Bob Graham

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, I, too, wish to speak on the tax bill which will soon be before us. I rise in opposition. There are many reasons to oppose this reckless proposal. I will mention three. No less an authority than Warren Buffett pointed out in written op- eds and television appearances the obvious fact. The obvious fact is that this legislation, as it relates to the tax-free status of corporate dividends, will create zero new jobs. Why will it create zero new jobs? It will do so because there is no additional money in the system to generate new jobs. If the corporations that are induced to pay dividends or increase the dividends that they are currently paying as a result of the tax-free status to the stockholder remove those funds from the corporate treasury, there is actually less chance that it will be invested in productive matters. Since generally only the wealthiest of Americans will benefit by this proposal to make the remainder of dividends which are subject to taxation free of taxes, the practical effect is going to be to have these high-income Americans put the money into some account, not to spend it, and create the demand that our economy needs. Conversely, if the funds stay at the corporate level, the corporation has ongoing needs which are likely to be met by those funds. If the economic theory behind the nontaxability of dividends is that it will stimulate the economy--and the title of this bill indicates that is the objective--it is likely to have just the opposite effect. The second concern which causes me to speak this evening is the fact that this legislation belies congressional concern for honest accounting. We have spent a lot of time in the last few months berating corporate America for its inappropriate and in some cases duplicitous accounting procedures. Now we are about to pass legislation which makes those shenanigans pale in comparison to what we are about to do. It is hard to believe this Senate has already passed a version of this tax cut which said for the first year taxation of dividends could be cut by 50 percent; for the second year taxation of corporate dividends would be cut 100 percent; for the third year corporate dividends tax could be cut by 100 percent; and in the fourth year we would go back to the current level of taxation of corporate dividends--an absurd proposition. Clearly, the only rationale for such cooked accounting books is to allow what appears at the most superficial level to be a $350 billion tax cut, in fact, balloon into a tax cut of between $800 billion and $1 trillion. This is according to the Center for Budget and Policy Priorities. I wanted to talk about a third reason. That is that this agreement, filled with many irresponsible policies and tax cuts, undermines our efforts to adequately fund homeland security. As a candidate for the Presidency, George Bush, when asked what would be his priorities for the use of the $5 billion surplus that lay ahead in the 10 years after January 20, 2001, said the first would be to meet our priority domestic challenges--at that time, he particularly focused on providing a prescription drug benefit for Medicare; certainly today he would include homeland security--the second, to pay down the national debt, and third, if there was any money left over, to return it to the American taxpayers in the form of tax reductions. Subsequent events have made the President's choices easier. We do not have a $5 billion surplus to consider allocating among domestic priorities, paying down the national debt and, if funds are left over, returning them to the American taxpayer because there is no surplus. The surplus has magically, in 28 months, been converted into one of the largest deficits that our Nation has ever suffered. And the 10-year projection of those deficits is $2 trillion. When you add those two numbers together, the $5 trillion surplus that was thought to be in hand as recently as January of 2001, and now the $2 trillion addition to our national debt that we face over the next 10 years, we have in excess of a $7 trillion swing in our Nation's fiscal well-being in the course of barely over 2 years. One of the areas in which this change in fiscal fortune has been particularly pronounced has been homeland security. The Transportation Security Administration has told the appropriators that the agency is facing a $913 million shortfall. This situation is so dire that the administration is now requesting authority to shift funds from one security program to another. Our Nation's seaports stand out as an example of the administration's blind eye to the vulnerabilities faced by our Nation. Our Presiding Officer represents a State with one of America's great seaports. Because of the vulnerability of our Nation's 361 seaports, Congress passed the Maritime Transportation Security Act in November of last year. The Senate attempted to include in that legislation provisions that would guarantee the funding of maritime security. That effort, regrettably, failed. But the failure did not stop there. The administration has ignored the need to improve security at our Nation's seaports, requesting little to no seaport security funds in fiscal years 2002, 2003, and again in 2004. The majority of funding which has been made available in seaport security grants has come at the action and the behest of Congress: $92 million in fiscal year 2002 through an emergency supplemental; $125 million in fiscal year 2002 through yet another supplemental; and $150 million in fiscal year 2003 in the omnibus appropriations bill. Of these amounts, only $92 million, those funds appropriated by the emergency supplemental in fiscal year 2002, has actually been distributed. Recently, in my State of Florida, two of our ports received approximately $11 million of this $92 million. While this funding is a step in the right direction, it is clearly inadequate. According to the Coast Guard, port security improvements are estimated to cost $963 million in the first year and $4.4 billion over the next 10 years. The need is clear. The fiscal year 2002 $92 million garnered grant request that totaled $695 million, the local governments, administrators, and users of our seaports, found there were needs of $695 million but we decided that $92 million was sufficient funding to meet those needs. For the next $125 million--these are the funds that were appropriated in the supplemental appropriations of fiscal year 2002--for $125 million in funds available, there were $997 million of requests. According to information from the intelligence community, the threat is clear. Although a great deal of information is necessarily classified, the Associated Press is reporting today that the FBI arrested a New York City cabdriver who had conducted surveillance on bridges in Miami, FL, after he attempted to buy enough explosives to blow up a mountain from an undercover law enforcement agent, as well as purchasing bulletproof vests and night vision goggles. Few can forget the recent tragedy of October 6, 2002, when the supertanker Lindberg was attacked by a small boat packed with explosives off the coast of Yemen. Despite these threats, the administration has consistently reduced levels of funding for homeland security. For example, the White House refused to designate $2.5 billion in homeland security money as a budgetary emergency in fiscal year 2002. This resulted in a loss to the Transportation Security Administration of $480 million. This should not be an either/or choice. We should not have to decide whether to protect our airports or protect our seaports. We should not have to decide whether to go on the offensive against international terrorists by effectively carrying the war to where they are as opposed to adequately defending the homeland from terrorist attacks. Why are these programs, vital to our homeland security, struggling for funding, while we enact tax cuts which are projected over the next 10 years to cost $1 trillion? Why are we doing this? This tax cut is supposed to stimulate the economy. As Mr. Buffett has so eloquently pointed out, the major component of the tax cut, which is the removal of taxation on corporate dividends, is unlikely to stimulate even the first job. But imagine the impact on our economy if we had to close America's seaports due to a terrorist incident. Just as a point of reference, the cost last year of a labor strike at the seaports on the west coast was estimated at more than $1 billion a day. What will be the economic price for closing all 361 of our seaports? A recent Booz Allen Hamilton port security analysis concluded that if the Government were unable to open U.S. seaports within 20 days after an attack, the New York Stock Exchange would have to halt all trading. In June of 2002, a White House press release on homeland security stated: The President's most important job is to protect and defend the American people. Regrettably, this rhetoric has not been matched by performance. It is wrong that the price of these tax cuts may be our homeland security. It does not have to be. In October, during the debate on the Iraq war resolution, I spoke about how the lives of millions of Americans are literally in our hands. We will determine whether the level of security is that which our Nation is committed to do by the President's statement that the most important job is to protect and defend the American people, or if the only thing that stands between the American people and additional and more lethal terrorist attacks is the rhetoric of the President. We are making the false choice in favor of tax cuts as opposed to Americans' security here at home. I urge my colleagues to oppose the conference agreement on this tax bill, to oppose creating the artificial impression that this is going to actually improve the economy by creating new jobs, to oppose the criticism that will legitimately be raised against the Congress for setting one standard in terms of proper accounting for corporate America but applying quite a different standard to ourselves. We should oppose this conference report because it is denying to America the resources necessary to truly protect our people.