Susan Collins

Ms. COLLINS

Ms. COLLINS. Mr. President, I ask unanimous consent that the text of the bill, the ``National Security Personnel System Act,'' be printed in the Record.

Ms. COLLINS

Ms. COLLINS. Mr. President, a vote in favor of the amendment offered by my colleague, Mr. Daschle, would prevent timely enactment of H.J. Res. 51. Swift passage of a clean bill allows the measure to move as quickly as possible to the President for his signature. Any delay will lead to a default on the national debt and the inability of our government to meet its financial obligations, including its obligation to pay Social Security checks on time. With the House adjourned for the Memorial Day recess, I am concerned that any further delay in enactment of the debt limit bill will cause Social Security beneficiaries to receive their monthly checks much later than scheduled. While I agree with Senator Daschle that the COLA should not be reduced, ironically, his amendment would immediately hurt those seniors for whom Social Security is a lifeline by delaying receipt of their checks. I would never vote to cut or tax Social Security benefits. With far too many seniors on limited budgets, I cannot support adoption of an amendment that could lead to a delay in the delivery of these vital benefits.

Ms. COLLINS

Ms. COLLINS. Mr. President, I rise today to discuss an amendment to the Defense Authorization bill which Senator Voinovich and I have submitted. Our amendment would, among other things, provide for the creation of a National Security Personnel System encompassing the Defense Department's 735,000 civilian employees. In April, the Department delivered to Congress a proposal to grant the Secretary of Defense authority to dramatically restructure the Department's civilian personnel system. The proposal was designed to provide the Department with the flexibility and agility it needs so it can respond to sudden changes in our security environment. To accomplish this objective, the Department's proposal would give Secretary Rumsfeld not only the personnel flexibilities Congress granted to the Secretary of Homeland Security, but also additional authority to unilaterally waive many personnel regulations. Of primary importance to the Department of Defense were the following three personnel flexibilities: First, the authority to replace the current General Schedule, 12-grade pay system with a performance-based pay system in which workers would no longer be awarded an automatic, across-the-board pay increase; second, the authority to conduct on-the- spot hiring for hard-to-fill positions; and third, the authority to raise collective bargaining to the national level rather than negotiating with more than 1,000 local units. Our proposal would grant the Secretary these authorities. It would provide the Secretary of Defense with the three pillars of his personnel proposal and thus would allow for a needed overhaul of an antiquated system. But we do not give the Secretary all he asked for; instead, we have attempted to strike the right balance between promoting a flexible system and protecting employee rights. Over the past 3 weeks, Senator Voinovich and I have repeatedly reached out to a wide variety of interested parties in an attempt to put together a bipartisan proposal. As of today, I believe we have made a considerable amount of headway toward forging a consensus. For example, in certain areas, such as employee appeals, I am not prepared to support granting the Secretary the authority to immediately do away with the Merit System Protection Board in order to create an internal appeals process. Instead, my amendment allows for a gradual transition from the MSPB to a new appeals process. During the transition, the Department will consult with MSPB while it develops and tests a new appeals process. I am also not prepared to grant the Secretary the authority to waive the collective bargaining rights of employees. Instead, my amendment places statutory deadlines of 180 days on the amount of time any one issue can be under consideration by one of the three components of the Federal Labor Relations Authority. This alone should make a significant difference in the timeliness of the bargaining process, and prevent the occasional case from dragging on for years. The bottom line is, we believe that our amendment would give the Secretary the authorities he needs to manage and sustain a civilian workforce some 735,000 strong. Our amendment would grant the administration's request for a new pay system, on-the-spot hiring authority, and collective bargaining at the national level, not individually with 1300 local union affiliates. In addition, our amendment would enable the Secretary to offer separation pay incentives for employees nearing retirement; to contract with individuals for services performed outside the United States in support of the Defense Department; to offer special pay rates for highly qualified experts like scientists, engineers and medical personnel; and to help mobilized Federal civilian employees whose military pay is less than their Federal civilian pay. The House Armed Services Committee has already included a personnel amendment in their own authorization bill. For that reason, I was dismayed to learn that our amendment was not deemed ``relevant'' to the underlying legislation, and therefore shall not be made part of the Senate's bill. But I have worked hard to find a consensus approach, and I don't intend to stop until this goal has been achieved. I believe that the House approach can be improved upon. This is why, on Friday, I plan to re-introduce this legislation as a free-standing bill and to hold a hearing on it the first week of June. Quite simply, I believe civil service personnel reform of this magnitude is too important an issue for the Senate to remain silent. I urge my colleagues to work with Senator Voinovich and me as we continue our efforts on this very important issue. In addition, I would like to thank Senators Warner and Levin for all the advice and input they have already provided. In addition to serving as ranking member of the Armed Services Committee, Senator Levin is a senior member of the Governmental Affair Committee, which I chair. As such, he brings expertise to the process from both perspectives. I hope that the bill I introduce on Friday will enjoy his support and that of the chairman.

