Phil English

Mr. ENGLISH

Mr. ENGLISH. Mr. Speaker, I want to thank the gentlewoman. I want to rise today not only to mark this historic day for Medicare beneficiaries because today, for the first time since the program's inception, Medicare, through a discount card, will be providing real relief to seniors who struggle to pay for their prescription medicines. I want to acknowledge that, but I also want to especially acknowledge the efforts of the gentlewoman as chairman of the Subcommittee on Health for making this legislation possible. I am very proud to have been part of the team that helped put this legislation together and see it through to the end; and I am also glad to be on the floor tonight, having heard some of the extraordinary claims from a number of Members who consistently voted against prescription drug benefits for seniors. They are now trying to run down the program that we put together, we fit into a budget, and we got passed in the House. The record shows that they did not offer a credible alternative, they did not offer a budget that they could fit it into, and they were talking a lot about seniors, but not delivering. The discount card program that was created under the Medicare reform bill that we passed will also ultimately create a prescription drug program that will be available by 2006 for every Medicare beneficiary. But what we have done, which is so important, is offer an interim program to provide immediate relief for seniors. Because I know, as the gentlewoman found in her district in Connecticut, in my district in Pennsylvania, what seniors wanted was some help that would be available quickly. And when I brought the head of CMS into my district for a town meeting and he said it would take a couple of years to ramp up a prescription drug program, they made it very clear, that group of seniors in Mercer County, Pennsylvania, they wanted to see something quicker, and that is what we have been able to do. These discount cards are meant to provide a transitional program, especially for the approximately 10 million Medicare beneficiaries who have no drug coverage. Seniors have been enrolling in the numerous discount cards in their area since May 3; and today, many seniors will begin to enjoy savings on their medicines. CMS, the Center For Medicare and Medicaid Services which administers the Medicare program, estimates that seniors will save between $3.8 billion and $5.1 billion over the 2-year duration of the program. This is a substantial amount of money. For an annual enrollment fee of no more than $30, seniors will enjoy savings on drugs of up to 30 to 60 percent on generic drugs, 16 to 30 percent or more on usual retail prices, and 11.5 to 17 percent off average retail prices with significantly larger discounts available on mail order drugs. This is in real contrast with the message we have heard from some of the critics. These are real savings. Even better, beneficiaries can choose the card that gets them the lowest prices; and if they wish, they can also get help finding low or no-fee cards, cards that include specific neighborhood pharmacies and/ or cards from specific sponsors. But the important thing is, this drug card, I think appropriately, provides additional assistance to low- income seniors through a direct subsidy. This is a big benefit to seniors in my district. Today, seniors with limited means are eligible for a $600 annual credit that goes a long way toward paying for their medication. In my home State of Pennsylvania, we have had a great program for low-income seniors called the PACE program, which provides a prescription drug benefit for low-income seniors who do not otherwise have such a benefit. This has been, I think, the hallmark of Pennsylvania State government for many years and an extraordinary success for those who are eligible. With this new Medicare legislation, the $600 credit will go directly to PACE and allow them to automatically enroll about 150,000 low-income seniors, lower PACE's costs, and allow PACE to waive some $6 co-pays which low-income seniors would otherwise have had to pay to get their medicines. PACE beneficiaries will continue to use the card PACE issues them to receive the benefits of the new program, and seniors enrolled in a Medicare Advantage plan like Security Blue in my district will receive a drug discount card from that plan. Other eligible Pennsylvania seniors can choose between 43 drug cards to find the benefit that is best for them. And as I think the gentlewoman is about to point out, they have one number that they can call to get the information that they need. Mr. Speaker, signing up for the drug discount card and getting information on the plans offered in their area could not be easier. Seniors who want help in selecting a card should call 1-800-MEDICARE or visit the Medicare Web site at www.medicare.gov; and there it is, right there. There are 3,000 customer service representatives available 24 hours a day, 7 days a week to answer these questions. To enroll in a particular card, beneficiaries should contact that card and receive an application. There is a standard enrollment form that will be accepted by all cards. Mr. Speaker, what is interesting to me is some politicians and special interest groups with their own narrow agendas have run down the prescription drug benefit as ineffective. But I would ask them how guaranteeing savings ranging from 11 to 60 percent is ineffective, especially considering the enormous credit for low- income seniors. After many years, and after the House of Representatives, having acted in two prior sessions, Congress has finally acted to give our seniors an affordable, flexible, and dependable Medicare program. Today, we ring in a new era of better prescription drug coverage. Tomorrow, we will broaden that benefit and work to make sure seniors continue to get the benefits they have earned. As one of the earlier speakers noted, perhaps indeed people will remember this on Election Day. But I think as they look at this program, they are going to decide that this is a very substantial benefit. This is a remarkable accomplishment. This is a massive moving of the Medicare program in the right direction, and I think it is going to provide substantial benefits for a lot of seniors that need it. Again, I want to thank the gentlewoman for her extraordinary efforts.