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, today I rise with my colleague Senator Patty Murray to sponsor a resolution federally acknowledging April 9, 2003, and recognizing April 9, 2004, as National Former Prisoner of War Recognition Day. As we watch the overjoyed faces of soldiers returning home from Iraq on television, we also remember those taken hostage by enemy forces. In this age of technology, we watched the images of brave soldiers from Operation Iraqi Freedom, courageous in the face of physical and mental hardships most of us can only imagine. I am outraged and saddened that, in clear violation of international treaties, opposing troops have taken even one of our fighting American men and women against their will. Our thoughts and prayers are with the families and friends of all of these soldiers, from recent as well as past conflicts. It is my sincere hope that the still-captive prisoners from previous wars will be home to participate in the celebrations next April, and I have faith that they will be. At this time, it is appropriate that we pause and reflect on the bravery and sacrifice made by all of our Nation's former prisoners of war, and to remember that tens of thousands of our friends and neighbors have endured unthinkable brutality fighting throughout America's history. The men and women who braved captivity and imprisonment gave up months and years of their lives to ensure the continuation of the freedom we enjoy today. Their service has taught us about patriotism, perseverance, and character. There is little we can do to repay these men and women but we can recognize their invaluable contribution. I urge my colleagues to join Senator Murray and myself in cosponsoring this important resolution honoring our former prisoners of war.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, today I am re-introducing legislation that will improve the effectiveness of one of the most successful programs we have to help Americans get affordable housing, the Low-Income Housing Tax Credit. I am proud to be joined in this effort by my esteemed colleagues, Senators Hatch and Jeffords. The need for affordable housing is as great today as ever. The generally accepted definition of affordability is for a household to pay no more than 30 percent of annual income on housing. Today, twelve million renter and homeowner households pay more than 50 percent toward housing costs. In fact, nowhere in the country can a family with one minimum wage worker afford the rent on a two-bedroom apartment. The Low-Income Housing Tax Credit was created in 1986 to attract private sector capital to the affordable housing market. It has been the major engine for financing the production of low-income multi- family housing. The program offers developers and investors in affordable housing credit against their federal income tax in return for their investment. Since its inception, the Low-Income Housing Tax Credit has assisted in the development and availability of roughly 850,000 new and rehabilitated units of affordable housing. In the fall of 2000, the Internal Revenue Service isssued its first guidance in the program's 16-year history. That guidance was issued in the form of several technical advice memoranda, or TAMs, and specified which development costs will be eligible and ineligible for the credit, known as eligible basis. TAMs are not official guidance, reviewed by the Treasury Department, but instead, are IRS legal opinions providing direction to IRS agents conducting audits. They are not citable in court proceedings because they are not official guidance. In the absence of official guidance, TAMs could be taken as the official government position. In fact, that is exactly what is happening. The problem is that the IRS's position is contrary to common industry practice, and eliminates many reasonable, legitimate and necessary costs from the tax credit. This has caused uncertainty among investors as to whether the credits for which they have paid, will be realized. Moreover, these guidelines could adversely affect the ability of States to target affordable housing to those who need it the most. It is important to understand, this legislation will not increase the pool of low-income housing tax credits. The Internal Revenue Code sets the maximum amount of credits that States may allocate to developers of affordable housing properties. Thanks to legislation that we enacted in 2000, the amount available to each State has increased from $1.50 to $1.75 times the State's population. That 40 percent increase is expected to produce about 30,000 more units a year. Since the unmet demand for affordable housing is many times greater than what can be built with the help of the credit, our legislation should not affect revenues. In fact, the only way for this legislation to have a revenue impact is if the legislation makes it easier for the states to use the credits we intend for them to have under present law. What this legislation does do, however, is very important. To understand its importance, it may be useful to have a little background on how the low-income housing tax credit works. In economic terms, the credit is equity financing which replaces a portion of debt that would otherwise be necessary to finance a property. By replacing debt, credits work to reduce interest costs. This allows a property owner to offer lower rents than otherwise would be the case. The most unique feature of the program is that state housing finance agencies award Federal tax credits to developers of rental housing. Since these agencies have considerable flexibility in how they distribute the credits, developers compete for the limited number of tax credits by submitting project proposals. The agencies rate the proposals, and allocate credits to individual properties based on criteria provided in the Internal Revenue Code, and on the state's particular housing needs and priorities. The Internal Revenue Code also limits the amount of credits a state may allocate to a particular property. The limit is determined as percentage of the basis of a property. The basis is, generally speaking, the cost of constructing a building that is part of an affordable housing project. Non-federally subsidized new construction may receive a 9 percent credit. Existing buildings and new buildings receiving other federal subsidies may get a 4 percent credit. The IRS takes the position that certain construction costs should not be included in basis. This position makes a large number of affordable housing properties financially unfeasible, and weakens the economics of those that still pass minimum underwriting requirements. The loss of equity would surely affect the properties that serve the lowest income tenants, provide higher levels of service, or operate in high cost areas. The reason that this is problematic is simple. Reducing the amount of credits does not reduce the development costs. It merely alters the source of financing from equity to debt, forcing either higher rents or lower quality construction. Apparently, the Treasury Department and Internal Revenue Service agree that this is an issue worthy of review, as both agencies have included it in their business plan. Last year, the IRS issued new guidance on one of the items addressed by the TAMs, but there does not appear to be a full review of the effect of the positions set forth in the TAMs anytime soon. This legislation would amend the Internal Revenue Code to specify that certain associated development costs are to be included in eligible basis. In many cases, the largest item excluded from eligible basis under the TAMs is ``impact fees.'' Impact fees are fees required by the government ``as a condition to the development'' and considered ineligible because they are one- time costs, unlike building permits that need to be renewed each time a building is built. These fees cover a wide range of infrastructure improvements including sewer lines, schools, and roads. Certainly, whether or not they are includable in basis for the purpose of calculating the amount of tax credit, these costs will be incurred and will impact the economics of the property. As I mentioned previously, the IRS has recently addressed the inclusion of impact fees in eligible basis, but not other costs directly related to building construction. Other items that would be severely restricted or excluded from eligible basis under the interpretations expressed in the TAMs are site preparation costs, development fees, professional fees related to developing the property, and construction financing costs. The legislation we are introducing today will clarify that any cost incurred in preparing a site which is reasonably related to the development of a qualified low-income housing property, any reasonable fee paid to the developer, any professional fee relating to an item includable in basis, and any cost of financing attributable to construction of the building is includable in basis for the purpose of calculating the maximum amount of credit a state may allocate to a low- income housing property. The intent of these clarifications is simply to codify common industry practice before the issuance of the TAMs. Not only will the legislation allow the low-income tax credit program to provide better quality hosing at lower rental rates than would be possible if the positions taken in the TAMs are followed, but clarification will help simplify administration of the credit by giving both taxpayers and the Internal Revenue Service a clearer statement of the standards that apply in calculating credit amounts. Our economy is not doing as well as we would like, and there is a significant likelihood that we are going to need even more affordable housing in the not too distant future. We should be proud that we increased the amount of low-income housing tax credits that will be available to help finance this housing. What we need to do now is to make sure that these credits are used as efficiently as possible to provide housing for those who need it the most. The legislation we are introducing today will help achieve that goal. I ask unanimous consent that the text of this bill be printed in the Record.