William Roth

Mr. ROTH

Mr. ROTH. Madam President, let me just point out that as far as the so-called 15 percent is concerned, the Comptroller General said that the President's proposal does nothing to alter the imbalance between the program's tax receipts and benefits payments. It has been cash deficits since 1992, and remains a cash deficit even with the new Treasury securities. Thus, the President's proposal does provide additional claims on the Treasury, not additional cash to pay benefits. Let me make it very clear, under this resolution we intend to do three things: To strengthen and preserve Social Security, to reform Medicare, and to provide a major tax cut for the working people of America. Let me stress that this resolution has been carefully crafted by the chairman and others on the Budget Committee to do exactly that. That is our intent, and we shall follow through on the policies laid down in this resolution. I think the distinguished Senator from Louisiana may care to comment.

Mr. ROTH. Well, let me answer you in general, and then I will ask the distinguished chairman of the Budget Committee. But it is our position that there are adequate funds both to provide reform of the Medicare program, to ensure its solvency in the long term, as well as to provide for a tax cut and, of course, protect and strengthen Social Security. As to the specifics, I yield to my distinguished colleague. Mr. KENNEDY addressed the Chair.

Mr. ROTH. I yield 10 minutes to the distinguished Senator.

Mr. ROTH. I say to my distinguished colleague that if there are surpluses in the budget, they could be used for Medicare.

Mr. ROTH. If I understand your question, no. If we fail to make a tax cut, I don't see that in and of itself being considered a tax increase.

Mr. ROTH. Madam President, I send an amendment to the desk and ask for its immediate consideration.

