Kit Bond

Mr. BOND

Mr. BOND. Mr. President, one of the very lucky things we have around here is the opportunity to listen to some very intelligent people giving us their ideas on a lot of important subjects. Recently, I have had the pleasure of listening to Chairman Alan Greenspan, who spoke before the Budget Committee a couple weeks ago. Yesterday, we had our budget director, David Walker, speaking to the Centrist Coalition and also had an opportunity to listen to Larry Lindsey, the President's economic adviser, who used to serve on the Federal Reserve. I have learned a good number of things from them that I think are very important for the discussions we have about the budget and how we deal with the tax surplus that is confronting our country. As previous speakers have said, we are no longer in a cold-war world; we are no longer trying to get out of the budget deficit problem. I think a couple things need to be clarified about some remarks I heard earlier. No. 1, it was not the tax increase of 1993 that got us out of the budget deficit situation. I served on the Budget Committee during those, what I would say were very frustrating years--1993, 1994, 1995. We went back and checked. Do you know something very interesting? In spite of the fact that President Clinton and the then-majority Democrats passed the largest tax increase in history, it did not do anything to lessen the deficits. We went back and checked because the President's budget proposal, I think for four straight budgets, proposed deficits of $200 billion a year, roughly, as far as the eye could see. There was no decrease in the deficit because they proposed to spend the money. We raised taxes to deal with the deficit, but then they raised spending to cover up the tax increases. So it was not until we got into those battles in 1995--and those were difficult battles; I don't want to relive those days--but those were important battles because we finally made the point--with a Republican Congress and a Democratic President--that we had to start getting spending under control to get out of this deficit spiral that was driving us further and further into debt. And we did it. And we did something else, again, without the support of the President initially, and with some, but not a lot of, support from the other side of the aisle. We cut the capital gains tax rate. At the time, CBO and others were saying: Oh, the capital gains cut is going to cost revenue to the Federal Government. Some of us believe that when you cut taxes, particularly on an optional activity, such as selling property--which triggers capital gains--you can actually get more sales of property; that we could unlock some of the locked-in gains. We did, and capital gains revenues went up significantly. But lo and behold, something else very important happened. As we took away the disincentive to roll over old investments and put them into new investments, we started investing them in something new called information technology, which enabled us to develop much more productive ways of doing things. Lo and behold, the productivity of this economy grew. When the productivity grows, that means we can get more goods and more services--a better quality--without paying more, and we can pay better wages. We also had welfare reform, which took significant portions of the people off welfare and put them to work. Again, I am proud that the Republican Congress was able to pass a bill three times--two vetoes-- and then it was finally signed, and we got more people working. So we were really generating things with our economy. We had good jobs, and productivity was up. Our lucky streak ran out, probably back in September, as the indicators turned down. We are seeing signs that are not encouraging, that the business cycle may be going into a downturn. But we believe that for the long term, this country is going to continue to grow. The budget projections of the CBO, and the blue chip indicators, suggest that even if we do have these budget downturns, we still are probably going to have about a $5.6 trillion tax surplus over the next 10 years. It might be lower; it might be higher. Most likely, if we can continue to invest in productivity--the rate of productivity growth we have had in recent years--it will be higher. So the question becomes, What do we do with that $5.7 trillion tax surplus? David Walker says we ought to pay down all the debt as quickly as we can. Chairman Greenspan used to say that, but now he has said: Wait a minute, you can only pay down so much of the debt because a lot of it is in bonds and other long-term instruments that people are not going to want to sell because a lot of us have given savings bonds, and other things, to our kids or people who have made long-term commitments to saving. So we cannot get them all back. So Alan Greenspan, when he testified before the Budget Committee, said it is time that we start reducing taxes. We need to continue to pay down the debt in a steady, consistent, prompt manner, but do not try to get rid of all of it, and start now with some tax relief. So the President has come up with a proposal for that $5.6 trillion: To use $2.9 trillion of it for Social Security and Medicare; to use $1.6 trillion to reduce the tax burden of those who are paying taxes; and set aside another $1 trillion for needed investments--actually, expenditures that may come along, and that is after we have the ordinary inflationary growth. So that is even after Government grows by, say, 4 percent in discretionary spending. The one thing that everybody agrees we should not do with that surplus is lock it in totally to more mandatory spending, entitlements, because that is what, according to David Walker, is going to break this country 20, 30, 40 years down the road, if we do not do something about it. We cannot continue to lock in automatic spending because you never can get out of it; it is too difficult. So the President said he wants to give a $1.6 trillion tax reduction. Our Democratic friends say: We want only $900 billion in tax reduction. The President said: We are going to increase spending some. But apparently--my guess is--my colleagues on the other side of the aisle would want to spend the $700 billion difference between what they want as a tax reduction and what we want as a tax reduction. Frankly, I think that is a bad way to go because our economy is suffering right now under the highest income tax rates we have ever had in peacetime. Mr. President, 21.6 percent is what we pay in taxes now. The only time it was higher was in 1944, at the height of World War II. That tax rate is too high. It threatens to choke off the money flowing into productivity, to businesses, to families, to make their own decisions, to make their own investments. So I believe $1.6 trillion is a reasonable figure. A portion of that must go to reduce marginal income tax rates. Just a few years ago, the top marginal rate was 28 percent. A lot of people, if you poll them, will say: Yes, the Federal Government could take 28 to 30 percent of a rich person's income, take it in taxes. The President is only lowering the top rate to 33 percent, but he is giving across-the-board tax relief to all Americans paying income tax. Six million people, the lowest income people paying income tax, could be dropped off the rolls. For a family of four making $35,000 a year now paying income tax, they would pay none. For a family of four making $50,000 a year, their income tax burden would be cut in half. A question has been raised in this Chamber about progressivity. Are you continuing to tax the wealthy more? The answer to that is yes. You drop 6 million people off at the bottom; then you have the wealthy. Anybody who makes over $100,000 a year--we could say that is relatively high income--right now those people making over $100,000 a year pay 61.9 percent of the total income taxes collected. After the Bush plan is fully implemented, they would pay 64.1 percent. They would be paying a larger share, more than 2 percent more of the taxes. If we want progressivity, President Bush's plan is important. Why is it important? Because only with that tax reduction can we make available the continuing investment in productivity that keeps the economy growing. Individuals, small businesses are making investments in other companies and in their own companies. There are some 20.7 million small businesses in America taxed at personal rates. They are proprietorships, personal operations--a farm, a small store, a computer consultant--or they are partnerships or sub S corporations. That means the individual tax rate affects the business. A few years ago, after the 1985-86 tax cut, they only had to pay 28 percent as a top rate on their income. They used that money to invest in new equipment, in new employees, to expand their business. Now some of them at some rates pay as much as 44 percent as a top rate in their business. That is a significant cut in the amount of money that is available to invest in business and expand productivity. I asked Alan Greenspan: Why is it that marginal tax rate cuts are the best thing we can do for the economy? He said: For the long-term, the best thing you can do for the economy is to reduce marginal rates because reducing marginal rates puts more money into the investments we need--into technology, equipment that improves productivity, provides better wages and better economic opportunity and more jobs. That is basically the reason why the Bush tax plan makes a great deal of sense. There are a lot of other ideas around here. I am sure we will have an opportunity to work on them. For the long term, if we want to keep our economy growing--and I think we certainly do--we need a balanced approach that does as the President said: No. 1, reduces the debt as far as it can; provides tax reductions that will be put into productive investment; and puts money into high priority items, items such as education, items where we can see a real need. We also need to reform Medicare, including prescription drug options for seniors in assisting low-income seniors. We ought to get about working to reform Social Security as well. As we do those things, leaving money in the private sector is the best way to make sure our country can progress. There are those on the other side who say we are giving tax money back to the wealthy to purchase a Lexus. Frankly, we make a lot of cars in Missouri; we don't make the Lexus. If they have earned the money, the question is, How much of that do you tax away? If they buy a Ford or a Chevy or a Dodge minivan, they are putting a Missourian to work. That is not all bad. We could have that if we adopt a sound economic plan, a sound budget, and a responsible tax reform proposal. I believe the President's proposal is sound. We have heard statements made, a lot of statements, that the top 1 percent of the income earners only pay 20 percent or 21 percent of the income tax. That is not true. They pay 34 percent of the income tax. They would wind up paying more under the Bush plan. It does keep progressivity as well as providing relief up and down the line. I hope the American people will take the time to find out the truth about the economics of the budget and this tax relief plan. I believe if they do, they will find that this is a plan that makes sense. It is balanced. It meets the priority needs of the American people, and it is the best recipe we have to see continued economic growth, good jobs, increasing productivity, and a better way of life for all Americans. I yield the floor and suggest the absence of a quorum.

Mr. BOND

Mr. BOND. Mr. President, consistent with standing rule XXVI, I ask unanimous consent that a copy of the Rules of the Senate Committee on Small Business be printed in the Record.

Mr. BOND

Mr. BOND. Mr. President, I rise in support of the Independent Office of Advocacy Act of 2001. This bill is designed to build on the success achieved by the Office of Advocacy over the past 24 years. It is intended to strengthen that foundation to make the Office of Advocacy a stronger, more effective advocate for all small businesses throughout the United States. This bill was approved unanimously by the Senate during the 106th Congress; however, it was not taken up in the House of Representatives prior to the adjournment last month. It is my understanding the House Committee on Small Business under its new chairman, Don Manzullo, is likely to act on similar legislation this year. The Office of Advocacy is a unique office within the Federal Government. It is part of the Small Business Administration, SBA/ Agency, and its director, the Chief Counsel for Advocacy, is nominated by the President and confirmed by the Senate. At the same time, the Office is also intended to be the independent voice for small business within the Federal Government. It is supposed to develop proposals for changing government policies to help small businesses, and it is supposed to represent the views and interests of small businesses before other Federal agencies. As the director of the Office of Advocacy, the Chief Counsel for Advocacy has a dual responsibility. On the one hand, he is the independent watchdog for small business. On the other hand, he is also a part of the President's administration. As you can imagine, those are sometimes difficult roles to play simultaneously. The Independent Office of Advocacy Act of 2001 would make the Office of Advocacy and the Chief Counsel for Advocacy a fully independent advocate within the executive branch acting on behalf of the small business community. The bill would establish a clear mandate that the Office of Advocacy will fight on behalf of small businesses regardless of the position taken on critical issues by the President and his administration. The Independent Office of Advocacy Act of 2001 would direct the Chief Counsel to submit an annual report on Federal agency compliance with the Regulatory Flexibility Act to the President and the Senate and House Committees on Small Business. The Reg Flex Act is a very important weapon in the war against the over-regulation of small businesses. When the Senate first debated this bill in the 106th Congress, I offered an amendment at the request of Senator Fred Thompson, chairman of the Government Affairs Committee, that would direct the Chief Counsel for Advocacy to send a copy of the report to the Senate Government Affairs Committee. In addition, my amendment also required that copies of the report be sent to the House Committee on Government Reform and the House and Senate Committees on the Judiciary. I believe these changes make good sense for each of the committees to receive this report on Reg Flex compliance, and I have included them in the version of the bill being introduced and debated today. The Office of Advocacy as envisioned by the Independent Office of Advocacy Act 2001 would be unique within the executive branch. The Chief Counsel for Advocacy would be a wide-ranging advocate, who would be free to take positions contrary to the administration's policies and to advocate change in government programs and attitudes as they impact small businesses. During its consideration of the bill in 1999, the Committee on Small Business adopted unanimously an amendment I offered, which was cosponsored by Senator John Kerry, the committee's ranking Democrat, to require the Chief Counsel to be appointed ``from civilian life.'' This qualification is intended to emphasize that the person nominated to serve in this important role should have a strong small business background. In 1976, Congress established the Office of Advocacy in the SBA to be the eyes, ears and voice for small business within the Federal Government. Over time, it has been assumed that the Office of Advocacy is the ``independent'' voice for small business. While I strongly believe that the Office of Advocacy and the Chief Counsel should be independent and free to advocate or support positions that might be contrary to the administration's policies, I have come to find that the Office has not been as independent as necessary to do the job for small business. For example, funding for the Office of Advocacy comes from the salaries and expense account of the SBA's budget. Staffing is allocated by the SBA Administrator to the Office of Advocacy from the overall staff allocation for the Agency. In 1990, there were 70 full-time employees working on behalf of small businesses in the Office of Advocacy. Today's allocation of staff is 49, and fewer are actually on- board as the result of the longstanding hiring freeze at the SBA. The independence of the Office is diminished when the Office of Advocacy staff is reduced to allow for increased staffing for new programs and additional initiatives in other areas of SBA, at the discretion of the Administrator. In addition, the General Accounting Office, GAO, undertook a report for me on personnel practices at the SBA, GAO/GGD-99-68. I was alarmed by the GAO's finding that during the past eight years, the Assistant Advocates and Regional Advocates hired by the Office of Advocacy shared many of the attributes of schedule C political appointees. In fact Regional Advocates are frequently cleared by the White House personnel office--the same procedure followed for approving Schedule C political appointees. The facts discussed in the GAO report cast the Office of Advocacy in a whole new light. The report raised questions, concerns and suspicions regarding the independence of the Office of Advocacy. Has there been a time when the Office did not pursue a matter as vigorously as it might have were it not for direct or indirect political influence? Prior to receipt of the GAO Report, my response was a resounding ``No.'' But since receipt of the GAO report, a question mark arises. Let me take a moment and note that I will be unrelenting in my efforts to insure the complete independence of the Office of Advocacy in all matters, at all times, for the continued benefit of all small businesses. However, so long as the administration controls the budget allocated to the Office of Advocacy and controls who is hired, the independence of the Office may be in jeopardy. We must correct this situation, and the sooner we do it, the better it will be for the small business community. As our government is changing over to President Bush's administration, this would be a opportune time to establish, once and for all, the actual independence of the Office of Advocacy. The Independent Office of Advocacy Act of 2001 builds a firewall to prevent the political intrusion into the management of day-to-day operations of the Office of Advocacy. The bill would require that the SBA's budget include a separate account for the Office of Advocacy. No longer would its funds come from the general operating account of the Agency. The separate account would also provide for the number of full- time employees who would work within the Office of Advocacy. No longer would the Chief Counsel for Advocacy have to seek approval from the SBA Administrator to hire staff for the Office of Advocacy. The bill would also continue the practice of allowing the Chief Counsel to hire individuals critical to the mission of the Office of Advocacy without going through the normal competitive procedures directed by federal law and the Office of Personnel Management, (OPM). I believe this special hiring authority, which is limited only to employees within the Office of Advocacy, is beneficial because it allows the Chief Council to hire quickly those persons who can best asset the Office in responding to changing issues and problems confronting small businesses. Mr. President, the Independent Office of Advocacy Act is a sound bill. It is the product of a great deal of thoughtful, objective review and consideration by me, the staff of the Committee on Small Business, representatives of the small business community, former Chief Counsels for Advocacy and others. These individuals have also devoted much time and effort in actively participating in a committee roundtable discussion on the Office of Advocacy, which my committee held on April 21, 1999. As I stated earlier, the Committee on Small Business approved this bill by a unanimous 17-0 vote, and it was later approved unanimously by the Senate. I urge each of my colleagues to review this legislation closely. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BOND. Mr. President, it is with great pleasure that I am introducing the White House Quadrennial Small Business Summit Act of 2001. This bill is designed to create a permanent independent commission that will carry-on the extraordinary work that has been accomplished by three White House Conferences on Small Business. The Small Business Commission will direct national and state Small business summits, and small business delegates from every state will attend the summits. Last year, representatives of small businesses and organizers of prior White House Conferences on Small Business worked closely with the Committee on Small Business to develop legislation similar to the bill I am introducing today. The bill passed the Senate last year as part of the Small Business Reauthorization Act of 2000, S. 3121; however, it was dropped in Conference. For the past 15 years, small businesses have been the fastest growing sector of the U.S. economy. When large businesses were restructuring and laying off significant numbers of workers, small businesses not only filled the gap, but their growth actually caused a net increase in new jobs. Today, small businesses employ over one-half of all workers in the United States, and they generate nearly 55 percent of the gross domestic product. Were it not for small businesses, our country could not have experienced the sustained economic upsurge that has been ongoing since 1992. Because small businesses play such a significant role in our economy, in both rural towns and bustling inner cities, I believe it is important that the Federal government sponsor a national conference every four years to highlight the successes of small businesses and to focus national attention on the problems that may be hindering the ability of small businesses to start up and grow. Small business ownership is, has been, and will continue to be the dream of millions of Americans. Countries from all over the world send delegations to the United states to study why our system of small business ownership is so successful, all the while looking for a way to duplicate our success in their countries. Because we see and experience the successes of small businesses on a daily basis, it is easy to lose sight of the very special thing we have going for us in the United States, where each of us can have the opportunity to own and run our own business. The White House Quadrennial Small Business Summit Act of 2001 is designed to capture and focus our attention on small business every four years. In this way, we will take the opportunity to study what is happening throughout the United States to small businesses. In one sense, the bill is designed to put small business on a pinnacle so we can appreciate what they have accomplished. At the same time, and just as important, every four years we will have an opportunity to learn from small businesses in each state what is not going well for them, such as, actions by the Federal government that hinder small business growth or state and local regulations that are a deterrent to starting a business. My bill creates an independent, bipartisan White House Quadrennial Commission on Small Business, which will be made up of 8 small business advocates and the Small Business Administration's Chief Counsel for Advocacy. Every four years, during the first year following a presidential election, the President will name four National Commissioners. In the U.S. Senate and the House of Representatives, the Majority Leader and Minority Leader of each body will each name one National Commissioner. Widespread participation from small businesses in each state will contribute to the work leading up to the national Small Business Summit. Under the bill, the Small Business Summit will take place one year after the Quadrennial Commissioners are appointed. The first act of the Commissioners will be to request that each Governor and each U.S. Senator name a small business delegate and alternate delegate from their respective states to the National Convention. Each U.S. Representative will be asked to name a small business delegate and alternative from his or her Congressional district. And the President will name a delegate and alternate from each state. The delegates to the Small Business Summit must be owners or officers of small businesses. Prior to the national Small Business Summit, there will be individual State Summits at which additional delegates will be elected to attend the national Summit. Three delegates and three alternates will be elected from each Congressional district within the state. The small busines delegates will play a major role leading up to the Small Business Summit. We will be looking to the small business delegates to develop and highlight issues of critical concern to small businesses. The work at the state level by the small business delegates will need to be thorough and thoughtful to make the Small Business Summit a success. My goal will be for the small business delegates to think broadly, that is, to think ``out of the box.'' Their attention should include but not be restricted to the traditional issues associated with small business concerns, such as access to capital, tax reform and regulatory reform. In my role as Chairman of the Committee on Small Business, I will urge the delegates to focus on a wide array of issues that impact significantly on small businesses, including the importance of a solid education and the need for skilled, trained workers. Once the small business delegates are selected, the Small Business Commission will serve as a resource to the delegates for issue development and for planning the State Conferences. The Small Business Commission will have a modest staff, including an Executive Director, that will work full time to make the State and National Summits successes. A major resource to the Small Business Commission and its staff will be the Chief Counsel for Advocacy from the SBA. The Chief Counsel and the Office of Advocacy will serve as a major resource to the Small Business Commission, and in turn, to the small business delegates, by providing them with both substantive background informaiton and other administrative materials in support of the State and National Summits. Mr. President, small businesses generally do not have the resources to maintain full time representatives to lobby our Federal government. They are too busy running their businesses to devote much attention to educating government officials as to what is going well, what is going poorly, and what needs improvement for the small business community. The White House Quadrennial Small Business Summit will give small businesses an opportunity every four years to make its mark on the Congress and the Executive Branch. I urge each of my colleagues to review their proposal, and I hope they will agree to join me as cosponsors of the ``White House Quadrennial Small Busines Summit Act of 2001.'' I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BOND