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, today I am re-introducing legislation that will improve the effectiveness of one of the most successful programs we have to help Americans get affordable housing, the Low-Income Housing Tax Credit. I am proud to be joined in this effort by my esteemed colleagues, Senators Hatch and Jeffords. The need for affordable housing is as great today as ever. The generally accepted definition of affordability is for a household to pay no more than 30 percent of annual income on housing. Today, twelve million renter and homeowner households pay more than 50 percent toward housing costs. In fact, nowhere in the country can a family with one minimum wage worker afford the rent on a two-bedroom apartment. The Low-Income Housing Tax Credit was created in 1986 to attract private sector capital to the affordable housing market. It has been the major engine for financing the production of low-income multi- family housing. The program offers developers and investors in affordable housing credit against their federal income tax in return for their investment. Since its inception, the Low-Income Housing Tax Credit has assisted in the development and availability of roughly 850,000 new and rehabilitated units of affordable housing. In the fall of 2000, the Internal Revenue Service isssued its first guidance in the program's 16-year history. That guidance was issued in the form of several technical advice memoranda, or TAMs, and specified which development costs will be eligible and ineligible for the credit, known as eligible basis. TAMs are not official guidance, reviewed by the Treasury Department, but instead, are IRS legal opinions providing direction to IRS agents conducting audits. They are not citable in court proceedings because they are not official guidance. In the absence of official guidance, TAMs could be taken as the official government position. In fact, that is exactly what is happening. The problem is that the IRS's position is contrary to common industry practice, and eliminates many reasonable, legitimate and necessary costs from the tax credit. This has caused uncertainty among investors as to whether the credits for which they have paid, will be realized. Moreover, these guidelines could adversely affect the ability of States to target affordable housing to those who need it the most. It is important to understand, this legislation will not increase the pool of low-income housing tax credits. The Internal Revenue Code sets the maximum amount of credits that States may allocate to developers of affordable housing properties. Thanks to legislation that we enacted in 2000, the amount available to each State has increased from $1.50 to $1.75 times the State's population. That 40 percent increase is expected to produce about 30,000 more units a year. Since the unmet demand for affordable housing is many times greater than what can be built with the help of the credit, our legislation should not affect revenues. In fact, the only way for this legislation to have a revenue impact is if the legislation makes it easier for the states to use the credits we intend for them to have under present law. What this legislation does do, however, is very important. To understand its importance, it may be useful to have a little background on how the low-income housing tax credit works. In economic terms, the credit is equity financing which replaces a portion of debt that would otherwise be necessary to finance a property. By replacing debt, credits work to reduce interest costs. This allows a property owner to offer lower rents than otherwise would be the case. The most unique feature of the program is that state housing finance agencies award Federal tax credits to developers of rental housing. Since these agencies have considerable flexibility in how they distribute the credits, developers compete for the limited number of tax credits by submitting project proposals. The agencies rate the proposals, and allocate credits to individual properties based on criteria provided in the Internal Revenue Code, and on the state's particular housing needs and priorities. The Internal Revenue Code also limits the amount of credits a state may allocate to a particular property. The limit is determined as percentage of the basis of a property. The basis is, generally speaking, the cost of constructing a building that is part of an affordable housing project. Non-federally subsidized new construction may receive a 9 percent credit. Existing buildings and new buildings receiving other federal subsidies may get a 4 percent credit. The IRS takes the position that certain construction costs should not be included in basis. This position makes a large number of affordable housing properties financially unfeasible, and weakens the economics of those that still pass minimum underwriting requirements. The loss of equity would surely affect the properties that serve the lowest income tenants, provide higher levels of service, or operate in high cost areas. The reason that this is problematic is simple. Reducing the amount of credits does not reduce the development costs. It merely alters the source of financing from equity to debt, forcing either higher rents or lower quality construction. Apparently, the Treasury Department and Internal Revenue Service agree that this is an issue worthy of review, as both agencies have included it in their business plan. Last year, the IRS issued new guidance on one of the items addressed by the TAMs, but there does not appear to be a full review of the effect of the positions set forth in the TAMs anytime soon. This legislation would amend the Internal Revenue Code to specify that certain associated development costs are to be included in eligible basis. In many cases, the largest item excluded from eligible basis under the TAMs is ``impact fees.'' Impact fees are fees required by the government ``as a condition to the development'' and considered ineligible because they are one- time costs, unlike building permits that need to be renewed each time a building is built. These fees cover a wide range of infrastructure improvements including sewer lines, schools, and roads. Certainly, whether or not they are includable in basis for the purpose of calculating the amount of tax credit, these costs will be incurred and will impact the economics of the property. As I mentioned previously, the IRS has recently addressed the inclusion of impact fees in eligible basis, but not other costs directly related to building construction. Other items that would be severely restricted or excluded from eligible basis under the interpretations expressed in the TAMs are site preparation costs, development fees, professional fees related to developing the property, and construction financing costs. The legislation we are introducing today will clarify that any cost incurred in preparing a site which is reasonably related to the development of a qualified low-income housing property, any reasonable fee paid to the developer, any professional fee relating to an item includable in basis, and any cost of financing attributable to construction of the building is includable in basis for the purpose of calculating the maximum amount of credit a state may allocate to a low- income housing property. The intent of these clarifications is simply to codify common industry practice before the issuance of the TAMs. Not only will the legislation allow the low-income tax credit program to provide better quality hosing at lower rental rates than would be possible if the positions taken in the TAMs are followed, but clarification will help simplify administration of the credit by giving both taxpayers and the Internal Revenue Service a clearer statement of the standards that apply in calculating credit amounts. Our economy is not doing as well as we would like, and there is a significant likelihood that we are going to need even more affordable housing in the not too distant future. We should be proud that we increased the amount of low-income housing tax credits that will be available to help finance this housing. What we need to do now is to make sure that these credits are used as efficiently as possible to provide housing for those who need it the most. The legislation we are introducing today will help achieve that goal. I ask unanimous consent that the text of this bill be printed in the Record.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, we have more dismal news on the state of the economy in today's press; that the April sales in the United States declined .9 percent below those in March. This is what the chief economist of Wells Fargo had to say about this development: Consumers are tapped out. They have done a marvelous job of supporting the economy, but they are basically done. We need something else to pull up the slack. I suggest that what we need is this amendment which will place money in the hands of those Americans and institutions most likely to spend and therefore create demand. Those include payroll, small business. It includes those who have already lost their jobs and their unemployment benefits and State governments. This proposal would focus on the next 2 years----

Mr. GRAHAM of Florida. The period of time in which we need to have a stimulus. Most importantly, this would not add to the national debt because it would be fully offset, therefore avoiding the potential that by adding to the deficit we will add to the economic problems that we will have in the future. Mr. President, I ask unanimous consent that an article from today's Washington Post on consumer spending be printed in the Record.

