John Kerry

Mr. KERRY

Mr. KERRY. Mr. President, this week we are celebrating National Small Business Week to recognize the contributions made by small businesses, which are the engine of our economic growth. During 2005, more than 25 billion small businesses in the United States contributed $918 billion to the economy. Many of our most successful corporations started as small businesses, including AOL, Apple Computer, Compac Computer, Datastream, Evergreen Solar, Intel Corporations, and Sun Microsystems. As you can see from this partial list, many of these companies played an integral role in making the Internet a reality. Today, Senator Snowe and I are introducing the Invest in Small Business Act of 2007, to encourage private investment in small businesses by making changes to the existing partial exclusion for gain from certain small business stock. We are at an integral juncture in developing technology to address global climate change. I believe that small business will repeat the role it played at the vanguard of the computer revolution by leading the Nation in developing the technologies to substantially reduce carbon emissions. Small businesses already are at the forefront of these industries, and we need to do everything we can to encourage investment in small businesses. Back in 1993, I worked with Senator Bumpers to provide a partial exclusion for gain from the sale of small business stock. This provision would provide a 50 percent exclusion for gain for individuals from the sale of certain small business stock that is held for five years. Since the enactment of this provision, the capital gains rate has been lowered twice without any changes to the exclusion. Due to the lower capital rates, this provision no longer provides a strong incentive for investment in small businesses. The Invest in Small Business Act makes several changes to the existing provision. This legislation increases the exclusion amount from 50 percent to 75 percent and decreases the holding period from five years to four years. This bill would allow corporations to benefit from the provision as long as they own less than 25 percent of the small business corporation stock. Currently, the exclusion is treated as a preference item for calculating the alternative minimum tax (AMT). The Invest in Small Business Act of 2007 would repeal the exclusion as an AMT preference item. Under current law, the nonexcluded amount of gain is taxed at 28 percent. This legislation would tax the nonexcluded portion at the lower capital gains rate of 15 or 5 percent. The Invest in Small Business Act of 2007 will provide an effective tax rate of 3.75 percent for the gain from the sale of certain small businesses. This lower capital gains rate will encourage investment in small businesses. In addition, the changes made by the Invest in Small Business Act of 2007 will make more taxpayers eligible for this provision. As we celebrate the success of entrepreneurs this week, it is an appropriate time to encourage new investment. The Invest in Small Business Act of 2007 strengthens an existing tax incentive to provide an appropriate incentive to encourage innovation and entrepreneurship. I ask unanimous consent that the text of the bill and a summary of the bill be printed in the Record

Mr. KERRY

Mr. KERRY. Mr. President, this week thousands of business owners, union members, faith leaders, physicians, nurses, and patients will come together in Washington and in each of the 50 States to demand immediate action to fix our Nation's growing health insurance crisis. The Robert Wood Johnson Foundation's fifth annual Cover the Uninsured Week will once again call attention to the 45 million of our neighbors, co-workers and friends--including 11 million children under age 21--who live without any health care coverage. Unable to afford doctor's visits and prescription drugs, they live day to day in fear that a child will get sick or suffer an accident. No family in this great Nation should have to live in such fear. Understandably, the focus of Cover the Uninsured Week this year is on the great opportunity presenting this Congress to expand coverage to millions of America's uninsured children through the reauthorization and expansion of the successful, bipartisan State Children's Health Insurance Program. This is the number one domestic budget priority for me and for the new Democratic Congress. In a given year, uninsured kids are only half as likely to receive any medical care. That neglect leads to chronic disease. Uninsured kids also cost us productivity when parents must choose between working and caring for a sick child without the help of a doctor. Kids in public insurance programs perform 68 percent better in school, and insuring all of them would reduce avoidable hospitalizations by 22 percent. But while kids are undoubtedly our first priority, we must take care not to lose sight of our ultimate objective: Ensuring that every single man, woman, and child in America has affordable and meaningful health insurance coverage. The fact is that denying health insurance is not just immoral, it's ultimately more costly than insuring them. In the long run, this is an obvious choice. But we do not have time to wait for the long run. Our businesses, families, and health care providers need relief immediately from the insecurity, inefficiency, and inequity bred by a system which insures too few at too high a cost. Therefore, I am introducing today the ``Countdown to Coverage Act of 2007.'' It's simple: The Countdown to Coverage Act requires Congress to pass legislation by the end of the 111th session that will ensure all Americans have quality, affordable health care coverage. If Congress fails to act, members will become responsible for 100 percent of the cost of their own plan through FEHBP. Senators and Congressmen give ourselves the very best health care coverage, and it's American taxpayers who foot the bill. Now, Congress needs to step up and pass universal health care coverage by 2011--or pay the price and pick up the cost of our own health care ourselves. 45 million people--11 million kids--without health insurance is unacceptable in the richest country in the world. Every American deserves the kind of quality care that Senators and Congressmen give themselves, and this bill sets a deadline for members of Congress to take real action. I ask unanimous consent that the text of the legislation be printed in the Record.

Mr. KERRY

Mr. KERRY. Mr. President, the United States has the fairest, most transparent and most efficient financial markets in the world. Our Nation achieved this status by developing a regulatory approach that insures investors around the world have confidence in our markets. We cannot go back to the days of Enron accounting for small businesses. As chairman of the Senate Committee on Small Business and Entrepreneurship, I oppose the amendment by Senator DeMint to provide an exemption from Sarbanes-Oxley regulations for small public companies because I believe it is premature, would endanger small business investors and limit access to capital for small public companies in the United States. Last week, I held a hearing in the committee on the upcoming changes to the Sarbanes-Oxley law and how they will affect small business. In that hearing, no Senator or witness expressed any support for providing a permanent exemption from Sarbanes-Oxley regulations for small public companies. The Securities and Exchange Commission Chairman Christopher Cox has said that he strongly opposes any type of permanent exemption for small public companies from Sarbanes-Oxley regulations. Here is why. It wasn't too long ago, between the years 1998-2000, that public companies were issuing financial restatements at a rate that was higher than the previous 10 years combined. Too often, public companies were overstating their income to attract investors. As a result, the trust and confidence of the American people in their financial markets was dangerously eroded by the actions of WorldCom, Inc., Enron, Arthur Andersen and others. The shocking malfeasance by these businesses and accounting firms put a strain on the growth of our economy, cost investors billions in assets and hurt the integrity of our financial markets around the world. By all accounts, the Sarbanes-Oxley Act has brought back accountability to corporate governance, auditing, and financial reporting for public companies. The audit of internal controls over financial reporting has produced significant benefits and public company financial reporting has improved. As a result, investor confidence in our capital markets has been restored and our Nation's economic growth continues. Recent published reports show that accounting restatements on large companies' financial reports declined by 20 percent last year. This is important evidence that Sarbanes-Oxley is working. These improvements, however, have not come without some drawbacks. Too many small public companies who played by the rules are now expected to deal with the time and financial burden required to comply with the Sarbanes-Oxley law. Last year, small businesses with less than $75 million in assets saw the number of financial restatements increase by 46 percent. This shows that small businesses getting ready to comply with Sarbanes-Oxley are having trouble. But I believe we will all benefit when small businesses eventually comply with Sarbanes Oxley. According to a recent United States Government Accounting Office--GAO-- study requested by Senator Snowe, the cost of compliance and the time needed for small public companies to comply with Sarbanes-Oxley regulations has been disproportionately higher than for large public companies. Firms with assets of $1 billion or more spend just thirteen cents per $100 in revenue for audit fees, while small businesses are forced to spend more than a dollar per $100 in revenue to comply with the same rules. The response to these problems is not to give a permanent blanket exemption from these regulations to small public companies, instead we need to assist them in making the transition to comply with the Law. That is why the SEC and the Public Company Accounting Oversight Board-- PCAOB--are currently considering final rules and guidance on the implementation of Sarbanes-Oxley that will make it easier for small businesses to comply with the law. In his testimony to the Small Business Committee, Chairman Cox said three quarters of the comment letters regarding the proposed Sarbanes- Oxley rule changes from small business interests supported the efforts to make it easier for small businesses to comply with the law. Specifically, these small businesses believed that the proposed rules would allow managements to tailor their audits and evaluations to the facts and circumstances of their particular companies and focus on their areas that are most important to reliable financial reporting. Chairman Olson testified at the same hearing that while the PCAOB is committed to making the process cost-effective for small businesses, the oversight program it has in place is reducing the risk of financial reporting failures and renewing confidence in U.S. security markets. We also heard from Joseph Piche, whose private company Eikos, Inc. operates out of Franklin, MA. Mr. Piche's testimony reflected the sentiments of so many small business owners--that while the burdens of cost make it difficult under the current regulatory structure, entrepreneurs rely on capital markets, and capital markets rely on trust. The Sarbanes-Oxley law has helped to restore this trust. So the upcoming changes to Sarbanes-Oxley will save small public companies time and money. Unfortunately, before these changes are even finalized, the DeMint amendment would provide a permanent exemption to more than 6,000 small public companies from ever having to comply with Sarbanes-Oxley. As Mr. Piche and other industry witnesses told the Small Business Committee, small businesses aren't resistant to fair and open financial reporting, because they know that it leads the way to access to capital. Today, small public companies are vital participants in U.S. capital markets and play a critical role in future economic growth and high-wage job creation. Once provided with the necessary regulatory flexibility, I have no doubt that our small public companies will be able to comply with the Sarbanes-Oxley law, just as big businesses are doing today. All small public companies know it is in their best interest to have regulations in place that provide transparency and accountability. These are the qualities that encourage investor confidence in U.S. markets. It gives them access to more investors and increases the pool of available capital while keeping their competitors from manipulating the marketplace through faulty accounting. As we move forward, there are additional steps that can be taken to assist small business. First, I recently wrote to the SEC and PCAOB with Senator Snowe, urging the regulators to give small businesses up to an additional year to comply with the pending changes to the Sarbanes-Oxley regulations. I believe this added time will help small businesses adapt to the changing regulatory structure and make it easier for those who lack the expertise or financial resources to comply with the law. The SEC has previously supported providing small public companies with additional time to comply with Sarbanes-Oxley and I hope they will do so again. The DeMint amendment is an overreaching, premature policy reversal that preempts years of thoughtful regulatory consideration on the part of the SEC and the PCAOB. It represents a blanket exemption that has the potential to take U.S. capital markets a large step backwards to the days of Enron. I urge my colleagues to oppose this amendment and allow the regulators to finish their jobs. As chair of the Committee on Small Business and Entrepreneurship, I will continue to closely follow the impact of Sarbanes-Oxley on small firms and look forward to working with Senator Snowe and my colleagues on the committee to determine what necessary steps Congress can take to help small public companies abide by the law while simultaneously allowing them to focus on what they do best--creating jobs and growing our economy by participating in our capital markets. This will help small businesses achieve the American dream of becoming innovative public companies. We can help our small public companies and encourage additional small businesses to become public companies--while ensuring transparency and honest accounting. This will help ensure that the United States continues to have the fairest, most transparent and most efficient financial markets in the world.