Mr. ROTH. Madam President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. ROTH. Madam President, this amendment is sponsored by myself, Mr. Breaux, Mr. Frist, Mr. Kerrey, Mr. Gramm, Mr. Domenici, Mr. Nickles, Mr. Grassley, and Mr. Hatch. Madam President, one of the most important bipartisan efforts we will undertake in the months ahead will be to address the challenges confronting the Medicare program--a program whose reach and importance in the lives of Americans cannot be overstated. In years past we have looked at the demographics, studied the statistics, and struggled with a sense of vulnerability concerning Medicare and its future. Our population is aging. Health care costs seem to be growing exponentially. New and necessary technologies are becoming more expensive. And the financial base of the Medicare program provided by working Americans is shrinking in proportion to the number of seniors who depend on it. In less than 10 years, the population of Medicare beneficiaries will begin growing at a rate unseen in the program's history. In the past, the Medicare population has grown by about 1 percent a year. Beginning very soon, that growth rate will begin to double. In just 10 years, the Medicare program will be required to serve a population that is 20 percent larger than it is today--that is, 46 million seniors--and at that point the baby-boom generation will have only just begun to retire. Concerning the growth in the cost of health care services, Gene Steuerle of the Urban Institute recently testified before the Finance Committee that an average couple retiring now receives about $250,000 in lifetime Medicare benefits. Once the baby-boom generation is in full retirement, that amount will double. As a result, we will need to dedicate a larger and larger portion of the Nation's budget to pay for Medicare. Medicare is expected to consume an expanding share of the Nation's economy. In 1998, Medicare spending was an estimated 2.6 percent of the gross domestic product. It is projected to grow to $518 billion--or 3.5 percent of GDP--in 2010. By 2030, Medicare is forecasted to grow to $2.2 trillion, representing 5.9 percent of the GDP. It is good news that people are living longer, that they are spending almost a decade more in retirement than they were when the Medicare program began. These are demographics we have worked long and hard to bring to pass and we should celebrate them. However, these were, and continue to be, serious challenges to the Medicare trust fund. The balance in the Part A Hospital Insurance Trust Fund is declining. The end-of-year balance began to drop in 1995, when payments from the trust fund began to exceed income to the trust fund. The Balanced Budget Act of 1997 helped to delay the bankruptcy of the trust fund for a few years, but it will still occur in our lifetimes if something is not done now. As I said, each of these represents a serious concern, Madam President. But as of late, there appears to be a growing sense of optimism that we can take the favorable economic conditions our Nation is enjoying and, with bipartisan leadership, we can find long-term solutions to these pressing challenges. Not only is there consensus on both sides of the aisle that something must be done, but there is growing confidence that something can be done. An important component of the answer, we have come to see, rests in the potential of a strong economy and with the willingness of the American people. Toward meeting the challenges confronting Medicare, we must be guided by five specific criteria: First, our efforts, if they are to succeed, must have bipartisan support, and they will require leadership from the White House. President Clinton must articulate his strategy for securing and strengthening the Medicare program. Second, we must assure that the measures we adopt do not undermine the economic growth our Nation needs to continue providing jobs, opportunity, and security for Americans now and in the future. Third, we must see that our policies are fair, that those who are being called upon to strengthen the system in the short term have the confidence of knowing that the system will be there for them in the long run. Fourth, reform measures must be holistic in nature, taking into account the challenges we have to preserve and strengthen Social Security and to coordinate other programs that can serve the same constituency benefited by the Medicare and Social Security programs. Fifth, our reform efforts must find acceptance with the American people. They must take what has been a good program and make it better--make it better by making it financially sound and easily accessible to those who depend on it. I am hopeful that the President will provide the genuine leadership required to address the future of Medicare. I encourage him and his administration to come work with us on the Finance Committee. We look forward to working with them. Certainly there are few issues as importnt as this one. It demands our immediate attention, and the best effort we have to offer. Our work must go beyond the few items he included in his budget. It must take into account the long-term needs of the program, a careful analysis of benefit expansion, such as pharmaceutical drugs, and other concerns. We must look at how we can best serve the Medicare program in a way that the reforms we offer will positively affect Medicaid. Too often lost in the debate over Medicare reform is the direct impact that Medicare changes will have on Medicaid. These two programs are most obviously linked through the 5.4 million low-income elderly and disabled individuals who are eligible for both. For this dually eligible population, Mediaid essentially serves as a source of wraparound benefits, providing among other important services nursing home care and prescription drugs. In addition, nearly 600,000 low-income Medicare beneficiaries receive Mediaid financial support to meet Medicare's cost-sharing requirements. Together, these six million individuals represent 16 percent of the Medicare population, but they consume 30 percent of all Medicare spending and 35 percent of all Medicaid spending. Medicare reform proposals that would impact these low-income populations must be very carefully undertaken to avoid simply shifting costs or responsibilties from one program to the other. As we face the challenges of reforming the Medicare program, we must explore opportunities to substantially improve the health care experiences of these dually eligible populations. Currently, efforts to coordinate the services covered by the two programs are stymied by barriers to integration. These barriers include the need for complicated waivers, arbitrary restrictions on mingling Medicare and Medicaid dollars, and difficulties in coordinating program oversight. A reform process undertaken by this Senate presents an opportunity to better meet the needs of a very vulnerable population. Immediately after passage of this budget, I will begin, as chairman of the committee that has jurisdiction over the Medicare and Medicaid programs, the process of developing a bipartisan, consensus proposal for real Medicare reform. In developing this plan, the Finance Committee will conduct a series of hearings to take testimony from Medicare consumers, trustees, providers, and other experts who are intricately involved with this program and who are in a position to make worthy recommendations on how to proceed with improving the Medicare program. We will indeed carefully study the recommendations of the bipartisan Commission on the Future of Medicare led by Senator Breaux. Senator Breaux and the other members of the bipartisan Commission on the Future of Medicare worked very hard and committed a great deal of time during the past year to try to find a solution to the impending Medicare crisis. They deserve our appreciation for their efforts. The discussions that they had has certainly furthered the Medicare debate and will be invaluable to us as we proceed with this important work. In addition to these measures, the committee will also take into consideration the many concerns and proposals of Senators--on both sides of the aisle--for improving this program which is so important for all of those we represent and are here to serve. Our effort to lay a solid foundation for the future of Medicare will be a major undertaking. I believe that the budget resolution we are considering now provides the necessary framework. The budget committee has set aside on-budget surplus funds of up to $133 billion that--if needed--can be used for Medicare reform, including prescription drug benefits. Once we have achieved a bipartisan agreement on a comprehensive Medicare plan, we may indeed find it necessary to revisit this budgetary framework--and I expect that we would be able to obtain the necessary votes to proceed with such adjustments. I strongly urge my colleagues to set aside attempts to legislate Medicare reform in the budget resolution. This is not the time or place for such a complex undertaking. Instead, I urge that we work together over the next few months on a Medicare reform plan. Such a plan should provide the nation's current and future seniors the assurance of health care that is comprehensive in benefits, superior in quality and financially sustainable. This is important to them. It is important to the future. And it is something that can and will be done. I yield the floor.