Mr. GRAHAM of Florida. Pursuant to section 904 of the Budget Act I ask that the point of order against my amendment be waived. I ask for the yeas and nays.

Mr. GRAHAM of Florida. I ask unanimous consent that Senators Rockefeller and Kerry be added as cosponsors to my amendment.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. I would like to add to your comments and those of Senator Biden that we have talked mainly this evening about the humanitarian aspects of this issue. If I could bring it a little closer to home, in large part because of the health care conditions in the Caribbean, my State has suffered from time to time outbreaks of tuberculosis and other serious diseases. We now have a significant percentage infected with HIV. These are not 5,000 miles away; they are just a few minutes away. We have a very direct national interest in arresting this problem, preventing its outbreak in the future, and therefore protecting the people of the United States. I hope this amendment will be adopted. It not only is the right thing to do for the people involved, it is the right thing to do for our people involved.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, the Veterans Health Administration has long-standing relationships with medical schools around the country, a partnership that continually proves beneficial for all who are involved. I am proud to highlight that the Miami VA Medical Center and the University of Miami have taken this collaboration to the next level, with the May 2, 2003, opening of a National Institutes of Health-funded UM/VA General Clinical Research Center at the Miami VAMC. At the September 12, 2002, meeting of the President's Task Force to Improve Health Care Delivery for our Nation's Veterans, Dr. John G. Clarkson, Senior Vice President for Medical Affairs and Dean of the University of Miami, testified about his experience in partnering with VA. He expressed how valuable the academic affiliation has been in improving care for veterans while contributing greatly to the educational and research capabilities of the schools. The affiliation-- in his view--has also fostered cost-effective and efficient sharing of clinical and research resources, resulting in significant health care reforms. Dr. Clarkson also pointed out that, were it not for its 50-year old collaboration with the Miami VAMC, the University of Miami Medical School never would have gotten off the ground, nor would it have accomplished all it has over the years. The new General Clinical Research Center will be only the third such facility housed at a VA Medical Center, and it will allow basic research results to be applied to the development of potentially lifesaving drugs, devices, and therapies that could benefit not only veterans, but the entire Nation. I would like to congratulate and thank the hardworking staffs of both the Miami VA Medical Center and the University of Miami Medical School. Without their dedication, their 50-year collaboration would never have been so successful and this latest development, a brand-new Clinical Research Center, would not have been possible.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Madam President, I send an amendment to the desk.

Mr. GRAHAM of Florida. Madam President, I ask unanimous consent that further reading of the amendment be dispensed with.

Mr. GRAHAM of Florida. Today, the Senate began consideration of the Jobs and Growth Tax Relief Reconciliation Act of 2003. This is an appropriately named act because the economy is very much in need of assistance. The President's mishandling of the economy since January 20, 2001, is almost incredible. Two million-plus Americans have lost their jobs since that date. We have seen a 50 percent increase in the unemployment rate to last month's 6 percent. The stock market has lost a quarter of its value. There has been a $7 trillion turn in the Federal Government's finances--from a $5 billion projected surplus to today's $2 trillion projected addition to the national debt. The CBO's most recent estimate is that the deficit this year will top $350 billion--the largest annual deficit ever. Economic growth has been anemic--on average, 1 percent, and consumer confidence has dropped 34 percentage points. What has been the response to this dismal economic record? The President has proposed the same prescription that he proposes for nearly all of our mounting domestic problems: tax cuts for the very wealthy. Madam President, I don't think we have a problem; we have at least three interconnecting challenges. The first is to regenerate a moribund national economy; the second is to prepare for the next decade, when our Government will be faced with enormous additional expenses, particularly in Social Security and Medicare; and finally, the immediate crisis that is occurring because of our States' financial positions and what that is doing to wage loss, benefits loss, and a denial of the services that represent the ultimate safety net under much of our population. The bill the Finance Committee has reported very closely follows the President's plan. There are two fundamental aspects of this plan with which I take the strongest exception. First, the mix of tax cuts that it includes will do little to stimulate the economy, which we desperately need. Second, the cost of this program is not offset, so Federal deficits and the debts that we will pass on to our children and grandchildren will grow even greater. Why is a stimulus important--a real stimulus? It is important because consumer spending makes up two-thirds of our economy; so as consumers go, so goes our economy. The economy is struggling today not because we don't produce enough goods and services in the United States but because consumers are reluctant to spend what they have to purchase those goods and services. Madam President, I would like to direct your and my colleagues' attention to this picture. This picture was taken on a desert airport in Senator Kyl's State of Arizona. It is a picture of a portion of the over 300 commercial airliners currently parked on that airfield. I submit these airplanes are not parked on the airfield in Arizona because Boeing cannot build enough airplanes. They are parked there because there are not enough passengers who want to or are able to or are willing to fly in those airplanes. This administration, in spite of that fundamental truth, has pursued a plan that does not emphasize demand-side stimulus. The administration believes producing goods and services is more important than selling those goods and services. This picture of airplanes parked is evidence that producing goods is not enough. For the economy to get back on track, more Americans must shop at our malls, go out to eat, and buy airline tickets. Putting more money quickly into the hands of those who are the most likely to spend it is the best formula for jump-starting this economy. Rather than spread tax cuts broadly to spur consumer demand, the President's plan directs most of the tax cuts to the wealthiest taxpayers. President Bush believes we need to reduce the tax burden on investment by completely exempting dividend income from the income tax. By doing so, President Bush hopes to spur savings and investments. Businesses are not going to make such investments when today, on average, they are only using 75 percent of their capacity. The plan I offer today provides substantial tax relief for all working Americans. My plan will give to the typical two-working-member family paycheck tax relief of up to $1,530 this year and again $1,530 next year. Let me recite a couple of recent experiences. Last Friday, I taught school at Oyster River High School in Durham, NH. I talked to some of the teachers at that school. Very few of them are invested in the stock market. Those who are invested in the stock market are invested generally through a plan, such as a 401(k) retirement plan, where the dividends are already exempt from taxation. So they will get zero benefit from this plan. On Sunday of this week, I worked at Drake's Diner in Des Moines, IA. I talked to the bus boys, the waiters, the cooks, and the dishwashers. I tell you, their salary level is not sufficient for them to have a significant presence in the stock market. This paycheck relief plan will put real money in the pockets of real Americans who will spend it to stimulate the demand that is so critical to getting this economy jump-started. This paycheck tax relief will inject $200 billion into the economy over the next 2 years. During the Finance Committee markup, some criticized the wage tax as being a threat to the finances of the Social Security trust fund. That argument is a red herring and has no basis. My amendment makes absolutely no changes to the payroll taxes paid by employers and employees and, therefore, does not affect one thin dime of the revenues that go in to the Social Security and the Medicare trust funds. My amendment provides a refundable income tax credit for workers