Kit Bond

Mr. BOND

Mr. BOND. Mr. President, the bill offered by Senator Collins today is intended to simplify the tax rules for small businesses as they purchase new equipment to sustain and expand their businesses. I am pleased to be the lead co-sponsor on this important small business legislation. The bill parallels the amendment that Senator Collins and I offered to the economic-stimulus legislation considered on the floor in January and makes the increase in the expensing limits permanent. The Bond- Collins amendment was approved by the Senate by a vote of 90-2. While some may think that small business is not that important, let's be clear about the role they play in our economy. Small business: represents 99 percent of all employers; employs 51 percent of the private-sector workforce; provides about 75 percent of the net new jobs; contributes 51 percent of the private-sector output; and represents 96 percent of all exporters of goods. In short, size is the only ``small'' aspect of small business. Our bill would permit small businesses to expense their new equipment purchases up to $40,000. The current annual limit is $24,000. The bill also increases the limitation on the total amount of property that a small business can place in service during a year before triggering a phase-out of the annual expensing amount. Under the amendment, a business would be able to claim the full $40,000 in expensing if it purchased no more than $325,000 of property during the year. Under current law, the phase-out limitation is only $200,000. To the extent that a business exceeds the phase-out limit, the annual expensing amount declines. Direct expensing allows small businesses to avoid the complexities of the depreciation rules as well as the unrealistic recovery periods for most assets. For example, under current law a computer must be depreciated over 5 years even though the useful life is most likely 2-3 years at best. These provisions have several important advantages, especially in light of the current economic conditions. By allowing more equipment purchases to be deducted currently, we can provide much needed capital for small businesses. With that freed-up capital, a business can invest in equipment, which will benefit the small enterprise and, in turn, stimulate other industries. In addition, that's more money available to keep employees working and hopefully hire new employees. Moreover, new equipment will contribute to continued productivity growth in the business community, which Federal Reserve Chairman Alan Greenspan has repeatedly stressed is essential to the long-term vitality of our economy. Finally, these modifications will simplify the tax law for countless small businesses. Greater expensing means less equipment subject to the onerous depreciation rules. In short, the equipment-expensing change I propose are a win-win for small businesses consumers, equipment manufacturers, and our national economy as a whole.

Mr. BOND

Mr. BOND. Mr. President, I rise today to introduce the Small Business Investment Company Capital Access Act of 2002, whose purpose is to increase the amount of venture capital available to small businesses. I am pleased that my good friend from Iowa, Senator Grassley, the ranking member on the Senate Finance Committee, has agreed to be the principal cosponsor of this important bill. During the past 18 months, there has been a significant contraction of the private-equity market. During this same period, the Small Business Administration's Small Business Investment Company program has taken on a significant role in providing venture capital to small businesses seeking investments in the range of $500,000 to $3 million. Small Business Investment Companies, SBICs are government-licensed, government-regulated, privately managed venture capital firms created to invest only in original issue debt or equity securities of U.S. small businesses that meet size standards set by law. In the current economic environment, the SBIC program represents an increasingly important source of capital for small enterprises. While Debenture SBICs qualify for SBA-guaranteed borrowed capital, the government guarantee forces a number of potential investors, namely pension funds and university endowment funds, to avoid investing in SBICs because they would be subject to tax liability for unrelated business taxable income, UBTI. More often than not, tax-exempt investors generally opt to invest in venture capital funds that do not create UBTI. As a result, 60 percent of the private-capital potentially available to these SBICs is effectively ``off limits.'' The Small Business Investment Company Capital Access Act of 2002 would correct this problem by excluding government-guaranteed capital borrowed by Debenture SBICs from debt for purposes of the UBTI rules. This change would permit tax-exempt organizations to invest in SBICs without the burdens of UBTI record keeping or tax liability. In 1958, Congress created the SBIC program to assist small business owners in obtaining investment capital. Forty years later, small businesses continue to experience difficulty in obtaining investment capital from banks and traditional investment sources. Although investment capital is readily available to large businesses from traditional Wall Street investment firms, small businesses seeking investments in the range of $500,000-$3 million have to look elsewhere. SBICs are frequently the only sources of investment capital for growing small businesses. Often we are reminded that the SBIC program has helped some of our Nations best known companies. It has provided a financial boost at critical points in the early growth period for many companies that are familiar to all of us. For example, when Federal Express needed help from reluctant credit markets, it received a needed infusion of capital from two SBA-licensed SBICs at a critical juncture in its development stage. The SBIC program also helped other well-known companies, when they were not so well-known, such as Intel, Outback Steakhouse, America Online, and Callaway Golf. What is not well known is the extraordinary help the SBIC program provides to Main Street America small businesses. These are companies we know from home towns all over the United States. Main Street companies provide both stability and growth in our local business communities. A good example of a Main Street company is Steelweld Equipment Company, founded in 1932, which designs and manufacturers utility truck bodies in St. Clair, Missouri. The truck bodies are mounted on chassis made by Chrysler, Ford, and General Motors. Steelweld provides truck bodies for Southwestern Bell Telephone Co., Texas Utilities, Paragon Cable, GTE, and GE Capital Fleet. Steelweld is a privately held, woman-owned corporation. The owner, Elaine Hunter, went to work for Steelweld in 1966 as a billing clerk right out of high school. She rose through the ranks of the company and was selected to serve on the board of directors. In December 1995, following the death of Steelweld's founder and owner, Ms. Hunter received financing from a Missouri-based SBIC, Capital for Business, CFB, Venture Fund II, to help her complete the acquisition of Steelweld. CFB provided $500,000 in subordinated debt. Senior bank debt and seller debt were also used in the acquisition. Since Ms. Hunter acquired Steelweld, its manufacturing process was redesigned to make the company run more efficiently. By 1997, Steelweld's profitability had doubled, with annual sales of $10 million and 115 employees. SBIC program success stories like Ms. Hunter's experience at Steelweld occur regularly throughout the United States. In 1991, the SBIC program was experiencing major losses, and the future of the program was in doubt. Consequently, in 1992 and 1996, the Committee on Small Business worked closely with the Small Business Administration to correct deficiencies in the law in order to ensure the future of the program. Today, the SBIC Program is expanding rapidly in an effort to meet the growing demands of small business owners for debt and equity investment capital. And it is important to focus on the significant role that is played by the SBIC program in support of growing small businesses. When Fortune Small Business compiled its list of 100 fastest growing small companies in 2000, 6 of the top 12 businesses on the list received SBIC financing during their critical growth year. The Small Business Investment Company Capital Access Act of 2002 is important for one simple reason: once enacted it paves the way for more investment capital to be available for more small businesses that are seeking to grow and hire new employees. According to the National Association of Small Business Investment Companies, NASBIC, a conservative estimate of the effect of this amendment would be to increase investments in Debenture SBICs by $200 million from tax-exempt investors in the first year and $400 million in the second year. Government-guaranteed SBIC leverage commitments equal to $400 million in year one and $800 million in year two would be added to the private capital. Thus, total year one capital available for investment would equal $600 million and total year two capital would equal $1.2 billion. Data developed by Venture Economics for the period 1970-1999 indicates that one job is created for every $22,600 investment in a small company. At that rate, this bill could be responsible for the creation or support of as many as 62,000 jobs within the next two years, whether within companies receiving investments directly or within those firms benefiting indirectly through increased sales of goods and services to the former companies. And the cost? Industry experts estimate that if the change were effective now, there would be less than a $1 million in lost tax revenues. About $1.5 billion in private capital is invested in Debenture SBICs. A NASBIC poll of Debenture SBICs indicates $30.3 million of that amount is from tax-exempt investors. For the previous 10 years, Debenture SBIC returns have averaged 7.78 percent. Applied to the $30.3 million, that would result in lost taxable income of $2.36 million per year. If all of that were taxed at the top 39 percent rate, the tax revenue loss would be $922,000 per year. The cost is low and the potential for economic gain is great. Passage of the bill will make the Government's existing SBIC program more effective in providing growth capital for America's small business entrepreneurs. And most importantly, it will provide sorely needed capital for the sector of our economy that provides about 75 percent of the net new jobs, small businesses. That is a real stimulus that would cause new investments to be made and the creation of critically needed new jobs. Our economy is primed for this kind of support, and I urge my colleagues to support this important bill. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BOND

