Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, how much time is allocated on this side?

Mr. BAUCUS. Parliamentary inquiry. When the Senator refers to ``this bill,'' is he referring to the House-passed bill?

Mr. BAUCUS. Is the Senator asking that all time is yielded?

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to bring your attention to a matter of pressing concern involving the upcoming visit of Chinese Premier Zhu Rongji and the prospects of China's accession to the World Trade Organization. Context of Relationship Let me begin, however, with some context. On April 8 and 9, the Premier of China will visit our country. As we speak, the Administration is negotiating with China the terms of its possible accession to the WTO. Already this session, the Senate has seen one floor debate concerning our overall China policy. That debate was prompted by an amendment that would have required Congress to vote on the terms of China's accession prior to the Administration's completion of an agreement. Such a pre- emptive vote raised several constitutional and precedential questions. Congress has not voted on any of the previous 110 GATT and WTO accessions because since 1948 WTO accessions have been executive agreements which generally require no U.S. concessions. I spoke loudly against that amendment for three specific reasons. First, a vote on WTO accession would more likely be a judgment on the immediate state of our overall relationship with China than on the trade policy details of the accession. Second, such a vote could result in the U.S. holding a set of unilateral trade concessions by China to the United States hostage to every other concern we have about China-- from human rights to security, environment, labor policies and much more. Third, we are already required to vote on China's permanent Normal Trading Relation status before the agreement becomes binding. Therefore, I was pleased that the Senate saw fit to defeat this resolution by a resounding vote of 69 to 30. Now we can move on to the matter of pressing concern. Mr. President, as the visit of the Chinese Premier nears, and as the Administration continues with its negotiations, I am sure that the Senate, the Administration, and the country as a whole will engage in an intense debate on China policy. Participants in this debate will have radically different views on the prospects of our relationship, and on the trade, security and human rights policies we should adopt in it. I rise today to encourage all participants in this debate to take a deep breath and to think carefully about this issue. For there is much at stake. And it is incumbent upon all of us to make sure that our actions are in the best interests of our country.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, most people my age have known the heartache of having to watch their parents grow old. It is a sad day in a person's life when they see their father get his first gray hair. Or the day you notice lines in your mother's face where previously, there were none. This aging process is made worse by the scary and very real possibility that too many people who will become senior citizens in the next several years are not at all prepared for the transition from work to retirement. To be honest, it isn't our parents who we need to worry about so much. They survived the Depression. They know what it takes to get by during the lean years--it takes planning and saving. Putting money aside, when it might be easier to spend it in the moment. Those are the values that our parents live by. They are the values we would do well to heed. And even better to teach those who will follow us. We as a nation have lost our imperative to save. Personal savings rates have dropped to one-half of one percent of our Gross Domestic Product, the lowest since 1933. Fifty-one million Americans in our nation's workforce have no pension coverage. But statistics like those don't tell the whole story. They don't do justice to the hardscrabble struggles that real people go through every day. Struggles that involve agonizing questions like: ``Should I eat today or take my medication?'' or ``Will I be able to heat my house this winter?'' Make no mistake, our nation's lack of saving for retirement is a tragedy in the making. That is why I am so proud to join my colleagues in introducing this legislation. A bill that will make it easier for Americans to put money aside, and a bill that will help move pension issues to the forefront of Americans' minds. A bill that will: Expand coverage for small businesses because they have a harder time affording health care and retirement plans; Enhance pension fairness for women because they fall into categories that have a harder time saving; Increase the portability of pension plans so that when you change jobs you don't have to worry about where your savings will go; Strengthen pension security and enforcement so you can rest easy at night, knowing your money is safe; Reduce red tape so it's easier for employers to give their workers retirement options; And encourage retirement education so that husbands and wives, parents and children, talk to each other-- make plans for their future. And know what to expect tomorrow and down the road. One aspect of the bill I am particularly proud of are the small business provisions. Thirty-eight million of the people in this country who do not have a pension plan work at small businesses. Eighty percent of all small business employees have no pension coverage. In my state of Montana, more than 95 percent of our businesses are small businesses. And almost 9 out of 10 offer no pension plans. We cannot let these hard-working Americans down. Currently, most small businesses can't afford pension plans. They would like to, but they just can't make ends meet. Our bill makes it a smart business decision for small business owners to offer retirement plans. I have made it my priority to work with members of the small business community, both back in Montana and nationally, to identify legislative solutions that will most readily enable small businesses to offer pension plans to their employees. While this bill does not include every recommendation we received, it does represent a collection of high-priority proposals which we believe could be supported by a bi- partisan majority of Congress. The major provisions in this bill which would help small businesses start and maintain pension plans include the following: To help make pension plans more affordable we have included two new tax credits: one to help defray start-up costs and the other to defray the cost of employer contributions to pension plans; In addition, we provide for the elimination of some fees. To address the problems the small business community has identified as a major impediment to establishing pension plans, we make significant changes in the top-heavy rules that limit employer contributions to plans. To address concerns of our smallest businesses, who want to provide pensions but can only afford `start-up' plans at first, we provide increases in income limits that apply to SIMPLE pension plans, along with a new, salary-reduction SIMPLE plan; And for those employers that want to provide the security of a defined benefit plan for their employees but cannot because of the increased regulatory burden, we create a simplified defined benefit plan for small business. These provisions are designed to address the problems of cost and complexity that are a barrier to so many small businesses. They will help small employers establish a pattern of saving for themselves and their employees. Mr. President, I hope the Pension Coverage and Portability Act will spearhead a national debate on how to improve employer-provided pensions in this country. This debate is essential if we are to achieve our goal of making America in the next century, not only strong as a nation, but strong as a community of individuals confident in the security of their financial futures. This is a good, bi-partisan bill. It takes the positive steps we as a nation need to put our future in safe hands. I am eager for the coming debate on this bill. I hope it sparks a debate in the coffee shops and kitchen tables all across the country. Working together, and with this bill, we can turn a nation of spenders, into a nation of savers.