Mr. BOND. Mr. President, I rise in support of the Independent Office of Advocacy Act of 2001. This bill is designed to build on the success achieved by the Office of Advocacy over the past 24 years. It is intended to strengthen that foundation to make the Office of Advocacy a stronger, more effective advocate for all small businesses throughout the United States. This bill was approved unanimously by the Senate during the 106th Congress; however, it was not taken up in the House of Representatives prior to the adjournment last month. It is my understanding the House Committee on Small Business under its new chairman, Don Manzullo, is likely to act on similar legislation this year. The Office of Advocacy is a unique office within the Federal Government. It is part of the Small Business Administration, SBA/ Agency, and its director, the Chief Counsel for Advocacy, is nominated by the President and confirmed by the Senate. At the same time, the Office is also intended to be the independent voice for small business within the Federal Government. It is supposed to develop proposals for changing government policies to help small businesses, and it is supposed to represent the views and interests of small businesses before other Federal agencies. As the director of the Office of Advocacy, the Chief Counsel for Advocacy has a dual responsibility. On the one hand, he is the independent watchdog for small business. On the other hand, he is also a part of the President's administration. As you can imagine, those are sometimes difficult roles to play simultaneously. The Independent Office of Advocacy Act of 2001 would make the Office of Advocacy and the Chief Counsel for Advocacy a fully independent advocate within the executive branch acting on behalf of the small business community. The bill would establish a clear mandate that the Office of Advocacy will fight on behalf of small businesses regardless of the position taken on critical issues by the President and his administration. The Independent Office of Advocacy Act of 2001 would direct the Chief Counsel to submit an annual report on Federal agency compliance with the Regulatory Flexibility Act to the President and the Senate and House Committees on Small Business. The Reg Flex Act is a very important weapon in the war against the over-regulation of small businesses. When the Senate first debated this bill in the 106th Congress, I offered an amendment at the request of Senator Fred Thompson, chairman of the Government Affairs Committee, that would direct the Chief Counsel for Advocacy to send a copy of the report to the Senate Government Affairs Committee. In addition, my amendment also required that copies of the report be sent to the House Committee on Government Reform and the House and Senate Committees on the Judiciary. I believe these changes make good sense for each of the committees to receive this report on Reg Flex compliance, and I have included them in the version of the bill being introduced and debated today. The Office of Advocacy as envisioned by the Independent Office of Advocacy Act 2001 would be unique within the executive branch. The Chief Counsel for Advocacy would be a wide-ranging advocate, who would be free to take positions contrary to the administration's policies and to advocate change in government programs and attitudes as they impact small businesses. During its consideration of the bill in 1999, the Committee on Small Business adopted unanimously an amendment I offered, which was cosponsored by Senator John Kerry, the committee's ranking Democrat, to require the Chief Counsel to be appointed ``from civilian life.'' This qualification is intended to emphasize that the person nominated to serve in this important role should have a strong small business background. In 1976, Congress established the Office of Advocacy in the SBA to be the eyes, ears and voice for small business within the Federal Government. Over time, it has been assumed that the Office of Advocacy is the ``independent'' voice for small business. While I strongly believe that the Office of Advocacy and the Chief Counsel should be independent and free to advocate or support positions that might be contrary to the administration's policies, I have come to find that the Office has not been as independent as necessary to do the job for small business. For example, funding for the Office of Advocacy comes from the salaries and expense account of the SBA's budget. Staffing is allocated by the SBA Administrator to the Office of Advocacy from the overall staff allocation for the Agency. In 1990, there were 70 full-time employees working on behalf of small businesses in the Office of Advocacy. Today's allocation of staff is 49, and fewer are actually on- board as the result of the longstanding hiring freeze at the SBA. The independence of the Office is diminished when the Office of Advocacy staff is reduced to allow for increased staffing for new programs and additional initiatives in other areas of SBA, at the discretion of the Administrator. In addition, the General Accounting Office, GAO, undertook a report for me on personnel practices at the SBA, GAO/GGD-99-68. I was alarmed by the GAO's finding that during the past eight years, the Assistant Advocates and Regional Advocates hired by the Office of Advocacy shared many of the attributes of schedule C political appointees. In fact Regional Advocates are frequently cleared by the White House personnel office--the same procedure followed for approving Schedule C political appointees. The facts discussed in the GAO report cast the Office of Advocacy in a whole new light. The report raised questions, concerns and suspicions regarding the independence of the Office of Advocacy. Has there been a time when the Office did not pursue a matter as vigorously as it might have were it not for direct or indirect political influence? Prior to receipt of the GAO Report, my response was a resounding ``No.'' But since receipt of the GAO report, a question mark arises. Let me take a moment and note that I will be unrelenting in my efforts to insure the complete independence of the Office of Advocacy in all matters, at all times, for the continued benefit of all small businesses. However, so long as the administration controls the budget allocated to the Office of Advocacy and controls who is hired, the independence of the Office may be in jeopardy. We must correct this situation, and the sooner we do it, the better it will be for the small business community. As our government is changing over to President Bush's administration, this would be a opportune time to establish, once and for all, the actual independence of the Office of Advocacy. The Independent Office of Advocacy Act of 2001 builds a firewall to prevent the political intrusion into the management of day-to-day operations of the Office of Advocacy. The bill would require that the SBA's budget include a separate account for the Office of Advocacy. No longer would its funds come from the general operating account of the Agency. The separate account would also provide for the number of full- time employees who would work within the Office of Advocacy. No longer would the Chief Counsel for Advocacy have to seek approval from the SBA Administrator to hire staff for the Office of Advocacy. The bill would also continue the practice of allowing the Chief Counsel to hire individuals critical to the mission of the Office of Advocacy without going through the normal competitive procedures directed by federal law and the Office of Personnel Management, (OPM). I believe this special hiring authority, which is limited only to employees within the Office of Advocacy, is beneficial because it allows the Chief Council to hire quickly those persons who can best asset the Office in responding to changing issues and problems confronting small businesses. Mr. President, the Independent Office of Advocacy Act is a sound bill. It is the product of a great deal of thoughtful, objective review and consideration by me, the staff of the Committee on Small Business, representatives of the small business community, former Chief Counsels for Advocacy and others. These individuals have also devoted much time and effort in actively participating in a committee roundtable discussion on the Office of Advocacy, which my committee held on April 21, 1999. As I stated earlier, the Committee on Small Business approved this bill by a unanimous 17-0 vote, and it was later approved unanimously by the Senate. I urge each of my colleagues to review this legislation closely. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BOND

Mr. BOND. Mr. President, it is with great pleasure that I am introducing the White House Quadrennial Small Business Summit Act of 2001. This bill is designed to create a permanent independent commission that will carry-on the extraordinary work that has been accomplished by three White House Conferences on Small Business. The Small Business Commission will direct national and state Small business summits, and small business delegates from every state will attend the summits. Last year, representatives of small businesses and organizers of prior White House Conferences on Small Business worked closely with the Committee on Small Business to develop legislation similar to the bill I am introducing today. The bill passed the Senate last year as part of the Small Business Reauthorization Act of 2000, S. 3121; however, it was dropped in Conference. For the past 15 years, small businesses have been the fastest growing sector of the U.S. economy. When large businesses were restructuring and laying off significant numbers of workers, small businesses not only filled the gap, but their growth actually caused a net increase in new jobs. Today, small businesses employ over one-half of all workers in the United States, and they generate nearly 55 percent of the gross domestic product. Were it not for small businesses, our country could not have experienced the sustained economic upsurge that has been ongoing since 1992. Because small businesses play such a significant role in our economy, in both rural towns and bustling inner cities, I believe it is important that the Federal government sponsor a national conference every four years to highlight the successes of small businesses and to focus national attention on the problems that may be hindering the ability of small businesses to start up and grow. Small business ownership is, has been, and will continue to be the dream of millions of Americans. Countries from all over the world send delegations to the United states to study why our system of small business ownership is so successful, all the while looking for a way to duplicate our success in their countries. Because we see and experience the successes of small businesses on a daily basis, it is easy to lose sight of the very special thing we have going for us in the United States, where each of us can have the opportunity to own and run our own business. The White House Quadrennial Small Business Summit Act of 2001 is designed to capture and focus our attention on small business every four years. In this way, we will take the opportunity to study what is happening throughout the United States to small businesses. In one sense, the bill is designed to put small business on a pinnacle so we can appreciate what they have accomplished. At the same time, and just as important, every four years we will have an opportunity to learn from small businesses in each state what is not going well for them, such as, actions by the Federal government that hinder small business growth or state and local regulations that are a deterrent to starting a business. My bill creates an independent, bipartisan White House Quadrennial Commission on Small Business, which will be made up of 8 small business advocates and the Small Business Administration's Chief Counsel for Advocacy. Every four years, during the first year following a presidential election, the President will name four National Commissioners. In the U.S. Senate and the House of Representatives, the Majority Leader and Minority Leader of each body will each name one National Commissioner. Widespread participation from small businesses in each state will contribute to the work leading up to the national Small Business Summit. Under the bill, the Small Business Summit will take place one year after the Quadrennial Commissioners are appointed. The first act of the Commissioners will be to request that each Governor and each U.S. Senator name a small business delegate and alternate delegate from their respective states to the National Convention. Each U.S. Representative will be asked to name a small business delegate and alternative from his or her Congressional district. And the President will name a delegate and alternate from each state. The delegates to the Small Business Summit must be owners or officers of small businesses. Prior to the national Small Business Summit, there will be individual State Summits at which additional delegates will be elected to attend the national Summit. Three delegates and three alternates will be elected from each Congressional district within the state. The small busines delegates will play a major role leading up to the Small Business Summit. We will be looking to the small business delegates to develop and highlight issues of critical concern to small businesses. The work at the state level by the small business delegates will need to be thorough and thoughtful to make the Small Business Summit a success. My goal will be for the small business delegates to think broadly, that is, to think ``out of the box.'' Their attention should include but not be restricted to the traditional issues associated with small business concerns, such as access to capital, tax reform and regulatory reform. In my role as Chairman of the Committee on Small Business, I will urge the delegates to focus on a wide array of issues that impact significantly on small businesses, including the importance of a solid education and the need for skilled, trained workers. Once the small business delegates are selected, the Small Business Commission will serve as a resource to the delegates for issue development and for planning the State Conferences. The Small Business Commission will have a modest staff, including an Executive Director, that will work full time to make the State and National Summits successes. A major resource to the Small Business Commission and its staff will be the Chief Counsel for Advocacy from the SBA. The Chief Counsel and the Office of Advocacy will serve as a major resource to the Small Business Commission, and in turn, to the small business delegates, by providing them with both substantive background informaiton and other administrative materials in support of the State and National Summits. Mr. President, small businesses generally do not have the resources to maintain full time representatives to lobby our Federal government. They are too busy running their businesses to devote much attention to educating government officials as to what is going well, what is going poorly, and what needs improvement for the small business community. The White House Quadrennial Small Business Summit will give small businesses an opportunity every four years to make its mark on the Congress and the Executive Branch. I urge each of my colleagues to review their proposal, and I hope they will agree to join me as cosponsors of the ``White House Quadrennial Small Busines Summit Act of 2001.'' I ask unanimous consent that the text of the bill be printed in the Record.

Mr. BOND

Mr. BOND. Mr. President, I rise briefly to welcome and congratulate my colleague, Senator Carnahan, the newly elected Senator from Missouri, on her first remarks on the floor. I apologize for not being able to be here when she made the comments. I was in a Health Committee meeting asking questions about Missouri education programs of the Secretary of Education. I understand Senator Carnahan was talking about education on the floor, and I know education and children's issues are going to be areas where we will work together. Yesterday, Senator Carnahan joined as a cosponsor on a couple measures that are very important, ensuring 100- percent deductibility on health insurance for the self-employed, which is very important to farmers and small business people in my State, and also providing relief from the draconian cuts enforced by HCFA on home health care agencies, which cost us half the home health care agencies in Missouri. We have many areas in which we are looking forward to working together. I tell my colleagues that Senator Carnahan has been a long- time friend. She and her family were close associates in Jefferson City. Senator Carnahan was best known in Missouri as a very strong helpmate of our late Governor, treasurer, and servant, Mel Carnahan. I got to know her very well when they shared the same public housing in which we had lived, the Governor's mansion in Missouri. She was a very strong champion of the preservation of that mansion and a most gracious hostess for all the people of Missouri who came there. After the terrible tragedy which befell her family in our State last year, she was strong and gracious and was widely respected and admired by all Missourians. I know colleagues on this side of the aisle who have not had an opportunity to get to know her and work with her will look forward to doing so. I congratulate her and wish her well after making her first speech on the Senate floor. I know there will be many other issues which affect our mutual constituents on which we will be working together. I thank the Chair and my colleagues for indulging me as I extend a very warm welcome to Senator Carnahan.