Mr. BOND. Mr. President, I rise today to introduce the Small Business Investment Company Capital Access Act of 2002, whose purpose is to increase the amount of venture capital available to small businesses. I am pleased that my good friend from Iowa, Senator Grassley, the ranking member on the Senate Finance Committee, has agreed to be the principal cosponsor of this important bill. During the past 18 months, there has been a significant contraction of the private-equity market. During this same period, the Small Business Administration's Small Business Investment Company program has taken on a significant role in providing venture capital to small businesses seeking investments in the range of $500,000 to $3 million. Small Business Investment Companies, SBICs are government-licensed, government-regulated, privately managed venture capital firms created to invest only in original issue debt or equity securities of U.S. small businesses that meet size standards set by law. In the current economic environment, the SBIC program represents an increasingly important source of capital for small enterprises. While Debenture SBICs qualify for SBA-guaranteed borrowed capital, the government guarantee forces a number of potential investors, namely pension funds and university endowment funds, to avoid investing in SBICs because they would be subject to tax liability for unrelated business taxable income, UBTI. More often than not, tax-exempt investors generally opt to invest in venture capital funds that do not create UBTI. As a result, 60 percent of the private-capital potentially available to these SBICs is effectively ``off limits.'' The Small Business Investment Company Capital Access Act of 2002 would correct this problem by excluding government-guaranteed capital borrowed by Debenture SBICs from debt for purposes of the UBTI rules. This change would permit tax-exempt organizations to invest in SBICs without the burdens of UBTI record keeping or tax liability. In 1958, Congress created the SBIC program to assist small business owners in obtaining investment capital. Forty years later, small businesses continue to experience difficulty in obtaining investment capital from banks and traditional investment sources. Although investment capital is readily available to large businesses from traditional Wall Street investment firms, small businesses seeking investments in the range of $500,000-$3 million have to look elsewhere. SBICs are frequently the only sources of investment capital for growing small businesses. Often we are reminded that the SBIC program has helped some of our Nations best known companies. It has provided a financial boost at critical points in the early growth period for many companies that are familiar to all of us. For example, when Federal Express needed help from reluctant credit markets, it received a needed infusion of capital from two SBA-licensed SBICs at a critical juncture in its development stage. The SBIC program also helped other well-known companies, when they were not so well-known, such as Intel, Outback Steakhouse, America Online, and Callaway Golf. What is not well known is the extraordinary help the SBIC program provides to Main Street America small businesses. These are companies we know from home towns all over the United States. Main Street companies provide both stability and growth in our local business communities. A good example of a Main Street company is Steelweld Equipment Company, founded in 1932, which designs and manufacturers utility truck bodies in St. Clair, Missouri. The truck bodies are mounted on chassis made by Chrysler, Ford, and General Motors. Steelweld provides truck bodies for Southwestern Bell Telephone Co., Texas Utilities, Paragon Cable, GTE, and GE Capital Fleet. Steelweld is a privately held, woman-owned corporation. The owner, Elaine Hunter, went to work for Steelweld in 1966 as a billing clerk right out of high school. She rose through the ranks of the company and was selected to serve on the board of directors. In December 1995, following the death of Steelweld's founder and owner, Ms. Hunter received financing from a Missouri-based SBIC, Capital for Business, CFB, Venture Fund II, to help her complete the acquisition of Steelweld. CFB provided $500,000 in subordinated debt. Senior bank debt and seller debt were also used in the acquisition. Since Ms. Hunter acquired Steelweld, its manufacturing process was redesigned to make the company run more efficiently. By 1997, Steelweld's profitability had doubled, with annual sales of $10 million and 115 employees. SBIC program success stories like Ms. Hunter's experience at Steelweld occur regularly throughout the United States. In 1991, the SBIC program was experiencing major losses, and the future of the program was in doubt. Consequently, in 1992 and 1996, the Committee on Small Business worked closely with the Small Business Administration to correct deficiencies in the law in order to ensure the future of the program. Today, the SBIC Program is expanding rapidly in an effort to meet the growing demands of small business owners for debt and equity investment capital. And it is important to focus on the significant role that is played by the SBIC program in support of growing small businesses. When Fortune Small Business compiled its list of 100 fastest growing small companies in 2000, 6 of the top 12 businesses on the list received SBIC financing during their critical growth year. The Small Business Investment Company Capital Access Act of 2002 is important for one simple reason: once enacted it paves the way for more investment capital to be available for more small businesses that are seeking to grow and hire new employees. According to the National Association of Small Business Investment Companies, NASBIC, a conservative estimate of the effect of this amendment would be to increase investments in Debenture SBICs by $200 million from tax-exempt investors in the first year and $400 million in the second year. Government-guaranteed SBIC leverage commitments equal to $400 million in year one and $800 million in year two would be added to the private capital. Thus, total year one capital available for investment would equal $600 million and total year two capital would equal $1.2 billion. Data developed by Venture Economics for the period 1970-1999 indicates that one job is created for every $22,600 investment in a small company. At that rate, this bill could be responsible for the creation or support of as many as 62,000 jobs within the next two years, whether within companies receiving investments directly or within those firms benefiting indirectly through increased sales of goods and services to the former companies. And the cost? Industry experts estimate that if the change were effective now, there would be less than a $1 million in lost tax revenues. About $1.5 billion in private capital is invested in Debenture SBICs. A NASBIC poll of Debenture SBICs indicates $30.3 million of that amount is from tax-exempt investors. For the previous 10 years, Debenture SBIC returns have averaged 7.78 percent. Applied to the $30.3 million, that would result in lost taxable income of $2.36 million per year. If all of that were taxed at the top 39 percent rate, the tax revenue loss would be $922,000 per year. The cost is low and the potential for economic gain is great. Passage of the bill will make the Government's existing SBIC program more effective in providing growth capital for America's small business entrepreneurs. And most importantly, it will provide sorely needed capital for the sector of our economy that provides about 75 percent of the net new jobs, small businesses. That is a real stimulus that would cause new investments to be made and the creation of critically needed new jobs. Our economy is primed for this kind of support, and I urge my colleagues to support this important bill. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BOND