Ms. COLLINS

Ms. COLLINS. Mr. President, our amendment addresses a practice known as ``contract bundling,'' which has become increasingly prevalent in recent years. An October 2002 report for the Small Business Administration that measured the trends and impact of bundling over the last decade concluded that: the number and size of bundled contracts issued by federal agencies has reached record levels; small businesses are receiving disproportionately small shares of the work on bundled contracts; although only 8.6 percent of contracts were bundled, bundled contracts accounted for 44.5 percent of the money spent through contracts from 1992-2001; large firms won 67 percent of all prime contract dollars and 75 percent of bundled contract dollars; and small firms won only 18 percent of prime contract dollars and 13 percent of bundled contract dollars. Moreover, the problem is getting worse. In 2001, 29,000 contracts were bundled government-wide, up eight percent from 2000 and 19 percent since 1992. Our amendment would require that DOD perform rigorous analysis on bundled contracts in excess of $5 million. It would require that alternatives be considered and that a determination be made that the benefits of bundling ``substantially exceed'' the benefits of the identified alternatives. Savings in administrative or personnel costs alone would not constitute a sufficient justification for consolidation ``unless the total amount of the cost savings is found to be substantial in relation to the total cost of the procurement.'' Our amendment focuses on DOD where, the SBA report notes, ``Bundling is rooted.'' Although bundling rates occur at levels as high or higher at the General Services Administration, Department of Health and Human Services, Social Security Administration, and Treasury, ``the high level of spending by the Army, Navy, Air Force and the Office of the Defense Secretary focus attention on defense contracts as the primary source of bundling.'' This amendment is about more than just allowing small businesses to compete for contracts on a level playing field; it is about preserving our government's contractor base. According to Office of Federal Procurement Policy Administrator Angela Styles the issue is a dramatically reduced contractor base, which has created a lost opportunity cost caused by choosing among fewer firms with fewer ideas and innovations to deliver products and services at lower prices. Further, she notes that when small businesses are excluded from federal opportunities through contract bundling everyone, including our agencies, small businesses, and the taxpayers lose. Our amendment sets in place a higher level of scrutiny than exists under current law and will be a good start in beginning to reverse a problem that has been building up over the last decade. For that reason, small business advocates such as the National Federation of Independent Business and the National Black Chamber of Commerce support it. This amendment will make a real difference for small business. One small business owner wrote to me in support of my amendment because, she said, bundling had made contracts of the size they could hope to obtain disappear. She had, she wrote, been knocking on the doors at the Department of Defense for years, without any success due to bundling. Another small business owner wrote to me that bundling had essentially created a monopoly in his line of business. Even small businesses that have a federal preference in contracting under various programs have seen the beneficial effects of the preferences all but wiped out due to bundling. One woman business owner pointed out in a letter to me what bundling truly is: a shield that keeps large companies from having to compete with smaller firms. Such a state of affairs is ultimately unhealthy for a federal procurement system that relies primarily upon vigorous competition to keep prices low and the quality of goods and services high. I am pleased that our amendment has received the support of the distinguished chairman and ranking member, and that it will become part of the defense bill the Senate passes today or tomorrow.

Ms. COLLINS. I thank the Senator from Missouri for his hard work. He has been an advocate for attacking this problem for some time and it has been a pleasure to work with him. One woman business owner really summed up what this is all about. She said, bundling is a shield that keeps large companies from having to compete with smaller firms. Such a state of affairs is ultimately unhealthy for the Federal procurement system. We rely on a vigorous competition to keep prices low and to ensure we are purchasing high quality goods and services. This amendment is going to make a difference in our procurement system and a difference for small businesses. For that reason, it has been strongly endorsed by the National Federation of Independent Businesses and the National Black Chamber of Commerce. I end my remarks by thanking the distinguished chairman of the committee and the ranking member for their cooperation and assistance. I ask for the adoption of the amendment.

