Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, just to remind the Senator from Massachusetts, I was chairman of the committee during this period of time for 4 months--from January until May of 2001. The Democratic Party chaired this committee from June of 2001 through all of the debate on the Medicare issue. I was not in charge of that committee at that time.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise to address the progress that's been made in how the Trade Adjustment Assistance, or TAA, program operates. You may recall that in 2002, I worked with Senator Baucus to shepherd landmark TAA reforms through Congress. President Bush acknowledged the role of TAA as an important part of his comprehensive trade agenda when he signed these reforms into law in August of that year. The reform legislation made a number of changes to TAA, including, for the very first time, the addition of a new health coverage tax credit, or HCTC, and a new wage insurance provision, as well as a doubling of the funds available for retraining workers dislocated by trade. Given the number and significance of the changes made to TAA, I joined Senator Baucus in asking the Government Accountability Office, or GAO, to study how the TAA Reform Act is being implemented. Separately, we asked GAO to study how the health coverage tax credit is being implemented. The GAO report on TAA came out last month, and while it's clear some of the details of implementation merit further study, overall the report shows a marked improvement in the way TAA is administered. The GAO report notes that the Department of Labor has reduced its average petition-processing time from 107 days in 2002 to 38 days in 2003, and the percentage of petitions processed in 40 days or less increased from 17 percent in 2002 to 62 percent in 2003. Certified workers are enrolling in training services more quickly than in prior years. More broadly, it is evident that the funds available under TAA are beginning to be administered more effectively. One of the hurdles that Labor officials had to overcome was a perception, at least in some states, that all TAA-eligible workers are entitled to training. According to GAO, that perception contributed to problems with managing TAA training funds. In response, the Labor Department has encouraged, States to take steps to better administer TAA funds. The Labor Department has also improved the way it disburses training funds so that State officials can better target the funds that are available to workers who are truly in need of training. These efforts are starting to pay off; in fact, after the GAO report came out, we learned that thanks to improved administration by the Labor Department, $28.4 million dollars was available at the end of the 2004 fiscal year for supplemental distribution. Last week my home State of Iowa received an additional $559,626 dollars in additional TAA training, job search; and relocation funds. These funds will help ensure that trade-impacted Iowans will receive the benefits they are entitled to under the program. The same is true for States across the country. I think we can all agree that it is good to see our taxpayer dollars being spent more wisely. Unfortunately, the GAO report fails to capture the full breadth of the improvements made by the Labor Department. The report States that 19 states temporarily discontinued enrolling TAA-eligible workers in training at some point between fiscal years 2001 and 2003 because they lacked adequate training funds. However, GAO collected only aggregate data, so it is unclear how many States temporarily discontinued enrollment before funding was doubled in the TAA Reform Act of 2002, versus after. That information would have been helpful. The report does note that six States temporarily discontinued enrollment during fiscal year 2004, which is quite puzzling given the fact that the TAA program had funds left over at the end of the year. I think it is important to note that Labor dispatched technical assistance teams to help those States implement needed improvements so that workers could get access to training. Since there wasn't any shortfall in funds, it seems those 6 States can work with Labor to administer the program more effectively. So, while Labor's progress has been impressive, there's certainly more work to be done. The wage insurance provision known as alternative TAA for older workers is a brand new program, so it is not surprising that implementation has not been without hiccups. But things are improving. According to the Labor Department, as of August 2004, 32 States had already issued alternative TAA payments and another 11 States had the capability to do so. In addition, 48 States reported that information on the alternative TAA program is provided as part of their rapid response activities. Approved petitions for alternative TAA increased from 60 in fiscal year 2003 to 937 in fiscal year 2004. Importantly, since alternative TAA went into effect in August 2003, well over 700 workers have received assistance from this new program. As for the health coverage tax credit, it is also a brand new program. The just-released GAO report shows that the HCTC was implemented at record speed and is providing valuable health care coverage to thousands of displaced workers and recipients of benefits from the Pension Benefit Guaranty Corporation, or PBGC. While the initial take-up rate may not be as high as was estimated at the time the TAA Reform Act was passed, even GAO noted that determining an actual rate of participation rate is difficult. Not all workers initially identified as being eligible will meet all the requirements, and of those that do it is not apparent how many have access to healthcare coverage via their spouse. In addition, enrollment numbers for the HCTC do not reflect all of the dependents who also benefit from the HCTC. The Labor Department has reached out to educate the public about these and other aspects of the TAA Reform Act. Labor officials conducted 15 training sessions with stakeholders across the country in