Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, the Voinovich amendment does nothing to protect Medicare. Just a few short months ago, every member of the Republican caucus voted for protection for both Medicare and Social Security. What has occurred that would lead them now to forget Medicare? This is not a wise course. In the name of protecting Social Security, this amendment would cut Medicare. The sequester that is provided for in this amendment says, if we are on the edge of going into Social Security, cut Medicare, cut defense. It is a one-trick pony. It does not matter whether the deficiency was caused by a tax cut, by an economic downturn, or by excessive spending, the answer to each and every one of them is the same: cut spending. It does not matter if the problem was caused by too big a tax cut: cut spending. It does not matter if the problem was caused by an economic downturn, the answer is cut spending. It is not a balanced approach. The assertion that there is no Medicare surplus simply does not fit the facts. This is the report of the Congressional Budget Office. On page 19, under the table ``Trust Fund Surpluses,'' it shows Social Security in surplus, it shows Medicare Part A in surplus, it shows Medicare Part B in rough balance. The argument that the Senator from Ohio is making is that because we have chosen, as a Congress, to fund Part B, in part by general fund transfers, that that means Medicare is in deficit. That is not the case. That is not the definition of the Congressional Budget Office; that is not the definition of the Office of Management and Budget. All of them assert there is a surplus in Part A and rough balance in Part B. We, as a Congress, have made the determination to finance Part B, by premiums in part, by general fund transfer in part. This is not an amendment we should adopt.

Mr. CONRAD. Mr. President, pursuant to section 904 of the Congressional Budget Act, I move to waive the applicable section of that act for the purpose of the pending amendment, and I ask for the yeas and nays.

Mr. CONRAD. Mr. President, the amendment I am offering today is an amendment I offered last year that got 60 votes on the floor of the Senate. Earlier this year, it got 53 votes on the floor of the Senate. It says we should protect both the Social Security and the Medicare trust funds. We already provide some protection of the Social Security trust fund. It would strengthen those protections. We would also provide those same protections to the Medicare trust fund. Both of these trust funds deserve protection. If we don't provide it, the money will be used for other purposes. I hope my colleagues will support this amendment.

Mr. CONRAD

Mr. CONRAD. Mr. President, let me just pick up where I left off and point out that while we are in a period of surpluses now with respect to Medicare and Social Security, we all know what is to come. The Congressional Budget Office has alerted us. The Comptroller General of the United States has alerted us. The Social Security Administration has alerted us. Medicare has alerted us. And they all have told us the same thing: That when we get past this decade--in the next decade when the baby boomers start to retire--these surpluses turn to massive deficits. That is what happens. The cash deficits begin in the year 2016, and then they grow geometrically as more and more baby boomers retire. That should warn us, that should alert us that we should not be using the trust funds for other purposes. We should not be using the Medicare and Social Security trust funds to fund other operations of Government. Yet we are poised to do that this year. We are poised to do it to an even greater degree next year. And we are poised to do it for the next decade even in a time of strong economic growth. Let's think about that. Let's think about it soberly. The administration is not forecasting an economic slowdown next year or the years thereafter; they are forecasting strong economic growth. In that context, the numbers reveal we will be using trust fund monies to fund the other operations of the Federal Government. I do not think that is right. Mr. Novak said, in a column yesterday, that I am--what did he say?-- an antique fiscal conservative. Whatever name one applies to it doesn't make much difference to me. It doesn't have anything to do with antique. It has to do with common sense. You don't take trust fund money to pay for other programs when you know what is to come, and there is no one in this Chamber who doesn't know what is to come. We know we are facing a demographic tidal wave unlike anything we have ever seen in our Nation's history. We are going to go from a time of surpluses in these trust funds to deficits. One of the ways to deal with it is not to use the money in the trust funds for other purposes. That is the heart and soul of my amendment. We ought to pass it. Does that mean you are forced to have a tax cut in a time of economic slowdown? No, absolutely not. We have an economic slowdown now. I proposed $60 billion of tax cuts, of fiscal stimulus this year. That was part of the proposal I put before my colleagues--far more fiscal stimulus than the President proposed. That isn't the correct suggestion, that somehow we would force tax increases or spending cuts at a time of an economic slowdown. They are not forecasting an economic slowdown for this year or next year or the year thereafter. They are forecasting strong economic growth. We see from the numbers that their plan has put us into the trust funds of Medicare and Social Security even at a time of economic growth. That doesn't make sense to this Senator. I don't think it makes any sense at all. My colleague on the other side put up a chart suggesting that spending is out of control, that that is the problem. I have to give the other side of the story. That may be the popular view, but it doesn't match the facts. This chart shows Federal spending as a share of the economy has gone down each and every year for the last 9 years. There hasn't been some big spending splurge. He talks about one part of Federal spending. That is the chart he had. The chart he had was not all Federal spending. No, the chart he had was one part of Federal spending that has shown significant increases. He didn't tell Members that he was showing a chart that has just one-third of Federal spending. He didn't say that. He made people believe that was all of Federal spending on that chart. He knows and I know that is not the case. He knows and I know that the proper way to compare Federal spending is as a share of our gross domestic product because that takes out the effects of inflation. That is the way to make the best comparison. What do we see when we do that? We see that Federal spending in 1992 was 22 percent of gross domestic product. Federal spending in this year, 2001, is going to be 18 percent of gross domestic product. There has not been some big spending explosion. That is not an accurate characterization to the American people. The fact is, the share of money out of national income going to the Federal Government has gone down dramatically, from 22 percent of gross domestic product to 18 percent of gross domestic product today. That is about a 20-percent reduction, not some big spending binge. That has been a reduction in the share of national income going to the Federal Government for spending. That is a fact. Under the budget we passed, spending is not going up as a share of gross domestic product or as a share of our national income; Federal spending is going to continue to decline. It is going to go down to 16 percent of gross domestic product. That will be the lowest level since 1951. Facts are stubborn things. The fact is, we do not have runaway Federal spending. We have Federal spending going down and going down sharply as a share of our national income, which every economist asserts is the appropriate way to measure so that we take out the effects of inflation and show real trends, what is really happening. This is what has happened to Federal spending. Right now it is at the lowest level since 1966 on a fair comparison basis, measured as a share of gross domestic product. We can see we did have sharp increases back in the 1980s. That is true. He was correct on that. But since then we can see Federal spending as a share of GDP has gone down and gone down sharply, gone down to the lowest level since 1966. We are poised, with the budget under which we are operating, to go down to the level last seen in 1951. This is an important subject. We do have a growing problem of dipping into the trust funds to finance the other operations of Government, even in a time of economic growth. It is economic growth that is forecasted next year. Those are all the numbers that are being used to make these analyses. The problem is significant and growing. I urge my colleagues to take a stand and vote to protect not only the Social Security trust fund but the Medicare trust fund as well. That is common sense. I yield the floor.