Mr. BOND. Mr. President, today I am adding my name as a co-sponsor of the Retirement Security Advice Act of 2002, S. 1978, introduced by my good friend from Arkansas, Senator Tim Hutchinson. I do so, and submit this statement for the Record, because the bill holds important implications for small businesses in this country and the millions of Americans they employ. In 1996, we created the Savings Incentive Match Plans for Employees SIMPLE, as a pension-plan option for small firms in this country. The goal was a simple one: provide a pension plan with low administrative costs for employers so they can offer pension benefits to encourage employees to save for their retirement. I am pleased that these plans have become quite popular, and together with the other pension simplifications and improvements enacted in the last five years, they have contributed to better access to pension benefits by small businesses and their employees. Greater retirement savings, however, have raised new and complex issues for many employees who have seen their pension accounts grow substantially. As the Ranking Member of the Committee on Small Business and Entrepreneurship, I have heard many constituents raise difficult questions in this area: What are appropriate investments for my personal circumstances and risk tolerance? Should I buy stocks, bonds, annuities, or something else? How should I diversify my investments? When should I modify my investment mix? And so on. The importance of these questions has increased substantially in light of recent high-profile business failures and more generally because of the economic downtown. Gone are the days of the momentum market where any dollar invested seemed to grow with little effort or risk. The return to more cautious investing has left employees who participate in employer-sponsored pension plans in a real dilemma, hire an outside investment advisor or go it alone in most cases. Why? Current pension rules effectively preclude most employers from offering investment advice to their employees. In fact, recent estimates are that only about 16 percent of participants have access to investment advice through their pension plan. In today's complex investment environment that is simply too little help for employees who are trying to manage their retirement security. Senator Hutchinson's bill addresses this situation in a responsible way. For most businesses, and particularly small firms, the logical place to look for an investment advisor would be the company that manages the plan's investment options or an affiliated firm. Under Senator Hutchinson's bill that option would now be available, opening the door for countless businesses to offer this important benefit at a low cost to their employees who participate in the company's pension plan. In addition, by allowing more businesses to offer investment- advice benefits, the bill creates an opportunity for increased competition among investment advisors, which can lead to better advice products and lower costs overall. Senator Hutchinson's bill, however, does not simply change the rules to help the business community. It also includes critical protections for the plan participants. Investment advisors must satisfy strict requirements concerning their qualifications, and they must disclose on a regular basis all their business relationships, fees, and potential conflicts of interest directly to the participants. In addition, and arguably most importantly, the investment advisor must assume fiduciary liability for the investment advice it renders to the employee participants in the plan. In short, if the investment advisor does not act solely in the interest of the participant, it will be liable for damages resulting from the breach of its fiduciary duty. Together, the bill's provisions provide substantive safeguards to protect the interests of the plan participants who take advantage of the new investment-advice benefit. Some have contended that a better alternative is to force small businesses to engage an independent third party to provide investment advice. I disagree. The result would simply be the same as under current law. Cost is a real issue for small businesses seeking to offer benefits like pension plans and related investment advice, hence, the genesis of the SIMPLE pension plan. As under the current rules, if the only option is a costly outside advisor, the small firm will not offer the investment-advice benefit. As a result, we would not move the ball even a yard further, employees would still be left to their own devices to figure out the complex world of investing or they would have to seek out and hire their own advisor, which few have the wherewithal to do. More to the point, nothing under the Hutchinson bill prevents a business from engaging an independent advisor if the employer deems that the best alternative. The standard under the Hutchinson bill for selecting the investment advisor is prudence; the same criteria that the employer must exercise under current law when selecting the company that manages the pension plan and its investment options. If a prudent person would not hire or retain the investment advisor, then under the Hutchinson bill, the employer should not do so either or face liability for breach of fiduciary duty. Again, additional protection for the plan participants. In my assessment, investment advice is an increasingly important benefit that employees want and need. Moreover, small businesses in particular need the flexibility to offer benefits that keep them competitive with big companies as they seek to hire and retain the very best employees possible. And when we talk about small business, we are not dealing with an insignificant employer in this country. In fact, according to Small Business Administration data, small businesses represent 99 percent of all employers and provide about 75 percent of the net new jobs in this country. The Retirement Security Advice Act provides a carefully balanced and responsible solution to this situation. Most importantly, it provides a solution that employers will actually use to offer the investment advice sought by their employees who struggle to put money aside in the hopes of having a nest egg that someday will provide them with a comfortable retirement. I am pleased to co-sponsor this bill and look forward to working with my colleague from Arkansas to see it enacted into law.

