Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I send an amendment to the desk and ask unanimous consent that Senators Conrad and Harkin be added as cosponsors.

Mr. BAUCUS. So $2 trillion, plus interest on the national debt, at a time when the baby boomers retire. Why is that so important? Just one more chart here. It shows when the baby boomers are going to retire, when current younger Americans are going to retire. It is clear. The chart goes way up, beginning here in 2010, and the cost is $250 billion by 2020, at a time when the trust fund, the Medicare trust fund, comes to zero. So add it all together and the Medicare trust fund comes down to zero in 2015. No dollars are left there. The baby boomer population is exploding and the tax cuts, which push us down into a deeper deficit, will be exploding in the second 10 years. No wonder the majority party wants us to pass this motion waiving all points of order, waiving fiscal responsibility. Again, why are we debating this? Why are we even debating whether to be responsible or irresponsible? It is clear. One final point. We remember that dreadful day when a conference report was brought back to this body with everything including the kitchen sink in it--everything--bills that were never debated in either the House or Senate, tax bills that were never debated, spending bills that were never debated. They all came back in one gigantic package. That is going to happen if this motion passes. That is very irresponsible. It is irresponsible to us and to the American people. I am just astounded, frankly, that we as a Democratic Party are in a position of saving the majority party from themselves and, more important, saving the American people. What happened in the 1980s? This is history all over again. In the 1980s, this body, the Republican President and Republican Congress, at the time succumbed to the siren song of huge tax breaks. What happened? Deficits exploded. Then what happened? The Republican Congress was forced to increase taxes. The Republican Congress and the President were forced to increase taxes twice--in 1982 and 1984. So I say if we, today, lock in these huge tax cuts for the future, they are going to have to come back again to re-enact it and put it back in place at a future time. I don't think they want to do that. I urge colleagues to do what is right and not support the majority on this motion.

Mr. BAUCUS. Mr. President, this debate is almost surreal. We are debating whether to be reckless or not. It comes down to that, whether to be responsible or not. I am astounded that the Senate is having this debate of whether to be responsible or whether to be reckless. The numbers are clear. They are compelling. The logic is steel-trap logic, with these numbers showing what this Republican majority budget tax proposal will cost--creating recklessness, irresponsibility. The numbers are just black and white clear. This side has come up with charts, numbers; we have quoted from objective observers, columnists. It all comes out the same. This is extremely irresponsible. Let me remind my colleagues again why. First of all, this is a column in a recent, very respected paper, the Wall Street Journal, from a day or two ago: ``GOP Uses Two Sets of Books. Double-Counting Surplus Keeps Alive the Notion of Being Within Budget.'' That is from the Wall Street Journal written by David Rogers. No one accuses him of being a biased Democrat. He is a reporter of one of the most respected financial papers in the world, the Wall Street Journal. This is his conclusion of what is going on: GOP uses two sets of books; double-counting. I call that reckless. I call that irresponsible. Again, it is surreal. Let me point this out, again, undisputed. Nobody disputes this. The Republican tax breaks explode, like the atom bomb, in the second 10 years. Nobody disputes that. If you added interest to this, their tax cuts are roughly $1 trillion. There is nothing left over for anything else--Medicare, veterans. If you add in defense, which I am sure the Republican majority is going to do, that amounts to about a 40-percent cut, 40 percent in veterans' benefits, in education, et cetera. That is just the first 10 years. Then you add it out in the next 10 years and it is over $2 trillion.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, if the Senator from Colorado is not going to use that time, I ask unanimous consent to speak for the remaining 4 minutes.

Mr. BAUCUS. Mr. President, I understand the other side had time, which would expire at 12:30, but I don't want to cut into that time.

