Wally Herger

Mr. HERGER

Mr. HERGER. Mr. Chairman, on rollcall No. 378 I was inadvertently detained. Had I been present, I would have voted ``aye.'' Stated against:

Mr. HERGER

Mr. HERGER. Mr. Chairman, so this amendment seeks to save the wildlife refuges of the Klamath Basin. From what, Mr. Chairman? Farming in the refuge of the Klamath Basin has occurred since they were created nearly 100 years ago. Today it continues to represent a shining example of how agriculture and wildlife cannot only coexist, but thrive together. And as if the farmers I represent in this area of Northern California have not suffered enough, it would cause them even more economic harm. And not unlike the disastrous decision that shut off 100 percent of their water just 2 short years ago, there is absolutely no valid justification or factual basis for it. Row crops are an essential part of the balance that embodies the lease land farm program. They are specifically required under the law, because they benefit wildlife and maximize revenues for farmers in local counties. On average, row crops have generated $10 million annually. If those same acres were planted only in grain, as this amendment would require, they would generate only $1 million. Make no mistake: that $9 million loss would cripple this economy. The irony, Mr. Chairman, is that despite the gentleman's desire to help wildlife, this measure would do precisely the opposite. For generations, farmers have worked and nurtured these lands for the benefit of the wildlife. Waterfowl populations in particular are thriving. Consider this statement from the California Waterfowl Association: ``For nearly 100 years, farmers and ranchers in the Klamath Basin have coexisted with immense populations of wildlife. Many wildlife species, especially waterfowl, are familiar visitors to their highly productive farms and ranches. Klamath Basin agriculture provides a veritable nursery for wildlife.'' Row crops are not just an economic necessity to farmers; they provide food for migrating birds. Crop rotation improves the health of soil and, therefore, the productivity of the cereal grains that provide other essential wildlife benefits. Allow me to address the notion that this measure would somehow provide more water to the refuges. That is simply inaccurate. For 100 years, all interests in the Klamath Basin, farmers, fish, and refuges, have gotten by together, sharing the pain and the profit alike. It was not until 2001 that the Endangered Species Act caused some interests to do without. Shortages are not the result of an overallocation; they are the result of environmental laws that do not allow for balance. Mr. Chairman, the lease land program is a win-win. It benefits the environment. The Fish and Wildlife Service have found that it is entirely compatible with refuge management, and a Federal district court has agreed. So what is the problem, Mr. Chairman? Why the persistent attacks on farmers when these facts are so clear? The purpose of the radical environmental groups supporting it is the removal of agriculture entirely. Consider that virtually the same groups behind today's amendment pursued a version several years ago to eliminate any new leases, and the same kinds of radical environmental groups have unsuccessfully attacked the program again and again in the courts. Mr. Chairman, I urge my colleagues to look at the facts and consider the lives and the families of those who will be directly impacted should this amendment succeed. Reject this veiled attempt to undermine agriculture.

Mr. HERGER

Mr. HERGER. Mr. Speaker, last year Congress, working together with President Bush, enacted into law the Jobs and Growth Tax Relief Reconciliation Act of 2003. Among other provisions, this new law strengthens and expands the expensing provisions afforded to small businesses under section 179 of the Internal Revenue Code. As such, the law encourages small businesses to make new capital investments, thus spurring our economy and creating jobs. I believe Congress should make this provision permanent and today I am introducing the ``Small Business Expensing Permanency Act of 2003'' to do just that. Specifically, the Jobs and Growth Act increases from $25,000 to $100,000 the amount of new investment a business can expense--or deduct from income--in a given year. The new law also increases--from $200,000 to $400,000--the amount of total investment a business can make in a year and still qualify for expensing under section 179. Unfortunately, under the new law, these provisions are set to expire after 2005. My legislation will repeal the 2005 sunset. If the higher expensing limits are good for our nation's small businesses over the next two years, they should be good for small businesses indefinitely. Small businesses truly are the backbone of our economy, representing more than half of all jobs and economic output. We should not take small business vitality for granted, however. Rather, our tax laws should support small businesses in their role as the engines of innovation, growth, and job creation. Mr. Speaker, in difficult economic times, we must do all we can to encourage new investment and job creation by creating certainty and predictability for America's small business owners. The ``Small Business Expensing Permanency Act of 2003'' will help accomplish this worthy goal. I applaud the administration for its consistent leadership on this issue, and I look forward to working with my colleagues to enact this much-needed legislation.