Mr. BOND

Mr. BOND. Mr. President, I thank the Senator from Michigan. It is not fair to say there are no safety standards. The Levin-Bond amendment requires safety be considered in setting the standards. There will be standards. I have just come from a press conference with Diane Steed, former NHTSA Director, speaking on behalf of the National Safety Council. The National Safety Council is extremely concerned about the Kerry proposal and its likelihood to kill more people. Therefore, I urge support of the Levin-Bond amendment. I ask unanimous consent that Senator Voinovich be added as a cosponsor.

Mr. BOND. I yield a minute to the Senator from Alaska.

Mr. BOND. Mr. President, I yield myself 2 minutes. I ask unanimous consent that Senators Grassley and Hutchinson of Arkansas and Allen be added as cosponsors.

Mr. BOND. Some people here believe Americans cannot be trusted to make the right choice. In choosing between consumers and Government, I will side with the consumers. I don't pretend to know what is best for the 15 million Americans who are purchasing vehicles each year, but I prefer to listen to those who are actually in the business of selling cars and trucks. They tell me one consistent message: The Kerry amendment is a job killer, a threat to the safety of friends and families, a mandated market that eliminates consumer choice. Now, 2,000 people a year, according to the National Academy of Sciences, have been killed by lighter cars. I don't want to tell a mom in my State she should not get an SUV because Congress decided that would be a bad choice. I just came from a news conference with Martha Godet, who explained last week that she wanted a minivan to carry her two preteen sons and one baby to various events. Her story in the newspaper was countered by one of my colleagues on the other side of the aisle who said her proposal was ``nonsense.'' She extends an invitation to that Senator to join her in a carpool to see how it would be if they were in a subcompact or a Yugo. She said it would look like a clown car if they were in a Yugo that managed to meet the fuel standards in the Kerry amendment. I am grateful for the support of the Missouri Soybean Association, Corn Growers, and the Farm Bureau. We appreciate the information on safety from the Insurance Institute for Highway Safety and the National Association of Independent Insurers. The best way to get better mileage is through sound science and NHTSA. I reserve the remainder of my time.