Ms. COLLINS. Mr. President, my colleague from Oregon, Senator Wyden, and I have offered this amendment that will pull back the curtain on government contracts to rebuild post-war Iraq, one of the most ambitious reconstruction projects since World War II. The government already has awarded numerous contracts towards this purpose. These contracts provide for an enormous scope of goods and services ranging from capital construction to the administration of key air and sea port facilities to the rebuilding of Iraq's education and health systems. One contract even provides for such fundamentals as teaching local leaders about the basics of the democratic process. In all, billions of Federal taxpayer dollars are being spent. It is Congress's job to ensure that they are spent wisely and fairly. Our amendment would ensure that the basic facts regarding these and other contracts for the rebuilding of Iraq are publicly available. For those contracts that have been awarded outside of the usual process of full and open competition, our amendment would require that, within 30 days of entering the contract, the contract's price, the scope of the work to be performed, the contractors asked to bid, and the criteria by which they were chosen must be made known, through publication in the Federal Register. In addition, the agency head also would need to make publicly available the justification for awarding the contract on a basis less than the full and open competition standard. These provisions have become necessary because of the way in which Federal agencies contracting for goods and services in Iraq have been awarding these contracts. Not a single Iraq reconstruction contract has been awarded on the basis of ``full and open competition'' embodied in the 1984 Competition in Contracting Act, whereby interested parties are notified and given a chance to bid. The rationale for this standard was not only to provide basic fairness for all potential bidders, but also to reassure the public that their tax dollars were being spent wisely and in the public interest. Instead, these contracts have either been awarded on the basis of limited competition, where the bidders are handpicked, or, in some cases, without any competition at all. The agencies involved generally have singled out a small number of bidders based on the agency's preconceived notions about the bidders' ability to perform the contract. Such a process, we are told, was necessitated by the short time frame in which the contracts had to be planned and awarded. Such a process, however, necessarily raises questions regarding fundamental fairness and impartiality and whether tax money is being spent in a responsible manner. Because we don't have all of the facts regarding these contracts, speculation has arisen over their content, their price tags, and the basis of their awards. For example, I was distressed to learn that a sole source contract entered into by the United States Army Corps of Engineers called for much more work to be performed than was initially indicated. This is because the Corps only released the information that it deemed relevant. Under our amendment, the public will be able to judge for itself whether the government was justified in awarding a contract bundle on less than full competition. The public deserves no less. At the same time, we have included in our amendment provisions to ensure that classified material remains safe and is provided only to congressional committees with oversight authority. It is my hope that the publication of the key information in these contracts will serve some of the same goals as the Competition in Contracting Act, such as reassuring the public that reconstruction in Iraq is being done in a fair manner and in furtherance of the public interest. Alternatively, keeping these justifications secret defeats the legal safeguards that protect full and open competition. Further, it breeds what may be unjustified fear that the contracting process is being run for the benefit of a select few rather than the Iraqi people. Ensuring that this information is available to the public will help maintain confidence that our work in rebuilding Iraq is being undertaken in a manner best calculated to advance the well-being of the Iraqi people, and will help dispel criticisms that the process by which these contracts are being awarded is unfair or unjustified. I want to thank the distinguished chair and ranking member of the ASC for working with Senator Wyden and me on this amendment, which I understand will be made part of the manager's package.