Mr. ENGLISH

Mr. ENGLISH. Mr. Speaker, it has been fascinating to appear several times on the floor during recent weeks to hear the debate on tax bills that seem to lurch in the direction of Iraq and wander all over the public policy landscape. I would like to bring the debate today back to the core issue of the bill that is before us and whether the substitute is actually an improvement on it, and I would argue that it is not. Mr. Speaker, the underlying bill that we have before us today would provide increased medical security, not as my friend, the gentleman from Massachusetts, has suggested, for the wealthiest Americans, but for many American workers. When flexible spending accounts are offered by an employer, their tax-preferred nature offers a powerful incentive for workers to contribute to and grow these accounts. Unfortunately, current law perversely influences these incentives by pushing workers who have built up an FSA to spend the money in the account if they have not used it by the end of the year. This use-it-or-lose-it policy defeats the positive benefits of an FSA, which is why many eligible workers have chosen not to open FSAs. When workers use the hard-earned dollars they have contributed themselves or earned from their employers, they will ask more questions, further inform themselves, and become better consumers, for example, of health care products. If they lose these dollars at the end of the year by simply not having the necessity for them instead of becoming better health care consumers, they become, in a sense, over- users of health care. Through allocating $500 of unused FSA funds to be carried forward or rolled over into a health savings account, FSAs and HSAs can thrive and become the practical vehicles they were intended to be for working families who want to manage their own health care. It is important to point out that the substitute, unlike the underlying bill, does not allow the unused funds to be transferred to the new HSAs. This is an essential component of the legislation because it encourages the HSAs, which embody similar pro-consumer and pro- worker principles as the FSAs. Employers are just beginning to offer HSAs, so now is not the time to discourage a health savings account, but to promote it. Let us not take a step backwards by passing the substitute. It is bad policy, it is poorly thought through, and I think that we ought to be looking at how we can provide workers with more opportunities to have these kinds of accounts, not fewer. These are not the wealthiest people in America. These are people who want the opportunity to manage their own health care, to manage their own resources; and we are giving them an opportunity to accumulate more of those resources in this bill.

Mr. ENGLISH

Mr. ENGLISH. Mr. Speaker, I am delighted to yield 3 minutes to the gentleman from Florida (Mr. Foley), my distinguished colleague on the Committee on Ways and Means.

Mr. ENGLISH. Mr. Speaker, I rise to claim the time in opposition to the amendment in the nature of a substitute.

Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the distinguished gentleman from New Hampshire (Mr. Bradley).

Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the gentlewoman from Tennessee (Mrs. Blackburn).

Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the distinguished gentleman from New Hampshire (Mr. Bradley).

Mr. ENGLISH. Mr. Speaker, I reserve the balance of my time with the right to close.

Mr. ENGLISH. Mr. Speaker, I yield 2 minutes to the gentlewoman from Michigan (Mrs. Miller).

Mr. ENGLISH. Mr. Speaker, I yield 3 minutes to the gentleman from California (Mr. Herger).