Mr. CONRAD. Mr. President, the Senator from Texas is wrong about the amendment of the Senator from Ohio. I just say this. Some of what the Senator from Texas says I agree with. I really do think we have a circumstance that requires us to think very carefully about how we are going to deal with requests for additional spending, requests for additional tax reductions, because, as I calculate it, the cupboard is bare. We are already into the trust funds or are poised to be if the items in the budget resolution are enacted. We are into the trust funds, just based on the tax cut that has passed, based on the budget resolution that has passed, and based on reductions in revenue because of the economic slowdown. Tongue in cheek, the Senator from Texas suggests it is my ascension to chairman of the Budget Committee that has somehow led to these events. I can assure the Senator from Texas that it was not my becoming chairman of the Budget Committee that led to the economic slowdown, and it was not my ascension to the Budget Committee chairmanship that led to the passage of the budget resolution. I opposed it. It wasn't my position as Budget Committee chairman that led to the passage of the tax bill. I opposed it because I predicted then we would face the circumstance I believe we face now. That is, we have just done too much and the result is we have a problem. I am not for raising taxes at a time of economic slowdown. I am not for cutting spending at a time of economic slowdown because that would counter fiscal stimulus, and we need fiscal stimulus. But looking ahead to times when the administration projects strong economic growth, it does not seem wise to me that we use the trust funds of Social Security and Medicare for other purposes. That just does not seem to be a wise thing to do. My amendment would prevent us from doing it. It would not absolutely prevent us because you could get around it with 60 votes. That is always true here. The Senator from Texas talks about the power that I have. The power I have is actually rather limited. The power I have is to release reserve funds that are in the budget, but any action I take can be overcome by 60 votes in the Senate. I have sent the very clear signal to the Secretary of Defense and the administration with respect to their request for additional spending for defense. By the way, I believe we need more money for defense. But, given our fiscal situation, the question becomes, Will it be taken out of the trust funds of Medicare and Social Security, or will it be paid for by spending cuts elsewhere, or will it be paid for by additional revenue? I do not believe it should come out of the trust funds of Medicare and Social Security. I think that is wrong. I think that is a mistake. I think the amendment of the Senator from Ohio is deficient. No matter what the cause of the shortfall is, he has only one answer. His answer is: Cut spending everywhere else, other than Social Security. I do not think that is the right answer. I think everything has to be on the table, revenue and spending cuts, especially if the problem is caused by tax cuts that were too big. No matter what the cause, whether it is economic downturn, whether it is a tax cut that was too big, he has only one answer: Cut all spending other than Social Security. I do not think that is a balanced response. I do not think that is a balanced response. Let me go again to the question of spending. I ask the Chair how much time is remaining on my side?

Mr. CONRAD

Mr. CONRAD. Mr. President, I ask unanimous consent the order for the quorum call be dispensed with.

