Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, it is with great pleasure that I join with my colleague from Utah, Senator Hatch, to introduce this important bill today. The Home Office Deduction Act of 1997 will correct a problem that has unfairly hurt thousands of small businesses in this country. In 1993, the Supreme Court, in its Commissioner versus Soliman decision, substantially narrowed the availability of the home office deduction. Until the Soliman decision, small business owners and professionals who dedicated a space in their homes for business activities were generally allowed to deduct the expenses of the home office if the space was used solely and exclusively and on a regular basis as an office, and the deduction was not greater than the income earned by the business. In the Soliman case, the Supreme Court limited the credit to only those persons who met with customers in the home office, or who conducted the primary business function in the home. This principal business location requirement has proven to be impossible to meet for many taxpayers with legitimate home office expenses. the ironic effect of the Supreme Court's decision is that a taxpayer who operates from a store front, an office building, or an office park is allowed a full deduction, but one who chooses to work at home is penalized. This ruling denies the home office deduction to self- employed plumbers, home-care nurses, and other self-employed business people who try to economize by working from their homes but cannot meet with customers there due to the nature of their businesses. Our bill is designed to restore the home office deduction to thousands of American men and women who work at home. Rather than requiring taxpayer to meet the new criteria set out by the Court, the bill allows a home office to meet the definition of a principal place of business if it is the sole location where essential administrative or management activities are conducted on a regular and systematic basis by the taxpayer. To avoid possible abuses, the bill requires that the taxpayer have no other location for the performance of these activities. The job market in the United States is constantly changing. New technologies are helping to make the work-at-home option a practical reality, bringing all the benefits to society that home-based businesses can provide. Mothers and fathers, whether single or married, are more often choosing to work at home to be with their children. Having a parent at home who can help supervise children while earning a living can have a tremendous positive effect on the well-being of our families and of society. Restoration of the home office deduction was one of the most important recommendations to come out of the June 1995 White House Conference on Small Business. Some of America's fastest growing and most dynamic companies originated in the spare bedroom or the garage of the founder. To foster continued economic growth and to encourage Americans to start their own business ventures, we need to pass legislation that will put home-based businesses on an equal footing with other enterprises. I urge my colleagues and the administration to support this legislation, and look forward to seeing it enacted in the 105th Congress.

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 Senators Abraham, Boxer, Bingaman, Conrad, D'Amato, DeWine, Dorgan, Moseley-Braun, Murray, and Rockefeller to introduce this bill, which is so critical to the ability of American businesses to effectively compete in the global marketplace. Companion legislation has been introduced in the House by Representatives Nancy Johnson and Robert Matsui. Our Nation is the world's undisputed leader in technological innovation, a position that would not be possible, absent U.S. companies' commitment to research and development. Investment in research is an investment in our Nation's economic future, and it is appropriate that both the public and private sector share the costs involved, as we share in the benefits. The credit provided through the Tax Code for research expenses provided a modest but crucial incentive for companies to conduct their research in the United States, thus creating high-skilled, high-paying jobs to U.S. workers. The R&E 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&E 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 nondefense 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, last year, for the first time, when Congress extended the credit it left a gap of an entire year 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 on 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 work forces and join the United States as high-technology manufacturing centers, they become more attractive to companies trying to penetrate foreign markets. Multinational companies sometimes find that moving both manufacturing and basic research activities overseas is necessary if they are to remain competitive. The uncertainty of the R&E credit factors into their economic calculations, and makes keeping these jobs in the United States more difficult. Although the R&E credit is not exclusively used by high-technology firms, they are certainly key beneficiaries of the credit. In my own State of Montana, 12 of every 1,000 private sector workers were employed by high-technology firms in 1995, the most recent year for which statistics are available. 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 Montana of $19,500 per year. Many of these jobs would never have been created without the assistance of the R&E credit. Making the credit permanent would most certainly provide the incentive needed to create many more in the future. I urge my colleagues to support this legislation, and look forward to working with them and with the administration to make the research and experimentation tax credit permanent.

