Max Baucus

Mr. BAUCUS

Mr. BAUCUS. The requests on this side for a vote at a reasonable hour--now it is 10 after 5 say maybe 5, 6, 7, 8 eight clock--a reasonable time, instead of 1 a.m., have been rejected by the other side?

Mr. BAUCUS. Mr. President, I will be a bit presumptuous here that I can speak for most Senators and probably most of the American people. One thing in life that is so difficult to deal with is when you are working with somebody, irrespective of a situation, and trying to resolve an issue, a problem, and the person you are talking to or working with is not dealing in good faith. When each side is dealing in good faith, then each side will begin to recognize the merits of the other person's point of view and each person tends to recognize the deficiencies and faults of his own point of view. It is a good-faith exchange. Not very many things in life are black and white and not many issues are black and white. Most of them are some shade of gray. I may think that even though my issues--I am not white and the other guy is black, I like to think my shade of gray is more light than his shade of gray. That is not relevant. What works is when both sides talk to each other and try to make an accommodation. I think I can safely say most Americans think our health care system needs some repair. It is too costly. There are too many cases when the insurance industry cherry-picks and takes advantage of people. It is not the right thing to do. Also, we have to find a different way to pay for doctors and hospitals, reimbursing on basic quality, not quantity. Almost all doctors agree we should move in that direction. A few minutes earlier, one Senator got up and said CBO has made this huge error, a $\1/2\ trillion error. He goes on and on about this $\1/ 2\ trillion error. To be honest, if we are going to deal in good faith, we should mention the pluses and the minuses, and let the Senators and the public figure out where all this nets out. CBO has made many statements, most of which I think the Democratic side has relied on, and CBO has made statements that the Republican side has relied on. It is not black and white. It is a shade of gray. In this case, it is true that CBO sent a letter, I think it was today--in fact, I have it here with me--that said they made a $\1/2\ trillion error in the second 10 years. What was the error? I don't remember the exact figure, but essentially I think CBO said this legislation will reduce the debt in the last 10 years by I think it was \1/2\ percent of GDP which comes out to about $1.3 trillion to the good. It reduces the debt by $1.3 trillion. CBO in a letter to us came back and said they made a mistake. This legislation does reduce the Federal budget deficits over the subsequent 10 years but not by as much. A \1/2\ percent GDP should have been between a \1/4\ percent GDP and \1/2\ percent GDP. Half the story is CBO said they made an error of \1/2\ percent GDP. But the full story is, still, nevertheless, the Congressional Budget Office says: All told, CBO expects that the legislation, if enacted, would reduce federal budget deficits over the decade over 2019 relative to those projected under current law--with the total effect during that decade that is in a broad range between one-quarter and one-half percent of GDP. Essentially, they are saying: We made a mistake at CBO, but still this is going to reduce deficits between $615 billion and, say, $1.3 trillion. That is the full story. I hope when we debate here that we give both sides of the story. That way we can work more toward common ground what is right. Nobody is totally right. Each of us is here serving in good faith. We want to do what is best for our people in our home States, and we are trying. Different States have different points of view. We are going to get better solutions in health care reform if we talk to each other in good faith and give the whole story, not just part of it.

Mr. BAUCUS. Mr. President, reserving the right to object, the doughnut hole will be filled. I have made that promise. Senator Reid has made that promise. The White House made that promise. When the bill is presented on the President's desk, the doughnut hole will be filled but not in the way suggested by my friend from Iowa. He is one of my best friends in the Senate, and it is with regret that I must object.

Mr. BAUCUS. I object.

Mr. BAUCUS. Mr. President, reserving the right to object, as enticing as that might sound, I object.

Mr. BAUCUS. I object.

Mr. BAUCUS. I object.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, let me say to my friend from Kentucky, I will not make a lengthy speech, but I am more than prepared to wait until you give your comments, and when you conclude, I will make my request.

Mr. BAUCUS. Well, other Senators wish to speak as well.