Mr. KERRY

Mr. KERRY. Mr. President, today Senator Smith and I are introducing the ``Tax Depreciation, Modernization, and Simplification Act of 2007.'' This legislation will update our depreciation system so that it can keep pace with new technology. Last July the Senate Finance Subcommittee on Long-Term Growth and Debt Reduction, on which Senator Smith was Chairman and I served as Ranking Member, held a hearing on updating our depreciation system. During the hearing, we heard that the current depreciation system is out of date and that changes should be made. Our tax system allows, as a current expense, a depreciation deduction that represents a reasonable allowance for the exhaustion, wear and tear of property used, or of property held for the production of income. Since 1981, the depreciation deduction for most tangible property has been under rules specified in section 168 of the Internal Revenue Code. The Modified Accelerated Cost Recovery System, or MACRS, specified under section 168 applies to most new investment in tangible property. MACRS depreciation allowances are computed by determining a recovery period called a ``class life'' and an applicable recovery method for each asset. The current depreciation system has not kept pace with technological advances. Several industries were not even contemplated when class lives were assigned in 1981, and some class lives even date back to 1962. In the 1980's it would have been difficult to imagine what our reliance on computer and wireless technology would be today. At that time, the wireless industry was in its infancy, and there was no specifically assigned life for wireless equipment. As a result, today's depreciation system is like playing ``audit roulette.'' There is no certainty in how these assets should be depreciated. All this matters because it impacts investment, innovation, competitiveness, and ultimately the quality and quantity of jobs in America. My home state of Massachusetts is a leader in the high tech industry. Massachusetts employs hundreds of thousands of skilled workers in key technology sectors, including computer hardware, life sciences, software, medical products, semiconductor, defense technology and telecommunications. We have learned in Massachusetts that a strategic tax policy can have a positive effect on economic competitiveness. For these reasons, we are reintroducing the ``Tax Depreciation, Modernization, and Simplification Act of 2007.'' This legislation makes four important changes to the current depreciation system. First, the legislation creates a process that provides the Department of Treasury with the authority to modernize class lives. The Secretary of the Treasury will prescribe regulations to provide a new class life for certain eligible property. Eligible property does not include residential rental property, nonresidential real property, or property for which Congress has specifically legislated the recovery period. The purpose of this provision is to provide Treasury with a mechanism to modify class lives that reasonably reflect the anticipated useful life and the anticipated decline in value over time of the property to the industry, and take into account when the property becomes technologically or functionally obsolete to perform its original purpose. Treasury will also have the authority to modify class lives in order to more accurately reflect economic depreciation. For example, a personal computer has a depreciable life of five years, but it has an economic life of only 2 to 3 years. Even though a computer can be used for five years, it becomes economically obsolete after a couple of years because of the newer, faster, and more advanced computers on the market. Our depreciation system has not been adequately updated since Congress revoked Treasury's rule making authority in 1988. When the MACRS system was enacted in 1986, Congress directed Treasury to establish an office to monitor and analyze the actual experience with class lives and to modify class lives if the new class life reasonably reflected the anticipated useful life and the anticipated decline in value over time of the property to the industry. The authority was then revoked because Congress did not agree with all of the decisions made by Treasury. The authority provided in this legislation addresses this previous problem by requiring Treasury to consult with Congress 60 days prior to publishing any proposed regulations. In addition, the Congressional Review Act would apply to any regulation proposed by Treasury and each class life prescribed by Treasury would be considered a separate rule. Providing Treasury with the authority to modify class lives would allow the process to move more efficiently than allowing Congress to make piecemeal changes to the current depreciation system. Congress would provide guidelines, and Treasury would have the role of administering those guidelines. Under the legislation, Treasury would monitor and analyze the actual experience of depreciable assets and report their findings to Congress. We expect Treasury to establish guidelines that will take into consideration the fact that some assets lose a significant percentage of their original value in the early part of their lives. This legislation specifically provides consultation with Congress in order for Congress to continue to have a role in this important tax policy issue. We do not expect Treasury within the first year or two to review all classes of assets. Rather, we expect Treasury to begin with new assets that do no fit into the system, assets that have undergone technological advances, and existing assets that do not really fit into the current system. For example, the current system creates an irrational result for fiber optic lines. The class life of a fiber optic line depends upon whether it is used for one-way or two-way communications. Second, the legislation would eliminate the mid-quarter convention. The placed-in-service conventions determine the point in time during the year that the property is considered ``placed in service'' and this determines when depreciation for an asset begins or ends. Under current law, there are the half-year, mid-month, and mid-quarter conventions. The mid-quarter convention is a source of complexity because it requires an analysis of the depreciable basis of property placed in service during the last three months of any taxable year. The Joint Committee on Taxation recommended the elimination of the mid-quarter convention in its 2001 recommendations on simplifying the Federal tax system. The calculation of the mid-quarter convention is burdensome, and it requires taxpayers to wait until after the end of the taxable year to determine whether the proper placed-in-service convention was used to calculate depreciation for assets during the taxable year. Third, the legislation would allow taxpayers to elect to use mass asset accounting for assets with a cost of less than $10,000. Generally, taxpayers calculate depreciation on an item-by-item basis. The bill would allow taxpayers to elect to use mass asset accounting for all assets with the same recovery period. This provision will help simplify the recordkeeping associated with depreciation. Fourth, the legislation would permanently extend increased expensing for small businesses. In lieu of depreciation, a taxpayer with a small amount of annual investment may elect to deduct such costs. The Jobs and Growth Tax Relief Reconciliation Act of 2003 increased the amount a taxpayer may deduct from $25,000 to $100,000 and increased the total amount of investment a business can make in a year and still qualify for expensing from $200,000 to $400,000. In addition, the Act allows off-the-shelf computer software to be eligible for the provision. The Tax Depreciation, Modernization, and Simplification Act of 2007 would make the $100,000 and $400,000 amounts permanent and index them for inflation. Off-the-shelf computer software would be eligible for the provision. Increased expensing for small businesses helps lower the cost of capital for mall businesses and eliminates complicated recordkeeping. In addition, it should reduce administrative costs for small businesses. The four components of this legislation will result in updating and simplifying the current depreciation system. The Tax Depreciation, Modernization, and Simplification Act of 2007 will provide certainty for taxpayers and put an end to ``audit roulette.''

Mr. KERRY

Mr. KERRY. Mr. President, today Senator Smith and I are introducing the ``Tax Depreciation, Modernization, and Simplification Act of 2007.'' This legislation will update our depreciation system so that it can keep pace with new technology. Last July the Senate Finance Subcommittee on Long-Term Growth and Debt Reduction, on which Senator Smith was Chairman and I served as Ranking Member, held a hearing on updating our depreciation system. During the hearing, we heard that the current depreciation system is out of date and that changes should be made. Our tax system allows, as a current expense, a depreciation deduction that represents a reasonable allowance for the exhaustion, wear and tear of property used, or of property held for the production of income. Since 1981, the depreciation deduction for most tangible property has been under rules specified in section 168 of the Internal Revenue Code. The Modified Accelerated Cost Recovery System, or MACRS, specified under section 168 applies to most new investment in tangible property. MACRS depreciation allowances are computed by determining a recovery period called a ``class life'' and an applicable recovery method for each asset. The current depreciation system has not kept pace with technological advances. Several industries were not even contemplated when class lives were assigned in 1981, and some class lives even date back to 1962. In the 1980's it would have been difficult to imagine what our reliance on computer and wireless technology would be today. At that time, the wireless industry was in its infancy, and there was no specifically assigned life for wireless equipment. As a result, today's depreciation system is like playing ``audit roulette.'' There is no certainty in how these assets should be depreciated. All this matters because it impacts investment, innovation, competitiveness, and ultimately the quality and quantity of jobs in America. My home state of Massachusetts is a leader in the high tech industry. Massachusetts employs hundreds of thousands of skilled workers in key technology sectors, including computer hardware, life sciences, software, medical products, semiconductor, defense technology and telecommunications. We have learned in Massachusetts that a strategic tax policy can have a positive effect on economic competitiveness. For these reasons, we are reintroducing the ``Tax Depreciation, Modernization, and Simplification Act of 2007.'' This legislation makes four important changes to the current depreciation system. First, the legislation creates a process that provides the Department of Treasury with the authority to modernize class lives. The Secretary of the Treasury will prescribe regulations to provide a new class life for certain eligible property. Eligible property does not include residential rental property, nonresidential real property, or property for which Congress has specifically legislated the recovery period. The purpose of this provision is to provide Treasury with a mechanism to modify class lives that reasonably reflect the anticipated useful life and the anticipated decline in value over time of the property to the industry, and take into account when the property becomes technologically or functionally obsolete to perform its original purpose. Treasury will also have the authority to modify class lives in order to more accurately reflect economic depreciation. For example, a personal computer has a depreciable life of five years, but it has an economic life of only 2 to 3 years. Even though a computer can be used for five years, it becomes economically obsolete after a couple of years because of the newer, faster, and more advanced computers on the market. Our depreciation system has not been adequately updated since Congress revoked Treasury's rule making authority in 1988. When the MACRS system was enacted in 1986, Congress directed Treasury to establish an office to monitor and analyze the actual experience with class lives and to modify class lives if the new class life reasonably reflected the anticipated useful life and the anticipated decline in value over time of the property to the industry. The authority was then revoked because Congress did not agree with all of the decisions made by Treasury. The authority provided in this legislation addresses this previous problem by requiring Treasury to consult with Congress 60 days prior to publishing any proposed regulations. In addition, the Congressional Review Act would apply to any regulation proposed by Treasury and each class life prescribed by Treasury would be considered a separate rule. Providing Treasury with the authority to modify class lives would allow the process to move more efficiently than allowing Congress to make piecemeal changes to the current depreciation system. Congress would provide guidelines, and Treasury would have the role of administering those guidelines. Under the legislation, Treasury would monitor and analyze the actual experience of depreciable assets and report their findings to Congress. We expect Treasury to establish guidelines that will take into consideration the fact that some assets lose a significant percentage of their original value in the early part of their lives. This legislation specifically provides consultation with Congress in order for Congress to continue to have a role in this important tax policy issue. We do not expect Treasury within the first year or two to review all classes of assets. Rather, we expect Treasury to begin with new assets that do no fit into the system, assets that have undergone technological advances, and existing assets that do not really fit into the current system. For example, the current system creates an irrational result for fiber optic lines. The class life of a fiber optic line depends upon whether it is used for one-way or two-way communications. Second, the legislation would eliminate the mid-quarter convention. The placed-in-service conventions determine the point in time during the year that the property is considered ``placed in service'' and this determines when depreciation for an asset begins or ends. Under current law, there are the half-year, mid-month, and mid-quarter conventions. The mid-quarter convention is a source of complexity because it requires an analysis of the depreciable basis of property placed in service during the last three months of any taxable year. The Joint Committee on Taxation recommended the elimination of the mid-quarter convention in its 2001 recommendations on simplifying the Federal tax system. The calculation of the mid-quarter convention is burdensome, and it requires taxpayers to wait until after the end of the taxable year to determine whether the proper placed-in-service convention was used to calculate depreciation for assets during the taxable year. Third, the legislation would allow taxpayers to elect to use mass asset accounting for assets with a cost of less than $10,000. Generally, taxpayers calculate depreciation on an item-by-item basis. The bill would allow taxpayers to elect to use mass asset accounting for all assets with the same recovery period. This provision will help simplify the recordkeeping associated with depreciation. Fourth, the legislation would permanently extend increased expensing for small businesses. In lieu of depreciation, a taxpayer with a small amount of annual investment may elect to deduct such costs. The Jobs and Growth Tax Relief Reconciliation Act of 2003 increased the amount a taxpayer may deduct from $25,000 to $100,000 and increased the total amount of investment a business can make in a year and still qualify for expensing from $200,000 to $400,000. In addition, the Act allows off-the-shelf computer software to be eligible for the provision. The Tax Depreciation, Modernization, and Simplification Act of 2007 would make the $100,000 and $400,000 amounts permanent and index them for inflation. Off-the-shelf computer software would be eligible for the provision. Increased expensing for small businesses helps lower the cost of capital for mall businesses and eliminates complicated recordkeeping. In addition, it should reduce administrative costs for small businesses. The four components of this legislation will result in updating and simplifying the current depreciation system. The Tax Depreciation, Modernization, and Simplification Act of 2007 will provide certainty for taxpayers and put an end to ``audit roulette.''