Mr. CONRAD

Mr. CONRAD. Mr. President, I enjoyed reading the Washington Post this morning and listening to the weekend talk shows. I noticed I was the subject of a number of the articles and a number of the shows. I must say, I didn't recognize the policy that was being ascribed to me. Somehow, people have taken what I have proposed and twisted it and distorted it in a way that is almost unrecognizable. I think after examination it is clear why they have done that, but we will get into that in a moment. The first article I would refer to is Robert Novak's piece in this morning's Washington Post that was headlined, ``Kent Conrad's Show Trial.'' Mr. Novak asserted that a hearing that I will be chairing later this week to talk about the fiscal condition of the country and where we are headed is some kind of a show trial. I want to assure Mr. Novak and anyone else who is listening, I have no interest in show trials. I do have a very serious interest in where we find ourselves after the fiscal policy that the President proposed has been adopted in the Congress because I think it has created serious problems. Mr. Daniels, the head of the Office of Management and Budget, was on one of the talk shows this weekend and said I was engaged in what he referred to as ``medieval economics.'' I kind of like better the way Mr. Novak referred to me. He accused me of ``antique fiscal conservatism.'' ``Antique fiscal conservatism,'' that is the characterization he applied to the policies I proposed. Mr. Daniels called it ``medieval economics.'' What is it that I have talked about that has aroused such ire? All I have said is I don't think we ought to be using the trust funds of Medicare and Social Security for other purposes. That is what I have said. I think that is the right policy. I don't think we should be using the trust funds of Social Security and Medicare for other purposes. After I made that statement, and after I noted that the latest numbers that come from this administration suggest that in fact we will be doing precisely that this year and next year, Mr. Daniels responded by suggesting that means Senator Conrad favors a tax increase at a time of an economic slowdown. That is not my proposal. That is not what I suggested. In fact, my record is precisely the opposite of that. They know that. They know that as the ranking Democrat on the Budget Committee this year, I didn't propose a tax increase in the midst of an economic slowdown. It is precisely the opposite of that. I proposed a $60 billion tax reduction as part of the Democratic alternative to the budget the President proposed. In fact, I supported much more tax relief as fiscal stimulus in this year than the President had in his plan. So, please, let's not be mischaracterizing my position and suggesting I was for a tax increase at a time of economic slowdown. That is not the truth. That isn't my record. My record is absolutely clear. Through all of the records of the Budget Committee and the debate on the floor, both during the budget resolution and the tax bill, my record is as clear as it can be. I favored fiscal stimulus this year, more fiscal stimulus than the President proposed--not a tax increase, a tax cut. We are going to have a debate, and the debate is required because we have a serious problem developing. Let's have it in honest terms. Let's not mischaracterize people's positions. Mr. Daniels, don't mischaracterize my position. You know full well I have not called for a tax increase in times of an economic slowdown. You know full well that my record was calling for a tax cut--in fact, more of a tax cut in this year of economic slowdown than the President was calling for. It is true that over the 10 years of the budget resolution I called for a substantially smaller tax cut than the President proposed because I was concerned about exactly what happened. Let's turn to that because this is what set off this discussion. As we look at the year we are now in, fiscal year 2001, if we start with the total surplus of $275 billion and take out the Social Security trust fund surplus of $156 billion and the Medicare trust fund of $28 billion, that leaves us with $92 billion. The cost of the President's tax cut which actually passed the Congress wasn't what he proposed. It was substantially different than he proposed because it was more front- end loaded, $74 billion this year. And $33 billion of that is a transfer out of this year into next year--a 2-week delay in corporate tax receipts in order to make 2002 look better, because they knew they were going to have a problem of raiding the Medicare trust fund in 2002. What did they do? They delayed certain corporate receipts by 2 weeks--$33 billion worth--and put them over into 2002. That added to the cost of the tax bill. There is only $40 billion of real stimulus in this tax bill that is going to go out into the hands of the American people during this year. But the cost is $74 billion because of this cynical device they use to delay corporate tax receipts to make 2002 look better. As we go down and look at the cost of other budget resolution policies for this year--largely the bill that is on the floor right now, the supplemental appropriations bill for certain emergencies--and we look at possible economic revisions that their own administration has suggested will come--that is, we are not going to receive the amount of revenue anticipated--we then see that we are into the Medicare trust fund by $17 billion this year. That is what it shows for this year. We had distinguished economists testify before the Budget Committee. Based on what they said, next year we are going to not only be using the entire Medicare trust fund surplus but we are actually going to be using some of the Social Security trust fund as well, $24 billion next year; that is, if we take into account a series of other policy choices that are going to have to be made. That is the question I am raising. Mr. Daniels wants to change that into a discussion of having a tax increase this year. I don't know anyone who is advocating a tax increase this year. I am certainly not. I advocated a tax reduction. But we don't have a forecast of economic slowdown for the next 10 years. That is not the forecast of the administration. They are forecasting strong economic growth. That is their forecast. Yet with a forecast of strong economic growth starting next year, we see that we are into the Medicare trust fund and the Social Security trust fund next year. We have problems with the two funds in 2003 and 2004, and that is before a single appropriations bill has passed. This is not a question of the Congress spending more money and putting us back into the deficit ditch. That is not this situation. We are in trouble just based on the budget resolution that was passed--the Republican budget resolution, I might add. Their tax cut--the tax cut supported by this President, and the reduction in revenue that they themselves are predicting--we have trouble going into the Medicare and Social Security trust funds just on the basis of those factors: The budget resolution that they endorsed, the tax cut that they proposed and the President signed, and the economic slowdown that they are predicting. We are into the trust funds already. That is before the President's request for additional funding for defense. He has already asked for $18 billion for next year. That has a 10-year effect of over $200 billion. The question I am raising is, Where should that money come from? We are already into the trust fund before the President's defense request. Should that come out of the trust funds of Medicare and Social Security? Should we raise taxes to fund it? Should we cut other spending to fund it? Where should the money come from? Or, does the administration believe we should just go further into the Social Security and Medicare trust funds? I hope that is not what they believe because I think that would be a mistake. Again, this is all within the context of their forecast of a stronger economy, of a growing economy. Is that circumstance the right policy to fund the President's additional spending requests for defense and the right policy to take it out of the Medicare trust fund or the Social Security trust fund? I don't think so. I think that is a serious mistake. As I say, we are already in trouble. We are already into the trust funds before the President's defense request, before any new spending for education. Remember that the Senate just passed, almost unanimously, a bill that authorized more than $300 billion of new spending for education. It is not in the budget resolution. We can see that if we fund just a part of that--if we only fund $150 billion of it--that makes the situation with the trust funds more serious. This is before any funding for natural disasters. There is no funding for natural disasters in the budget. Yet we know we spend $5 billion to $6 billion a year on natural disasters. Should that funding come out of the Medicare and Social Security trust funds? That is exactly where we are headed. The question is, Is that the right policy? That is before the tax extenders are dealt with. Those are popular measures such as the research and development tax credit and the wind and solar energy credits. Some of them run out this year. We are going to extend them. Yet that is not in the budget. Is it the right policy to take the funds necessary to extend those tax credits out of the Medicare and Social Security trust funds? Because that is what we are poised to do. The alternative minimum tax--that now affects some 2 million taxpayers, but under the tax bill that has passed it is going to affect 35 million taxpayers--just to fix the part of the alternative minimum tax that is caused by the tax bill we just passed would cost over $200 billion to fix. That is not in the budget. Should that money come out of the Medicare and Social Security trust funds? Because that is what we are poised to do. I have said I do not think that is a good policy. I do not think we should pay for a defense buildup out of the trust funds of Social Security and Medicare. I do not think we should pay for additional education funding out of the trust funds. I do not think we should pay for natural disasters or tax extenders or the alternative minimum tax fix out of the Medicare and Social Security trust funds. Because we need to run surpluses there to prepare for the retirement of the baby boom generation. That is the money that is being used to pay down the publicly held debt. I think, as I have said, at a time of strong economic growth--which is what is in the forecast--as a policy we should not be using the Medicare and Social Security trust funds to fund other parts of governmental responsibility. I think that is a profoundly wrong policy. Any private-sector organization in America that tried to use the retirement funds of their employees to fund the operations of the organization would be headed for a Federal institution, but it would not be the Congress of the United States; they would be headed for a Federal prison because that is fraud, to take money that is intended for one purpose and to use it for another. We have stopped that practice. In the last year we stopped raiding the trust funds to use those moneys for other purposes. We have stopped it. We have used that money to pay down debt. That is the right policy. I hope very much we do not go back to the bad old days of raiding every trust fund in sight in order to make the bottom line look as if it balances. I suggest to my colleagues, using the Medicare trust fund or the Social Security trust fund for the other costs of Government is not a responsible way to operate. That is the point I have made. I do not advocate a tax increase at a time of economic slowdown. I want to repeat, my proposal that I gave my colleagues was for a substantial tax cut this year, fiscal stimulus, $60 billion of fiscal stimulus that I supported in this year. But we are not talking about an economic slowdown being projected by this administration for the next 10 years. They are projecting a strong return to economic growth. I just saw the Secretary of the Treasury, the top spokesman on economic policy for this administration, at a meeting overseas saying they anticipate a return to strong economic growth next year. That is their projection. That is their forecast. What I am saying is, if we are in a period of strong economic growth, it is not right to raid the trust funds of Medicare and Social Security for other purposes. It is just wrong. It should not be done. But that is exactly where we are headed. The record is just as clear as it can be. We are going to be into the Medicare trust fund and even the Social Security trust fund next year just with the budget resolution that has passed, just with the tax cut that has passed, and just with the slowdown in the economy that we already see. That is where we are. That is before any additional money for defense. That is before any additional funding for education. That is before any money for natural disasters or tax extenders or to fix the AMT problem. And that is before additional economic revisions we anticipate receiving in August from the Congressional Budget Office. When we factor in those matters, what we see is a sea of red ink, what we see is a very heavy invasion of both the Medicare trust fund and the Social Security trust fund. That is where we are headed. The question I am posing to my colleagues, and to this administration, is, Does that make any sense as a policy? I do not think so. I do not think this is where we want to go, especially given the fact that we know in 11 years the baby boomers start to retire and then our fiscal circumstance changes dramatically. We have to get ready for that eventuality. The first thing to get ready is not to raid the Medicare trust fund and the Social Security trust fund at a time of surpluses. That is just wrong. They can call me an antique fiscal conservative. They can call me somebody who is advocating medieval economics. I do not think so. I do not think this is antique fiscal conservatism. I think this is good old-fashioned, Midwestern common sense. You do not take the retirement funds of your citizens to fund the operation of Government. You do not take the health care funds of your people for other operations of Government. There is not a private-sector company in America that could do that. I think this is very clear, the circumstance we face. We are already in trouble just with the budget resolution that has passed, just with the tax cut that has passed, and just with the economic slowdown that is being forecasted in the next 2 years. The trouble only gets more severe, only gets deeper, when you factor in the President's request for a big increase in defense. I think it is fair to ask the President, and this administration, how do you intend to pay for it? Do you intend to use the money from the trust funds to pay for this big buildup in defense? Do you intend to use the Medicare and Social Security trust funds to pay for natural disasters? Do you intend to use the Medicare and Social Security trust funds to pay for the tax extenders? I think people deserve to know what their recommendation is. Mr. President, I will conclude as I began by saying I am not for a tax increase at a time of economic slowdown. That does not make good economic sense. The administration is not forecasting an economic slowdown next year or for the years to follow. They are forecasting strong economic growth. Yet the policies they have laid out and the plan they have put in place lead to huge, dramatic raids on both the Medicare and the Social Security trust funds each and every year for the next 9 years. I believe that is a mistake. I do not support that policy. I support, certainly, fiscal stimulus at a time of economic downturn. But when we have forecasts of strong economic growth, to build in a policy that says the way we pay for the operations of this Government is to take money from the Medicare trust fund and the Social Security trust fund--count me out. I don't care what name you call me, I don't want any part of it. I don't care if I am the only vote that says: I am not, at a time of economic growth, for using the trust funds of Medicare and Social Security to fund the other operations of Government. That is wrong. I believe it is wrong in every way. And I want no part of it. But that is where we are headed.