Mr. BAUCUS. Mr. President, I ask unanimous consent to speak as in morning business when the Senate reconvenes at 2:15, for 15 minutes, and that Mr. Sessions be allowed to speak for 12 minutes as in morning business immediately following my remarks.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, when the tax reconciliation budget comes before the Senate tomorrow, I plan to offer an amendment which will provide for a lockbox on the Social Security surplus; that is, all the payroll tax surplus that would otherwise go to the Social Security trust fund would be locked into that trust fund. The amendment also provides that one-third of the onbudget surplus be set aside for Medicare. Why am I doing that? Very simply, Mr. President, because I believe that as we leave this century and this millennium and as we move into the next century and the next millennium, we are faced with a historic opportunity to make decisions that are going to either correctly or incorrectly affect lots of Americans. What do I mean? Very simply this. A little history first: About 18 or 19 years ago, after the 1980 elections, this Congress passed a very large tax reduction bill--very large--proposed by the President and passed by this Congress. What happened as a consequence of that very large tax cut in 1981? I think all commentators will agree--at least a vast majority of commentators will agree--that it caused the deficits in this country to shoot up and the national debt to rise. That tax cut was accompanied by a big increase in defense spending. I am not going to quarrel how much that increase was correct or incorrect. But the agreement is--and by far most people agree--that as a consequence of that action deficits rose dramatically. If we add up the annual deficits beginning with President George Washington and continuing every year through all the Presidents in American history, up through and including Jimmy Carter, they total about $1 trillion. In 1988, when Congress passed a tax cut, what happened? The national debt shot up. Why? Because deficits shot up. The national debt in 1980 was about $1 trillion. Twelve years later, the national debt was about $5-, $6- or $7 trillion. It increased $4- or $5 trillion, from $1 trillion to $6- or $7 trillion in that 12-year period--a huge national debt--and we are paying interest on that national debt in the neighborhood of $267- to $280 billion a year. That is what happened. What did Congress do? It passed two tax increases. The Republican President, Republican Congress, passed two tax increases. There was a significant tax increase in 1982 because the deficits were going out of sight and, in 1984, another tax increase with the Republican President, Republican Congress because the deficits were still going out of sight. That is what happened in the 1980s when Congress was tempted and succumbed to the get-rich-quick siren song with huge tax reductions. That is what happened: instant gratification. However, the future kids and grandkids paid for it in the national debt increase. We passed on the burden and gave it to ourselves, saddling the future with the burden. That is what we did in 1981, pure and simple. In 1999, what happened? Through a lot of factors, including the Democratic President and the Democratic Congress in 1993, we enacted a large deficit reduction, half tax increases and half spending cuts. Economists agree, as a consequence of that, the national deficit started coming down. The debt starting coming down. That is not the only reason the debt started coming down. The economy was doing pretty well. Interest rates were down, probably because the market saw the President was going to get a handle on spending and handle on the deficit because the deficits were so high. With increasing technology and globalization, American firms became much more competitive in competing in world markets. The American economy did very well in the last several years as a consequence of all those factors. Incomes have gone up, payroll tax revenues have gone up, and income tax receipts have gone up. What does that mean today? In 1999, we are projecting a $3 trillion surplus over the next 10 years. Mr. President, $2 trillion of that is payroll tax revenue increases, which we all agree will go to the Social Security trust fund; $2 billion of the $3 billion comes from payroll taxes, and we all agree it will go to the Social Security trust fund. That leaves $1 trillion in the surplus. That $1 trillion is generated by income tax receipts. The question before the Congress is: What are we going to do with that $1 trillion? That is the question. As we are poised to move into the next millennium, I say we ought to make careful decisions about that. We better not blow it. We better be careful, be prudent with the taxpayers' money, and do what is right. What is right? I have two charts. The first chart shows the proposal that will come to the floor tomorrow, passed by the majority party, that will provide for a huge tax cut of $792 billion over 10 years. You have to add back $179 billion in interest over 10 years on the national debt because of the tax cut. That means the debt will go up, with more interest payments to make. What does that leave? That leaves $7 billion less after 10 years. That is all. Man, oh, man, I could stand here for days and days and talk about the problems with that proposal. Let me mention a few. No. 1, this is only a projection. We have no idea what the surplus will be over the next 10 years. It is just a guess. Most commentators think the economy is overheated now. Maybe there is a bubble economy, and maybe the economy will not do so well over a good part of the next 10 years compared to the last 5 or 6 years. This is a projection. What do we do with the projection? We are locking in tax cuts for the future, offset by a hope that we will have the revenues to pay for it. That is what we are doing. That is one thing that is wrong with this: A tax cut in place by law, offset by a hope that the money will be there--and it probably won't be there. Second, I point out that the tax cuts are, in fancy parlance, backloaded. Most go into effect near the end of the 10-year period, meaning in the next 10 years, boy, we will really pay. That is when the deficit will start to increase. I said ``deficit'' increase, not ``surplus.'' The next chart shows that the baby boomers will start to retire about the year 2010, and in 2020 and 2030 most baby boomers will be hitting retirement age. That is when the tax cuts go into effect an even greater amount, meaning we have less money to take care of the baby boomers. I say the size of this tax cut is much too much. Alan Greenspan does not agree with it. He says now is not the time for a tax cut because he knows it will tend to put upward pressure on interest rates. We all don't want to see an increase in interest rates. In addition, there is nothing left over for Medicare. Medicare is an extremely important program for Americans. Ask Americans which national programs they think make the most sense, and most, I daresay, think Social Security is one and Medicare probably is another. Before Medicare went into effect, 50 percent of seniors had no health care; 50 percent had no health care benefits or programs when Medicare went into effect. Now virtually every senior has some kind of health care program. What are the current problems with Medicare? There are several. Let me name three. No. 1, it does not provide for prescription drugs. Senior citizens get drugs when they are in the hospital, but Medicare will not pay for prescription drugs when they are out of the hospital. There is zero payment under Medicare for prescription drugs. We all know that health care is changing in America. It is changing a little bit more from procedures and a little more toward drugs, DNA benefits, and things of that nature. Drugs have become much more important. That is one problem with Medicare. We have to provide for prescription drugs. Medicare does not now provide for outpatient prescription drugs. No. 2, this Congress cut back on Medicare payments too much in 1997 with the so-called Balanced Budget Act of 1997. Medicare payments to hospitals increased significantly, I think on average about 10 percent over the 1990s. Now it is negative, it is cut back, because of provisions this Congress enacted a couple of years ago, which were too great, too much. We all hear it from our hospitals back home, whether they are teaching or rural hospitals, that it has been too much. That has to be dealt with. The majority budget does not deal with it, which is another reason for my amendment. No. 3, Medicare is in trouble, folks. We all talk about Social Security. The Social Security trust fund will not reach zero deficit for 20 or 30 years. The Medicare trust fund will come down to zero, depending upon who is making the estimates, perhaps 12 or 15 years from now, much sooner than the Social Security trust fund. I say, therefore, we should pay attention to Medicare. The amendment I will offer will provide that one-third of the on-budget surplus, one- third of the $1 trillion, will be dedicated to Medicare. I know the arguments. We have to have structural reform of Medicare first before we can put more money into Medicare. I think most agree we need both structural reform and additional money for Medicare. When we in the Congress begin to address structural reform in Medicare, my guess is we will probably not have money anyway so it is good to set aside one-third of the on-budget surplus for Medicare. If we do not need that one-third at the time, we can send it back to the people in tax cuts or we can use it for veterans' care or for education or for whatnot. In summation--and I thank the Chair for his patience--at the appropriate time, I will be offering an amendment along with Senator Conrad to provide that one-third of the on-budget surplus be dedicated to Medicare along with the off-budget surplus dedicated to Social Security. I thank the Chair.

Mr. BAUCUS

Mr. BAUCUS. I yield 8 minutes to my good friend, the distinguished Senator from Wyoming.

Mr. BAUCUS. Mr. President, I yield 4 minutes to my friend, the Senator from West Virginia, Mr. Rockefeller.

Mr. BAUCUS. Mr. President, I believe that concludes the number of speakers who wish to speak on this matter and, therefore, I yield back the remainder of my time.

