Don Nickles

Mr. NICKLES

Mr. NICKLES. Mr. President, will the Senator yield?

Mr. NICKLES. I don't think the Senator is correct.

Mr. NICKLES. I clarify something for my colleague's amendment on cost. Her proposal in February was estimated by CBO to be $5.4 billion, but that proposal expired in June. This one expires in November. This one is retroactive. The one in February was not. So we have many more months, and we also have the retroactive provision. We have estimates that this proposal will cost $9 billion. It is not paid for. I will make a budget point of order. I reserve the remainder of my time.

Mr. NICKLES. The intention of the Senator from Washington may be that it is not retroactive, but your amendment is retroactive. With the amendment before the Senate, an individual could be out of work in January and February, get a job in March, and receive payments. Read the amendment. It is there. It is retroactive. It may not have been the Senator's intention, but it is the fact. The amendment is unnecessary even if it is prospective, but it is not. As written, it is retroactive. This is the middle of May. By the time this would get through conference, it would be in June, July, or later. Yet this amendment says, let's go back to January. So if someone gets a job in between then, they would be entitled to receive payments. It is grossly irresponsible and all the more reason our colleagues should not support the amendment.

Mr. NICKLES. I ask unanimous consent that both sides have 1 additional minute.

Mr. NICKLES. Mr. President, I urge my colleagues to vote for this budget point of order that I am going to raise because this amendment is retroactive. This amendment costs 67 percent more than the last time. It costs $9 billion and it is not paid for. I am going to make a pay-go point of order. We did this last week and most of the people who say they support pay-go voted to waive pay-go. We are going to give them another opportunity to sustain pay-go and make sure this amendment does not pass because it would increase the deficit by $9 billion. The pending amendment offered by the Senator from Washington, Ms. Cantwell, increases mandatory spending and if adopted would cause an increase in the deficit in excess of levels permitted in the most recently adopted budget resolution. Therefore, I raise a point of order against the amendment pursuant to section 505 of the H. Con. Res. 95, the concurrent resolution on the budget for fiscal year 2004.

Mr. NICKLES

Mr. NICKLES. Sure.

