operations not only for local-to- local coverage but also to help in the availability of broader bandwidth and higher-speed Internet connections because we have the opportunity now while we are providing satellite service for local use to also say: OK, maybe we should also give some consideration to wireless, broad bandwidth, and higher-speed access to the Internet because clearly that is the way of the future. Many of the urban parts of our country have broad bandwidths. It is 10 times more expensive, but they have it. In addition, many companies are competing vigorously to provide this service all across the country. They are doing it the good old American way--based on a profit motive. That is great. That is what built America. But a consequence is that rural America often doesn't get near the same coverage as urban America for the same reason, that satellite companies are not providing local-to-local to America; namely, because it doesn't pay nearly as well in rural America as it does in urban America. I am saying that whoever makes the decision, I hope it is not the board. But if it is the board, give them incentives to provide financing and guarantee financing for satellite companies. It could be perhaps a cable company. It might even be a telephone company that would provide local-to-local cable service. But also they would be in a position to more quickly provide broad bandwidth to the same area. That is the sum and substance of what I hope we do. I think it makes a lot of sense. For those Senators who have some questions about some of these points, I am more than willing to sit down and try to work out some of the details. Some of the details can be worked out in conference as well. But let us not let perfection be the enemy of good. I think these are pretty good ideas. They are not perfect, but they are good. I urge my colleagues to work together to try to incorporate these provisions. I thank the Chair.