Mr. BAUCUS. Mr. President, I appreciate the feelings and good intentions of the Senator from New Hampshire, but I respectfully oppose this motion to discharge the Finance Committee from considering the resolution to disprove extension of the Jackson-Vanik waiver for China. Why do I do so? First, I say to my good friend from New Hampshire, he has lots of opportunities to debate human rights, or any similar issues, on the floor. He can offer an amendment to any bill. That is a standing rule of the Senate. Any Senator can offer an amendment to virtually any bill at any time. He has that right. The rules of the Senate provide for unlimited debate. So he can talk for as long as he can physically stand on his own two feet. He has plenty of opportunity, as do all Senators, to raise issues that concern them. I think it is inappropriate to discharge the Finance Committee from considering the resolution to disapprove an extension. Why? Very simply, because the current process has worked pretty well. I am somewhat bemused when I think back on how furious the debate was on this issue--oh, gosh, it must be 4, 5, 6 years ago. In fact, I was one of the few Members of the Senate on the Democratic side who voted to sustain the veto of President Bush on this very measure, as a consequence of President Bush's intention to extend unconditional MFN-- now NTR--status for China, which prevailed. Ever since then, gradually, over the years, each President, each year, has reached the same conclusion after studying all the issues--that there should be a 1-year unconditional extension of most-favored-nation trading status. We have changed the name now to normal trade relations status. That is more accurate--more normal than most favored. In fact, for all intents and purposes, it is least favored. That is because the United States has trade agreements with many other countries which give them favorable terms of trade compared with the standard of MFN, or NTR. Over the years, as more and more Americans have become more familiar with this question, and as the Congress has become more familiar, it has now come to the point where the vast majority of Members of Congress agree that annual unconditional extensions make sense, pure and simple. That is why we are here today. Several years ago, it was a huge debate. Now, over the years, it has come to be virtually a nonissue. It is virtually a nonissue because the vast majority of Members on both sides of the aisle, Republicans and Democrats, and Presidents, Republicans and Democrats, know that to do otherwise would cause a tremendous upheaval of our relationships with a very important country--in this case, China. I think it is important as we enter the next millennium that we deal with other countries with tremendous respect, recognizing that countries have interests. China has its own interests, and the United States has its own interests. The real question is how do we get along better with each other, in a way that accommodates American points of view. The basic policy, as announced by the Presidents over time, has been engagement. I say it is basically engagement without illusions; that is, we talk with countries, but we are realistic about what they do or do not do. But we do not cut off something that is very basic, something that we grant to virtually every country in the world, including a lot of others that I can name that have foreign policies and internal policies that are inimical to the United States, but nevertheless we think to deal with those countries, it is best to maintain the current trade relationship with them. One of the huge adverse consequences that have been caused by this in the past would be the clear setback of negotiations between the United States and China over China's membership in the World Trade Organization. That is a clear winner for the United States, as long as it is done on commercially acceptable principles. The last agreement that Premier Zhu tabled for the United States when he was in Washington not too long ago was clearly in the United States best interest. Why? Because it was unilateral. In every case, it was China that was making concessions. It was China opening up its markets to American products. It was China that changed its distribution system. It would be China that would agree to--a much more fancy term is ``transparency''--much more openness, which undermines corruption, which undermines favoritism. It brings the Chinese economy much more into the modern world. If this resolution were to pass, I will bet my bottom dollar we would have no WTO this year, and probably not for the next couple of years. Then the relationship with China, if you think they are risky now, would make today's relationship look like a cake walk. We have China's difficulties with Taiwan. They will be there for the indefinite future. There are problems we have now with China over the tragic, mistaken bombing of the Chinese Embassy in Belgrade. We have very deep human rights concerns. We have concerns about China's--in the past, anyway-- transfers of missile technology, and perhaps nuclear weapons, to rogue nations. But let's remember, China has taken a lot of actions which have been very helpful to the United States. What is one? China abstained at the U.N. Security Council when we wanted the Security Council resolution on Kosovo. China could have caused all kinds of problems and could have vetoed that Security Council resolution but did not. China also signed the Comprehensive Test Ban Treaty. They have signed it. As far as we know, they have not violated it. They helped us in the gulf war, particularly by their actions with the Security Council. They helped with North Korea and the problems we have with North Korea, and particularly the greater potential problems we might have if North Korea starts sending missiles farther out into the Pacific. But if this resolution passes, all those problems I mentioned are going to be exacerbated and all the good points I mentioned will become irrelevant and not helpful in our relationship with that country. It is a very important country to deal with in a very solid, commonsense way. China is the largest country in the world. China has the largest freestanding army in the world. China has the largest population in the world. China is a nuclear power. China is the fastest growing developing country in the world. It is a major power. We can't close our eyes to China. I am not saying we should accept what China is doing. I am not saying we should accept what any country is doing that is adverse to American interests. But I am saying that we have to, with eyes wide open, look at China and engage China without illusion. That is the policy. If this resolution were to pass, believe me, we would be disengaging China. China would be so upset--and they should be, if it were to pass--and we would be dealing with China as an enemy and not as a country that is separate from us. There is an old saying in life that if you stick your finger in somebody's eye and you treat somebody like the enemy, guess what. They are going to be an enemy; they will react adversely. That is exactly how this would be recognized if it were to pass. There is another important point. It is procedural. Procedural matters, I might add, are not unimportant. This measure has been reported out of the House Ways and Means Committee unfavorably. So it is highly likely that this resolution will not come over to the Senate. If that is the case, why are we going through all of this? It doesn't make any sense. I suggest, with deep respect to the other body, and with deep respect to my friend from New Hampshire and to my fellow colleagues, that if it comes up in the House, despite the recommendation of the House Ways and Means Committee, they pass the resolution, and it comes over here, then we will take it up and we will debate it. But it is premature to take it up at this time when it is clear, because of the House vote, that it will not pass the House and therefore will not be ripe as an issue over here. But the fundamental reason is that this resolution, if it were to pass, would cause many more problems than the purported solutions that lie under the premise of this motion. Again, all Presidents who have looked at this issue and all Congresses that have looked at this issue have reached the same conclusion--Republican and Democrat--that continuing the grant on an annual basis of unconditioned, normal trade relations with China will create the foundation and the condition for a much greater probability that we are going to achieve the success we want with various other issues that we have with China. I oppose this move to discharge the Finance Committee from considering the resolution to disapprove extension of Jackson-Vanik waiver authority for China. It is an unnecessary attempt to alter a process that has worked well in providing for Congress' role in the annual NTR debate. America's economic and trade relations with China have developed significantly over the past decade. I fervently hope that we will be able to resume WTO negotiations with China, complete a good commercial agreement, and extend permanent NTR quickly and in time for China to join the WTO in November in Seattle. This is important for our businesses, important for our workers, and important for our country. I have no illusions about the serious problems we have with China, whether it is human rights, arms proliferation, espionage, Taiwan, or other areas. But using NTR, whether it is the annual extension or the permanent granting of that status, is not an effective way to influence China and move them in a direction we would like to see that society go. It holds our economic interests with China hostage to other aspects of the relationship. We need to regularize and normalize our trading relationship with China. We need to put predictability and stability into that trading relationship so that our industries can improve their ability to do business with China. This resolution to discharge, although seemingly procedural, has an intent that damages our businesses, our workers, our farmers, and our Nation. I urge my colleagues to reject this effort. I see my colleague. I guess he is going to yield time to one of our colleagues.