designed to provide the same benefits as would a temporary reduction in the payroll tax. My plan also includes tax relief for small businesses. It substantially increases the amount of machinery and equipment that a small business can deduct; therefore, creating an incentive for that business to make its investment now when we need it as opposed to deferring it to a future date. My amendment will provide States with over $40 billion in aid over the next 12 months. This temporary assistance is provided to the States by the Federal Government, increasing its share of Medicaid costs. Greater assistance from the Federal Government will help forestall drastic cuts in State health programs that will affect those least able to absorb them. Directing relief to the Medicaid reimbursement rate is the most efficient means by which to get these funds to the States. Finally, my plan bolsters unemployment compensation benefits. Many of those over 2 million people who have lost their jobs since January 20, 2001, have lost them for a considerable period of time and, thus, have exhausted both their State and now their Federal unemployment benefits. My proposal would extend the Federal program, which is currently scheduled to expire at the end of this month, through November. It would provide 26 weeks of benefits to those who are struggling to find work in this stagnant economy. It would also provide 13 weeks of benefits to the approximately 1 million workers who had exhausted their benefits before the end of last year but who were excluded from the extended program which we enacted in January. Finally, this proposal gives the States the option of modernizing their unemployment compensation programs to better cover part-time and low-wage workers. In summary, the plan I have submitted will stimulate demand and, thus, has the better opportunity to stimulate the economy. It focuses all the money in the next 24 months, as Senator Nelson from Nebraska commented that one of his objections to several of the proposals was they would spread the money out over a 10-year period and, in the case of the President's plan, an infinite period because the tax cuts would stay in effect assumedly until Congress acted to do otherwise, whereas what we need to do is the money that is available to stimulate the economy needs to be focused in the period when the economy needs stimulation. Finally, this plan is fair. It treats all Americans, whether they are teaching school in Oyster River or whether they are busing tables at Drake's Diner, fairly and gives them an opportunity to be part of the recovery of the American economy. Maybe even more important, my plan does not ask our children and grandchildren to foot our bill. We have had an incredible buildup of debt. If I could use as an example my own family. My father was born in 1885. On the day he was born, he inherited, as his share of the Federal national debt, $33. I was born in 1936. On the day I was born, I inherited a national debt of $264. My oldest daughter was born in 1963. When she was born, she inherited as her portion of the national debt $1,634. The last number I am going to give you is stunning, almost unbelievable. My youngest granddaughter was born 3 years ago. When she was born, her share of the national debt was $20,163. In four generations of one American family, we have gone from $33, as that citizen's portion of the national debt, to $20,163. This expansion of debt is not only immoral, it is also bad economics. By putting the cost of their tax plan on the Nation's credit card, the President jeopardizes the very economic growth we hope to stimulate. Increasing the debt reduces national safety, crowds out private sector borrowing, increases the cost of capital for the private sector, and ultimately reduces economic potential. Even further, there is a commonsense reason to offset the cost of the stimulus bill so that it does not increase the national debt. In just 8 years, the first wave of the baby boom generation, born after World War II, will become eligible for full Social Security and Medicare benefits. Today, there are 39\1/2\ million Americans eligible for Social Security and Medicare full benefits. In the year 2011, 8 years from today, when the first of the baby boomers become eligible, there will be 45 million. At the time when the last of the baby boomers turn 65, which will be in the year 2030, there will be nearly 72 million participants in these two programs. Those numbers are hard to comprehend, but what they say is that our Federal Government has entered into a contract with our citizens paying through this very payroll tax that we discussed earlier, with the expectation that upon retirement, they will have purchased some benefits, both economic and medical security. My plan is fully offset, primarily by suspending some of the tax cuts enacted in 2001, tax cuts that have yet to go into effect. My proposal suspends the reductions in the top three income tax rates planned to go in effect in 2004 and in 2006. My plan freezes the planned cuts in the estate tax scheduled beyond 2006. My plan also clamps down on those Americans who avoid paying taxes by investing in abusive tax shelters, moving their corporate headquarters to a file cabinet in Bermuda or hiding assets offshore. We need to bring America back to a time when our economy was booming and our Federal finances were sound. The President's plan will not do that. My plan will. I ask for the yeas and nays on this amendment.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, I am enormously proud that on Tuesday, the Florida Veterans Mobile Service Center came to Capitol Hill as part of the National Coalition for Homeless Veterans Annual Membership Meeting and Conference. The Florida Veterans Mobile Service Center is a 40-foot van equipped with two exam rooms, as well as facilities for dental care. The Center travels the State of Florida providing care to homeless veterans who live in rural encampments. The unit offers homeless veterans immediate assistance of food and clothing, health screening and assessment, VA benefit determination and counseling, as well as assessment of housing, mental health, substance abuse, employment, educational and vocational needs. That the Center is mobile, allows its team--comprised of staff from Volunteers of America and Department of Veterans Affairs--to go where their assistance is most needed. This community service provider offers homeless veterans a unique way to receive quality care while still ensuring their sense of dignity and respect. I take pride in the fact that my State offers this initiative, effective source of help to our Nation's veterans. We all owe those who risked their lives defending this country a debt of gratitude, and I am so thankful to the Center's hardworking, compassionate team for doing their part in paying that debt. I especially want to point out the dedication of Scott Martin, who drove more than 900 miles to bring the Florida Veterans Mobile Service Center from Tampa, FL, to Washington, DC. I also would like to thank Kathryn Spearman, president and CEO of Volunteers of America of Florida, Ray Tuller, chief financial officer of Volunteers of America of Florida, and Ed Quill, director of external affairs for Volunteers of America of Florida, all of whom joined Scott here in Washington.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, throughout its history, the Department of Veterans Affairs, VA, has made great strides in medical research. At a time when VA's medical and prosthetic research program is being starved of vital funding, as ranking member of the Committee on Veterans' Affairs, I would like to draw attention to a significant discovery the program recently has made. As highlighted in an April 22, 2003, article in The Washington Post, researchers at the Minneapolis VA Medical Center found that not only do seniors who get vaccinated against the flu gain protection from the disease, but they also reduce their risk of hospitalization from pneumonia, cardiac disease and stroke. The VA study, published in the April 3, 2003, issue of The New England Journal of Medicine, also found that during a given flu season, vaccinated elderly patients were half as likely to die as their unvaccinated peers. Since its inception, the VA research program has made landmark contributions to the well-being of veterans and the Nation as a whole. Past VA research projects have resulted in the first successful kidney transplant performed in the U.S., as well as the development of the cardiac pacemaker, a vaccine for hepatitis, and the CAT and MRI scans. This new discovery is yet another example of the crucial research work done by the VA, and of why we must keep the research program sufficiently funded. I ask unanimous consent that the article from The Washington Post highlighting the VA research study on the benefits of the flu vaccine be printed in the Record.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Yes.