Mr. HERGER

Mr. HERGER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, in closing, let me remind the gentleman from Maryland (Mr. Cardin) that just in the last 2 weeks we passed legislation which was signed by the President which gives to the States an additional $20 billion in State aid. The States also have some $6 billion in Temporary Aid to Needy Families or TANF surplus that is available to them. We also transferred some $3 billion of surplus that they have available. We also have $6 billion of unemployment that they have in surplus available. The gentleman asked if the legislation is so successful, why would we want to make changes; child poverty has fallen, more parents are working, dependence fell by unprecedented levels. But the fact is there is still more that needs to be done. There is still 58 percent of recipients who are not working or trained. There are too many families that are breaking up, who never formed, that this legislation will address, and there are some 2 million families that remain dependent on welfare. And that is why even though this legislation has been so incredibly successful, we still have more to do. With that, I would urge the body to support this legislation, this extending of 3 months. I urge an ``aye'' vote. Mr. Speaker, I yield back the balance of my time.

Mr. HERGER. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2350) to reauthorize the Temporary Assistance for Needy Families block grant program through fiscal year 2003, and for other purposes.

Mr. HERGER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would just like to remind the other side how successful this legislation has been since 1996. Child poverty has fallen sharply. Nearly 3 million children have been lifted from poverty. The black child poverty rate is now at a record low. More parents are working. Employment by mothers most likely to go on welfare rose by 40 percent from 1995 to 2000. Dependence fell by unprecedented levels. Welfare caseloads fell by 9 million, from 14 million recipients in 1994 to just 5 million today. Again, this is legislation that has been updated this year that we had some 20 hearings on in the last Congress and which passed earlier this year; and I might mention also that we provide an additional $2 billion in added child care funds in our legislation which hopefully will be renewed here in 3 months. We provide the States with more State flexibility in spending cash welfare funds, we focus more on promoting healthy marriage and child well-being, and we encourage more work, higher incomes, and less welfare dependence. Mr. Speaker, I reserve the balance of my time.

Mr. HERGER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I rise in support of H.R. 2350, the Welfare Reform Extension Act of 2003. This legislation is a simple 3-month extension of key parts of the Nation's welfare system. Since the historic 1996 welfare reform law, nearly 3 million children have been lifted from poverty, record shares of current and former welfare recipients are working, and welfare dependence has been cut in half. Despite the challenges facing our country, these welfare reforms continue to benefit families with children by promoting work by low- income parents. Unless we act, the authorization for key welfare programs will expire on June 30, 2003. H.R. 2350 will continue current funding for these programs through September 30, 2003. That will provide the Senate more time to consider a broad welfare reauthorization bill along the lines proposed by the President and already passed by the House. Members will recall that the House passed a broad 5-year welfare reauthorization bill last year. The Senate did not act on that bill before the 107th Congress adjourned. The 2002 House bill was the product of intensive research and evaluation, including more than 20 hearings in the House. Key provisions focused on achieving more work, less poverty, and stronger families. In February 2003, the House again acted on a full 5-year welfare reform reauthorization bill and approved H.R. 4, an updated version of its 2002 bill. While we have been waiting for consensus on a long-term reauthorization of these programs, the House and Senate have agreed to three separate short-term extensions. Those extensions covered the first, second, and third quarters of the current fiscal year. The legislation before us today would do more of the same, extending these programs for the fourth quarter of the current fiscal year, or through September 30, 2003. States and families would be on the receiving end if we reach agreement on a long-term reauthorization bill. The House-passed 5-year reauthorization bill, H.R. 4, encourages even more low-income parents to work while providing more resources to support them. Unfortunately, the improvements included in H.R. 4 will continue to remain on hold while we pass short-term placeholder extensions. For example, H.R. 4 as passed by the House provides at least $2 billion in added child care funds over 5 years, along with more flexibility in spending cash welfare funds on child care and other needs. So long as we continue to extend our Nation's welfare system on a short-term basis, States cannot take advantage of these additional dollars or improve flexibility. That means low-income families will not see the benefits of the improvements we have proposed for the program. Ultimately, the success of the 1996 law reforms may begin to erode as well. It is my hope H.R. 2350 will be the final short-term extension we approve, and in the next 3 months we get a comprehensive welfare reform bill to the President's desk for signature. Mr. Speaker, I reserve the balance of my time.

