Richard Neal

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I would like to recognize the unprecedented accomplishments of the 1999 Longmeadow High School football team. Longmeadow became the first Western Massachusetts team to win three straight titles. The Lancers captured the Division II Super Bowl with a 36-21 victory over Shrewsbury. Longmeadow could not have asked for a better beginning as they scored on all five possessions in the first half. Running back Winston McGregor led the way with 162 yards rushing and three touchdowns. Quarterback Justin Vincent was impressive with 118 yards passing, and the Lancer defense shut out their opponents in the fourth quarter. As always, credit must be given to the linemen who gave Vincent the time to pick apart the Shrewsbury defense and McGregor the holes through which to run. Longmeadow Head Coach Alex Rotsko has built an impressive program at Longmeadow. The Lancers, having now three Super Bowls in a row, will be the odds on favorite in the coming season. Despite losing leaders like McGregor and Ryan McCarthy to graduation, Coach Rotsko will have his charges ready to defend their title once more, a situation with which the Lancers are intimately familiar. Mr. Speaker, I am proud and honored to congratulate the 1999 Longmeadow High School football team. Winning a title once is something to be remembered, but winning three in a row is the start of a dynasty. I wish Coach Rotsko and his Lancers the best of luck in the 2000 season, as they return once again to defend their Super Bowl title.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I would like to recognize the wonderful accomplishments of the football team from the High School of Commerce in Springfield, MA. The Commerce football team finished the season 10-1 and captured the first State title in school history. This was the first Super Bowl game for Commerce since 1978, and the players made the most of their chance by beating Bay Path Regional Vocational Technical 33-15. The Commerce team became the Division IIIA Super Bowl Champions on the strength of their defense which was able to come up with three fumble recoveries and an interception. The Red Raiders scored three touchdowns in just 42 seconds during the second quarter and never looked back. Commerce amassed over 200 yards on the ground behind the superb running of Julius Walker, who gained over 100 yards by himself. Credit must be given to the offensive line. Although they are accustomed to throwing the ball, the Commerce offense adjusted to the Bay Path game plan and ran the ball successfully. Head Coach Todd Kosel leads a program which recently endured a winless season. However, Coach Kosel has turned all of that around and now has a team feared and respected for its intelligence, its determination, and its commitment. The depth of this squad can be seen on the score sheet as touchdowns were scored by five different players: Alfonso Dixon, Brandon Bass, Wister Figueroa, Julius Walker, and Michael Vaz. Mr. Speaker, once again, allow me to recognize and congratulate the Super Bowl Champions from the High School of Commerce. I wish all of the student-athletes on this team the best of luck in 2000 as they return to defend their title.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I rise today to recognize the accomplishments of the 1999 Ludlow High School girls soccer team. The Ludlow girls soccer team won the program's third Western Massachusetts title last year by defeating defending state champion Cathedral High School. The Lions defeated Central Massachusetts Champion Shrewsbury en route to the state final match, where they fell just short of their goal. The Ludlow girls soccer team finished the year with a record of 19-2- 1. Ludlow was able to dominate a tough league in Western Massachusetts in 1999 by employing a highly skillful style of play. A team that was tough when it needed to be, Ludlow was capable of outclassing most of its opponents. As a result of their high class style, the Lions enjoyed the fervent support of the residents of the Town of Ludlow throughout the season. Head Coach Jim Calheno has built a very successful program at Ludlow High School. Coach Calheno is well-respected in the coaching community and his team is duly feared. The Ludlow talent pool runs very deep, and the Lions are certain to be the team to beat in 2000. Two All-America selections, Liz Dyjak and Stephanie Santos, are among a group of talented Juniors who will be looking to claim the state title next season. Mr. Speaker, allow me to recognize here the players, coaches, and managers of the 1999 Ludlow High School girls soccer team. The Seniors are: Melissa Dominique, Sandy Salvador, Angela Goncalves, Jen Crespo, Marcy Bousquet, Lynsey Calheno, Jenn Genovevo, and Leana Alves. The Juniors are: Nicole Gebo, Lindsay Robillard, Lindsay Haluch, Kara Williamson, Sarah Davis, Liz Dyjak, Stephanie Santos, Tina Santos, and Jessica Vital. The Sophomores are: Michele Goncalves, Lindsey Palatino, and Kristine Goncalves. The Freshmen are: Natalie Gebo, Lauren Pereira, Beth Cochenour, Darcie Rickson, and Amy Rodrigues. The Head Coach is Jim Calheno, and he is assisted by Saul Chelo, Nuno Pereira, Melanie Pszeniczny, and Mario Monsalve. The managers are Melissa Santos and Elizabeth Barrow. Mr. Speaker, once again, allow me to congratulate the Ludlow High School girls soccer team on a season well played. I wish them the best of luck for the 2000 season.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I am going to vote for this legislation even though it is not paid for because added to the Ticket To Work program are important ``must pass'' tax provisions vital to all our constituents. The most important provision in this bill is the extension of the current waiver of the alternative minimum tax rules affecting nonrefundable personal credits. Without enactment of this provision, next April approximately 1 million taxpayers will find they owe more money to the federal government than they thought, for an average ``stealth'' tax increase of about $900 each. Millions more will have to though the alternative minimum tax calculations, which can take 5 or 6 hours, just to find out they don't owe any more money. In 1997 Congress approved new credits for children, and for education. We promised our constituents that the federal government would help them with these responsibilities. However, we subjected these credits to the alternative minimum tax. The result is that more and more middle income Americans will be forced into the AMA by our actions--and we will rightly get the blame. So now we have to fix it. This bill does that for 3 years. But what we really need to do is to fix this problem permanently, because no middle income American should ever by subject to the alternative minimum tax calculation simply because they decided to send their kids to college. Mr. Speaker, other members may focus their remarks regarding taxes on the research and development tax credit, or the Subpart F extension, or employer provided educational assistance. All important items. But not items that drive this bill--what is of paramount importance is the AMA fix, and I am pleased that we are finally taking steps to fix this for the immediate future.