fiscal years 2002 and 2003. During fiscal year 2004, six regional forums were held for workforce practitioners in which Labor began focusing on policies and practices that integrate service delivery to dislocated workers in need of services. Labor administers a wide array of programs for trade affected workers, including both TAA and the Workforce Investment Act, or WIA. In the past, these programs have been splintered, leading to inconsistent service delivery. Through initiatives started by the current Department of Labor, workers are now receiving a wider array of services in faster time. While it is clear more work remains, the GAO reports do bear witness to the progress that's been made. I will continue working with Senator Baucus to monitor developments and oversee implementation of the TAA Reform Act. We must continue to assess how the program can be improved. For example, there is currently no incentive for States to report the most accurate information possible. We should consider ways to improve the data that is reported, so the TAA program's true impact can be fully assessed. Additional study by GAO may prove helpful in this and other areas. Labor started its own 5-year rigorous impact evaluation of the TAA program this year, and that should also prove helpful. But while there is room for improvement, it is also true that much has been accomplished, and I want to take this opportunity to thank the hard working officials at the Department of Labor for their dedication in implementing the significant changes brought about by the TAA Reform Act of 2002. I also thank officials at the Internal Revenue Service, the Centers for Medicare and Medicaid Services, and PBGC, along with those in State agencies, who have worked so hard to implement the HCTC.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that text of this bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, the state of children's health insurance program, or SCHIP, is one of the largest and most successful expansion of public health insurance for children since the creation of Medicaid. This vitally important program was created through a bipartisan commitment to expanding health coverage for children. Because today is the last day of the fiscal year for the Federal Government, $1.1 billion in unspent SCHIP funds are set to expire. These are funds that have been reallocated and then subsequently have had their availability extended several times over the past few years. In addition approximately $660 million in unspent 2002 state allotments are available to Secretary Thompson to redistribute to states that have spent their 2002 allotments. I want to go on the record to say that I am absolutely committed to finding a bipartisan solution that will keep the $1.1 billion in the SCHIP program. Congress can, and should, address this issue before recessing in October, but if not, certainly before the close of the session. I want to work together with my colleagues in both parties toward a productive approach. The SCHIP program was created when people reached across the aisle and joined together to do the right thing to get kids health coverage. Today we need to move forward with this same spirit of cooperation and commitment. We can also improve the SCHIP program to get more kids covered. In 2003, SCHIP covered 5.8 million targeted low-income individuals. However, a substantial number of children who are eligible for health coverage through SCHIP are not enrolled. This is a serious issue that deserves our thoughtful attention. We can do better. The Federal Government should commit itself to getting more of these kids enrolled. They are entitled to health coverage under this vitally important program, yet billions of SCHIP dollars lie unspent. These unspent dollars are not helping any children today. I would hope that we can work out a plan to target a portion of the $1.1 billion in expiring SCHIP funding towards a coordinated SCHIP outreach plan so that as many eligible children as possible receive the coverage they deserve. Of course, I am aware that there are fiscal concerns from states that can impede their ability to use State dollars to match Federal SCHIP dollars. Some are also concerned that increased enrollment will place a burden on states already struggling with the rising cost of health care. I really believe, however, that we can find a way to get more kids covered and provide states incentives to do so. The fact that these funds are expiring does not mean that the SCHIP program is in danger of imminent collapse. That is not the case. While I am informed by CMS that six States face potential SCHIP shortfalls in FY05, Secretary Thompson has indicated that, unless Congress passes legislation to address these shortfalls, he will redistribute the approximately $660 million in 2002 allotments, which is more than enough to make up for these shortfalls in 2005. Working together, Congress can reallocate the expiring $1.1 billion after tomorrow with no impact on the SCHIP program. In fact, in the past, Congress has acted months later to reallocate expired SCHIP funds back into the program. So it is not the case that September 30th is the ``drop dead date'' for action. In fact, when the FY1998 and FY1999 reallocations expired at the close of FY2002, Congress acted in 2003 to ``reinstate'' these funds through September 30, 2004. So, even if Congress acts in November to reallocate these funds, this is how Congress has dealt with the issue in the past and it can be done again. We can work together to get the job done. I am committed to working with members on both sides of the aisle to reach a bipartisan agreement so that we can keep the $1.1 billion in the SCHIP program, address the projected 6-state shortfall and get as many kids as possible the health care coverage for which they are entitled. I believe we can do it if we all commit ourselves to putting kids first and moving ahead together.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that text of this bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. GRASSLEY