Mr. KERRY

Mr. KERRY. Madam President, today I honor the distinguished 70-year history of the National Small Business Association. This member-driven organization continues to take the lead on important issues facing small businesses and is the oldest small business advocacy group in the United States. It is especially fitting that we recognize this organization during National Small Business Week. The NSBA can trace its founding back to DeWitt M. Emery, a determined small business owner struggling to keep his business running in the midst of the Great Depression. As owner of the Monroe Letterhead Corporation in Akron, OH, Mr. Emery labored to keep his small business running while feeling burdened by the increasing cost of doing business--including higher material costs and wages. Frustrated by the lack of support for small businesses in national politics, and inspired by an idea to make his and his peers' voices heard, Mr. Emery founded the National Small Business Men's Association on November 13, 1937. One hundred sixty small business owners out of 200 who received Mr. Emery's recruitment letter joined the organization that now boasts a reach of over 150,000 small businesses. In keeping with the organization's responsiveness to the ever- changing small business climate, and to be more inclusive of the growing number of women small business owners, the group changed its name in 1962 to the National Small Business Association. In 1986, the organization changed its name again to National Small Business United when it joined with Small Business United, or SBU, a rival organization that started 5 years earlier. SBU and its member groups, such as the Smaller Business Association of New England, or SBANE, helped establish the current organization's vast network of small business affiliates. After the merger, the new organization became responsible for running the SBANE-created Washington Presentation. In addition to SBANE, some of the other NSBA affiliates are the Arizona Small Business Association, the Small Business Association of Michigan, Missouri Merchants and Manufacturers Association, SMC Business Councils, Council of Smaller Enterprises and Small Business California. Thanks to its strong affiliates NSBA has emerged as a vibrant grassroots organization. In 2003, the oldest small business advocacy group changed its name back to the National Small Business Association. Through its name changes and merger, the organization's commitment to representing small business owners has been unwavering, and today's group boasts a wide variety of members from carpenters to investors, from manufacturers to grocers. NSBA truly represents the diversity of our Nation's small businesses. As chairman of the Committee on Small Business and Entrepreneurship, I work with NSBA's members in my State and across the Nation, welcoming their insights and unique perspective. I find it important to note that today's small business owners struggle with some of the same issues that plagued Mr. Emery in 1937, and many new issues. From access to capital to health care, we will continue to work with small businesses as they strive to maintain and grow their firms--and as they make a significant contribution to our economy. Through the efforts of advocacy groups like the NSBA working with us to pass legislation, we have been able to assist thousands of determined small business owners like Mr. Emery. The tireless work of the NSBA is testament to the resolve and spirit of small business owners, and I am gratified that the current organization leads the charge on many important issues. I invite the Senate to join me in honoring NSBA and its distinguished history of nonpartisan work on behalf of small businesses.

Mr. KERRY

Mr. KERRY. Mr. President, I ask unanimous consent I be permitted to proceed as in morning business for such time as I may consume.

Mr. KERRY. I thank the Chair. Mr. President, let me just comment. I did not come to the floor to speak about the bill specifically. I wish to speak about the alternative minimum tax in a moment. But I cannot help, since I am a member of the committee--listening to the ranking member talk about Medicare and what the impact of allowing Medicare the possibility of being able to negotiate might or might not be--but speak to that for a moment, if I can. I think most Americans understand, as a matter of common sense, that when an entity that represents their tax dollars has the ability to go out into the marketplace and negotiate for a price, the probability they are going to have saved tax dollars is pretty real, if there is a good and decent negotiation. The resistance of the Senator from Iowa and others is interesting because it is a resistance that represents the power of big companies in the country--the drug companies--to sort of say: Hey, we kind of like the system the way it is--which we understand because the profits are enormous. But our job is to represent the taxpayers' dollars. Our job is also to use the marketplace thoughtfully. I do not know what it is that suggests, on the one hand, it is legitimate for the Veterans' Administration to go out as a Government entity and negotiate a lower price for the drugs it purchases to distribute to veterans--which we do--but it is not OK for Medicare-- which is another Government program that costs the taxpayers a lot of money--to be able to go out and negotiate a lower price for seniors. It is illogical. What they do is come in and try to scare people and say: Well, we have given this special privilege to the Veterans' Administration, but if all of a sudden we allow somebody else to negotiate it, then the veterans are not going to get as good a deal. Well, nobody knows that until you go out into the marketplace. The Veterans' Administration and Medicare together still do not represent the entire market. You are going to have an incredible number of private citizens still purchasing through private health care plans or their HMOs or other plans--private as they are--also. The marketplace is still going to have its capacity to work. This is not such a large block that it represents a complete and total eradication of a marketplace, No. 1. No. 2, there are other countries where you have this kind of negotiated fee for the service being provided which has worked very effectively. I think the bottom line is that people have to remember that this legislation we are talking about does not order the Secretary to do this. It is pretty obvious under this administration it is not going to happen because they do not believe in it. All we are doing is lifting the prohibition against the Secretary doing it. So if all the negative things the Senator talks about are true, a smart Secretary is not going to do them because they are negative. But why would you put in place a prohibition? Why do you specifically say: No, the Secretary can't go out and negotiate the price. You are stuck with the status quo. You are stuck with the current system. The reason is very simple: because it is a lot of money out of the pockets of taxpayers into the pockets of the big companies. That is it, and they are here protecting that. This is a question of whether we are simply going to lift the prohibition, let the Secretary make the judgment. Can you go out into the market? Can you do this without hurting veterans? Can you do it without upsetting the marketplace? Can you do it and still have the kind of resources you want put into the research of new drugs and other things? I am confident a Secretary is going to make a smart decision. It is interesting to see the people who usually spend the most time arguing in this country ``don't let the government interfere'' are the ones who are standing up to let the Government--excuse me, not let the Government, force the Government, in effect, to interfere with the marketplace. Actually, what they really are doing is putting in place a prohibition against the Secretary actually letting the marketplace work or testing whether the marketplace could work more effectively. In effect, we leave it in a state where the companies are dictating effectively what the price is going to be and the citizen, as a result, winds up paying an unfair burden. We are not doing the best job possible as Government trustees of taxpayer money in taking care of that money and in representing the interests of our taxpayers. That is what is at stake here. Are you prepared to trust the discretion of the Secretary to analyze this, to look at what is best for the country, best for the delivery system, and make that judgment? All we are doing is lifting an unfair special interest prohibition to allow a full analysis of what the better alternative might be. Alternative Minimum Tax Mr. President, as Americans prepared their taxes this year, millions of families in Massachusetts and across the country found a very unpleasant surprise. Beyond their regular income taxes, families found another hidden income tax, which is the alternative minimum tax. It costs those families many thousands of dollars. Most taxpayers are accustomed to computing their income tax liability in the usual way: adding up their income, making whatever deductions they are entitled to, subtracting exemptions for their dependents, and then checking their tax bracket to find out how much they owe. But this year, many of those same taxpayers discovered another tax that ate up any exemptions and deductions they might have claimed. It is a hidden income tax, and it affects the wrong people. It affects people we never intended to affect, and each year that we don't address it, it grows worse. This alternative minimum tax is a tax that made sense once upon a time. When it was first enacted in 1969, it had a rationale, but since then, it has become bloated and illogical. The tax was first put in place when Treasury Secretary Joseph Barr, during his 1 month as the shortest tenured Treasury Secretary in history, told Congress about 155 wealthy Americans who had paid no income tax in 1966. Congress was overwhelmed with mail expressing outrage that these 155 rich Americans weren't pulling their weight. In response, Congress passed the first version of the AMT. So the AMT was put in place to address Americans' concerns with 155 of the richest Americans at a time when 155 represented a large block of those who were among the wealthiest Americans. Urging tax reform, Secretary Barr coined the phrase ``taxpayers' revolt'' and that is exactly what we are likely to see unless we get this right now. In 1970, 20,000 taxpayers were affected by the alternative minimum tax. This year, about 4 million Americans will pay it, and next year that number could rise to 23 million Americans. What was originally a small fix at the edge of our Tax Code has now ballooned into a massive inconvenience and unfairness at the center of our Tax Code. Instead of serving its original purpose, the tax cuts we saw passed into law a few years ago, illogical and deceptive as they were, are winding up targeting the very people we are supposed to be helping. The very people we hear most of the rhetoric about--those who need help in America and the middle class being unfairly taxed--are the very people who are being unfairly taxed by this hidden tax people don't want to talk about. The fact is the middle class has seen an enormous shift in the burden away from the wealthiest Americans onto the middle class, the very people the AMT was designed to protect. The AMT is now poised to make a dramatic shift from the wealthy to the middle class. In 2006, taxpayers earning more than half a million dollars will pay 47 percent of the tax. By 2010, that number will drop to 16 percent. We are going to go from 47 percent of the people who earn more than half a million dollars who are supposed to be the targets of the alternative minimum tax--that will drop to 16 percent-- and the people who are going to pick up the difference are going to be Americans in the middle class who are struggling with increasing tuition costs, increasing energy costs, increasing health care costs, and wages that are either frozen or going down. Meanwhile, investment income will not be impacted by the alternative minimum tax, and the top alternative minimum tax rate is lower than the top marginal tax rate, which is what people pay on their income. So a tax designed to cover or apply to the wealthiest Americans has become a solidly middle-class tax. This tax also punishes certain States in our country more than other States, and particularly a State such as mine--Massachusetts--but other States in the Northeast and large industrial States. In 2007, 24 percent of Massachusetts taxpayers, up from about 5 percent last year, will be hit by the alternative minimum tax, so that Massachusetts will be No. 4 in the rankings of all the States in the country. I don't think we ought to be putting an undue burden on the middle class, and we certainly shouldn't be putting one unfairly on certain States while other States are exempt. Worse still, the tax penalizes families with children because it eliminates any dependent exemptions. So here we are talking about family values, but the family values are stripped away for those middle-class families because they lose their exemptions for their dependents. In 2007, the alternative minimum tax will impact a family with four children and an income of $57,000. Married couples will be more than 12 times as likely as singles to face the alternative minimum tax in 2010. So those of us who argued strongly about the marriage penalty need to note that the marriage penalty is, in fact, growing larger as a consequence of the alternative minimum tax. We wrote the exemptions that we had specifically to help families to get away from that problem, and my question is, do we now want to burden them with this additional tax. President Bush has acknowledged, at least rhetorically, this is a failed policy. There is room for bipartisanship here. Congress and the President need to work together to address what has become a major structural problem in our Tax Code. I commend my colleague from Massachusetts, Congressman Neal, who is working in the House on this issue and showing important leadership in order to try to address it, and I look forward to seeing his proposal. In fixing this tax, there are two major pitfalls we have to avoid. The first is: Don't simply repeal the tax without paying for it. We can't afford to do that, and it is clearly not fiscally responsible. Finally, it doesn't solve the problem. Second, we need to find a permanent solution. The alternative minimum tax itself was originally a small fix for a different tax issue. It is the accumulation over time of stopgap measures that has brought us to the current problem. So I don't believe it serves us well at all to push this issue down the road, as has been the practice of the Congress in these last years. We also need to make the tax policy of our country simpler and more straightforward and fill it with a little more common sense and a little less special interests. Our tax problem as a nation was, in fact, made significantly worse by the Bush tax cuts, and the alternative minimum tax has been used quietly, more and more, to ask middle-class families to pay the burden of the wealthiest Americans' tax cut. We can all agree the main reason this tax has grown out of proportion is that it wasn't indexed to inflation. The same money we talk about today went an awful lot farther in 1970. The movies back then cost $1.65. The fact is we haven't adjusted the tax brackets to rise with inflation. Another major problem has been the alternative minimum tax interaction with the Bush tax cuts. This administration and the Republican Congress purposefully allowed the tax system to become unbalanced. This was done in order to hide the true cost of the tax cuts. Normally, sound tax policy involves changing the alternative minimum tax to reflect changes in regular tax cuts. For example, in 1993, we raised rates for both taxes simultaneously. But under this President, in 2001 and in 2003 and in 2004, we cut the regular income tax rate without making corresponding significant changes in the AMT. Instead of paying upfront through the regular income tax, this administration used the AMT to finance tax cuts for the very people the AMT was designed to tax. The AMT quietly takes back a portion of the Bush tax cuts by 2010, about 29 percent, transferring the tax burden from the top tax brackets to largely middle-class tax families. If we had a vote on the floor of the Senate which specifically said: Are you going to tax middle-class families in order to pay for a wealthy tax cut and shift the burden by about 29 percent, almost everybody here would vote no. So it is the hidden tax cut that has the impact. Before the Bush tax cuts, 17 million taxpayers would have been affected by the alternative minimum tax in 2010, but with the Bush tax cuts, that number almost doubles to 31 million. If we let the Bush tax cuts expire in 2011, at least the number of AMT taxpayers would drop dramatically. I am confident that will be an important debate down the road here. In 2007, a family with 2 children and an income of $80,000 will see 59 percent of their tax cut taken back by the alternative minimum tax. Tom Waits, the 1970s singer and songwriter, once said the large print giveth and the small print taketh away. Well, the small print, my friends, is the alternative minimum tax, and it is taking away America's families' tax savings. We need to be honest about the cost of our tax cuts. Back in 2001, I tried to offer an amendment that exempted all taxpayers with incomes under $100,000 from the AMT. At that time I warned that the AMT is encroaching on middle-class taxpayers and that the tax cuts would only make things worse. The fix for the AMT problem at that time was estimated to cost $110 billion over 10 years, money that instead is now being paid by middle-class families. The amendment at that time was revenue neutral. It offset the cost by delaying some of the Bush tax cuts. It cut the 39.6 rate down to 37 percent, instead of 35, but unfortunately, the amendment failed. I don't believe we can continue to put this problem off. Unless we reform our tax system for the sake of middle-class families--and we simply can't afford not to reform it--we are going to pay one way or the other, with the debt that is passed on to our children or with taxes passed on from the wealthiest to an ever-growing part of the middle class. We need a bipartisan, fiscally responsible, permanent approach, not one that masks the costs of irresponsible cuts or becomes a burden for the middle class, and not one that gives more and more families an unpleasant surprise on tax day. Mr. President, I yield the floor.