Mr. BOND

Mr. BOND. Mr. President, I appreciate the courtesy of the managers of the bill. Senator Levin will be in the Chamber shortly, but I thought I would go ahead and make some remarks prior to the offering of this amendment, which I think is a very significant one. There are many important issues in an energy bill, but what happens to our automobile economy, what happens to the workers, what happens to the people who buy them, what happens to the people on the highways should be a very important consideration. I think when you talk about energy and fuel economy standards, the impact on jobs and safety need to be at the top of anyone's list. That is why I am pleased to join my colleague from Michigan, Senator Levin, in crafting a commonsense amendment to the energy bill that will increase passenger car and light truck efficiency while protecting jobs, highway safety, and consumer choice. Before we get into the details of the amendment--and we will be getting into lots of details, probably more than anybody wants to know about corporate average fuel economy--let me just take a moment to review the state of our economy. A few weeks ago, I was disappointed that the Senate had stalled out on an economic stimulus package. We have been in a recession for months, and although there are signs of a recovery, there are still many Americans without jobs. Of course, as you know, we did pass a smaller bill to increase the time of payment for unemployment compensation that did have a portion of the stimulus package in it. Now, what would be the link between higher fuel economy standards and economic recovery and stimulus and jobs? I will tell you. I have listened to the car manufacturers, the working men and women in the unions who build the cars, and the other impacted groups, and the significantly higher CAFE standard, or the miles per gallon, which will be required for vehicles that are included in Senator Daschle's energy bill that he created, without committee action, has a very real likelihood of throwing thousands of Americans out of work, including many of the 221,000 auto workers in Missouri. That is because the only way for car companies to meet the unrealistic numbers in the underlying amendment is to cut back significantly on making the light trucks, the minivans, and the SUVs that the American consumers want, that the people of my State and the people of the other States want--to carry their children around safely and conveniently, to do their business. If they have jobs in one of the trades, they need minivans and compartment trucks and others to carry their goods. If they are farmers, they need pickup trucks to take care of their livestock and to haul equipment and feed. I know some in this Chamber believe our fellow Americans cannot be trusted to make the right choice when purchasing a vehicle. But when it comes down to choosing between the consumer and the Government as to who is best to make a choice, I will side with the consumer every time. I don't pretend to know what is best for each of the 15 million Americans who will be purchasing a new vehicle this year and the ones next year or in the years after. Those who want higher Government CAFE or miles-per-gallon standards always claim to have the best interests of the consumer in mind and always promise that the last thing they want to do is hurt the car manufacturers. Well, they have missed the mark by a mile with language that ended up in the bill before us today. Proponents portray this CAFE provision, authored by Senator Kerry and others, as reasonable and necessary. I have other words in mind to describe it. It is antisafety, anticonsumer and antijob. I also have the numbers to consider during this debate. How about 6.6 million. That is the number of Americans employed in direct or spin-off jobs related to the automotive industry. In fact, every State in America is an auto State. We all know that Michigan, Indian, Missouri, and Ohio are big manufacturing States. But even smaller States such as Nebraska, New Hampshire, and Delaware have suppliers and other industries where success and business profitability is directly related to the large car assembly plants in the Nation. As we struggle to get our economy moving again, we ought to be developing proposals that will increase the number of jobs. Unfortunately, the underlying miles-per-gallon standard in this bill by Senator Daschle does just the opposite. It must be removed. It must be replaced. I recognize there are competing views on this subject. Some of my colleagues prefer to listen to the arguments put forth by those who have never built a vehicle, never visited a plant, or don't even have an elementary understanding of how a car works. I prefer to listen to those who are actually engaged in the business of making cars, of designing cars, servicing cars, selling cars and trucks. They tell me one consistent message: The CAFE provision is a job killer, a threat to the safety of our friends and families and a mandated market that eliminates consumer choice. For those who say, too bad, we must force Detroit to build more fuel-efficient cars and trucks, do you know that under CAFE it doesn't matter what the companies manufacture and build? It is calculated based on what the consumer buys. There are over 50 of these high economy models in the showrooms across America today. But guess what. They represent less than 2 percent of total sales. Americans don't want them. You can lead a horse to water; you can't make him drink. You can lead the American consumer to a whole range of fancy, lightweight, long-distance automobiles, but you can't make them buy them. Meanwhile, consumers from families, soccer moms, farmers, people with teenagers, people with soccer teams, they want the minivans. A constituent of mine, Laura Baxendale in Ballwin, MO, asked: Senator, our mini-van is used to transport two soccer teams, equipment and seven players, how would this be possible in a smaller vehicle? I have to tell Ms. Baxendale, the bad news is they would have to have a string of golf carts. You can see the golf carts going down the highway to soccer practice, maybe two kids in each golf cart. It is not a very safe or efficient way to transport. Here is a quote from Jeffrey Byrne, of Byrne Farm in Chesterfield, MO: As a farmer I do not purchase pickup trucks because of their fuel economy, I purchase them for their practicality. He buys them because he needs them. He is taking care of his livestock. Did you ever try to put a load of hay in the back of a golf cart? It doesn't make a very big delivery vehicle. Under the new CAFE numbers, the production of these popular vehicles would need to be curtailed. I don't want to tell a mom and dad in my home State they can't get the SUV they want because Congress decided that would be a bad choice. I don't think that is a sound way to set public policy. After hearing from assembly line workers, farmers, auto dealers, and others directly impacted by Government CAFE standards, I fully believe the appropriate fuel economy standards are best decided by experts within the Department of Transportation who have the technology and the scientific know-how to determine what is feasible to help lead us down the path towards the most efficient, economical, and environmentally friendly standards, rather than by politicians choosing some political number out of the air. We could get in a bidding war, but we are bidding on something we know nothing about--how efficient can engines be made. Under the Levin-Bond amendment, the experts at the National Highway Transportation Safety Administration are directed to refer to sound science in promulgating an appropriate and feasible increase. Think of that. This would be historic, if this body said we are going to use sound science on a technological issue before us. Senator Levin and I believe the time has come. This amendment will strengthen the regulatory process to ensure that the miles per gallon or CAFE levels are accurate and reflect the needs of consumers, the technology development, without undo consequences for safety and jobs. Ultimately, I do believe science, not politics, should drive the deliberations on the CAFE or miles-per-gallon standards. I would be most interested to see what hard data and solid science our colleagues who have pushed for this 35-mile-an-hour CAFE standard say justifies it, the standard in the bill. I am waiting to see what scientist thinks there is a technology to meet it. I don't believe I would hold my breath because I don't think it exists. This is, unfortunately, a political number pulled out of thin air. Even worse, it is a number that could have deadly consequences for American drivers and passengers. I have read the 2001 National Academy of Sciences report on the CAFE standard. Let me share with you a key finding about safety and higher standards. This is a report in USA Today. It says: The fatality statistics show that 46,000 people have died because of a 1970s-era push for greater fuel efficiency that has led to smaller cars. The National Academy of Sciences say: In summary, the majority of that committee finds that the downsizing and weight reduction that occurred in the late 1970s and in early 1980s most likely produced between 1,300 and 2,600 crash fatalities and 13,000 to 26,000 serious injuries in 1993. They estimate that 2,000 people were killed in 1993. I fear that has been replicated every year since. It goes on to say: If an increase in fuel economy is effected by a system that encourages either downweighting or the production and sale of more small cars, some additional traffic fatalities would be expected. That National Academy of Sciences report offers all of us clear guidance and expert scientific analysis as we debate fuel economy levels. I would also point out that the NAS panel was extremely careful to caution its readers that its fuel economy targets were not recommended CAFE goals because they did not weigh considerations such as employment, affordability, and safety. These are the quotes from the National Academy of Sciences that I have just given you. I will leave it up so my colleagues can read it. I will have a copy of the report on the floor. I am sure everybody will be as fascinated as I have been to read it because it contains important information. Opponents of our amendment may question how effective the experts at NHTSA will be in leading the new fuel economy standards. Some might prefer that Congress set a political number as we find in the current energy bill. Our amendment takes an approach that, rather than politics and guesswork, hard science and technological feasibility should be the prime consideration in the development of any new CAFE standards. I will ask that my colleague from Michigan, who is going to describe this amendment, give you the details. I will just say that it is vitally important that we strike the people killing, jobs killing, market killing, CAFE or miles-per-gallon provisions currently in S. 517 because they would only hurt the consumer and do very little for fuel economy. Let's save jobs and save American lives by voting yes on the Levin-Bond amendment. I yield the floor.

Mr. BOND. Mr. President, reserving the right to object, two things. For the 11:30 a.m. vote, several on this side have asked for more time. So I will respectfully request that that be extended to 20 minutes. I have a basic problem. We still have not seen the amendment that is to be offered by Senators Kerry or Snowe, and, until we see it, we don't know if the time is adequate. We would like to see that.

Mr. BOND. OK. Then with the change to 20 minutes equally divided, we have no objection.