Mr. BAUCUS

Mr. BAUCUS. I thank you for working with me on this measure and agree with you that it is critical that South Korea live up to its trade agreements concerning beef and pork. For that reason, I agree that we should clarify the implications of paragraph (4). In answer to your questions, I would respond that reporting to Congress is meant to say that any reporting will: be in verbal form. And, second, that reports on resources used to stabilize the South Korean market will be provided by the Department of Treasury and the Department of Agriculture as appropriate.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I want to take just a brief moment to thank my colleagues for passing this resolution marking today as National School Violence Victims Memorial Day. Let me tell you why this day is so important to me and to the citizens of Butte, Montana. Butte fifth grader Jeremy Bullock was 11 years old when he and his twin brother Joshua left for school together as they always did. The day was April 12, 1994. Jeremy didn't come home from school that day. He was shot and killed on the playground, leaving family and a community forever changed. By recognizing March 24th as National School Violence Victims Memorial Day we will be honoring the memory of Jeremy Bullock and countless other children, families and communities by saying clearly, with one voice that we as Americans will meet the challenge of eradicating violence from our schools. So, today and every day, let us always remember Jeremy Bullock. For, though he is gone, his memory will always linger and help to fuel our work.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I know that each Senator has his own story and experience with respect to problems of veteran health care in his or her home State. I am just going to take a couple of minutes to explain some problems that rural States have with which I am particularly familiar. Today I spoke to Tom Pouliot. Who is Tom? Tom is a vet from my hometown of Helena, MT. He is also the national commander of the Veterans of Foreign Wars. Let me tell you a story that Tom has explained to me, which I know is a major problem in rural States. I say ``rural.'' I mean really rural. I am not talking about eastern rural, although veterans in all parts of the country obviously need health care, and aren't getting the health care that they need. But I am talking about western rural, west of the 100th meridian where it doesn't rain, where the distances between towns are vast. Let me tell you a story I repeat sometimes to my colleagues. When the First Lady was in Montana not too many years ago, she got off the plane, and says, ``This isn't rural. This is mega-rural. This is hyper-rural.'' I mean, for those who haven't been in the West west of the 100th meridian, I don't know, with all due respect, that one gets the sense of just how rural it is until you are there. What is the problem? The problem is that tonight we can vote to increase veterans' health care by an additional $2 billion. That is the amendment offered by the Senator from South Dakota, Mr. Johnson. Why do I think that is a good idea? It is a good idea because the VA has had a flatline appropriations for veterans' health care for 3 consecutive years. Just think of it. For 3 consecutive years, there has been no increase for veterans' health care, something that is very important and desperately in need of. I believe that a fourth year of a flatline health care budget would be deeply irresponsible. Let me explain a couple of reasons why. Not only Tom, but I and others who have visited the VA facilities in Montana, of which there are not many, found this problem firsthand. I asked the VA in Montana to visit Miles City, Billings, and Helena, so they could get a firsthand look of what veterans face in getting the health care that they need.