Mr. GRASSLEY. I yield 5 minutes to the Senator from Utah for that purpose.

Mr. GRASSLEY. Ten minutes, yes.

Mr. GRASSLEY. Mr. President, I yield the Senator from Arizona 10 minutes.

Mr. GRASSLEY. Mr. President, I yield the Senator from Texas 5 minutes.

Mr. GRASSLEY. I am sorry. I was not paying any attention.

Mr. GRASSLEY. Mr. President, I yield myself such time as I might consume. I will take a few minutes in closing this debate to thank some folks who made this tax relief possible. First of all, as I said in my opening remarks, President Bush made middle-income tax relief a priority. He pursued this package with focus, with determination, and with good humor. The bottom line is, we wouldn't be here today without the leadership of our President. Next, I would like to thank our majority leader, Senator Frist. Like the President, Leader Frist made this bill a priority. His patience and dedication in backing me as we moved through the conference process was very important. Then I would like to thank for the second time, and not too many times can I do that because not enough times make up for the cooperation I have received, my friend and colleague, Senator Baucus, the ranking member on the Democratic side in the Finance Committee. We didn't agree on all points, as he stated, but we agreed on most of the substance of the bill and the direction of the policy. Senator Baucus and other conferees, including Senators Lott, Nickles, and Lincoln-- each of the conferees brought strong views to the process. Sometimes those views differed sharply. For instance, as you have seen in tonight's debate, Senator Lincoln and Senator Nickles also do not agree on refundable tax credits. Both of them made principled reasons for their views. They are passionate. The conference agreement reflects a fair balance of those sharply divided positions. This bill would not have come to the floor without the work of staff. I thank them very much. I would like to thank Senate Finance Republican staff, Kolan Davis, staff director; Mark Prater, chief tax counsel; Ed McClennan; Elizabeth Paris Dean Zerbe, whom we also refer to around here on the floor as ``the white tornado.'' We also thank Christy Mistr. She happens to be a brandnew mom. She came back early to help us get this bill worked out. We thank also John O'Neill, a new addition to our staff; Adam Freed, graduate of the fine school known as the University of Northern Iowa where I graduated; also, our press team of Jill Kozeny and Jim Gerber. They helped our committee get the word out. Then, on the Senate Democratic staff, obviously, very good staff, very professional: Russ Sullivan, staff director; Bill Dauster; Patrick Heck; Melissa Mueller; Matt Jones; Anita Horn Rizek; Jon Selib; Judy Miller; Matt Grenasci; Matt Stokes; and Ryan Abraham; Senate legislative counsel: Jim Fransen, Mark Mathiesen, and Mark McMonagle. And then we have on the Joint Tax Committee: George Yin, Tom Barthold, and their entire crew. And then we have the GOP leadership staff: Lee Rawls, Eric Ueland, and Rohit Kumar all helping. With Senator Lincoln's staff, Mac Campbell; Senator Nickles' staff: Rachel Jones, and Hazen Marshall. Mr. President, I would like to sum up what this bill is all about. As the bill title says, it is about America's families. It is about providing tax relief to hard-working men and women in America. When I think about it, I consider the families on the farms back home. In the fields of Iowa, folks are starting the harvest. In the factories of Davenport, IA, and in the offices in Des Moines, great insurance companies, people are working hard to raise their kids, and this bill will help them. Let me take some time here to correct what have been very troubling statements about the Working Families Tax Relief Act and its benefits for low-income working families. Let's be clear--this bill provides enormous benefits to working families and especially to low-income families. Let me remind my colleagues of where we have been on this bill. The Senate passed legislation in 2003 that called for accelerating the refundability of the child credit from 10 percent to 15 percent, providing for a uniform definition of a child, and including combat pay for purposes of calculating the child tax credit. That was what the Senate passed in 2003. At the same time, the other body passed legislation that also accelerated the refundability but the other body did not include the uniform definition of a child and did not include the combat pay provisions as it relates to the child tax credit. We then went to conference and thanks to President Bush's leadership we have been successful in reaching an agreement. What does our conference bill do in regards to the Senate-passed legislation affecting low-income families? The conference report agrees with every single one of them. Let me repeat that, the conference report accepted every single provision in the Senate-passed bill that was directed to helping low-income families. The conference made the uniform definition of a child permanent. This is an extremely important simplification effort that creates a uniform definition of a child for the dependency exemption, child credit, the Earned Income Credit, the dependent care credit, and head-of-household filing status. This long-overdue simplification makes many more taxpayers--especially low-income taxpayers--eligible for a child- related benefit. This is at a cost of over $1.5 billion over 10 years and is the only substantive tax provision in this bill that is made permanent. The conference agreed to accelerate refundability and also the combat pay provisions in the Senate-passed legislation. These two provisions provide over $2 billion in benefits. So again, as people wring their hands, lets remember that the conference agreed to every single tax provision in the Senate-passed bill targeted for low-income families. In fact, there was only one provision in the Senate bill that was targeted to help families making over $100,000--the elimination of the marriage penalty of the child credit. What happened that provision? It was dropped in conference. But the conference did not stop with just accepting all the Senate provisions that help low-income families. The conference added to the provisions that will help low-income families. First, the conference provided expanded benefits for our men and women in uniform receiving combat pay. They will now also be able to get expanded benefits under the earned income credit. While combat pay is excluded for income purposes, our soldiers, sailors and airmen can elect to include combat pay if it will assist them in getting an increase in the earned income credit. This is a new provision that helps low-income military families. It was not included in the Senate proposal. This, combined with other provisions in the bill means that targeted relief for low-income military families receiving combat pay is increased in this conference report by nearly six times over what was provided in the Senate proposal. Let me repeat that, the conference report provides almost six times greater targeted relief for military families receiving combat pay then was included in the Senate proposal. Turning to the other items that assist low-income families: Second, the conference increases the child credit to $1,000 and extends it through 2010. This will benefit low and middle-income families. Third, we extend the lowest tax-bracket, the 10 percent tax bracket, which at its core benefits low-income families. Fourth, we extend marriage penalty relief which helps low-income taxpayers along with all taxpayers. There is over $23 billion in outlays contained in this bill--that reflects primarily the extension of the child credit, the lowering of the rates and refundability portions. Thus, of a $145 billion tax cut, over $23 billion of it is targeted to low-income families who have little to no federal income tax liability. So lets put this to rest. The conference report is better then what the Senate proposed for low-income families and better then what the Senate proposed to help military families. Now, let me turn to another chestnut that has been put out. That chestnut is that the tax laws will harm 4 million low-income families. This is a bait and switch focusing on one issue and ignores the overall tax code and all the tax legislation contained in this bill. The threshold for the refundable child tax credit--included in the 2001 bill--is that for those who do not pay taxes should still benefit from the child tax credit beginning at $10,000 in income--and that