Mr. GRAHAM of Florida. I thank the Senator. Mr. President, the real priorities of the President and those who wrote this budget can be seen by comparing two numbers: The tax cuts authorized in this resolution total $1.3 trillion over the next 10 years. Over the same 10 years, the Federal budget will run deficits totaling $1.4 trillion. The priority of those supporting this resolution is crystal clear: tax cuts today, in exchange for an even higher mountain of debt that will be paid by our children and grandchildren. So strong is the lust for tax cuts, the conference committee on the budget has gone so far as to develop an unprecedented gimmick by which the Senate and the House of Representatives will consider a portion of these tax cuts later in the year. Under normal procedures, a conference report is to be a consolidated single resolution of all of its issues. We are presented with what is called a conference report, which has a dramatic difference between tax cut allowances in the House--$550 billion, over 10 years--and tax cuts allowed in the Senate--$350 billion. The goal of the majority is to give the appearance of limiting tax cuts to the Senate-passed limit of $350 billion, while paving the way for fast-track tax cuts of $550 billion. During the debate on the Senate's budget resolution a couple of weeks ago, I voted against any tax cut in the budget. Why? Because, in my judgment, they do not reflect our Nation's priorities. This budget should seek to reduce the national debt. It should seek to strengthen and reform Social Security. It should seek sufficient funds to modernize the Medicare Program and add a meaningful prescription drug benefit. It should provide funds for programs the Federal Government has committed itself to which are so critical in the lives of our children. This budget includes no adequate money for these priorities. It is laser like in its focus on tax cuts. The tax cuts allowed by this budget are not only irresponsible, they are misdirected. Although their advocates claim their purpose is to create jobs and stimulate economic growth, these tax cuts will not do the job. That is especially true of the proposed tax cut on stock dividends. To truly stimulate the economy, any tax cuts should be targeted so they boost demand for consumer goods and services. Most economists agree that this is best achieved by directing the tax cuts to low- and middle-income families and small businesses. I personally would prefer a short-term reduction in the payroll tax, paid for by general revenue, holding the Social Security and Medicare trust funds whole. The tax cuts contemplated by this resolution are directed at upper income families who are the least likely to boost their purchases of goods and services. We had a debate a few moments ago as to whether this was class warfare. That is in the eyes of the beholder. But one thing that it clearly is: It is intergenerational warfare. It is warfare against children, with cuts in education, the failure to fund the No Child Left Behind Act, which we passed 2 years ago, cuts in childcare, cuts in women's, infant's, and children's health care. The irony of this intergenerational warfare against children is that they will end up paying, during their adulthood, the cost of the deficits which we are adding today. It is also intergenerational warfare against older Americans. Some would argue that this budget includes $400 billion for a Medicare prescription drug benefit. They know full well that $400 billion is inadequate to provide an affordable, comprehensive, universal prescription drug benefit for America's seniors. Why do we know this? Last year, 52 Senators voted for a plan, which I had offered, to provide to Medicare beneficiaries real drug benefits, with no gimmicks, no gaps, no hidden ``gotchas.'' With inflation and the change in demographics of the older population, such a benefit would now cost $619 billion over 10 years. Limiting a prescription drug benefit to $400 billion means that 89 percent--89 percent--of Medicare beneficiaries, those who have elected to stay in the fee-for-service Medicare Program, will go without prescription drug coverage, unless they either have very low incomes or very high drug costs. The only way to provide a drug benefit within this budget's framework is to limit the benefit to a relatively small number of Medicare beneficiaries. If they should happen to live in an area that offers health maintenance organization coverage--and millions of our seniors do not-- Medicare beneficiaries will have no choice but to move into managed care plans because there is no other way that they will be able to access the lifesaving prescription drugs they need. It is wrong to force seniors to make this choice. It is irresponsible to approve a budget that ignores vital priorities such as modernizing the Medicare Program, securing Social Security's future, reducing the national debt, while promoting massive tax cuts for the wealthiest of Americans. I urge my colleagues to take responsibility for our actions, to pay for our obligations now--not to pass a budget that promotes unaffordable tax cuts, tax cuts with consequences that will be felt now, particularly by children and older Americans, tax cuts with costs that will be passed on to future generations to pay. Therefore, I shall vote no on this budget resolution and hope that we might have an opportunity later in the year to reconsider this misguided proposal. I ask unanimous consent that an item which appeared in the New York Times of April 9, titled, ``No New Tax Cuts,'' which was authored by former Senators Bob Kerrey, Sam Nunn, and Warren Rudman, as well as Peter Peterson and Robert E. Rubin, and Paul A. Volcker be printed in the Record.

Mr. GRAHAM of Florida. Mr. President, how much time would the Senator from Florida like?