Mr. BAUCUS. Mr. President, I want to follow on the remarks of my good friend from Massachusetts, Senator Kennedy, because I think he, with great articulation, hits the nail on the head. We are talking here not about gimmicks but what is the right way, the most solid way to put a budget together and to protect Social Security. There is a right way; there is a wrong way. The Lautenberg amendment is the right way to preserve Social Security. The amendment of the Senator from Michigan is a good example of an idea that sounds good, but is the wrong way. Mandated reductions in our Nation's debt limit are irresponsible. They are dangerous. They could hurt the very people that the proponents claim they want to help; namely, Social Security beneficiaries. As a member of the Finance Committee, I understand very clearly the risks this amendment poses. Debt is incurred solely to pay expenditures that Congress has already authorized. The time to limit spending is when Congress is considering the underlying bills, whether they be appropriations bills or tax bills, not after the bills have already been enacted into law. By the time the debt limit is reached, the Government is already obligated to make payments and must have enough money to do so. The debt obligations of the United States are recognized as having the least credit risk of any investment in the world. That credit standing is a precious asset for the American people and helps our economy by reducing the costs of borrowing. Remember, the last time we came face to face with a debt limit crisis in November 1995, Moody's credit rating service placed Treasury securities on review for possible downgrade. They did this because it appeared possible for the first time in our Nation's history that the United States might be forced to default on our debt obligations. From the safest investment in the world, America overnight became comparable to that of countries which we do not hold in as high regard. If the debt limit is reached and Congress cannot quickly obtain a supermajority to increase the limit, Treasury might easily be forced to stop honoring any payments. The largest single recurring monthly expenditure for the Treasury comes every month when Social Security checks are sent out. The effect of this amendment, which is being touted as helping to preserve Social Security for the future, could easily be to force current beneficiaries to live without the monthly checks that so many depend upon for their livelihood. Those who support this amendment-- that is, of the Senator from Michigan--seem to feel that we must in effect destroy Social Security in order to save it. Obviously, the majority of Members disagree. I believe we can save Social Security for the future without putting current beneficiaries at risk of losing their monthly checks. We can do this not by supporting the Abraham amendment but by sticking to the budget enforcement tools that have successfully brought us this far, from a time of red ink as far as the eye could see to a day of projected budget surpluses. That is why I support strongly the amendment offered by Senator Lautenberg. Simply put, we should reach agreement on a solution to the Social Security problem before we begin spending money we don't yet have. Until that happens, we should keep the pay-go rules and discretionary spending caps in place. This is the only way to truly save Social Security first. I believe if we pursue this course we can make room in the budget for a number of critical priorities. In addition to saving Social Security, we can preserve Medicare. We all know that Medicare is in dire straits, worse shape than Social Security, and I am astounded that the majority party does not want to save Medicare, a program that is in worse shape even than Social Security. I might also say that the balanced budget amendment which we passed a couple of years ago has a disproportionately detrimental effect on rural hospitals and rural doctors. In my State of Montana, rural hospitals lost 6.5 percent in 1997 in spite of the news that hospitals nationwide are making big profits--a 6.5-percent loss. That was before the balanced budget amendment cuts. If, as some suggest, we don't infuse the Medicare trust fund with some surplus moneys, there is a very real possibility that providers could suffer further cuts. If that happens, small rural hospitals will not just lose money, they will close. For all the very real danger in the social security system, did you know that if we do nothing Medicare will be insolvent in about the next ten years? Think about that. We are less than a decade away from allowing a major piece of our nation's security to whither on the vine. Let's consider how quickly that date is coming. Only eight years ago, we launched Operation Desert Storm in Iraq. Ten years ago the Berlin Wall fell. Seems like yesterday, doesn't it? And just a couple of years ago, Mr. President, Congress passed the Balanced Budget Act. In the BBA, we extended the life of the Medicare Trust Fund. But we also implemented over $100 billion in cuts to health care providers. I hear about those reductions from Montanans every day. Montana small rural hospitals lost 6.5 percent in 1997, in spite of news that hospitals nationwide were making a killing. 6.5 percent, Mr. President. And that was before the BBA cuts. If, as some have suggested, we don't infuse the Medicare Trust Fund with some surplus monies, there is a very real possibility that providers could suffer further cuts. If that happens small rural hospitals will not just lose money, they will close. And patients--not just providers--will suffer. This Congress should do the responsible thing by not balancing the budget on the backs of Medicare patients and providers. The Senate should dedicate 15 percent of the budget surplus to save Medicare. Mr. President, saving Social Security and shoring up Medicare must be our two top priorities. I don't think that precludes us from passing targeted tax cuts, though. I think we can make room for tax cuts by getting rid of wasteful spending wherever it occurs. Let me tell you a few tax cuts I will personally work for this Congress: We should end the marriage penalty for Montana and American families. We should provide tax cuts to promote education for our children. I will push this year to further expand the student loan interest deduction. I'll introduce legislation to encourage greater donations of computers and technology to schools. And I'll expand the lifelong learning credit so our workers can get the vital training they need to adapt to today's changing, global economy. We should expand pension coverage particularly for our small business. Only one in five Montanans working for small businesses have access to retirement plans. I am introducing legislation to try to make pension plans more affordable and less complicated for small businesses and their employees. And, as part of my safety net to help farmers weather these turbulent times, I am promoting a new farm savings account. Mr. President, in conclusion, I believe that the pending amendment is the right way to go. We must save Social Security first. We should not use gimmicks like the ``lock box'' that could jeopardize our ability to issue social security checks and hurt the very people that we are trying to help. Mr. President, I believe that, without such a gimmick, we can make room in the budget for what should be our three biggest priorities: Social Security, Medicare, and targeted tax cuts. Let's seize this opportunity and do what's right for our country. In summary, I am quite concerned about the priorities that are in the majority budget. A budget sets a country's priorities. For me, one of the main priorities should be saving Social Security, which, in effect, the majority budget does not do. Certainly we should help do what we can to save Medicare, to shore up Medicare, shore up the Medicare trust fund, which certainly the budget resolution before the Senate does not do. We should not use gimmicks like lockboxes, and so forth. It may sound good, but they do not provide the benefits they purport to have. I very much hope we adopt the amendment offered by the Senator from New Jersey, the amendment that sets the priorities that this country really needs and want. I yield back the remainder of my time.