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, today I am introducing a modest bill which builds on the recommendations of the Department of the Treasury and the New York State Bar Association. This legislation applies section 1032, which was added in 1954 to the Internal Revenue Code, to all derivative contracts. The impact of this change is to prohibit corporations from recognizing gain or loss in derivative transactions to the extent the derivative purchased by the corporation involves its own stock. Section 1032 states that a corporation generally does not recognize gain or loss on the receipt of money or other property in exchange for its own stock. In addition, a corporation does not recognize gain or loss when it redeems its own stock for cash. Section 1032 as originally enacted simply recognized that there was no true economic gain or loss in these transactions. However, the 1984 Deficit Reduction Act extended this policy to option contracts, recognizing the potential for tax avoidance inherent in these contracts. Since that time the financial industry has developed a number of new types of derivative products. My legislation merely updates current law to include in section 1032 current and future forms of these new types of financial instruments. On June 16, 1999 the New York State Bar Association issued a report on section 1032 which recommended the changes discussed above. In addition, building on the work of the Treasury Department's budget recommendation, the New York State Bar Association also recommended that Congress require a corporation that retires its stock and ``substantially contemporaneously'' enters into a contract to sell its stock forward at a fixed price, to recognize as income a time-value element. In effect, these two transactions provide a corporation with income that is economically similar to interest income but is tax-free. This legislation includes a provision that recognizes a time-value element, i.e., the version recommended by the Bar Association. The effective date of this legislation is for transactions entered into after date of enactment. The problem identified in 1984, and in 1999 by the Department of the Treasury, is best described in the New York State Bar Association Report. The report states: We are concerned that all the inconsistencies described above (both in the general scope of section 1032 and in its treatment of retirements combined with forward sales) present whipsaw and abuse potential; the government faces the risk that income from some transactions will not be recognized even though those transactions are economically equivalent to taxable transactions. In addition, the government faces the risk that deductions are allowed for losses from transactions that are equivalent in substance to transactions that would produce nontaxable income, or--because taxpayers may take different positions under current law--even in the same form as such transactions. To avoid these inconsistencies, we believe it is necessary to amend section 1032. . . . Mr. Speaker, I consider the legislation I am introducing today to be a normal housekeeping chore, something the Committee on Ways and Means has done many times in the past and hopefully will do so in the future. As such, I hope it will be seen both in Congress and in the industry as relatively noncontroversial, and that it can be added to an appropriate tax bill in the near future. I do hope, however, that the industries affected will provide written comments on technical changes they believe need to be addressed in this legislation as introduced, especially on the time value of money section of the bill.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I rise today to congratulate Joseph Moffett for being selected to the ABA/Leica Tropicbirds Team of 1999. Joseph, along with three other youths, has been chosen to compete in The Florida Space Coast Flyway Festival birdathon. This is a national birding competition which will be held on November 13, 1999. Joseph, who is fifteen years old, lives in Mendon, Massachusetts and is a member of the ABA and the Massachusetts Audubon Society. Joe is also a member of many other birding clubs including; the Brookline Bird Club, the Forbush Bird Club, and the Stony Brook Bird Club. Joe works at the Stony Brook Audubon Sanctuary as a volunteer naturalist and a councilor in training. Joe also takes part in the Christmas Bird Count and Massachusetts Audubon Birdathon fund-raiser. Joe keeps lists of the birds he sees on various birding outings and submits them to the Bird Observer, a birding journal. In addition to Joe's birding skills, he is also a proponent of environmental protection. Joe has started a rainforest club in his school and has raised money to save acreage of a rainforest. Most of the birding events that Joe participates in are also fund-raisers, which raise money for the protection of new bird species that are found during the events and for the protection of birds in general. Mr. Speaker, it is my great pleasure to congratulate Joseph Moffett on his accomplishments and commend him for being a model citizen and a great influence to his community.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, the natural beauty of western Massachusetts is hardly a well-kept secret. We are attracting more people each day who seek the quality of life that is offered. However, there is something that we need in western Massachusetts that would make our lives even better, and what we want is the high-speed Internet connections that our friends down the pike and in the Cape Cod area already have. Our businesses, employers, and households have a serious interest in the Internet to win contracts, coordinate production and distribution, export entertainment, enhance education, and both to teach and learn at the best medical centers. Right now there are too few capacity Internet data trunks that make the trek from Boston to western Massachusetts. When we get a few high-capacity Internet trunks or backbones, as they are called, we can take it from there. We already have excellent fiberoptics within my district. This is why I support legislation that provides an incentive that is needed for expanded investment in the Internet backbone into rural areas. Having a better choice provides those who seek it stronger data links that will make Western Massachusetts an even better place to live.