Mr. GRAHAM of Florida. Taking the position of the ranking member of the Budget Committee, I shall allocate 10 minutes to my colleague.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, I rise today with my friend and colleague from Rhode Island, Mr. Chafee, and a bipartisan group of co- sponsors to introduce the Immigrant Children's Health Improvement Act of 2003. This legislation will give states the option to provide Medicaid and State Children's Health Insurance Program, CHIP, coverage to legal immigrant children and pregnant women during their first five years in this country. Medicaid and CHIP are vital components of our nation's health care safety net. They provide coverage to over 40 million non-elderly, low- income Americans, most of them children. These programs have helped dramatically reduce infant mortality, and they have provided health care financing for millions of poor children whose families cannot afford the high cost of private health insurance. However, for many low-income families that are eligible for Medicaid and CHIP, these safety net programs are little more than a mirage in a desert--an illusion to those who need them most. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, commonly known as the welfare reform law, arbitrarily barred states from using federal funds to provide health coverage to low-income legal immigrants during their first five years in the United States. While the goal of welfare reform was to encourage self-sufficiency in adults, the legislation unintentionally punished children. Prior to 1996, Medicaid coverage was available to qualified children, parents, seniors, and people with disabilities in both citizen and legal immigrant families alike. After passage of the 1996 welfare reform law, many low-income and working legal immigrant families were left without a viable option for health insurance coverage. In fact, while the percentage of our nation's children with health insurance has risen in recent years, the percentage of children in immigrant families with health insurance has fallen. According to the Kaiser Commission on Medicaid and the Uninsured, in 2000, half of low- income children in such families were uninsured. Florida is home to over half a million uninsured children, many of whom are legal immigrants. Take the Sardinas family of Miami. The Sardinas family immigrated to the United States from Cuba in 2001. Mr. Sardinas works in a factory assembling airplanes while Mrs. Sardinas maintains a low-wage job. The family's four children--Swani, 17; Sinai, 13; Samuel, 8; and Sentia, 5--have been on a State waiting list for health insurance for almost two years. Sentia has allergies and Swani suffers from asthma. Mrs. Sardinas worries about not having access to regular check-ups for her children, but she has no choice. She does not know what the family will do if Sentia has a severe allergic reaction or Swani is hospitalized after an asthma attack. The Immigrant Children's Health Improvement Act eliminates the arbitrary designation of August 22, 1996, as a cutoff date for allowing children to get health care. More than 155,000 children like Swani, Sinai, Samuel, and Sentia will have access to health coverage each year, allowing them to receive preventive services, have their chronic conditions properly diagnosed and treated, and receive timely care for acute conditions. States have asked for this option. In its 2003 Winter Policy Report, the National Governors Association endorsed this common-sense policy proposal. The National Council of State Legislators has also endorsed this bill. Twenty-two States are already providing health coverage for legal immigrants through State-funded replacement programs. However, severe budget shortfalls may prevent such states from being able to continue these important programs in the future. Our bill provides immediate fiscal relief for these States by allowing them to draw down federal matching funds. It also gives states that are not currently providing health coverage to legal immigrant children and pregnant women the flexibility to do so. Legal immigrants pay taxes, serve in the military, and have the same social obligations as United States citizens. Legal immigrant children are, as much as citizen children, the next generation of Americans. It is important that all children, both citizen children and legal immigrant children alike, start off on the right foot towards full civil participation. Our bill is supported by Senators McCain, Daschle, Jeffords, Bingaman, Lincoln, Collins, Kennedy, Feinstein, Corzine, Levin, Sarbanes, Dodd, Landrieu, Boxer, Kerry, and Bill Nelson. Representatives Lincoln Diaz-Balart of Florida and Henry Waxman of California have also introduced bipartisan companion legislation in the House. We call upon Congress and the President to act this year and pass this important bill.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, I rise today with my friend and colleague from Rhode Island, Mr. Chafee, and a bipartisan group of co- sponsors to introduce the Immigrant Children's Health Improvement Act of 2003. This legislation will give states the option to provide Medicaid and State Children's Health Insurance Program, CHIP, coverage to legal immigrant children and pregnant women during their first five years in this country. Medicaid and CHIP are vital components of our nation's health care safety net. They provide coverage to over 40 million non-elderly, low- income Americans, most of them children. These programs have helped dramatically reduce infant mortality, and they have provided health care financing for millions of poor children whose families cannot afford the high cost of private health insurance. However, for many low-income families that are eligible for Medicaid and CHIP, these safety net programs are little more than a mirage in a desert--an illusion to those who need them most. The Personal Responsibility and Work Opportunity Reconciliation Act of 1996, commonly known as the welfare reform law, arbitrarily barred states from using federal funds to provide health coverage to low-income legal immigrants during their first five years in the United States. While the goal of welfare reform was to encourage self-sufficiency in adults, the legislation unintentionally punished children. Prior to 1996, Medicaid coverage was available to qualified children, parents, seniors, and people with disabilities in both citizen and legal immigrant families alike. After passage of the 1996 welfare reform law, many low-income and working legal immigrant families were left without a viable option for health insurance coverage. In fact, while the percentage of our nation's children with health insurance has risen in recent years, the percentage of children in immigrant families with health insurance has fallen. According to the Kaiser Commission on Medicaid and the Uninsured, in 2000, half of low- income children in such families were uninsured. Florida is home to over half a million uninsured children, many of whom are legal immigrants. Take the Sardinas family of Miami. The Sardinas family immigrated to the United States from Cuba in 2001. Mr. Sardinas works in a factory assembling airplanes while Mrs. Sardinas maintains a low-wage job. The family's four children--Swani, 17; Sinai, 13; Samuel, 8; and Sentia, 5--have been on a State waiting list for health insurance for almost two years. Sentia has allergies and Swani suffers from asthma. Mrs. Sardinas worries about not having access to regular check-ups for her children, but she has no choice. She does not know what the family will do if Sentia has a severe allergic reaction or Swani is hospitalized after an asthma attack. The Immigrant Children's Health Improvement Act eliminates the arbitrary designation of August 22, 1996, as a cutoff date for allowing children to get health care. More than 155,000 children like Swani, Sinai, Samuel, and Sentia will have access to health coverage each year, allowing them to receive preventive services, have their chronic conditions properly diagnosed and treated, and receive timely care for acute conditions. States have asked for this option. In its 2003 Winter Policy Report, the National Governors Association endorsed this common-sense policy proposal. The National Council of State Legislators has also endorsed this bill. Twenty-two States are already providing health coverage for legal immigrants through State-funded replacement programs. However, severe budget shortfalls may prevent such states from being able to continue these important programs in the future. Our bill provides immediate fiscal relief for these States by allowing them to draw down federal matching funds. It also gives states that are not currently providing health coverage to legal immigrant children and pregnant women the flexibility to do so. Legal immigrants pay taxes, serve in the military, and have the same social obligations as United States citizens. Legal immigrant children are, as much as citizen children, the next generation of Americans. It is important that all children, both citizen children and legal immigrant children alike, start off on the right foot towards full civil participation. Our bill is supported by Senators McCain, Daschle, Jeffords, Bingaman, Lincoln, Collins, Kennedy, Feinstein, Corzine, Levin, Sarbanes, Dodd, Landrieu, Boxer, Kerry, and Bill Nelson. Representatives Lincoln Diaz-Balart of Florida and Henry Waxman of California have also introduced bipartisan companion legislation in the House. We call upon Congress and the President to act this year and pass this important bill.