Mr. KERRY

Mr. KERRY. Mr. President, the Chairman would like to inform the Members of the Committee that the Committee will hold a hearing entitled ``Sarbanes-Oxley and Small Business: Addressing Proposed Regulatory Changes and their Impact on Capital Markets,'' on Wednesday, April 18, 2007 at 10 a.m. in room 428A of the Russell Senate Office Building.

Mr. KERRY

Mr. KERRY. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. KERRY. I ask unanimous consent that I be permitted to proceed in morning business and that I be followed by the Senator from North Dakota.

Mr. KERRY. I also ask unanimous consent that the time be charged to the postcloture time.

Mr. KERRY. Mr. President, I rise to speak about the situation in Iraq, notwithstanding that the headlines and the television shows over the last days have been consumed by discussions about what happened with the Duke lacrosse team and comments made by Don Imus and other things. Yesterday, I attended another funeral for a young soldier, a sergeant in the U.S. Army, 10th Mountain Division, Chris Wilson, at Arlington. That is where the real focus of our country ought to be right now, on the war in Iraq, about which yesterday the Senator from Arizona gave a speech that I thought was divisive, a speech that was more political than one that offered a solution, because the solution is not more of the same. The solution is not to characterize the war as it has been characterized over the course of the last 4\1/2\ years, as a do-or-die fight against al-Qaida over there or it is going to be over here. This is the most amazing scare tactic we have seen employed over the last years. It avoids reality, and it draws the United States deeper and deeper into a position of loss of credibility and loss of leverage in our ability to do what we need to do. I don't know one person in the Senate who cheers for surrender or cheers for loss or for chaos in Iraq. To suggest that is an insult to the Members of the Senate. It is an insult to those of us who care as much about victory and as much about success and as much about the lives and support of our troops as anybody in public life today. The devastating attack in Baghdad yesterday, the lack of any real political progress as a result of the President's escalation, and the incredible toll this is taking on our Armed Forces deserves a real debate, not a polarized, divisive appeal to the lowest common denominator of fear in American politics. It also deserves a debate about what this administration could learn if it listened to our generals. We are now more than 4 years into the war in Iraq and, tragically, it is only now that the administration suddenly realizes: Wow, maybe we ought to find one individual who can coordinate the war efforts between Afghanistan and Iraq and have the authority to coordinate the military efforts and civilian efforts. But they are doing it at a time where apparently no one wants the job, and no one wants the job in the most extraordinary way. It says a lot, when the President finally decides to appoint a war czar in order to get everybody on the same page, that the situation in Iraq is actually so bad and the administration's stubborn willingness to change course so persistent that they can't, at least as of now, find anybody to take the job. I read yesterday's articles on the front pages of our paper in Washington. I was really stunned. This administration has approached three retired four-star generals about taking on this task. Maybe Senator McCain ought to stop and think about why those generals resisted an appeal to their patriotism, to their sense of duty, to their service to country after years of a career in the U.S. military. What did Marine GEN Jack Sheehan say? He is not an opponent of this administration, nor is Army GEN Jack Keane, nor retired Air Force GEN Joseph Ralston. All three declined. None of them are opponents of this administration. In fact, they all have established ties with this administration. Why would our top military commanders decline such a high-level position? General Sheehan, a 35-year marine who once served as the top NATO commander, summed it up pretty well in what I thought was an extraordinary statement. He said: The very fundamental issue is they [the administration] don't know where the hell they're going. That is a 35-year retired Marine general: . . . they don't know where the hell they're going. Then he said: So rather than go over there, develop an ulcer and eventually leave, I said no thanks. It is pretty incredible that three retired four-star generals, whose careers, whose service to the Nation, whose understanding of the military is a lifetime of experience, all said no to the Commander in Chief. The President insists he listens to the generals, not the politicians. He ought to heed his own advice and end the disgraceful record of ignoring the very military administration he professes to believe in. Again and again this administration has turned its back on the best advice of the military. Each time they have done so at our peril. Start with General Shinseki, who we all now agree was right when he said we needed a lot more troops and was met with dismissal. As the former top operating officer at the Pentagon, a different Marine lieutenant general put it: The commitment of our forces to this fight was done with a casualness and swagger that are the special province of those who have never had to execute these missions--or bury the results. Instead of listening to General Shinseki, the administration decided to push him aside, give him the cold shoulder, and eventually retirement. Last year, retired high-ranking military leaders, many of whom played key combat or planning roles in Afghanistan and Iraq, came forward and publicly called for the resignation of Defense Secretary Donald Rumsfeld. Across the administration, the warnings of those who wore the uniform of their country all their lives and who, retired or not, did not resign their citizenship in order to serve their country all were dismissed as acts of disloyalty or as threats to civilian control of the Armed Forces. Think about that. A retired military officer who isn't wearing the uniform, earned their retirement, speaks out about a war they were personally involved in helping to plan, saying: We have to change course. They are somehow called unpatriotic and disloyal, and somehow that threatens the civilian control of the Armed Forces. How does an ex-military officer who has the right to speak out threaten civilian control of the Armed Forces? It is the scare tactic, the usual approach of this administration--try to throw out a big red herring, put the straw man out there and debate the straw man instead of debating the real strategy of the war. In the end, it took an election. The American people spoke out. That is what replaced Secretary Rumsfeld, not the advice of the men and women who had seen him nearly break the military they had served for decades. That was the administration's choice. But it didn't stop there. Ask General Casey or General Abizaid, who warned that more U.S. troops would not solve Iraq's security problem and could actually slow the process of getting Iraqi security forces to assume more responsibility. The Joint Chiefs of Staff, who unanimously opposed this escalation--what happened to listening to the Joint Chiefs of Staff and their recommendation? General Abizaid was replaced. General Casey was reassigned. The Joint Chiefs were overruled. Yesterday, we learned that the Pentagon is going to stretch our overextended military even further by extending combat tours and reducing the time between rotations to provide the additional troops necessary for the President's misguided escalation. What do our military leaders have to say about that? Robert Scales, a retired Army two-star general, said that to sustain this deployment while giving soldiers the training and the rest they need would require twice as many Army and Marine Corps brigades as we have today. Then he warned, this two-star Army general, that the Army is about to be ``broken.'' We are hearing our own generals talk to us again about what is happening to our military that is overstretched and about to be broken. Those are not our words; those are the words of military personnel. Barry McCaffrey, retired Army four-star general, who recently returned from another factfinding trip to Iraq, tells us that combat equipment for both the Active and Reserve components ``is shot.'' His conclusion was simple: There is no argument of whether the U.S. Army is rapidly unravelling. At a time when mistake after mistake is being compounded by the very civilian leadership that ignored expert military advice in the invasion and occupation of Iraq, those who understand that the price for each mistake is being paid by our troops must be heard. The message from the generals who were offered the war czar position has been crystal clear. If they really thought the administration had a strategy that could succeed in Iraq, why would they turn down the job? There is a very good reason for their skepticism. This administration simply refuses to accept the reality of how you change course or even that you must fundamentally change course in Iraq. We keep hearing that the escalation is showing progress. While the level of Iraqi civilian casualties may have gone down in Baghdad, it has gone up in other parts of the country. Why? For the obvious reason that they have the flexibility of choosing where they will engage. Almost a certainty, some came to the floor and predicted: Put more troops into Baghdad, they will retreat into the shadows, into other communities. They will probe, they will find the weaknesses, and that is where they will reengage. That is precisely what has happened. The overall casualty rate in Iraq has remained essentially the same. Just today we learned of a devastating suicide bombing in the Iraqi Parliament, right in the heart of the heavily fortified Green Zone. Ten people died, including two Iraqi lawmakers, along with any sense of personal security in what is supposed to be the safest part of Baghdad. It is a strange definition of the progress we have been hearing about. How are more American troops going to stop a single fanatic with explosives strapped to his or her chest? One thing we do know is American troops are paying the ultimate price for this escalation. In the first 7 weeks, the number of U.S. troops who died in Baghdad doubled. On Monday alone, we learned of two more soldiers from Massachusetts who died in Iraq, CAPT Anthony Palermo, age 26, of Boston, MA, and SGT Adam P. Kennedy, 25, of Norfolk, MA. The administration says that these men and women are giving their lives because the purpose of this escalation is to allow the Iraqis space to make the political deals that we all agree are the only hope for ending the civil war. But if the violence is going down in Baghdad, where is the political progress? We keep hearing that the Iraqis are getting closer to a deal on sharing oil revenues. I think we have had the Secretary of State in front of the Foreign Relations Committee at least twice that I can think of in which she has said: We are almost there, we are nearing a deal. The last time was a month and a half ago, maybe 2 months ago. Where is the deal? Every time, hopes for a final deal turn out to be an illusion. Where is the rapidity of the Iraqi response to the political compromises that need to be made to resolve this? The de-Baathification law that is a key part of the national reconciliation process was recently denounced by Ayatollah Sistani and is nowhere near completion. The Iraqis are still at square one when it comes to amending the Constitution and disarming the militias. Still the President refuses to impose any meaningful consequences on the Iraqis for failure to meet these benchmarks. Now, again, I listened to the speech of the Senator from Arizona yesterday in which he talked about those who advocate surrender and those who cheer for the potential of loss. Again and again, our military leaders have said there is no military solution in Iraq. General Abizaid said it. General Casey said it. Most recently, General Petraeus--new on the job--reiterated there is no military solution. The President has said it. The Secretary of State has said it. Donald Rumsfeld said it. But where is the diplomatic effort necessary within the whole Middle East, let alone in Iraq alone, to leverage the kind of transformation that is necessary to end the civil war? And how dare the Senator from Arizona only talk about the fundamentals of al-Qaida and how if we don't fight them over there we will fight them over here, when the fight is really one between civil parties in Iraq? Yes, al-Qaida is in Iraq. We understand that. Yes, al-Qaida has the ability to be able to bomb something and create trouble as a consequence of that. But the real violence, the fundamental divisions, the piece of this which is extending the stalemate and the American presence at the same time is the unwillingness of the Shia and Sunni and the politicians who are fighting for position and for the future spoils of Iraq itself--their unwillingness to resolve those differences. The longer the U.S. military stays there saying: We are here, we are going to do this, we are going to go out and do the pacification, we will do the military backup--as long as that security blanket is there, those politicians know they can take as long as they want to come to any compromise. I have heard some of our own diplomats in the region express their concern about the open-endedness and express the lack of leverage over the Iraqis themselves that helps us bring a resolution here. The only way in which you can change the dynamic on the ground is when the administration accepts the simple reality that this Congress has now voted on, that the Iraqi politicians have repeatedly shown they only respond to a deadline, a deadline to transfer the authority. Remember that, back when Ambassador Bremer was there and we said: ``We are going to change the provisional government. We are going to transfer authority to Iraq,'' and they said: ``Oh, no, we're not ready. Don't do this.''