Mr. CONRAD. Typically, we would get it in July or August. We are hearing already from the Congressional Budget Office that they anticipate that the forecast will be somewhat reduced because economic growth is not as strong as was anticipated. That means we will have less revenue than was in the forecast. My colleague and I warned repeatedly that these 10-year forecasts are uncertain. Nobody should be counting on every penny to actually be realized. Some said to us in rejoinder: There is going to even be more money. I remember some of my colleagues on the Budget Committee saying they think the forecast is too low. I hope over time that will be the case. I hope the economy strongly recovers. I hope we have even more revenue. That would be terrific. But I don't think we can base Government policy on that. We certainly can't bet on every dime of the revenue that is in a 10-year forecast. The reason it matters so much is because if we look ahead--these are the years of surpluses we are in now--but, according to the Social Security, what happens, starting in the year 2016, we start to run into deficits in both Medicare and Social Security. Medicare is the yellow part of the bars; Social Security is the red. These surpluses that we now enjoy turn to massive deficits. That is why some of us think we have to save the Social Security trust fund for Social Security and the Medicare trust fund for Medicare, and that while that is necessary, it is not sufficient. We need to do even more than that to prepare for what is to come because we have a demographic tidal wave called the baby boom generation. They are going to turn these surpluses we have now into deficits. And if we start, at a time of surpluses, by raiding the trust funds, this situation becomes much worse, far more serious. I don't think name calling is going to carry the question here. They can accuse me of medieval economics or antique fiscal conservatism. I don't think it is either one to say you ought to reserve the trust funds of Medicare and Social Security for the purposes intended. You ought not to use the money to finance the other functions of Government, however worthy the other functions are. I don't think we should use the money at a time of economic growth, which is what the administration is projecting for next year and beyond. Yet we see, according to the most recent numbers, that we are already into the trust funds. That is before a single appropriations bill has passed the Senate, before a single one has passed. The question is, Are we going to dig the hole deeper? What are we going to do about the President's defense request? He wants $18 billion next year. The effect over 10 years is in the range of $200 billion from a request like that. That is not in the budget. Since we are already into the trust funds, it simply means that if we were to approve such a request, we would go deeper into the trust funds and Medicare and Social Security to defend or to finance that defense buildup. How are we going to pay for natural disasters? At a time of economic growth, should we be funding natural disasters out of the trust funds of Medicare and Social Security? I don't think so. Should we fund the tax extenders by taking the money out of the trust funds of Social Security and Medicare? I don't think so. They may call that antique fiscal conservatism. I will wear that as a badge of honor, that policy of protecting the trust funds of Medicare and Social Security. Call me any name you want. That is exactly the right thing to do. Certainly in a time of economic growth, you should not be using trust fund money to fund the other needs of Government. That is shortsighted. It is irresponsible. It is wrong. I am not going to support it. I believe at the end of the day the American people will not support it because they have common sense. They know this doesn't add up. They know if you have already got a problem, you don't dig the hole deeper before you start filling it in. That is just common sense. I yield the floor and suggest the absence of a quorum.

Mr. CONRAD. I am happy to yield.

Mr. CONRAD

Mr. CONRAD. I yield the floor and suggest the absence of a quorum.

Mr. CONRAD. Mr. President, I am pleased to rise today in support of S. 1077, the Supplemental Appropriations Act for Fiscal Year 2001. The Senate bill provides $8.477 billion in new discretionary budget authority, offset by the rescission of $1.933 billion of budget authority provided in previous years, for a net increase of $6.544 billion. As a result of this additional budget authority, outlays will increase by $1.291 billion in 2001. The Senate bill meets its revised section 302(a) and 302(b) allocations for budget authority and is well under--by more than $1 billion--those allocations for outlays. I commend Chairman Byrd and Senator Stevens for their bipartisan effort under unusual circumstances in bringing this important measure to the floor within its allocation and without resorting to unnecessary emergency designations. This bill provides important resources to our uniformed personnel, including funding statutory increases in pay and health care. In addition, it provides assistance to low-income families for heating and education. I urge adoption of the bill. I ask for unanimous consent that a table displaying the Budget Committee scoring of this bill printed in the Record.