Mr. HERGER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would just like to remind everyone that what we are renewing is an updated legislation that we had some 20 hearings on in the last Congress. It is legislation that is updating probably the most successful social welfare reform in our Nation's history. More than 50 percent of those who have been on welfare are now out being productive. Child poverty levels are at the lowest in history. Again, what we need to do is extend this for the 3 months so that we can get agreement in the Senate so we can move forward with this updated legislation. Mr. Speaker, I yield 5 minutes to the gentleman from Pennsylvania (Mr. English), a member of the committee and subcommittee.

Mr. HERGER

Mr. HERGER. Mr. Speaker, on rollcall No. 256 I was unavoidably detained. Had I been present, I would have voted ``yea.''

Mr. HERGER

Mr. HERGER. Mr. Speaker, I was unavoidably absent on Monday, June 2 and Tuesday, June 3. Had I been present, I would have voted as follows on the following rollcall votes: Roll No. 227--``yea''; Roll No. 228-- ``yea''; Roll No. 229--``yea''; Roll No. 230--``yea''; Roll No. 231-- ``yea''; Roll No. 232--``yea''; Roll No. 233--``nay''; Roll No. 234-- ``yea''; and Roll. No. 235--``yea''.

Mr. HERGER

Mr. HERGER. Mr. Speaker, I want to thank my colleagues, and in particular the gentleman from California (Chairman Pombo), the gentleman from Colorado (Chairman McGinnis), and the gentleman from Oregon (Mr. Walden), for their hard work in bringing this much-needed legislation to the floor. Through President Bush's leadership, we are at long last taking proactive steps here today to provide some major relief from the regulatory quagmire that continues to put our forests and communities in serious jeopardy. The public health and safety risk posed by catastrophic fires can no longer be ignored. With each passing year that we allow good management to be hijacked by radical environmentalists, people's lives are put at risk. We can't stop these fires, but we know that by thinning our forests in an environmentally sensitive way we can make them healthier and more fire-resilient, reducing their fire size and destructive potential. But analysis gridlock and the appeals and lawsuits by radical environmentalists have stymied good forest management. The Forest Service chief Dale Bosworth recently testified to Congress that his agency is being strangled by analysis paralysis. They spend up to 40 percent of their time in planning and assessment. Mr. Speaker, clearly, Congress could not have intended our environmental laws to aid and abet a public health and safety risk and a risk to the environment that they were enacted to protect. I urge my colleagues to support the rule and allow us to consider this important bill which will restore some common sense to a system gone awry.

Mr. HERGER

Mr. HERGER. Mr. Speaker, I rise today with my colleague from Tennessee, Mr. Tanner, to introduce the Tip Tax Fairness Act, a bill to require the Internal Revenue Service (IRS) to accurately account for FICA taxes paid by employers on employee's tip income. As we all know, many employees in the service sector of the business community earn a substantial portion of their income from tips. Recognizing this, Congress passed legislation years ago requiring employers and employees to pay FICA payroll taxes on tip income. This ensures that an employee's total earnings are reflected in their Social Security wage history, which determines the employee's Social Security benefits upon retirement. In the IRS's effort to collect the FICA taxes they believe is owed on unreported tips,. the agency has created an aggregate method for assessing employers which is inconsistent with congressional intent. Congress did not intend FICA taxes to be paid on an aggregate basis, because earnings subject to FICA taxes are intended to be credited to an employee's Social Security wage history. Under current law, employees are required to report all of their tips to their employer. The employer is required to send this information to the IRS, along with the employer and employee share of the FICA taxes owed. If the IRS believes the amount of tip income reported is not accurate the agency will audit the employer, bill the employer using an aggregate estimate, and collect the employer's portion of the FICA taxes. However, the agency does not credit the employee's Social Security wage history. By not doing so, the agency is disregarding one of the reasons Congress required employers to pay FICA taxes on tips. Furthermore, this lack of accounting on the part of the IRS, and the use of aggregate estimates, creates a dramatic shift in the burden of tax collection. Under this method, it is the employer who must determine if there was underreporting of income, not the IRS, and the employer who must disprove an inaccurate assessment. Many service providers have expressed concerns that this shift in burden pits the employer against their own employees, effectively turning them into ``tip police.'' The bill Mr. Tanner and I are introducing today is a solution that we believe employees and employers can support. Simply stated, this legislation requires the IRS to ensure that assessments paid by employers, for FICA taxes owed on unreported tips, are credited to each affected employee's Social Security wage history. As such, this measure requires the IRS to use FICA taxes as Congress intended. Mr. Speaker, I urge my colleagues to support this worthy legislation.