Mr. ROTH. I yield to the Senator from New Jersey.

Mr. ROTH

Mr. ROTH. Mr. President, I rise today in support of the Ashcroft amendment. This Sense of the Senate expresses the Senate's opposition to the Federal government directly investing the Social Security Trust Funds in the nation's financial markets, that is, making the Federal government or Social Security the owner of stocks and bonds. The risks of this kind of investing are well known, but bear repeating. Put simply, many believe, with good reason, that there would be a strong, irresistible temptation by future Administrations or Congresses to invest according to political considerations, rather than seeking the best rate of return. Let us consider just a few of these ways. For example, some stocks might be avoided because of public policy concerns. For example, last year the State of Minnesota decided to divest tobacco stocks from its state employee pension fund, losing $2 million in the process. Others might want to invest in particular businesses to create or protect jobs. But even if proponents of direct Federal investing are right that firewalls could be built to insulate Trust Funds investments from political considerations, such investing would almost certainly be contentious. Americans are very diverse, with diverse views, and groups would almost certainly organize to bring those views to bear on Trust Fund investing. Frankly, we need to solve Social Security's future problems, not add new ones. Nonetheless, there is broad, bipartisan agreement that the future of Social Security may be improved by reaping higher returns from investments in the nation's securities markets, in stocks and bonds. The President has generally endorsed this approach, as well as many lawmakers, economists and other policy experts, and millions of average Americans. The issue is how to conduct such investments. One promising approach is personal retirement accounts. While proposals differ, personal retirement accounts would provide each working American with an investment account he or she owns. With even conservative investment in stocks and bonds and the power of compound interest, personal retirement accounts can provide a substantial retirement nest egg. Indeed, I have introduced legislation, S. 263, the Personal Retirement Accounts Act of 1999, that would get accounts up and running with a portion of the budget surplus. Still others may have ideas to secure the benefits of investments for Social Security. In my view, the more ideas the better regarding investment--as long as the Federal government is not the owner of record. Amendment No. 147 (Purpose: To use any Federal budget surplus to save Social Security and Medicare first)