Mr. BAUCUS. Mr. President, it is with great pleasure that I join with my colleague from Utah, Senator Hatch, to introduce this important bill today. The Home Office Deduction Act of 1997 will correct a problem that has unfairly hurt thousands of small businesses in this country. In 1993, the Supreme Court, in its Commissioner versus Soliman decision, substantially narrowed the availability of the home office deduction. Until the Soliman decision, small business owners and professionals who dedicated a space in their homes for business activities were generally allowed to deduct the expenses of the home office if the space was used solely and exclusively and on a regular basis as an office, and the deduction was not greater than the income earned by the business. In the Soliman case, the Supreme Court limited the credit to only those persons who met with customers in the home office, or who conducted the primary business function in the home. This principal business location requirement has proven to be impossible to meet for many taxpayers with legitimate home office expenses. the ironic effect of the Supreme Court's decision is that a taxpayer who operates from a store front, an office building, or an office park is allowed a full deduction, but one who chooses to work at home is penalized. This ruling denies the home office deduction to self- employed plumbers, home-care nurses, and other self-employed business people who try to economize by working from their homes but cannot meet with customers there due to the nature of their businesses. Our bill is designed to restore the home office deduction to thousands of American men and women who work at home. Rather than requiring taxpayer to meet the new criteria set out by the Court, the bill allows a home office to meet the definition of a principal place of business if it is the sole location where essential administrative or management activities are conducted on a regular and systematic basis by the taxpayer. To avoid possible abuses, the bill requires that the taxpayer have no other location for the performance of these activities. The job market in the United States is constantly changing. New technologies are helping to make the work-at-home option a practical reality, bringing all the benefits to society that home-based businesses can provide. Mothers and fathers, whether single or married, are more often choosing to work at home to be with their children. Having a parent at home who can help supervise children while earning a living can have a tremendous positive effect on the well-being of our families and of society. Restoration of the home office deduction was one of the most important recommendations to come out of the June 1995 White House Conference on Small Business. Some of America's fastest growing and most dynamic companies originated in the spare bedroom or the garage of the founder. To foster continued economic growth and to encourage Americans to start their own business ventures, we need to pass legislation that will put home-based businesses on an equal footing with other enterprises. I urge my colleagues and the administration to support this legislation, and look forward to seeing it enacted in the 105th Congress.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I thank my very distinguished colleague from New York. Not only the residents, citizens, and voters of the State of New York, but the rest of us in the country are very fortunate to have in the U.S. Senate the Senator from New York. He has added so much to our understanding of historical issues, cultural issues, and institutional memory. I just want to thank the Senator very much for all he has done for us.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise in support of the balanced budget amendment. Amending our Constitution is not an action that anyone in this body should take lightly. I did not reach my conclusion without a great deal of thought and consideration. It is time for Congress to pass this amendment and open it up to the scrutiny of the State legislatures, the Governors, and the citizens. a brief history ``Max, Congress needs to get its act in gear. We need to balance the budget.'' Four years ago I heard that everywhere I went in Montana. It didn't matter if I was out on one of my workdays or at the county fairs; spending time on a dusty ranch, or in the growing cities. The deficit had ballooned to $290 billion and it showed no signs of shrinking. The deficit was not only running up our national debt, it was eating away at the public's confidence in their Government. Then, 4 years ago, an interesting thing happened. Congress passed, and President Clinton signed, a budget that actually cut our deficit. And now for the past 4 years we have shrunk the deficit. Last year the Congressional Budget Office estimated that the deficit was down to $107 billion. We can all agree that these are steps in the right direction. But not is not the time to start patting ourselves on the back. These steps toward solvency are not enough. Montanans still tell me that balancing the budget is one of their highest priorities. And it should be our top priority. I have worked toward a balanced budget for a long time. I believe that we need to cut spending, eliminate Government waste, and to create a Tax Code which is fair to Montana families. I have often been in pretty small company as I have worked for the first of those priorities--cutting spending. In 1984, I was joined by former Senator Kassebaum, and Senators Grassley and Biden in sponsoring an across-the-board freeze on all Government spending. This 1-year freeze got just 33 votes. While it would have caused pain in Montana, it spread the cuts out to many programs and shared the pain. That's how this process must work if we are to get to a balanced budget. In 1986, I was the only member of Montana's congressional delegation--and the delegation was 33 percent larger then--to vote for the Gramm-Rudman-Hollings act. That bill required Congress to meet a set of progressively lower budget targets each year. But that bill included no plan to get us to our targets. I was just one of 31 Senators to join Senator Kerrey in 1994 on a bill to cut $9 billion from a number of programs. This package included cuts to programs which benefit Montana, like the food aid programs which help our wheat farmers and the honey program. And the means testing for Medicare part B would have increased medical expenses for some