Mr. BOND

Mr. BOND. Mr. President, I rise today to introduce a bill that addresses an issue of growing concern to small businesses across the nation--tax accounting methods. I am pleased to be working with our colleague in the other body, Congressman Wally Herger, who is introducing the companion to this legislation. While this topic may lack the notoriety of some other tax issues currently in the spotlight like tax-rate reductions, estate-tax repeal, or elimination of the alternative minimum tax, it goes to the heart of a business' daily operations--reflecting its income and expenses. And because it is such a fundamental issue, one may ask: ``What's the big deal? Hasn't this been settled long ago?'' Regrettably, efforts by the Treasury Department and Internal Revenue Service (IRS) over the past couple of years have muddied what many small business owners have long seen as a settled issue. To many small business owners, tax accounting simply means that they record gross receipts when they receive cash and expenses when they write a check for the various costs associated with operating a business. The difference is income, which is subject to taxes. In its simplest form, this is known as the ``cash receipts and disbursements'' method of accounting--or the ``cash method'' for short. It is easy to understand, it is simple to undertake in daily business operations, and for the vast majority of small enterprises, it matches their income with the related expenses in a given year. Coincidentally, it's also the method of accounting used by the Federal government to keep track of the nearly $2 trillion in tax revenues it collects each year as well as all of its expenditures for salaries and expenses, procurement, and the cost of various government programs. Unfortunately, what's good for the Federal government apparently is not good enough for small businesses. In recent years, the IRS has taken a different view with respect to small businesses on the cash method. In too many cases, the IRS has asserted that a small business should report its income when all events have occurred to establish the business' right to receipt and the amount can reasonably be determined. Similar principles are applied to determine when a business may recognize an expense. This method of accounting is known as ``accrual accounting.'' The reality of accrual accounting for a small business is that it may be deemed to have income well before the cash is actually received and an expense long after the cash is actually paid. As a result, accrual accounting can create taxable income for a small business that has yet to receive the cash necessary to pay the taxes. While the IRS argues that the accrual method of accounting produces a more accurate reflection of ``economic income,'' it also produces a major headache for small enterprise. Few entrepreneurs have the time or experience to undertake accrual accounting, which forces them to hire costly accountants and tax preparers. By some estimates, accounting fees can increase as much as 50 percent when accrual accounting is required, excluding the cost of high-tech computerized accounting systems that some businesses must install. For the brave few that try to handle the accounting on their own, the accrual method often leads to major mistakes, resulting in tax audits and additional costs for professional help to sort the whole mess out--not to mention the interest and penalties that the IRS may impose as a result of the mistake. To make matters even worse, the IRS focused on small service providers who use some merchandise in the performance of their service. In an e-mail sent to practitioners in my State of Missouri and in Kansas on March 22, 1999, the IRS'' local district office took special aim at the construction industry asserting that ``[t]axpayers in the construction industry who are on the cash method of accounting may be using an improper method. The cash method is permissible only if materials are not an income producing factor.'' For those lucky service providers, the IRS has asserted that the use of merchandise requires the business to undertake an additional and even more onerous form of bookkeeping--inventory accounting. Let's be clear about the kind of taxpayer at issue here. It's the home builder who by necessity must purchase wood, nails, dry wall, and host of other items to provide the service of constructing a house. Similarly, it's a painting contractor who will often purchase the paint when he renders the service of painting the interior of a house. These service providers generally purchase materials to undertake a specific project and at its end, little or no merchandise remains. They may even arrange for the products to be delivered directly to their client. Mr. President, if we thought that accrual accounting is complicated and burdensome, imaging having to keep track of all the boards, nails, and paint used in the home builder's and painter's jobs each year. And it doesn't always stop at inventory accounting for these service providers. Instead, the IRS has used it as the first step to imposing overall accrual accounting--a one-two punch for the small service provider when it comes to compliance burdens. Even more troubling is the cost of an audit for these unsuspecting service providers who have never known they were required to use inventories or accrual accounting. According to a survey of practitioners by the Padgett Business Services Foundation, audits of businesses on the issue of merchandise used in the performance of services resulted in tax deficiencies from $2,000 to $14,000, with an average of $7,200. That's a steep price to pay for an accounting method error that the IRS for years has never enforced. The bill I'm introducing today--the Cash Accounting for Small Business Act of 2001--addresses both of these issues and builds on the legislation that I introduced in the 106th Congress. First, the bill establishes a clear threshold for when small businesses may use the cash method of accounting. Simply put, if a business has an average of $5 million in annual gross receipts or less during the preceding three years, it may use the cash method. Plain and simple--no complicated formula; no guessing if you made the right assumptions and arrived at the right answer. If the business exceeds the threshold, it may still seek to establish, as under current law, that the cash method clearly reflects its income. Some may argue that this provision is unnecessary because section 448(b) and (c) of the Internal Revenue Code already provide a $5 million gross receipts test with respect to accrual accounting. That's a reasonable position since many in Congress back in 1986 intended section 448 to provide relief for small business taxpayers using the cash method. Unfortunately, the IRS has twisted this section to support its quest to force as many small businesses as possible into costly accrual accounting. The IRS has construed section 448 to be merely a $5 million ceiling above which a business can never use the cash method. My bill corrects this misinterpretation once and for all--if a business has average gross receipts of $5 million or less, it is free to use cash accounting. Additionally, the bill indexes the $5 million threshold for inflation so it will keep pace with price increases. As a result, small businesses will not be forced into the accrual method merely because their gross receipts increased due to inflation. Second, for small service providers, the Cash Accounting for Small Business Act exempts these taxpayers from inventory accounting if they meet the general $5 million threshold. These businesses will be able to deduct the expenses for such inventory that are actually consumed and used in the operation of the business during that particular taxable year. While the small service provider will still have to keep some minimal records as to the merchandise used during the year, it will be vastly more simple than having to comply with the onerous inventory accounting rules currently in place in the tax code. The $5 million threshold set forth in my bill is a common-sense solution to an increasing burden for small businesses in this country, which was recently highlighted by the IRS National Taxpayer Advocate. In his 2001 Report to Congress, the Advocate noted that ``Small business taxpayers may be burdened by having to maintain an accrual method of accounting for no other purpose than tax reporting. Because these taxpayers can be relatively unsophisticated about tax and inventory accounting issues, they are likely to hire advisors to help them comply with their tax obligations.'' Unfortunately, these higher costs of recordkeeping and tax preparation take valuable capital away from the business and hinder its ability to grow and produce jobs. The Cash Accounting for Small Business Act takes a big step toward easing those burdens and allowing small business owners to dedicate their time and money to running successful enterprises--instead of filling out government paperwork. In addition, it sends a clear signal to the IRS: stop wasting scarce resources forcing small businesses to adopt complex and costly accounting methods when the benefit to the Treasury is simply a matter of timing. Whether a small business uses the cash or accrual method or inventory accounting or not, in the end, the government will still collect the same amount of taxes--maybe not all this year, but very likely early in the next year. What small business can go very long without collecting what it is owed or paying its bills? Last year, the Treasury Department's answer was to propose a $1 million threshold under which a small business could escape accrual accounting and presumably inventories. While it is a step in the right direction, it simply doesn't go far enough. Even ignoring inflation, if a million dollar threshold were sufficient, why would Congress have tried to enact a $5 million threshold 14 years ago? My bill completes the job that the Clinton Treasury Department was unable or unwilling to do. More recently, the IRS issued a notice announcing that the agency has temporarily changed its litigation position concerning the requirement that certain taxpayers must use inventory and accrual accounting. Based on losses in several court cases, the IRS has decided to back off on taxpayers in construction businesses similar to those addressed by the courts. For those taxpayers, the agency has turned down the fire, and I applaud the IRS for its decision. The new litigation position, however, does not solve the underlying statutory issues that led the IRS to pursue these taxpayers in the first place, nor is it any assurance that the litigation position will not be changed again once the IRS'' Chief Counsel has completed its study of these issues. The Cash Accounting for Small Businesses resolves this matter once and for all small businesses giving them clear rules and certainty as they struggle to keep their businesses running. The legislation I introduce today is the companion to the bill that Congressman Herger is introducing in the other body. Together with Congressman Herger and the small business community, I expect to continue the momentum that we started last year and achieve some much needed relief from unnecessary compliance burdens and costs for America's small businesses. The call for tax simplification has been growing increasingly loud in recent years, and this bill provides an excellent opportunity for us to advance the ball well down the field. This is not a partisan issue; it's a small business issue. And I urge my colleagues on both sides of the aisle to join me in this common-sense legislation for the benefit of America's small enterprises, which contribute so greatly to this country's economic engine. Mr. President, I ask unanimous consent to have printed in the Record, the text of the bill and a description of its provisions.

Mr. BOND. Mr. President, I rise today to join with my colleague from Maine, Senator Collins, to introduce legislation that addresses the ongoing crisis in home health care. Twenty-two of our colleagues join with us today to offer the Home Health Payment Fairness Act to deal with this crisis and to try to ensure that seniors and disabled Americans have appropriate access to high-quality home health care. Home health care is an important part of Medicare in which seniors and the disabled can get basic nursing and therapy care in their home, if their health or physical condition makes it almost impossible to leave home. Often home health is an alternative to more expensive services that may be provided in a hospital or a skilled nursing facility--and thus is a cost-effective way to provide needed care. It is convenient, but much more importantly, patients love it. They love it because home health care is the key to fulfilling what is virtually a universal desire among seniors and those with disabilities--to remain independent and within the comfort of their own homes despite their health problems. Yet we have a crisis in home health--too many seniors who could and should be receiving home health are not getting it. They may be suffering, in their home, without getting the health care they need. Or, they may be getting care, but only because they have been forced into a nursing home rather than being able to stay in the comfort and the dignity of their home. Either way, they are not getting the most appropriate care--and this is tragic. As with so many other problems with Medicare in the last few years, the problem comes from two sources--the Balanced Budget Act, and the Health Care Financing Administration. We all know the basic story by now--in an effort to balance the budget, Congress in the BBA tried to cut the growth in Medicare spending. Yet the real-world results went much further than we intended--partially because of things beyond anyone's control, but largely due to faulty implementation and the excessive regulatory zeal of HCFA. As the cuts and regulation went out-of-control, health care providers struggled to survive, but many were forced to close entirely or to stop serving Medicare. This harmed patients because they lost care options that had been available previously. This basic storyline applies to patients and providers in all parts of Medicare--hospitals, nursing homes, home health care--everyone. But there are two things that distinguish the home health crisis from all of the other problems that stem from the Balanced Budget Act. First and most importantly, no other group of Medicare patients and providers have endured as many difficulties. This is a big claim, given the many horror stories we've heard about the Balanced Budget Act. But absolutely nobody has suffered like home health patients and home health agencies. The numbers don't lie. Two years after the Balanced Budget Act, almost 900,000 fewer seniors and disabled Americans were receiving home health care than previously. That's upwards of a million patients--one of every four who had been receiving home health--who simply disappeared from the world of home care. Unfortunately, the explanation is not a miraculous improvement in the health of our nation's seniors that drastically reduced the need for home health care. No, almost one million fewer people were receiving home care because the help just wasn't available. This is partly because more than 3,300 of the nation's 10,000 home health agencies have either gone out-of-business, or have stopped serving Medicare patients. That's one-third of the home health providers--gone. Can you imagine the outrage we would have in this country if one-third of the hospitals simply disappeared? In some areas, this hasn't been a major problem because there were other local home health agencies to pick up the slack. But in many parts of America--particularly in rural America--this has led to a serious problem of getting access to care. In one sense, what's bad for the patient is good for the budget. Medicare home health spending has actually gone down for three straight years--dropping by 46 percent from 1997 and 2000. In Medicare, these types of cuts in spending are absolutely unprecedented. No other type of health care service in Medicare has ever seen drastic cuts like this. Remember, our goal in the Balanced Budget Act was to slow down the growth of the program, not to slash almost half of the spending out of vital services like home health care. In 1997, we envisioned $16 billion in savings from home health over five years--but the most recent estimates show that we are on target to get $69 billion in savings, more then four times the target figure. This is not how anybody wanted to balance the federal budget. No State has been spared this crisis, but the seniors and the disabled in my home state of Missouri have been particularly hard-hit. 27,000 fewer patients are receiving home care than before--that's a drop of 30 percent. And while Missouri had 300 home health agencies when the Balanced Budget Act passed, we now have just 161. That's almost 140 health care providers that Missourians need--but that are now gone. All of this points to the fact that the breadth and the depth of the post-Balanced Budget Act problems are undeniably worse in home health care than any other part of Medicare. That's the first thing that distinguishes home care from other struggling Medicare providers. The second thing that is unique about home health--the biggest cuts may be yet to come. While hospitals, nursing homes, hospice programs, and other Medicare providers still face some additional Balanced Budget Act cuts, most of the BBA provisions have already either taken effect or been erased by the two ``Medicare giveback'' bills we have passed into law. But home health care patients and providers still have the largest BBA cut of all staring them in the fact--the 15-percent across-the- board home health cuts that are now scheduled for October of 2002. That's a 15-percent cut on top of everything else that has happened thus far--on top of the loss of 900,000 patients, on top of the loss of 3,000-plus home health agencies, and on top of the loss of almost half of Medicare home health spending. I do not believe this should happen, and I actually don't know of anybody who believes the 15-percent home health cuts should go into effect. That's why Congress has already delayed the 15-percent cuts three separate times. To impose these cuts, given all that home health care has been through, would be adding insult to injury. It would risk putting thousands more home health agencies out-of-business, perhaps risking the care for a million more patients. Today, Senator Collins and I propose to fix this once and for all--no more mere delays, no more half-measures. The key provision in the Home Health Payment Fairness Act would permanently eliminate these 15- percent cuts. This will be expensive--probably more than $10 billion over 10 years. I don't think anybody in Congress wants to drop the guillotine on home health by imposing these cuts--that's what the three delays have shown. We need to just bite the bullet and get rid of them once and for all. The one additional key provision in our bill would make permanent the 10-percent bonus payments that we are about to start giving rural home health agencies. These new rural payments recognize that, historically, rural patients have been more expensive due to the added transportation and labor costs incurred as home health nurses travel longer distances between visits. The second Medicare ``giveback'' bill that Congress just passed into law in December authorized these bonus payments for the first time--but only for a two-year period. The reasons that rural patients cost more are going to last for more than two years--we believe the added rural payments should as well. This policy change will provide desperately-needed assistance to help home health care in rural America--which, as I mentioned earlier, has been much harder hit by the home health crisis. These added payments would be similar to the 10-percent incentive bonus Medicare currently pays to doctors in rural areas, and would serve the same purpose as the various Medicare mechanisms we have to protect rural hospitals. The rural incentives for doctors and hospitals are part of permanent law; the rural incentives for home health should be too. Home health care has been through enough. Our Nation's dedicated home health providers--and you know they are dedicated if they have struck with it through the difficulties of the last few years--deserve to be left along and given a rest. They deserve to be left alone to recover from the post-Balanced Budget Act chaos. They deserve to be left alone in order to adjust to a brand new home health payment system that Medicare put into place a few months ago--a new payment system specifically designed to reduce overuse of service in a much more intelligent and appropriate way than arbitrary cuts like those that are scheduled. And they deserve to be left alone to focus on providing high-quality care to Medicare patients. The seniors and disabled Americans who rely on home health for their health care, and for their independence, deserve no less.