Mr. BAUCUS. Mr. President, in a nutshell, the problem is this: Veterans in Montana get appointments at Fort Harrison and other veterans facilities. They drive hundreds of miles for the appointments. They get there, and it is canceled. They have to get in their car, or have someone drive them back to their home hundreds of miles away again. This is very common. Why? Because of personnel cuts. It is going to get worse unless we increase the veterans' health care budget. Tonight I plead with my colleagues to support the Johnson amendment. Give our veterans a break. Men and women who have fought so hard for America, particularly our elderly vets, who in, say, World War II, or in the Korean war, fought for America. Here we are increasing the defense budget. We are not helping veterans' health care. That is just not right. All we are asking is to take a little bit of a nick out of the defense budget, just a little, and increase veterans' health care just a little. As I mentioned, there has been no increase in the last 3 years. This budget this year has no increase. That will be the fourth year. Let's just add a little bit to veterans' health care. I think it is the right thing to do for America's veterans. I thank the Senator from New Mexico for the extra minute. I yield the floor.

Mr. BAUCUS. Mr. President, I ask for 1 minute.

Mr. BAUCUS. Just 4 minutes. That is not 8 o'clock. That is 5 minutes from now.

Mr. BAUCUS. Mr. President, I ask unanimous consent to speak for 4 more minutes.

Mr. BAUCUS. That is 5 minutes from now. I am asking for 4 minutes.

Mr. BAUCUS

Mr. BAUCUS. Assuming they will file late this summer, or early this fall, on this issue, how long might that lawsuit be pending?