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. Mr. President, I am pleased that the Senate is considering the CARE Act today. By enacting this legislation, Congress acknowledges the inherent good in millions of Americans. The bill includes a number of changes to the tax rules that will make it easier for individuals to donate to the tens of thousands of worthwhile charities that operate across this nation. By making the charitable deduction available to those taxpayers who don't itemize their deductions, married couples can deduct as much as $500 of the contributions they make to charity. Provisions in the legislation also make it easier for individuals to donate funds they have saved in an IRA. Rather than having to report this amount in income and then take a commensurate deduction for the contribution, the new rule allows the funds to be transferred directly to the charity. The bill also eases the burden of gaining tax benefits for those individuals who wish to make donations of food, books, and scholarly compositions to charity. While these charitable giving incentives are useful to many citizens and the charities they desire to help, this legislation may be even more important because it contains strong provisions that will help the Internal Revenue Service and the Nation's courts crack down on abusive tax shelters. In his last report to the IRS Oversight Board, the IRS Commissioner Charles Rossotti identified abusive corporate tax shelters and promoters of tax schemes of all varieties as among the most serious compliance problem areas. In addition to the revenue lost by the Federal Government--funds that could be used for defending the homeland, education, and protecting the environment--the proliferation of these schemes represents in Commissioner Rossotti's words ``a failure of fairness to the millions of honest taxpayers whose commitment to paying their taxes is based on the principle that the IRS will act if they or their neighbors do not pay their fair share.'' This administration has been slow to embrace measures that crack down on those who manipulate the Tax Code to avoid paying their taxes. Despite the previous administration having identified the proliferation of tax shelters as a large and growing problem as far back as 2000, President Bush's initial budget contained no legislative recommendations to stem the proliferation of tax shelters. Only after it became clear that Congress was going to address this issue, did the Bush Administration take notice. Even then, their approach to combating this problem was, at best, timid. The Bush administration's solution was to continue to rely solely on the Service's ability to detect an abusive tax shelter from within the minutiae of a taxpayer's tax return. If the Service was fortunate to uncover a tax shelter, it could then initiate steps to shut it down. This is a difficult and time-consuming process for the IRS to undertake. While disclosure of these schemes by taxpayers and promoters can be useful in combating the proliferation of tax shelters, the IRS also needs some additional tools. This is why the bill includes a statutory requirement that transactions utilized by taxpayers have an economic rationale beyond the creation of tax benefits, commonly referred to as the ``economic substance doctrine''. The bill backs up this new requirement with stiff penalties for taxpayers who engage in such transactions. It is a simple requirement. You don't even need to be a tax attorney to understand it. Simply put, it would require that transactions conducted by taxpayers have a business purpose. What does that mean? The proposal requires that a taxpayer have a reason other than the creation of tax benefits for engaging in a transaction. A cursory review of the recent Joint Committee on Taxation report on the tax returns of Enron Corporation highlights the dire need for this legislative change. The Joint Committee on Taxation found that Enron paid total federal income taxes for the period 1996 through 2001 of $63 million. During this same period Enron reported to investors that it had profits of nearly $6 billion. How was Enron able to paint such obviously contrasting pictures? According to the Joint Committee on Taxation's report, Enron transformed its tax department from an administrative function to a profit center. Enron spent millions of dollars on tax attorneys and shelter promoters who helped it cook up transactions that had no purpose other than to artificially reduce its tax liability. According to the JCT Report, these transactions: demonstrate the need for strong anti-avoidance rules to combat tax-motivated transactions that might satisfy the technical requirements of the tax statutes and administrative rules, but that serve little or no purpose other than to generate income tax or financial statement benefits. This bill provides those strong anti-avoidance rules, and I hope they will become law sooner rather than later.

Mr. GRAHAM of Florida

Mr. GRAHAM of Florida. I call up amendment No. 459.

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

Mr. GRAHAM of Florida. Mr. President, on behalf of a large number of our colleagues--Senators Kerry, Mikulski, Murray, Dorgan, Dayton, Daschle, Johnson, Landrieu, Lautenberg, Bingaman, Clinton, Biden, Edwards, Rockefeller, Akaka, and my colleague Senator Nelson of Florida--I offer an amendment today to address the cost of providing health care to troops serving in the war in Iraq. This amendment would provide to the Veterans' Administration the additional funds it will require to meet the needs of returning service men and women. There is a history behind this amendment. Following the 1991 gulf war, returning servicemembers began to report unexplained illnesses and ailments that many linked to their service. Under the law that existed and controlled at that time, only those who had been granted a claim for a service-connected disability or demonstrated financial need could turn to the VA for health care services. The effect was to leave many of the returning veterans without medical coverage. Reservists were particularly vulnerable as they lost their military health care benefits shortly after returning. In 1998, Congress acted to ensure that no combat veteran endures such a delay again. This chart indicates the evolution of this process with the gaps that were identified after the first gulf war being filled by Public Law 105-368 which assured that combat veterans are eligible for VA care for 2 years after discharge or separation from active duty, and it also extended this coverage to include reservists and National Guard personnel, so that today any servicemember who participates in a theater of combat is eligible for free VA health care for 2 years after separation or release from active duty. I emphasize, this is not discretionary. We are not talking about an item that we can decide to omit. These veterans have a congressionally sanctioned right, an entitlement to these VA health services. On March 19, 2003, the United States committed itself and our sons and daughters to a second gulf war, this time in the country of Iraq. The Senate supported this second war. Now the Senate must provide support for them. We owe it to them to make certain they have the proper equipment to win the war, and we also must take care of these men and women when they have completed their duty to our Nation. This is why I rise today to offer an amendment to provide to the Veterans' Administration $375 million in funding to provide for the care that we are obligated through the VA to make available to returning troops. This is a downpayment on the cost of paying for these returning servicemembers, a cost of war that has thus far been overlooked. The estimated cost of $375 million is based on the percentage of veterans who sought VA health care and benefits following the 1991 gulf war multiplied by the current VA average per patient cost of care. Briefly, to look at the math, in the 1991 gulf war, there were 582,136 persons who were subsequently separated from the military. That represents 82 percent of the force that was committed in the first gulf war. Of that number, 166,717 were able to establish that they had a service-connected disability, or 29 percent of the total of now veteran, former combat personnel in the first gulf war. In addition to that, 287,848, or half of those veterans who were combat service personnel in the first gulf war, used the VA for outpatient health care services. We use these numbers times the $3,300 of estimated annual cost as the basis for the amendment we are offering. We assumed that the blend between those who had a service-connected disability and those who used the VA for nonservice disability would equal one-third of those who were deployed into the field. That would result in a number of 340,000 troops who would be eligible, including reservists and National Guard, times $3,300, or $375 million to meet this mandate and obligation of the VA. No provision has been made for this responsibility of the VA in legislation today. Nearly one-third of the 582,000 veterans in the first gulf war have already been granted service-connected disability claims, and we can assume there will be a minimum of a similar number of veterans who will come from this second gulf war. I indicate to my colleagues that this is a downpayment because as additional service personnel, including reservists and National Guard, either by the end of their term or other voluntary action, are separated from service, they will become eligible for this 2 years of VA health care. There is an issue raised: Can the VA absorb this cost within its current budget? It has been stated that it could because on January 17, 2003, the VA cut off the future enrollment into the VA Health Care System for moderate and higher income veterans. At that time, the VA cited rising costs, long waiting times, and focusing on core constituencies as the rationale for limiting services. There was no reference in January of 2003 that the Veterans Administration was doing this in order to prepare itself financially to meet the obligation it was going to have on returning troops. In a press release on January 17, Secretary of the VA Principi said: VA is maintaining its focus on the health care needs of its core group of veterans, those with service-connected disabilities, the indigent, and those with special health care needs. Again, no reference to the new obligation the VA was going to have as a result of a war which was still almost 2 months prior to commencement. In the article in the Gainesville Sun on March 30, Secretary Principi tried to justify ending access to VA health care services for moderate and higher income veterans because of the war. He said at that time: It's very important at this time, when you've got men and women in combat, that we assure we have the capability to treat them, that we're not trying to care for everybody at the expense of those who take a bullet. Some 10 weeks later, the rationale for the cutoff of moderate and high-income veterans was because of the war, whereas at the time it was done it was because the VA needed to be able to maintain its focus on its current responsibility. I ask unanimous consent to have printed in the Record the Gainesville Sun article and the VA press release.