? But we said: ``It is going to happen. It is going to happen on this date. Get ready.'' And it did, and we did transfer the authority. The same thing for the two elections and the referendum. I remember them saying: ``We have to push this off. We are not ready for the election. Can't participate.'' We said: ``No. We're going to have this firm date. We're going to have an election.'' And guess what. We had the two elections. We had the referendum. We got the Constitution, flawed as it is. But we pushed people to understand this was not open- ended and interminable. The fact is, I do not believe young Americans ought to be dying or maimed to provide a window of opportunity for Iraqi politicians to continue to procrastinate, to give them the cover they need and want to be able to manipulate and maneuver and position themselves for power. That is not what our troops went over there to do. If you go back and reread the resolution we voted on here, it was to deal with Saddam Hussein, it was to deal with the weapons of mass destruction; it was not to put our troops in the middle of a civil war and engage in the kind of struggle we are involved in today. Mr. President, another thought about this issue. Again, there are those running for President on the Republican side who I guess have found that the orthodoxy of their primaries requires them to go out and suggest that Democrats want something they do not want. So maybe we have not learned anything about the truth in American politics. But the fact is, no Democrat whom I know of has suggested abandoning Iraq. No Democrat has suggested inviting chaos--more than the chaos that exists today. In fact, we have what we believe is a plan for success, and it does not leave Iraq without the presence of American troops--I might add, to the chagrin of some people in this country who think it ought to. It leaves the President the discretion to finish the training of Iraqis. That is the principal thing we ought to be there to do. And it leaves the President the ability to be able to decide how many troops are necessary to complete the task of training the Iraqis. It also leaves the President the discretion to decide what the President needs in order to prosecute al-Qaida. It does not walk away from the battle against al-Qaida. It leaves those special forces and special operations and intelligence-gathering and other operations necessary to continue to prosecute al-Qaida. Finally, it leaves the President the discretion to be able to leave such forces as are necessary to protect American facilities and personnel. Now, how much more discretion, at this point in time, after 4-plus years of war, when they have made every decision wrong, should we allow the President? People say: Don't micromanage the war. Somebody has to manage this war because the folks who are in there, obviously, are not doing it effectively. When you have your own generals coming back and telling you the troops still do not have the armor, they still do not have the level of up-armored Humvees, they are still going out on patrols in ways that are, in many cases, provocatively dangerous and invite the kinds of injuries they are getting, without the gain on the back end as a consequence of the risk they have taken, I think that is unacceptable. Last month, Iraq's neighbors and key players from the international community finally got together at a conference in Baghdad. Guess what. Nothing tangible came out of the conference. There is no sense of urgency about the upcoming meeting in Egypt, which is why a deadline is so essential. The countries in the region need to know this dynamic is going to change. To the degree they are concerned about Iran, to the degree they are concerned about their Sunni brothers--and they are; Saudi Arabians, Jordanians, Egyptians are predominantly Sunni, and they are deeply concerned about the Sunni minority in Iraq. But they need to translate that concern into a regional security plan where there is a greater level of assistance in order to force the kinds of compromises necessary between the parties. Absent that, this is just going to go on. We owe it to our troops and to our country to have an honest debate and to try to work together to find the way forward in Iraq. I think the speech Senator McCain gave yesterday, in which he said Democrats were cheering for defeat and surrender in Iraq, does a disservice to the Senator from Arizona as well as to the U.S. Senate. I think he knows better. And he knows full well that no one here wants to see Iraq fall apart. But we have a different plan for how you prevent it. We have a different plan for how you achieve success. It seems to me that a plan that says the President has the discretion to leave troops that are necessary to complete the training is not, on its face, an abandonment of Iraq. It is an alternative way of achieving the leverage necessary to be able to get the responses we have not gotten over the last 4 years. So, Mr. President, we disagree on the strategy, but we do not disagree on the stakes. The Vice President hides behind similar rhetoric. He dares to claim that those who offer a new way forward are ``undermining'' our troops. Well, I have had enough of that rhetoric. I have had enough. And I think most of my colleagues have. Undermining our troops? Let's have that debate, Mr. Vice President. This is a Vice President who helped send them into combat without adequate protection, without adequate numbers of troops, without an adequate plan, without the guarding of the ammo dumps, without the kind of engagement diplomatically that helps them, without the humvees that were up-armored, without the armor--that's why parents in America are going out and buying the state-of-the-art armor for those troops. And this President and Vice President want to talk about undermining the troops? Let's have a debate with an administration that sent them into battle in Iraq with serious injuries and other medical problems, including some whose doctors said they were too injured to even wear their body armor. You want to have a debate about undermining the troops? Then how about failing to provide them with the proper medical care when they come home with broken bodies and minds, with a VA budget that is inadequate, with a hospital situation that does not follow up and honor the sacrifice they have made? How about the extended tours in Iraq, where people have given up their jobs and their livelihoods because they are in the National Guard and they have been called up repeatedly, and they are the sole proprietor of a business? How about that? It seems to me Congress has done what the President and this administration have stubbornly refused to do. We have recognized the best way you support the troops is to change a failed policy. The best way you support the troops is to implement a strategy that works for those troops. The best way you support the troops is to guarantee we put in place a strategy that honors their sacrifice and really leverages the real interests and real stakes of the United States in the region. I think we ought to honor the lives lost, not with words and not with divisive speeches, but we ought to honor them with lives saved. That starts by putting aside the hollow rhetoric and the straw men that have undermined a real debate for far too long and by supporting an exit strategy that preserves our core interests in Iraq, a strategy that negotiates a new security arrangement for the region; helps to leverage the kind of participation of other countries that have an interest in standing up to Iran; and regains our credibility in the region, which has been tattered with Abu Ghraib and Guantanamo, not to mention the policies in Iraq themselves. Our own CIA has told us the current strategy is creating more terrorists, that it is emboldening the radical Islam extremists. What we are offering is a strategy that we believe better speaks to America's values, to America's interests, and, most of all, to our obligation to the troops. I yield the floor.

Mr. KERRY

Mr. KERRY. Mr. President, today I wish to honor former New England Patriots Quarterback Drew Bledsoe on his retirement, after 14 years in the National Football League, NFL. Drew Bledsoe helped usher in the modern era of Patriots football. Throughout his career, Drew Bledsoe may have also played for the Buffalo Bills, an AFC East rival of the Patriots, and for the Dallas Cowboys, but he got his start in chilly Foxboro, MA. Fourteen years ago, a young Bledsoe was the first overall selection in the NFL Draft for New England draft of Washington State. He brought the Patriots to their first Super Bowl in 11 years, and despite ultimately losing to Brett Favre and the Green Bay Packers, a newfound feeling of excitement and pride overtook New England's football fans. And that feeling hasn't subsided. After Tom Brady went down in the AFC playoff in 2002, Bledsoe led the Patriots to victory over the Pittsburgh Steelers, ensuring the Pats a spot in Super Bowl XXXVI. And as you know, that was just the beginning of the New England football dynasty. Bledsoe is a four-time Pro-Bowl quarterback, who throughout his career threw for more than 44,000 yards and completed more than 250 touchdown passes. He finished his career 7th all-time in yards passing, 13th in touchdowns, and 5th in completions. His career off the field was just as impressive. Bledsoe has long worked to help improve the lives of children by teaching parenting skills through both the Drew Bledsoe Foundation and Parenting with Dignity. The programs' curriculum, which teaches the importance of family values, is used nationwide, reaching an estimated 1.75 million American families. He has also served as international chairman of the Children's Miracle Network, helping to raise millions of dollars to benefit children nationwide. Bledsoe is the recipient of the Thurman Munson Humanitarian Award, the NFL Alumni Spirit Award for exemplifying the spirit of the NFL caring for kids and the Walter Payton Man of the Year Award, chosen by his teammates for demonstrating balance between civic and professional responsibilities. He also received the Ed Block Courage award, chosen by his teammates as the NFL player demonstrating the most courage and character. Drew Bledsoe has conducted himself with both dignity and maturity throughout his 14 years in the NFL, and today I, along with Patriots fans across New England, congratulate him on a fantastic career and wish him success in the next chapter of his life.