was indexed for inflation. This was agreed to by the supporters of this provision in 2001 and eliminating the index was not included in the Senate proposal last year. Unfortunately we are now hearing from those who don't want to be reminded of these facts. I am saddened by those who want to muddy all the tremendous work we have accomplished for working families in this bill. To argue that we are raising taxes on those making less than $11,000 or less is completely and utterly wrong. First, it is current law that requires indexing, there is nothing in this bill that requires indexing. Second, these are families who do not have a federal income tax liability. They pay no taxes. So it is wrong to say that they are having an increase in taxes. Third, the naysayers completely ignore the benefits being provided in this bill when they pull numbers from thin air. For example, the indexing of the $10,000 next year provided in the 2001 bill will mean that a family making $18,000 with a child will lose approximately $40 in child credit benefits, but that same family--because of this bill-- will see their child credit benefit increase by $300 because of the accelerated refundability and making the child credit $1000. The naysayers want to just pick and choose the provisions and not look at the whole package. When you look at the overall package the vast majority of the families they talk about being harmed by the 2001 agreement to index the refundable credit will actually be benefiting from the overall package. And finally for those families--far, far fewer than the number of 4 million thrown around--that may see no child credit because of indexing, we must bear in mind the EIC benefits that are also indexed. Indexing of the refundable child tax credit must be understood in conjunction with the EIC benefit, and cannot be looked at in a vacuum. For example, in 2001 a single parent making $10,500 and with two children had no federal income tax liability and received the maximum earned income credit of $4008. In 2003, that same parent, still making $10,500, will now receive a nearly $200 increase in her earned income credit and receive a check for $4,204. It is accurate that because of indexing the family will not receive the $50 previously provided under the refundable child credit, but it is important to understand it in the context of the overall benefits provided in the tax code. I recognize that for a low-income family even $50 is important and that is why in conference I supported an amendment to end indexing inflation of the refundable portion. But I encourage Senators to keep their feet on the ground when discussing this and instead reflect on the enormous benefits this bill provides to low-income families who do not have a federal income tax liability--nearly $24 billion--and to also keep in mind the other very beneficial provisions that are in the tax code already that assist low income families. We have done very right by low-income families and especially military families in this bill and in the overall tax code. I know as Senators and the American people examine this matter closely they will see the enormous good that is in this bill and not be swayed by the naysayers. This bill will provide great benefit to low-income families and military families and that is a credit to President Bush and Senators on both sides of the aisle, and it is why we will see this legislation receive overwhelmingly support in the Senate. Just to be clear, what we are talking about here is not whether to provide a certain EIC benefit but whether or not to review administration of that tax benefit in two years as we do with other expiring tax provisions. There are several administrative reasons why that may be appropriate in this circumstance. In general, changes to the earned income credit should be studied carefully in light of the current error rate in the program's administration which exceeds 30 percent and results in nearly $10 billion of erroneous payments annually. Many are working to reform these problems and we don't want to work against their efforts. With respect to the combat zone proposal itself, the IRS has indicated that the proposal--which allows taxpayers to elect into the provision--will increase complexity of the EIC and make administration of the provision harder. For these reasons, we should review the effectiveness of the provision in two years and make any necessary adjustments to the provision at that time. In addition, the preponderance of the bill benefits working families including military families. With the exception of a clean extension of expiring tax provisions and certain technical corrections, this bill focuses 100 percent on providing tax relief to working families including those serving in the military. In particular, the bill ensures that parents serving in the military receive an income tax credit of $1,000 per child each year. For military families at the lowest levels of income, the refundability provisions of the child tax credit have also been enhanced beginning in 2004. This legislation further provides that military wages earned by parents in a combat zone will be treated as earned income for purposes of the child credit. This ensures that families whose only income consists of combat zone wages will be eligible for the refundable child credit. One very important provision of the bill may provide economic and mental relief to working families. For the most part, we have provided a single definition of a ``child'' for tax purposes. For some, this will mean additional family tax benefits; for everyone, the bill gives needed simplification for working families filing the most basic of tax returns. Finally, the bill provides permanent tax relief to the first $14,000 of all dual family taxable wages. In conclusion, this legislation would ensure that a single mom in the military with 2 kids making $25,000 would save 5 percent on the entire amount of her first $14,000 of wages. It would ensure that she gets two child tax credits of $1,000 per child so that her federal income tax liability, to the extent she has any, would be reduced dollar-for- dollar by that $2,000 credit amount. If she does not have any federal income tax liability already--which is very possible--further enhancements to the refundability provisions of the bill ensure that she could receive a check for the full amount of her child credits totaling $2,000. Finally, if she works in a designated ``combat zone,'' the bill treats her combat zone wages as earned income to give her the full benefit of the child credit and the combat zone exclusion. So you see, this bill provides significant tax relief to military families. Let me make one more critical point about the issue of earned income credit and combat pay. We should all remember that at one time we did have combat pay included for purposes of the earned income credit. Then in the 2001 budget proposal, the Clinton administration requested the Congress to exclude from the EIC calculations all income excluded from gross income--including combat pay--for the purposes of determining the EIC. This request was made because of concerns of simplification and administration. So it was the Clinton administration that proposed this change regarding exclusion of combat pay from EIC--a change that this bill today reverses. I make this point not to cast a shadow over the Clinton administration's proposal but to highlight--as Senators raise their voices about the EIC combat provision being only a two year proposal-- that it was the Clinton administration itself that first raised the concerns about the difficulty of administering combat pay and EIC benefits and asked that the code be changed. We need to get this right. A confusing and unworkable tax provision will do more harm than good as military families unnecessarily find themselves crossways of the IRS. We need to ensure that we are giving our military families a tax benefit that will do the job right. Senator McCain criticized the extension of section 45. It is a renewable energy production credit. It is current law. The bottom line is the expiring tax provisions were treated similarly. All expiring tax provisions were extended through December 31, 2005. Everyone agrees we need to reduce America's dependence on imported oil. The renewable energy production credit is one incentive that will help move America to energy independence. To let this incentive lapse would be to send the wrong signal to America's alternative energy producers. More dependence on Middle East oil is the wrong answer.