Mr. ROTH. Mr. President, I rise in support of the Abraham amendment. This amendment expresses the sense of the Senate that the Social Security surpluses be used only for preserving and protecting Social Security, and that new procedural safeguards be enacted to ensure this outcome. The Abraham amendment provides an important first step in saving Social Security, and is an excellent occasion to reflect on the issues before the Congress in preserving Social Security for the long-term. Social Security's financial problems of Social Security are well known, but bear repeating. In just 15 years, in 2013, Social Security benefit payments will exceed revenues, and Social Security will need to tap its Trust Fund. Today's Trust Fund is relatively small, equal to about a year-and-a half benefits and intended as a cushion in an economic downturn. However, the Trust Fund will swell over the next 15 years because of payroll tax surpluses and interest. Between 2013 and 2032, Social Security Trust Fund will need to spend over $6 trillion for benefits. But the Trust Fund is simply a claim on the U.S. Treasury. Future taxpayers--our children, our grandchildren, even our great grandchildren--will have to pay off this debt. Even so, the Trust Fund will be empty in 2032, and Social Security can pay only 75 percent of benefits from annual revenues. Worse yet, the President has proposed to add even more debt to the Trust Fund. Although the President claims his plan would extend solvency to 2050, in fact the President would simply commit another $24 trillion of future Federal budgets to Social Security. David Walker, head of the General Accounting Office, delivered this stark assessment of President's proposal at a February 9th Finance Committee hearing: ``It would be tragic indeed if [the president's] proposal, through its budgetary accounting complexity, masked the urgency of the Social Security solvency problem and served to delay much-needed action.'' Most traditional fixes won't work, either. Social Security has faced financial crises before--in 1977 and again in 1983. Both times, the biggest part of the solution was a hike in payroll taxes. The result? Today, 80 percent of American families pay more in payroll taxes than income taxes (with the employer share factored in). And let's remember, Social Security taxes are on the first dollar of income--no deductions, no exemptions. Mr. President, there is broad bipartisan agreement that there may be another way to preserve and protect Social Security benefits--personal retirement accounts. While proposals differ, personal retirement accounts would provide each working American with an investment account he or she owns. With even conservative investment in stocks and bonds and the power of compound interest, personal retirement accounts can provide a substantial retirement nest egg. As Senator Pat Moynihan, my colleague on the Senate Finance Committee, has pointed out, with annual deposits equal to just 2 percentage points of the current payroll tax, ``A worker who spent 45 years with the Bethlehem Steel Company could easily find himself with an estate of half a million dollars. The worker could pass on that wealth to his or her heirs.'' How remarkable! Personal retirement accounts embody other enduring American values as well. Creating these accounts would give the majority of Americans who do not own any investment assets a new stake in America's economic growth--because that growth will be returned directly to their benefit. More Americans will be the owners of capital--not just workers. Creating these accounts may encourage Americans to save more. Today, Americans save less than people in most countries, and even this low savings rate has declined in recent years. Personal retirement accounts will demonstrate how even small personal savings grow significantly over time. Creating these accounts will help Americans to better prepare for retirement. According to one estimate, 60 percent of Americans are not actively participating in a retirement program other than Social Security. Indeed, most Americans have little idea of what they will need in order to retire when and how they want. Personal retirement accounts can help Americans--particularly Baby Boomers--better understand retirement planning. And these accounts may point the way to a more flexible Social Security program. Today, Social Security is a ``one-size-fits-all'' program. People receive a fixed benefit based on earnings and the number of years worked, with the earliest benefits available at age 62. But if an individual takes early retirement but still wants to work, Social Security cuts his or her benefits. Personal accounts can be crafted to give individuals more control over retirement decisions, and eliminate the penalty for working. Setting up a personal retirement accounts program will be a big job. Who will hold, manage, and invest the accounts? How much will it cost to run the program? What kinds of investment choices should be allowed? How to finance the accounts? The White House Conference should tackle each of these issues. Fortunately, there are proven models, such as the Federal Thrift Savings Plan, a pension savings and investment plan for Federal employees. Indeed, I have introduced legislation, S. 263, the Personal Retirement Accounts Act of 1999, that would get accounts up and running with a portion of the budget surplus to answer just these questions. Mr. President, personal retirement accounts have one other big promise. Poll after poll find that Social Security is the most popular Federal government program, deservedly so. But the same polls also show that many Americans, particularly young Americans, doubt they will receive benefits when they retire. Personal retirement accounts can provide the accountability and assurances that Americans are asking for, and restore the confidence of the American people in Social Security.

Mr. ROTH

Mr. ROTH. Mr. President, I rise today to ask that my name be added as a cosponsor to S. 625, the Bankruptcy Reform Act. It is clear that a reform of our consumer bankruptcy laws is called for. The United States is at the height of its prosperity, yet in these good economic times bankruptcy filings are at an all time high. Of course, no matter how well the Nation is doing as a whole, individuals and individual families may need to fall back upon bankruptcy protection. The reforms included in the bipartisan Grassley- Torricelli proposal will not punish legitimate uses of the bankruptcy codes. Rather this bill will root-out what I agree are its illegitimate uses, and assert rights of consumers filing for bankruptcy. S. 625 also extends or authorizes several necessary bankruptcy judgeships, including one in Delaware, and reenacts farm bankruptcy laws among its provisions. This bill also makes changes in the way that tax claims are handled in bankruptcy. As chairman of the Finance Committee, I have a strong interest in these tax-related provisions. As Senator Grassley mentioned when he introduced the bill, we both expect to modify a number of the provisions at the appropriate time. Mr. President, I am glad to join my friend and fellow Delaware Senator, Joe Biden, as a cosponsor of the Bankruptcy Reform Act. I look forward to its consideration on the Senate floor in the coming months.