Mr. BAUCUS. Mr. President, I yield 6 minutes to my very good friend, the distinguished Senator from the State of Washington.

Mr. BAUCUS

Mr. BAUCUS. I yield 1 minute to the Senator from Arizona.

Mr. BAUCUS. I deeply appreciate the concerns of the Senator from New Hampshire. I think we all do. This is not an easy issue. But I think it is important to ask ourselves what is the best way, what is the most likely way, we Americans will properly help achieve the objectives we are looking for in Vietnam, and I daresay also with China, because the China discharge resolution will be up before us at a later time today. I oppose both of the motions to discharge. I daresay most of my colleagues will also oppose both of those motions. It is my judgment, and I think the judgment of most of us, that there are some differences between the United States and Vietnam and there are some differences between the United States and China. We know there are. But how do we best accomplish our objectives with these two countries? I believe it is best to continue with the Jackson/Vanik waiver with Vietnam and what is called a ``normal trading relationship'' with China, which, essentially, is really less than average because the United States has trade agreements with many other countries which, in effect, provide for much better than average trading relations. So we are really talking about the bare minimum standard for trading relationships. If we continue that standard for trade, that is, MFN or NTR, we will be more likely--working through other channels, and government to government or group to group--to accomplish the goals for which we are looking. The world is changing. It is changing dramatically. Trade and commerce are so key, so vital. The more trade is encouraged among countries--particularly Vietnam and China--clearly, the more help we provide those countries in the form of government and judicial systems and enforcement systems that can be relied upon with predictability worldwide, not only for America but for other countries. That is really the objective. There are certainly problems with Vietnam and with China. But we should deal with those issues on the levels in which they occur, whether it is China with human rights or nuclear proliferation or missile technology transfer or Taiwan or the accidental bombing of the Chinese Embassy in Belgrade. We should deal with those issues one at a time; that is, not deny minimal trade relationships with a country just because we have other considerations and other problems. The Senator from New Hampshire says he does not have the time to present his case. The Senator from New Hampshire has lots of time to present his evidence in many different ways before the Senate. If he has a strong case, a compelling case, that would encourage the Senate to take another position, I encourage the Senator to give it. There is morning business. There are lots of opportunities for the Senator to provide the information he says he has. I am not really sure he has much more than he already provided. I note that other Senators, on both sides of the aisle, Senators who have served in Vietnam--including Senator McCain from Arizona and Senator Kerry from Massachusetts--as the Senate has heard, very strongly oppose this discharge motion. They believe that non-trade issues are more likely to be dealt with successfully along the path that has been taken already in the past. Countries have interests. Vietnam has an interest in world affairs; China does; the United States does. We have to deal with this in a solid way. The phrase that is often used is ``engagement.'' I think engagement makes sense, but more importantly it should be ``engagement without illusions''; that is, we talk with countries, we negotiate with countries, we have to keep communicating with countries and looking for ways to find solutions. Engaging without illusions--without illusions that everything in that country is going along perfectly well. We have to be very realistic about things. It is also important to remember at this time in the history of the world that with the United States so big and so powerful, it is beginning to cause some resentment worldwide. That is a new challenge facing America, how to deal with it, how to deal with that angst, how to deal with that concern that maybe we are too big, we are too inclusive, the English language pervades too much, the Internet uses the English language; American culture, McDonald's, and movies are too pervasive in countries; American military might is just too overwhelming, even by European standards; the concern that we might, since we did not lose a single life in Kosovo and won, that militarily we might deal with other areas in the same way. There are lots of different concerns people have now, watching what America has done in the last several years. So we have to be careful. We have to be prudent. To deny something that is normal and expected, that is, a normal trade relation with China, would be unsettling and would cause many more problems than it is going to solve. I fully understand the points of the Senator from New Hampshire, but often there are different ways to skin a cat. The cat we are trying to skin is the effective way, not the ineffective way. It is my judgment that the effective way is to continue the dialogue, continue the engagement, and continue the engagement without illusions but continue it nevertheless. I respectfully urge my colleagues to vote against the motion to discharge the petition. I yield back the remainder of my time.

Mr. BAUCUS. The other side?

Mr. BAUCUS. Mr. President, I yield 4 minutes to the Senator from Alaska.

Mr. BAUCUS. Mr. President, I yield 5 minutes to the Senator from Massachusetts.

Mr. BAUCUS. I yield 5 minutes to the distinguished Senator from Arizona.

Mr. BAUCUS. How much time is remaining on each side?