Mr. KERRY

Mr. KERRY. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. KERRY. Mr. President, I thank the Chair and the distinguished manager. I thank him also for his leadership on this issue, which has been long and steady. Last summer, I had the privilege of coming to the floor to speak on this issue, accompanied by a summer intern from my office, a college student from Massachusetts named Beth Colby. Beth was paralyzed from the chest down in a car accident when she was 14 years old. She came to Washington, like so many women, and so many young folks, period, to learn about Government. She also came here with a determination to try to fight for the scientific research that holds untold promise for her and for tens of millions of Americans. She wanted to be, as she put it to me in asking to come to the floor during the debate on stem cell research, a face Senators can see so they can see what they are voting for. The truth is there are people like that in every single community in our country. They are all hoping to benefit one day from lifesaving stem cell therapy. Grandparents with Parkinson's disease have that hope. Soldiers coming back from Iraq who are crippled by a roadside bomb have that hope. Children who, decades from now, will suffer from a disease we are not aware of yet, or that we know well, hope stem cell research might be able to cure them. Since we first heard about stem cell research several years ago, the country has been on a journey together. We have discussed it. A lot of folks have sat around their kitchen tables and in their living rooms and have talked about stem cell research. Everybody has debated it. We have learned a lot more about the promise and the peril of stem cell research. At first, our natural reaction was to temper our excitement with a well-founded fear that this technology perhaps posed insurmountable ethical hurdles. The President himself deliberated. He appointed a task force. He studied and debated the fine points with teams of bioethicists. He reached what he felt was a reasonable compromise. In August of 2001, he announced to the American people that Federal funds would be used only for research on a few lines of stem cells that were already harvested. Back then, he said stem cells ``offer both great promise and great peril. I have decided we must proceed with great care.'' That was the President speaking. Since then, America's understanding of this issue has evolved. We have learned that the lines available for research are far less useful than we had initially hoped. We learned the technology is as promising as we dreamed it might be. We have come to understand that embracing stem cell research does not condemn us to the slippery slope of human cloning. Since the President's decision, stem cell research funded by the private sector and by the States has gone ahead across the country. But it has gone ahead slower than many of us might like in the absence of crucial Federal funding--fast enough to fill the pages of major medical journals with exciting new discoveries. But this research has taken place on a large enough scale at our most important educational research institutions to be able to tell us it addresses our major fears. What in the summer of 2001 might have seemed a well-founded suspicion has completely proven to be unfounded. As Newt Gingrich told me yesterday, after reversing himself and acknowledging the threat posed by global warming is both urgent and real, serious legislators change their stances over time. That is permissible. That is the product of thinking, the product of additional information and additional input. Look at the Senate. Republicans such as John McCain, former majority leader Bill Frist, the Senator from Utah, Orrin Hatch, who is on the floor now, have looked carefully at the scientific facts and have searched their own consciousness. They have all reached the same conclusion: Opposing stem cell research is the opposite of a pro-life policy. Last summer, 63 Senators, Republicans and Democrats alike, and 235 House Members voted in favor of stem cell research. That was a responsible bill, a consensus bill. It was designed specifically to address the concerns of lawmakers who are worried about the bioethics-- and appropriately worried, I might add. It is difficult to get 63 Senators to agree on anything more controversial than the sort of standard fare of America, and it is especially difficult on a polarizing, emotionally charged issue. But we came together as a Senate. We hammered out our differences and they came together in the House, and we arrived at a smart, thoughtful, sensitive piece of legislation that reflected a consensus and respected our collective conscience. When we did so, we were confronted by a President who promised to proceed with great care, whose commitment to deliberation has calcified into a stubborn refusal to confront reality or re-engage in a changing debate. America has evolved on this issue, but the President has stood still. That is why over an overwhelming bipartisan Senate majority, the President finally dusted off the veto pen and offered up the first and, to date, the only veto of his entire Presidency. The President has signed good and bad legislation--torture bills, pork, giveaways to oil companies, and tax cuts for millionaires. But when it came to a strong emerging national consensus on an issue that brings hope to families across the country, the President chose to shut down the debate and block Federal funding for scientific research. Make no mistake, this is a personal issue--deeply personal for each of us in this Chamber, and for the President. I understand that. I am confident when the President made his decision about stem cell research over 6 years ago, he searched his mind and his heart, as all of us who care passionately about this issue have done. If he vetoes stem cell research again, that will send a message that this country no longer intends to be the global leader in scientific knowledge and discovery. It would send a message to Americans suffering from Parkinson's, spinal injuries, and countless ailments that their well-being is not important to us. We are telling these people we could do more to cure you, but we choose not to. We are telling them help is not on the way. The current policy is eroding our national advantage on stem cell research. It is undermining the hopes and dreams of millions of Americans. We are tying our scientists' hands behind their backs and holding them back from the possibilities of the future. We need a Federal policy that builds on the advances being made in our States and our universities, in our private foundations, and in our research centers, all of which have proceeded in a thoughtful and commonsense way to the ethics concerned in this issue. The research now is already showing tremendous promise. In my State of Massachusetts, some of the best scientists in the world are working at the Whitehead Institute for Biomedical Research at MIT and the Harvard Stem Cell Institute. We are still in the early stages of this line of research, but there is here the kind of discovery that we are already making. Let me explain. The Harvard Stem Cell Institute identified cells that they call ``master cardiac'' stem cells, which is a single cell type that gives rise to the major cellular building blocks of the mammalian heart. That discovery rewrote the story of cardiac development and contributed a significant building block toward what could become revolutionary new treatments for heart disease. We are already seeing cures for diseases in our labs. At the Whitehead Institute, a leading stem cell researcher and his team used stem cell therapy to cure a mouse suffering from an immune deficiency disease. As you can see, the research is still in the early stages, so we cannot say what the immediate results are going to be for humans. But, rest assured, today's breakthroughs in mice have often become tomorrow's cures for humans. Now we can all hope that alternatives to embryonic stem cell research hold similar promise. But you cannot wish away what our scientists are telling us. Research on embryonic stem cells is incredibly promising, pivotal to this new field, and not easily sidestepped. Nobel Prize winners past and present, and most likely future, believe this is the future biology of medical science. People of good will and good sense can resolve these complicated ethical issues without stopping lifesaving research. The country has led the world in revolutionary discoveries, with our breakthroughs and our beliefs moving ahead together, symbiotically. Senate passage of this bill with a veto-proof majority can put us, again, on that path. We are giving this administration yet another chance to consider a misjudgment with profound consequences. We are working to create a framework for ethical, federally funded research. Like the bill passed last summer, this legislation provides important ethical safeguards by extending federally funded research only to embryos that are, one, donated by in vitro fertilization clinics; two, created specifically for fertility treatment, not for research; three, in excess of treatment needs and would otherwise be discarded; and four, donated by treatment-seeking individuals who provided written, informed consent and were not offered financial inducements. I cannot think of any way to more effectively and thoughtfully address the ethical issues that are concerned here. Mr. President, I ask unanimous consent for 2 more minutes. Is that possible?

Mr. KERRY. Mr. President, what may not have been clear to us initially--and it should be clear now--it just doesn't make sense to allow in vitro fertilization to create millions of embryos that will never become human beings and then prohibit science from using them to cure sick people and relieve human suffering but to simply discard those embryos. Valuing the mysteries and sacredness of human life is something all of us should do. It underlies every religion on this planet. Stem cell advocates are no different. Here in the Senate and across this country, Americans are approaching an ethical consensus which bans human cloning, which is thoughtful about the use of embryos that would be discarded, and which respects life and also respects that life by protecting stem cell research. We don't have the luxury of patience, not when 100 million Americans suffer from illnesses that might one day be cured with stem cell therapy, not when more than 3,000 Americans die from diseases every day that one day may be made treatable by stem cell research. If we can get 67 votes out of 100 Senators--4 more than we had last summer--then we can send the President a veto-proof message. Last summer, the Senate sent the administration a strong message by passing a bill that would responsibly fund this research, and the American people showed their agreement last November when they sent an even larger majority back to Washington to vote in greater numbers to support lifesaving scientific research. Sixty-three votes are not enough. We hope we receive more today so that we can open the doors to this promising future. I thank the Chair.

Mr. KERRY

Mr. KERRY. Mr. President, I wish to speak to an amendment that, if enacted, will serve to fix a program at the Small Business Administration, SBA, that was designed to help small businesses dependent on a military reservist who is called to active duty. Since 2002, fewer than 300 loans have been made to these businesses, despite seemingly ever-increasing numbers of reservists sent overseas. Reservists and their small businesses have been asked to sacrifice enough without having to incur the financial hardships associated with business failure, and we should be doing everything we can to help these businesses stay afloat. According to a February 2007 report by the General Comptroller's Office, there are approximately 1.1 million reservists serving our country today, which represents about 44 percent of the Nation's entire military force. On March 1, 2007, the Independent Commission on the National Guard and Reserves issued an interim report stating that, since September 11, 2001, the deployments of U.S. military reservists have risen from approximately 12.7 million days of annual service to an estimated 63 million days in 2006. Additionally, a recent Congressional Budget Office, CBO, analysis finds that only about 6 percent of businesses employ reservists. Smaller firms--those with fewer than 500 staff--employ 35 percent of all reservists. Eighteen percent of reservists work for firms with fewer than 100 employees. This report concluded that reservist activations are creating vacancies that firms would not otherwise have had, and, while larger businesses may absorb the loss of personnel at little cost, many small firms struggle to compensate for the absence of a key employee who has been called to active duty. In an attempt to help reservists and businesses that incur economic hardships as a result of an essential employee or small firm owner being deployed, I authored legislation to create the Military Reservist Economic Injury Loan Program, MREIDL, in 1999. The program's goal is to assist reservist-dependent small businesses with the ordinary, day-to- day operating costs of running a business. The law provides these employees access to low interest loans from the SBA when they are called up to active duty. Unfortunately, the intent of the law has not been put into action. Due to poor marketing of this program and the inability of a business to apply for a loan prior to a reservist's being called to active duty, as well as a very limited window of time in which a business can apply for a loan following a reservist's discharge, businesses are either reluctant to take on additional debt due to already declining revenues or are unaware of the program altogether. My amendment serves to address these issues. First, my amendment extends the window of time for a reservist dependent business to apply for a loan from 90 days following the date of discharge to 1 full year. Reservists need ample time to return and get their feet underneath them. Often 90 days is not enough time to realize that the business is in need of assistance. This extension will allow a returning reservist to better understand the financial situation and to act accordingly in a reasonable amount of time. Second, this amendment directs the SBA to create a preapproval process for reservist dependent businesses so that businesses can begin to draw down funds immediately upon the reservist being called to duty. Businesses that depend on reservists should not have to wait until they are failing in order to receive the financial assistance they require to stay afloat. Third, this amendment establishes a coordinated, proactive marketing plan to be conducted by the SBA, the Veterans' Administration, and the Department of Defense to more effectively get information in the hands of reservists and their families. This program is of little help unless reservists and their families are aware of its benefits, and this provision addresses that simple fact. Finally, the amendment directs the SBA to report back to the Small Business Committees of the Senate and the House of Representatives on the status of this program, as well as additional steps that may be taken to improve the program for reservist-dependent small businesses. Mr. President, this is a noncontroversial amendment that simply seeks to fix a program that is not serving its original intent. The provisions in this amendment, including the extension of the application period and the preapproval process, were created in response to testimony heard earlier this year during a hearing in the Senate Committee on Small Business and Entrepreneurship, which I chaired and at which the administration testified. These are commonsense solutions for fixing this program and for helping our small business owners who have sacrificed the service of a key employee to military service. These small businesses are serving their country in a time of war. They should not be asked to sacrifice their livelihood as well. I would like to thank Senator Hagel for his support of this important amendment. I ask my colleagues to support this amendment as well.