Mr. CONRAD

Mr. CONRAD. If I could at this moment, on a separate matter, I send an amendment to the desk to the underlying bill. This amendment is to provide emergency funding for a situation we have just encountered on one of the Indian reservations in my State, the Turtle Mountain Indian Reservation. It is offset so it does not add to the overall cost of the supplemental. But we have found a situation that is extraordinarily serious on the Turtle Mountain Indian Reservation. Very briefly, I will just describe that and then end so my colleague from Missouri, who is seeking recognition, can gain the floor. Over 200 homes on the Turtle Mountain Reservation are infested with black mold; 40 percent of them that have been tested have the worst kind of black mold. This is throughout the structures. It is in the basements. It is running up the studs, in the ceilings, in the insulation. People in these homes are sick. We have had two infants die. People who are in the families and medical experts on the reservations believe their deaths are related to the conditions in these homes. It is because of extraordinarily wet conditions in that part of our State. We have had 7 years of wet conditions. It is as though these houses are in a sponge and the sponge is full and the houses are wicking up the surface water. In fact, if you look in the crawl spaces of these homes, they are filled with water and that water has found its way up through the entire structure and has created the perfect environment for this black mold growth. We have had the CDC there, the Corps of Engineers, and FEMA. It is a crisis situation that requires emergency housing for some 200 families. The tribal chairman told me he is about to move people into a school gymnasium because the conditions in these homes are so bad. I went there personally over the break. I can testify it is the worst situation I have seen, and I have dealt with black mold in our own home here in Washington, DC, in just one small area, where seven times our home flooded because the city sewer system could not handle torrential downpours here. We are the low spot on the block. It cost me $4,000 and three contractors to fix just a small part of one corner of our house. These are houses that have it throughout. The basements are loaded with black mold. It is in the studding. In fact you can see it in the beams across the ceilings of these homes. In every home we went into, people testified to the illnesses. In fact, the tribal chairman himself is ill from these circumstances. This is an emergency situation that simply must be addressed. Obviously, the committee could not have known about it because nobody knew about it. But I offer that amendment for that purpose, and I thank my colleagues.

Mr. CONRAD. Mr. President, very briefly, I thank Senator Byrd for introducing my amendment in the second degree to the amendment of the Senator from Ohio, and indicate to my colleagues the nature of the amendment. I think the Senator from Ohio is going in basically the right direction, but I do not think he is protecting both of the trust funds. I have offered, in the second degree, my amendment that would protect both the Social Security trust fund and the Medicare trust fund because I think both deserve protection. I think both are in danger. Unfortunately, as I said several moments ago with respect to where we find ourselves, after the budget resolution is passed, after the tax cut is passed, and with the anticipated reduction in the revenue forecast because of the slowdown in the economy, we see we are headed for being into the Medicare trust fund this year, the Medicare and Social Security trust fund next year and for all the years that follow. That is before any appropriations have passed. That is before the President's major request for additional defense spending. We are already in trouble. We are already headed for raiding the trust funds of Medicare and Social Security. So I am glad the Senator from Ohio has sent up an amendment. I have provided an amendment in the second degree that I think is stronger and provides additional protection and acknowledges that we have a responsibility not just to the Social Security trust fund but to the Medicare trust fund as well. Amendment No. 867

Mr. CONRAD

Mr. CONRAD. I rise for the purpose of bringing a point of order; that point of order will not be available until time has been used up on both sides.

Mr. CONRAD. Mr. President, this goes beyond the question of jurisdiction. This is the first test of fiscal discipline in this Chamber. Do we adhere to the Budget Act or do we abandon fiscal discipline? That is the question on this vote. Are we going to spend money that is not offset and thereby violate the allocation that has been made to this committee and exceed the allocation that has been made to this committee? I hope this body will stick with fiscal discipline and require we offset spending that is over and above the allocation to this committee. Spending, after all, is actually a transfer of funds to protect the Social Security trust fund. Mr. President, I bring, therefore, a point of order that the pending amendment violates section 302(f) of the Congressional Budget Act of 1974.

Mr. CONRAD. Mr. President, sections 502 and 503 of the bill help to ensure that the Social Security surplus is not affected by the costs associated with providing expanded patient protection. The bill extends customs user fees beyond 2003. That is all. The bill does not change the current nature, structure, or purpose of these fees. Customs operations will not lose funds as a result of the extension of these fees. However, the net effect of accepting the Grassley amendment would be that over $6 billion in spending contained in this bill would not be offset. That is spending that represents a transfer of funds to protect the Social Security trust fund. Deleting that offset would cause the Health, Education, Labor, and Pensions Committee to exceed its committee budget allocation. As a result, at the appropriate time I will raise the point of order.

Mr. CONRAD. Has all time been yielded back on the other side?

Mr. CONRAD

Mr. CONRAD. Mr. President, I am pleased to join Senator Larry Craig and 31 of our colleagues today in the introduction of the National Rural Development Partnership Act of 2001. This bill is similar to S. 3175 which Senator Craig and I sponsored last year during the 106th Congress. I am pleased that so many members from both sides of the aisle have recognized the importance of this measure by agreeing to join as original cosponsors. The National Rural Development Partnership had its origin in Executive Order 12720, issued by President George H. Bush in 1990. Through the issuance of this order, the U.S. Department of Agriculture was assigned the responsibilities of creating the partnership and providing assistance to States that wish to form rural development partnerships. The intent of the legislation is the same. At least 40 States have now formed partnership councils to coordinate rural development activities of Federal, State, local, and tribal governments with private and non-profit organizations, to address community and economic development needs, and to coordinate community and job building activities in rural areas. The funding for these activities has been voluntary from various Federal agencies, including the Departments of Health and Human Services, Labor, Transportation, Veterans, and state agencies. The U.S. Department of Agriculture has historically provided the largest single amount. The needs of rural America are great. The demands on the Federal budget are also great. If we are to make optimum use of hard-to-find Federal, State, local, and private resources in rural areas, it is imperative that we find ways to coordinate development activities. This legislation does that. It formally authorizes National Rural Development Councils and also authorizes appropriations for this program. The existing partnerships are doing an outstanding job in coordinating activities to enhance the quality of life and to build jobs in areas that have historically lacked high paying opportunities. While we recognize the continuing importance of the agriculture industry in many States, especially a State like North Dakota, we recognize that, unless we diversify our economy, we will continue to see out migration from the rural areas into the already crowded metropolitan areas of our country. Again, I am pleased to join this bipartisan effort.

Mr. CONRAD

Mr. CONRAD. Mr. President, I am pleased to join Senator Larry Craig and 31 of our colleagues today in the introduction of the National Rural Development Partnership Act of 2001. This bill is similar to S. 3175 which Senator Craig and I sponsored last year during the 106th Congress. I am pleased that so many members from both sides of the aisle have recognized the importance of this measure by agreeing to join as original cosponsors. The National Rural Development Partnership had its origin in Executive Order 12720, issued by President George H. Bush in 1990. Through the issuance of this order, the U.S. Department of Agriculture was assigned the responsibilities of creating the partnership and providing assistance to States that wish to form rural development partnerships. The intent of the legislation is the same. At least 40 States have now formed partnership councils to coordinate rural development activities of Federal, State, local, and tribal governments with private and non-profit organizations, to address community and economic development needs, and to coordinate community and job building activities in rural areas. The funding for these activities has been voluntary from various Federal agencies, including the Departments of Health and Human Services, Labor, Transportation, Veterans, and state agencies. The U.S. Department of Agriculture has historically provided the largest single amount. The needs of rural America are great. The demands on the Federal budget are also great. If we are to make optimum use of hard-to-find Federal, State, local, and private resources in rural areas, it is imperative that we find ways to coordinate development activities. This legislation does that. It formally authorizes National Rural Development Councils and also authorizes appropriations for this program. The existing partnerships are doing an outstanding job in coordinating activities to enhance the quality of life and to build jobs in areas that have historically lacked high paying opportunities. While we recognize the continuing importance of the agriculture industry in many States, especially a State like North Dakota, we recognize that, unless we diversify our economy, we will continue to see out migration from the rural areas into the already crowded metropolitan areas of our country. Again, I am pleased to join this bipartisan effort.