Mr. GRASSLEY. Mr. President, I yield back the remainder of my time.

Mr. GRASSLEY. I yield 1 minute to the Senator from Oklahoma.

Mr. GRASSLEY. I thank the Senator. I think we did what conference committees are supposed to do. If the Senator would let me interrupt, I think we do what conference committees are supposed to do. They conference and every idea people wanted to bring up was presented and debated.

Mr. GRASSLEY. I yield myself such time as I might consume. The conference on H.R. 1308 brings to the Senate for consideration the Working Families Tax Relief Act of 2004. This is a product of the cooperative efforts that Senator Baucus and I have had on a lot of legislation, and even though there were some differences of opinion within the conference, for the most part, many parts of this bill are things on which we mutually agree. There are some parts included that we might not agree on, but it doesn't keep us from getting it to finality. I thank Senator Baucus for his cooperation as the leader of the Democrats on the Finance Committee and helping us get this bill to where it is. First, we are here in a great part as well due to a determination of the President of the United States and his enunciation of a very clear tax policy that goes back to the year 2001. In fact, it goes back to probably before he was sworn in as President of the United States. This President saw that the economy was in an economic free fall in 2000. As you recall, in March of 2000, the NASDAQ started to lose half of its value, which it did. You also will remember that during that year the manufacturing sector started a 44-month slide. The President knew these things were going on, so even before he was sworn in as President of the United States, he had a tax policy that was ready to go to stimulate the economy. So we passed that in 2001. We added to it and sped it up a little bit in 2003 to bring about the rejuvenation of the economy that we now have. As an example, we have had 13 months of economic growth in employment, with 1.7 million new jobs created, and I think it will go on. So we are seeing the impact of the President's tax policies going back to that particular time. What we are dealing with here is a conference committee report that will ensure that the tax reductions made in 2001 and 2003 stay as tax cuts, and that the benefit that working men and women get from that and the benefit that the economy has gotten from that by being rejuvenated with enhanced employment will not turn sour and our working men and women have to pay higher taxes starting next year because provisions of the Tax Code sunset. Under that scenario, a sunset of tax legislation means there would otherwise be a big increase in taxes to working men and women starting automatically on January 1 of next year, hence, this legislation, to make sure those sunsets do not occur, and we do not have automatic increases without a vote of Congress on the working men and women. Those tax increases would be an unacceptable position to take, plus there is the injustice to working men and women, and we might be pulling the plug on the revival of the economy that the tax reductions of 2001 and 2003 brought to the economy. Raising a family is always a struggle, and the last thing they need to do is to send more money to Washington. That money can certainly be better spent by mothers and fathers closer to home for lots of purposes. It could be helping educate a child, buying a better health insurance program, or allowing a parent to spend more time with their son or daughter at home instead of having to work an extra shift. This basic package from the conference contains several key elements. One is extending the child tax credit and the marriage penalty relief for the 10-percent and 15-percent bracket. These provisions will now be in effect through the year 2010, accelerating the 15-percent refundability for low-income families starting this tax year. This is of particular importance to low-income families. Without doing this, there would be some disincentive to work. Our policy in this country since 1996 has been to move people from welfare to work because people on welfare are in a lifetime of poverty, and the only way to move them from that situation is to encourage them into the world of work, and being in the world of work, they have an opportunity to move up the economic ladder. But there are some tax policies that discriminate against that. One of those is the regressivity of the payroll tax and even the hindrance of childcare, as an example. What we do is reduce, not eliminate, the regressivity of the payroll tax so that is not a disincentive for people to go to work; that they know if they go to work, they are going to have more in the world of work than they may in some other lifestyle. We also do an important simplification in the administration of the uniform definition of a child. Prior to this conference report, the Tax Code would have several different definitions of a child. Not only doesn't that make good legal and public sense, but it is also complicated. We bring uniformity to public policy, but we also bring some simplification to the Tax Code. Then we also expand the earned-income tax credit and the child credit benefits for military serving in combat zones. We provide alternative minimum tax relief for millions of Americans in the year 2005. These are people who would be hit by the AMT who were never intended to be affected by the AMT. In fact, already there are more people hit by the alternative minimum tax than was ever intended when it was instituted in 1969. Remember, in 1969, it was instituted to make sure that some Americans, high-income Americans, and maybe also wealthy Americans who took advantage of every tax loophole they could take advantage of to wipe out any payment of any tax whatsoever, would make some contribution based on their success to the Federal Treasury so that everybody in our society was manning an oar in this effort to make our economy and our Government go. Mr. President, do you know what is happening with AMT because it was not indexed back in 1969? It is beginning to hit a lot more wealthy people than it was ever intended to hit, hitting people who do not take advantage of every tax loophole and are still paying a lot of tax and being hit by the alternative minimum tax. We are not doing a heck of a lot to help those people who have already been hit, but we are setting up a situation so that situation does not get worse. But to some extent we are putting off the inevitable. If we do not do something about this--and I take some responsibility for not doing enough, although I do remind people who are watching, and my colleagues, that in 1998, I did vote for a bill that did away with the alternative minimum tax totally. It went to President Clinton, and President Clinton vetoed the bill. At that time, it would have been the ideal time to take care of it. But soon, instead of hitting 3 or 4 million Americans, it is going to be hitting 20 to 30 million Americans, and pretty soon it is going to be hitting the middle class, and it is going to be punitive to the middle class. Somewhere along the line, we have to adopt a policy that realizes that the consequences of our tax policies are hurting people we never intended to hurt, and if we want a stable society, we never want to hurt the middle class. I know there are a lot of people in this body who believe if we make any changes in tax policy whatsoever, we have to offset it dollar for dollar. For every reduction we make, there is a $1 increase in somebody else's taxes to make it up. It is almost impossible to do that with the alternative minimum tax. We ought to decide sometime that something has gone wrong and correct the wrong, save the middle class, and not worry about offsets because people who will be paying the tax were never intended to pay the tax, and it does not make sense to tax them. But that is happening through the alternative minimum tax. What do we do in this bill? We delay for 1 year finding a permanent fix to this situation. By doing it, we are not hurting any more people at least. Finally, there is a provision in this bill to extend current law on several expiring tax provisions. In regard to these retiring tax provisions, I know there is frustration for some of my colleagues, particularly in the area of expanding the R&D tax credit. In order to reach agreement, my counterparts on the Ways and Means Committee and I agreed that these extenders should be a clean 1-year extension. This had the solution of making no one happy, either in the Congress or in the economic sectors that are impacted by these tax provisions. The House of Representatives had to accept extenders they did not want, as did we in this body, but it resolved the issue and allowed us to go forward. I want my colleagues to know that I am committed to working with them on this issue and on other extender-related issues in the JOBS bill that hopefully now will go to conference. We are going to be able to turn our full attention to the issue of the JOBS bill, which passed this body 3 or 4 months ago by 92 to 5. With the conclusion of this legislation, we are going to be able to work on that and hopefully complete it prior to leaving this October. This bill provides great tax relief to millions of working families, and I commend President Bush for his leadership in making these proposals a reality. One thing I need to explain to my colleagues, the President was hoping to get this done in July. Way back in the early winter, I decided the best time to take up this tax bill was now in September. I thought it would be easier to do, and I think the way it is working out it is easier to do. I tried to respond to the President's inquiries to me about moving this in July, and I came up at that point not with a 5-year extension but with a 2-year extension because at that point we could get bipartisan movement and move it through. The White House did not want just a 2-year; they wanted the 5-year. I could not get the 5-year in July. So we dropped everything and then went home for our summer break during August and the two political party conventions and now we are back doing this. Senator Frist and I were called down to the White House in July to visit with the President about this issue. We had a meeting with the President, the Vice President, the chief of staff, and the chief congressional liaison. We discussed all these issues, and I presented the view to the President that I wanted to do this in September. He made the point he wanted to do it in July. I said I will try to do it in July, but, I said: Mr. President, there is also another issue connected as well, and that other issue is the JOBS bill. The JOBS bill is to create jobs in manufacturing. It also corrects a decision that the World Trade Organization made about our export tax laws. Everybody understands we have to do this. I was presenting to the President at that particular meeting in July the necessity of getting this bill passed and how important it was, but that we had not heard a whole lot out of the White House about the JOBS bill. The President told me in July: Get this extension for me and then we will concentrate on the JOBS bill. We referred to it as FSC/ETI and he referred to it as FSC/ETI as well. So I hope now that we are delivering on this bill the President asked for, albeit 2 months late, that the President will keep his commitment to me to get the White House behind our JOBS bill, the FSC/ETI bill. That is what I heard him say. I think the President will keep his word to me and we will maybe now hear from the White House on the importance of the JOBS bill. I yield the floor.