Mr. HERGER

Mr. HERGER. Mr. Speaker, I rise in strong support of the legislation before us appropriately titled the Jobs and Growth Act of 2003. That is exactly what our efforts today are all about: growing our economy and creating jobs. This legislation provides immediate tax relief while also making our Tax Code more investor-friendly and less of an impediment to future economic growth. Specifically, this bill accelerates the income tax rate reductions enacted 2 years ago, rather than phasing in over the next several years as previously planned. These lower rates would take effect beginning this year. This legislation will increase the child tax credit from $600 per child to $1,000 per child. This means real tax relief for families struggling to make ends meet. This bill also speeds up relief from the unfair marriage tax penalty and increases the exemption amount for the alternative minimum tax, or AMT, meaning that fewer families will be subjected to this burdensome tax. I am especially pleased that this legislation makes it easier for small businesses to make new business purchases by raising the amount of new investment that small businesses can deduct from their taxes, from $25,000 a year to $100,000 a year. This provision will be of great benefit to millions of small businesses across America. Mr. Speaker, the government cannot grow the economy or create new jobs. Good government policies, however, can allow the ingenuity of the American people to flourish. Let us get our economy moving again. I urge all of my colleagues to support this bill.

Mr. HERGER

Mr. HERGER. Mr. Speaker, today I rise to introduce the Cooperative Dividend Equity Act. This legislation will help to end an unfair tax on cooperatives and their members. As those of us from agricultural and rural areas can attest, cooperatives play a vital role in many Americans' lives. Whether it be farmers pooling their resources in order to survive in the global marketplace, consumers maximizing their buying power through volume purchasing, or healthcare facilities providing community-based services--cooperatives facilitate people working together for a common good. One of the greatest challenges facing cooperatives today is access to capital. In order to raise much needed capital and avoid further debt, many cooperatives are considering issuing preferred stock. However, under the current tax laws, stock dividends paid to stockholders are taxed three times: (1) When they are earned by the cooperative; (2) when received by the stockholder; and (3) at the corporate level when earnings are distributed. Members of cooperatives are taxed on income generated by the cooperative. The cooperative itself, however, is not taxed so long as any ``patronage income'' is distributed to its members. Cooperatives frequently earn at least some non-member, or ``nonpatronage,'' income. Much like a corporation, a cooperative must pay taxes on such nonpatronage income, just as the stockholder, whether a member or non- member, must also pay tax on that income when it is distributed as a dividend. Unlike a corporation, however, cooperatives must then pay what amounts to a third tax due to the operation of an obscure IRS rule. The ``dividend allocation rule'' imposes a third level of taxation on the cooperative by reducing the amount of patronage dividends paid to cooperative members. Cooperatives, such as a typical farming cooperative, may deduct dividends paid to patrons from taxable income. IRS regulations, however, provide that net earnings eligible for the patronage dividend deduction are reduced by dividends paid on capital stock. This requirement has been interpreted to mean that even dividends paid out of nonpatronage earnings will be ``allocated'' to a cooperative's patronage and nonpatronage earnings in proportion to the relative amount of patronage/nonpatronage business done by the cooperative. This ``allocation'' significantly reduces the amount of net earnings from the patronage operation that may be claimed as a deduction, thus increasing the cooperative's level of taxation. Put more simply, the ``dividend allocation rule'' allocates income already taxed against what would have otherwise been a deduction. As a result, cooperatives pay more taxes on income used to pay a dividend on stock than would a non-cooperative corporation. It is time to end the triple taxation on cooperative income and give farmers, consumers, hospitals, and other coop members the flexibility they deserve in structuring their affairs. It is time to eliminate the dividend allocation rule and pass the Cooperative Dividend Equity Act of 2003.