Mr. BAUCUS. Mr. President, I appreciate the remarks of my good friend from Alaska. After all, he is one of the two Senators who represent the State of Alaska, and he believes strongly in this matter. Mr. President, this is the very same matter we discussed 6 months ago, exactly the same. This is one of those environmental riders which has popped up again. It is the Glacier Bay environmental rider. That is the environmental rider on the Interior appropriations bill of last year, a bill that never came before the Senate, I think, with all due respect to my good friend from Alaska, because a lot of Senators did not want to have those votes on those environmental riders. There were several of them. And so the whole Interior appropriations bill was then submerged into the omnibus appropriations bill, that giant and super granddaddy bill that came up before the House and Senate last year, and in that omnibus bill there was an agreement--this was a provision which was an agreement essentially between the White House and the Senator from Alaska, the chairman of the Appropriations Committee, Mr. Stevens, on this matter. We have already dealt with this. There is an agreement. It was written into the law, and let me read you the agreement. This is the law. The agreement says very simply: The Secretary of Interior and the State of Alaska shall cooperate in the development and the management and planning for the regulation of commercial fisheries in Glacier Bay National Park. On and on. Then it goes on to say: Such management plan shall provide for commercial fishing in the marine waters within Glacier Bay National Park outside of Glacier Bay proper and within marine waters within Glacier Bay as specified in paragraph . . . Anybody who wants to can read all of the relevant provisions. Basically, the agreement is this: That fishing, commercial fishing, outside of Glacier Bay is fine. It is fine. Even fishing next to the boundaries of Glacier Bay is fine. A commercial fishery within Glacier Bay was to have certain restrictions because there was a conflict between the national park values within Glacier Bay--for example, wilderness areas within Glacier Bay--and commercial fishing interests within Glacier Bay. So we worked out an agreement--the White House and Senator Stevens, the chairman of the Appropriations Committee--worked out an agreement, of which I read part. Other parts of the agreement are not quite as relevant as the parts I read. That is the essential nature of the agreement. We have debated this before. This is not new. I stood on this floor several hours, with other Senators, debating other environmental riders. Izembek was an environmental rider; now we have Glacier Bay, another environmental rider. After several hours of debate on the Senate floor, we concluded debate because the Interior appropriations bill never came up. It was withdrawn. It was then subsumed into the large omnibus appropriations bill with the agreement that I just outlined between the White House and the senior Senator from Alaska. Now, here we are all over again; same issue, same subject; nothing new. I say to my colleagues, we have discussed this. We have debated it. We have reached an agreement on this issue. We are here now on the supplemental appropriations bill. We want to get this bill passed today so we can send it over to the other body and have a conference, come back, and be through with the supplemental appropriations this week. Why prolong the Senate on an amendment which has already been debated, an amendment which has already been agreed to, in the sense that a compromise was worked out that recognized both the National Park interests and the wilderness interests--which, after all, are American interests--in Glacier Bay on the one hand, with the fishing interests and particularly the indigenous interests on the other hand? I say to my colleagues, we are hearing this argument all over again. We have an agreement. Essentially, what the amendment by the Senator from Alaska provides is to rescind that agreement. That is what the amendment does, rescind it. It is couched a little bit by saying rescind it and tell the State that it will be rescinded until the State of Alaska has resolved its lawsuit with the Federal Government--but we don't know when that will be; some lawsuits go on forever with appeals and so forth. It is essentially a recision of the agreement that we already agreed to. The State of Alaska and the Department of Interior are now engaging in discussions as to what the management plan at Glacier Bay should be. Those are ongoing discussions. To override the agreement we have reached just because a couple weeks ago we heard that the State of Alaska intends to file a lawsuit--a suit which may or may not occur, a suit which may last for years; who knows if it will ever be finally terminated--and for us to then stop an agreement on that basis, I think, does not make a lot of sense, frankly. I think it makes much more sense--and this is a bit presumptuous on my part--for the State of Alaska to, in good faith, sit down with the Department of Interior and see if they can work out any remaining issues. Certainly filing a lawsuit raises questions as to how feasible an agreement is, whether one can be reached. I say don't file the suit. Sit down with the Department of Interior and try to work it out. If in good faith the State of Alaska believes the Department of Interior is not acting in good faith, then we will see what we can work out at that point. We are not at that point. We are certainly not at that point when a lawsuit has been filed by the State of Alaska which only muddies the waters--no pun intended--on this whole issue. I am not going to go into all the details of this because we have gone over it so many times and in so many hours, except to say this has been debated, this very subject. This is one of those environmental riders which, incredibly, has popped up again. We have reached an agreement; the White House and the senior Senator from Alaska reached an agreement. I say abide by the agreement, try to make that work. If it doesn't work, then we will see if we can resolve it later. We all understand the Senator from Alaska is here standing up for the people at Glacier Bay, and I understand that. However, there is an agreement worked out in the omnibus appropriations bill. I say let's stand by that agreement. I yield the floor.