Mr. GRASSLEY

Mr. GRASSLEY. Madame President, I rise to offer an amendment. My amendment serves two purposes. First, to ensure that credit guarantees extended by the Export-Import Bank to help build an ethanol dehydration plant in Trinidad and Tobago did not violate the Bank's charter. And, second, to ensure that Congress has prior notification before similar credit is extended by the Bank in the future. Much to my dismay, I recently learned that the Export-Import Bank approved approximately $9.6 million in taxpayer guaranteed credit insurance to help Angostura Limited finance the construction of an ethanol dehydration plant in Trinidad and Tobago. The purpose of this credit insurance was to enable Angostura Limited to purchase equipment which will be used to dehydrate up to 100 million gallons of ethanol annually from Brazil and re-export the ethanol to the United States duty-free under the current Caribbean Basin Initiative trade preference program. I am deeply concerned that the extension of this credit may have violated the letter and spirit of the Export-Import Bank's own authorizing statutes. Section 635(e) of the authorizing statute states that the Bank is not to provide credit or financial guarantees to expand production of commodities for export to the United States if the resulting production capacity is expected to compete with U.S. production of the same commodity and that the extension of such credit will cause substantial injury to U.S. producers of the same commodity. The statute further provides that ``the extension of any credit or guarantee by the Bank will cause substantial injury if the amount of the capacity for production established, or the amount of the increase in such capacity expanded, by such credit or guarantee equals or exceeds 1 percent of United States production.'' The total 100 million gallon capacity of the facility in question is nearly four percent of U.S. production. Thus, the capacity of this plant clearly exceeds the one percent threshold for causing substantial injury to the U.S. ethanol industry outlined in the authorizing statute. This raises serious questions as to whether it was within the Bank's authority to issue credit for the construction of the Angostura Limited facility. Because the amount financed by the Export-Import Bank was less than $10 million dollars no detailed economic impact analysis was conducted by the Bank. Thus, the Export-Import Bank never conducted an analysis to determine whether this plant will cause substantial injury to ethanol facilities in the United States. Let's be clear--the potential economic impact of financing this facility is significant. This new facility will be able to dehydrate up to 100 million gallons of Brazilian ethanol per year for duty-free export to the United States. The capacity of this single facility far exceeds total annual U.S. imports of ethanol from the entire Caribbean region, which have never exceeded about 60 million gallons in any one year. This fact alone should have raised concerns within the Export-Import Bank as to whether it was appropriate to provide financing for this project. It is now time to get all the facts from the Export-Import Bank. This amendment requires that the Bank conduct an economic impact analysis on this project and report within 30 days after the enactment of this bill on whether or not this facility will cause substantial injury to U.S. and Iowa producers of ethanol. If so, the Export- Import Bank may have violated its own statutory authority. If that is the case, we will evaluate what further actions to take at that time. I also want to note that no public notice was provided in the Federal Register during the Bank's consideration of whether to provide credit financing for this project, and no written report was issued setting out the basis for the Bank's decision. I am confident that public notice and greater transparency throughout this process would have provided interested parties such as myself an opportunity to comment on this proposal. I want to make sure the general public and I have an opportunity to comment on proposals for similar projects in the future. Thus, my amendment will also require consultation with the appropriate committees before credit is extended for similar purposes. Recently I introduced S. 2762 which would prohibit ethanol from getting duty-free access through the Caribbean Basin Initiative trade preference program unless the ethanol is produced substantially with inputs from the Caribbean Basin nations. The purpose of this legislation is to close the loophole in the Caribbean Basin Initiative which enables companies such as Angostura Limited to transship Brazilian ethanol to the United States duty-free. Sadly, the extension of credit for the facility in Trinidad and Tobago flies in the face of this goal. Instead of helping to close the loophole, the Export-Import Bank's actions actually help foreign companies exploit it. These actions seem to violate common sense. I intend to do all I can to try to determine how the Export-Import Bank came to this decision and, hopefully, to make sure the Bank does not make similar decisions in the future. I appreciate the willingness of Chairman McConnell and Ranking Member Leahy in working with me to include my amendment as part of this legislation. Their understanding of the importance of this issue to my home state of Iowa and many others in the United States is appreciated. I also appreciate their understanding of the importance of making sure that taxpayer money is being used appropriately and that the Export- Import Bank is operating within the confines, and spirit, of its statutory authority. Amendment No. 3693