Mr. HERGER

Mr. HERGER. Mr. Speaker, I rise in strong support of the Social Security Program Protection Act. I would like to thank the gentleman from Florida (Chairman Shaw) and the other members of the Committee on Ways and Means who have worked tirelessly to improve Social Security programs that provide an important, crucially important, safety net for many of our Nation's neediest disabled and elderly individuals. These changes have been designed to ensure that the right benefits go to the right people, a principle which should guide our efforts on behalf of the taxpayers we serve. I am especially pleased that the bill before us includes a provision designed to keep convicted fugitive felons from getting Social Security checks. These efforts build upon the criminal welfare provision which I introduced and which were enacted into law more than 3 years ago. By all accounts, these laws have been effective in stopping illegal fraudulent Social Security payments to prisoners. We have also stopped hard-earned taxpayer dollars from being used to subsidize addicts with disability checks. Overall, we have saved taxpayers and beneficiaries literally billions of dollars. Other provisions in the legislation before us, such as granting the Social Security Administration the tools it needs to weed out waste and fraud, will further protect vulnerable beneficiaries. Mr. Speaker, this bill passed with overwhelming bipartisan support in the last Congress. I urge my colleagues to join me today in supporting it once again.

Mr. HERGER

Mr. HERGER. Mr. Speaker, today I am introducing a bill to allow mutual funds to invest without restriction in publicly traded partnerships, or PTPs. PTPs, which are also known as MLPs, are limited partnerships, which are traded on public securities exchanges in shares known as ``units.'' Because interests in PTPs are liquid and can be bought in small increments, they can be and often are bought by small investors. Many of those investing in PTPs are older individuals, who buy them for the reliable income stream they receive from quarterly PTP distributions. Unfortunately, the tax code currently deters mutual funds representing many small investors from investing in PTPs. As safe, liquid securities, which generally provide a steady income stream, PTPs could be an excellent investment for mutual funds. However, the tax code requires that mutual funds get 90 percent of their income from specific sources in order to retain their tax-exempt status. Distributions from a partnership do not qualify, nor do most types of partnership income, which flow through to the fund. The only way a mutual fund can invest in a PTP is to be certain that the income it receives from that investment and other nonqualifying sources will never exceed 10 percent of its total income. Faced with the burden of keeping track of percentages and the drastic consequences of going over the limit, most mutual fund managers turn to other investments. It makes no sense for publicly traded partnerships to be excluded from the list of qualifying income sources for mutual funds. While traditional partnership interests--the only kind that existed when these rules were written--were illiquid and not always well regulated, PTPs are traded on public exchanges and must file the same information with the Securities and Exchange Commission as publicly traded corporations. Mutual funds are an increasingly important part of the capital markets, and the inability to attract them as investors is hindering PTPs in their ability to raise the capital they need to grow and provide new jobs. Many PTPs are in energy-related businesses, such as pipe lines that transmit oil and gas from where they are extracted as well as from refineries to end users across the nation. Unfortunately, at the precise time that we need to develop domestic sources of energy, we lack sufficient pipeline capacity to move natural gas from where it is produced in the Rockies to extraction facilities and finally to consumers. In the Gulf Coast, the problem is that we have insufficient pipelines to move oil and gas from the refineries to consumers in the Midwest and on the East coast. The legislation I am introducing today would not only provide access to the capital needed by these energy pipeline companies, it would also significantly speed up the creation of 20,000 to 30,000 high paying construction jobs to build these pipelines at precisely the time we need to jump start our economy. In addition, the sooner we build these pipelines, the sooner we will reduce our dependence on foreign sources of energy. The bill I am introducing today would provide PTPs with access to needed capital by simply adding income received by or allocated to a mutual fund by a PTP to the list of income sources that a mutual fund may use to meet the 90 percent test. According to the Joint Committee on Taxation, this change in mutual fund rules which will hasten our energy independence will cost only $18 M over 5 years and $49 M over ten years. In the past, this provision was sponsored by Bill Thomas, now chairman of the Ways and Means Committee, and was approved by Congress in 1999 as part of the Taxpayer Refund and Relief Act, later vetoed by the President. I am happy to take up the cause in the 108th Congress, and hope that my colleagues will join me in supporting this legislation.