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, it is an honor for me today to speak this afternoon about a constituent of mine, Reverend Karl Donfried, who offered the opening prayer here in the House of Representatives on this day. I would like to use 60 seconds to both welcome and introduce him to the House of Representatives. Reverend Donfried is a professor and chairman of the Department of Religion and Biblical Literature at Smith College in Northampton, Massachusetts. He has been a member of Smith's faculty for more than 30 years. Reverend Donfried is deeply involved in the religious community at Smith College and in the ecumenical movement in western Massachusetts. He developed the Ecumenical School of Theology in Springfield's Christ Church Cathedral, where he has served as the Ecumenical Canon of the Cathedral since 1977. He chaired the Lutheran Roman Catholic Committee of New England and was appointed to co-chair the New Testament Panel of the National Lutheran Roman Catholic Dialogue. A theologian and a scholar, Reverend Donfried has taught at Brown University, Amherst College, Mount Holyoke College, and Assumption College. I use this opportunity today on behalf of the House of Representatives to extend a heartfelt welcome to Reverend Karl Donfried.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I was stunned by this headline in the New York Times today. It said that the Republicans plan to delay the earned income tax credit for the working poor. This program, Ronald Reagan said, was absolutely the best one ever devised to help the working poor, and the answer here today is that we are going to delay its implementation. Mr. Speaker, in this institution we would never dream of delaying an income tax refund to the wealthiest Americans. We would never dream of delaying oil incentives or mining incentives; or, heaven forbid, we would never dream of cutting back on the ethanol subsidy. But the answer today is that we should delay granting the working poor the earned income tax credit to get past this budget impasse that we currently see. It makes no sense to harm the working poor with this issue. We should be coming to their assistance. If one works, one should not be poor. This idea makes no sense whatsoever, and it is being used as a gimmick to get around this budget impasse. We should proceed with granting the working poor this opportunity.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, today I am introducing for myself and Mr. Houghton, Mr. Rangel, Mr. Coyne, Mrs. Johnson (CT), and Mr. Matsui, legislation to extend for one additional year the temporary waiver of the minimum tax rules that deny many families the full benefit of nonrefundable personal credits, pending enactment of permanent legislation to address this inequity. This problem is well known. The tax credits for education and children are limited by the alternative minimum tax. Consequently, more and more average Americans who use the dependent care credit, the new child credit, the HOPE credit or the lifelong learning credit, will be forced to fill out the time consuming, complex alternative minimum tax form. Even worse, a growing number of Americans will have all or part of these credits denied because they are part of the AMT base. For families with three or more children, the refundable portion of the child credit is also subject to the AMT cutback, which this bill also fixes for 1999. The Department of the Treasury estimated that in 1998, without the ``one year'' waiver that was enacted last year, eight hundred thousand taxpayers who were entitled to the child credit or the education credits would have been denied the full benefit of these credits by the AMT. And although the AMT was enacted into law to ensure that wealthy individuals pay some tax, a large percentage of these new AMT taxpayers will be married couples who earn between $45,000 and approximately $100,000. Mr. Speaker, we know that there is widespread agreement to fix this problem either on a permanent basis, or if that is not possible, for one additional year. The Clinton Administration, the House and Senate, and both parties agree. Yet, it has not been accomplished. We are introducing this bill, which extends last year's waiver for one additional year, to highlight the problem once again and to urge quick action to solve it for tax year 1999. Given the lead time the Internal Revenue Service needs to draft and print tax forms for next year, it is necessary for us to take action early next month. Hopefully, legislation that is acceptable to all of us will be enacted on a bipartisan basis shortly.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I thank the gentleman for yielding time to me. Mr. Speaker, at the beginning of August, the strategy of the Republican Conference was to return home to their respective districts and make an attempt to convince the American people of the merits of this tax cut proposal. When they returned from the August break, they collectively, I think, would agree that the American people said, we prefer fixing social security and Medicare first, then paying down the national debt. What this journey proves, I think, to the Republican party at this time is that they simply cannot sell a bad idea. The American people responded overwhelmingly to the message, in this instance, of President Clinton and the Democratic Caucus suggesting that, as we flip the last pages on this century, we have the rarest of opportunities, the opportunity to repair and fix social security, and listen to this number, for the next 75 years, and to repair and to fix Medicare for the next 35 years. We would be hard-pressed to find or discover a responsible economist across this country who has suggested once that the Nation desired or needed or the current economic growth that we have had would benefit from a $1 trillion tax cut. The wealthiest businesspeople that I know back in Massachusetts have not been clamoring for a tax cut. They argue, instead, and I think accurately so, that they prefer and that we prefer low interest rates, so that those who are getting into the homebuyer market for the first time can purchase a 30-year fixed mortgage at 7\1/2\ to 8 percent, or a 15-year fixed mortgage at 7 percent. They want stability and predictability as they forecast economic growth. Let me state another, I think, compelling statistic here. When we used that suggestion of a $3 trillion surplus over the next 15 to 20 years, let us emphasize on this occasion that it is a projected surplus, heavy emphasis on the word ``projected.'' Then let me deflate the argument that we have $3 trillion to toy with by suggesting that of the $3 trillion, $2 trillion comes from social security. How can we argue honestly to the American people that we really desire this rarest of opportunity, to fix social security for generations to come, and in the next breath say that we are going to gamble with a projection of a surplus which might not even materialize 15 years out? The President did the right thing on this. I hope that we will sustain the President's veto.