Mr. ENGLISH. Mr. Speaker, I first yield myself 15 seconds to thank the gentleman from New York for his presentation. It was very thoughtful. I want to associate myself with his remarks. We appreciate his making this debate very bipartisan, and I welcome him to get involved in our Zero AMT Caucus and try to work on a bipartisan basis to deal with this problem. Mr. Speaker, it is a great privilege for me to yield 5 minutes to another gentleman from New York (Mr. Houghton), who has put an extraordinary amount of time in on this issue, the chairman of the Subcommittee on Oversight of the Committee on Ways and Means, my colleague.

Mr. ENGLISH. Mr. Speaker, I yield myself 10 seconds to thank the gentleman for his salute to the simplicity of the economic substance doctrine, and we look forward to the vote on the substitute. Mr. Speaker, I yield 3 minutes to the gentlewoman from Connecticut (Mrs. Johnson), a member of the Committee on Ways and Means.

Mr. ENGLISH. Mr. Speaker, I yield 3 minutes to the gentleman from Missouri (Mr. Akin).

Mr. ENGLISH. Mr. Speaker, I yield myself 15 seconds just to say to the gentleman what is fairly clear and Chairman Greenspan recently indicated to us before the Joint Economic Committee that the tax cuts are working as a tonic for the economy. Clearly they are helping us to expand our tax base and move back toward a balanced budget, and that is fairly clear. Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Sam Johnson), a member of the Committee on Ways and Means.

Mr. ENGLISH. Mr. Speaker, I yield myself such time as I may consume. This has been a fascinating debate today, and I particularly want to congratulate the gentleman for his contribution. The gentleman from Massachusetts, as with his customary eloquence, has laid out his position, and in the process perhaps subconsciously has drawn a striking contrast between the two parties and perhaps one that he had not intended. He characterizes, first of all, Republican tax relief as maniacal. I think that is an interesting choice of words, but as I look at it, it perhaps I think accurately captures the view on the other side of tax relief and a tax program that is already lifting the economy, that is creating jobs, that is creating opportunities throughout America, including for a lot of people who were not directly the beneficiary of as much tax relief as we would have liked. Let me say in addition to that, there has been the procedural argument made here that this proposal before us today has not been adequately vetted. Mr. Speaker, to be very clear, this language is similar to what has been included in the tax bill that passed. This kind of language has been many times before the body. We have thoroughly debated within the Committee on Ways and Means the issue of the alternative minimum tax, and it is not clear that additional hearings would have provided a substantive additional agenda. I am delighted to hear the gentleman come out in favor of full repeal because, as I said to the gentleman from New York earlier in our discussion, I invite the gentleman to join with me and other members of the zero AMT caucus to come together and to work through a proposal to get rid of this AMT. The substitute that we have now risen to debate, though, was not I think adequately discussed in the gentleman's remarks, and perhaps there is where the contrast is clearest. Because in an effort to, as they put it, pay for the AMT relief that is included in the bill, what they have proposed doing is permanently putting in place an increase of corporate taxes in order to pay for 1-year relief to the individual AMT. That sounds like good politics, but at a time when our economy is struggling, at a time when even people on the other side of the aisle have conceded that corporate tax rates in our country and on our companies and workers are higher than those globally and are a clear competitive disadvantage to our companies who are seeking to keep jobs here in the United States, that the idea of permanently raising corporate taxes is one that I think is striking and I think uniquely ill conceived. What they have proposed doing is generating revenue through the permanent implementation of something called the economic substance doctrine. Economic substance is a doctrine that our courts apply on a discretionary basis to situations which erode our rules-based tax system. The substitute attempts to codify this judicial doctrine and expand its definition so the IRS can pick apart any ordinary business transaction and subjectively look for reasonable business purposes. The result is a new requirement for taxpayers to have yet another layer of IRS intervention and be burdened with restrictions in ways that the courts have not even considered. I realize that there are some who have embraced this on the Senate side, but no one on our side of the aisle here in the House of Representatives so far has done so. The result would be a new requirement for taxpayers and another layer of IRS intervention. The proposal would then propose strict liability penalties on understatements of tax, which would not be limited to abusive transactions. The proposal, in our view, is far too broad and significantly expands common-law doctrines. There is also no indication that the doctrine would be limited to abusive transactions. While we are currently debating a 1-year extension of tax relief for working families, let me make this clear again: this substitute levies a permanent tax increase on employers and ultimately on the labor of the workers that they employ. The gentleman from New York (Mr. Rangel) has himself indicated support for lower corporate tax rates for our manufacturers in his own bill to replace the FSC/ETI regime. Here his proxy is insisting on raising their taxes by $15 billion. In addition to a $15 billion tax increase, companies would now have to spend valuable time and resources managing the implications of the law, when they could be using these resources to expand their operations, invest in production lines, and create jobs. Instead, what this proposal effectively does is create jobs only in the legal profession. Mr. Speaker, the House has voted repeatedly against this tax increase because it is bad tax policy, bad economic policy, and it further hinders American competitiveness and does so permanently. I think it is fairly clear that what is being attempted here in this substitute is to take something that we really need to do, addressing the problem of the AMT, and attach to it something off of a wish-list from the left, which, frankly, has no place here at a time when we are trying to buoy the economy. I think it is worth noting that the last time someone really aggressively proposed to raise taxes during a slowdown was Mr. Hoover, so there may even be some Republican genealogy in the proposal we are seeing offered on the other side. But the Republicans of today do not recognize this as a positive thing. Let me summarize the bill of particulars against the Rangel substitute and specifically the economic substance doctrine. First of all, it is a permanent tax increase. Although the AMT relief in the Democratic substitute is temporary, the tax increases are permanent. In addition, the administration strongly opposes codification of the economic substance doctrine. They have looked at it, and they have found it wanting. Acting Treasury Assistant Secretary for Tax Policy, Gregory Jenner, has stated that codifying the economic substance doctrine could be counterproductive, as it would drive tax shelters even further underground. Assistant Secretary Jenner has stated that the most effective way to stop tax shelter transactions is to require increased disclosure. The administration's tax shelter proposal increases disclosure by levying substantial penalties on those who fail to disclose their transactions. As I have noted, this proposal has been repeatedly rejected in the House, and it would also hurt jobs and investment. Codifying the economic substance doctrine would result in businesses foregoing job- creating investments because of concerns that the IRS would improperly apply the economic substance doctrine to legitimate transactions. Finally, this proposal goes beyond accepted case law. The Democratic proposal requires that some transactions have at least a risk-free rate of return. This type of provision goes beyond what is required by either the Tax Code or common-law court doctrines. Furthermore, their proposal does not define a risk-free rate of return. All things being equal, this is a very poor substitute; and we urge its rejection. Mr. Speaker, I reserve the balance of my time.