Mr. KERRY

Mr. KERRY. Mr. President, I rise today with my colleague Senator Hagel, the Senator from Nebraska, to introduce the Military Reservist and Veteran Small Business Reauthorization Act of 2007. There are currently 25 million veterans in America, including over one million who have left military service since September 11, 2001. As the conflicts in Iraq and Afghanistan continue, the number of veterans, including service disabled veterans, will increase and reservists will continue to carry more of the burden than ever before. As veterans and reservists reenter civilian life, the economic benefits and opportunities provided by the Federal Government will become even more critical, particularly in the field of entrepreneurship and business ownership. As the Chairman of the Senate Committee on Small Business and Entrepreneurship, I am serious about addressing the problems affecting veterans and reservists who wish or are already engaged in small business and this bill is another step forward in doing so. As veterans, Senator Hagel and I believe that the government has an obligation to help deployed reservists avoid economic hardship because of their service and to help veterans, particularly the service- disabled, return to civilian life when they retire. There are more veterans returning each day because of the war on terror--800,000 veterans were discharged between 2002 and 2005--and ensuring that these individuals have a secure financial future is not just a matter of fairness but of national security. The treatment of our troops affects the Nation's ability to recruit and retain the best and brightest. Veterans have told me that they feel that they are being forgotten and that the government is simply not living up to its past promises of helping veteran entrepreneurs succeed. This bill is one step in ensuring that the government is doing all it can to help those who have served and sacrificed on our behalf. The Military Reservist and Veteran Small Business Reauthorization Act of 2007 reauthorizes the veteran programs in the Small Business Administration. Specifically, this legislation increases the funding authorization for the Office of Veteran Business Development from $2 million today to $2.5 million in three years. In light of the large numbers of veterans returning from Iraq and Afghanistan and increased responsibilities placed on this office by Executive Order 13360, it is high time that the Office of Veteran Business Development receive the funding levels that it needs. In addition, this bill permanently extends the SBA Advisory Committee on Veterans Business Affairs. The committee was created to serve as an independent source of advice and policy recommendations to the SBA, the Congress, and the President. The veteran small business owners who serve on this committee provide a unique perspective which is sorely needed at this challenging time. Unfortunately, continuing uncertainty about the Committee's future has, at times, distracted the committee from focusing on its core function. Therefore, I have called for its permanent extension. It is clear to me that more needs to be done to address the issues facing veterans and reservists, and the role this committee plays will continue to be important. Additionally, I have taken a number of steps to better serve the reservists who are serving their country abroad while their businesses are suffering at home. Over the past decade, the Department of Defense has increased its reliance on the National Guard and reserves. This has intensified since September 11 and increased deployments are expected to continue. The effect of this increase on reservists and small businesses continues to remain of concern. A 2003 GAO report indicated that 41 percent of reservists lost income when mobilized. This had a higher effect on self-employed reservists, 55 percent of whom lost income. In 1999, I created the Military Reservist Economic Injury Disaster Loan (MREIDL) program to provide loans to small businesses that incur economic injury as a result of an essential employee being called to active duty. However, since 2002, fewer than 300 of these loans have been approved by the SBA, despite record numbers of reservists being called to active duty. It is clear that changes need to be made, so that reservists are informed about the availability of the MREIDL program and that the program better meets their needs. At a hearing of the Committee on Small Business and Entrepreneurship on January 31st, the first hearing we held in this Congress, we heard suggestions for a number of changes which would improve the Military Reservist Economic Injury Disaster Loan program, and I have included those changes in this bill. They include increasing the application deadline for such a loan from 90 days to one year following the date of discharge; creating a pre-deployment loan approval process; and improved outreach and technical assistance. This bill also creates a non-collaterized loan program. Reservist families have already sacrificed enough when a family member goes away to serve their country and when their business is harmed as a result. This loan program would allow reservist dependent businesses to access the capital they need to stay afloat without having to sacrifice beyond the service of the key employees. In order to give reservists time to repay the loans, the non-collaterized loan created in this bill would not accumulate interest or require payments for one year or until after the deployment ends, whichever is longer. In addition, because loans aren't the answer for every business-- additional debt could permanently cripple some businesses--I have also included a grant program for reservists. This program would allow up to $25,000 in grants for small businesses that can show economic injury because of deployment and prove that they have a viable business plan for the next three years. A grant program would help small businesses that cannot afford to take on a military reservist economic injury disaster loan or that were denied such a loan, but still are viable businesses and need assistance. While addressing the funding needs of reservists is essential, I also want to make sure that reservists receive the technical and management assistance they need to succeed. For that reason, this bill also includes the establishment of the Reservists Enterprise Transition and Sustainability Task Force. This grant program would allow Small Business Development Centers, Women's Business Centers and veteran centers to compete for grants to create programs that help small businesses prepare for and cope with the mobilization of reservist- employees and owners. Veterans possess great technical skills and valuable leadership experience, but they require financial resources to turn that potential into a viable enterprise. A recent report by the Small Business Administration stated that 22 percent of veterans plan to start or are starting a business when they leave the military. For service-disabled veterans, this number rises to 28 percent. So the legislation I introduce today will create a new program, administered by the Small Business Administration, to provide very-low-interest loans, up to $100,000, to help veterans start new small businesses. Lastly, this bill calls for two reports from the Government Accountability Office. One report will look at the needs of service- disabled veterans who are interested in becoming entrepreneurs. As a result of the war on terror and improved medicine, we are seeing more service-disabled veterans than we have seen in decades. For some service-disabled veterans, entrepreneurship is the best or only way of achieving economic independence. Therefore, it is essential that we understand and take steps to address the needs of the service-disabled veteran entrepreneur or small business owner. I am also calling for a study to investigate allegations that the changes the Department of Defense has made in regard to the use of reservists is harming the ability of reservists to find jobs and the ability of small business owners to continue hiring reservists. At the Committee's hearing on veteran small business issues, witnesses testified about reservists being turned down or not considered for jobs because they are reservists. I have heard reservists talk about being pressured to leave the reserves if they would like to continue to advance at work. I have also heard the concerns of small business owners who want to support servicemembers; however, they cannot do so if it means the survival of their business. Understanding more about this issue is important and essential to making sure that policymakers can continue to support citizen soldiers and the small businesses that employ them across the Nation. One of the issues I am not addressing in my legislation today is Federal procurement. I heard clearly the concerns from veterans that they are not being treated fairly when it comes to selling goods and services to the Federal Government, and I am committed to making changes. However, to make real changes, changes that can pass the Senate and the House and become law, these changes must be part of a bigger package. Legislation that addresses not just the concerns of service-disabled veteran small business owners, but the concerns of all small business owners who want their fair share of Federal contracts. I am committed to taking the difficult steps necessary to address these issues and will do so. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KERRY

Mr. KERRY. Mr. President, I rise today with my colleague Senator Hagel, the Senator from Nebraska, to introduce the Military Reservist and Veteran Small Business Reauthorization Act of 2007. There are currently 25 million veterans in America, including over one million who have left military service since September 11, 2001. As the conflicts in Iraq and Afghanistan continue, the number of veterans, including service disabled veterans, will increase and reservists will continue to carry more of the burden than ever before. As veterans and reservists reenter civilian life, the economic benefits and opportunities provided by the Federal Government will become even more critical, particularly in the field of entrepreneurship and business ownership. As the Chairman of the Senate Committee on Small Business and Entrepreneurship, I am serious about addressing the problems affecting veterans and reservists who wish or are already engaged in small business and this bill is another step forward in doing so. As veterans, Senator Hagel and I believe that the government has an obligation to help deployed reservists avoid economic hardship because of their service and to help veterans, particularly the service- disabled, return to civilian life when they retire. There are more veterans returning each day because of the war on terror--800,000 veterans were discharged between 2002 and 2005--and ensuring that these individuals have a secure financial future is not just a matter of fairness but of national security. The treatment of our troops affects the Nation's ability to recruit and retain the best and brightest. Veterans have told me that they feel that they are being forgotten and that the government is simply not living up to its past promises of helping veteran entrepreneurs succeed. This bill is one step in ensuring that the government is doing all it can to help those who have served and sacrificed on our behalf. The Military Reservist and Veteran Small Business Reauthorization Act of 2007 reauthorizes the veteran programs in the Small Business Administration. Specifically, this legislation increases the funding authorization for the Office of Veteran Business Development from $2 million today to $2.5 million in three years. In light of the large numbers of veterans returning from Iraq and Afghanistan and increased responsibilities placed on this office by Executive Order 13360, it is high time that the Office of Veteran Business Development receive the funding levels that it needs. In addition, this bill permanently extends the SBA Advisory Committee on Veterans Business Affairs. The committee was created to serve as an independent source of advice and policy recommendations to the SBA, the Congress, and the President. The veteran small business owners who serve on this committee provide a unique perspective which is sorely needed at this challenging time. Unfortunately, continuing uncertainty about the Committee's future has, at times, distracted the committee from focusing on its core function. Therefore, I have called for its permanent extension. It is clear to me that more needs to be done to address the issues facing veterans and reservists, and the role this committee plays will continue to be important. Additionally, I have taken a number of steps to better serve the reservists who are serving their country abroad while their businesses are suffering at home. Over the past decade, the Department of Defense has increased its reliance on the National Guard and reserves. This has intensified since September 11 and increased deployments are expected to continue. The effect of this increase on reservists and small businesses continues to remain of concern. A 2003 GAO report indicated that 41 percent of reservists lost income when mobilized. This had a higher effect on self-employed reservists, 55 percent of whom lost income. In 1999, I created the Military Reservist Economic Injury Disaster Loan (MREIDL) program to provide loans to small businesses that incur economic injury as a result of an essential employee being called to active duty. However, since 2002, fewer than 300 of these loans have been approved by the SBA, despite record numbers of reservists being called to active duty. It is clear that changes need to be made, so that reservists are informed about the availability of the MREIDL program and that the program better meets their needs. At a hearing of the Committee on Small Business and Entrepreneurship on January 31st, the first hearing we held in this Congress, we heard suggestions for a number of changes which would improve the Military Reservist Economic Injury Disaster Loan program, and I have included those changes in this bill. They include increasing the application deadline for such a loan from 90 days to one year following the date of discharge; creating a pre-deployment loan approval process; and improved outreach and technical assistance. This bill also creates a non-collaterized loan program. Reservist families have already sacrificed enough when a family member goes away to serve their country and when their business is harmed as a result. This loan program would allow reservist dependent businesses to access the capital they need to stay afloat without having to sacrifice beyond the service of the key employees. In order to give reservists time to repay the loans, the non-collaterized loan created in this bill would not accumulate interest or require payments for one year or until after the deployment ends, whichever is longer. In addition, because loans aren't the answer for every business-- additional debt could permanently cripple some businesses--I have also included a grant program for reservists. This program would allow up to $25,000 in grants for small businesses that can show economic injury because of deployment and prove that they have a viable business plan for the next three years. A grant program would help small businesses that cannot afford to take on a military reservist economic injury disaster loan or that were denied such a loan, but still are viable businesses and need assistance. While addressing the funding needs of reservists is essential, I also want to make sure that reservists receive the technical and management assistance they need to succeed. For that reason, this bill also includes the establishment of the Reservists Enterprise Transition and Sustainability Task Force. This grant program would allow Small Business Development Centers, Women's Business Centers and veteran centers to compete for grants to create programs that help small businesses prepare for and cope with the mobilization of reservist- employees and owners. Veterans possess great technical skills and valuable leadership experience, but they require financial resources to turn that potential into a viable enterprise. A recent report by the Small Business Administration stated that 22 percent of veterans plan to start or are starting a business when they leave the military. For service-disabled veterans, this number rises to 28 percent. So the legislation I introduce today will create a new program, administered by the Small Business Administration, to provide very-low-interest loans, up to $100,000, to help veterans start new small businesses. Lastly, this bill calls for two reports from the Government Accountability Office. One report will look at the needs of service- disabled veterans who are interested in becoming entrepreneurs. As a result of the war on terror and improved medicine, we are seeing more service-disabled veterans than we have seen in decades. For some service-disabled veterans, entrepreneurship is the best or only way of achieving economic independence. Therefore, it is essential that we understand and take steps to address the needs of the service-disabled veteran entrepreneur or small business owner. I am also calling for a study to investigate allegations that the changes the Department of Defense has made in regard to the use of reservists is harming the ability of reservists to find jobs and the ability of small business owners to continue hiring reservists. At the Committee's hearing on veteran small business issues, witnesses testified about reservists being turned down or not considered for jobs because they are reservists. I have heard reservists talk about being pressured to leave the reserves if they would like to continue to advance at work. I have also heard the concerns of small business owners who want to support servicemembers; however, they cannot do so if it means the survival of their business. Understanding more about this issue is important and essential to making sure that policymakers can continue to support citizen soldiers and the small businesses that employ them across the Nation. One of the issues I am not addressing in my legislation today is Federal procurement. I heard clearly the concerns from veterans that they are not being treated fairly when it comes to selling goods and services to the Federal Government, and I am committed to making changes. However, to make real changes, changes that can pass the Senate and the House and become law, these changes must be part of a bigger package. Legislation that addresses not just the concerns of service-disabled veteran small business owners, but the concerns of all small business owners who want their fair share of Federal contracts. I am committed to taking the difficult steps necessary to address these issues and will do so. Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Mr. KERRY. Mr. President, today I am introducing legislation that will clarify which dividends are eligible for a lower rate of 15 percent for upper-income taxpayers or a 5 percent rate for lower-income taxpayers. I am concerned that some foreign companies have a tax advantage over their American competitors. Since dividend rates were lowered in 2003, some banks have promoted hybrid debt instruments from foreign corporations that may qualify for the lower rate. These hybrid arrangements are treated as debt in the host foreign country and the entity takes a deduction. In the United States, these instruments are classified as equity and thus treated as dividends eligible for the lower rate. This was not the intention of Congress, and this abuse needs to stop. There should not be preferences in our tax code which make it easier for foreign corporations to raise capital at the expense of American companies. I believe that changes need to be made to our tax system to ensure that U.S companies can compete fairly in a global market place. The legislation that I am introducing today is the same legislation introduced by Ways and Means Subcommittee on Select Revenue Chairman Neal. This legislation amends Section 1 of the Internal Revenue Code to disallow the preferential dividends rate for payments from foreign entities not subject to tax in the foreign country, for payments that are deductible in the foreign country, or payments with respect to an instrument not treated as stock in the foreign country. In addition, the bill does not allow dividends from an entity not subject to or exempt from corporate tax in a foreign country to be eligible for the lower rate. If the entity is a passive foreign investment company (PFIC), the dividend would not be eligible for the lower rate even if the entity is also classified as a controlled foreign corporation. This legislation builds upon a bill that Senator Baucus and I introduced last Congress, S. 1363, which prevents dividends received from corporations in a tax haven from receiving the lower rate. This legislation was introduced in the 109th Congress out of concern that the definition of qualifying foreign corporations is overly broad and includes companies in tax haven countries with little or no tax system. The legislation that I am introducing today includes the provisions of S. 1363 which require that only dividends from foreign companies which are located in countries with a comprehensive income tax and are traded on a U.S. stock exchange may qualify for the preferential rate. In total, this legislation carries out the intent of the 2003 rate deduction on dividends. The initial proposal to address dividends taxation was designed to eliminate the double taxation of corporate earnings. Eventually, this proposal was modified to lower the tax rate on dividends. I believe that it was never the original intent of Congress to provide the lower rates to dividends which are not subject to double taxation. I urge my colleagues to support these common sense changes. I ask for unanimous consent that the text of the legislation be printed in the Record.