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, it brings me great pleasure to pay tribute to a remarkable woman who has dedicated the better part of her life to an admirable career in public service. For over a half century, Florence Chandler has worked tirelessly for the Commonwealth of Massachusetts. During that time she continuously reinforced the notion that government and politics can be a noble endeavor. On the occasion of her retirement, I want to express my own personal congratulations and thanks on a job well done. Like many patriotic American women during World War II, best characterized by the defiant Rosie the Riveter, Florence Chandler's slogan has always been ``We Can Do It!'' From the Town Hall to the White House, Florence brought her trademark energy and enthusiasm to every challenge. She was a strong, resilient, and sometimes singular voice for the people of Southbridge. For nearly a decade, I watched her place the town's best interests before her own. She would lobby local, state and national officials for what she believed in. And she always earned respect and admiration along the way. A new police station, daycare center and water treatment facility are part of the legacy she will leave behind. A stabilized tax rate and major school renovations have also been achieved during her tenure. But her finest hour was bringing the Department of Defense training facility to Southbridge. It is her signature accomplishment. Quite simply, without the charismatic leadership of Florence Chandler that exciting project and those new jobs would not be in this community. A town manager, an attorney, a friend, a sibling and a grandmother, Florence has been a success in life on many different levels. She is the rare individual who succeeded at bringing the town of Southbridge to the attention of the President of the United States. For those who say it can't be done, I would recommend spending a day with Saugus native Florence Chandler. Like Rosie the Riveter, she has shown that anything is possible.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I rise today to recognize the exciting achievement of the Western Mass. Pioneers soccer team. On Saturday, September 11, 1999, the Pioneers defeated the South Jersey Barons 2-1 in the National Championship match of the D3 Professional Soccer League. The Pioneers organization became the national champion in just its second year of existence and was also awarded Franchise-of- the-Year status. Western Massachusetts has long been a hotbed of soccer in America. Immigrants from countries such as Portugal, Poland, Italy, and Ireland brought their passion for the world's game with them as they settled in places like Ludlow, Chicopee, the South End, and Hungry Hill. The fan support at Lusitano Stadium in Ludlow, MA, the home field of the Pioneers, can only be described as phenomenal. The raucous, yet knowledgeable crowd numbered 5,223 for the final game. In their final three matches, the Pioneers had an average attendance of 4,478, setting a new record each night. Clearly evident of the faces of both the young and the old were the passions of the old countries, as well as the growing American soccer pride. The strength of Western Massachusetts soccer can be seen on the roster as well, as seven members of the champions are local products. These players include starting goalkeeper John Voight, starting defenders Paul Kelly and Brad Miller, starting midfielder Chris Legowski, defenders Greg Kolodziey and Nate Allen, and backup keeper Danny Pires. Voight was named Championship match MVP, and Kelly was named to the 1999 All D3 Pro League All-Star First Team, as was forward Rob Jachym. As Champions of the D3 League, the Pioneers may be considered for promotion to the A-League, the division two of American professional soccer. Whether they choose to pursue promotion or to remain in the D3, the Pioneers, led by general manager Rick Andre, have plenty to be proud of this year. Mr. Speaker, once again I am proud and honored to recognize and congratulate the Western Mass. Pioneers, the 1999 National Champions of the D3 Professional Soccer League.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, recently a trial balloon involving a delay in earned income tax credit refunds has been floated by the majority party. The balloon needs to be popped immediately so we can move on to more serious solutions. The earned income tax credit is designed to provide a refund of payroll taxes to the working poor, thereby giving an income supplement as well as an extra work incentive. Under current law, most individuals receive an earned income credit in the form of a refund in May after they file their income taxes. The Republican proposal would single these refunds out to be paid over a 12-month period. This would result in a $7 billion saving for this fiscal year because about 25 percent of the total refund would be pushed into the next fiscal year. This $7 billion would then be used, reportedly, to offset spending in the Labor-HHS Appropriations Bill. Mr. Speaker, I don't think it is fair for Republicans to deny working families a tax refund to pay for a shortfall of funds in an Appropriations Bill. I think there are better ways to find the money than to take refunds away from those who need them the most. It is not the fault of the working poor that Republicans put together an unrealistic budget resolution this spring, and are now desperate to find some way to implement it. But to lash out against those who need their tax refund the most is unconscionable. We should stick this idea where it belongs, in the trash can, and start to implement a bipartisan budget that will win broad support in the House. I would also note that given this time in the filing system, it is by no means clear that the changes necessary to delay earned income credit refunds for the working poor can be accomplished without significantly slowing down refunds for all other Americans. The current system does not distinguish between types of refunds, and it is possible that this proposal will result in all refunds having to be done manually, which will delay refunds for all. This is clearly not the intention, but bad proposals sometimes bring unexpected results and it would be better simply to move on to other solutions to our budget problems.