Ms. COLLINS. I thank the Chair. Mr. President, our amendment addresses an increasing practice in the Department of Defense to bundle contracts to award a larger contract. The problem with that is it disadvantages smaller companies that cannot bid on a giant contract but would be perfectly able to responsibly perform the work if the contract were broken up into smaller segments. Contract bundling has become increasingly prevalent in recent years. In fact, it has reached record levels. Contract bundling is up by 19 percent since 1992, and the result of this is the shutout of many small firms from doing business with the Federal Government. Our amendment would require that the Department of Defense perform rigorous analysis on bundled contracts in excess of $5 million. It would require that alternatives to bundling be considered and that a determination be made that the benefits of bundling the contracts substantially exceed the benefits of identified alternatives. We have focused on DOD because the Small Business Administration indicates that ``bundling is rooted at the Department of Defense.'' The Collins-Talent-Hutchison-Snowe amendment is necessary because bundling has had an unfortunate effect on the U.S. Government contractor base. According to the Office of Federal Procurement Policy Administrator Angela Styles: This issue is a dramatically reduced contractor base, and the mounting lost opportunity cost of choosing among fewer firms with fewer ideas and innovations to deliver products and services at lower prices. She noted: The negative effects of contract bundling over the past 10 years cannot be overestimated. . . . Not only are there fewer small businesses receiving Federal contracts, but the Federal Government is suffering from a smaller supplier base . . . when small businesses are excluded from Federal opportunities through contract bundling, our agencies, small businesses, and taxpayers lose. That is exactly the case. When contracts are bundled so that only a few large firms can bid on them, the United States does not get as good a deal. The United States Government is not taking advantage of the many innovative small firms that are capable of doing the work for the Federal Government if the contract was awarded in smaller amounts. This is a matter of making sure we have a healthy industrial base, that we have as many firms competing as vigorously as possible to do work for the Federal Government, and of making sure our smaller companies have a fair shot at competing for Federal contracts. This amendment will make a real difference for our small businesses. I yield to the Senator from Missouri.

Ms. COLLINS. Mr. President, I ask unanimous consent that the 10 minutes we have been allocated be allocated among the three of us as follows: 3 minutes for the Senator from Maine, 3 minutes for the Senator from Missouri, 3 minutes for the Senator from Texas, and 1 final minute for the Senator from Maine.

Ms. COLLINS. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Ms. COLLINS. Mr. President, on behalf of myself, Senator Talent, Senator Hutchison, and Senator Snowe, I send an amendment to the desk and ask for its immediate consideration.

Ms. COLLINS

Ms. COLLINS. Mr. President, if I could respond to the Senator from Virginia, the chairman of the committee, we have been working for many weeks. We do have a draft. We have had come forth from the other side of the aisle some additional suggestions we are looking at and eager to incorporate. I personally think it would be good to add something to this bill because I think it would be good for the Senate to go on record with its own version which differs from what was done in the House. So I think it strengthens the position of the Senate in conference for us to put forth our own proposal since, as the Senator points out, this issue is going to arise in conference given the House provisions. So it is not as if it is going to be left to another day. We have legislative language drafted. We have been meeting extensively during the last few weeks. On Friday we received some additional suggestions which we are looking at right now. I cannot predict for certain--I realize time is short--whether there will be bipartisan support for the final version, but there will be a version I am happy with. I do not know if that will be sufficient, however.

Ms. COLLINS. I do. The Senator from Virginia has put it very well, and I am eager to craft legislation--and believe we have done so--that would give the Secretary the flexibility he needs for the Department to have an efficient, effective, and fair personnel system for the civilian employees. I note, however, that the Department has some 700,000 civilian employees. So we need to make sure we are doing this in an appropriate manner. Some of the provisions submitted by the Secretary go far beyond the authority that we gave to the new Secretary of Homeland Security. So we are looking at it, and we have come up with draft legislation language that we are sharing and have been sharing with the staff of the Senator from Virginia and with other interested parties. My hope-- it may be a vague hope--is that we could have a consensus document that would provide bipartisan support and the support of some of the employee organizations. I don't know whether that is going to be the case. But that certainly is my hope. If I might make one other point, I simply point out the obvious to all of us--that this legislation is the train moving through at this point in time. The probability of its passage by the Chamber is quite high. These provisions, as the Senator says, are of great concern to those groups, whether they are union or other groups, that act on behalf of the very courageous and wonderful cadre of civilians without which we couldn't have a defense. The likelihood of a separate bill moving forward at a later point in this session has a question mark, which is obvious to my colleague from Maine and my colleague from Michigan. To the extent we can reach some consensus and attach it to this bill is the extent to which maybe we can make some progress at this point in a timely likelihood of making progress at this point in time. I yield the floor.

Ms. COLLINS. I thank the chairman. And again I thank the Senator from Massachusetts.