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to give praise to a great nonprofit organization, Santa's Children Christmas Village, run by Orien Hodges in Walnut, IA. This organization has been supporting children in crisis for years both by raising money for other nonprofit organizations dedicated to children in crisis and by organizing Santa visits to bring joy to children, helping them escape briefly from the reality of serious illness. Santa's Children Christmas Village has been able to visit over 7,500 children in Iowa as well as neighboring states since the program started in 1998. Santa's Children Christmas Village is currently expanding its efforts to help underprivileged children by working with a fellow organization, Kids In Distressed Situations, Inc. KIDS's main goal is to prevent the cycle of poverty that is started in childhood from continuing into adulthood. KIDS has been successful in its efforts because of the help it receives from leading retailers, manufacturers, licensors and other charity organizations such as Santa's Children Christmas Village. I am proud of the efforts of my fellow Iowans and the organizations that they are working with in order to better the lives of children in America.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President. The safety and security of our Nation's borders has been on all of our minds lately. In the past, we have approached the problem in a stovepipe manner, focusing on what illegal items criminals were bringing across our borders. We need to begin thinking about these challenges differently. Increasingly, smuggling organizations do not tie themselves to the movement of one particular commodity, but are specialists in smuggling merchandise of any type into the United States undetected. So long as there is profit to be made, smugglers don't really care what they smuggle. If we are going to encourage effective investigations and prosecutions of these smuggling organizations, we must ensure sufficient penalties to send a clear message that smuggling--whether it's heroin, pirated CDs, AK-47s, or look-a-like designer hand bags--is wrong, and will be severely punished. Today I am introducing a bill that will do just that. It is very simple. Raise the penalty for smuggling contraband into the United States from a maximum of 5 years to a maximum of 20 years. This will give prosecutors and law enforcement agents a better tool to go after those who try and evade our customs, border, and port security efforts. If we are serious about securing our borders, then we need to be serious about punishing those who try and evade our controls. I urge my colleagues to join me in sponsoring this legislation.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I would like to take a moment to congratulate two Iowa educators, Kelly Smith Arickx, a teacher at Rockford High School in Nora Springs, IA and Naomi Peuse, an educator at the State Historical Society of Iowa in Des Moines, IA. They were part of a group of 25 educators selected from across America to participate in the National History Day 2004 Summer Teacher Institute, ``Politics and the Press: The Influence of the Media on History.'' The institute took place from July 25 to July 30, 2004, at the University of Maryland in College Park, Maryland. This select group of participants from across the country had the opportunity to work with prominent journalists and historians. They were exposed to an array of resources, including oral histories and discussions, learning about various primary source materials that can be incorporated into teaching. I am pleased to recognize Kelly Smith Arickx and Naomi Peuse for their accomplishment in having been selected to participate in the National History Day Summer Teacher Institute. I am proud to have had them representing my home State of Iowa.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President. The safety and security of our Nation's borders has been on all of our minds lately. In the past, we have approached the problem in a stovepipe manner, focusing on what illegal items criminals were bringing across our borders. We need to begin thinking about these challenges differently. Increasingly, smuggling organizations do not tie themselves to the movement of one particular commodity, but are specialists in smuggling merchandise of any type into the United States undetected. So long as there is profit to be made, smugglers don't really care what they smuggle. If we are going to encourage effective investigations and prosecutions of these smuggling organizations, we must ensure sufficient penalties to send a clear message that smuggling--whether it's heroin, pirated CDs, AK-47s, or look-a-like designer hand bags--is wrong, and will be severely punished. Today I am introducing a bill that will do just that. It is very simple. Raise the penalty for smuggling contraband into the United States from a maximum of 5 years to a maximum of 20 years. This will give prosecutors and law enforcement agents a better tool to go after those who try and evade our customs, border, and port security efforts. If we are serious about securing our borders, then we need to be serious about punishing those who try and evade our controls. I urge my colleagues to join me in sponsoring this legislation.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to pay tribute to SP Dustin S. Colby, a fellow Iowan from the Mason City/Clear Lake area. The Iowa National Guard regretfully announced the death of Specialist Colby when he was killed on August 27, 2004, along with fellow soldier SSG Bruce J. Pollema, when their military motor vehicle rolled over into a ditch near Camp Dodge. Specialist Dustin Colby was a member of the 2168th Transportation Company based in Sheldon, IA. SP Colby is survived by his mother, Misty L. Thoe, and his father, Jerry L. Colby, as well as numerous siblings. This brave young soldier was only 20 years old. The family of Dustin Colby issued the following statement in response to the news of their son's death: Dustin was a dedicated son, grandson, brother, cousin, nephew, boyfriend, friend and Soldier. He loved life, his family, and being a soldier. My deepest sympathy goes out to his family and friends. Specialist Colby brought happiness to many people, and his memory will never die because of the impact he had on the people he knew. It is fitting that we pay tribute to his life and his service to his country. Sgt. James Daniel Faulkner