Mr. BAUCUS. Mr. President, I have a few brief questions, if I might. The question is, Has the State of Alaska filed a lawsuit?

Mr. BAUCUS. Fine.

Mr. BAUCUS. Might that lawsuit conceivably take a couple, or 5, or 10 years before it is resolved? Is that possible?

Mr. BAUCUS. But it is possible.

Mr. BAUCUS. Mr. President, I will be very brief. I don't know why this issue needs to go on forever. It is deja vu all over again. The Senator from Alaska has admitted that his amendment has the effect of preventing the management plan from going into effect for years--5, 10, who knows how many years--because his amendment essentially says no funds may be expended by the Secretary of Interior to implement the plan until such time as the State of Alaska's legal claim over ownership and jurisdiction, et cetera, is resolved. Who knows how long that is going to take? That could take a long, long time. That would mean for up to many, many years that this issue remains unresolved. We resolved this issue in the omnibus appropriations bill. It was resolved. The senior Senator from Alaska agreed with the White House on the compromise, recognizing, on the one hand, the interests of the national park and the wilderness area and, on the other hand, the fishing interests of the people who live in and about Glacier Bay. It has already been agreed to. There is a compromise agreed to by both sides--the Senator from Alaska, the senior Senator, Senator Stevens, and the White House--in the omnibus appropriations bill. It has been agreed to. So here we are now faced with an amendment which undoes that agreement. It very simply undoes that agreement by saying no funds may be expended with respect to any management plan in Glacier Bay until a lawsuit, not yet filed, is resolved. I say that we should go ahead with the plan. We should go ahead with working out the provisions of the plan. The State of Alaska can still file its lawsuit if it wants to. And that lawsuit may or may not change the result. In addition, I might add, this is a national park. This is a wilderness area. This has very pristine values which all Americans want to protect. We do at the same time want to recognize--and do recognize--the interests of the fishermen in Glacier Bay; thus, the compromise. The compromise, the agreement, is already reached. It has been debated ad nauseam. So I am going to stop right here. I urge the Senate to uphold the original agreement, which most Senators already agreed to when they voted for the omnibus appropriations bill last year. Mr. MURKOWSKI addressed the Chair.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. BAUCUS. Mr. President, I see the Senator from Alaska on the floor. I am about to move to table the Murkowski amendment and to give the Senator notice as to when he may or may not want to vote on this.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, it is with great pleasure that I join with my colleague from Utah, Senator Hatch, and my other colleagues to introduce this bill, which is so critical to the ability of American businesses to effectively compete in the global marketplace. I am particularly pleased that this bill includes as original co-sponsors one-third of the members of this body. This bill is bi-partisan and bi-cameral. Companion legislation, introduced in the House by Representatives Nancy Johnson and Robert Matsui, is co- sponsored by over one-quarter of the Members of the House. Our Nation is the world's undisputed leader in technological innovation, a position that would not be possible absent U.S. companies' commitment to research and development. Investment in research is an investment in our Nation's economic future, and it is appropriate that both the public and private sector share the costs involved, as we share in the benefits. The credit provided through the tax code for research expenses provides a modest but crucial incentive for companies to conduct their research in the United States, thus creating high-skilled, high-paying jobs for U.S. workers. The R&D credit has played a key role in placing the United States ahead of its competition in developing and marketing new products. Every dollar that the federal government spends on the R&D credit is matched by another dollar of spending on research over the short run by private companies, and $2 of spending over the long run. Our global competitors are well aware of the importance of providing incentives for research, and many provide more generous tax treatment for research and experimentation expenses than does the United States. As a result, while spending on non-defense R&D in the United States as a percentage of GDP has remained relatively flat since 1985, Japan's and Germany's has grown. The benefits of the credit, though certainly significant, have been limited over the years by the fact that the credit has been temporary. In addition to the numerous times that the credit has been allowed to lapse only to be extended retroactively, the 1996 extension left a 12- month gap during which the credit was not available. This unprecedented lapse sent a troubling signal to the U.S. companies and universities that have come to rely on the government's longstanding commitment to the credit. Much research and development takes years to mature. The more uncertain the long-term future of the credit is, the smaller its potential to stimulate increased research. If companies evaluating research projects cannot rely on the seamless continuation of the credit, they are less likely to invest in research