Ms. COLLINS. Madam President, if I could respond to the inquiry of the distinguished chairman of the committee, during the past several weeks, since the Secretary sent his plan to the Hill, my staff, in close cooperation with other staff members on the Committee on Governmental Affairs, including Senator Levin's committee staff and others, have been working to see if we could reach consensus on a proposal. Frankly, I believe the Secretary's initial proposal goes too far. It is overreaching. But there are certain authorities that would be extremely helpful to the Secretary as he attempts to make sure we can reward civilian employees with higher pay and streamline the personnel process. We came up with a proposal. We are still assessing the import that the proposal might have. In addition, there may be some procedural barriers in our ability to bring forward the amendments. So we are continuing to work closely to see if we can come up with a consensus. I hope to have an answer shortly for the chairman.

Ms. COLLINS. Madam President, I thank the Senator from Massachusetts, who, as always, is extremely gracious, and the Senator from Michigan, for allowing me to proceed, and the chairman of our distinguished committee. Madam President, I rise today in support of the Fiscal Year 2004 National Defense Authorization Act. As a member of the Senate Armed Services Committee, I would like to begin by expressing my appreciation to the chairman and the ranking member for their extraordinary efforts in producing this bill. The mark-up of this legislation was conducted in a true spirit of cooperation. While certain portions of this bill engendered spirited debate, the points of controversy are relatively few. It is tribute to both Senator Warner and Senator Levin that we completed our mark-up in a remarkably short period of time. This legislation includes authorization for the vital resources that the young men and women in our military require in defending our Nation. With terrorist attacks continuing across the globe, and our troops helping the Iraqi people to rebuild their country, this legislation will ensure that our military has the tools necessary to fight, and ultimately win, the war against terrorism. Since joining the Armed Services Committee, I have been a member of the Personnel Subcommittee, which has jurisdiction over military pay, housing, and health care. In recent years, we have made tremendous progress in improving the quality of life not just for our soldiers, sailors, airmen, and marines, but also for their families. That is important. The old saying goes: we recruit the soldier but we retain the family. When our troops deploy, it's important that they have the peace of mind that comes from the knowledge that their families have good housing, quality health care, and a support network to help address any problems. I am proud that the legislation before us builds on the efforts that we have made in previous years to ensure that our troops are the best paid, best housed, and best equipped in the world. It includes a 3.7 percent across-the-board pay raise for all uniformed personnel, and incorporates a targeted pay raise ranging from 5.25 percent to 6.25 percent for mid-career service members. We want to make an extra effort to retain their expertise. It also authorizes a significant increase in the rate of family separation allowance, from $100 per month to $250 per month. There are two provisions affecting pay and benefits that I believe are particularly important. Last month, along with the majority leader and a number of my colleagues, I traveled to South Korea to meet with our troops at Osan Air Force Base and in the Demilitarized Zone. I was privileged to speak with two of my constituents, SS Jennifer Meuth of Thomaston and MS Jay Mason of China. As I always do when I meet with our troops, I asked if there was anything that the Congress could do to support them. Without hesitation, both of them asked me to support the establishment of Assignment Pay for troops stationed in Korea. Our troops endure many hardships as part of their service in Korea. Most are separated from their families, the housing is often substandard, and they live under the constant threat of North Korean aggression. I am proud to say that the legislation before us mandates the payment of $100 per month in assignment incentive pay to the brave men and women serving our Nation in Korea. It is a tribute to the leadership of Senator Saxby Chambliss and Senator Ben Nelson, who lead the Personnel Subcommittee. Most of all, I want to thank Sergeants Meuth and Mason for bringing this important issue to my attention. The second provision that I want to highlight is a bill that I introduced this year calling for an increase in what is called the military death gratuity. Currently, when a servicemember is killed while on active duty, his or her family receives a payment of $6,000, usually within days after the death. While other long-term financial assistance is provided to support the family, this payment helps the survivors cover any short term expenses. The bill I introduced earlier this year, S. 704, would increase this amount to $12,000 and make it retroactive to September 11, 2001. So the families of those troops killed in Afghanistan will receive this additional benefit. The last time the Congress raised the death gratuity was during that last gulf war over a decade ago. Recognizing the importance of this issue, the Senate moved very quickly earlier this year to pass my legislation as a free-standing bill. The House, however, has not yet acted upon it. I am grateful to the Chairman of the Personnel Subcommittee, Senator Chambliss, for incorporating this increase in the death gratuity in the Defense Authorization bill. I would also like to express my congratulations to Senator Talent, the new Chairman of the Seapower Subcommittee. The shipbuilding portion of this year's Defense Authorization represents a significant turning point. In previous years, the budget for ship construction proposed by the Department of Defense has been inadequate to sustain a large enough fleet to meet our Nation's requirements. The legislation before us today recognizes the challenge, and provides critically needed increases in shipbuilding funds. It authorizes the construction of seven new ships, including three DDG-51 destroyers. I am pleased to report that two of those destroyers will be built at the world famous Bath Iron Works in my home State of Maine. Certainly, it will take more than 1 year's progress to address years of funding shortfalls. But this bill surely represents significant progress. The committee also recognized the importance of modernizing the DDG- 51 destroyers currently in the fleet. At my request, $20 million has been allocated for a DDG-51 modernization program. This funding will be used to examine ways to improve the effectiveness of these ships, while at the same time reducing their manpower requirements. That in turn will lead to lifetime savings for these ships. It will allow the Bath Iron Works to explore initiatives aimed at ensuring that these destroyers continue to be the backbone of our surface combatant fleet. The seapower portion of the bill also includes $248 million for the refueling and overhaul of the USS Jacksonville, a nuclear submarine that had been scheduled to be decommissioned by the Navy. If this were allowed to occur, the problem is that our submarine force would fall below the levels recommended by the 2001 Quadrennial Defense Review. Today, the requirements for submarines is increasing, especially given the growing role that they play in intelligence gathering. This refueling, which will take place at the Kittery-Portsmouth Naval Shipyard, will add years of useful life to the Jacksonville. It is good news for the Navy, and it is good news for the skilled workers at the shipyard. Without question, some aspects of the bill reported from the Armed Services Committee are somewhat controversial, and I expect that they will be debated fully here on the Senate floor. But the overwhelming majority of this bill is the product of bipartisan consensus. There is an agreement that we should spare no resources in ensuring that the brave young men and women who proudly wear the uniform have the highest quality training available, the most advanced equipment in the world, and receive the best benefits we can offer. I am proud to say this bill accomplishes those goals. Again, I express my appreciation to our chairman and our ranking member for their hard work and for their dedicated leadership. I am very proud to serve with them.