Mr. ENGLISH. I presume, Mr. Speaker, that also means that we cannot mischaracterize them. Mr. Speaker, I yield myself the balance of my time. This has been a useful debate because I think in an odd way it has highlighted a couple of things. First of all there is a consensus in this Chamber behind the bill that the gentleman from Connecticut (Mr. Simmons) has put forward. There will be a substitute offered. I will have ample opportunity and grounds to criticize that substitute when it is offered, but for now I think what needs to be emphasized here is that in the end both parties are committed to at least moving forward on this very limited bill. I wish we were doing more today, but the fact is, this is probably the best we could agree on in the gridlock that exists in the institution right now. I would like to use some of my time to respond to some of the points that were made by the other side. First of all, let us be clear. This bill is not about the war. It is not really about the deficit in the sense that I think it is fairly clear and I would hope people on both sides could agree that we do not need revenue from this source. We can come up with spending cuts, and we can come up with alternative revenue sources to deal with this. We do not need the revenue applied from applying an AMT that was intended to be applied originally only to a very narrow band of very wealthy taxpayers, applying it to the middle class. Some strange things have been said here and I would like to respond to them. First of all, this problem was not created by the Republicans. This was created back in 1986 when a tax reform passed when the other body controlled the Chamber, and in all the time that they controlled the Chamber afterward, they did nothing to deal with this problem. In fact, in 1993, they voted to actually increase the burden of the AMT. And we have heard from a number of speakers today who purport to be against the AMT, but actually who voted for that increase. It has been said by the distinguished gentleman from Washington, my friend, that Republicans do not know what they are doing. I would submit to the Members when this AMT was put in place without any provision for how inflation would move and more taxpayers into AMT status, they knew what they were doing. They wanted the revenue. They wanted to apply a progressively higher tax burden to the American people and use that future revenue in order to justify a higher level of spending and an expansion of the welfare state. We in this Chamber today are committed to moving forward to making sure that a new heavier tax burden is not applied to taxpayers next year and that next year taxpayers do not face a bait and switch on some of the key provisions that we have passed. That I would submit is really what the Republican Party is all about. And as for Republican management of the economy, I am proud to associate myself with Republican management of the economy at a time when clearly responsible economists agree the tax policies enacted in this Congress supported by this administration are having the effect of lifting the economy, not as much as I would like right now in my district, but clearly turning around the slowdown that we had experienced that we inherited from the last administration and providing a significant prospect of new jobs and new economic growth and new dynamics that are going to provide opportunities for working families in the coming months. We recognize that we need to do more, and this Congress is clearly committed to doing that. And yet we need to agree at very least today to pass this provision. I am very proud to support this bill as introduced by the gentleman from Connecticut (Mr. Simmons) that provides some relief to middle class taxpayers, to make sure that they have access to the relief that we promised them so that we can continue to grow the economy, that we can continue to create opportunities, that we can continue to provide some relief to families that have children and that are eligible and should be eligible for the tax credit that we have passed in this Chamber. This is to me a critical issue of tax equity. We need to be prepared to guarantee to middle class families that they do not face a higher burden because of a stab in the back called the AMT, that they are not hit on tax day with an unexpected tax burden, that they are not required to recalculate their taxes accordingly. We have an opportunity today to strike a real blow for tax equity for the middle class. With that, I hope we pass this bill.