Mr. ROTH

Mr. ROTH. Mr. President, I rise to oppose the amendment offered by my distinguished colleague from Arkansas, Senator Hutchinson. Like him, I am deeply concerned about the issues he is attempting to address with this legislation--human rights violations and security concerns involving China, particularly the theft of scientific information from Los Alamos. I am concerned about China's military build-up, its continuing threats of force against Taiwan, and what is taking place in Tibet. I believe that appropriately addressing these issues is vitally important and I look forward to working with Senator Hutchinson and others to do so. However, as chairman of the Finance Committee, I must oppose both the method and timing of this approach. It not only fails to allow the Senate to raise and address the sensitive issue of trade relations with China in the appropriate forum of the Finance Committee--a forum where the merits of such an amendment can be carefully studied and weighed against the best interests of our nation--but this approach also has tremendous foreign policy implications that need careful scrutiny. Let me address the first concern. Trade negotiations and trade agreements go to the core of the Finance Committee's jurisdiction over trade matters. Together with Senator Moynihan, I as Chair, and he as ranking member, are responsible, not only for the Committee's substantive role in the trade policy process, but also are the guardians of its prerogatives. The Committee was the first formed in the United States Congress when tariffs were the central source of revenue to a still new republic. Trade and tariff policy remain central to the Committee's role in the legislative process. For example, the Finance Committee reported out a trade bill the first day of the 106th Congress. In addition, at my instigation, the Committee has launched a comprehensive review of America's trade policy, including the role that China's accession to the WTO would play in our trade policy. Unfortunately, there has been no attempt to offer this legislation and lay it before the Finance Committee for its review. Nor has there been any attempt by its supporters to engage with the Committee in the process of our review of America's trade policy. Instead, this amendment seems to be driven by the emotions of the moment toward a form of legislative anarchy. It has gone around the Finance Committee in a way that provides no time for the deliberations for which the Senate is designed. It attempts to move legislation of monumental importance to our trade and foreign policies on the back of a supplemental appropriations measure principally designed to help impoverished countries in Central America and to support the constructive role Jordan has played in the Middle East peace process. Beyond these procedural concerns, I am deeply concerned about the underlying intent of this amendment. Is this bill being raised at this time out of a concern that our trade negotiators will not strike a deal that serves our commercial interests in China? Or is this bill being offered simply to hinder those negotiations in response to recent allegations of spying or the theft of secrets from Los Alamos? I ask those questions because there seems to be a rush to pass this measure in advance of the visit of Zhu Rongji to the United States. It rests on the assumption that the United States will reach an agreement on WTO accession and that, by virtue of that deal, China will enter the WTO the day after Zhu leaves. That is simply wrong. Everything we hear of the negotiations is that it will be difficult even to reach an agreement on U.S. access to China's market. I want to emphasize to my colleagues that a deal on market access, even if it is reached in time for the summit, is only one step along the road to China's accession to the WTO. The more difficult negotiations on when and how China will agree to be bound by the basic rules of the WTO remain. No protocol of accession will be approved until those negotiations are complete. In other words, there is no reason to act precipitously on this measure. There is no reason to subvert the normal legislative processes to secure passage of this amendment at this time. Indeed, the Finance Committee is actively at work on trade matters as part of the trade policy review I have initiated. That is the appropriate venue for the initial discussion of this measure and any necessary refinements to my colleague's approach. China has been the subject of intense concern to the Finance Committee. We have made it clear at every stage that constructive trade relations with China must offer concrete assurances of U.S. market access consistent with our national interest. We have also made it clear that there must be no rush to judgment or attempt to offer a politically-motivated deal to the Chinese simply because the White House wants a foreign policy ``deliverable'' to cap the upcoming summit meeting. My impression from our discussion with Ambassador Barshefsky is that, while there has been considerable progress in recent days, there is still a considerable distance to go even before the United States could agree to a package on market access, much less the more difficult process of negotiating the actual protocols of accession. Beyond these reasons, Mr. President, I oppose Senator Hutchinson's amendment on China's accession to the World Trade Organization because of the damaging precedent it would set for all future WTO accessions. It would dramatically undercut the United States' consistent position-- under both Republican and Democrat presidents--that accession to the WTO and its predecessor organization, the GATT, is not a political decision, but is one we as Americans base simply on another country's willingness to be bound by the same rules that govern our other trading partners in the world trading system. It is quintessentially a commercial agreement that should be judged on its merits as such. I also oppose this amendment as a matter of Senate procedure. I have always objected to attempts to legislate on appropriations measures. Offering substantive amendments to appropriations bills subverts the normal process of the Senate by which legislation is introduced, moved through the committee of jurisdiction with expertise on the matter, and moved to the floor. Attempts to modify substantive law on the back of appropriations bills often results in the delay of the appropriations themselves. Whether my colleagues support the current supplemental or not, I think we would all agree that the bill deserves to rise or fall on its own merits, not as a result of extraneous and unrelated matters. For all these reasons, I urge my colleagues to vote against Senator Hutchinson's amendment.