Mr. NEAL

Mr. NEAL. Mr. Speaker, I would like to take this time to acknowledge the outstanding contributions Claire L. Cummings and Mary Constantino have made to the second congressional district of Massachusetts, to our state, our nation, and the Democratic party. In particular I would like to recognize their longstanding service on the Milford, Massachusetts Democratic Committee. The Milford Democratic Committee assists the Democratic party and their candidates in reaching the citizens of Milford with the message of the Democratic party. Both Claire and Mary have worked hard to extend the message of the Democratic party into the Town of Milford. Claire L. Cummings has been an active member of the Milford Democratic Committee for thirty five years. Prior to being a member of the Democratic Committee Claire was actively involved in her community, attending and participating in Milford Town Meetings. She was also the first woman in Milford to run for the office of selectman. It was at this time the Milford Democratic Committee asked Claire to become a member of the committee. Claire L. Cummings has made it a point to attend every Democratic state convention, and particularly remembers the National Presidential Convention of Lyndon B. Johnson. Outside of politics she was involved in other community service groups such as: the Democratic Women on Wheels and the Telephone Pioneers of America. Mary Constantino began her political career at the early age of eighteen. Mary has worked hard for the Milford Democratic Committee, going door to door asking for votes. She has also been influential in persuading many to join the Democratic party. In all of her thirty five years of membership she has never missed a Democratic convention held in Milford, Massachusetts. Mary is also involved in her community in many other ways. She has been a member of the Grandparents for Literacy group, and was honored by the Jaycees for her work with children. She was named Woman of the Year by the American Heart Association, in honor of her eighteen years of service. Mary Constantino is an asset to the town of Milford and the state of Massachusetts. Both Claire L. Cummings and Mary Constantino are assets to the Milford Democratic Committee, their state, and our nation. I am pleased to recognize the contributions of both of these women to the second congressional district of Massachusetts.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I rise today in support of an extremely worthwhile piece of legislation, the Quinebaug and Shetucket Rivers Valley National Heritage Corridor Reauthorization Act of 1999, House Resolution 1619. H.R. 1619 expands the boundaries of this National Heritage Corridor by ten towns, nine of which are in my home state of Massachusetts. I'd also like to take this opportunity to thank Mr. Gejdenson for his tireless efforts on behalf of this bill. The Quinebaug and Shetucket region's history and significance begins with the Native Americans, as it was largely a frontier zone between tribes. European settlement began in the late 1650s, and the area soon became a center of fiscal, religious, and political radicalism. The Industrial Revolution began on a small scale here, with water powered textile structures on lesser streams and as a spillover from the adjoining Blackstone Valley. However, the latter half of the nineteenth century saw the construction of the great mills that characterize the valley. Staffed by immigrants from Europe and Canada, these factories were the region's prime economic engine. However, the twentieth century brought steady declines of the textile industry, leaving many formerly busy mills empty or only marginally used. Thus, the region entered a long period of economic recession and the need to develop a more diversified economy, a condition that brings us to the present day. The region into which we wish to expand this Heritage Corridor is clearly both culturally and environmentally part of ``the Last Green Valley.'' The expansion area shares a history, a desire to protect resources and a view to economic revitalization. The mill towns and farmland offer residents and visitors a special view into the American experience and allow them to explore New England's agrarian and industrial past. Environmental protection is one of the most important tasks facing the American people as we go forth into the new millennium. As such, the goal of this legislation is to develop and implement natural, cultural, historic, scenic, recreational, land and other resource management programs. The purpose is to retain and enhance the significant features of lands, water, structures, and history of the Quinebaug and Shetucket Rivers Valley. The National Heritage Corridor designation allows local governments and grassroots organizations to carry out their visions for a healthier, more sustainable society. As always, the delicate balance between environmental protection and economic growth is at the heart of the Quinebaug and Shetucket Rivers Valley National Heritage Corridor. Since the authorization of the Quinebaug and Shetucket Rivers Valley National Heritage Corridor in 1994, the State of Connecticut, via the Quinebaug-Shetucket Heritage Corridor, Inc., has worked efficiently under a constrained budget by combining the financial resources of the public and private sectors. As a result, the economic aspect of the Corridor has been as successful as the environmental protection programs. The Corridor Commission has been able to match federal funds at a ratio of 12:1. The Commission and its partners have revitalized Industrial Revolution era mills, enhanced greenways and waterways, and have increased preservation of open space and wildlife habitats, resulting in an increase in tourism. The proximity of the Corridor to the major metropolitan areas of Springfield, Worcester, Boston, Hartford, Providence, and New York City serves as further evidence that this expansion is an economically viable venture. In order to ensure that the projects selected reflect the needs and desires of the states, the Corridor Commission Board of Directors will include voting members