Mr. CONRAD

Mr. CONRAD. Mr. President, today I am introducing legislation to bring fairness to farmers in an important element of our trade policy. I am very pleased to be joined in this effort by the ranking member of the Finance Committee, Senator Grassley, who has been a true champion of this effort over the past several years. The legislation we are introducing today would amend the Trade Act of 1974 to make farmers eligible for Trade Adjustment Assistance, TAA, so that they can get assistance similar to that provided to workers in other industries who suffer economic injury as a result of increased imports. When imports cause layoffs in manufacturing industries, workers become eligible for TAA. Under TAA, a portion of the income these workers lose is restored to them in the form of extended unemployment insurance benefits while they adjust to import competition and seek other employment. When imports of agricultural commodities increase, though, farmers do not lose their jobs. Instead, the increased imports drive down the prices farmers receive for the crops they have grown. This drop in prices can have an impact that is every bit as devastating to the income of a family farmer as a layoff is to a manufacturing worker. In fact, it can be even more devastating. In many cases, the check that farmers get for all the hard work of growing crops or livestock for the year may not only leave the farmer with no net income, it may not even cover all the input costs associated with producing the commodity, leaving the farmer with thousands of dollars in losses. But, because job loss is a requirement for getting cash assistance under TAA, farmers generally don't get benefits from TAA when imports cause their income to plummet. Trade is very important to our overall economy, and trade is especially important to our agricultural economy. For example, we export over half the wheat grown in the United States. That is why, historically, agriculture has been among the leading supporters of trade liberalization. However, today many farmers believe their incomes are hurt by free trade, and they have nowhere to turn for assistance when this happens. Trade Adjustment Assistance for Farmers can not only provide badly needed cash assistance to the devastated agricultural economy, it can re-ignite support for trade among many family farmers. By giving farmers some protection against precipitous income losses from imports, this legislation will strengthen support for trade agreements. The Conrad-Grassley TAA for Farmers Act would assist farmers who lose income because of imports. Farmers would get a payment to compensate them for some, but not all, of the income they lose if increased imports affect commodity prices. The eligibility criteria are designed to be analogous to those that apply currently to manufacturing workers. First, just as the Secretary of Labor now decides whether there has been economic injury to workers in a given manufacturing firm by determining whether production has declined and significant layoffs have occurred, the Secretary of Agriculture would decide whether there has been economic injury to producers of a commodity by determining if the price of the commodity had dropped more than 20 percent compared to the average price in the previous five years. Second, just as the Secretary of Labor determines whether imports ``contributed importantly'' to the layoffs, the Secretary of Agriculture would determine whether imports ``contributed importantly'' to the commodity price drop. In order to be eligible for benefits under this program, individual farmers would have to demonstrate that their net farm income had declined from the previous year, and farmers would need to meet with the USDA's extension service to plan how to adjust to the import competition. This adjustment could take the form of improving the efficiency of the operation or switching to different crops. Farmers who are eligible for benefits under the program would receive a cash assistance payment equal to half the difference between the national average price for the year (as determined by USDA) and 80 percent of the average price in the previous 5 years (the price trigger level), multiplied by the number of units the farmer had produced, up to a maximum of $10,000 per year. In most years, the program would have a modest cost, as few commodities, if any, would be eligible. But in a year when surging imports cause prices to drop precipitously, this program would offer a cash lifeline to give farmers the opportunity to adjust to this import competition. This legislation sends a strong signal to farmers that they will not be left behind in our trade policy, that agriculture must be a priority. We need to be sure that we don't leave American farmers behind. I hope my colleagues will join me in supporting American family farmers as they compete in the global market place.

Mr. CONRAD

Mr. CONRAD. Mr. President, today I am introducing legislation to bring fairness to farmers in an important element of our trade policy. I am very pleased to be joined in this effort by the ranking member of the Finance Committee, Senator Grassley, who has been a true champion of this effort over the past several years. The legislation we are introducing today would amend the Trade Act of 1974 to make farmers eligible for Trade Adjustment Assistance, TAA, so that they can get assistance similar to that provided to workers in other industries who suffer economic injury as a result of increased imports. When imports cause layoffs in manufacturing industries, workers become eligible for TAA. Under TAA, a portion of the income these workers lose is restored to them in the form of extended unemployment insurance benefits while they adjust to import competition and seek other employment. When imports of agricultural commodities increase, though, farmers do not lose their jobs. Instead, the increased imports drive down the prices farmers receive for the crops they have grown. This drop in prices can have an impact that is every bit as devastating to the income of a family farmer as a layoff is to a manufacturing worker. In fact, it can be even more devastating. In many cases, the check that farmers get for all the hard work of growing crops or livestock for the year may not only leave the farmer with no net income, it may not even cover all the input costs associated with producing the commodity, leaving the farmer with thousands of dollars in losses. But, because job loss is a requirement for getting cash assistance under TAA, farmers generally don't get benefits from TAA when imports cause their income to plummet. Trade is very important to our overall economy, and trade is especially important to our agricultural economy. For example, we export over half the wheat grown in the United States. That is why, historically, agriculture has been among the leading supporters of trade liberalization. However, today many farmers believe their incomes are hurt by free trade, and they have nowhere to turn for assistance when this happens. Trade Adjustment Assistance for Farmers can not only provide badly needed cash assistance to the devastated agricultural economy, it can re-ignite support for trade among many family farmers. By giving farmers some protection against precipitous income losses from imports, this legislation will strengthen support for trade agreements. The Conrad-Grassley TAA for Farmers Act would assist farmers who lose income because of imports. Farmers would get a payment to compensate them for some, but not all, of the income they lose if increased imports affect commodity prices. The eligibility criteria are designed to be analogous to those that apply currently to manufacturing workers. First, just as the Secretary of Labor now decides whether there has been economic injury to workers in a given manufacturing firm by determining whether production has declined and significant layoffs have occurred, the Secretary of Agriculture would decide whether there has been economic injury to producers of a commodity by determining if the price of the commodity had dropped more than 20 percent compared to the average price in the previous five years. Second, just as the Secretary of Labor determines whether imports ``contributed importantly'' to the layoffs, the Secretary of Agriculture would determine whether imports ``contributed importantly'' to the commodity price drop. In order to be eligible for benefits under this program, individual farmers would have to demonstrate that their net farm income had declined from the previous year, and farmers would need to meet with the USDA's extension service to plan how to adjust to the import competition. This adjustment could take the form of improving the efficiency of the operation or switching to different crops. Farmers who are eligible for benefits under the program would receive a cash assistance payment equal to half the difference between the national average price for the year (as determined by USDA) and 80 percent of the average price in the previous 5 years (the price trigger level), multiplied by the number of units the farmer had produced, up to a maximum of $10,000 per year. In most years, the program would have a modest cost, as few commodities, if any, would be eligible. But in a year when surging imports cause prices to drop precipitously, this program would offer a cash lifeline to give farmers the opportunity to adjust to this import competition. This legislation sends a strong signal to farmers that they will not be left behind in our trade policy, that agriculture must be a priority. We need to be sure that we don't leave American farmers behind. I hope my colleagues will join me in supporting American family farmers as they compete in the global market place.