Mr. BOND. Mr. President, unless it is from the majority whip, I would prefer to go on with my statement. I have told the Senators that I would hope to be able to complete this in less than 15 minutes, if I could reclaim the floor. First, there was a statement by my friend, the Senator from Arizona, that there is nothing going to be done to improve fuel efficiency under the Levin-Bond amendment. I refer the Senator from Arizona to section 801, the very first page. It directs the Secretary of Transportation to issue new regulations setting forth increased fuel economy standards for automobiles that are determined on the basis of maximum feasible average fuel economy levels, taking into consideration the matters set forth in subsection F. That essentially lists all of the factors included in the National Academy of Sciences study. Frankly, it says, ``setting forth increased average fuel economy standards.'' There have been questions raised by the Senators from Massachusetts and Arizona as to whether there would be any action by the Department of Transportation. It is important to point out to whoever still remains that Secretary Mineta, in July of 2001, requested that Congress remove riders preventing the Department of Transportation from revising the current CAFE standards. Once Congress did that, the National Highway Traffic Safety Administration--which I will refer to as NHTSA--moved expeditiously in resuming CAFE rulemaking and published a notice on January 24, and on February 7 issued a request for comment for new CAFE standards for light trucks, requested public input. On February 1, the Secretary sent a letter to Congress urging that DOT be given the necessary authority to reform the CAFE program. The administration has requested an increase in NHTSA's budget to accomplish the development of the new standards and has begun updating its 1997 analysis of vehicle size. So I think NHTSA, which the National Academy of Sciences study said should move forward, has shown it is willing to do so and that it is anxious to do so. Now, one other item has been raised. My colleague from Massachusetts had a great line, a wonderful line, saying they had the most efficient workers and the U.S. auto industry can turn out the best cars around but they are forbidden to do so by the ``terrible management.'' It is all the management and the designers. Do you know something, Mr. President. The people saying they don't want those minicars are the consumers. The people who determine what the national auto- and truck- buying public consume are the consumers themselves. There are some in this body who think we can tell them that it is good for you, eat your spinach--even if you don't like it. They tried to tell them to eat their spinach. They got 50 different small cars that meet very high standards. Yes, by God, some of them are golf carts. I love the golf carts. They are going to be all over the place if we have this absolutely arbitrary 37-mile-per-gallon fleet average, or 35, or whatever they come up with in their secondary amendment. We are going to be driving lots of golf carts because they will make it. But only 1.5 percent of vehicle sales in the United States today--even though there are 50 different models--are of the mini subcompacts that get the very high miles per gallon average. For those people who want to drive them and want to save gasoline, more power to them. That should be their choice. That should be the consumer's choice. There have been a lot of statements made about the fact that, well, the only arguments against increased CAFE are from the automakers. There are those of us who are supporting the Levin-Bond amendment who believe that the basis for our concern and for our amendment is the National Academy of Sciences study. I had my breath taken away by the attacks on the National Academy of Sciences, but I will quote some figures from it. The Senator from Massachusetts said it is technically feasible and potentially economical to improve fuel economy without reducing vehicle weight or size. It goes on to say that two members of the committee believe it may be possible to improve fuel economy without any implications for safety, even if down-weighting is used. So that statement from the National Academy of Sciences shows that the rest of the members of the panel said it would have an impact on safety. Furthermore, the committee states that it recognizes the automakers' responses could be biased, but extensive downsizing that occurred after fuel economy requirements established in 1970 suggest that a likelihood of a similar response to further increases in fuel economy requirements must be considered seriously. From this, I repeat the message previously received--that we will be getting into smaller cars that are more dangerous. Speaking of smaller cars, my colleague from Massachusetts talked about the Escape hybrid electric vehicle. Well, the rest of the story, and what he did not tell you, is that the Escape, which is the basic car, can only tow 1,000 pounds. It is a small front-wheel drive. The hybrid would cost $3,000 to $5,000 more, and it is 1,000 pounds lighter. Now, 1,000 pounds is a significant factor because that is basically what the lower weight of vehicles after the CAFE standards went into effect--what resulted in the roughly 2,000 deaths per year that the National Academy of Sciences foresaw. There may be some people who want the hybrid electric vehicle. But if I were driving young children in my family around, I don't think I would want to go with a smaller car. There is no assurance that the consumers are going to buy it. That is the problem with some of these command-and-control decisions from Washington. They say that if we direct the manufacturers to build it, then the consumers will buy it. Well, American consumers like to make choices themselves. Sometimes they say we are not going to buy them. The 10 most fuel-efficient cars in America account for only 1.5 percent of auto sales. In a recent survey of attributes, they show that the consumers value safety, comfort, utility, performance, and fuel economy ranks at the bottom. In addition, when we talk about the technological improvements, Congress is not making the laws of physics. We are not changing science. The safety improvements add weight to the vehicles. The heavier the vehicle, the more energy it takes to move it down the road and it results in a decrease in fuel economy. The National Committee of Sciences report said: If an increase in fuel economy is affected by a system that encourages either downweighting or the production in sale of more small cars, some additional fatalities would be expected. In addition, the Senator from Massachusetts said unequivocally that NAS, in its report, said a fleet of 37 miles per gallon could be reached with existing technology and without any loss of jobs. That is just simply not true. Nobody can find a reference in this wonderful National Academy of Sciences report. I hold it up. It is a little dog eared. I have been looking for the statement cited as gospel by the Senator from Massachusetts. It is not in there. There are not even any fleetwide numbers in the report. Rather, there are cost- efficient fuel economy levels for 10 different subclasses of light-duty vehicles. Nowhere are those numbers sales weighted to yield a fleet average. Of the six cost-effective scenarios examined by the National Academy of Sciences panel, is there even 1 of the 10 classes estimated to be able to reach that level? There are subcompact and compact cars which under a 3-year payback period could get up to 30 miles per gallon, and the highest light truck value is only 24.7 miles per gallon. The National Academy of Sciences report in no way suggests that a 37, 35, 32--whatever number you want to give me--is achievable. Also, my friend from Massachusetts cited a Consumers Union study on possible safety effects. Unfortunately, that CU study used an invalid comparison of vehicle crash death rates published by the Insurance Institute for Highway Safety to suggest that drivers of Honda Civics are at less risk than drivers of Chevrolet Surburbans. The Insurance Institute says: Such a claim is absurd on the face of it. Plus, the comparison is invalid. The two death rates are not statistically different, as indicated by the confidence bounds we published. Also . . . nonvehicle factors such as use patterns and driver demographics influence vehicle death rates, and these are likely to vary across different vehicle types such as small cars . . . and very large sport utility vehicles. I ask unanimous consent this letter be printed in the Record.