Ms. COLLINS. I was trying to defer to my more senior colleague but, of course, I would be delighted to have the opportunity to proceed.

Ms. COLLINS

Ms. COLLINS. I would like to engage the distinguished chairmen of the Senate Budget and Finance Committees in a colloquy on the Budget Committee chairman's dividends amendment. As my colleagues are aware, no provision of the economic growth package is more important to me than my amendment providing $20 billion in short-term fiscal relief to States and localities. If we are to kick-start our economy through Federal tax relief, we must help our States avoid raising taxes and slashing spending. And in the process of passing this bill, the last thing we can afford is to exacerbate the States' fiscal woes. I am therefore concerned that the language of the Budget Committee chairman's dividends amendment does not adequately protect States from revenue loss. As you know, I cannot vote for a dividends amendment that would lessen the benefits of my fiscal relief provision without an assurance that it would be fixed in conference. I therefore seek the assurances of the distinguished Budget and Finance Committee chairmen that they will do all they can in conference to protect States from revenue loss associated with any dividends provisions in the final bill.

Ms. COLLINS. I thank my distinguished colleagues, both for their assurances and for their leadership in putting together a growth package that can stimulate the economy and create new jobs.

Ms. COLLINS

Ms. COLLINS. Mr. President, this bipartisan amendment would provide $20 billion in much needed fiscal aid to the States. Forty-nine States are struggling with budget deficits. This won't relieve them of the obligation to make painful budget choices, but it will recognize the difficult financial strains under which they are operating. Half of the money would go for an increase in the FMAP rate under Medicaid. The other half would be used for a flexible grant program that would be allocated between the States and localities. I yield the remainder of my time in favor of the amendment to the Senator from Nevada, if he wishes to speak.

Ms. COLLINS

Ms. COLLINS. I thank the Chair and I yield the floor.