Mr. BOND

Mr. BOND. Mr. President, I rise today to introduce a bill that addresses an issue of growing concern to small businesses across the nation--tax accounting methods. I am pleased to be working with our colleague in the other body, Congressman Wally Herger, who is introducing the companion to this legislation. While this topic may lack the notoriety of some other tax issues currently in the spotlight like tax-rate reductions, estate-tax repeal, or elimination of the alternative minimum tax, it goes to the heart of a business' daily operations--reflecting its income and expenses. And because it is such a fundamental issue, one may ask: ``What's the big deal? Hasn't this been settled long ago?'' Regrettably, efforts by the Treasury Department and Internal Revenue Service (IRS) over the past couple of years have muddied what many small business owners have long seen as a settled issue. To many small business owners, tax accounting simply means that they record gross receipts when they receive cash and expenses when they write a check for the various costs associated with operating a business. The difference is income, which is subject to taxes. In its simplest form, this is known as the ``cash receipts and disbursements'' method of accounting--or the ``cash method'' for short. It is easy to understand, it is simple to undertake in daily business operations, and for the vast majority of small enterprises, it matches their income with the related expenses in a given year. Coincidentally, it's also the method of accounting used by the Federal government to keep track of the nearly $2 trillion in tax revenues it collects each year as well as all of its expenditures for salaries and expenses, procurement, and the cost of various government programs. Unfortunately, what's good for the Federal government apparently is not good enough for small businesses. In recent years, the IRS has taken a different view with respect to small businesses on the cash method. In too many cases, the IRS has asserted that a small business should report its income when all events have occurred to establish the business' right to receipt and the amount can reasonably be determined. Similar principles are applied to determine when a business may recognize an expense. This method of accounting is known as ``accrual accounting.'' The reality of accrual accounting for a small business is that it may be deemed to have income well before the cash is actually received and an expense long after the cash is actually paid. As a result, accrual accounting can create taxable income for a small business that has yet to receive the cash necessary to pay the taxes. While the IRS argues that the accrual method of accounting produces a more accurate reflection of ``economic income,'' it also produces a major headache for small enterprise. Few entrepreneurs have the time or experience to undertake accrual accounting, which forces them to hire costly accountants and tax preparers. By some estimates, accounting fees can increase as much as 50 percent when accrual accounting is required, excluding the cost of high-tech computerized accounting systems that some businesses must install. For the brave few that try to handle the accounting on their own, the accrual method often leads to major mistakes, resulting in tax audits and additional costs for professional help to sort the whole mess out--not to mention the interest and penalties that the IRS may impose as a result of the mistake. To make matters even worse, the IRS focused on small service providers who use some merchandise in the performance of their service. In an e-mail sent to practitioners in my State of Missouri and in Kansas on March 22, 1999, the IRS'' local district office took special aim at the construction industry asserting that ``[t]axpayers in the construction industry who are on the cash method of accounting may be using an improper method. The cash method is permissible only if materials are not an income producing factor.'' For those lucky service providers, the IRS has asserted that the use of merchandise requires the business to undertake an additional and even more onerous form of bookkeeping--inventory accounting. Let's be clear about the kind of taxpayer at issue here. It's the home builder who by necessity must purchase wood, nails, dry wall, and host of other items to provide the service of constructing a house. Similarly, it's a painting contractor who will often purchase the paint when he renders the service of painting the interior of a house. These service providers generally purchase materials to undertake a specific project and at its end, little or no merchandise remains. They may even arrange for the products to be delivered directly to their client. Mr. President, if we thought that accrual accounting is complicated and burdensome, imaging having to keep track of all the boards, nails, and paint used in the home builder's and painter's jobs each year. And it doesn't always stop at inventory accounting for these service providers. Instead, the IRS has used it as the first step to imposing overall accrual accounting--a one-two punch for the small service provider when it comes to compliance burdens. Even more troubling is the cost of an audit for these unsuspecting service providers who have never known they were required to use inventories or accrual accounting. According to a survey of practitioners by the Padgett Business Services Foundation, audits of businesses on the issue of merchandise used in the performance of services resulted in tax deficiencies from $2,000 to $14,000, with an average of $7,200. That's a steep price to pay for an accounting method error that the IRS for years has never enforced. The bill I'm introducing today--the Cash Accounting for Small Business Act of 2001--addresses both of these issues and builds on the legislation that I introduced in the 106th Congress. First, the bill establishes a clear threshold for when small businesses may use the cash method of accounting. Simply put, if a business has an average of $5 million in annual gross receipts or less during the preceding three years, it may use the cash method. Plain and simple--no complicated formula; no guessing if you made the right assumptions and arrived at the right answer. If the business exceeds the threshold, it may still seek to establish, as under current law, that the cash method clearly reflects its income. Some may argue that this provision is unnecessary because section 448(b) and (c) of the Internal Revenue Code already provide a $5 million gross receipts test with respect to accrual accounting. That's a reasonable position since many in Congress back in 1986 intended section 448 to provide relief for small business taxpayers using the cash method. Unfortunately, the IRS has twisted this section to support its quest to force as many small businesses as possible into costly accrual accounting. The IRS has construed section 448 to be merely a $5 million ceiling above which a business can never use the cash method. My bill corrects this misinterpretation once and for all--if a business has average gross receipts of $5 million or less, it is free to use cash accounting. Additionally, the bill indexes the $5 million threshold for inflation so it will keep pace with price increases. As a result, small businesses will not be forced into the accrual method merely because their gross receipts increased due to inflation. Second, for small service providers, the Cash Accounting for Small Business Act exempts these taxpayers from inventory accounting if they meet the general $5 million threshold. These businesses will be able to deduct the expenses for such inventory that are actually consumed and used in the operation of the business during that particular taxable year. While the small service provider will still have to keep some minimal records as to the merchandise used during the year, it will be vastly more simple than having to comply with the onerous inventory accounting rules currently in place in the tax code. The $5 million threshold set forth in my bill is a common-sense solution to an increasing burden for small businesses in this country, which was recently highlighted by the IRS National Taxpayer Advocate. In his 2001 Report to Congress, the Advocate noted that ``Small business taxpayers may be burdened by having to maintain an accrual method of accounting for no other purpose than tax reporting. Because these taxpayers can be relatively unsophisticated about tax and inventory accounting issues, they are likely to hire advisors to help them comply with their tax obligations.'' Unfortunately, these higher costs of recordkeeping and tax preparation take valuable capital away from the business and hinder its ability to grow and produce jobs. The Cash Accounting for Small Business Act takes a big step toward easing those burdens and allowing small business owners to dedicate their time and money to running successful enterprises--instead of filling out government paperwork. In addition, it sends a clear signal to the IRS: stop wasting scarce resources forcing small businesses to adopt complex and costly accounting methods when the benefit to the Treasury is simply a matter of timing. Whether a small business uses the cash or accrual method or inventory accounting or not, in the end, the government will still collect the same amount of taxes--maybe not all this year, but very likely early in the next year. What small business can go very long without collecting what it is owed or paying its bills? Last year, the Treasury Department's answer was to propose a $1 million threshold under which a small business could escape accrual accounting and presumably inventories. While it is a step in the right direction, it simply doesn't go far enough. Even ignoring inflation, if a million dollar threshold were sufficient, why would Congress have tried to enact a $5 million threshold 14 years ago? My bill completes the job that the Clinton Treasury Department was unable or unwilling to do. More recently, the IRS issued a notice announcing that the agency has temporarily changed its litigation position concerning the requirement that certain taxpayers must use inventory and accrual accounting. Based on losses in several court cases, the IRS has decided to back off on taxpayers in construction businesses similar to those addressed by the courts. For those taxpayers, the agency has turned down the fire, and I applaud the IRS for its decision. The new litigation position, however, does not solve the underlying statutory issues that led the IRS to pursue these taxpayers in the first place, nor is it any assurance that the litigation position will not be changed again once the IRS'' Chief Counsel has completed its study of these issues. The Cash Accounting for Small Businesses resolves this matter once and for all small businesses giving them clear rules and certainty as they struggle to keep their businesses running. The legislation I introduce today is the companion to the bill that Congressman Herger is introducing in the other body. Together with Congressman Herger and the small business community, I expect to continue the momentum that we started last year and achieve some much needed relief from unnecessary compliance burdens and costs for America's small businesses. The call for tax simplification has been growing increasingly loud in recent years, and this bill provides an excellent opportunity for us to advance the ball well down the field. This is not a partisan issue; it's a small business issue. And I urge my colleagues on both sides of the aisle to join me in this common-sense legislation for the benefit of America's small enterprises, which contribute so greatly to this country's economic engine. Mr. President, I ask unanimous consent to have printed in the Record, the text of the bill and a description of its provisions.

Mr. BOND

Mr. BOND. Mr. President, I rise today to join with my colleague from Maine, Senator Collins, to introduce legislation that addresses the ongoing crisis in home health care. Twenty-two of our colleagues join with us today to offer the Home Health Payment Fairness Act to deal with this crisis and to try to ensure that seniors and disabled Americans have appropriate access to high-quality home health care. Home health care is an important part of Medicare in which seniors and the disabled can get basic nursing and therapy care in their home, if their health or physical condition makes it almost impossible to leave home. Often home health is an alternative to more expensive services that may be provided in a hospital or a skilled nursing facility--and thus is a cost-effective way to provide needed care. It is convenient, but much more importantly, patients love it. They love it because home health care is the key to fulfilling what is virtually a universal desire among seniors and those with disabilities--to remain independent and within the comfort of their own homes despite their health problems. Yet we have a crisis in home health--too many seniors who could and should be receiving home health are not getting it. They may be suffering, in their home, without getting the health care they need. Or, they may be getting care, but only because they have been forced into a nursing home rather than being able to stay in the comfort and the dignity of their home. Either way, they are not getting the most appropriate care--and this is tragic. As with so many other problems with Medicare in the last few years, the problem comes from two sources--the Balanced Budget Act, and the Health Care Financing Administration. We all know the basic story by now--in an effort to balance the budget, Congress in the BBA tried to cut the growth in Medicare spending. Yet the real-world results went much further than we intended--partially because of things beyond anyone's control, but largely due to faulty implementation and the excessive regulatory zeal of HCFA. As the cuts and regulation went out-of-control, health care providers struggled to survive, but many were forced to close entirely or to stop serving Medicare. This harmed patients because they lost care options that had been available previously. This basic storyline applies to patients and providers in all parts of Medicare--hospitals, nursing homes, home health care--everyone. But there are two things that distinguish the home health crisis from all of the other problems that stem from the Balanced Budget Act. First and most importantly, no other group of Medicare patients and providers have endured as many difficulties. This is a big claim, given the many horror stories we've heard about the Balanced Budget Act. But absolutely nobody has suffered like home health patients and home health agencies. The numbers don't lie. Two years after the Balanced Budget Act, almost 900,000 fewer seniors and disabled Americans were receiving home health care than previously. That's upwards of a million patients--one of every four who had been receiving home health--who simply disappeared from the world of home care. Unfortunately, the explanation is not a miraculous improvement in the health of our nation's seniors that drastically reduced the need for home health care. No, almost one million fewer people were receiving home care because the help just wasn't available. This is partly because more than 3,300 of the nation's 10,000 home health agencies have either gone out-of-business, or have stopped serving Medicare patients. That's one-third of the home health providers--gone. Can you imagine the outrage we would have in this country if one-third of the hospitals simply disappeared? In some areas, this hasn't been a major problem because there were other local home health agencies to pick up the slack. But in many parts of America--particularly in rural America--this has led to a serious problem of getting access to care. In one sense, what's bad for the patient is good for the budget. Medicare home health spending has actually gone down for three straight years--dropping by 46 percent from 1997 and 2000. In Medicare, these types of cuts in spending are absolutely unprecedented. No other type of health care service in Medicare has ever seen drastic cuts like this. Remember, our goal in the Balanced Budget Act was to slow down the growth of the program, not to slash almost half of the spending out of vital services like home health care. In 1997, we envisioned $16 billion in savings from home health over five years--but the most recent estimates show that we are on target to get $69 billion in savings, more then four times the target figure. This is not how anybody wanted to balance the federal budget. No State has been spared this crisis, but the seniors and the disabled in my home state of Missouri have been particularly hard-hit. 27,000 fewer patients are receiving home care than before--that's a drop of 30 percent. And while Missouri had 300 home health agencies when the Balanced Budget Act passed, we now have just 161. That's almost 140 health care providers that Missourians need--but that are now gone. All of this points to the fact that the breadth and the depth of the post-Balanced Budget Act problems are undeniably worse in home health care than any other part of Medicare. That's the first thing that distinguishes home care from other struggling Medicare providers. The second thing that is unique about home health--the biggest cuts may be yet to come. While hospitals, nursing homes, hospice programs, and other Medicare providers still face some additional Balanced Budget Act cuts, most of the BBA provisions have already either taken effect or been erased by the two ``Medicare giveback'' bills we have passed into law. But home health care patients and providers still have the largest BBA cut of all staring them in the fact--the 15-percent across-the- board home health cuts that are now scheduled for October of 2002. That's a 15-percent cut on top of everything else that has happened thus far--on top of the loss of 900,000 patients, on top of the loss of 3,000-plus home health agencies, and on top of the loss of almost half of Medicare home health spending. I do not believe this should happen, and I actually don't know of anybody who believes the 15-percent home health cuts should go into effect. That's why Congress has already delayed the 15-percent cuts three separate times. To impose these cuts, given all that home health care has been through, would be adding insult to injury. It would risk putting thousands more home health agencies out-of-business, perhaps risking the care for a million more patients. Today, Senator Collins and I propose to fix this once and for all--no more mere delays, no more half-measures. The key provision in the Home Health Payment Fairness Act would permanently eliminate these 15- percent cuts. This will be expensive--probably more than $10 billion over 10 years. I don't think anybody in Congress wants to drop the guillotine on home health by imposing these cuts--that's what the three delays have shown. We need to just bite the bullet and get rid of them once and for all. The one additional key provision in our bill would make permanent the 10-percent bonus payments that we are about to start giving rural home health agencies. These new rural payments recognize that, historically, rural patients have been more expensive due to the added transportation and labor costs incurred as home health nurses travel longer distances between visits. The second Medicare ``giveback'' bill that Congress just passed into law in December authorized these bonus payments for the first time--but only for a two-year period. The reasons that rural patients cost more are going to last for more than two years--we believe the added rural payments should as well. This policy change will provide desperately-needed assistance to help home health care in rural America--which, as I mentioned earlier, has been much harder hit by the home health crisis. These added payments would be similar to the 10-percent incentive bonus Medicare currently pays to doctors in rural areas, and would serve the same purpose as the various Medicare mechanisms we have to protect rural hospitals. The rural incentives for doctors and hospitals are part of permanent law; the rural incentives for home health should be too. Home health care has been through enough. Our Nation's dedicated home health providers--and you know they are dedicated if they have struck with it through the difficulties of the last few years--deserve to be left along and given a rest. They deserve to be left alone to recover from the post-Balanced Budget Act chaos. They deserve to be left alone in order to adjust to a brand new home health payment system that Medicare put into place a few months ago--a new payment system specifically designed to reduce overuse of service in a much more intelligent and appropriate way than arbitrary cuts like those that are scheduled. And they deserve to be left alone to focus on providing high-quality care to Medicare patients. The seniors and disabled Americans who rely on home health for their health care, and for their independence, deserve no less.