Mr. HERGER

Mr. HERGER. Mr. Speaker, I am today introducing legislation that would restore effective use of the installment method of accounting to long-term service business owners who sell their business interests. The installment method of accounting allows a seller to pay tax on the gain from a sale as the seller receives the sale proceeds. This tax treatment matches the time for paying the tax to when the seller has the cash with which to pay that tax. As many Members are aware, in the 106th Congress, we acted on a recommendation from the Clinton Administration to repeal the installment method of accounting for accrual basis taxpayers. Only after such change became law did we discover that we had effectively eliminated the installment method of accounting for many small business owners and, as a result, made it much more difficult for those business owners to sell their businesses. These business owners were forced to pay the entire federal income tax due on the sale of their business in the year of sale, even though the proceeds of the sale would be received over several years. This up- front demand by the government forced business owners to borrow to pay the tax or to accept lower sale prices in order to induce buyers to pay enough up-front to cover the seller's tax. To its credit, the Congress admitted its mistake and retroactively restored the installment method to accrual basis taxpayers in the Installment Tax Correction Act of 2000 (P.L. 106-573), which was enacted on December 28, 2000. While restoring the installment method for accrual method taxpayers in 2000 was the right thing to do, it did not go far enough in remedying the installment sale problems of business owners. Despite the clear policy decision by Congress in 2000 to permit sellers of businesses to use the installment method, some long-term business owners continue to be required to pay a significant portion of total taxes upon entering into an installment sale of their business, even though they have not yet received any significant part of the sale proceeds. An exception to the installment sale method of accounting requires taxpayers to pay all tax attributable to depreciation recapture in the year of a sale. This depreciation recapture rule was adopted in 1984 in order to prevent taxpayers from engaging in ``churning'' transactions, sale/leasebacks, and other tax shelter transactions involving real estate and equipment. However, the recapture provision was expanded well beyond its original purpose in 1993 in connection with legislation relating to the treatment of intangibles. Unfortunately, Congress may not have fully appreciated the consequences to sellers of business interests. In 1993, the Congress adopted rules to clarify the amortization of acquired intangibles (e.g., goodwill, going concern value). The 1993 change required intangibles to be written off over a 15-year period, but specified that any gain on the sale of the intangibles attributable to previous amortization deductions would be treated as depreciation recapture. As a result, tax on this gain must be paid immediately in the year of sale. Because these new rules generally applied to intangibles acquired after August, 1993, business owners are now only just beginning to feel the effects of the recapture rule. This rule is having a particularly adverse effect on service businesses, because intangibles such as goodwill and going concern value represent a major portion of the value of those businesses. For a simplified example, take the case of a business owner who purchased an interest in an architectural firm for $100 in 1993, substantially all of the value of which was attributable to going concern value. The owner, who has actively participated in the business, retires in 2009 and sells the business for $200, payable in ten equal annual installments. This sale would produce $100 of capital gain (at an assumed tax rate of 20%) and $100 of ordinary income (at an assumed tax rate of 33%), generating a total tax of $53. Because of the intangibles recapture rule, the seller will have to pay $35, or 66% of the total tax, in the first year, despite having received only 10% of the sale proceeds in that year. This result is clearly inequitable and defeats the purpose of allowing business owners to use the installment method of reporting gain from the sale of the business. Moreover, the result is especially harsh in cases where a business owner is retiring and selling the business. My bill would allow a long-term active participant in a service business to report intangibles recapture gain on the installment basis along with other gain from the sale. The legislation would not change the character of any gain. As such, intangibles recapture gain would continue to be ordinary income to reflect the fact that it previously gave rise to an ordinary deduction. The bill is limited to long-term participants because they are the individuals who would otherwise be likely to suffer the greatest hardship under the recapture rule and who are most likely to be relying on installment sale payments to supplement their retirement income. Specifically, my bill would allow an individual who has been an active participant for five of the prior seven years in a business in which capital is not a material income-producing factor (i.e., a service business) to report on the installment basis any intangibles recapture income resulting from the disposition of an interest in the business. Because this proposal does not apply to depreciation recapture from tangible property, the proposal does not conflict with the original goals of Congress in adopting the depreciation recapture exception to the installment sale rules. Specifically, this is not a change that would permit tax sheltering through any sort of ``churning'' transactions, While this proposal does not address all of the potential cases in which the installment sale method is unavailable upon the sale of a business, it does go a long way towards addressing one of the most egregious situations. I urge my colleagues to support this worthy legislation.