Ms. COLLINS. I would like to add one other point of clarification on this provision. By no means do we intend to prohibit States from using the revenuesharing portion of this amendment on services or other spending that the State cut in its most recent budget. If a State wanted to use a portion of these funds to restore all or part of a vital service it was forced to eliminate or reduce, it should be allowed to do so. We know that the State is the best judge of how to prioritize these funds, not the Federal Government. Madam President, I thank my colleague and close friend, the Senator from Nebraska, for his leadership and for making such an excellent case. I know there are others who are waiting, so I will conclude the debate on this by making just one final point. Forty-nine States are facing severe budget shortfalls. This is not an isolated problem. It is a problem that affects all but one State. This isn't a case where States have been fiscally irresponsible, spending wildly. In fact, the States are coping with the demand for services and a decline in revenues at the same time. It is not something they brought upon themselves. That is why we should step in temporarily--these are not permanent assistance programs--to provide help. It will help ensure that 1.7 million Americans will not lose their Medicaid services. It will help ensure that they might just have a little bit of help as they make the painful, difficult choices that are necessary to close their budget gap. It will help ensure that it has a direct stimulative effect, which is, after all, the entire purpose of this package. It is to get our economy growing again and create good jobs. Fiscal aid to States will help to achieve that critical goal. I want to take this opportunity to ask for the yeas and nays on my amendment.

Ms. COLLINS. I thank my colleague for that valuable clarification. Let me ask my colleague from West Virginia about another question that has come up regarding the impact of our proposal on the baseline for future Medicaid calculations. There is some concern that this provision might increase FMAP rates in future years. Would you clarify this issue for our colleagues?

Ms. COLLINS. I would like to ask my friend from Nebraska how he would respond to a valid question that has been raised about our amendment: Will the increase in the FMAP, Federal share of Medicaid, be a temporary one?

Ms. COLLINS. Madam President, I thank the distinguished chairman of the committee for his remarks. I thank the Senator from West Virginia for his eloquent statement, and I now yield time to the other great leader on this issue, my colleague and friend, Senator Ben Nelson of Nebraska.