Mr. BOND

Mr. BOND. Thank you very much, Mr. President. I rise today to discuss some of the benefits of the tax plan that President Bush has sent to Congress. I believe everybody is beginning to understand the significant benefit families would receive under this tax reduction plan. A family of four living in my State--St. Louis, Kansas City, Sedalia, Moberly, Maryville, or Kennett--if they earn $35,000, would have all their taxes eliminated, a 100-percent tax cut. That has to be good news. A family of four making $50,000 a year would receive a 50-percent tax cut--at least $1,600. That could be a downpayment on a new van or a car or buy several weeks of summer camp for the kids or several weeks of groceries. President Bush's plan doubles the child tax credit to $1,000, bringing it more in line with the actual cost of raising a kid. It is a news flash for those of us inside the beltway. Kids are expensive. Those of us who have kids know they are life's greatest blessing, but they do not come cheap. I commend the President for recognizing this. I believe it is also very important that President Bush's plan expands the charitable tax deduction. We ought to be encouraging more people to contribute to the Salvation Army, Red Cross, Catholic Charities, or any of the myriad wonderful private agencies that are doing very important work helping those who need help. I want to speak today specifically about the impact these tax reductions would have on small business. As chairman of the Senate Committee on Small Business, I hear from small businesses every day that are the dynamic engine growing this economy. These are the businesses that create the new jobs. As larger and larger businesses cut back and lay off employees, they are finding jobs. They are finding good opportunities in small business. Small businesses represent about 99 percent of all employers. They employ 53 percent of the private workforce and create about 75 percent of the new jobs in this country. As you are looking to see where jobs can be provided to those who are coming off welfare and those entering the workforce for the first time, small businesses are the ones giving them the opportunities. Under the Bush tax plan, small businesses will get a huge benefit from collapsing the tax brackets from 5 to 4--giving marginal rate reductions. This is extremely important for these small businesses. Why? You may think businesses and individuals are different. But according to IRS statistics on income--most recent data available-- about 20.7 million tax returns filed by small businesses were sole proprietorships, partnerships, and S corporations with business assets less than $1 million. Those are significant numbers of small businesses that are taxed on the individual tax rates. The income of the business is passed through, and it is applied to their tax returns. On the other hand, there are about 2\3/4\ million corporations, or regular C corporations, that are taxed under the business rates. Almost 10 times as many businesses, much smaller, of course, are taxed on individual tax returns. Eighty-eight percent of the businesses with receipts under $1 million are passthrough entities--businesses taxed only at the individual owner level. The rate reduction proposed by the President will cut the taxes paid by farmers, retail shop owners, small businesses, startup businesses that are formed as sole proprietorship, partnerships, and S corporations. What are they going to do with it? We have seen in the past when they have the taxes reduced--and we are reducing the taxes because we have a tax surplus; we are taxing them too much; too much money is being taken out of families' pockets and out of businesses' pockets--they will use those dollars left in their pockets to invest in new equipment, in new technologies, hire more workers, and pay better wages. They will be able to expand the product lines and the services they offer. Most importantly, they will contribute to the economic growth of their hometowns. Week before last, we had a fascinating discussion with Chairman Alan Greenspan of the Federal Reserve. Chairman Greenspan, many people believe, has been one of the real economic gurus whose good economic policies have allowed this economy to grow. He has talked in the past about the need to reduce the huge national debt run up over past years. But do you know something. This time Chairman Greenspan said it is time for a tax reduction. Why? Because we are running surpluses. There is a projected $5.6 trillion surplus over the next 10 years. That means we would pay off all the debt we could pay off. Then the Federal Government would be left in the position of what to do with the extra money after they pay down the debt. One of the most dangerous things he said they could do would be to have the Federal Government accumulating private assets. That is ``economic speak'' for buying up businesses, buying up shares of the stock market, or getting the Federal Government into socializing the economy. We don't need to go that direction. We don't need to have the Federal Government as the major shareholder in our economy. Reducing high tax rates now is the best way to make sure we don't put the Federal Government into the business of buying up businesses. That is very dangerous. That is not where we want to go. In addition, I asked Chairman Greenspan about what nature of tax cut would most benefit the economy. He said as an economist that clearly the most important thing we can do is lower the marginal rates. With tax reform in the 1980s, we got the top rate down to about 80 percent. Most people think if the Federal Government is taking over a quarter of every dollar earned, that is as much as it should take. But right now we have the rates on the books of 39.6 percent. But with all the phaseouts and others, sometimes that tax rate is 44 percent--almost half of every dollar. When you take that much money out of the system, and when you take that much money out of the new dollars coming into a business, for example, you discourage investment. From the economist's standpoint, the best thing we can do is reduce those high marginal rates so that small businesses will have the incentive to put more money into technology and into equipment. We have had a phenomenal growth in productivity. Because there has been investment in new technology, information technology, the information age has revolutionized the way businesses work. Businesses are able to be more productive. What does that mean? It doesn't just mean the businesses are more profitable. It means you and I as consumers get better products at lower prices. It means they can hire more workers. It means they can pay workers better salaries. These are the benefits that come about from a marginal tax rate reduction. In addition, the President calls for repealing the death tax. This will be a tremendous benefit to small business. I have a lot of farmers in my State who are very worried that when they die the Federal Government is going to come in with a confiscatory Federal death tax and take away the farm, take away the small business that has been built up over the years that the business owner or the farmer would like to leave to his or her children. Repealing the death tax will make a significant difference in assuring that we continue jobs and economic activity. Thousands of small businesses in this country waste millions of dollars each year on estate planning and insurance costs just to keep the doors open if the owners die. A good friend of mine farms along the Missouri River in western Missouri. When his father died they paid almost $100,000 in accounting and legal fees to figure out how they could keep his farms from being broken up. Death ought not be a taxable event. It is bad enough to have the undertaker arrive at your door. You don't want to have the tax man arrive at the same time. The money we pay to accountants, to lawyers, and to insurance companies to try to get around this estate tax could be much more productively employed in investing in new equipment, in providing new jobs and better wages. Many times the tax at death ends a small business; it has to be sold. It is a job killer. I think the days of the death tax should be numbered, not the days of the business owned by an older business owner or farmer who is reaching the end. It should come as no surprise if the economy slows, as clearly it is, small businesses will be first to feel the pain. Capital dries up, sales will fall, and possibly business productivity will diminish. As we focus on the need for immediate tax relief and the merits of it in the Bush tax plan, we cannot ignore the plight of America's small enterprises in the growing economy. Taxes are not supposed to be countercyclical. This is a long-term investment in the productivity of our country. When we cut the capital gains rate in the last decade, the money made available from the tax reductions helped spur the investments in productivity that kept our economy growing. Incidentally, that increased activity actually brought more revenue to the Federal Government. I think the Bush plan, in addition to holding tremendous benefits for families, for individuals struggling to make ends meet, will have a tremendous benefit for small business. The rate cut, the estate tax repeal, and the other features of the President's proposal will directly help the hard-working women and men who dedicate their lives to creating small businesses, to taking the risks in the marketplace that will allow this country to be healthier, and to allow themselves, their families, and their workers to be productive, contributing members of the economy. When small businesses win, we all win. I think President Bush's tax plan is one of the best hopes we have for ensuring that our economy continues to grow. I yield the floor.

Mr. BOND

Mr. BOND. Mr. President, 28 years ago, I had the responsibility to appoint a State auditor for Missouri. Based upon what I saw to be the promise in John Ashcroft--his character, intelligence, and commitment to public service--I selected him. For the past 28 years, I have had the honor and privilege to work with him as he handled his duties in the best and highest tradition of Missouri and of this country. Many of my colleagues have also seen him during the last 6 years, when he served with distinction in the Senate. I know this man. Most of you in this body know this man. He is a good man, whose service reflects well on his friends, his family, our State of Missouri, and on this great body. Everything about John Ashcroft's record of public service and his personal integrity and character tells us that he will be faithful to the law. Everything about John's career also tells us that he understands one thing above all else: The promise contained in this Nation of laws can only be realized when all the laws are properly enforced. Two weeks ago, I went before the Judiciary Committee to ask that they judge John Ashcroft's nomination to be Attorney General on the content of his character, and reject the slime campaign then underway against him. Today I must say I stand here profoundly disappointed so many failed to push away those whose only goal is to tear down and destroy. However, let me add my sincere appreciation of the fact that some of our colleagues on the other side of the aisle have chosen to support this nomination, despite the strong political winds blowing against them, including clear-cut threats of retaliation at the polls for any vote in favor of John Ashcroft. Senator Russ Feingold was courageous in casting the lone Democratic vote in favor of the nominee in committee. My friends, Senator Byrd, Senator Dodd, and others, have announced on the floor they intend to support the nominee for reasons they gave. I commend them and thank them for that. I note that others of my colleagues appear to have given the nomination full consideration and concluded, for their own substantive reasons, not to support this nomination. While I disagree with their final decision, I certainly cannot condemn their actions. But I am deeply disturbed and disappointed in some of the things done and said in the Judiciary Committee and some of the remarks made on the Senate floor. Over the past month, we have seen self-described spokesmen of various activist groups--groups that preach tolerance, diversity and religious freedom--systematically display their intolerance, narrowness, and dogmatic views, as they try to smear the record of the man who has been nominated to be the Attorney General of the United States. In fact, I think the words on this chart tell us all we need to know--this is from the special interest groups of what they are doing-- ``by any means necessary.'' ``We're going to spend whatever it takes.'' These are the words of the extreme liberal groups that are out to sabotage John Ashcroft and, incidentally, his nomination. The purpose-- search and destroy. Like millions of Americans, I watched the Senate confirmation hearing to see both how my friend would do in answering questions defending his record but also to see how potential opponents would handle their responsibilities. I, too, hoped for full and fair hearings. Two weeks ago, the American people did not see a confirmation hearing. They did not see the Senate Judiciary Committee acquit itself in the best and highest traditions of this fine body. They did not see full and fair hearings. What they saw--pure and simple--was an exercise in political theater of the worst kind. I cannot begin to express my profound disappointment in how some of my colleagues handled their few days in the majority--mishandled their days to rise above the rancor. In the Ashcroft hearing, there was an opportunity to set an example for us to follow for the rest of this session. Instead of rising to the occasion, too many sank to the level of the interest groups, where only the shrillest survive. What we heard was a campaign designed to create a caricature, and to fan the grotesque charges of racism, bigotry, and so-called political opportunism--a campaign so out of control that 2 days of questions were not enough. An extra day of attack witnesses, and hundreds of additional questions--often asking the same questions over and over again--were then submitted for the record. They even went so far as to ask for a ``complete discussion'' of all conversations that then- Senator Ashcroft had with Senate leaders about any of the 1,600 Presidential nominations considered by the Senate during his term. That is an impossible task. Nobody can recall those. The reaction was that the answers were incomplete, when they did not report all those conversations. Who of us could have done that unless we had carried a tape recorder in our pocket at all times. To the special interest groups who invented the term ``Borking,'' I had little expectation they could or would understand or embrace the terms of civility and respect. So I expected that false charges would be leveled--repeated and repeated--in hopes that something would stick. But I had hopes that colleagues would resist those charges. Too often, they did not. What are those false charges? One of the false charges thrown against John Ashcroft was that he could not be entrusted to enforce laws with which he personally disagrees. Now, Janet Reno opposed the death penalty, yet she was trusted to follow the law. Now, 8 years later, why is it that with John Ashcroft, a conservative and committed Christian, doubts are aired--and given credence--about his ability to enforce the law? Some activists who claim to embrace and promote religious diversity and tolerance seem unable to extend their beliefs to a conservative Christian. I thought we broke that barrier when John F. Kennedy became President and we saw the obvious that he did not put his Catholic beliefs above the law of the land. And what of our colleague Joe Lieberman, whose candidacy for Vice President and his public religious utterances tore down even more barriers? Should religious diversity and tolerance be extended only to some religions and not others? What we see in this part of the smear campaign against John Ashcroft is nothing less than religious bigotry. Second, we have seen the absolutely reckless charge that John Ashcroft opposed desegregation. Several Members have attempted to use the long, tortured and controversial school desegregation cases in the State of Missouri to color further their caricature of John Ashcroft as insensitive and an extremist. To do so, however, they have to ignore the facts of the case, the various tortured rulings, the victory in the Kansas City case, the fiduciary duty of the Attorney General and the widespread opposition to the court-ordered desegregation plan by the public and elected officials alike. The truth of the matter is that the desegregation cases were filed in St. Louis and Kansas City in 1972, with Kansas City being litigated until 1995 and the St. Louis case being litigated until 1999. The lawsuits and the various court orders have been opposed by Democratic and Republican Governors, Attorneys General and State Treasurers and the overwhelming majority of Missourians for nearly three decades. To single out John Ashcroft and to say his positions on the case and his work was that of an extremist insensitive to the needs of Missouri school children is one of the more misleading positions ever staked out on this floor. Since I cannot imagine that colleagues and critics would have one set of standards for John Ashcroft, and another for those in their own party, it is only fitting that we review the whole record of the day. In September of 1981, in response to the controversial Eighth Circuit decision, the current Minority Leader of the House of Representatives, Richard Gephardt, introduced a constitutional amendment to ban court ordered busing to achieve racial integration. Congressman Gephardt was also a sponsor of legislation to bar federal courts from mandating busing as a remedy for segregated schools. In explaining his legislation, the esteemed minority leader called busing for desegregation ``a total failure'' and called the court-ordered busing program in the St. Louis schools ``an obscenity and a crime against the youth of St. Louis.'' About the same time, again while Senator Ashcroft was Missouri Attorney General, Missouri Senator Tom Eagleton, my predecessor, stated publicly that he ``personally opposes court ordered busing'' and did not believe the St. Louis plan would work. While in the Senate he fought the Department of Health, Education and Welfare practice of denying funding to school districts that do not have a school desegregation plan in place. Beyond that, both Missouri State Treasurers who served while John Ashcroft was Attorney General, both of whom were Democrats, opposed the court ordered desegregation. In fact, the second of those Treasurers, the late Mel Carnahan, was highly critical of both Attorney General Ashcroft and me for the handling for the desegregation case. He was not critical of anyone opposing the plan, rather he felt the Attorney General was not being aggressive enough in the fight. In 1981, he told UPI, ``In my opinion, they have not staffed up and produced in this case and that's the reason we're where we are today on desegregation.'' And in 1983, as he was gearing up to run for Governor, Treasurer Carnahan even took the unusual action of requesting a state appropriation so that the Treasurer's office could join the case, initiating new litigation against the federal court order desegregating the St. Louis schools. The Treasurer said the desegregation payments represented ``burdensome demands on the taxpayers of the state.'' He further stated ``my staff and I have been intensely studying the financial problems created for the State of Missouri by the court orders in the St. Louis desegregation case. It is my intention to file additional actions or motions directed to testing the issues of state liability for payments . . . I plan to use outside counsel for a separate additional effort to supplement and complement the efforts of the Attorney General to reverse or modify the orders as to state financial liability.'' As Governor, I refused to support the appropriation because it was the job of the Attorney General to handle legal matters that impact the state. But that statement by the state Treasurer, a Democrat and future Governor, shows that John Ashcroft was clearly in the mainstream and representing the people of the state in a complicated and controversial legal matter. Unless of course Mel Carnahan was an extremist too. The strong democratic opposition did not stop in the eighties but continued right on through the '98 election cycle. In fact, the current Missouri Attorney General, Democrat Jay Nixon, made opposition to state involvement in school desegregation a platform of his first campaign for Attorney General, calling busing ``a failed social experiment'' that must end in the State of Missouri. And he criticized Ashcroft and Webster, the two previous Attorneys Generals by stating ``The republican team hasn't been fighting the battle against unfair desegregation payments; they've been losing it.'' ``We need new and better lawyers to win the case.'' Upon taking office, Nixon filed suit to end state involvement in the St. Louis desegregation case and filed suit to overturn a court decision in Kansas City. Shortly after that he appealed and fought the Kansas City plan all the way to the United States Supreme Court. In St. Louis, he criticized the appointment of a well respected St. Louisan appointed to negotiate a settlement. He even filed suit on the eve of the beginning of the school year to bar student participation in a St. Louis city-county transfer program. Former Congressman Bill Clay, in a letter to President Clinton, sharply criticized the Democratic Attorney General as ``waging unremitting warfare'' against the court orders which ``provided educational opportunity for many thousands of students in St. Louis''. Nixon was also repeatedly criticized by the St. Louis chapter of the NAACP for his efforts. In 1995, the group said those efforts ``will wipe out the gains made by desegregation and deprive city parents of opportunities they now have to better their children's education''. The Kansas City Star said this Attorney General ``climbed over the backs of African Americans'' to advance his career. Yet when this man wanted again to advance his political career, was the Senator from Massachusetts condemning his actions? Quite to the contrary, the Senator from Massachusetts was actively promoting his political career, even headlining a fund raiser for him here in Washington. Nor can I imagine the Senator labeling the positions of Congressman Gephardt, former Senator Eagleton, and the late Governor Carnahan, whose campaign the Senator from Massachusetts supported, as extreme. The hypocrisy could not be clearer. And leads us back to those guiding principles of this entire effort against John Ashcroft--by any means necessary, and spend whatever it takes. The third charge centers around his handling of the nomination of Judge Ronnie White. Much has been said about this, but let me simply say that the emotional power and pain of the Johnson case remains as strong today as it was 10 years ago when the brutal murders tore apart the lives of 4 families and their communities. For all my colleagues who agreed with Judge White's reasoning that would have tossed out the conviction and granted a new trial to the triple cop-killer who also killed the sheriff's wife right in front of her 8 year old daughter; for those who agreed with his lone dissent that Johnson's lawyers didn't do a good enough job so he deserves a new trial--I would hope they would channel their strong views and weigh in with Missouri's Governor in seeking a commutation of his death sentence. Johnson's appeal to the U.S. Supreme Court has been denied and he now sits on death row. I can certainly provide any of you the correct address of the Governor in Jefferson City. Finally the latest attempt to smear--so weak that's it more of a smudge--was made by a democrat activist who claimed that 16 years ago John Ashcroft asked a legal but inappropriate question during a job interview. Quickly refuted by others present in the interview this attempted smear fades from view, but again takes time and energy to respond to. And when all one's energy is spent knocking down false charges it is hard to find the time to talk about what you believe can be accomplished at the Justice Department--which of course is what the people of America are really interested in. How will you do the job? What are your plans to improve the lives and opportunities for all Americans? So where does all this leave us? Back where we started. A conservative, pro-life, Christian simply isn't fit to serve according to the litmus test of a bunch of left-wing groups. And rather than admit it, the smokescreen of false charges must be used to justify their own intolerance. It is a sad day that we have come to this. But through it all John Ashcroft has stayed firm. Firm in his belief that in America our sense of fairness will outweigh short term political gain. Firm in his belief that while his attackers have been shameless and unrelenting, that he should not, and will not respond in kind. I am so proud of John Ashcroft. I am proud of his service to Missouri and the nation over the last 28 years. At each level of responsibility, he not only acquitted himself as a gentleman and good American, but he did great work on behalf of so many citizens. That is true of his terms as Missouri Attorney General. As Governor. And United States Senator. He is a fine man. He is a gentleman. A good man of deep conviction who will do great service on behalf of all Americans as our next Attorney General. So I am also very proud that a fellow Missourian will become the next Attorney General of the United States of America. But perhaps most of all, I am proud to be able to call John Ashcroft my friend. I yield the floor.