Mr. ROTH

Mr. ROTH. Mr. President, one question many Americans ask themselves is this: Will I have enough to live on when I retire. According to a study published by the Employee Benefit Research Institute, about one third of Americans are not confident that they will have enough to live on in their retirement years. Social Security is an important component of an individual's retirement income, but savings--whether through personal accounts or through employer-provided retirement plans--will help provide for a better life at retirement. Another troubling factor is that if you are employed by a small business you are far less likely to be eligible for a retirement plan. There must be ways to get more Americans interested in providing for their retirement years and to get small businesses interested in providing retirement benefits for their employees. This is a concern that spreads across party lines; everyone knows that there must be incentives for promoting retirement savings. Despite these concerns, we have a strong system of tax favored savings plans in place. For savings through the workplace, there are 401(k) plans, 403(b) plans and 457 plans, each of which can be sponsored by different types of employers. For individual savings, there is either the traditional IRA or the Roth IRA. And all these different savings vehicles have different limits on how much individuals can save. However, our current system can do more and the limitations that we placed on retirement savings in times of budgetary restraints should be re-examined now. In addition, we should capitalize on some of the successful savings incentives and use them to broaden our savings base. Both Senator Baucus and I are pleased to introduce a new bill, the Retirement Savings Opportunity Act of 1999, which will build upon the strengths of our current system, yet provide new opportunities for people to save for retirement. In addition, this bill would also increase the incentives that would help small businesses start and maintain retirement plans for its employees. These are issues that Senator Baucus is very concerned about and I join him in providing these important incentives for small businesses. The provisions of this bill are as follows: Increase IRA dollar limit. The maximum contribution limit for IRAs (both traditional IRAs and Roth IRAs) is $2,000. This limit, which has been in place since 1982, has never been indexed for inflation. If the IRA limit were indexed for inflation it would be close to $5,000. In this bill, the limit for all IRAs (both traditional IRAs and Roth IRAs) will be increased to $5,000 per year. In addition, this limit will be adjusted annually for cost of living increases, in $100 increments, so that the amount that taxpayers can save with an IRA will never again be reduced due to the impact of cost of living increases. It is important to remember who makes IRA contributions. An estimated 26 percent of American households how own a traditional IRA, according to a 1998 survey by the Investment Company Institute. In 1993 (the most recent year for which comprehensive aggregate data is available) 52 percent of all IRA owners earned less than $50,000. This same group made about 65 percent of all IRA contributions in 1985. We know that people at all income levels are limited by the $2,000 cap on contributions. For example, IRS statistics show that the average contribution level in 1993 for people with less than $20,000 in income was $1,500. Clearly this means that there were lower income people who wanted to make contributions of more than the $2,000 limit. In addition, IRAs are the only tax-favored savings vehicle for many taxpayers. According to the Bureau of Labor Statistics, only 48 percent of individuals who work in small business establishments were eligible for any retirement plan in 1994. This is a problem that both Senator Baucus and I try to address elsewhere in this bill by providing greater incentives to business for establishing employer-sponsored retirement savings plans. However, regardless of the incentives that we may provide, not all employers will establish retirement plans for their employees. Furthermore, not all employees will stay with one employer long enough to receive a benefit. Under current law, the maximum amount that an individual can save is too low to provide adequate savings for retirement. In order to spur an increase in savings, we believe that an increase in the IRA limit is warranted. Increase IRA income caps. There are different and confusing caps on contributions to traditional and Roth IRAs. They are as follows: Tax deductible contributions to traditional IRAs. If an individual is an active participant in an employer provided pension plan, the amount of a deductible contribution that an individual can make is confusing. First of all the $2,000 contribution amount is reduced if the adjusted gross income of the taxpayer is over $51,000, if the taxpayer is filing a joint return. If the taxpayer is a single or head of household filer, the $2,000 contribution amount is reduced if adjusted gross income exceeds $31,000. These income limits are scheduled to increase annually until the year 2007 when the joint filer limit will be $80,000 and the single and head of household filer limit will be $50,000. Married taxpayers who file separately are precluded from making deductible contributions if their adjusted gross income is above $10,000, unless the couple has not lived together for the entire year. Finally, if an individual is not an active participant in an employer's plan and the individual's spouse is, an individual is not able to make a deductible contribution to an IRA if the couple's income is $150,000 or above. These are too many restrictions. The