Mr. BAUCUS

Mr. BAUCUS. I thank the Chair.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, the bill I am introducing today requires that the United States Trade Representative, the USTR, appear before the Finance Committee in the Senate and the Ways and Means Committee in the House, on the day that the National Trade Estimates Report is released. USTR must deliver the NTE Report to the Committees. He or she must provide an analysis of the contents of the NTE Report. And they must outline the major actions that will result from the NTE findings or give the reasons for not taking action. The NTE is an important document. It is the major opportunity each year for the Administration to set out the key trade barriers we confront with our major trade partners. At present, our trade law requires merely that USTR report the NTE to the President, the Finance Committee and the appropriate committees in the House. The change I am proposing means that the NTE will be made public on Capitol Hill rather than at USTR. The U.S. Trade Representative will present both its analysis of the trade barriers and its plan of action to deal with those barriers. That presentation will be made directly and immediately to the Congress. USTR should also explain what they have done over the past year to address trade barriers listed in the prior year's report. This is a small change, but an important symbolic one. The NTE should be the plan of action the Administration will pursue to dismantle foreign trade barriers. And USTR and the Administration must be accountable to the Congress for the results of this plan. During twenty-nine years of service in the United States Congress, I have watched a continuing transfer of authority and responsibility for trade policy from the Congress to the executive branch. The trend has been subtle, but clear and constant. I want to see this trend reversed. We in the Congress have a clear constitutional responsibility for trade. Article I of the Constitution reads: ``The Congress shall have power . . . To regulate commerce with foreign nations.'' I want to use this constitutional authority to provide more effective and active congressional oversight of trade policy. And I would like to see more congressional direction for the executive branch in the area of trade policy. Again, this bill is a very small step in that direction. In the coming weeks and months, I will introduce further measures to ensure that the Congress implements fully its constitutional prerogatives on trade.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, the bill I am introducing today requires that the United States Trade Representative, the USTR, appear before the Finance Committee in the Senate and the Ways and Means Committee in the House, on the day that the National Trade Estimates Report is released. USTR must deliver the NTE Report to the Committees. He or she must provide an analysis of the contents of the NTE Report. And they must outline the major actions that will result from the NTE findings or give the reasons for not taking action. The NTE is an important document. It is the major opportunity each year for the Administration to set out the key trade barriers we confront with our major trade partners. At present, our trade law requires merely that USTR report the NTE to the President, the Finance Committee and the appropriate committees in the House. The change I am proposing means that the NTE will be made public on Capitol Hill rather than at USTR. The U.S. Trade Representative will present both its analysis of the trade barriers and its plan of action to deal with those barriers. That presentation will be made directly and immediately to the Congress. USTR should also explain what they have done over the past year to address trade barriers listed in the prior year's report. This is a small change, but an important symbolic one. The NTE should be the plan of action the Administration will pursue to dismantle foreign trade barriers. And USTR and the Administration must be accountable to the Congress for the results of this plan. During twenty-nine years of service in the United States Congress, I have watched a continuing transfer of authority and responsibility for trade policy from the Congress to the executive branch. The trend has been subtle, but clear and constant. I want to see this trend reversed. We in the Congress have a clear constitutional responsibility for trade. Article I of the Constitution reads: ``The Congress shall have power . . . To regulate commerce with foreign nations.'' I want to use this constitutional authority to provide more effective and active congressional oversight of trade policy. And I would like to see more congressional direction for the executive branch in the area of trade policy. Again, this bill is a very small step in that direction. In the coming weeks and months, I will introduce further measures to ensure that the Congress implements fully its constitutional prerogatives on trade.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, today I am introducing the Species Conservation Tax Act of 1999. The Endangered Species Act sometimes is referred to as our most important environmental law. However, it also is one of the most controversial. Over the past decade, a debate has raged about whether, and how, the Act should be revised. In 1995, Congress went so far as to impose a complete moratorium on the listing of species (fortunately, the moratorium has since been lifted). Several bills were introduced, and given serious consideration, that would have radically weakened the law. On a more positive note, last Congress, after several years of work, the Environment and Public Works Committee reported a bipartisan bill, supported by the Clinton Administration, that would have made a series of modest, common-sense reforms to the Act. Unfortunately, that bill was never considered by the full Senate. There seems, however, to be an agreement on at least one basic point: we should use more incentives to promote the conservation of threatened and endangered species, including tax incentives. For example, in 1995, a group organized by the Keystone Center reported that ``taxes, including income taxes, estate taxes, and property taxes, affect all landowners and sometimes significantly affect their land use decisions. Changes in tax laws, including some that have a relatively small cost to the Treasury, could yield important conservation benefits.'' Over the years, we have made some progress. The tax code now contains two significant incentives for conserving land. One is section 170(h), which allows a charitable contribution deduction for donations of conservation easements in order to, among other things, preserve wildlife habitat. The other is section 2031(c), which, with the leadership of Senator Chafee, was enacted in 1997; it complements section 170(h) with an estate tax incentive to encourage the conservation of land for future generations. The bill that I am introducing today builds on these provisions. It enhances the section 170(h) and section 2031(c) incentives, and it adds a new estate tax incentive for land that is managed to protect threatened or endangered species. Let me briefly describe each provision of the bill. Income Tax Exclusion for Cost Share Payments Under the Partners for Wildlife Program Tax Code section 126 excludes from income payments received pursuant to certain agricultural and silvicultural conservation programs; it specifically excludes payments received pursuant to eight specific programs, then provides two general exclusions, one for payments received pursuant to certain state programs and another for ``any small watershed program administered by the Secretary of Agriculture which is determined by the Secretary of the Treasury . . . to be substantially similar'' to the eight specific programs. The Joint Tax Committee explained the reason for the adoption of this provision, in 1978, as follows: In general, these programs relate to improvements which further conservation, protect or restore the environment, improve forests, or provide a habitat for wildlife. These payments ordinarily do not improve the income producing capacity of the property. Also, since these payments represent a portion of an expenditure made by the taxpayer, the taxpayer generally does not have additional funds to pay the tax when such payments are made. The potential adverse tax consequences may operate to discourage certain taxpayers from participating in these programs. For these reasons, Congress believes that it is appropriate to exclude these payments from income, and to provide for their inclusion only at the time the underlying property is disposed of. However, this provision does not apply to all of the appropriate programs. In 1987, the U.S. Fish and Wildlife Service established the Partners for Wildlife program, which provides cost-sharing assistance to landowners for various wildlife conservation efforts. To date, 18,000 landowners have participated voluntarily in the program, restoring more than 330,000 acres of wetlands alone. In fiscal year 1999, about $28 million will be available through the program, of which about $9 million is expected to be paid directly to landowners as cost- share payments. Although cost-share payments made to private landowners under the Partners for Wildlife program are similar to the payments that are excluded under section 126, payments under the Partners for Wildlife program are not eligible for the exclusion, because the Partners program is not one of the specific programs listed in section 126 and cannot qualify as a ``substantially similar'' program because it is not administered by the Secretary of Agriculture. As a result, landowners who receive payments for protecting habitat under the Partners program get a 1099 form, from the IRS, stating that the payments must be treated as taxable income. If, for example, the Fish and Wildlife Service plans to pay a riparian landowner $10,000 to take steps to restore streamside habitat, federal taxes can reduce the value of the payment by several thousand dollars. I have received reports that this is causing some landowners to decline to participate in the program. Mr. President, the Partners for Wildlife program serves the important purpose of promoting federal-state-private partnerships to conserve species and the habitat upon which they depend. Payments received under the program are similar to those that are excluded under section 126: they promote conservation, they ordinarily do not improve the income producing capacity of the property, they represent a portion of an expenditure made by the taxpayer, and the potential adverse tax consequences may operate to discourage some taxpayers from participating. For these reasons, it is appropriate to amend section 126 to treat payments received under the Partners for Wildlife program