Mr. BOND. Mr. President, I ask unanimous consent to have printed in the Record some materials that I believe will be relevant to the consideration of this nomination: a letter from the National Sheriffs' Association; a letter from the Missouri Sheriffs' Association; a written statement of Sheriff Kenny Jones before the Committee on the Judiciary; and testimony of U.S. Representative Kenny Hulshof before the U.S. Senate Committee on the Judiciary.

Mr. BOND

Mr. BOND. Mr. President, I rise because I have just come from a very interesting and informative hearing in the Budget Committee. Federal Reserve Chairman Alan Greenspan came in today to talk about what he has seen as the tremendous productivity growth in this economy. The productivity growth essentially has come about because of the investment in information technology which has allowed our country to produce more in less time and to increase the output of the many sources of goods and services in this country. It has brought with it, as Chairman Greenspan noted, a significant increase in revenues to the Federal Government, which are allowing us to pay down even more rapidly than previously thought the debt now held by the public. Last year, Chairman Greenspan was adamant. He said the best thing we could do was to pay down the debt. He said, ``I have absolutely zero concern that we are going to pay the debt down too fast.'' Remarkably, today he has said that there is a real danger: We are potentially paying down the debt too quickly. He said if we get to the point where we have paid down the debt and the Federal Government is starting to accumulate private assets--in other words, having to put its surpluses into investments in the country--we could have a serious political problem. He therefore said that, in addition to continuing debt reduction, it is time to take ``surplus-lowering policy initiatives.'' Now sometimes the Chairman doesn't speak in the clearest language, and we questioned him as to what he meant. He indicated that a reduction in taxes beginning now, prior to the time we get to the point where there is no debt held by the public, is a good idea. He said, from an economist's standpoint, the most effective way to generate growth in the economy is to reduce marginal rates. Well, this was very informative and useful testimony. I urge my colleagues to read it. He also warned that we are in serious trouble if we follow the path we have followed in this Congress and in the last several years of spending explosions, going above the budget and continuing to spend more. He said that spending too much can be a real danger. There is much less danger of cutting taxes too much because there are limits on how much taxes can be cut. Mr. President, I introduce the Small Business Works Act of 2001. This legislation is built on one inescapable fact--small business ``works'' in this country. The men and women who venture into small businesses take incredible risks. They work countless hours, often seven days a week, just to see their businesses break even. They risk their life savings and often capital put up by family and friends. And they forego valuable time with their families all for the promise of working for themselves and creating prosperous businesses in their communities. Our country also reaps the benefits of successful small enterprises. According to the Small Business Administration, small businesses represent more than 99 percent of all employers, employ 53 percent of the private work force, and create about 75 percent of the new jobs in this country. In addition, these small firms contribute 47 percent of all sales in this country, and they are responsible for 51 percent of the private gross domestic product. With these kinds of results, it is quite clear that small business works for America. Despite their success in recent years, one thing clearly does not work for small business--the Internal Revenue Code. Instead of collecting the lowest amount of taxes necessary in the least burdensome manner, the current tax law represents a morass of rules, regulations, forms, and, of course, penalties, with which the self-employed must contend. Just to put this into perspective, by some estimates, small business owners spend more than 5 percent of their revenues just to comply with the tax laws. In fact, a small business owner from Kansas City testified before the Senate Committee on Small Business that his business routinely spends more than 16 percent of the company's net income just to keep the records and file the appropriate tax forms. And that's even before he writes the tax check. These revenues are taken away from the business and spent on accountants, bookkeepers, and lawyers to sort out all the rules and filing requirements. In addition, small business owners must dedicate valuable time and energy on day-to-day recordkeeping and other compliance requirements, all of which keep them from doing what they do best--running their business. And then there are the taxes themselves. As the chairman of the Committee on Small Business, I have heard from small business owners in Missouri and across this country that they are more than willing to pay their fair share of taxes. What they object to, however, is paying high tax bills and vast amounts for professional tax assistance only to end up the victim of an unfair tax code. Mr. President, the legislation I introduce today continues my long- standing commitment to helping small businesses obtain much needed tax relief and common-sense simplifications of our tax laws. For their unending contribution to the prosperity of this country, they deserve no less. The bill is designed to complement the broad-based tax stimulus package that President Bush has proposed. With an economy that appears to be slowing, small businesses are likely to be among the first affected. We need to ensure that they benefit from any tax stimulus we enact this year to secure their continued vitality in the future. The Small Business Works Act also draws from the priorities of the nation's small business organizations including the National Federation of Independent Business, the Small Business Legislative Council, and many others. While there are too many organizations to name them all individually, I am grateful for their ideas, their insights, and their support, without which this bill would not have been possible. This legislation also includes recommendations from the National Women's Small Business Summit, which I chaired in Kansas City, Missouri, last June. That summit brought together hundreds of women business owners who focused on specific areas of concern to their businesses, one of which was taxes. As the Summit's final report concludes, ``the Congress and the Executive Branch have a new mandate-- listen to what women small-business owners have said and answer their call to action.'' During the Summit, I listened carefully to the views and recommendations of the participants, and with this legislation I am taking steps to answer their needs. Lastly, this bill incorporates a number of the recommendations that the Internal Revenue Service (IRS) National Taxpayer Advocate set out in his Annual Report to Congress for 2001. The Taxpayer Advocate has become an invaluable resource for identifying problems facing small business taxpayers and offering legislative proposals to address them. Mr. President, the Small Business Works Act recognizes the incredible contribution that entrepreneurs, farmers and ranchers, and home-based business owners continually make to our economy despite the financial and paperwork headaches they face at every turn. To ease those burdens, the legislation provides tax relief for the self-employed and small firms, includes broad ranging tax simplifications for small enterprises, and accords small businesses greater protection as they strive to comply with our increasingly complex tax code. When it comes to paying taxes, small business really works for the government. According to recent IRS data, small business owners pay approximately 40 percent of the nearly $2 trillion that the Federal government collects each year. With the growing budget surpluses, small businesses, like American families, are clearly paying more than the government needs to carry out its programs and obligations. So when we talk about a tax cut, small enterprises cannot be left behind. The Small Business Works Act embraces that fact by reducing the tax burden on small firms in several ways. First, the bill includes the legislation that I introduced earlier this week to provide 100 percent deductibility of health insurance for the self-employed beginning this year. This was among the top priorities named by the National Women's Small Business Summit last summer, and it has been identified by the IRS National Taxpayer Advocate as a legislative recommendation for small business taxpayers. With the self-employed able to deduct only 60 percent of their health-insurance costs today, and only 70 percent next year, it comes as no surprise that 24.2 percent of the self-employed still do not have health insurance. In fact, 4.8 million Americans live in families headed by a self-employed individual and have no health insurance. A full deduction will make health insurance more affordable to the self- employed and help them and their families get the health-insurance coverage that they need and deserve today--not years in the future. Full deductibility also levels the playing field for the self- employed, who for too long have only had partial deductibility while their large corporate competitors have been able to deduct all of their insurance costs. Full deductibility against income taxes, however, is only part of the battle. My bill also corrects an additional peculiarity of the tax code, which prevents the self-employed from deducting their health-insurance premiums against their self-employment taxes. As the Taxpayer Advocate noted in his 2001 Report to Congress, ``[a]lthough self- employed individuals can reduce their taxable income by the cost of their health insurance, they still must pay self- employment taxes on this amount.'' In contrast, the Taxpayer Advocate continues, ``Wage earners who participate in pre-tax plans do not pay Social Security tax on their health insurance payments.'' My bill eliminates this narrow disparity in the law and allows the self- employed to exclude their health-insurance premiums from their self- employment tax. As a result, the self-employed will truly be on an equal footing with owners and employees of corporations whose health-insurance benefits are not subject to income or employment taxes. It is a simple matter of fairness. Second, the Small Business Works Act addresses the increasingly onerous consequences of the individual and corporate Alternative Minimum Tax (AMT). For the sole proprietors, partners, and S corporation shareholders, the individual AMT increases their tax liability by, among other things, reducing depreciation and depletion deductions, limiting net operating loss treatment, eliminating the deductibility of state and local taxes, and curtailing the expensing of research and experimentation costs. In addition, because of its complexity, this tax forces small business owners to waste precious funds on tax professionals to determine whether the AMT even applies. For these reasons, the bill includes the recommendation of the Taxpayer Advocate to repeal the individual AMT. This will be accomplished by eliminating 20 percent of the tax each year until it is completely repealed in 2006. For small corporations, the AMT story is much the same--high compliance costs and additional taxes draining away scarce capital from the business. In fact, the Committee on Small Business heard at a hearing in the last Congress that the corporate AMT resulted in a $95,000 tax bill for one small business in Kansas City, all because the company purchased life insurance on the father, who was the primary owner of the business, to prevent the estate tax from closing the company down. That type of nonsense must come to an end here and now. Accordingly, for small corporate taxpayers, the bill increases the current exemption from the corporate AMT. As a result, a small corporation will initially qualify for the exemption if its average gross receipts are $7.5 million or less (up from the current $5 million) during its first three taxable years. Thereafter, a small corporation will continue to qualify for the AMT exemption for as long as its average gross receipts for the prior three-year period do not exceed $10 million (up from the current $7.5 million). Third, the Small Business Works Act, repeals the unemployment surtax. Since 1976, small businesses have had to bear the burden of a 0.2 percent surtax on the unemployment taxes they pay for their employees. This surtax was enacted to repay loans from the Federal unemployment fund made during the 1974 recession. Those loans were fully repaid in 1987, and yet the surtax continues to be extended, adding to the tax burden facing small employers. With the Federal surplus proving that small businesses are paying too much, this tax clearly should go. Fourth, the Small Business Works Act incorporates a central piece of President Bush's tax plan to help businesses dedicated to developing new products and technology; it permanently extends the research and experimentation tax credit. Over the years this credit has stimulated research and development in this country and has contributed to the leadership of American businesses in the technological revolution. Unfortunately, this credit has also had a checkered history of expiration and reauthorization, which is simply untenable for businesses trying to plan for long-term research programs. It is time to end the on-again/off-again nature of this credit and provide businesses the certainty of knowing it will be available for the future. Finally, the bill responds to the recommendation from the National Women's Small Business Summit to enhance the business-meals deduction. Unlike their large competitors, small enterprises often sell their products and services by word of mouth and close many business transactions on the road or in a local diner. In many ways the business breakfast with a potential customer is akin to formal advertising that larger businesses purchase in newspapers or on radio or television. While the newspaper ad is fully deductible, however, the business meal is only 50 percent deductible for the small business owner. In addition, individuals who are subject to the Federal hours-of- service limitations of the Department of Transportation (such as truck drivers) are currently able to deduct 60 percent of their business meals and are on schedule to deduct up to 80 percent in coming years. As a result, small business owners have a significant lack of parity with individuals subject to hours-of-service limitations. Accordingly, the Small Business Works Act increases the limitation on the deductibility of business meals from the current 50 percent to 80 percent beginning in 2001. As chairman of the Committee on Small Business, I spent considerable time in the last Congress examining the paperwork and filing burdens on small enterprises. According to research completed by the General Accounting Office at my request, there are more than 200 forms and schedules that a small business owner could have to file. That's a daunting universe of forms, which boils down to more than 8,000 lines, boxes, and data requirements. These forms are also accompanied by more than 700 pages of instructions--not including the countless pages of the tax code, regulations, rulings, and other IRS guidance. Since entrepreneurs usually open their own businesses to work for themselves, not to waste valuable time and resources on government filing and recordkeeping requirements, the Small Business Works Act includes several provisions to simplify the tax code and let small business owners get on with their work. First, in continuation of my effort in the last Congress, the bill includes my Small Business Tax Accounting Simplification Act, with some improvements. This provision allows a small business to use the cash method of accounting, rather than the more onerous accrual method, if the business' average annual gross receipts are less than $5 million. This proposal has been strongly endorsed by small business associations, including the National Federation of Independent Business and the Associated Builders and Contractors, and most recently by the Taxpayer Advocate stressing the need for simplifying the tax accounting rules. More critically, the bill allows businesses that require merchandise in the performance of their services to use the cash method of accounting for all purposes. This provision responds to the pleas for help from small service providers, such as painters and contractors, who have recently become the focus of the IRS' attention, to the tune of thousands of dollars in taxes and penalties, not to mention accounting fees. And for what? A difference in timing, when the small business will ultimately pay the same amount of taxes? This change in the tax code is long overdue and will dramatically simplify the tax rules for countless small businesses. At the National Women's Small Business Summit last summer, the participants raised another area of complexity for America's entrepreneurs--depreciation. The Small Business Works Act addresses this issue, in large part, by increasing the amount of equipment that small firms can expense each year to $50,000 and thereby avoid the complex depreciation rules. This bill also adjusts the phase-out limitation on expensing to permit more small businesses to purchase basic equipment without losing the benefit of immediate expensing. This limitation has not been increased since 1986, and as a result it is sorely out of step with the cost of new technology, which has risen dramatically over the past decade. In addition, the bill responds to another recommendation of the Taxpayer Advocate by permitting computer software to be expensed. For computers and software purchased over the new $50,000 expensing limit, the bill modifies the present law to allow this technology to be depreciated over two years. Currently, computer equipment is generally depreciated over a five- year period and software is usually depreciated over three years. Any small business owner will tell you that a computer is largely obsolete well before three years of use, let alone five years. And computer software becomes outdated even faster. As a result, small business owners are left with thousands of dollars of depreciation on their books well after the equipment or software is obsolete. The bill makes the tax code in this area more consistent with the technological reality of the business world. The Small Business Works Act also amends the limitations on the amount of depreciation that business owners may claim for vehicles used for business purposes. Under current law, a business loses a portion of its depreciation deduction if the vehicle placed in service in 2000 costs more than $14,400. Although these limitations have been subject to inflation adjustments, they have not kept pace with the actual cost of new cars and vans in most cases. For many small businesses, the use of a car or van is an essential asset for transporting personnel to sales and service appointments and for delivering their products. Accordingly, the bill adjusts the thresholds so that a business will not lose any of its depreciation deduction for vehicles costing less than $25,000, which will continue to be indexed for inflation. Mr. President, another source of complexity for many small business owners are the estimated tax rules and the differing thresholds depending on the owner's income level. In fact, this issue was the number three legislative recommendation of the Taxpayer Advocate this year. The Small Business Works Act restores the simple two-option rule to avoid the interest penalty for underpayment of estimated taxes, which has been repeatedly altered in recent years primarily to raise revenues. To end that headache for the self-employed, the bill allows an individual to satisfy the requirements of the code if his estimated taxes are equal to 90 percent of the current year's tax bill or 100% of last year's tax bill--a simple and straightforward rule so small business owners can stop wasting time on tax preparation and get back to work. The Small Business Works Act also addresses a complexity issue raised by the IRS National Taxpayer Advocate concerning small businesses jointly owned by a husband and wife. As noted by the Advocate in his 2001 Report to Congress: ``A married couple operating a small business must comply with the complex partnership reporting requirements. Even though the married couple files a joint tax return, the law requires them to treat the business as a partnership rather than a sole proprietorship. . . . [the] IRS estimates it takes over 200 hours longer to complete a partnership return than a Sole Proprietorship Schedule C.'' In light of this situation, the bill amends the tax code to permit married couples who jointly own a small business to opt out of the partnership rules and file as a sole proprietorship. Mr. President, in the 105th Congress, we took bold steps to restructure the IRS and improve the quality of service that taxpayers receive. Since the IRS Restructuring and Reform Act was enacted in 1998, the IRS made great strides to redirect the agency and balance its dual mission of collecting tax revenues and serving taxpayers in a fair and respectful manner. With the growing complexity of our tax code, however, opportunities abound for small businesses to make honest mistakes. The IRS Restructuring and Reform Act provided important protections for all taxpayers, but work remains to ensure that small businesses are treated justly under the tax laws. The Small Business Works Act addresses several issues that small businesses continue to report as major problems. A top concern is the excessive nature of penalties and interest imposed on taxpayers who make mistakes. Far too often, a minor tax bill grows into an unmanageable liability because of the interest on the tax owed, the penalties for negligence and late payment, and the interest on the penalties. Frequently, these penalties can prevent a small business owner from settling his account and getting back into good standing. Penalties were included in the tax code to encourage taxpayers to comply with our voluntary assessment system, and interest was intended to compensate the government for the lost use of tax dollars. But the multiplicity of penalties and hidden punishments disguised as interest on those penalties seriously undermines Americans' confidence that our system is fair. The Small Business Works Act stops the runaway freight train of excessive penalties and interest in two ways. First, the bill eliminates the failure-to-pay penalty, which is part of the multiple penalties often applied to the same error. Penalties should punish bad behavior, not honest errors that even well-intentioned people are bound to make now and then. Second, the bill stops the practice of charging interest on penalties. Instead, interest will only be applied to the taxes due, just like interest is charged on a credit card for unpaid balances. Both of these changes implement recommendations of the Taxpayer Advocate. Again, it's simply a matter of fairness. The bill also addresses the issue of electronic filing of tax returns. In the 1998 IRS Restructuring and Reform Act, we set a goal for the IRS to make electronic filing the most practical and preferred method of filing so that 80 percent of taxpayers would choose to file electronically by 2007. While I continue to support that goal, I am concerned that the temptation for ensuring that the goal is reached will lead to mandatory electronic filing. At a time when small firms are already faced with daunting government mandates just in completing their tax returns, the last thing they need is a new mandate for filing them. To prevent that result, my bill makes clear that expanded electronic filing of tax and information returns will be a voluntary option for small businesses, not another government mandate. The taxpayer protections included in the bill are intended to strike a balance for small business taxpayers. On the one hand, the bill eases the excessive punishment imposed for honest errors and reduces the burdens faced by taxpayers subject to an audit by the IRS. On the other, it preserves the agency's authority to enforce the tax laws and prevent individuals from cheating the tax system, which in the end increases the tax burden on all Americans. Mr. President, the legislation I introduce today is a commonsense package of tax relief, simplification, and protections for America's small businesses who work so hard. As we strive in the coming weeks to enact tax-relief legislation, I urge my colleagues to remember that small business works in America, the jobs they provide in our local communities are too important, and they simply cannot be left behind. I ask unanimous consent to have printed in the Record following the text of my statement a description of the bill's provisions, and letters I have received from small business organizations supporting the Small Business Works Act.