Mr. CONRAD

Mr. CONRAD. Mr. President, I rise today, joined by my colleagues Mr. Nickles, Mr. Breaux, Mr. Dorgan, Mr. Fitzgerald, Mr. Hatch, Mr. Helms, Mr. Hutchinson of Arkansas, Mr. Johnson, Mr. Kyl, Mr. Schumer, and Mr. Torricelli, to introduce important legislation to provide for a 10-year depreciation life for leasehold improvements. Leasehold improvements are the alterations to leased space made by a building owner as part of the lease agreement with a tenant. This is a common sense move that will help bring economic development to cities and towns around the country that want to revitalize their business districts. It will allow owners of commercial property to remodel their buildings to better meet the business needs of their communities--whether it's new computer ports and data lines for high- tech entrepreneurs, or better lighting and sales space for retailers. In actual commercial use, leasehold improvements typically last as long as the lease--an average of 5 to 10 years. However, the Internal Revenue Code requires leasehold improvements to be depreciated over 39 years--the life of the building itself. Economically, this makes no sense. The owner receives taxable income over the life of the lease, yet can only recover the costs of the improvements associated with that lease over 39 years--a rate nearly four times slower. This preposterous mismatch of income and expenses causes the owner to incur an artificially high tax cost on these improvements. The bill we are introducing today will correct this irrational and uneconomic tax treatment by shortening the cost recovery period for certain leasehold improvements from 39 years to a more realistic 10 years. If enacted, this legislation would more closely align the expenses incurred to construct improvements with the income they generate over the term of the lease. By reducing the cost recovery period, the expense of making these improvements could fall more into line with the economics of a commercial lease transaction, and more building owners would be able to adapt their buildings to fit the needs of today's business tenant. We have an interest in keeping existing buildings commercially viable. When older buildings can serve tenants who need modern, efficient commercial space, there is less pressure for developing greenfields in outlying areas. Americans are concerned about preserving open space, natural resources, and a sense of neighborhood. The current law 39-year cost recovery period for leasehold improvements is an impediment to reinvesting in existing properties and communities. Shortening the recovery period will make renovation and revitalization of business properties more attractive. That will be good not just for property owners, but also for the economic development professionals who are working hard every day to attract new businesses to empty downtown storefronts or aging strip malls. And it will be good for the architects and contractors who carry out the renovations. The broad appeal of this proposal is reflected in the roster of supporters we have attracted. The proposal has been endorsed by Building and Office Managers Association International; International Council of Shopping Centers; National Association of Industrial and Office Properties; National Association of Real Estate Investment Trusts; National Association of Realtors; American Institute of Architects; Real Estate Roundtable; Associated General Contractors; National Retail Federation; and International Franchise Association. I urge all Senators to join us in supporting this legislation to provide rational depreciation treatment for leasehold improvements. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. CONRAD

Mr. CONRAD. Mr. President, today, I am introducing the Rural Health Improvement Act of 2001. This proposal is the result of a bipartisan and bicameral effort. I am proud to be joined by Senator Thomas the lead cosponsor of the bill, along with Senators Daschle, Roberts, Johnson, Lincoln, Jeffords, Crapo, Rockefeller, Harkin, Dorgan, Wellstone, Bond, Helms, Cochran, Edwards, Hutchinson, Domenici, Burns, and Bingaman. I would also like to thank our House companions, led by Representatives Moran and McIntyre. In addition, I would like to thank the National Rural Health Association, the Federation of American Hospitals, the National Association of Rural Health Clinics, the American Hospital Association, and the College of American Pathologists for their support of this effort. Working together, I believe we are taking important steps toward improving access to health care in our rural communities. Rural health care providers are often forced to operate with significantly fewer resources than larger, urban facilities. In my State of North Dakota, rural hospitals often receive only half the Medicare reimbursement of their urban counterparts. For example, a rural facility in North Dakota receives approximately $4,200 for treating pneumonia, while Our Lady of Mercy in New York city receives more than $8,500. This funding disparity is simply unfair and has placed many rural providers on shaky ground. And in my State, if these facilities close, rural communities will be left without access to needed health care services. We simply cannot allow this to happen. According to the Medicare Payment Advisory Commission, MedPAC, continued funding shortfalls have resulted in rural providers having much tighter Medicare margins than their urban counterparts. Today, the average rural hospital operates with a slim 4.1 percent inpatient margin, compared to 13.5 percent for urban providers. When you look at overall Medicare margins, the situation is even more bleak, rural providers are working with an average negative 2.9 percent Medicare margin compared to 6.9 percent for urban hospitals. Our rural facilities cannot continue to provide high-quality services it they lose nearly 3 percent on every Medicare patient they serve. To address these problems, the bill I am introducing today would take three important steps to erase inequities in the Medicare inpatient hospital payment system and provide new resources to rural health care providers. As you know, it is nearly impossible for hospitals serving small, rural areas to take advantage of economies of scale realized by facilities located in larger communities. This problem is compounded by the fact that Medicare does not adequately account for the higher costs of serving low-volume populations. According to MedPAC, the result of these factors is that the majority of small facilities operate in the red. To ensure our smallest rural hospitals can keep their doors open, the Rural Health Care Improvement Act would provide a new, and much needed, extra payment to hospitals serving fewer than 800 patients per year. This new low-volume adjustment payment would provide up to 25 percent in additional funding to help rural providers cover inpatient hospital services. Second, this proposal would close the gap in payments hospitals receive for serving low-income patients. Today, hospitals are provided special payments to help cover the costs of serving the uninsured; these supplements are called disproportionate share payments, DSH. The problem is that under current law urban providers can receive unlimited DSH payments, while rural providers' add-ons are capped. There is no sound policy reason for this disparity. My bill closes this gap by allowing rural providers to also receive unlimited DSH payments. Third, this proposal would take steps to equalize another glaring Medicare disparity with no policy justification that provides larger hospitals a base payment amount 1.6 percent higher than rural hospitals. The Rural Health Care Improvement Act would address this disparity by increasing the rural hospital base payment amount to the level urban providers receive. I am happy to say that these improvements to Medicare's inpatient hospital reimbursement, combined with our rural health care efforts from last year, would significantly reduce the rural/urban payment gap by increasing rural providers' Medicare margins to approximately 11.8 percent. In total, these changes would place our rural hospitals on much sounder financial footing. In addition to Medicare changes, the Rural Health Care Improvement Act would also establish three new rural health care programs. Our legislation would allow hospitals to apply for up to $5 million to help cover the cots of repairing crumbling buildings. It is my hope these resources will help strengthen the infrastructure of our nation's rural hospitals. In addition, our proposal would make $100,000 per facility available to help rural hospitals update or purchase new technology. Often, with limited budgets, rural hospitals cannot afford to buy quality, up-to- date medical tools. This new program ensures rural citizens have access to modern and safe health care services. Third, our bill would provide funding to help establish Telehealth Resource Centers. Today, larger telehealth networks often work with fledgling networks to provide technical assistance. This grant program would provide new resources to support this collaboration and further expand telehealth services into the most remote, rural communities. Finally, the Rural Health Care Improvement Act also takes important steps to strengthen rural health clinics, RHCs. Today, there are more than 3,300 RHCs nationwide that provide health care to thousands of rural residents. However, while we recognize the importance of these clinics, we also know that more than 50 percent of RHCs are being significantly underpaid for their services, according to recent data. My bill addresses this funding shortfall by increasing rural health clinic payments by 25 percent. Thank you again to my Senate and House colleagues, as well as the organizations who worked with us, for your cooperation in developing this important health care proposal. It is my hope that this legislation will help to strengthen and sustain our nation's rural health care system. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. CONRAD