Montanans. But it was fair and it represents the task before us. There are no simple cuts. I have fought Government waste for years. I have long opposed the star wars defense system and the space station. In the 103d Congress, as chairman of the Committee on the Environment and Public Works, I cut $120 million from the Federal courthouse construction budget. Prior to that I worked with then-Senator DeConcini to cut $50 million from the CIA's National Reconnaissance Office after we caught them wasting money on a building with a fountain and a sauna. I am not a newcomer to this fight. rationale On this floor there has been a lively, principled debate about if, when, and how easily this country should run a deficit. I do believe that in times of crisis, such as an act of war, we should be allowed to run a deficit--temporarily. The last time there was a balanced budget or a budget surplus was fiscal year 1969. We have been running at a deficit for 28 years now--through three expansions and two recessions. To run a deficit for that long--without a clear and pressing need--is wrong. The time to balance the budget is now. reservations: social security I also recognize that we have a commitment to Social Security that we cannot ignore. Many Montanans and Americans depend on these benefits when they retire. We are all aware of the far-reaching budget consequences that will result when my generation, the baby boomers, reaches retirement age. The strain on the system will be unprecedented, but not insurmountable. Through careful planning we can preserve Social Security for all. However, I fear that it would only be a matter of time before a mid- year scramble to meet budget requirements would lead some legislators to consider cutting benefits. We cannot let that happen. We must protect the Social Security system for our Nation's seniors. I will work very hard to do just that. conclusion So I urge you all to speak to your constituents. Look deep within yourselves and examine your values. Amending our Constitution is--by design--a difficult task. Something that cannot be done on a whim. I have thought long and hard. And I've concluded that we need to make a clean break with the past. We need to establish a new ethic of responsibility. As I said earlier, there has been a lively and principled debate here on the Senate floor. It is now time to expand the debate. Let the people decide. I am confident that they will be as cautious and thoughtful as we have been.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am pleased today to join Senator Hatch in cosponsoring the Software Export Equity Act. I believe the continued vitality of the U.S. software industry is extremely important to the U.S. economy. The Software Export Equity Act will not only help us to retain high-paying U.S. software development jobs with successful U.S. software companies, but also will help smaller U.S. software companies to enter the export market by helping to offset the high costs of exporting. The Software Export Equity Act ensures that U.S. software exports qualify for the benefits of the foreign sales corporation [FSC] rules, which are very important to maintaining a high level of U.S. exports. The foreign sales corporation rules were enacted to provide an incentive for U.S. companies to manufacture their products in the United States for export overseas, thus retaining U.S. development and manufacturing jobs. It is clearly as important to Congress to retain U.S. software development jobs, which are among the highest paying jobs in the United States, as it is to retain other manufacturing and development jobs. Nonetheless, the IRS has questioned the application of the FSC rules to software because independent software products did not exist when this incentive was originally enacted in 1971. Our tax laws must keep up with changes in technology and recognize that FSC rules should apply to software. This legislation is about fairness, but more importantly, this legislation is about jobs and preserving the ownership of technology in the United States. The Department of Commerce estimates that every $1 billion of export trade is worth domestic jobs. Today there are nearly 600,000 U.S. employees working directly in the software industry, with at least another 1.5 million software developers employed in related industries. These are high-paying jobs, with average compensation in 1992 of $55,000 per employee. The Software Export Equity Act will prevent U.S. software companies from moving those high-paying software development jobs overseas, where highly skilled labor is available for much lower wages. The Software Export Equity Act will also help smaller software companies to enter the export market by helping to offset the high cost of exporting, which was one of the principal purposes for creating the FSC rules. FSC treatment is as important to exports of software as it is to exports of other U.S. products that are clearly covered by these rules. Finally, the Software Export Equity Act will protect U.S. ownership of technology. If software development jobs were moved outside the United States, ownership of the technology created would also move outside the United States. Today the software industry has revenues of $200 billion a year and a growth rate of 13 percent per year. To lose U.S. ownership of the future of this industry would mean not only a tremendous direct loss to the GDP, but also would mean a loss of the spillover benefits that U.S.-developed technology has on other U.S. industries. In summary, the loss of ownership of this technology would be devastating to the growth potential of the U.S. economy. I appreciate the fact that the administration supports our position and has recommended FSC treatment for computer software in the budget. Enactment of this legislation will make that recommendation reality. I urge my colleagues to join Senators Hatch, Breaux, Nickles, and myself in support of swift action on the Software Export Equity Act.