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I rise today to pay tribute to SSG Bruce J. Pollema, a fellow Iowan originally from Hull, IA. The Iowa National Guard regretfully announced the death of Staff Sergeant Pollema when he was killed on August 27, 2004 along with fellow soldier, Spc. Dustin S. Colby, when their military motor vehicle rolled over into a ditch near Camp Dodge. Staff Sergeant Pollema was a heavy vehicle operator with the 2168th Transportation Company, based in Sheldon, IA. Staff Sergeant Pollema is survived by his wife, Teri Winter, father and mother, Wilmar and Betty Pollema, his older brother, Waylon, and his twin brother, Brandon. This brave soldier was thirty years old. The family of Bruce Pollema issued the following statement in response to the news of their son's death: ``Our hearts, minds, spirits and prayers are with the rest of the Troops and we wish them God speed. We will be there for them when they come back.'' It is fitting that we should honor Staff Sergeant Pollema today for his service to our country. My deepest sympathy goes out to his family and friends. I know his memory will live on in the hearts of everyone he knew.

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I rise today to pay tribute to a great patriot, PFC Nicholas Skinner, U.S. Marine Corps. Private First Class Skinner courageously gave his life on August 26, 2004, in support of Operation Iraqi Freedom when he was shot during a heavy exchange of gunfire in Najaf, Iraq. Private First Class Skinner is survived by his father Randy Skinner, his mother Laura Hamann, his older brother James and his younger sister Stephanie. This brave young soldier was only 20 years old. In his short life he made a lasting impression on his friends, family and fellow soldiers. I ask my colleagues in the Senate and my fellow Americans to join me today in paying tribute to my fellow Iowan, Private First Class Skinner, for his sacrifice on behalf of our country. My deepest sympathy goes out to his family and friends. Private First Class Skinner was a great man that dedicated himself to his duty as a soldier. Private First Class Skinner told his grandmother that he joined the Marines because ``They're over there fighting for me and my country, I want to go over there and fight for you and my country.'' Private First Class Skinner is the example of a fine man and a strong soldier. I salute him for his sense of duty and his service to the American people. We can all be proud of this extraordinary soldier. He did not die in vain, but died for his country that he loved to serve. Private First Class Skinner has entered the ranks of our Nation's greatest patriots. He will always be honored as a hero who gave the ultimate sacrifice for liberty. He will be greatly missed.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, recently the Senate passed S. 2610, the United States-Australia Free Trade Agreement Implementation Act. The U.S.-Australia Free Trade Agreement, which will be implemented by this legislation, will provide many benefits to U.S. manufacturers and agricultural producers. U.S. consumers will clearly gain from it as well. This agreement will also further cement our friendship with Australia, a long-time ally and our strong partner in the war on terrorism. The U.S.-Australia Free Trade Agreement is an example of the importance of Trade Promotion Authority. It has been almost 2 years since Trade Promotion Authority was signed into law as part of the trade act of 2002. During this time, the United States has signed free trade agreements with Chile, Singapore, and now Australia. The implementing bills for each of these agreements passed the Congress with strong support, so Congress clearly recognizes the benefits of trade promotion authority. Many people worked hard to see that this vote became a reality. First and foremost, this would not have happened without the leadership of President George W. Bush. President Bush is committed to building the U.S. economy by opening the world's markets to U.S. goods and services, and the U.S.-Australia Free Trade Agreement is just the latest of the trade accomplishments he has made possible. U.S. Trade Representative Robert Zoellick deserves strong commendation for his efforts in negotiating this agreement. His commitment to expanding U.S. trade opportunities is steadfast. I would also like to thank chief U.S. agricultural negotiator Allen Johnson for his willingness not only to listen, but also to act, upon the concerns of U.S. farmers and ranchers during the negotiations. Many others at the Office of the U.S. Trade Representative deserve my thanks as well. I commend my colleagues on the Finance Committee for their interest in seeing that the agreement was concluded and that the implementing bill was passed. I would like to extend a special thanks to the ranking member of the Committee, Mr. Baucus. We have worked together over the years to expand trade to the benefit of U.S. workers, farmers, and consumers, and I am pleased with the outcome of our current efforts with the passage of this implementing bill. My staff on the Finance Committee has worked diligently over the past weeks on the implementing bill and other materials connected with it. My goal was to have this legislation passed prior to the August recess, and they were instrumental in making this happen. Moreover, my Finance Committee staff was engaged in consultations with officials from the Office of the U.S. Trade Representative throughout the negotiations, which began way back in March 2003, so this has been a long process for them. I greatly appreciate their hard work. My Chief Counsel and Staff Director, Kolan Davis, deserves recognition. His talent in managing many legislative issues, including trade, is readily apparent. The Chief International Trade Counsel of the Committee, Everett Eissenstat, worked tirelessly to see that the passage of this legislation would actually occur, so today's vote is yet another testament to his skills. I would also like to thank the rest of my trade staff--David Johanson, Stephen Schaefer, Dan Shepherdson, and Zach Paulsen--for all of their hard work and dedication to the Finance Committee's work and to the people of Iowa. Mr. Baucus's Finance Committee staff also deserves recognition. Russ Sullivan and Bill Dauster, respectively staff director and deputy staff director of Mr. Baucus's Finance Committee staff, worked well with my staff throughout the process. I also appreciate the efforts of Tom Punke--Mr. Baucus's chief international trade counsel--and Sara Andrews, Shara Aranoff, John Gilliland, Pascal Niedermann, and Brian Pomper. Finally, I would like to thank Polly Craighill of the office of the Senate Legislative Counsel for the many hours she put into drafting the implementing bill. Without her patience, hard work, and skills, today's vote would not have been possible. I look forward to the signing of this legislation into law by President Bush.