the same as other conservation payments. The bill would do so. There is broad support for this change among both environmentalists and landowners: It is supported by the Environmental Defense Fund, the American Farm Bureau Federation, the Center for Marine Conservation, American Rivers, the National Woodland Owners Association, the Defenders of Wildlife, the Izaak Walton League of America, and the National Cattlemen's Beef Association. Enhanced Deduction for the Donation of Interests in Real Property that Conserve Threatened or Endangered Species Under current law, a taxpayer generally may not take a charitable contribution deduction for the donation of a property interest that is less than the taxpayer's entire interest in the property. There are several exceptions. One is for donations of conservation easements, which include easements to preserve open space and protect natural habitat. Taxpayers may deduct the value of such contributions, but only up to 30% of the taxpayer's adjusted gross income, with a five year carry-forward. The bill would enhance the deduction for contributions of conservation easements that are made for the purpose of the conservation of a species that has been listed as threatened or endangered (or proposed for listing). The deduction is enhanced in three ways: the AGI limitation is increased from 30% to 50%, the carry- forward period is increased from five to 20 years, and, if the taxpayer dies before then, the entire unused carry-forward amount can be deducted on the decedent's last return. Mr. President, when a landowner donates an interest in property for the purpose of conserving an endangered species, the landowner is providing a public benefit above and beyond the benefit provided by an ordinary conservation easement. For example, an easement might not only assure that farmland remains farmland, but also that there are buffer strips to control runoff in order to protect and endangered fish and that harvesting schedules conform to the needs of migratory waterfowl. By taking such steps voluntarily, landowners reduce the need to take other steps to preserve the species, including the imposition of regulatory restrictions. By enhancing the deduction for landowners who take such steps, we create a modest additional incentive for landowners not only to conserve land but also to assure that the land is managed in a way that helps conserve and recover endangered species. Estate Tax Exclusion for Property Subject to a Conservation Agreement Under current law, an executor can deduct the value of a conservation easement (within the meaning of section 170(h)) from the value of an estate. In addition, section 2031(c), an executor can exclude from the estate up to 40% of the remaining value of the land subject to the easement. For example, if a decedent conveys property worth $1,000,000, subject to a conservation easement that reduces the value of the property by $300,000, and the property qualifies for the full 40% exclusion, the taxable portion of the estate would be $280,000 (40 percent of the $700,000 in remaining value after deducting the $300,000 value of the easement). The amount of the exclusion is limited to $500,000 and, under section 170(h), the conservation easement must be granted in perpetuity. The bill creates a new estate tax incentive for donations of a partial interest in property that is subject to an agreement, approved by the Secretary of the Interior or Commerce, to carry out activities that would make a major contribution to the conservation of a species that is listed as threatened or endangered, is proposed for listing, or is a candidate for listing. The executor may exclude from the estate the entire value of the portion of the property subject to the agreement, up to $10,000,000. The conservation agreement need not be in perpetuity; after all, the purpose of the agreement is to help recover the species, and once that goal is achieved, land use restrictions may no longer is necessary. However, if the agreement ends in less than 40 years (i.e., because the property is sold, there is a material breach of the agreement, or the agreement is terminated), the estate must pay a recapture amount, as follows: 100% of the excluded amount if the agreement is terminated in less than 10 years; 75% if it is terminated in less than 20 years; 50% if it is terminated in less than 30 years; and 25% if it is terminated in less than 40 years. Mr. President, current law recognizes that estate tax incentives are an appropriate way to encourage landowners to take steps to conserve precious natural resources for future generations. When a landowner or the executor of a landowner's estate enters into an agreement to manage land in a way that makes a major contribution to the conservation of an endangered or threatened species, they are, as I said before, providing a public benefit above and beyond the benefit provided by an ordinary conservation easement. By creating an alternative estate tax incentive for landowners who take such steps, we create a modest additional incentive for landowners not only to conserve land but also to assure that the land is managed in a way that helps conserve and recover endangered species. Elimination of the Mileage Limitation For the Estate Tax Exclusion For Land Subject to a Conservation Easement Tax code section 2031(c) allows an executor to exclude from a gross estate a portion of the value of land that is subject to a conservation easement (within the meaning of section 170(h)), but only if the land is within 25 miles of a metropolitan area, a wilderness area, or a national park; or is within 10 miles of an Urban National Forest. The bill eliminates 25 and 10 mile limitations, so that an executor can exclude land subject to a conservation agreement regardless of where the land is located. Mr. President, section 2031(c) serves the important purpose of encouraging landowners to conserve open space for future generations, rather than forcing heirs to sell undeveloped land to pay estate taxes. The 25 and 10 mile limitations were included in order to reduce the revenue loss and target the incentive to the areas that were likely to be under the greatest development pressure. However, the mileage limitations are a very imperfect proxy. It excludes about one-third of the continental United States; in many cases, the excluded lands are just as pristine and sensitive as lands surrounding wilderness areas or national parks--such as lands surrounding national wildlife refuges. And it excludes many fast-growing areas that do not happen to be metropolitan statistical areas, like areas outside Bozeman and Kalispell, Montana--two of the fastest growing communities in Montana. What's more, the mile limitations have a differential impact among regions of the country. For example, they have the effect of making virtually the entire Northeast and West Coast eligible for the 2031(c) incentive, but exclude large parts of the Great Plains and the Rocky Mountain West. To eliminate this differential impact, and provide a modest incentive for conservation all across the country, the mileage limitation should be eliminated. Conclusion Mr. President, taken together, these complementary provisions provide modest but important incentives for the conservation of habitat and the protection of endangered species. And, the more we can use tax incentives to encourage the conservation of threatened and endangered species, the more likely we are to reduce the regulatory burdens associated with those species. I should note that there are other significant proposals along similar lines, including tax proposals introduced by Senators Jeffords and Chafee and funding proposals introduced by Senator Boxer. I look forward to working with them, and with other interested colleagues, to enacted a solid package of conservation tax incentives into law. I ask unanimous consent that a copy of the bill be included in the Record.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, today I am introducing the Species Conservation Tax Act of 1999. The Endangered Species Act sometimes is referred to as our most important environmental law. However, it also is one of the most controversial. Over the past decade, a debate has raged about whether, and how, the Act should be revised. In 1995, Congress went so far as to impose a complete moratorium on the listing of species (fortunately, the moratorium has since been lifted). Several bills were introduced, and given serious consideration, that would have radically weakened the law. On a more positive note, last Congress, after several years of work, the Environment and Public Works Committee reported a bipartisan bill, supported by the Clinton Administration, that would have made a series of modest, common-sense reforms to the Act. Unfortunately, that bill was never considered by the full Senate. There seems, however, to be an agreement on at least one basic point: we should use more incentives to promote the conservation of threatened and endangered species, including tax incentives. For example, in 1995, a group organized by the Keystone Center reported that ``taxes, including income taxes, estate taxes, and property taxes, affect all landowners and sometimes significantly affect their land use decisions. Changes in tax laws, including some that have a relatively small cost to the Treasury, could yield important conservation benefits.'' Over the years, we have made some progress. The tax code now contains two significant incentives for conserving land. One is section 170(h), which allows a charitable contribution deduction for donations of conservation easements in order to, among other things, preserve wildlife habitat. The other is section 2031(c), which, with the leadership of Senator Chafee, was enacted in 1997; it complements section 170(h) with an estate tax incentive to encourage the conservation of land for future generations. The bill that I am introducing today builds on these provisions. It enhances the section 170(h) and section 2031(c) incentives, and it adds a new estate tax incentive for land that is managed to protect threatened or endangered species. Let me briefly describe each provision of the bill. Income Tax Exclusion for Cost Share Payments Under the Partners for Wildlife Program Tax Code section 126 excludes from income payments received pursuant to certain agricultural and silvicultural conservation programs; it specifically excludes payments received pursuant to eight specific programs, then provides two general exclusions, one for payments received pursuant to certain state programs and another for ``any small watershed program administered by the Secretary of Agriculture which is determined by the Secretary of the Treasury . . . to be substantially similar'' to the eight specific programs. The Joint Tax Committee explained the reason for the adoption of this provision, in 