Mr. NICKLES. Madam President, I wish to make a few comments regarding the bill. First, I compliment my colleagues, Senator Grassley and Senator Baucus. We will be successful in passing a bill today. I compliment them for it. I believe we have been on this bill for about 14 days, maybe 15 days. They have considered hundreds of amendments. In my opinion, this bill has gotten pretty expensive and I want to talk about it a little bit. Senator Kyl and I voted against the bill reported out of the Finance Committee primarily because the committee-reported bill had a differential rate for manufacturers than other corporations. It said manufacturers should have a rate of 32 percent and other corporations have a rate of 35 percent. Prior to my coming to the Senate, I ran a manufacturing company. I should be saying, Thank you very much. I may be going back to a manufacturing company. So maybe I should say, Thank you very much. But this is terrible tax policy. The Senate and the Congress, if it becomes law, will regret it. Members might say, Why is that? First, who is a manufacturer? You would think it would be very obvious who is a manufacturer but, frankly, it is not. The only thing that is certain out of this bill, there will be lots and lots of lobbyists lining up to be defined as manufacturers because if you are defined as a manufacturer, you get a 10-percent lower rate than all the other corporations. As a matter of fact, the bill defines manufacturers as, obviously, manufacturers, but also agriculture. So I have a lot of wheat farmers in Oklahoma who will now be manufacturers--software producers, movie producers. Now architects and engineers are going to have a lot of people asking they be defined as manufacturers. Maybe manufacturing employment will rise as a result of people redefining themselves as manufacturing, but other than that, I am not sure it makes sense. We also have a lot of large corporations that do a lot of things. They may have a manufacturing division but they also have services or they also have financials. Probably one of the biggest beneficiaries dollarwise in this bill, it is my guess, would be a company such as General Electric or maybe it would be a company such as Boeing or a big manufacturer. But General Electric, I would guess their financial services are bigger than their manufacturing. We will say for part of your corporation you get a corporate rate of 32 percent, but the rest of your corporation gets 35 percent. Guess what. Where you allocate those expenses will make a difference in your bottom line. You could have an enormous amount of internal complexity trying to decide, Should this be allocated to manufacturing? Should it be allocated to our financial services? Should it be allocated to our maintenance services? And if you make a mistake, you cannot only be audited, but you can be fined. But there is a great incentive to crowd as much income, as much profit into the manufacturing sector, and as much expenses into the nonmanufacturing sector. With the complexity of it--albeit we are all trying to help manufacturers, and I think maybe this is very well intended--I think it is faulty economic policy. Canada tried a differential rate, a lower rate, for manufacturers than other corporations, and they did it in 1982. They repealed it in 2001. I will make a statement on the floor: If this becomes law, we will repeal it. Congress will repeal it at some point, because our colleagues are going to hear from people in the field that it does not work, or that they have been audited and the complexity is too much. The Treasury Department made these comments: Taxpayers will be required to devote substantial additional resources to meeting their tax responsibilities. . . .The resulting costs will reduce significantly the benefits of the proposal. . . . It will be difficult, if not impossible, for the IRS to craft simplified provisions tailored to small businesses. . . . Significant additional IRS resources will be needed to administer the [manufacturing deduction] provision. . . . By distinguishing ``production'' from other activities, the provision places considerable tension on defining terms and designing anti-abuse rules. In other words, I have heard lots and lots of people say they are for tax simplicity. This is just the opposite, and we are going to regret it. I want people to know that. I would like for them to know it before it becomes law so we do not make a mistake, because I believe it will be a mistake. I asked the Congressional Budget Office for the economic analysis of this. I would love for the sponsors of the amendment to know this. CBO estimates the efficiency gains to the economy are $4 to $7 billion per year from an across-the-board rate cut. In other words, if we are going to cut corporate taxes, let's cut all corporate taxes the same. You could probably do that to a rate of about 33 percent or maybe 33.5 percent or something. But all corporations would be taxed the same. We have always taxed all corporations the same. To have a differential rate for manufacturing is a mistake. CBO says the cost-- well, I will finish that. They say: The gains to the economy are $4 to $7 billion per year from an across-the-board rate cut. That is $40 to $70 billion over the next 10 years. That is a significant amount, given the fact the entire bill was $110 billion. Now that was $110 billion when we reported it out of committee. The bill now moves around not $110 billion, not $120 billion, but $170 billion. It is a big bill. It adds a lot of miscellaneous provisions. A lot of them, in this Senator's opinion, should not be in the bill. I hope and expect to be a conferee, and I will tell our conferees, I will always work with my colleague from Iowa because I have great respect for him. I think the differential rate is a mistake. I also think there are a lot of extraneous provisions that were put into the bill that should not be that are bad tax policy, and maybe they need to be reviewed very closely before they become law. I plan on being pretty active in the conference, to try to accept amendments that make sense, to try to make us more competitive, to try to avoid the fines and the penalties and the tariffs that are being imposed by the EU. I very much agree with the objective of the bill. Let's avoid those penalties. Let's not get in a trade war. Let's not have countervailing tariffs. But let's not add a bunch of junk to the tax policy. The table of contents, when the bill passed the Finance Committee, was about 5\1/2\ pages. The table of contents usually has about 15 or maybe 20 amendments on a page. There are now about 11 or 12 pages on the table of contents. In other words, this bill has hundreds of provisions and a lot of them have nothing to do with manufacturing. A lot of them have nothing to do with being compliant with WTO, being compliant with trying to eliminate trade tariffs that are imposed on the United States. So again, I regret I could not support the bill when it came out of the Finance Committee. I know it is going to pass by a big margin today. I compliment the sponsors of the amendment, Senator Grassley and Senator Baucus. I compliment them for their work and patience and tenacity in getting us here. I look forward to working with them in conference to hopefully make a better bill, compliant with WTO, something we can afford, and something that will not add 1,000 pages to the IRS Code. I yield the floor.