Mr. BAUCUS

Mr. BAUCUS. Under current law, the estate tax disappears next year-- in 16 days--but snaps back to a 55-percent rate the year after. I believe that is not sound policy. The estate tax should not be zero in 1 year and then be snapped up to a very high rate in the subsequent year. As the Chair knows, current law has the rate slowly declining and the exemption slowly increasing. The individual exemption now is $3.5 million. If Congress takes no action, then beginning on January 1 of next year, that could be zero. The estate tax could be zero. But another consequence that will occur too is that all heirs of the estate will find that the property they receive will be subject to a carryover basis. Currently, today, property received by heirs is subject to a step-up basis. They get the new basis and the value of the estate as of the date of the decedent's death. If this law expires, there would be no estate tax paid next year on any estate, but also the heirs will no longer have a step-up basis on the assets they receive. There are several problems with letting the current law expire next year. One is the yo-yo effect. It is an outrage if Congress allows estate taxes to change so much, particularly near the end, that is, a lower rate this year with an expiration to a zero rate next year, and also changing a step-up to a carryover basis, and the following year up at a much higher rate. The second problem, frankly, is I do think there should be an estate tax on the highest value estates. I think that is good policy. Third, people don't talk much about this, but I think we should focus on it. If current law expires, every heir will be subject, as I said, to a carryover basis in determining his or her taxes when that taxpayer, the heir, at a later date sells the property and has to pay capital gains. What are the problems with that? First of all, massive record-keeping confusion--massive. Soon, I am going to propose an extension in the current law. If that is not passed and if we do not extend the estate tax law, all taxpayers, all heirs, will be subject to massive confusion in trying to determine the value of the underlying assets when they later try to sell. The value of the step-up basis to the heir obviously is a lower capital gains tax, but there is also certainty. People pretty much know the value at the death of the decedent. I cannot emphasize strongly enough how much confusion there will be on January 1, if my consent is not agreed to. There will be such confusion because of the heirs receiving property subject to a carryover basis, not a step-up basis, let alone the capital gains tax they will have to pay when they sell that capital asset at a subsequent date. Currently, when the heir receives that capital asset, because it is a step-up basis, there is much less capital gain paid, presumably, by that heir who sells the asset. Here it is mid-December. The only responsible thing to do to prevent the yo-yo effect--how in the world can people look at planning in their estates if the law goes up and down and changes all the time? It has kind of leveled off, as I said, at the 2009 rates and people have a pretty good idea what those are. Some in this body would like to see the rate go lower and exemptions go higher. Some in this body would like to see other changes. We kind of leveled off at 2009 estate tax laws, where the rates are set and the exemptions are set. Most people in the country are anticipating Congress will eventually pass that. It would be irresponsible to further the yo-yo effect by allowing current law to expire and create all this massive confusion, this chaos that will apply to heirs of the estates on January 1 because of this change in capital assets from step-up to a carryover basis, among other things. Unanimous Consent Request--H.R. 4154 Mr. President, I ask unanimous consent that the Senate proceed to the immediate consideration of H.R. 4154, which was just received from the House and is at the desk; that the Baucus substitute be considered and agreed to, the bill, as amended, be read the third time and passed, the motion to reconsider be laid upon the table; that any statements relating to the measure be printed in the Record without any further action or debate.

Mr. BAUCUS. Mr. President, I don't think this is the way to do business here; that is, to enact estate tax law here on the floor of the Senate without any notice, and also because there are so many considerations Senators on both sides want to look at. It would be improper. I object.

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

Mr. BAUCUS. Mr. President, I ask unanimous consent that Senator Kyl be permitted to speak for up to 5 minutes and that following his remarks, the hour of controlled time on the health care legislation begin.

Mr. BAUCUS. Mr. President, clearly, the right public policy is to achieve continuity with respect to the estate tax. If we do not get the estate tax extended, even for a very short period of time, say, 3 months, we would clearly work to do this retroactively so when the law is changed, however it is changed, or if it is extended next year, it will have retroactive application. The uncertainty for tens of thousands of middle-class families needs to stop. That is why retroactive application of anything that passes next year makes sense. Right now, 99.7 percent of estates do not have to worry about the estate tax. If we do not extend current law, many heirs are going to have to worry about capital gains. There is the potential for high- income households to take advantage of the temporary reductions in the rates for gift taxes and temporary elimination of GST to do massive estate planning--potentially benefiting those households by billions of dollars at the expense of U.S. taxpayers. Beyond this, what Congress is doing is a huge benefit for lawyers and accountants who do all the estate planning. The right thing to do is to extend current law for a brief period of time to get our act together to decide what estate laws should be. That is the right thing to do. I am very disappointed that the other side of the aisle does not let us do the right thing--at least extend current law for a while until we know what the estate tax law should be. Mr. COBURN addressed the Chair.