from the offices of the Governors of Massachusetts and Connecticut. The Commission will also be linked to, and under the guidance of, the Secretary of the Interior via a compact. Mr. Speaker, the most important people involved in the environmental and historical preservation process are the locals. These are the people involved in the actual work that our legislation authorizes. I would like my colleagues to understand that the local governments and local business along the Corridor are in overwhelming support of this legislation. I have received numerous calls from businessmen and women looking for ways to get involved and the Boards of Selectmen of the affected towns have been pressing the issue in their town halls. The people have spoken out and they are in favor of the Corridor Expansion. Mr. Speaker, it is important to note that we in Massachusetts are not stepping on the toes of our Connecticut neighbors. The members of the Massachusetts State Heritage Corridor Commission have been working with their successful counterparts from Connecticut for a long time now. The two groups have come to an understanding and are looking forward to working together. In order for the Corridor Expansion to be a success, the experience of those on the Connecticut side must be utilized. Mr. Speaker, once again I would like to thank Mr. Gejdenson for all of his work, and I would like to thank the members of the Corridor Commission who have been the driving force behind this legislation.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I rise today to pay tribute to one of the Second Congressional District of Massachusetts' outstanding and dedicated citizens, Mr. John Follit. John is being honored today by his fellow citizens at the Italian American Veterans Post No. 64 of East Longmeadow, MA. It is an honor for me to join in this recognition of someone who has contributed a great deal to our community. John Follit has served the East Longmeadow community through his work with the Office of Children and his advocacy for children in the State. He has been active in politics by serving as chairman of East Longmeadow's Democratic Town Committee, and he has helped many political candidates by planning campaign strategies in local, state, and national campaigns. John has also been a union steward and has been a champion of democratic principles in whatever he does. Beyond his work in the community, John has put so much energy into his family life. He is a loving husband to his wife, Laurie, and a great father to his three children. John and his family have demonstrated their generosity in many ways, including bringing a foster child into their care. John Follit is a leading citizen and is dedicated in everything he does. My best wishes go out to John Follit and his family as, together, they now face the many related challenges to his health. My thoughts and prayers are with them all. John Follit has done so much for so many that it is a privilege to honor and pay tribute to him on this special day.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, there are so many reasons to oppose this tax bill it is hard to know where to start. I have spoken on the floor about the need to save the surplus for Social Security and Medicare. I have spoken about their importance as the premier government programs that keep millions of elderly Americans out of poverty. I have discussed the importance of deficit reduction and the need to maintain on-budget surpluses in the face of unrealistic budget assumptions. Every day that goes by, it is more and more clear just how unrealistic these budget assumptions currently are. If we hold this bill until September, it will be as clear as a pie in the face. The Washington Post this morning has a long article about how Republicans have already spent the on-budget surplus for next year. If we cannot maintain discipline for 1 year, how on earth will we guarantee that surplus for the next 10 years. We cannot. The Democratic approach here is entirely reasonable. We want to go slow. Let us not repeat the errors of the last 18 years and pass a massive tax bill. Let us be for modest, reasonable tax cuts that become clear when the budget surplus really arrives.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, today I am introducing legislation to eliminate a tax avoidance technique available only to the very wealthy. This technique involves the use of swap funds. Like the legendary phoenix, a bird that lived for 500 years, burned itself to ashes on a pyre, and rose alive from the ashes to live again; this swap fund transaction has been closed down by Congress three times to date, only to see life again in the form of new and more exotic designs to get around whatever restrictions had been placed into law. Legislation to shut down this particular practice was enacted in 1967, 1976, and again in 1997. In 1967, Congress enacted a law to prevent swap funds from being transacted in the form of a corporation, as was popular at the time. This led to the swap fund transaction being resurrected in the form of a partnership, which was closed down in 1976. Subsequently, the industry developed methods to get around both laws by manipulating the 80 percent test for investment companies. The Taxpayer Relief Act of 1997 closed these transactions down by broadening the definition of financial assets that are taken into account for purposes of the 80 percent test. Obviously, the point here is that three times Congress has acknowledged the tax avoidance potential of this transaction, and three times Congress has made a public policy decision to close this shelter down. And three times Congress has failed. We will not fail again. Swap funds are designed to permit individuals with large blocks of appreciated stock to diversify their portfolio without recognizing gain and paying tax. In this transaction, a fund is established into which wealthy individuals with large blocks of undiversified stock transfer their stock. In exchange for the transferred stock, these individuals receive an equivalent interests in the fund's diversified portfolio. In effect, these individuals