Mr. CONRAD. Mr. President, today, I am introducing the Rural Health Improvement Act of 2001. This proposal is the result of a bipartisan and bicameral effort. I am proud to be joined by Senator Thomas the lead cosponsor of the bill, along with Senators Daschle, Roberts, Johnson, Lincoln, Jeffords, Crapo, Rockefeller, Harkin, Dorgan, Wellstone, Bond, Helms, Cochran, Edwards, Hutchinson, Domenici, Burns, and Bingaman. I would also like to thank our House companions, led by Representatives Moran and McIntyre. In addition, I would like to thank the National Rural Health Association, the Federation of American Hospitals, the National Association of Rural Health Clinics, the American Hospital Association, and the College of American Pathologists for their support of this effort. Working together, I believe we are taking important steps toward improving access to health care in our rural communities. Rural health care providers are often forced to operate with significantly fewer resources than larger, urban facilities. In my State of North Dakota, rural hospitals often receive only half the Medicare reimbursement of their urban counterparts. For example, a rural facility in North Dakota receives approximately $4,200 for treating pneumonia, while Our Lady of Mercy in New York city receives more than $8,500. This funding disparity is simply unfair and has placed many rural providers on shaky ground. And in my State, if these facilities close, rural communities will be left without access to needed health care services. We simply cannot allow this to happen. According to the Medicare Payment Advisory Commission, MedPAC, continued funding shortfalls have resulted in rural providers having much tighter Medicare margins than their urban counterparts. Today, the average rural hospital operates with a slim 4.1 percent inpatient margin, compared to 13.5 percent for urban providers. When you look at overall Medicare margins, the situation is even more bleak, rural providers are working with an average negative 2.9 percent Medicare margin compared to 6.9 percent for urban hospitals. Our rural facilities cannot continue to provide high-quality services it they lose nearly 3 percent on every Medicare patient they serve. To address these problems, the bill I am introducing today would take three important steps to erase inequities in the Medicare inpatient hospital payment system and provide new resources to rural health care providers. As you know, it is nearly impossible for hospitals serving small, rural areas to take advantage of economies of scale realized by facilities located in larger communities. This problem is compounded by the fact that Medicare does not adequately account for the higher costs of serving low-volume populations. According to MedPAC, the result of these factors is that the majority of small facilities operate in the red. To ensure our smallest rural hospitals can keep their doors open, the Rural Health Care Improvement Act would provide a new, and much needed, extra payment to hospitals serving fewer than 800 patients per year. This new low-volume adjustment payment would provide up to 25 percent in additional funding to help rural providers cover inpatient hospital services. Second, this proposal would close the gap in payments hospitals receive for serving low-income patients. Today, hospitals are provided special payments to help cover the costs of serving the uninsured; these supplements are called disproportionate share payments, DSH. The problem is that under current law urban providers can receive unlimited DSH payments, while rural providers' add-ons are capped. There is no sound policy reason for this disparity. My bill closes this gap by allowing rural providers to also receive unlimited DSH payments. Third, this proposal would take steps to equalize another glaring Medicare disparity with no policy justification that provides larger hospitals a base payment amount 1.6 percent higher than rural hospitals. The Rural Health Care Improvement Act would address this disparity by increasing the rural hospital base payment amount to the level urban providers receive. I am happy to say that these improvements to Medicare's inpatient hospital reimbursement, combined with our rural health care efforts from last year, would significantly reduce the rural/urban payment gap by increasing rural providers' Medicare margins to approximately 11.8 percent. In total, these changes would place our rural hospitals on much sounder financial footing. In addition to Medicare changes, the Rural Health Care Improvement Act would also establish three new rural health care programs. Our legislation would allow hospitals to apply for up to $5 million to help cover the cots of repairing crumbling buildings. It is my hope these resources will help strengthen the infrastructure of our nation's rural hospitals. In addition, our proposal would make $100,000 per facility available to help rural hospitals update or purchase new technology. Often, with limited budgets, rural hospitals cannot afford to buy quality, up-to- date medical tools. This new program ensures rural citizens have access to modern and safe health care services. Third, our bill would provide funding to help establish Telehealth Resource Centers. Today, larger telehealth networks often work with fledgling networks to provide technical assistance. This grant program would provide new resources to support this collaboration and further expand telehealth services into the most remote, rural communities. Finally, the Rural Health Care Improvement Act also takes important steps to strengthen rural health clinics, RHCs. Today, there are more than 3,300 RHCs nationwide that provide health care to thousands of rural residents. However, while we recognize the importance of these clinics, we also know that more than 50 percent of RHCs are being significantly underpaid for their services, according to recent data. My bill addresses this funding shortfall by increasing rural health clinic payments by 25 percent. Thank you again to my Senate and House colleagues, as well as the organizations who worked with us, for your cooperation in developing this important health care proposal. It is my hope that this legislation will help to strengthen and sustain our nation's rural health care system. I ask unanimous consent that the text of the bill be printed in the Record.

Mr. CONRAD

Mr. CONRAD. I move to lay that motion on the table. The motion to lay on the table was agreed to.