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am pleased today to join Senator Hatch in cosponsoring the Software Export Equity Act. I believe the continued vitality of the U.S. software industry is extremely important to the U.S. economy. The Software Export Equity Act will not only help us to retain high-paying U.S. software development jobs with successful U.S. software companies, but also will help smaller U.S. software companies to enter the export market by helping to offset the high costs of exporting. The Software Export Equity Act ensures that U.S. software exports qualify for the benefits of the foreign sales corporation [FSC] rules, which are very important to maintaining a high level of U.S. exports. The foreign sales corporation rules were enacted to provide an incentive for U.S. companies to manufacture their products in the United States for export overseas, thus retaining U.S. development and manufacturing jobs. It is clearly as important to Congress to retain U.S. software development jobs, which are among the highest paying jobs in the United States, as it is to retain other manufacturing and development jobs. Nonetheless, the IRS has questioned the application of the FSC rules to software because independent software products did not exist when this incentive was originally enacted in 1971. Our tax laws must keep up with changes in technology and recognize that FSC rules should apply to software. This legislation is about fairness, but more importantly, this legislation is about jobs and preserving the ownership of technology in the United States. The Department of Commerce estimates that every $1 billion of export trade is worth domestic jobs. Today there are nearly 600,000 U.S. employees working directly in the software industry, with at least another 1.5 million software developers employed in related industries. These are high-paying jobs, with average compensation in 1992 of $55,000 per employee. The Software Export Equity Act will prevent U.S. software companies from moving those high-paying software development jobs overseas, where highly skilled labor is available for much lower wages. The Software Export Equity Act will also help smaller software companies to enter the export market by helping to offset the high cost of exporting, which was one of the principal purposes for creating the FSC rules. FSC treatment is as important to exports of software as it is to exports of other U.S. products that are clearly covered by these rules. Finally, the Software Export Equity Act will protect U.S. ownership of technology. If software development jobs were moved outside the United States, ownership of the technology created would also move outside the United States. Today the software industry has revenues of $200 billion a year and a growth rate of 13 percent per year. To lose U.S. ownership of the future of this industry would mean not only a tremendous direct loss to the GDP, but also would mean a loss of the spillover benefits that U.S.-developed technology has on other U.S. industries. In summary, the loss of ownership of this technology would be devastating to the growth potential of the U.S. economy. I appreciate the fact that the administration supports our position and has recommended FSC treatment for computer software in the budget. Enactment of this legislation will make that recommendation reality. I urge my colleagues to join Senators Hatch, Breaux, Nickles, and myself in support of swift action on the Software Export Equity Act.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to express my strong support for the nomination of Rodney Slater to be the next Secretary of Transportation. Most of my colleagues know Rodney Slater from his tenure as the Federal Highway Administrator--a position he has held since 1993. Mr. Slater has proven his ability to grasp and understand transportation issues that are important to all regions of this country. Even though he is a native of Arkansas, I can tell my colleagues that he recognizes the needs of areas such as the West. In fact, he has traveled to Montana three times to see first hand the vast expanse of land and low population that is our State. These trips have enabled him to appreciate the true meaning of the word rural. And this experience will come in handy in the coming months. One of the key issues the 105th Congress will face is the reauthorization of the Intermodal Surface Transportation Efficiency Act or ISTEA. This legislation will set the highway and transit funding levels for every State and an understanding of the needs of rural States will be critical. ISTEA expires on September 30 of this year and we have our work cut out for us. There will be many difficult and controversial issues to be debated during reauthorization. One such issue will be the question of highway funding formulas. I would remind my colleagues that we are one Nation-- not 50 separate ones. We all come from different States with diverse transportation needs. But our goal should be to craft a reauthorization bill that will move this country forward into the next century--not one that takes us back. Mr. President, transportation in Montana is not just limited to highways. There is another important component of our transportation system--the Essential Air Service program. The Essential Air Service program ensures that some of this country's most rural and vulnerable communities have access to air transportation. It is truly an essential transportation program. Montana is second only to Alaska in the number of EAS communities-- seven. Every year, Congress must fight for the necessary funding to continue this program. However, Mr. Slater has pledged his commitment to support this program. I look forward to working with him and the rest of the Department to ensure the stability of this program into the future. Rodney Slater has repeatedly shown an ability to bring diverse interests together for a common goal. He has also displayed a skill for taking innovative approaches to many of the problems facing the transportation community. He has always been responsive to me and other Members of the Senate. It is these skills that Congress will need during the reauthorization of ISTEA and other transportation matters. Mr. President, I support this nomination without reservation and urge my colleagues to do the same. I yield the floor.