Mr. NICKLES

Mr. NICKLES. Reserving the right to object, I want to make sure the Senator from Washington be allowed to speak and there be no unanimous consent requests made pertaining to her amendment.

Mr. NICKLES. If the Senator will yield further, the unanimous consent request only limits time; is that correct? I have no objection.

Mr. NICKLES

Mr. NICKLES. How much time remains?

Mr. NICKLES. I am happy to yield to my colleague from Montana for a question.

Mr. NICKLES. I object.

Mr. NICKLES. First, I yield to my colleague from Oregon.

Mr. NICKLES. Mr. President, I thank my colleague from Iowa for his statement. I hope our colleagues paid attention to it. I see my friend from Oregon. Before I make my statement, I have a question because I am trying to determine who is eligible. How many weeks does a worker have to work in a service industry before he would be eligible for this trade adjustment assistance?

Mr. NICKLES. I am asking a question.

Mr. NICKLES. That is how many weeks? I reclaim my time. If my colleague from Oregon finds an answer to that, I appreciate hearing it. I have asked our staff the answer to that question and it came back that a person only had to work 26 weeks of the previous 52 to qualify for the benefit.

Mr. NICKLES. I wanted to make sure. We are saying if you work in service, manufacturing, we will give you trade adjustment assistance. What is the benefit? The benefit is equal to 2 years of unemployment compensation. For what? A person worked 26 weeks--one half of a year-- and now under this proposal, we are expanding it. It was too generous in the first place. We are expanding it to say a person is entitled to receive very generous benefits, benefits equal to 2 years of unemployment compensation, 26 weeks by the State, and a year and a half under the Federal program, all federally paid unemployment compensation. That is more generous. All other States have 26 weeks. We have debated that back and forth, but now we are saying for this group of employees, you get 2 years, mostly paid for by the Federal Government. That is too generous.

Mr. NICKLES. No, I want to make a few comments. Then I will be happy to engage in a dialog. What is the cost of this proposal? I have heard somebody say it is paid for. It is not, according to the scoring rules we use in the Senate. The cost of it--and we got a copy of this from the Congressional Budget Office. The total budget authority over 10 years is $5.3 billion; estimated outlay is $5 billion, and a revenue decrease, because of the insurance tax credit, of $669 million. So it is a total cost of 7.6 billion over 10 years. Now let's look at a couple of other provisions in the bill. This bill says we will take the present program and expand it. We will give basically refundable tax credits for insurance. The present program says the Federal Government will pay 65 percent of it, two-thirds. This bill says we will replace that and have the Federal Government pay 75 percent. That is three-fourths, if you are not real quick in math. And there is no limit on the cost. So a person in high tech, as I heard my colleague say, could maybe have a very generous health care plan, maybe it costs $10,000 a year and the Federal Government will pay $7,500 because there is not a limit in the cost. Wow. This thing is just growing. And maybe some people get some support from this union or that union, and it sounds good. But you start looking at it and you say: What are we doing? It purports to make some changes in the earned-income tax program. I am happy to make changes in the earned-income tax program, but I don't think this gets it done. Basically what I see this doing is expanding an entitlement, saying, if you happen to be unemployed, either through manufacturing or through service workers, and somebody can say it is because those jobs went overseas--and that is somewhat discretionary in the assessment of it-- the Federal Government is going to pick up three-fourths of your health care cost for the next 2 years and you are entitled to 2 years of unemployment compensation. Unemployment compensation for most States averages about $260, $280, maybe $300 a week. In some States it is up to $700 a week. Again, there is no limit. If you are looking at $700 a week, you are talking about real money. You do that for 104 weeks, that is a pretty generous benefit paid by the Federal Government. Guess what, folks. We have a little deficit problem around here. This is going to add to it. In fact, this would add to it to the tune of about $7 or $8 billion--$7.3 billion, I believe. At the appropriate time, I am going to make a budget point of order. Let me give a little facts on trade adjustment assistance. Again, for all of our fiscal conservatives who say we need to get a handle on Federal spending, trade adjustment assistance cost $350 million in the year 2001. The year 2004, it cost $800 million. If we do this expansion, it is going to grow dramatically. There are lots of reasons to vote against this proposal. I urge my colleagues at the appropriate time to vote against it, and at the appropriate time I will be making a budget point of order.