Mr. BOND

Mr. BOND. Mr. President, I ask unanimous consent that I may be permitted to proceed as in morning business notwithstanding the order for the recess.

Mr. BOND

Mr. BOND. Mr. President, I join my colleague from Virginia and my colleague from Delaware in welcoming our new member from the State of Virginia. Frankly, I am delighted to see another former Governor join this body. I wish there were more of us here. I know the Senator from Virginia will have a great deal to offer. He has already made a significant contribution, and it was a pleasure for me to be able to be here and to hear his first speech. I know not only from that speech, but from his actions, he is going to be an extremely valuable Member of this body. I think the senior Senator from Virginia will agree that having additional ``wahoos'' is always a good idea.

Mr. BOND

Mr. BOND. Mr. President, I rise because I have just come from a very interesting and informative hearing in the Budget Committee. Federal Reserve Chairman Alan Greenspan came in today to talk about what he has seen as the tremendous productivity growth in this economy. The productivity growth essentially has come about because of the investment in information technology which has allowed our country to produce more in less time and to increase the output of the many sources of goods and services in this country. It has brought with it, as Chairman Greenspan noted, a significant increase in revenues to the Federal Government, which are allowing us to pay down even more rapidly than previously thought the debt now held by the public. Last year, Chairman Greenspan was adamant. He said the best thing we could do was to pay down the debt. He said, ``I have absolutely zero concern that we are going to pay the debt down too fast.'' Remarkably, today he has said that there is a real danger: We are potentially paying down the debt too quickly. He said if we get to the point where we have paid down the debt and the Federal Government is starting to accumulate private assets--in other words, having to put its surpluses into investments in the country--we could have a serious political problem. He therefore said that, in addition to continuing debt reduction, it is time to take ``surplus-lowering policy initiatives.'' Now sometimes the Chairman doesn't speak in the clearest language, and we questioned him as to what he meant. He indicated that a reduction in taxes beginning now, prior to the time we get to the point where there is no debt held by the public, is a good idea. He said, from an economist's standpoint, the most effective way to generate growth in the economy is to reduce marginal rates. Well, this was very informative and useful testimony. I urge my colleagues to read it. He also warned that we are in serious trouble if we follow the path we have followed in this Congress and in the last several years of spending explosions, going above the budget and continuing to spend more. He said that spending too much can be a real danger. There is much less danger of cutting taxes too much because there are limits on how much taxes can be cut. Mr. President, I introduce the Small Business Works Act of 2001. This legislation is built on one inescapable fact--small business ``works'' in this country. The men and women who venture into small businesses take incredible risks. They work countless hours, often seven days a week, just to see their businesses break even. They risk their life savings and often capital put up by family and friends. And they forego valuable time with their families all for the promise of working for themselves and creating prosperous businesses in their communities. Our country also reaps the benefits of successful small enterprises. According to the Small Business Administration, small businesses represent more than 99 percent of all employers, employ 53 percent of the private work force, and create about 75 percent of the new jobs in this country. In addition, these small firms contribute 47 percent of all sales in this country, and they are responsible for 51 percent of the private gross domestic product. With these kinds of results, it is quite clear that small business works for America. Despite their success in recent years, one thing clearly does not work for small business--the Internal Revenue Code. Instead of collecting the lowest amount of taxes necessary in the least burdensome manner, the current tax law represents a morass of rules, regulations, forms, and, of course, penalties, with which the self-employed must contend. Just to put this into perspective, by some estimates, small business owners spend more than 5 percent of their revenues just to comply with the tax laws. In fact, a small business owner from Kansas City testified before the Senate Committee on Small Business that his business routinely spends more than 16 percent of the company's net income just to keep the records and file the appropriate tax forms. And that's even before he writes the tax check. These revenues are taken away from the business and spent on accountants, bookkeepers, and lawyers to sort out all the rules and filing requirements. In addition, small business owners must dedicate valuable time and energy on day-to-day recordkeeping and other compliance requirements, all of which keep them from doing what they do best--running their business. And then there are the taxes themselves. As the chairman of the Committee on Small Business, I have heard from small business owners in Missouri and across this country that they are more than willing to pay their fair share of taxes. What they object to, however, is paying high tax bills and vast amounts for professional tax assistance only to end up the victim of an unfair tax code. Mr. President, the legislation I introduce today continues my long- standing commitment to helping small businesses obtain much needed tax relief and common-sense simplifications of our tax laws. For their unending contribution to the prosperity of this country, they deserve no less. The bill is designed to complement the broad-based tax stimulus package that President Bush has proposed. With an economy that appears to be slowing, small businesses are likely to be among the first affected. We need to ensure that they benefit from any tax stimulus we enact this year to secure their continued vitality in the future. The Small Business Works Act also draws from the priorities of the nation's small business organizations including the National Federation of Independent Business, the Small Business Legislative Council, and many others. While there are too many organizations to name them all individually, I am grateful for their ideas, their insights, and their support, without which this bill would not have been possible. This legislation also includes recommendations from the National Women's Small Business Summit, which I chaired in Kansas City, Missouri, last June. That summit brought together hundreds of women business owners who focused on specific areas of concern to their businesses, one of which was taxes. As the Summit's final report concludes, ``the Congress and the Executive Branch have a new mandate-- listen to what women small-business owners have said and answer their call to action.'' During the Summit, I listened carefully to the views and recommendations of the participants, and with this legislation I am taking steps to answer their needs. Lastly, this bill incorporates a number of the recommendations that the Internal Revenue Service (IRS) National Taxpayer Advocate set out in his Annual Report to Congress for 2001. The Taxpayer Advocate has become an invaluable resource for identifying problems facing small business taxpayers and offering legislative proposals to address them. Mr. President, the Small Business Works Act recognizes the incredible contribution that entrepreneurs, farmers and ranchers, and home-based business owners continually make to our economy despite the financial and paperwork headaches they face at every turn. To ease those burdens, the legislation provides tax relief for the self-employed and small firms, includes broad ranging tax simplifications for small enterprises, and accords small businesses greater protection as they strive to comply with our increasingly complex tax code. When it comes to paying taxes, small business really works for the government. According to recent IRS data, small business owners pay approximately 40 percent of the nearly $2 trillion that the Federal government collects each year. With the growing budget surpluses, small businesses, like American families, are clearly paying more than the government needs to carry out its programs and obligations. So when we talk about a tax cut, small enterprises cannot be left behind. The Small Business Works Act embraces that fact by reducing the tax burden on small firms in several ways. First, the bill includes the legislation that I introduced earlier this week to provide 100 percent deductibility of health insurance for the self-employed beginning this year. This was among the top priorities named by the National Women's Small Business Summit last summer, and it has been identified by the IRS National Taxpayer Advocate as a legislative recommendation for small business taxpayers. With the self-employed able to deduct only 60 percent of their health-insurance costs today, and only 70 percent next year, it comes as no surprise that 24.2 percent of the self-employed still do not have health insurance. In fact, 4.8 million Americans live in families headed by a self-employed individual and have no health insurance. A full deduction will make health insurance more affordable to the self- employed and help them and their families get the health-insurance coverage that they need and deserve today--not years in the future. Full deductibility also levels the playing field for the self- employed, who for too long have only had partial deductibility while their large corporate competitors have been able to deduct all of their insurance costs. Full deductibility against income taxes, however, is only part of the battle. My bill also corrects an additional peculiarity of the tax code, which prevents the self-employed from deducting their health-insurance premiums against their self-employment taxes. As the Taxpayer Advocate noted in his 2001 Report to Congress, ``[a]lthough self- employed individuals can reduce their taxable income by the cost of their health insurance, they still must pay self- employment taxes on this amount.'' In contrast, the Taxpayer Advocate continues, ``Wage earners who participate in pre-tax plans do not pay Social Security tax on their health insurance payments.'' My bill eliminates this narrow disparity in the law and allows the self- employed to exclude their health-insurance premiums from their self- employment tax. As a result, the self-employed will truly be on an equal footing with owners and employees of corporations whose health-insurance benefits are not subject to income or employment taxes. It is a simple matter of fairness. Second, the Small Business Works Act addresses the increasingly onerous consequences of the individual and corporate Alternative Minimum Tax (AMT). For the sole proprietors, partners, and S corporation shareholders, the individual AMT increases their tax liability by, among other things, reducing depreciation and depletion deductions, limiting net operating loss treatment, eliminating the deductibility of state and local taxes, and curtailing the expensing of research and experimentation costs. In addition, because of its complexity, this tax forces small business owners to waste precious funds on tax professionals to determine whether the AMT even applies. For these reasons, the bill includes the recommendation of the Taxpayer Advocate to repeal the individual AMT. This will be accomplished by eliminating 20 percent of the tax each year until it is completely repealed in 2006. For small corporations, the AMT story is much the same--high compliance costs and additional taxes draining away scarce capital from the business. In fact, the Committee on Small Business heard at a hearing in the last Congress that the corporate AMT resulted in a $95,000 tax bill for one small business in Kansas City, all because the company purchased life insurance on the father, who was the primary owner of the business, to prevent the estate tax from closing the company down. That type of nonsense must come to an end here and now. Accordingly, for small corporate taxpayers, the bill increases the current exemption from the corporate AMT. As a result, a small corporation will initially qualify for the exemption if its average gross receipts are $7.5 million or less (up from the current $5 million) during its first three taxable years. Thereafter, a small corporation will continue to qualify for the AMT exemption for as long as its average gross receipts for the prior three-year period do not exceed $10 million (up from the current $7.5 million). Third, the Small Business Works Act, repeals the unemployment surtax. Since 1976, small businesses have had to bear the burden of a 0.2 percent surtax on the unemployment taxes they pay for their employees. This surtax was enacted to repay loans from the Federal unemployment fund made during the 1974 recession. Those loans were fully repaid in 1987, and yet the surtax continues to be extended, adding to the tax burden facing small employers. With the Federal surplus proving that small businesses are paying too much, this tax clearly should go. Fourth, the Small Business Works Act incorporates a central piece of President Bush's tax plan to help businesses dedicated to developing new products and technology; it permanently extends the research and experimentation tax credit. Over the years this credit has stimulated research and development in this country and has contributed to the leadership of American businesses in the technological revolution. Unfortunately, this credit has also had a checkered history of expiration and reauthorization, which is simply untenable for businesses trying to plan for long-term research programs. It is time to end the on-again/off-again nature of this credit and provide businesses the certainty of knowing it will be available for the future. Finally, the bill responds to the recommendation from the National Women's Small Business Summit to enhance the business-meals deduction. Unlike their large competitors, small enterprises often sell their products and services by word of mouth and close many business transactions on the road or in a local diner. In many ways the business breakfast with a potential customer is akin to formal advertising that larger businesses purchase in newspapers or on radio or television. While the newspaper ad is fully deductible, however, the business meal is only 50 percent deductible for the small business owner. In addition, individuals who are subject to the Federal hours-of- service limitations of the Department of Transportation (such as truck drivers) are currently able to deduct 60 percent of their business meals and are on schedule to deduct up to 80 percent in coming years. As a result, small business owners have a significant lack of parity with individuals subject to hours-of-service limitations. Accordingly, the Small Business Works Act increases the limitation on the deductibility of business meals from the current 50 percent to 80 percent beginning in 2001. As chairman of the Committee on Small Business, I spent considerable time in the last Congress examining the paperwork and filing burdens on small enterprises. According to research completed by the General Accounting Office at my request, there are more than 200 forms and schedules that a small business owner could have to file. That's a daunting universe of forms, which boils down to more than 8,000 lines, boxes, and data requirements. These forms are also accompanied by more than 700 pages of instructions--not including the countless pages of the tax code, regulations, rulings, and other IRS guidance. Since entrepreneurs usually open their own businesses to work for themselves, not to waste valuable time and resources on government filing and recordkeeping requirements, the Small Business Works Act includes several provisions to simplify the tax code and let small business owners get on with their work. First, in continuation of my effort in the last Congress, the bill includes my Small Business Tax Accounting Simplification Act, with some improvements. This provision allows a small business to use the cash method of accounting, rather than the more onerous accrual method, if the business' average annual gross receipts are less than $5 million. This proposal has been strongly endorsed by small business associations, including the National Federation of Independent Business and the Associated Builders and Contractors, and most recently by the Taxpayer Advocate stressing the need for simplifying the tax accounting rules. More critically, the bill allows businesses that require merchandise in the performance of their services to use the cash method of accounting for all purposes. This provision responds to the pleas for help from small service providers, such as painters and contractors, who have recently become the focus of the IRS' attention, to the tune of thousands of dollars in taxes and penalties, not to mention accounting fees. And for what? A difference in timing, when the small business will ultimately pay the same amount of taxes? This change in the tax code is long overdue and will dramatically simplify the tax rules for countless small businesses. At the National Women's Small Business Summit last summer, the participants raised another area of complexity for America's entrepreneurs--depreciation. The Small Business Works Act addresses this issue, in large part, by increasing the amount of equipment that small firms can expense each year to $50,000 and thereby avoid the complex depreciation rules. This bill also adjusts the phase-out limitation on expensing to permit more small businesses to purchase basic equipment without losing the benefit of immediate expensing. This limitation has not been increased since 1986, and as a result it is sorely out of step with the cost of new technology, which has risen dramatically over the past decade. In addition, the bill responds to another recommendation of the Taxpayer Advocate by permitting computer software to be expensed. For computers and software purchased over the new $50,000 expensing limit, the bill modifies the present law to allow this technology to be depreciated over two years. Currently, computer equipment is generally depreciated over a five- year period and software is usually depreciated over three years. Any small business owner will tell you that a computer is largely obsolete well before three years of use, let alone five years. And computer software becomes outdated even faster. As a result, small business owners are left with thousands of dollars of depreciation on their books well after the equipment or software is obsolete. The bill makes the tax code in this area more consistent with the technological reality of the business world. The Small Business Works Act also amends the limitations on the amount of depreciation that business owners may claim for vehicles used for business purposes. Under current law, a business loses a portion of its depreciation deduction if the vehicle placed in service in 2000 costs more than $14,400. Although these limitations have been subject to inflation adjustments, they have not kept pace with the actual cost of new cars and vans in most cases. For many small businesses, the use of a car or van is an essential asset for transporting personnel to sales and service appointments and for delivering their products. Accordingly, the bill adjusts the thresholds so that a business will not lose any of its depreciation deduction for vehicles costing less than $25,000, which will continue to be indexed for inflation. Mr. President, another source of complexity for many small business owners are the estimated tax rules and the differing thresholds depending on the owner's income level. In fact, this issue was the number three legislative recommendation of the Taxpayer Advocate this year. The Small Business Works Act restores the simple two-option rule to avoid the interest penalty for underpayment of estimated taxes, which has been repeatedly altered in recent years primarily to raise revenues. To end that headache for the self-employed, the bill allows an individual to satisfy the requirements of the code if his estimated taxes are equal to 90 percent of the current year's tax bill or 100% of last year's tax bill--a simple and straightforward rule so small business owners can stop wasting time on tax preparation and get back to work. The Small Business Works Act also addresses a complexity issue raised by the IRS National Taxpayer Advocate concerning small businesses jointly owned by a husband and wife. As noted by the Advocate in his 2001 Report to Congress: ``A married couple operating a small business must comply with the complex partnership reporting requirements. Even though the married couple files a joint tax return, the law requires them to treat the business as a partnership rather than a sole proprietorship. . . . [the] IRS estimates it takes over 200 hours longer to complete a partnership return than a Sole Proprietorship Schedule C.'' In light of this situation, the bill amends the tax code to permit married couples who jointly own a small business to opt out of the partnership rules and file as a sole proprietorship. Mr. President, in the 105th Congress, we took bold steps to restructure the IRS and improve the quality of service that taxpayers receive. Since the IRS Restructuring and Reform Act was enacted in 1998, the IRS made great strides to redirect the agency and balance its dual mission of collecting tax revenues and serving taxpayers in a fair and respectful manner. With the growing complexity of our tax code, however, opportunities abound for small businesses to make honest mistakes. The IRS Restructuring and Reform Act provided important protections for all taxpayers, but work remains to ensure that small businesses are treated justly under the tax laws. The Small Business Works Act addresses several issues that small businesses continue to report as major problems. A top concern is the excessive nature of penalties and interest imposed on taxpayers who make mistakes. Far too often, a minor tax bill grows into an unmanageable liability because of the interest on the tax owed, the penalties for negligence and late payment, and the interest on the penalties. Frequently, these penalties can prevent a small business owner from settling his account and getting back into good standing. Penalties were included in the tax code to encourage taxpayers to comply with our voluntary assessment system, and interest was intended to compensate the government for the lost use of tax dollars. But the multiplicity of penalties and hidden punishments disguised as interest on those penalties seriously undermines Americans' confidence that our system is fair. The Small Business Works Act stops the runaway freight train of excessive penalties and interest in two ways. First, the bill eliminates the failure-to-pay penalty, which is part of the multiple penalties often applied to the same error. Penalties should punish bad behavior, not honest errors that even well-intentioned people are bound to make now and then. Second, the bill stops the practice of charging interest on penalties. Instead, interest will only be applied to the taxes due, just like interest is charged on a credit card for unpaid balances. Both of these changes implement recommendations of the Taxpayer Advocate. Again, it's simply a matter of fairness. The bill also addresses the issue of electronic filing of tax returns. In the 1998 IRS Restructuring and Reform Act, we set a goal for the IRS to make electronic filing the most practical and preferred method of filing so that 80 percent of taxpayers would choose to file electronically by 2007. While I continue to support that goal, I am concerned that the temptation for ensuring that the goal is reached will lead to mandatory electronic filing. At a time when small firms are already faced with daunting government mandates just in completing their tax returns, the last thing they need is a new mandate for filing them. To prevent that result, my bill makes clear that expanded electronic filing of tax and information returns will be a voluntary option for small businesses, not another government mandate. The taxpayer protections included in the bill are intended to strike a balance for small business taxpayers. On the one hand, the bill eases the excessive punishment imposed for honest errors and reduces the burdens faced by taxpayers subject to an audit by the IRS. On the other, it preserves the agency's authority to enforce the tax laws and prevent individuals from cheating the tax system, which in the end increases the tax burden on all Americans. Mr. President, the legislation I introduce today is a commonsense package of tax relief, simplification, and protections for America's small businesses who work so hard. As we strive in the coming weeks to enact tax-relief legislation, I urge my colleagues to remember that small business works in America, the jobs they provide in our local communities are too important, and they simply cannot be left behind. I ask unanimous consent to have printed in the Record following the text of my statement a description of the bill's provisions, and letters I have received from small business organizations supporting the Small Business Works Act.