1978, as follows: In general, these programs relate to improvements which further conservation, protect or restore the environment, improve forests, or provide a habitat for wildlife. These payments ordinarily do not improve the income producing capacity of the property. Also, since these payments represent a portion of an expenditure made by the taxpayer, the taxpayer generally does not have additional funds to pay the tax when such payments are made. The potential adverse tax consequences may operate to discourage certain taxpayers from participating in these programs. For these reasons, Congress believes that it is appropriate to exclude these payments from income, and to provide for their inclusion only at the time the underlying property is disposed of. However, this provision does not apply to all of the appropriate programs. In 1987, the U.S. Fish and Wildlife Service established the Partners for Wildlife program, which provides cost-sharing assistance to landowners for various wildlife conservation efforts. To date, 18,000 landowners have participated voluntarily in the program, restoring more than 330,000 acres of wetlands alone. In fiscal year 1999, about $28 million will be available through the program, of which about $9 million is expected to be paid directly to landowners as cost- share payments. Although cost-share payments made to private landowners under the Partners for Wildlife program are similar to the payments that are excluded under section 126, payments under the Partners for Wildlife program are not eligible for the exclusion, because the Partners program is not one of the specific programs listed in section 126 and cannot qualify as a ``substantially similar'' program because it is not administered by the Secretary of Agriculture. As a result, landowners who receive payments for protecting habitat under the Partners program get a 1099 form, from the IRS, stating that the payments must be treated as taxable income. If, for example, the Fish and Wildlife Service plans to pay a riparian landowner $10,000 to take steps to restore streamside habitat, federal taxes can reduce the value of the payment by several thousand dollars. I have received reports that this is causing some landowners to decline to participate in the program. Mr. President, the Partners for Wildlife program serves the important purpose of promoting federal-state-private partnerships to conserve species and the habitat upon which they depend. Payments received under the program are similar to those that are excluded under section 126: they promote conservation, they ordinarily do not improve the income producing capacity of the property, they represent a portion of an expenditure made by the taxpayer, and the potential adverse tax consequences may operate to discourage some taxpayers from participating. For these reasons, it is appropriate to amend section 126 to treat payments received under the Partners for Wildlife program the same as other conservation payments. The bill would do so. There is broad support for this change among both environmentalists and landowners: It is supported by the Environmental Defense Fund, the American Farm Bureau Federation, the Center for Marine Conservation, American Rivers, the National Woodland Owners Association, the Defenders of Wildlife, the Izaak Walton League of America, and the National Cattlemen's Beef Association. Enhanced Deduction for the Donation of Interests in Real Property that Conserve Threatened or Endangered Species Under current law, a taxpayer generally may not take a charitable contribution deduction for the donation of a property interest that is less than the taxpayer's entire interest in the property. There are several exceptions. One is for donations of conservation easements, which include easements to preserve open space and protect natural habitat. Taxpayers may deduct the value of such contributions, but only up to 30% of the taxpayer's adjusted gross income, with a five year carry-forward. The bill would enhance the deduction for contributions of conservation easements that are made for the purpose of the conservation of a species that has been listed as threatened or endangered (or proposed for listing). The deduction is enhanced in three ways: the AGI limitation is increased from 30% to 50%, the carry- forward period is increased from five to 20 years, and, if the taxpayer dies before then, the entire unused carry-forward amount can be deducted on the decedent's last return. Mr. President, when a landowner donates an interest in property for the purpose of conserving an endangered species, the landowner is providing a public benefit above and beyond the benefit provided by an ordinary conservation easement. For example, an easement might not only assure that farmland remains farmland, but also that there are buffer strips to control runoff in order to protect and endangered fish and that harvesting schedules conform to the needs of migratory waterfowl. By taking such steps voluntarily, landowners reduce the need to take other steps to preserve the species, including the imposition of regulatory restrictions. By enhancing the deduction for landowners who take such steps, we create a modest additional incentive for landowners not only to conserve land but also to assure that the land is managed in a way that helps conserve and recover endangered species. Estate Tax Exclusion for Property Subject to a Conservation Agreement Under current law, an executor can deduct the value of a conservation easement (within the meaning of section 170(h)) from the value of an estate. In addition, section 2031(c), an executor can exclude from the estate up to 40% of the remaining value of the land subject to the easement. For example, if a decedent conveys property worth $1,000,000, subject to a conservation easement that reduces the value of the property by $300,000, and the property qualifies for the full 40% exclusion, the taxable portion of the estate would be $280,000 (40 percent of the $700,000 in remaining value after deducting the $300,000 value of the easement). The amount of the exclusion is limited to $500,000 and, under section 170(h), the conservation easement must be granted in perpetuity. The bill creates a new estate tax incentive for donations of a partial interest in property that is subject to an agreement, approved by the Secretary of the Interior or Commerce, to carry out activities that would make a major contribution to the conservation of a species that is listed as threatened or endangered, is proposed for listing, or is a candidate for listing. The executor may exclude from the estate the entire value of the portion of the property subject to the agreement, up to $10,000,000. The conservation agreement need not be in perpetuity; after all, the purpose of the agreement is to help recover the species, and once that goal is achieved, land use restrictions may no longer is necessary. However, if the agreement ends in less than 40 years (i.e., because the property is sold, there is a material breach of the agreement, or the agreement is terminated), the estate must pay a recapture amount, as follows: 100% of the excluded amount if the agreement is terminated in less than 10 years; 75% if it is terminated in less than 20 years; 50% if it is terminated in less than 30 years; and 25% if it is terminated in less than 40 years. Mr. President, current law recognizes that estate tax incentives are an appropriate way to encourage landowners to take steps to conserve precious natural resources for future generations. When a landowner or the executor of a landowner's estate enters into an agreement to manage land in a way that makes a major contribution to the conservation of an endangered or threatened species, they are, as I said before, providing a public benefit above and beyond the benefit provided by an ordinary conservation easement. By creating an alternative estate tax incentive for landowners who take such steps, we create a modest additional incentive for landowners not only to conserve land but also to assure that the land is managed in a way that helps conserve and recover endangered species. Elimination of the Mileage Limitation For the Estate Tax Exclusion For Land Subject to a Conservation Easement Tax code section 2031(c) allows an executor to exclude from a gross estate a portion of the value of land that is subject to a conservation easement (within the meaning of section 170(h)), but only if the land is within 25 miles of a metropolitan area, a wilderness area, or a national park; or is within 10 miles of an Urban National Forest. The bill eliminates 25 and 10 mile limitations, so that an executor can exclude land subject to a conservation agreement regardless of where the land is located. Mr. President, section 2031(c) serves the important purpose of encouraging landowners to conserve open space for future generations, rather than forcing heirs to sell undeveloped land to pay estate taxes. The 25 and 10 mile limitations were included in order to reduce the revenue loss and target the incentive to the areas that were likely to be under the greatest development pressure. However, the mileage limitations are a very imperfect proxy. It excludes about one-third of the continental United States; in many cases, the excluded lands are just as pristine and sensitive as lands surrounding wilderness areas or national parks--such as lands surrounding national wildlife refuges. And it excludes many fast-growing areas that do not happen to be metropolitan statistical areas, like areas outside Bozeman and Kalispell, Montana--two of the fastest growing communities in Montana. What's more, the mile limitations have a differential impact among regions of the country. For example, they have the effect of making virtually the entire Northeast and West Coast eligible for the 2031(c) incentive, but exclude large parts of the Great Plains and the Rocky Mountain West. To eliminate this differential impact, and provide a modest incentive for conservation all across the country, the mileage limitation should be eliminated. Conclusion Mr. President, taken together, these complementary provisions provide modest but important incentives for the conservation of habitat and the protection of endangered species. And, the more we can use tax incentives to encourage the conservation of threatened and endangered species, the more likely we are to reduce the regulatory burdens associated with those species. I should note that there are other significant proposals along similar lines, including tax proposals introduced by Senators Jeffords and Chafee and funding proposals introduced by Senator Boxer. I look forward to working with them, and with other interested colleagues, to enacted a solid package of conservation tax incentives into law. I ask unanimous consent that a copy of the bill be included in the Record.