Ms. COLLINS. Madam President, I was beginning with my thank-yous to the distinguished chairman of the Finance Committee, who has worked so hard to produce not only the bill on the floor but also has worked very closely with the sponsors of this amendment to come up with a proposal for fiscal aid to the States that I believe is carefully drafted and is going to make a real difference to the 49 States that are struggling to close budget shortfalls. I am pleased to have a number of cosponsors, including Senators Rockefeller, Ben Nelson, Smith, Schumer, Coleman, Clinton, Murray, and Wyden. But I particularly want to pay tribute to Senator Ben Nelson and Senator Rockefeller, who have worked night and day with not only Senator Grassley and myself but others interested in this issue to forge a compromise that I think will result, at the end of the day, in the conference report with $20 billion in much needed fiscal relief for our States. Half of this funding would be through a temporary increase in the Federal Medicaid share, to ensure that States can continue to protect millions of vulnerable Americans who rely on the Medicaid program as part of the health care safety net. The attacks of September 11, coupled with the subsequent recession and resulting unemployment, have placed tremendous and unanticipated strains on State budgets. The States are, after all, our partners in providing health care, education, and other essential services to the citizens of this Nation. They are, however, facing a dramatic and unexpected decline in government revenues at precisely the time when the demand for government services has never been higher because of a lagging economy. States from Maine to Nebraska to West Virginia to Alaska are facing their most serious budget shortfalls in 50 years. States face deficits of between $70 and $85 billion for the next fiscal year, which begins in most States on July 1. They also face deficits of $26 billion trying to close the books on the current fiscal year. Moreover, while the President's proposal for excluding dividends from taxation would spur needed investment in American businesses, it would cost the States nearly a billion dollars over the next 3 years. That strengthens, to me, the case for providing aid to the States. Let me tell you what the State of Maine, my home State, is facing. The State of Maine faces a budget shortfall for this year and the next of approximately $1.2 billion. Let me put that in perspective. The entire budget for the State of Maine is only $5.3 billion, which means it faces a shortfall of approximately 20 percent. Imagine if the Federal Government were struggling with a budget shortfall of 20 percent. It would have to close a $440 billion budget gap, and it would have to do so without borrowing a single dime. That summarizes the dilemma facing our State. Forty-nine States have balanced budget requirements. They have to balance their budgets. They cannot print more money. They can't run temporary deficits. They can't borrow the money to close the deficit. As a consequence, States have been cutting spending, increasing taxes, using rainy day funds, and delaying capital projects. They are doing whatever they can because they must balance their budgets. All of the States have cut programs--even programs that provide lifelines to our most vulnerable citizens. At a time when the number of people without health insurance is climbing, 49 States have either already cut their Medicaid Programs or are planning to do so. Medicaid provides a critical health care safety net for 44 million of our most vulnerable low-income citizens, including 218,000 in my State of Maine. States, as a result of trying to balance their budgets, are slashing Medicaid Programs. As a consequence, approximately 1.7 million Americans are at risk of losing their health insurance. That means they are going to be added to the growing number of 41 million Americans lacking health insurance. Moreover, not only is our proposal compassionate, not only will it help the most vulnerable Americans keep their health care services, but our proposal makes sound economic sense. Putting money into the hands of States is a great way to stimulate economic growth in conjunction with the tax provisions of this package. As States cut spending and raise taxes to balance their budgets, they weaken the overall economy. A recent Goldman Sachs analysis underscores the stimulative effect of State fiscal relief. The report notes that ``State governments could provide significant support to the economy without large long-term budget cuts, reducing the need for these jurisdictions to raise taxes, and cut spending.'' After all, if we cut taxes here in Washington only to have taxes increase in State capitals across the country, we will wipe out some of the good we are trying to do by cutting Federal taxes. I am not saying Congress should bail out the States. I am not saying States should not have to make hard choices. I am not saying States should not balance their budgets. The States are going to have to make hard, painful choices, even with the $20 billion we are proposing to assist them. The nature and the severity of the fiscal crisis facing our States has convinced me that we simply have to help them. The consequences are too dire otherwise, and too many vulnerable low-income American families will suffer if we do not step in and lend a helping hand. I am encouraged that the economic stimulus package approved by the Senate Finance Committee authorizes temporary fiscal relief to the States. As the distinguished chairman has indicated, tonight we are deciding how to fill in the blanks and how that help should be allocated. We focus particularly on Medicaid because of our concern about the impact of State budget cuts on low-income families in America. But there is another reason it makes sense to target one-half of the assistance to the Medicaid Program. That is that Medicaid is the fastest growing component of State budgets. While State revenues are stagnant, or declining in most States, Medicaid cuts are increasing at a rate of more than 13 percent a year. That is why States have no choice but to look to the Medicaid Program. If you look at home State budgets, the vast majority of State spending is for education and Medicaid. If we want to help protect low- income Americans, the best thing we can do is to approve an increase in the Federal match for the Medicaid Program. As to the State of Maine, our amendment would mean $116 million over the next 2 years for health care and other services that will help our most vulnerable Americans. There is another advantage to using the current Medicaid structure-- what is known as the Federal Medicaid matching rate, or FMAP. That is, the States don't have to take any new legislative action or establish any new administrative structures in order to use these additional Federal matching funds. They can go straight into the Medicaid Program. The remaining $10 billion could be used by States and local governments to fund education or job training, health care or other social services, transportation or other infrastructure needs, and law enforcement or public safety. In other words, we provided a great deal of flexibility for that remaining $10 billion. Our amendment would allocate $4 billion of those funds directly to counties and local governments. Our amendment is strongly supported by a wide range of health care groups, which I will submit as part of my formal statement in the interest of time. The support for our proposal--the Collins-Rockefeller-Nelson-Smith, et al, amendment--underscores the critical importance of providing assistance to States right now. Now is when they need it. Now is when we must act. Congress is most effective when it stands arm in arm and not toe to toe with our partners, the States. Our States face a fiscal crisis of expanding dimension. We need to help, and this bipartisan, carefully crafted amendment is the critical step forward in doing just that. I hope we will have a strong bipartisan vote for this important amendment. It is similar to proposals that my colleagues and I advanced last year and this year which garnered the overwhelming support of the Senate. Now we can make sure that it happens. I would like to yield at this time to the Senator from West Virginia who has been stalwart in arguing for fiscal relief for the States. It has been a great pleasure to work with him. I yield to him as much time as he needs out of my time.