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to ask that this body honor a man whose life was an honor to Montana. And a man whose death is a loss to us all. My friend, Charles A. ``Bill'' Bishop, died on Sunday, January 26. But his memory will continue to live on in all of us who remember him. His loss is sudden, and we are left now to remember this man who gave us so much. Throughout his life, he was a husband, a father, an advocate, a learner, a jokester, and a teacher. In everything he did, he attacked it with a passion--an unquenchable zest for life. Family was everything to Bill. He idolized his wife and children, and they loved him dearly. One of his favorite things in the world was spending time with his family. I extend my deepest sympathies to them in this time of sorrow. Bill's zest for life can easily be seen in his legacy of outspoken advocacy for the environment. With a heart as big as the Mission Mountains that he loved so much, Bill was committed to leaving this planet a better place for his children and grandchildren. On these issues, Bill was often an adviser to me. If he agreed with something I did, he would let me know. If he disagreed, I could expect to get an earful from him. Yet through it all, he was thoughtful, respectful, and eager to find solutions to the many problems that confront Montana. I still have a hard time imagining Montana without Bill Bishop. In many ways, I will never get used to his absence. To say that I will miss him is not enough. His passing leaves my life with a little less laughter and a little less joy. Those of us who knew Bill will make sure that the memories stay always fresh, renewed over and over again by our love for this great man. God bless you, Bill.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise to recognize and offer my deep gratitude to legislative director, Mark Smith, who tomorrow, after 14 years of public service, will leave our office to pursue a career in the private sector. I first became acquainted with Mark in 1983, when he joined my office as a legislative correspondent. He worked on my second campaign for the Senate as a driver and advance worker. After attending law school, he returned to my staff as a natural resources expert, and finally became legislative director in 1993. Very rarely in my life have I met someone who so embodies the qualities of integrity, hard work, perseverance, and loyalty. Mark's family comes from Thompson Falls in the northwest section of Montana. That part of our State is known around the world for its spectacular forests and mountains. And it is known throughout Montana for the respect its people hold for the land; for their strong ties of family and friendship; and for their old-fashioned values and work ethic. All these have put their stamp on Mark, and Mark brings them to work every day. He is an expert on the environment and natural resources. On these issues, Mark has always been able to find the elusive but essential balance. He has helped preserve Montana's most beautiful natural riches, while at the same time promoting and protecting the natural resource jobs that sustain so many Montana families. The preservation of Pompey's Pillar, the beauty of the Fort Peck Reservoir, and the prosperity of many Montana businesses are due in large part to Mark's appreciation of our great outdoors. He has a respect for public service and reverence for the law that come right from the heart. Of Mark's many accomplishments here, perhaps the one that has made me proudest comes from this unique quality. That is the confirmation of two Montanans, Sid Thomas and Ron Molloy, as Federal judges. Mark helped me create a selection process that brought two of the most qualified individuals in America to the Federal bench. And that will benefit every Montanan for many years to come. He has a rock solid work ethic and a deep respect for working men and women. Mark himself comes in to the job early and stays late. And when the Senate goes out on recess, Mark travels throughout Montana listening and learning from millworkers, farmers, small business owners, and people in every walk of life. And that has helped me more than I can say. And finally, but perhaps most important of all, Mark is one of the most honest, loyal, and dedicated people I have ever met. Now Mark is moving on. Everyone in our office will miss a valuable coworker, a respected adviser, and a good friend. But I and all the rest of us are very proud to have worked with Mark, and we wish him the best in the years to come.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I would like to take a moment to recognize a truly outstanding Montanan, and to make note of the recent honor extended to him by President Clinton. Many in Montana know Dan Kemmis through his years of devoted public service, first in the Montana Legislature, where he rose to the position of Speaker of the House, and later as Mayor of the City of Missoula. In every aspect of public life, Dan has served as an example of the standards to which we all aspire. A true gentleman and a model leader he is a public servant who believes that the true greatness of democracy lives in the shared experience of the citizenry. As mayor, even while working diligently on the problems of the day, Dan continued to think ahead, authoring ``Community and the Politics of Place'' in 1990, the acclaimed book serving as a written testament to his work to foster a sense of community in Missoula. Then in 1995 a second work, ``The Good City and the Good Life,'' was published, again to an outstanding reception. Many were surprised last spring when Dan stepped down as mayor to accept a new challenge as head of the Center for the Rocky Mountain West at The University of Montana. To those of us who know him, however, the move is simply the progression of Dan's unique talents as a leader. It is now his time to share the knowledge of the past years with rest of America, and a time to learn anew. This past month President Clinton recognized the contributions of Dan Kemmis, not only to Missoula, but to communities throughout America, by awarding him the National Endowment for the Humanities' Charles Frankle Prize. I cannot think of an individual more deserving of the honor. Thoughtful and compassionate, a true visionary and thinker, Dan is one of Montana's treasures and an American leader. In his prose as in his life, Dan has worked to shape the politics of the future, building consensus, and bringing people together, absent the rhetoric of the past that simply seeks to divide. As President Clinton so eloquently noted, he, ``* * * is a welcome and convincing voice against cynicism and social divisiveness.'' For this alone, we all owe him a debt of gratitude. I am honored to call Dan Kemmis a friend, and I join with all Montanans in expressing our thanks for his many years of service and congratulations upon receiving this most prestigious award.

Mr. BAUCUS

Mr. BAUCUS. Yes, that is my understanding of the intent of the lender and fiduciary liability provisions.