Mr. BAUCUS. Mr. President, for the benefit of Senators, we are now back on the health care bill. Let me lay out today's program. It has been nearly 4 weeks since the majority leader moved to proceed to the health care reform bill. This is the 16th day that the Senate has considered the bill. The Senate has considered 23 amendments or motions and conducted 18 rollcall votes. Today the Senate will debate the motion to commit regarding taxes offered last night by the Senator from Texas, Mrs. Hutchison. Under the previous order, later this morning, we expect that the Senator from Vermont, Mr. Sanders, will offer his amendment No. 2837 on a national single-payer system. This morning, the first hour of debate will be equally divided and controlled between the two leaders or their designees. The majority will control the first half hour and the Republicans will control the second half hour. We expect the Senate to conduct votes today in relation to the Hutchison motion and the Sanders amendment. Also, today, the House of Representatives is scheduled to act on the Department of Defense Appropriations Act which also contains a number of vital year-end measures. We look forward to receiving that measure in the Senate as well. I yield 10 minutes to the Senator from Ohio and then 15 minutes to the Senator from Delaware.

Mr. BAUCUS. Mr. President, reserving the right to object, I would like to just remind our colleagues, I have sought it, and I think it has been basically a very forthright, open process we have conducted here. Certainly in the Finance Committee--I see my colleague from Iowa on the floor--it was totally transparent for months upon months, with hearing upon hearing. We posted amendments in the Finance Committee on the Internet in advance of consideration. I have never been part of a more transparent process since I have been here, frankly, at least for something of this magnitude over this period of time. In fact, one reporter even said to me: Senator, is this the new way we do things around here? It is so transparent, so bipartisan, and so forth. I said: I don't know. I sure like it that way. I also remind all of us that Senator Reid's amendment was made available on November 18 of this year, and 3 days later, on the 21st, we voted for cloture on the motion to proceed. Then, 12 days after the Reid amendment was made available, we finally began debate on the bill. And here we are, nearly a month later. So this bill has been out here. The Senator mentioned, I note, having in mind the managers' amendment, which he has not seen and, frankly, this Senator has not seen either. I have some ideas what is in it, but I have not seen it myself. I think as a practical matter this will be available for 72 hours, as the Senator suggests. Why do I say that? I say that because it is my expectation that Senator Reid's managers' amendment will be filed very quickly, maybe in a day or two. It is also my expectation that we will then proceed, according to expectations here, to the Defense appropriations conference report, which we will then be working on for several days. And probably a cloture motion might be filed on the health care bill--on the managers' amendment probably not until after we do Defense appropriations. So during the interim, everyone is going to be able to see, at least for more than 72 hours, the contents of the managers' amendment in the health care bill which Senator Reid is going to be filing. So as a practical matter, I think it is going to happen. I cannot at this point agree to the request to lock that in for 72 hours, but I think as a practical----

Mr. BAUCUS. Yes.

Mr. BAUCUS. Sure.

Mr. BAUCUS. I think that is a good idea. I think it is going to happen.

Mr. BAUCUS. I cannot at this time but, again, saying it is my expectation it will be available for more than 72 hours.

Mr. BAUCUS. I thank the Senator. I object.

Mr. BAUCUS. Mr. President, reserving the right to object, I certainly agree with the basic underlying import that we should know what we are voting on here. But I must say to my good friend from Oklahoma, I cannot certify that Members of the Senate will understand what they are reading. That presumes a certain level of perception on my part in understanding and delving into the minds of Senators that not only have they read but they have taken the time to understand. And what does ``understand'' mean? Understand the second and third levels, the fourth level of questions? I think it is a practical impossibility for anybody to certify that any other Senator has fully understood. They may read, but they may not fully understand for a whole variety of reasons. So I cannot certify that.

Mr. BAUCUS. I have to object.

Mr. BAUCUS. The Senator is always free to make any representations he wants. If he wants to certify he has read it and certify that he has understood it, that is the Senator's privilege.

Mr. BAUCUS. I can't certify that every Member of the Senate has done anything around here. Neither can the Senator from Oklahoma. That is an impossibility. But if the Senator wants to certify he has read it, that is great, and understands it fully, that is great, on any measure--not just this measure but any measure. But I can't certify that for 100 different Senators, on any measure. That is up to the individual Senators and that is up to their mental capacities and up to their initiatives and imaginations and conscientiousness and so forth. I can't certify to that.