Mr. HERGER

Mr. HERGER. Mr. Speaker, I rise in support of the Social Security Program Protection act. I would like to thank Chairman Shaw and the other members of the Committee on Ways and Means who have worked tirelessly to improve Social Security programs that provide a crucial safety net for many of our Nation's neediest disabled and elderly individuals. These changes have been designed to ensure that the right benefits go to the right people, a principle which should guide our efforts on behalf of the taxpayers we serve. I am especially pleased that the bill before us includes a provision designed to keep convicted fugitive felons from getting Social Security checks. These efforts built upon the criminal welfare prevention provisions which I introduced and which were enacted into law more than 3 years ago. By all accounts, these laws have been effective in stopping illegal, fraudulent Social Security payments to prisoners. We have also stopped hard-earned taxpayer dollars from being used to subsidize addicts with disability checks. Overall, we have saved the taxpayers and beneficiaries literally billions of dollars. Other provisions in the legislation before us, such as granting the Social Security Administration the tools it needs to weed out waste and fraud, will further protect vulnerable beneficiaries. Mr. Speaker, this bill passed with overwhelming bipartisan support in the last Congress. I urge all my colleagues to join me today in supporting it once again.

Mr. HERGER

Mr. HERGER. Mr. Chairman, I rise in opposition to the substitute and I yield 10 minutes to the gentlewoman from Washington (Ms. Dunn) for purposes of control.

Mr. HERGER

Mr. HERGER. Mr. Chairman, I yield 1 minute to the gentleman from Georgia (Mr. Kingston).

Mr. HERGER. Mr. Chairman, that is correct.

Mr. HERGER. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I have great respect for my colleague on the Committee on Ways and Means, the gentleman from Maryland (Mr. Cardin). I appreciate his hard work on this issue. I do, however, have a difference of opinion with him regarding the amendment we are considering, and I oppose it for several reasons. The gentleman's amendment weakens work requirements and would lead to less work, more welfare and more poverty. Like the failed AFDC program that preceded TANF, the substitute promotes more welfare dependence. It places new mandates on States by requiring them to assess every recipient for child care needs, barriers to work and history of domestic violence, and by prohibiting States from applying sanctions to those who refuse to work. The substitute, which we estimate to cost at least $20 billion over the next 5 years, is just too expensive and would greatly increase deficits. However, I would like to commend the gentleman for including certain provisions that mirror those in our H.R. 4. Those provisions include maintaining the basic TANF funding and block grant structure, requiring parents to engage in real work for 24 hours per week, raising total work requirements to 40 hours per week at State option, increasing State work rate requirements and adding reducing poverty as a TANF purpose. I urge the Members to oppose this amendment and vote in support of H.R. 4.

Mr. HERGER. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I would like to remind my good friend from Texas that in H.R. 4, his State of Texas will receive an additional $370 million for child care over the next 5 years. Mr. Chairman, I yield 2 minutes to the gentleman from Indiana (Mr. Pence). (Mr. PENCE asked and was given permission to revise and extend his remarks, and include extraneous material.)

Mr. HERGER. Mr. Chairman, I yield 2 minutes to the gentleman from Arizona (Mr. Hayworth), a key person on the Committee on Ways and Means. (Mr. HAYWORTH asked and was given permission to revise and extend his remarks.)

Mr. HERGER. Mr. Chairman, I yield myself 30 seconds to respond. Mr. Chairman, I want to thank the gentleman for his interest and activity on the mentoring issue. The programs you have described are important to helping welfare recipients to succeed in the workforce. The gentleman's proposal will be considered, and I look forward to working with him to support these types of mentoring programs so that we can help even more recipients achieve independence through work. Mr. Chairman, I reserve the balance of my time.