have now diversified their holdings by mixing their shares of stock with different shares of stock from other individuals, without having to sell that stock and pay tax on the gain like ordinary Americans. The swap fund transaction is complicated, and is limited to individuals with large blocks of stock. For example, a recent offering was limited to subscriptions for $1 million, although the general partner retained the right to accept subscriptions of lesser amounts. This, however, does not mean an individual with only a million dollars in stock could invest in the swap fund. In order to avoid Securities and Exchange Commission registration requirements, these transactions are often limited to sophisticated investors who under SEC regulations, according to a 1998 prospectus, must have total investment holdings in excess of $5 million. As outlined above, current law tries to stop swap funds involving a corporation or a partnership that is in investment company. An investment company is a corporation or partnership where the contribution of assets results in a diversification of the investor's portfolio, and more than 80 percent of the assets of which are defined by law as includable for purposes of this test. In the most current form of the swap fund transaction, that limitation is avoided by holding at least 21 percent of assets in preferred and limited interests in limited partnerships holding real estate. In fact, the purpose of the fund is clearly identified by the prospectus, which states that ``the value of the Private Investments will constitute at least 21% of the total value of the Fund's portfolio, so that the Fund will satisfy the applicable requirements of the Code and the Treasury Regulations governing the nonrecognition of gain for federal income tax purposes in connection with the contribution of appreciated property to a partnership.'' As in past years, the bill I am introducing addresses the specific transaction being used; that is, the bill would eliminate the latest avoidance technique by providing that such investments would be treated as financial assets for purposes of the 80 percent test. The second part of this bill at long last recognizes the inadequacy of the above approach, given its 32 year record of failure. This section states that any transfer of marketable stock or securities to any entity would be a taxable event, if that entity is required to be registered as an investment company under the securities laws, or would be required to register but for the fact that interests in the entity are only offered to sophisticated investors, or if that entity is formed or availed of for purposes of allowing investors to engage in tax-free exchanges of stock for diversified portfolios. The effective date of this legislation is for transfers after date of Committee action, with an exception for binding contracts signed prior to date of introduction. While it is clear that the Committee will decide on the appropriate effective date, I do not believe it would be fair to apply this legislation to contracts signed prior to the date that taxpayers were first on notice of a potential change in the law. This effective date is, by the way, similar to the effective date the Committee chose for the 1997 change. For those taxpayers who react by rushing their deals, they should be on notice that I intend to attach this legislation to the first tax bill that emerges from the Committee on Ways and Means after September 1, 1999. For those who have technical suggestions to make to the legislation, it would behoove them for the same reason to analyze this bill carefully and make whatever technical suggestions they have as soon as they practically can. Mr. Speaker, the life and death of this transaction is not simply another instance of American ingenuity and creativity which we can all admire. It is, in reality, a practical example of the need to seriously consider what generic powers should be granted to the Department of the Treasury to close down certain tax shelters without waiting for Congress, which inevitably can only attempt to keep up with the most obvious techniques being utilized to minimize tax payments. One of the great dangers I see on the horizon, Mr. Speaker, is that the proliferation of tax shelters will eventually lead to a severe backlash by Congress that may not be as well crafted as many, including myself, would like.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, today I am introducing legislation to eliminate a tax avoidance technique available to only the very wealthy. This technique involves the use of swap funds. Legislation to shut down this particular practice was enacted in 1967, in 1976, and most recently in the Taxpayer Relief Act of 1997. Each time that we have acted to shut this activity down, we have failed. We will not fail this time. Swap funds are designed to permit individuals with large blocks of appreciated stock to diversify their portfolio without recognizing gain and paying taxes, like ordinary Americans. This transaction is often limited to blocks of stock with a value in excess of $1 million to investors with investment holdings exceeding $5 million. My bill shuts down the latest avoidance techniques being used, which is to retain 21 percent of the assets of the swap fund in certain limited partnerships holding real estate. The second part of this bill is broader. It states that any transfer of marketable stock or securities to any entity would be a taxable event under certain specific conditions. Let us be clear. This bill will be enacted into law this year.