in this country, less likely to put money into cutting-edge technological innovation that is critical to keeping us in the forefront of global competition. Our country is locked in a fierce battle for high-paying technological jobs in the global economy. As more nations succeed in creating educationally advanced workforces and join the U.S. as high- technologically manufacturing centers, they become more attractive to companies trying to penetrate foreign markets. Multinational companies sometimes find that moving both manufacturing and basic research activities overseas is necessary if they are to remain competitive. The uncertainty of the R&D credit factors into their economic calculations, and makes keeping these jobs in the U.S. more difficult. According to a study conducted by Coopers & Lybrand last year, making the R&D credit permanent will provide a substantial positive stimulus to investment, wage-growth, productivity, and overall economic activity for this country. Payroll increases from gains in productivity are estimated to total $64 billion over the period 1998 through 2010. In the year 2010 alone, the payroll increase is estimated to total nearly $12 billion. Also according to the study, gross State Product, which is the basic measure of economic activity in a state, will rise overall by nearly $58 billion between 1998 and 2010 as a result of a permanent credit. Nearly three-fifths of this increase nationally is attributable to additional value added by industries that generally do not perform R&D themselves, but benefit from the R&D done by companies in other industries. Gains in payroll and in Gross State Produce are not limited to states regarded as centers for technological innovation. Although such regions of the country certainly benefit from the credit, each and every state will profit in some measurable way from the credit since all sectors of the economy--agriculture, mining, basic manufacturing, and high-tech services--benefit from productivity improvements resulting from the additional research and development caused by the credit. My own State of Montana is an excellent example of this economic activity. The total increase in payroll due to the R&D credit for the years 1998-2010 is estimated to be just over $250 million. The total increase in Gross State Product during this same period is expected to be $150 million. Neither of these increases place Montana in the top tier of States benefiting from the credit. However, looking beyond those numbers, the impact of the credit in Montana is substantial. In 1995, 12 of every 1,000 private sector workers were employed directly by high-tech firms in Montana. Almost 400 establishments provided high- technology services, at an average wage of $34,500 per year. These jobs paid 77 percent more than the average private sector wage in 1995 of $19,500 per year. Many of these jobs would never have been created without the assistance of the R&D credit. And many more jobs in Montana are dependent upon the growth and stability of the high-tech sector. Although the cumulative numbers may not be high in comparison with other States, the impact of the R&D credit on Montana's economy is clear. Senator Hatch and I are not newcomers to this issue. We have jointly introduced bills to make the R&D credit permanent in numerous previous Congresses only to end up with extensions of one year or less. But I like to think that this year will be different. The hard work we have done to bring our budget into balance is finally beginning to pay off, and the projected budget surpluses gives us an opportunity to think carefully about how best to allocate our resources. We believe making the R&D credit permanent is a wise use of budget dollars because of the direct positive impact on economic growth and productivity. This is not just a corporate issue. This is a use of tax dollars that benefits all of us who are working to expand employment, increase wages and keep our Nation at the cutting edge of technological development. I sincerely hope we can make this year the year that the R&D credit becomes a permanent part of our tax code. I urge my colleagues to support this legislation.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, it is with great pleasure that I join with my colleague from Utah, Senator Hatch, and my other colleagues to introduce this bill, which is so critical to the ability of American businesses to effectively compete in the global marketplace. I am particularly pleased that this bill includes as original co-sponsors one-third of the members of this body. This bill is bi-partisan and bi-cameral. Companion legislation, introduced in the House by Representatives Nancy Johnson and Robert Matsui, is co- sponsored by over one-quarter of the Members of the House. Our Nation is the world's undisputed leader in technological innovation, a position that would not be possible absent U.S. companies' commitment to research and development. Investment in research is an investment in our Nation's economic future, and it is appropriate that both the public and private sector share the costs involved, as we share in the benefits. The credit provided through the tax code for research expenses provides a modest but crucial incentive for companies to conduct their research in the United States, thus creating high-skilled, high-paying jobs for U.S. workers. The R&D credit has played a key role in placing the United States ahead of its competition in developing and marketing new products. Every dollar that the