Mr. KERRY

Mr. KERRY. Mr. President, today I am introducing legislation that will clarify which dividends are eligible for a lower rate of 15 percent for upper-income taxpayers or a 5 percent rate for lower-income taxpayers. I am concerned that some foreign companies have a tax advantage over their American competitors. Since dividend rates were lowered in 2003, some banks have promoted hybrid debt instruments from foreign corporations that may qualify for the lower rate. These hybrid arrangements are treated as debt in the host foreign country and the entity takes a deduction. In the United States, these instruments are classified as equity and thus treated as dividends eligible for the lower rate. This was not the intention of Congress, and this abuse needs to stop. There should not be preferences in our tax code which make it easier for foreign corporations to raise capital at the expense of American companies. I believe that changes need to be made to our tax system to ensure that U.S companies can compete fairly in a global market place. The legislation that I am introducing today is the same legislation introduced by Ways and Means Subcommittee on Select Revenue Chairman Neal. This legislation amends Section 1 of the Internal Revenue Code to disallow the preferential dividends rate for payments from foreign entities not subject to tax in the foreign country, for payments that are deductible in the foreign country, or payments with respect to an instrument not treated as stock in the foreign country. In addition, the bill does not allow dividends from an entity not subject to or exempt from corporate tax in a foreign country to be eligible for the lower rate. If the entity is a passive foreign investment company (PFIC), the dividend would not be eligible for the lower rate even if the entity is also classified as a controlled foreign corporation. This legislation builds upon a bill that Senator Baucus and I introduced last Congress, S. 1363, which prevents dividends received from corporations in a tax haven from receiving the lower rate. This legislation was introduced in the 109th Congress out of concern that the definition of qualifying foreign corporations is overly broad and includes companies in tax haven countries with little or no tax system. The legislation that I am introducing today includes the provisions of S. 1363 which require that only dividends from foreign companies which are located in countries with a comprehensive income tax and are traded on a U.S. stock exchange may qualify for the preferential rate. In total, this legislation carries out the intent of the 2003 rate deduction on dividends. The initial proposal to address dividends taxation was designed to eliminate the double taxation of corporate earnings. Eventually, this proposal was modified to lower the tax rate on dividends. I believe that it was never the original intent of Congress to provide the lower rates to dividends which are not subject to double taxation. I urge my colleagues to support these common sense changes. I ask for unanimous consent that the text of the legislation be printed in the Record.

Mr. KERRY

Mr. KERRY. Mr. President. I honor a great and dedicated American, Joseph A. Dart, who for almost 30 years has championed the rights of workers across Massachusetts. As he prepares for a well- deserved retirement, I am grateful to be able to pay tribute to this wonderful man and give him the recognition he deserves for touching the lives of so many. Joe has spent his career bringing real meaning to the American dream. As president of the Massachusetts Building Trades Council, AFL-CIO, and executive vice president of the Massachusetts AFL-CIO, Joe advocates for the rights of more than 75,000 construction trades men and women throughout the Commonwealth. Joe has fought for, and defended, the right to collective bargaining and the empowerment that it has brought to working families throughout our history. Joe helped write competitive bid laws for public construction projects, helped to pass the OSHA 10-hour law which requires all construction workers on public projects to undergo safety training, and helped to pass a law strengthening wage enforcement. Throughout his years in public service, Joe has negotiated dozens of agreements to guarantee fair, competitive wages, a reasonable work week, and safe working conditions on billions of dollars of construction projects throughout the Commonwealth. I am most fortunate to have had his support, friendship, and counsel throughout many campaigns and many years in office here in Massachusetts. An exemplary community leader, Joe has worked tirelessly to uphold the rights of thousands of Massachusetts workers who entrusted him with this office. Massachusetts is grateful for the service he has provided. Countless families in Massachusetts are living better, safer lives because of Joe Dart and his commitment to organized labor. On behalf of workers throughout our State, I am proud to honor him for his selfless dedication to countless works across the Commonwealth.

Mr. KERRY

Mr. KERRY. Mr. President, the Chair wishes to inform Members that the Committee on Small business and Entrepreneurship will hold a public markup entitled, ``Small Business Disaster Response and Loan Improvements Act of 2007'' on Thursday, March 29, 2007, at 9:30 a.m., in room 428A Russell Senate Office Building. The Chair urges every Member to attend.

Mr. KERRY

Mr. KERRY. Mr. President, I want to thank my colleagues for supporting the amendment Senator Snowe and I offered to provide an additional $97 million to the Small Business Administration. This amendment was necessary because the President's budget request of $464 million was inadequate to fund the agency's core programs. This, unfortunately, is nothing new. Since the President took office in 2001, he has cut the SBA, the only Federal agency dedicated to the startup and growth of small businesses, more than any other agency. If we exclude disaster loan funding, the President has cut the SBA by more than 30 percent. As a result of the President's cuts, SBA's loans and venture capital are more expensive, shifting more than $100 million in fees to the small business community, businesses are getting less counseling, and they are losing out on opportunities to do business with the Federal Government, a very serious problem since the Federal Government spends about $370 billion on contracting for services and goods each year. Consequently, the baseline funding for the SBA is so low that it has made it very hard for Congress to reverse the President's cuts. Nevertheless, Senator Conrad and his Committee were able to increase by $635 million the account--referred to as function 370--that provides funding for the SBA and other agencies. I congratulate them, and thank them. They have demonstrated that it is possible to provide reasonable funding for effective initiatives and still put the country back on track to a balanced budget. Among the most disturbing proposed cuts to the SBA in fiscal year 2008, the President has for the fourth year in a row eliminated all funding for the Microloan program and for Microloan Technical Assistance. This is very hard to justify given that the administration is willing to spend so much on micro-credit in other countries. In 2005, the administration provided approximately $211 million for the development of foreign microenterprise programs through the Agency for International Development. In fiscal year 2006, we are told by Ambassador Zalmay Khalilzad, the U.S. Ambassador to Iraq, that the administration provided more than $54 million for microloans in Iraq. And for fiscal year 2007, the administration has requested supplemental funding for Iraq that includes at least $160 million for micro-credit programs. Our amendment restores the Microloan and Microloan technical assistance programs to the levels they were at in 2001--$3.2 million to leverage $30 million in loans and $20 million in technical assistance. Our amendment also restores the proposed cuts to the Women's Business Centers, the Small Business Development Centers, the Office of Veterans Business Development, and programs for the development of minority businesses and Native Americans. It restores $10 million in funding for the New Markets programs, which have never received support from this administration, in spite of claims about targeting areas of high unemployment. My one big regret is that this amendment does not provide funding for the 7(a) Loan Guaranty Program. My original budget amendment, No. 515, did include $79 million in order to reduce fees on borrowers and lenders, which could have gone a long way to making these loans more affordable. Right now, on the largest loans, borrowers are paying around $50,000 in fees when a conventional loan would only cost around $20,000 in fees. We need to get that cost down. I am very disappointed that the Republican leadership would not allow any funding for the 7(a) loans to be included in our amendment. I am hopeful that Senator Snowe and I, with our colleagues in the House, can continue to work on this and get funding for fee relief during the appropriations process. Aside from that one disappointment, I am very pleased with our amendment. It is reasonable and realistic. By restoring $97 million to the SBA, we bring its funding for fiscal year 2008 to $561 million. This is still $125 million--or 18 percent--less than SBA's funding in fiscal year 2001, and it is a fraction of the $2.9 trillion budget President Bush proposed for fiscal year 2008, but it will go a long way to fostering small business growth and sparking innovation. I thank Senator Snowe and our colleagues Senators Lieberman, Enzi, Cantwell, and Pryor for joining in this bipartisan effort.