Mr. BOND. Mr. President, I have enjoyed listening to the Senator's speeches and questions, and I have a number of answers to questions he has already raised. I prefer to answer those questions, and then I shall be happy to entertain such remaining questions. But he has addressed in his statements a number of questions to me. I am looking forward to the opportunity to attempt to answer those questions.

Mr. BOND. Mr. President, I thank my colleague from Illinois. I have been waiting since about 3:45 because there were a number of points that were raised by my good friend from Massachusetts. He was kind enough to pay attention to some analogies I drew. It is probably going to take me 10 to 15 minutes to correct the Record. But I am very sympathetic to the needs of my other colleagues who wish to speak, and I do need to straighten that out. With the Chair's permission, I will go ahead and reclaim my time and begin by making, first, a request. Mr. KERRY addressed the Chair.

Mr. BOND. Mr. President, finally, it has been suggested that the Honda manufacturing motor company is supporting the effort to get the 36 miles per gallon. Today's National Journal Congress Daily on page 9 reports that it opposes the bill sponsored by Senators Kerry and McCain, and it says it supports the measure supported by the distinguished Senator from Michigan and myself. Honda's representative in Washington said: The Kerry provision is just too aggressive. Ultimately, NHTSA ought to decide the standard. The Levin-Bond amendment would do that. For all those who have complained that there is going to be no progress, that it is going to be in the hands of the auto companies, I refer them simply to the Levin-Bond amendment which says that NHTSA must increase fuel economy, it must do so in consideration of the scientific and technological information developed and presented in the National Academy of Sciences proposal. Their report is called ``The Effectiveness and Impact of Corporate Fuel Economy Standards.'' We are seeking to do something that is rather unusual, and that is to say, use the best science, the best economics, continue to make progress but do not throw hundreds of thousands of people out of work, do not endanger lives, and do not destroy consumer choice. This is not a command-control economy like the old Soviet Union where we could say we are going to put out one car and that is what you are going to drive. Frankly, American consumers have developed their own tastes. Yes, we are going to push for better technology, but we are not going to tell them that you can only drive a mini subcompact or, as I say to my friend from Massachusetts, a golf cart. I look forward to continuing the debate tomorrow, and I urge my colleagues to support the Levin-Bond amendment. I am happy to yield the floor.

Mr. BOND. I am happy to yield to the distinguished Senator from Michigan.

Mr. BOND. For a parliamentary inquiry, I am happy to do so.

Mr. BOND. Mr. President, I had an inquiry to the distinguished deputy majority leader. We have been promised to see a copy of the amendment that is to be offered. Before we agree on the unanimous consent request on this side, we would like to see a copy of that amendment. I wonder if we could be accommodated.

Mr. BOND. Mr. President, I appreciate the chance to address a number of things that have been said on the floor. Before doing that, I would ask if the distinguished majority whip had further comments. I did not mean to cut him off.

Mr. BOND

Mr. BOND. Mr. President, I appreciate the opportunity to come to the Floor once again on another bipartisan matter with the distinguished chairman of the Small Business Committee. We have such a constructive working relationship in the Federal procurement issue area, and I always welcome the opportunity to work with the Senator from Massachusetts, Mr. Kerry, to advance small business participation in Government contracting. This bill we are introducing today will further clarify the relationship between the HUBZone and 8(a) contracting programs. This relationship has been a strongly debated topic lately, although we thought our Committee provided clear guidance on the matter in the 1997 HUBZone Act. In the matter before us, we are clarifying what happens when firms are eligible for both programs and become certified. The original Small Business Administration regulations on the HUBZone program called for the highest contracting priority to be given to HUBZone 8(a) ``dual status'' firms. That is, if a firm has been certified in both programs, it moves to the head of the class in getting Government contracts. The HUBZone regulations said that, in a HUBZone set-aside, an 8(a) firm should win over non-8(a) firms. Unfortunately, a comparable change was not included in the 8(a) regulations, to give HUBZone firms a preference in 8(a) set-asides. In a letter to SBA's Acting General Counsel last year, I asked SBA to resolve this inconsistency. Robert Gangwere, the Acting General Counsel, stated he did not think SBA had the statutory authority to grant a ``superpreference'' to HUBZone 8(a) dual status firms. Currently, SBA has a proposed rulemaking in progress that deletes the ``superpreference'' language. This bill would restore that. In a HUBZone set-aside (a competition restricted only to firms that are HUBZone firms), an 8(a) bidder would have priority over non-8(a) HUBZone bidders. A comparable change would be made in the 8(a) set-aside, giving HUBZone firms priority. I think this is reasonable, in that it encourages firms to take advantage of both programs. I do have one reservation with this bill. Both the HUBZone program and the Small Disadvantaged Business program, of which 8(a) is a part, offer a 10 percent price evaluation preference under certain circumstances in full-and-open competition. The old SBA rules called for HUBZone 8(a) combined firms to get a 20 percent price evaluation preference, combining both the HUBZone preference and the Small Disadvantaged Business preference. I think 20 percent is excessive. One of the goals of the small business program is to try to help small firms stabilize and develop, so they can survive in a competitive marketplace. Government contracts are supposed to be a means toward that end. But if a firm requires a 20 percent preference to win a contract, it probably has not done what it needs to do to become efficient and ready for the competitive marketplace. I am concerned that a 20 percent preference will be an unreasonable subsidy for inefficient firms. If a small business bidder is not even able to get within 20 percent of the lowest bidder, it probably is not a viable enterprise, and subsidizing its existence is not the highest and best use of taxpayer monies. With that reservation, I am happy to cosponsor this measure with the Senator from Massachusetts. I am confident we can come to some kind of accommodation on the price evaluation preference, and look forward to working with him to do so.