federal government spends on the R&D credit is matched by another dollar of spending on research over the short run by private companies, and $2 of spending over the long run. Our global competitors are well aware of the importance of providing incentives for research, and many provide more generous tax treatment for research and experimentation expenses than does the United States. As a result, while spending on non-defense R&D in the United States as a percentage of GDP has remained relatively flat since 1985, Japan's and Germany's has grown. The benefits of the credit, though certainly significant, have been limited over the years by the fact that the credit has been temporary. In addition to the numerous times that the credit has been allowed to lapse only to be extended retroactively, the 1996 extension left a 12- month gap during which the credit was not available. This unprecedented lapse sent a troubling signal to the U.S. companies and universities that have come to rely on the government's longstanding commitment to the credit. Much research and development takes years to mature. The more uncertain the long-term future of the credit is, the smaller its potential to stimulate increased research. If companies evaluating research projects cannot rely on the seamless continuation of the credit, they are less likely to invest in research in this country, less likely to put money into cutting-edge technological innovation that is critical to keeping us in the forefront of global competition. Our country is locked in a fierce battle for high-paying technological jobs in the global economy. As more nations succeed in creating educationally advanced workforces and join the U.S. as high- technologically manufacturing centers, they become more attractive to companies trying to penetrate foreign markets. Multinational companies sometimes find that moving both manufacturing and basic research activities overseas is necessary if they are to remain competitive. The uncertainty of the R&D credit factors into their economic calculations, and makes keeping these jobs in the U.S. more difficult. According to a study conducted by Coopers & Lybrand last year, making the R&D credit permanent will provide a substantial positive stimulus to investment, wage-growth, productivity, and overall economic activity for this country. Payroll increases from gains in productivity are estimated to total $64 billion over the period 1998 through 2010. In the year 2010 alone, the payroll increase is estimated to total nearly $12 billion. Also according to the study, gross State Product, which is the basic measure of economic activity in a state, will rise overall by nearly $58 billion between 1998 and 2010 as a result of a permanent credit. Nearly three-fifths of this increase nationally is attributable to additional value added by industries that generally do not perform R&D themselves, but benefit from the R&D done by companies in other industries. Gains in payroll and in Gross State Produce are not limited to states regarded as centers for technological innovation. Although such regions of the country certainly benefit from the credit, each and every state will profit in some measurable way from the credit since all sectors of the economy--agriculture, mining, basic manufacturing, and high-tech services--benefit from productivity improvements resulting from the additional research and development caused by the credit. My own State of Montana is an excellent example of this economic activity. The total increase in payroll due to the R&D credit for the years 1998-2010 is estimated to be just over $250 million. The total increase in Gross State Product during this same period is expected to be $150 million. Neither of these increases place Montana in the top tier of States benefiting from the credit. However, looking beyond those numbers, the impact of the credit in Montana is substantial. In 1995, 12 of every 1,000 private sector workers were employed directly by high-tech firms in Montana. Almost 400 establishments provided high- technology services, at an average wage of $34,500 per year. These jobs paid 77 percent more than the average private sector wage in 1995 of $19,500 per year. Many of these jobs would never have been created without the assistance of the R&D credit. And many more jobs in Montana are dependent upon the growth and stability of the high-tech sector. Although the cumulative numbers may not be high in comparison with other States, the impact of the R&D credit on Montana's economy is clear. Senator Hatch and I are not newcomers to this issue. We have jointly introduced bills to make the R&D credit permanent in numerous previous Congresses only to end up with extensions of one year or less. But I like to think that this year will be different. The hard work we have done to bring our budget into balance is finally beginning to pay off, and the projected budget surpluses gives us an opportunity to think carefully about how best to allocate our resources. We believe making the R&D credit permanent is a wise use of budget dollars because of the direct positive impact on economic growth and productivity. This is not just a corporate issue. This is a use of tax dollars that benefits all of us who are working to expand employment, increase wages and keep our Nation at the cutting edge of technological development. I sincerely hope we can make this year the year that the R&D credit becomes a permanent part of our tax code. I urge my colleagues to support this legislation.