bill will eliminate these conflicting and confusing income limits for deductible IRAs. What this will mean is that all individuals who have earned income can make full deductible contributions to a traditional IRA. In addition, a homemaker without earnings will be able to make IRA contributions. Contributions to Roth IRAs. A full $2,000 contribution can only be made to a Roth IRA if a single taxpayer's adjusted gross income is less than $95,000 and married taxpayer's adjusted gross income is less than $150,000. If a taxpayer is married and files separately from his or her spouse, the taxpayer cannot make a Roth IRA contribution if his or her adjusted gross income exceeds $10,000, unless they live apart for the entire year. The bill will eliminate these income limits for Roth IRA contributions, so that all taxpayers can make a contribution to a Roth IRA. Remember, however, that a taxpayer cannot make a full contribution to a Roth IRA and also make a full contribution to a traditional IRA; amounts contributed to one type of IRA reduce the amounts that can be contributed to the other type of IRA. Conversion to Roth IRAs. In order to convert to a Roth IRA, an individual's adjusted gross income must not exceed $100,000 regardless of whether the individual is married filing jointly or single. Married individuals who are filing separately cannot convert to a Roth IRA, unless they live apart for the entire year. The bill will raise the income cap for conversions to $1 million. The current income limitations relating to IRAs are needlessly complex and are confusing to taxpayers. As we heard at the recent Senate Finance Committee hearing on retirement savings, these limits are confusing to taxpayers with the result that taxpayers do not fully utilize these products. By eliminating these income limitations, which affect only a small percentage of taxpayers, we can increase the use of IRAs. When Congress restricted the deductibility of IRA contributions in 1986, the IRS reported that the level of IRA contributions fell from $38 billion to $14 billion in 1987. Will taxpayers increase the amount of their savings to IRAs if the savings opportunities were increased? According to a 1997 survey conducted on behalf of the Savings Coalition, increasing the IRA limits would result in more savings for retirement. Sixty-four percent said that they would increase the rate of their personal savings with IRAs. Economic studies also have shown that increasing the tax incentives for savings should result in substantial increases in savings due to increases in the net return. See, for example, Lawrence H. Summers, ``Capital Taxation and Accumulation in a Life Cycle Growth Model,'' American Economic Review, 71, September 1981. The staff of the Joint Committee on Taxation noted in its description of Present Law and Background Relating to Tax Incentives for Savings prepared for the Finance Committee hearing (JCX-7-99), there are many reasons for this increase in savings due to increased limits, including the psychological incentives to save and the increased advertising by banks and other financial institutions of tax-benefitted savings vehicles may influence people's savings decisions. Increase other dollar-based benefit limitations. Currently, the maximum pre-tax contribution to a 401(k) plan or a 403(b) annuity is $10,000. In addition, the maximum contribution to a 457(b) plan (a salary deferral plan for employees of government and tax exempt organizations) is $8,000. Finally, the maximum contribution to a SIMPLE plan (a simplified defined contribution plan available only to small employers) is $6,000. These limits are indexed for cost of living increases. There has traditionally been a differential in contribution limits among the various types of plans: IRAs (which are individual plans) having the lowest limits; SIMPLE plans having a greater limit-- but not as much as a 401(k) plan; and 401(k) and 403(b) plans having the highest limits, but the greatest number of regulations. Since the IRA limit will be raised to $5,000, the bill will increase limits for 401(k) and 403(b) plans to $15,000 and for SIMPLE plans to $10,000; thereby continuing the differential. The limit for 457(b) plans for government employees will increase to $12,000. As stated before, there is a clear need to increase the IRA limit above the current $2,000 contribution level. But increasing that level without increasing the savings opportunity levels for employer provided plans will result in some business owners eliminating their employer provided plans and saving only for themselves in an IRA. By increasing the employer provided plan limits, business owners will still have the incentive to maintain a plan for employees if only to avail themselves of the higher plan limits for employer provided plans. This does not mean that business executives can automatically take advantage of these higher contribution limits. First, it is important to remember that contributions can only be made on the first $160,000 of compensation. In addition, in order for a business owner or other highly compensated employee to take advantage of these limits, a number of non-highly compensated employees must also benefit under the plan. An example should show how these non-discrimination rules work. In a company, there is one person--let's say the owner of the business--who makes over $160,000 and that person wants to contribute the full $15,000 to the company 401(k) plan. He could only contribute the full $15,000 if (i) low paid employees as a group contribute 8% of their compensation to the 401(k) plan, (ii) all low paid employees receive a fully vested contribution from the employer equal to 3% of their compensation or (iii) all low paid employees would