Mr. BOND

Mr. BOND. Mr. President, I appreciate the opportunity to come to the Floor once again on another bipartisan matter with the distinguished chairman of the Small Business Committee. We have such a constructive working relationship in the Federal procurement issue area, and I always welcome the opportunity to work with the Senator from Massachusetts, Mr. Kerry, to advance small business participation in Government contracting. This bill we are introducing today will further clarify the relationship between the HUBZone and 8(a) contracting programs. This relationship has been a strongly debated topic lately, although we thought our Committee provided clear guidance on the matter in the 1997 HUBZone Act. In the matter before us, we are clarifying what happens when firms are eligible for both programs and become certified. The original Small Business Administration regulations on the HUBZone program called for the highest contracting priority to be given to HUBZone 8(a) ``dual status'' firms. That is, if a firm has been certified in both programs, it moves to the head of the class in getting Government contracts. The HUBZone regulations said that, in a HUBZone set-aside, an 8(a) firm should win over non-8(a) firms. Unfortunately, a comparable change was not included in the 8(a) regulations, to give HUBZone firms a preference in 8(a) set-asides. In a letter to SBA's Acting General Counsel last year, I asked SBA to resolve this inconsistency. Robert Gangwere, the Acting General Counsel, stated he did not think SBA had the statutory authority to grant a ``superpreference'' to HUBZone 8(a) dual status firms. Currently, SBA has a proposed rulemaking in progress that deletes the ``superpreference'' language. This bill would restore that. In a HUBZone set-aside (a competition restricted only to firms that are HUBZone firms), an 8(a) bidder would have priority over non-8(a) HUBZone bidders. A comparable change would be made in the 8(a) set-aside, giving HUBZone firms priority. I think this is reasonable, in that it encourages firms to take advantage of both programs. I do have one reservation with this bill. Both the HUBZone program and the Small Disadvantaged Business program, of which 8(a) is a part, offer a 10 percent price evaluation preference under certain circumstances in full-and-open competition. The old SBA rules called for HUBZone 8(a) combined firms to get a 20 percent price evaluation preference, combining both the HUBZone preference and the Small Disadvantaged Business preference. I think 20 percent is excessive. One of the goals of the small business program is to try to help small firms stabilize and develop, so they can survive in a competitive marketplace. Government contracts are supposed to be a means toward that end. But if a firm requires a 20 percent preference to win a contract, it probably has not done what it needs to do to become efficient and ready for the competitive marketplace. I am concerned that a 20 percent preference will be an unreasonable subsidy for inefficient firms. If a small business bidder is not even able to get within 20 percent of the lowest bidder, it probably is not a viable enterprise, and subsidizing its existence is not the highest and best use of taxpayer monies. With that reservation, I am happy to cosponsor this measure with the Senator from Massachusetts. I am confident we can come to some kind of accommodation on the price evaluation preference, and look forward to working with him to do so.

Mr. BOND

Mr. BOND. Madam President, how many minutes remain on this side?

Mr. BOND. I will be happy to yield half a minute to my colleague from Pennsylvania.

Mr. BOND. Madam President, I yield myself 5 minutes. I thank the Senator from Pennsylvania for his excellent work on this bill. As a former prosecutor in a State that has not been a stranger to vote fraud, he knows how difficult it is, and he has made a very compelling case for our efforts to eliminate fraud in this bill. We have had an interesting dueling set of editorials today that have come out in some of the papers on the east coast. We do not read a lot of them in Missouri, but the Washington Post is the one that did not get it. The Washington Post said: Republicans should contain their sense of betrayal and support the measure. They go on to say that without the Schumer amendment, it would disqualify a number of voters. No. 1, Madam President, sense of betrayal counts for something here and counts for something back home. It may not matter to editorial board writers within the beltway, but when we make a deal, as we made a deal, a bipartisan deal after accommodations on both sides, I expect that people will stay with that deal. Somebody said: You made a deal, but now we want you to start negotiating again. I said: Wait a minute, we do not work that way. We came in good faith to an agreement, and we agreed with the proposition that we ought to make sure everybody who is eligible to vote is registered and can vote. The Washington Post just flat gets it wrong when it says there are going to be people who cannot qualify. Ninety percent of adult Americans have a driver's license. You have to show identification to get on a plane, to rent a video, to buy cigarettes. Why can't you have some minimal identification to assure that you are a live human being entitled to vote, and entitled to vote only once in every important election? Well, we have agreed that with the money we are providing to States, if somebody does not have a photo identification, a driver's license, a government check, a bank account, a utility bill, a pay stub, we are providing the money for the States to issue an election card. We are worried about all the people in nursing homes. No. 1, everybody who is registered is going to stay registered. The Senator from New York pointed out the problems they had with crowded rolls. We do need to work on purging. I voted against the amendment by my colleague from Montana; he wanted to make it easier to purge no longer active voters from the rolls. I think it was a good idea, but because we had a deal, I voted against his amendment. We are, as the Senator from New York pointed out, going to have to clean it up. Incidentally, speaking of the Senator from New York, he assured us yesterday--and I am glad to see he is in the Chamber --there was no fraud in New York. Well, I do not know anything about New York, but the Wall Street Journal this morning points out the doubledippers sign up to vote in New York and Florida, and they report that an investigation turned up 286 individuals who voted both in New York City and in Florida last November in the 2000 election. Since you can figure that New York City voters generally vote 3 to 1 Democratic, that means at least 140 fraudulent votes for the Gore-Lieberman ticket in Florida. One other thing. Somebody gave me a copy of the New York Daily News: Double Take in Ballot Probe. Voters With Same Name and Birthday Expose New York System. Seventy-five voters with the same name and same date of birth registered to vote in Brooklyn and either Rockland or Orange Counties. Fourteen actually voted in more than one county, sometimes in the same election. It describes how the double voting and the double registration occurs in some areas with heavy Democratic votes. So there are some problems, but frankly we do not have time to go into it.

Mr. BOND. Madam President, I ask unanimous consent that the Daily News article, the Wall Street Journal editorial, the Washington Post editorial, and a New York Times editorial which says Americans should be willing to verify their identity in order to exercise the right to vote, and the St. Louis Post-Dispatch article on the famous dog Ritzy Mekler, whose owner says she, Ritzy, does not want any other dogs voting, be printed in the Record.