Mr. BAUCUS. Yes, what you have expressed is my understanding of the intent of Congress in enacting this legislation.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I wish to pay tribute to the life of a great Montanan and a very good man, Judge James F. Battin. Judge Battin lost his battle with cancer yesterday. But he leaves behind a legacy of public service and devotion to the law that has helped make Montana a better place. Last August, I had the honor of attending the investiture of Montana's newest Federal judge, Judge Don Molloy. Years ago, Judge Molloy served as a clerk for Judge Battin. And, through the ensuing years, Judge Battin played the role of friend and mentor to his former clerk. So it was a great honor to see Judge Battin administer the oath to our new judge. As Judge Molloy begins his service on the bench, he could look for no finer role model than Judge Battin. One of President Nixon's first judicial appointments, Judge Battin came to the bench from Congress. He served for a number of years--with great effectiveness and distinction--as eastern Montana's Republican Congressman. Yet, at the time, there were some Montana lawyers who questioned whether a good Congressman would also make a good judge. One attorney was later quoted as saying, ``everybody said he would be a terrible pain.'' But that same lawyer went on to say ``everybody was proven wrong . . . he's a superior judge.'' That is a sentiment shared by everyone in Montana who knew Judge Battin. Wanda and I offer our condolences to his wife Barbara and their family. Yet they should be deeply proud of the life Judge Battin lived. He made a difference.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, the Senate now has before it the conference report to accompany S. 640, the Water Resources Development Act of 1996. I would like to compliment the conferees on the fine work they have done in bringing this conference report to the Senate for resolution before the 104th Congress adjourns. A great deal of work has been done by the House and Senate committees, working together, to reach this point. Everyone involved has been diligent in applying sound criteria for determining the worthiness of individual projects. I particularly want to commend the conferees for deleting the House provision that would have increased the navigation season on the Missouri River. The operation of the Missouri River is a controversial issue in my State. The Corps of Engineers is currently in the middle of a comprehensive review to determine the best way to manage the river for all interests, including recreation, navigation, irrigation, hydropower and water supply. For Congress to intervene at this stage of the reevaluation, to predetermine its outcome, would have been counterproductive to a fair and equitable resolution of this issue. I thank the House conferees for receding to the Senate on this issue. There are some laudable provisions in this conference report, most notably the changes in flood control policy. With tighter Federal budgets, there is a growing need for local interests to become even more committed to their projects. The conference report changes the current Federal cost share for flood control projects from 75 percent to 65 percent. It also reforms the so-called ability-to-pay provisions of current law to make them more meaningful. It requires floodplain management plans and the consideration of nonstructural alternatives to traditional flood control facilities. Finally, the conference report requires the corps, for the first time, to provide levee owners with a manual describing what they must do in order to maintain a levee to corps specifications. Another important provision of the bill directs the Secretary to provide increased emphasis on recreation opportunities at corps facilities. And it recognizes the problem of funding disposal facilities for dredged materials and allows that cost to be considered when calculating the overall cost of a navigation project. Mr. President, while all of these provisions are important improvements to current law and corps policy, I have one overriding concern with this conference report and that is its cost. This bill authorizes $3.8 billion in new Federal spending. When the Senate considered this bill earlier this year, I voiced concern that the cost of the bill at that time--$3.3 billion--was at odds with our efforts to balance the budget. Since that time, the cost of the bill has grown. I have long supported investments in our infrastructure, including our water infrastructure. They are necessary if America is to retain its competitive advantage and keep a sound base of manufacturing jobs. But we need to make choices about these investments, hard choices. And while the majority of the projects in this bill are worthy ones, the truth is that we simply cannot afford them all at this time.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I yield the floor and suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I thank my good friend, Senator Bingaman, from New Mexico, for his statement. The words he spoke are true. He very well characterized the nature of this problem. I appreciate his assistance.

Mr. BAUCUS. Madam President, I send the bill to the desk and ask unanimous consent it be printed in the Record and referred to the appropriate committee.