Mr. BAUCUS

Mr. BAUCUS. In this case, the outcome is very simple. A patient could have been discharged to home with follow-up care as an outpatient. Instead, she was admitted to the hospital because timely follow-up care couldn't be guaranteed through the health plan. Her hospitalization costs were much higher than the care she would have received as an outpatient. Now, I must say, too, we have heard many stories about the retrospective denial of coverage for poststabilization services. These services are not optional medical care. That is not what we are talking about. That is a red herring. We are not talking about optional medical care. We are talking about the situation where the emergency doc has time only to make sure the patient is taken care of, either admitted to a hospital poststabilization or coordinate a plan with the patient's doctor, some similar thing, not unrelated or just tangentially related optional medical care. That is a red herring. That is not what we are talking about. If my colleagues support the Graham-Chafee amendment, it is clear they will be voting for more efficient and more timely medical care. I hope the Republicans will join us to pass the real prudent layperson standard for emergencies. This standard has bipartisan support. It is endorsed by many professional organizations and consumer groups throughout the country. For example, just this afternoon I received an endorsement by the American Heart Association of the prudent layperson amendment offered by Senators Graham and Chafee. The American Heart Association states that the prudent layperson standard is ``essential to their mission of reducing death and disability from cardiovascular disease, the leading cause of death in America.'' The American Heart Association wants this amendment because they know it is right. Kaiser-Permanente wants this amendment because they know it is right. There is no reason why this amendment should not pass, particularly when the same standard applies today because of a law passed by this Congress 2 years ago, to Medicare and Medicaid. I think it is common sense. I can't believe the objections to this amendment. I hope that after the other side thinks about it a little bit, they will realize that it does make sense and support it. Mr. President, I ask unanimous consent to have printed in the Record a letter to me from the American Heart Association endorsing this amendment.