Mr. NICKLES. The Senator is correct. I believe you do provide trade adjustment assistance to workers in companies where it is 20 percent and you are looking backward to see whether they qualify.

Mr. NICKLES. That is correct.

Mr. NICKLES. Mr. President, I agree.

Mr. NICKLES. I didn't say there was a lump sum. I said the facts are the benefits under this Trade Adjustment Assistance Program, which was an amendment that was added to the fast-track promotion bill to maybe encourage some people to vote for it, in my opinion, is fatally flawed. Because it has a tax credit where the Federal Government is going to pay two-thirds of the health care costs, 65 percent of the health care cost if somebody is in this category. You only have to work 26 weeks out of the previous year and yet you can get your health care benefits paid for under current law 65 percent by the Federal Government. This makes it three-fourths paid for by the Federal Government. That is a serious mistake. It benefits, frankly, those plans and those companies that have very high health care costs. In some cases that would be union plans that maybe overpromised, and they have very expensive plans. It also would benefit those people who say: Wait a minute. I lost my job. I lost my job because now that job is being done in India. Maybe somebody is a programmer or maybe somebody is a computer programmer or maybe they are a telephone solicitor and now maybe that job is being done some in the States and some overseas. But the company had a tough time. Maybe it is a telecommunications company and they reduced their employment. But there happens to be some employment overseas. You could see a whole lot of people saying: My job was lost because it went to India, because it went to China. Therefore, even though I have only worked there for 26 weeks out of the last year, pay for my health care for the next 2 years, Uncle Sam. And yes, I want unemployment compensation for the next 2 years. Thank you very much. And incidentally, I want cash. Give me $5,000 cash for the next 2 years. That is all in this system. It expands it greatly. That is the reason why the Congressional Budget Office says over the next 10 years it is going to cost $6 billion. At the appropriate time, I will be making a budget point of order that it is not paid for. I am going to make a pay-go point of order. For the information of my colleagues who are very confused on budget points of order, I have used committee allocation points of order. I could use that on this one, or I could use pay-go. Most of the time I have used committee allocation. I may start using pay-go so people become more familiar with it. I understand people are in favor of pay-go. I would like for them to become more familiar with that particular budget point of order. We will be making it. This amendment also increases the wage assistance that Senator Grassley mentioned, which is supposed to be for older workers who might have a hard time being retrained, down to 40 years. So all they have to do is work for 26 weeks and then we are going to give them wage assistance, wage insurance. How socialistic do you have to get? People come to this floor and say, I believe in the free enterprise system, but if you have a change in jobs, we want the Federal Government to come in and give you your wage difference. We want to make up the difference. Oh, we are going to take care of your health care for the next 2 years. Yes, we are going to give you unemployment compensation for 2 years. Everybody else in the country has 26 weeks. But since you have determined maybe yours is because of overseas competition, we are going to give you 2 years. I don't think it is affordable. I don't think it makes sense. I think it was crafted in a way to maybe buy votes. I look at these 57 pages and I am saying: Why don't we just call this an entitlement expansion? Let's expand all these programs. Let's tax and spend. How are we going to pay for it? It says we will do something with the earned-income tax credit. We will get those undocumented workers. Joint Tax says that doesn't count. Joint Tax says that is a technicality, and so you don't get scoring for that. And we use Joint Tax around here. I reserve the remainder of my time.

Mr. NICKLES. How much time remains on both sides?

Mr. NICKLES. Will the Senator yield me the remainder of the time?