Mr. BOND

Mr. BOND. Mr. President, I rise today to discuss a measure that has broad bipartisan support. Today, with my colleague from Illinois, Senator Durbin, I am introducing legislation addressing what is a top concern of small business owners in this country. That is the availability of health care. For the past three Congresses, we have worked to level the playing field for America's self-employed by ensuring that they can deduct 100 percent of their health insurance premiums. Large corporations, businesses, and other organizations can deduct 100 percent of what they pay, but small businesses, up until recently, have been severely limited in what they can deduct. The legislation Senator Durbin and I are introducing today, the Self- Employed Health Insurance Act of 2001, will end finally one of the most glaring inequities that has existed in our tax law. I have had the pleasure of serving for over 4 years now as chairman of the Senate Committee on Small Business. Throughout, one of my top priorities has been to ensure full deductibility of health insurance for the self-employed. We have made some progress. Most notably, in the Taxpayer Relief Act of 1997, we broke through the longstanding cap on the deduction to provide 100-percent deductibility. In 1998, we passed legislation to speed up the date that self-employed can fully deduct their health insurance costs to 2003 and increase the deductible amounts in the intervening years. We realize the problem with budget scoring has postponed the effective date of this measure, but I have talked to too many small business people who tell us they cannot wait until 2003 to get sick or to go to 2003 without having coverage for themselves and their employees. The self-employed still cannot afford, in many instances, health insurance without 100-percent deductibility. They should not have to wait any longer. It is time for us to unite behind this bipartisan issue and get this job done. Let me give you a fact, Mr. President. With a self-employed able to deduct only 60 percent of their health insurance costs today and only 70 percent next year, it probably will come as no surprise to any of us that almost a quarter, 24.2 percent, of the self-employed business owners in Missouri do not have health insurance. In fact, 4.8 million Americans live in families headed by a self-employed individual and have no health insurance. Those families include more than 1 million children who lack adequate health care insurance coverage. The bill Senator Durbin and I are introducing today addresses this situation by making 100-percent deductibility begin this year. Full deductibility will make health insurance affordable to the self- employed and help them get themselves and their families the kind of health insurance coverage they should have. This measure also corrects another inequity in the law affecting self-employed who try to provide health insurance for themselves, their families, and their employees. It deals with an issue I raised in the last Congress. Under the current law, the self-employed lose all the health insurance deduction if they are eligible to participate in another plan, whether or not they actually participate. This provision affects self-employed individuals such as Steve Hagan in my hometown of Mexico, MO. Steve is a financial planner who runs his own small business. Although he has a group medical plan for his employees, Steve cannot deduct the medical cost of covering himself or his family simply because his wife is eligible for health insurance through her employer. The inequity is clear. Why should he be able to deduct the cost of health insurance for his employees but not for himself and his family? What if the insurance available through his wife's employer does not meet the needs of their family? Besides being patently unfair, this is also an enormous trap for the unwary. Imagine the small business owner who learns that she can now deduct 60 percent of her health insurance costs this year, and with the extra deduction, she can finally afford a group medical plan for herself and her employees. Then later in the year, her husband gets a new job that offers health insurance. Suddenly, her self-employed health insurance deduction is gone. Sadly, she is left with two choices. She can bear the entire burden of her family's coverage, or she can terminate the insurance coverage for all her employees, which will likely increase due to coverage of fewer employees under the plan. The Tax Code should not force small business owners into this kind of ``no win'' situation when they try to provide insurance coverage for their employees and themselves. This bill eliminates this problem by clarifying that the self- employed health insurance deduction is limited only if the self- employed person actually participates in a subsidized health insurance plan offered by a spouse's employer or through a second job. It is simply a matter of fairness. It makes common sense. We ought to take this step right now. It is a commonsense measure that answers the urgent plea of small businesses for fairness in the Tax Code. It has been on the ``must do'' list of the national small business groups for too long. And when I hosted the National Women's Small Business Summit this past summer, in Kansas City, it was at the top of the list among the recommendations we received. We have a tremendous opportunity to work together. Let's take this opportunity and finish the job. I had initially offered a list of 21 original cosponsors. I ask unanimous consent that, in addition to those cosponsors, the following Senators be added: The Senator from Wyoming, Mr. Enzi; the Senator from Indiana, Mr. Lugar; the Senator from Kansas, Mr. Roberts; the Senator from Maine, Ms. Collins; the Senator from Pennsylvania, Mr. Specter; and the Senator from Wisconsin, Mr. Kohl.

Mr. BOND. Mr. President, I ask unanimous consent the bill and a description of its provisions be printed in the Record.

Mr. BOND

Mr. BOND. Mr. President, I ask unanimous consent that I be permitted to speak as in morning business for 6 minutes.

Mr. BOND. Mr. President, first, on behalf of my colleagues, permit me to extend a warm welcome to our new Senator from Michigan. It was an honor to be on the floor as she made her first speech. I appreciate very much her dedication and enthusiasm and her expressed commitment and interest in working together. I assure her we will have many opportunities in the months to come. All of us are going to have to work together if we are going to make the kind of progress we wish. (The remarks of Mr. Bond pertaining to the introduction of S. 29 are located in today's Record under ``Statements on Introduced Bills and Joint Resolutions.'')

Mr. BOND

Mr. BOND. Mr. President, is there further business to come before the Senate at this time?

Mr. BOND

Mr. BOND. Mr. President, I ask unanimous consent the bill and a description of its provisions be printed in the Record.

Mr. BOND. Mr. President, I rise today to discuss a measure that has broad bipartisan support. Today, with my colleague from Illinois, Senator Durbin, I am introducing legislation addressing what is a top concern of small business owners in this country. That is the availability of health care. For the past three Congresses, we have worked to level the playing field for America's self-employed by ensuring that they can deduct 100 percent of their health insurance premiums. Large corporations, businesses, and other organizations can deduct 100 percent of what they pay, but small businesses, up until recently, have been severely limited in what they can deduct. The legislation Senator Durbin and I are introducing today, the Self- Employed Health Insurance Act of 2001, will end finally one of the most glaring inequities that has existed in our tax law. I have had the pleasure of serving for over 4 years now as chairman of the Senate Committee on Small Business. Throughout, one of my top priorities has been to ensure full deductibility of health insurance for the self-employed. We have made some progress. Most notably, in the Taxpayer Relief Act of 1997, we broke through the longstanding cap on the deduction to provide 100-percent deductibility. In 1998, we passed legislation to speed up the date that self-employed can fully deduct their health insurance costs to 2003 and increase the deductible amounts in the intervening years. We realize the problem with budget scoring has postponed the effective date of this measure, but I have talked to too many small business people who tell us they cannot wait until 2003 to get sick or to go to 2003 without having coverage for themselves and their employees. The self-employed still cannot afford, in many instances, health insurance without 100-percent deductibility. They should not have to wait any longer. It is time for us to unite behind this bipartisan issue and get this job done. Let me give you a fact, Mr. President. With a self-employed able to deduct only 60 percent of their health insurance costs today and only 70 percent next year, it probably will come as no surprise to any of us that almost a quarter, 24.2 percent, of the self-employed business owners in Missouri do not have health insurance. In fact, 4.8 million Americans live in families headed by a self-employed individual and have no health insurance. Those families include more than 1 million children who lack adequate health care insurance coverage. The bill Senator Durbin and I are introducing today addresses this situation by making 100-percent deductibility begin this year. Full deductibility will make health insurance affordable to the self- employed and help them get themselves and their families the kind of health insurance coverage they should have. This measure also corrects another inequity in the law affecting self-employed who try to provide health insurance for themselves, their families, and their employees. It deals with an issue I raised in the last Congress. Under the current law, the self-employed lose all the health insurance deduction if they are eligible to participate in another plan, whether or not they actually participate. This provision affects self-employed individuals such as Steve Hagan in my hometown of Mexico, MO. Steve is a financial planner who runs his own small business. Although he has a group medical plan for his employees, Steve cannot deduct the medical cost of covering himself or his family simply because his wife is eligible for health insurance through her employer. The inequity is clear. Why should he be able to deduct the cost of health insurance for his employees but not for himself and his family? What if the insurance available through his wife's employer does not meet the needs of their family? Besides being patently unfair, this is also an enormous trap for the unwary. Imagine the small business owner who learns that she can now deduct 60 percent of her health insurance costs this year, and with the extra deduction, she can finally afford a group medical plan for herself and her employees. Then later in the year, her husband gets a new job that offers health insurance. Suddenly, her self-employed health insurance deduction is gone. Sadly, she is left with two choices. She can bear the entire burden of her family's coverage, or she can terminate the insurance coverage for all her employees, which will likely increase due to coverage of fewer employees under the plan. The Tax Code should not force small business owners into this kind of ``no win'' situation when they try to provide insurance coverage for their employees and themselves. This bill eliminates this problem by clarifying that the self- employed health insurance deduction is limited only if the self- employed person actually participates in a subsidized health insurance plan offered by a spouse's employer or through a second job. It is simply a matter of fairness. It makes common sense. We ought to take this step right now. It is a commonsense measure that answers the urgent plea of small businesses for fairness in the Tax Code. It has been on the ``must do'' list of the national small business groups for too long. And when I hosted the National Women's Small Business Summit this past summer, in Kansas City, it was at the top of the list among the recommendations we received. We have a tremendous opportunity to work together. Let's take this opportunity and finish the job. I had initially offered a list of 21 original cosponsors. I ask unanimous consent that, in addition to those cosponsors, the following Senators be added: The Senator from Wyoming, Mr. Enzi; the Senator from Indiana, Mr. Lugar; the Senator from Kansas, Mr. Roberts; the Senator from Maine, Ms. Collins; the Senator from Pennsylvania, Mr. Specter; and the Senator from Wisconsin, Mr. Kohl.