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, we should continue normal trade relations with China. This is a very important issue to the United States of America, as well as to the future of China. As is the case with almost all important legislation, the rhetoric is heated and the arguments are exaggerated. That is only natural, because the debate we are involved in is a complexity that oftentimes is far beyond the immediate issue in front of us: trade. The debate ranges on both sides to economic, political, strategic, security, and humanitarian issues. Yet, we have this one vehicle to express our opinions, our positions, and even our frustrations about our relationship with China. China is the largest emerging market in the world, and it is increasingly important politically and militarily to the United States. China's leadership will, whether we like it or not, shape much of what happens throughout Asia and the Pacific. We must try to influence what happens inside of China. We must influence the course of conduct by China's influence and leadership, and, of course, we must take the opportunity to see how best we can influence how China emerges as a greater economic and military power. But how do we influence China if we refuse to trade with them and they retaliate against us? How do democratic values emerge? How do they learn to tolerate dissent? How do they come to respect human rights and religious liberties? Do we sit back and hope that the Europeans are willing to demonstrate these values, or do we actively engage the Chinese at all levels and patiently work for change within that country? I do not think there is anybody who is willing to say that there has been no change in China during the last 20 years. I do not think anyone would say that that change has been sufficient. In fact, it seems painstakingly slow, but it is occurring, and we must see to it that it continues to occur. We must not lose site of the penalty here. It is to deny to China what we give to almost every other nation in the world: normal trade relations, exactly what the term implies. The aberration is not with those who would grant NTR to China; it is with those who would apply the Smoot-Hawley Tariff Act to China.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, I strongly support the motion to recommit offered by the Blue Dog Democrats. It makes common sense to save half the budget surplus for deficit reduction, and it is hard for me to believe that this would be controversial. I understand a sense of Congress resolution in favor of debt reduction has now been added to Chairman Archer's bill. That clarifies the issue. You can either vote for the motion to recommit to actually accomplish debt reduction, or you can vote to say you are for debt reduction without taking any action to do it. Mark my words, the Republican tax bill will plunge us back into deficit spending before its is fully implemented. According to the Congressional Budget Office, if you assume that appropriations bills will increase by the rate of inflation, and there is no emergency spending for 10 years, then its $996 billion surplus shrinks to $247 billion. The difference, if the Republican tax bill passes, will be deficit spending. And its $3 trillion cost of the Republican tax bill when fully implemented during the second ten years will plunge us off a deficit cliff just as surely as lemmings heading to the sea. This motion to recommit is the last opportunity to turn away from the cliff. I hop my colleagues will use their common sense, and vote for this motion to recommit.

Mr. NEAL of Massachusetts. Mr. Speaker, Members on both sides of the aisle have said that the tax bill reported by the Committee on Ways and Means is a bill that makes budget priorities clear. These Members are right. This is a debate about Social Security and Medicare and paying down the Federal budget debt. Our priority on the Democratic side is clear. It is saving Social Security first, fixing Medicare, and making sure the Federal deficits from the last era do not return under an unreasonable tax bill offered by the Republican Party. As we all know, the 1981 tax bill was the leading cause of deficits we incurred during the past 15 years, but the Republican slogan today is clear. Extremism in the pursuit of a tax cut is no vice. This priority is a reckless tax bill based upon uncertain economic projections and based on unlikely assumptions about Draconian cuts in the future of government spending: programs like law enforcement, farm aid, education, veterans programs, to name just a few. They almost could not even get this tax bill to the floor because the moderates in their own party are suspicious of where this legislation will take us. On the Democratic side, we are not saying we are against tax cuts. We are simply saying, fix Social Security and Medicare first. Leave enough of a reserve to pay down the Federal debt and then talk about a modest tax cut initiative aimed at working class Americans, not the wealthiest among us who are not even clamoring for a tax cut at this time. Social Security is the Nation's premier program. It is the greatest achievement legislatively of this century. It has been crucial to the way elderly Americans have lived during the last 60-plus years and we have a chance now to protect it. Reject this bill. It is irresponsible and reckless.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. Mr. Speaker, a Member of the Republican Party yesterday called the vote on the tax bill today a defining moment; and, by goodness, was he right. The position of the majority party can be best summarized in a paraphrase of the old, ``Extremism in the pursuit of a tax cut is no vice.'' That is the position they are taking today as a party. The tax bill they are proposing is the largest since 1981 when supply-side economics gave us an additional $3 trillion in debt. Both bills are based on economic assumptions which are notoriously chancy, and on budget projections that are just plain wrong. Democrats want a modest tax cut that the Nation can afford. We want to reserve the surplus until the issues of Social Security and Medicare, I repeat, Social Security and Medicare are dealt with, and until how we see this budget process in the end goes. We do not want to go back to an era of deep deficit spending, which is exactly where the Republican Party will take us today. Democrats cannot and will not vote for this bill, but it is only moderate elements within Republican Party today who can save us from it. We hope they will.

Mr. NEAL of Massachusetts

Mr. NEAL of Massachusetts. One quick question: Fix social security first, Medicare first, and then tax cuts?