Mr. ENGLISH. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, today the House will consider one of the most important bills from the standpoint of tax equity that we will consider this year, the Middle-Class Alternative Minimum Tax Relief Act, a bill to make sure that the tax cuts which allowed middle-class families to keep more of their income over the past 3 years will not be undermined by the Alternative Minimum Tax. There is little dispute, certainly none outside of this Chamber, that the Republican tax cuts helped families cope with economic uncertainties and played a significant role in stimulating the economic growth that we are seeing today. But if we do not act now to give the taxpayers another year of reprieve, the AMT will suddenly reappear and 11 million taxpayers will be hit with an average tax increase of $1,520. Mr. Speaker, by preventing middle-class Americans from claiming their rightful exceptions from tax liability, the AMT punishes families with children or those who live in high tax localities. If we do not act, married couples will see their AMT exceptions snap back from a threshold of $58,000 to $45,000. Single individuals will see their AMT exception drop from $40,250 to $33,750. Mr. Speaker, let us be clear about this. These are not wealthy people. These are middle-class Americans who would be slapped with a steep tax hike that they would not know about until tax day, when they learn that the tax exemptions that they thought they could take, the same tax exemptions we intended for them to take and told them we were giving them, would no longer apply. For example, a family of four with a household income of $58,000 would, in 2005, be hit with the AMT. I am sure that no one here would seriously argue that that family is wealthy. Today, the House has the opportunity, indeed, the duty, to extend AMT relief for 1 year and to ensure that middle-class Americans are not faced with an increase in their tax liability; and we must do this without raising taxes someplace else and stifling growth and killing jobs. Mr. Speaker, this is an important measure to buy us time to truly reform the AMT and, as I hope, to repeal this regressive tax entirely. I have taken it upon myself to work with a number of colleagues, including the gentleman from Louisiana (Mr. McCrery), a fellow member of the Committee on Ways and Means, to form a Zero AMT Caucus. We will have our day; but in order to get there, we need to pass this bill today on behalf of working families. Mr. Speaker, I reserve the balance of my time.

Mr. ENGLISH. Mr. Speaker, I yield myself 15 seconds. Mr. Speaker, I note that this issue has come up repeatedly before the Committee on Ways and Means. The Committee on Ways and Means has repeatedly worked its will on this issue and it has made very clear that it is committed to this kind of exemption. The Committee on Ways and Means is clearly in the loop in this. Mr. Speaker, I yield 3 minutes to the gentleman from Illinois (Mr. Crane), a distinguished member of the Committee on Ways and Means.