Mr. BAUCUS. Madam President, essentially, this is a bipartisan bill to correct a bureaucratic, administrative error that has penalized 28 States under the highway program. It is that simple. This bill is identical to the amendment I offered to the Transportation appropriations bill on July 31. It is the same bill. Although that amendment received the support of 57 Senators--57 Senators voted in favor of it--the conference committee dropped the issue from the conference report. That is why Senator Bingaman, myself, and my colleagues are back here today. Let me briefly explain this bill. In 1994, the Treasury delayed crediting the highway trust fund with approximately $1.6 billion in revenues collected from the Federal gasoline tax. It was an error. They made a mistake. While the money was later eventually deposited into the highway trust fund, this delay has had very serious ramifications on all of our States. As most of my colleagues know, the formulas for distributing Federal highway funds to the States were set in place in 1991 in the highway bill, otherwise known as ISTEA. Those formulas govern the distribution of funds for 6 years through September 30 of next year. That is the formula. It is in place. It is in the law for distributing allocations of highway funds among our States. Of our many categories of highway funding, there is a direct correlation between the amount of money a State pays into the highway trust fund and the amount of money a State subsequently receives. If the revenue the States paid to the highway trust fund are not correctly credited to the appropriate accounts, the wrong amount of funds is subsequently distributed to the individual States. That is what happened. When the Treasury made this mistake and delayed crediting $1.6 billion to the highway trust fund, the amount of money distributed to the States under one category, called 90 percent of payments category, was skewed, simply because of a bureaucratic delay. Pure and simple bureaucratic delay, mistake. As a consequence, some States were initially shortchanged in 1996 of their distributions, and on this coming Tuesday, October 1, the error will be compounded. Some States will receive much more than the original highway bill formula called for; others will receive much less. A lot of money is at stake. In the fiscal year 1997 Transportation appropriations conference report, highway spending was set at $18 billion. That is $450 million more than last year, a record amount for the highway program. One would think that such an increase would mean that each State will receive an increase in available funds. Not so. Just the opposite has happened. Even with that large increase in total funds allocated, 28 States will see a decrease in their highway apportionments. Some States will lose up to 17 percent. Others will see an increase of up to 30 percent. A good part of these fluctuations is due to the Treasury Department error, obviously unfair. Our bill fixes this, puts us right back to the status quo, to the formula prescribed allocations. It requires the Department of Transportation use the correct numbers in fiscal year 1997 when calculating the distribution of funds to States under ISTEA, the highway bill. It also requires the Department of Transportation to correct the error in fiscal year 1996. So the distributions errors made in 1996, as well as the errors that will be made, unless corrected, in 1997, will both be corrected. In other words, I want to completely correct the situation. No State should gain or lose Federal highway funds based only on a bureaucratic error at the Department of Treasury. Now that we understand the tremendous financial impact of this error, now that it is discovered, I don't think it should be compounded and continued in the future. Let me stress to my colleagues that this is not--I repeat, is not--an ISTEA formula change. This is not a legislative change to change the formula that Congress set back in 1991. This has nothing to do with the allocation that was set by legislation back in 1991. In fact, this bill will ensure that all States receive the amount of money originally authorized under ISTEA, no more, no less. Furthermore, this is not a donor State versus donee State funding issue, as some would say. It is not that at all. I am disappointed that some continue to characterize the situation in those terms. Some have even said that States interested in fixing the error are being greedy, a few believe. How can a State who seeks to correct an acknowledged error be called greedy? We are trying put the situation back to where it was as we legislated and intended it to be. This is truly a case of correcting an honest bureaucratic mistake. Both the Departments of Treasury and Transportation admit that the error was made. If some States are not happy with the ISTEA formulas adopted in 1991, I say so be it. There is ample opportunity to have that debate next year when Congress takes up the highway bill and deals with formula allocations. It is going to be a big fight, but that is where the fight should be, Madam President. We all know that. It should be in the context of the highway bill. But to use a bureaucratic error as a backdoor way to change the formulas, I think, is underhanded and is not the way the Senate--the whole Congress, for that matter--ought to do business. We are introducing this legislation before the end of the 104th Congress. I want to alert my colleagues that many of us feel that this Treasury error is of such magnitude and of such importance that it must be addressed in the future. I thank my good friend, Senator Bingaman, from New Mexico, for his hard work and the welcome support of other Senators. We are helping get this error corrected. I thank you, Madam President, for your hopeful help, too, as I see your colleague is a cosponsor. It is my hope that the other Senator from Maine will see the wisdom of his efforts as well. I ask unanimous consent that Senator Dorgan be added as a cosponsor.

Mr. BAUCUS. Madam President, the cosponsors of our legislation include the following Senators, in addition to myself and Senator Bingaman: Senator Akaka from Hawaii, Senator Cohen, Senator D'Amato, Senator Dodd, Senator Domenici, Senator Frahm, Senator Gregg, Senator Grassley, Senator Harkin, Senator Jeffords, Senator Kassebaum, Senator Kennedy, Senator Kerry, Senator Leahy, Senator Lieberman, Senator Moynihan, Senator Pressler, and Senator Thomas. I ask unanimous consent that all those Senators be listed as original cosponsors of our legislation.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I thank my good friend, Senator Bingaman, from New Mexico, for his statement. The words he spoke are true. He very well characterized the nature of this problem. I appreciate his assistance.

Mr. BAUCUS. Madam President, I send the bill to the desk and ask unanimous consent it be printed in the Record and referred to the appropriate committee.