Mr. ENGLISH. Mr. Speaker, I yield myself the balance of my time, and first of all, thank the gentleman for his contribution and take him up on his offer because we in the Zero AMT Caucus would like to work for permanent resolution of this problem. We would like to see a permanent repeal of the AMT; but unfortunately, in the current political climate, in the current climate of gridlock and recrimination that we have in Washington, nothing more elaborate than the current fix appears to be possible. Let me say there are a couple of things that I need to correct at the outset. It was suggested by the gentlewoman from Texas that our bill is a tax increase. It is very hard to understand how she would make that point; but to be clear, this provides critical tax relief for a significant portion of the middle class. The gentleman from Long Island intimated that there was nothing in this bill to help these people. Well, as a practical matter, a place like Long Island would be one of the biggest beneficiaries of the underlying Republican bill because of the high taxes. Let me say that the gentleman from Michigan talked about a tax train wreck. I come from a part of the world where we make locomotives, and we recognize their dynamics; and let me say that we recognize that the locomotive that was started, that is threatening, the train wreck was started back when the other party controlled the Chamber and did not deal with an underlying problem by making the AMT responsive to increases in the cost of living. We have heard procedural arguments from the other side, that the committee has not looked closely enough at this issue; and I reject those because the committee clearly has been tracking this issue from the get-go. What we have instead is the core issue, which is the substitute being offered today and which, on the other side, they are proposing to dramatically increase the complexity of the Tax Code and also significantly raise corporate taxes on a permanent basis in order to provide temporary tax relief. They congratulate themselves for doing that, but I do not think that they are entitled to a new chapter in ``Profiles in Courage.'' My feeling is that the substitute is inherently a bait-and-switch and increasing taxes at a time when we are experiencing, we are trying to come out of a slow-down. We are, in a sense, embracing Herbert Hoover economics. I think that the substitute is very ill conceived. It, among other things, imposes a burden on the corporate community at a time when we worry about competitiveness; but that burden is far greater than the one simply indicated by the expected revenue. This is a burden which will permanently change behavior and affect legitimate business transactions. So the rhetoric of the gentleman from North Dakota that this only affects tax cheats is unfortunately not accurate. This is going to be an enormous burden for the corporate sector coming at a most unfortunate time. Ultimately, I sense that the reason why the folks on the other side have not been as aggressive and certainly in many cases not as aggressive as the gentleman from Massachusetts to deal with this problem is that they want to spend the money. May I suggest, in the end, we get to the solution on reforming the corporate AMT, not by undercutting the tax bill, not by undercutting the tax program which is revitalizing America's economy today, but ultimately by controlling our spending. That is how we will in the context of a growing economy get back to a balanced budget and I think in the long run also have room to deal with this AMT. Again, I invite our friends on the other side of the aisle to work with us on this issue. We have an opportunity to do this on a bipartisan basis. This is a part of the Tax Code that we agree on, but I think the solution starts today with a rejection of the ill conceived substitute that is being offered by the other side and passage of the underlying legislation. Mr. Speaker, I yield back the balance of my time.

Mr. ENGLISH. Mr. Speaker, I yield 4 minutes to the gentleman from Arizona (Mr. Hayworth), a member of the Committee on Ways and Means (Mr. Hayworth).

Mr. ENGLISH. Yes.

Mr. ENGLISH. Mr. Speaker, I reserve the balance of my time.

Mr. ENGLISH. Mr. Speaker, on that I demand the yeas and nays.

Mr. ENGLISH. Mr. Speaker, I yield 1 minute to the distinguished gentleman from Florida (Mr. Shaw), a member of the Committee on Ways and Means.

Mr. ENGLISH. Mr. Speaker, it is a great privilege for me to yield 4 minutes to the gentleman from Connecticut (Mr. Simmons), the prime sponsor of this legislation and a real advocate for middle-class taxpayers. (Mr. SIMMONS asked and was given permission to revise and extend his remarks.)