Mr. BAUCUS. Madam President, essentially, this is a bipartisan bill to correct a bureaucratic, administrative error that has penalized 28 States under the highway program. It is that simple. This bill is identical to the amendment I offered to the Transportation appropriations bill on July 31. It is the same bill. Although that amendment received the support of 57 Senators--57 Senators voted in favor of it--the conference committee dropped the issue from the conference report. That is why Senator Bingaman, myself, and my colleagues are back here today. Let me briefly explain this bill. In 1994, the Treasury delayed crediting the highway trust fund with approximately $1.6 billion in revenues collected from the Federal gasoline tax. It was an error. They made a mistake. While the money was later eventually deposited into the highway trust fund, this delay has had very serious ramifications on all of our States. As most of my colleagues know, the formulas for distributing Federal highway funds to the States were set in place in 1991 in the highway bill, otherwise known as ISTEA. Those formulas govern the distribution of funds for 6 years through September 30 of next year. That is the formula. It is in place. It is in the law for distributing allocations of highway funds among our States. Of our many categories of highway funding, there is a direct correlation between the amount of money a State pays into the highway trust fund and the amount of money a State subsequently receives. If the revenue the States paid to the highway trust fund are not correctly credited to the appropriate accounts, the wrong amount of funds is subsequently distributed to the individual States. That is what happened. When the Treasury made this mistake and delayed crediting $1.6 billion to the highway trust fund, the amount of money distributed to the States under one category, called 90 percent of payments category, was skewed, simply because of a bureaucratic delay. Pure and simple bureaucratic delay, mistake. As a consequence, some States were initially shortchanged in 1996 of their distributions, and on this coming Tuesday, October 1, the error will be compounded. Some States will receive much more than the original highway bill formula called for; others will receive much less. A lot of money is at stake. In the fiscal year 1997 Transportation appropriations conference report, highway spending was set at $18 billion. That is $450 million more than last year, a record amount for the highway program. One would think that such an increase would mean that each State will receive an increase in available funds. Not so. Just the opposite has happened. Even with that large increase in total funds allocated, 28 States will see a decrease in their highway apportionments. Some States will lose up to 17 percent. Others will see an increase of up to 30 percent. A good part of these fluctuations is due to the Treasury Department error, obviously unfair. Our bill fixes this, puts us right back to the status quo, to the formula prescribed allocations. It requires the Department of Transportation use the correct numbers in fiscal year 1997 when calculating the distribution of funds to States under ISTEA, the highway bill. It also requires the Department of Transportation to correct the error in fiscal year 1996. So the distributions errors made in 1996, as well as the errors that will be made, unless corrected, in 1997, will both be corrected. In other words, I want to completely correct the situation. No State should gain or lose Federal highway funds based only on a bureaucratic error at the Department of Treasury. Now that we understand the tremendous financial impact of this error, now that it is discovered, I don't think it should be compounded and continued in the future. Let me stress to my colleagues that this is not--I repeat, is not--an ISTEA formula change. This is not a legislative change to change the formula that Congress set back in 1991. This has nothing to do with the allocation that was set by legislation back in 1991. In fact, this bill will ensure that all States receive the amount of money originally authorized under ISTEA, no more, no less. Furthermore, this is not a donor State versus donee State funding issue, as some would say. It is not that at all. I am disappointed that some continue to characterize the situation in those terms. Some have even said that States interested in fixing the error are being greedy, a few believe. How can a State who seeks to correct an acknowledged error be called greedy? We are trying put the situation back to where it was as we legislated and intended it to be. This is truly a case of correcting an honest bureaucratic mistake. Both the Departments of Treasury and Transportation admit that the error was made. If some States are not happy with the ISTEA formulas adopted in 1991, I say so be it. There is ample opportunity to have that debate next year when Congress takes up the highway bill and deals with formula allocations. It is going to be a big fight, but that is where the fight should be, Madam President. We all know that. It should be in the context of the highway bill. But to use a bureaucratic error as a backdoor way to change the formulas, I think, is underhanded and is not the way the Senate--the whole Congress, for that matter--ought to do business. We are introducing this legislation before the end of the 104th Congress. I want to alert my colleagues that many of us feel that this Treasury error is of such magnitude and of such importance that it must be addressed in the future. I thank my good friend, Senator Bingaman, from New Mexico, for his hard work and the welcome support of other Senators. We are helping get this error corrected. I thank you, Madam President, for your hopeful help, too, as I see your colleague is a cosponsor. It is my hope that the other Senator from Maine will see the wisdom of his efforts as well. I ask unanimous consent that Senator Dorgan be added as a cosponsor.

Mr. BAUCUS. Madam President, the cosponsors of our legislation include the following Senators, in addition to myself and Senator Bingaman: Senator Akaka from Hawaii, Senator Cohen, Senator D'Amato, Senator Dodd, Senator Domenici, Senator Frahm, Senator Gregg, Senator Grassley, Senator Harkin, Senator Jeffords, Senator Kassebaum, Senator Kennedy, Senator Kerry, Senator Leahy, Senator Lieberman, Senator Moynihan, Senator Pressler, and Senator Thomas. I ask unanimous consent that all those Senators be listed as original cosponsors of our legislation.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, the U.S. merchant marine is facing an uncertain future. The U.S. commercial fleet is falling behind which diminishes its power to protect the United States' interests abroad and at home. This is why I strongly support the Maritime Security Act of 1995, H.R. 1350. This bill would be the beginning of the rebuilding of the U.S. merchant marine fleet. It will establish a fleet of privately owned, active and military capable ships to help maintain the defense of the United States' interests. This will help maintain peace and protect cargo during times of crisis in the world. The fleet would also be updated because of the bylines in the bill which in itself would make the merchant marine stronger and allow it to continue being competitive in the world market. This bill through the building of the fleet will create jobs in many sectors of the economy. The increase in the economy will range from the workers on the ship all the way to those manufacturing the parts. The bill will also change the way that the costs of running a ship in the United States are offset. This will encourage more owners to register their ships under the U.S. flag. From the changes, old outdated regulations will be cut, such as the way to replace older vessels. This in itself will help keep costs down and help generate profits and revenues for all. This legislation is very much in our national interest. And I, therefore urge its passage.