be eligible to receive matching contributions of 100% of their contribution to the 401(k) plan of their first 3% contribution and 50% of their next 2% of compensation contribution. Clearly, business owners and high paid employees cannot benefit with this new higher contribution limits unless the amount of savings that low paid people make--either on their own or with the help of the employer--increases. Roth 401(k) or 403(b) plan. We have heard testimony before the Finance Committee that the results of the first year of the Roth IRA has been successful. And we have all seen the television and print ads touting the benefits of the Roth IRA. The opportunity for tax-free investment returns has clearly caught the fancy of the American people. In less than five months after the Roth IRA became available, the Investment Company Institute estimated that approximately 3 percent of American households owned a Roth IRA. In addition, the survey found that the typical Roth IRA owner was 37 years old, significantly younger than the traditional IRA owner who is about 50 years old, and that 30 percent of Roth IRA owners indicated that the Roth IRA was the first IRA they had ever owned. This bill will harness the power of the Roth IRA and give it to participants in 401(k) plans and 403(b) plans. Companies will have the opportunity to give participants in 401(k) plans and 403(b) plans the ability to contribute to these plans on an after-tax basis, with the earnings on such contributions being tax-free when distributed, like the Roth IRA. More than the maximum Roth IRA contribution amount can be contributed under this option; employees would be limited to the maximum 401(k) or 403(b) contribution amount. The regular non-discrimination rules that apply to 401(k) and 403(b) plans will also apply to these after-tax contributions. Consequently, in order for business owners and highly compensated employees to take full advantage of these new savings opportunities, low paid employees must also benefit. The regular distribution rules (rather than the Roth IRA distribution rules) would apply to these types of plans. However, these after-tax accounts could be rolled into a Roth IRA when the individual retires. And unlike Roth IRAs, there would not be an opportunity for 401(k) or 403(b) plan participant to convert their current 401(k) and 403(b) account balances into the new non-taxable balances. Catch-up contributions. This provision will provide an additional savings opportunity to those individuals who are close to retirement. According to a study by the Employee Benefit Research Institute, older workers tend to have their contributions constrained by maximum limits which are either plan limits on how much can be contributed or legal limits on how much can be contributed. EBRI believes that this is probably due to the fact that they are more focused on retirement and are thus more likely to contribute at a higher level. We all know that there can be other pressing financial needs earlier in life--school loans, home loans, taking time off to raise the kids--which limit the amount that we may have available to save for retirement. The closer that we get to retirement, the more we want to put away for those years when we are not working. However, the current law limitations on how much may be contributed to tax qualified savings vehicles may restrict people's ability to save at this time in their lives. The bill will give those who are near retirement--age 50--the opportunity to contribute an additional amount in excess of the annual limits equal to an additional 50% of the annual limit. Catch-up contributions will be allowed in 401(k) plans, 403(b) plans, 457(b) plans and IRAs. For IRAs, this will mean that someone age 50 could contribute $7,500 each year rather than $5,000. For employer provided plans, the catch contribution will be available to anyone who is age 50 or above and who is limited in the amount that he or she can contribute to the plan by a plan limit, the maximum contribution limit or the nondiscrimination rules that apply to highly paid employees. This additional catch-up contributions to employer provided plan will not be subject to the normal non-discrimination rules for other contributions. Consequently, if a highly paid employee is limited by the nondiscrimination rules to only contributing $9,000 to a 401(k) plan, the employee will be able to contribute an additional $7,500 annually in the years after he attains age 50. This way, an employee is able to make contributions to provide for his or her retirement security when he or she is best able to afford to make these contributions and not be limited because other younger employees do not make contributions. Small business incentives. According to the most recent Bureau of Labor Statistics figures, only 48 percent of employees in a small business are likely to be covered by any retirement plan, while 78 percent of employees of large or medium size businesses are likely to be covered. Since employees of small businesses are less likely to be covered by a retirement plan, we needed to find incentives for small businesses to want to establish plans. This is an issue that Senator Baucus is particularly interested in and these small business incentives represent some of his ideas on how to expand the small business market for retirement plans. The bill will assist small businesses in establishing retirement plans in the following ways: Tax credit for start-up costs. A non-refundable tax credit of up to $500 would be available to small businesses with up to 100 employees to defray the administrative costs of establishing a new retirement plan. This credit would only be available for the first three years of operation of the plan. This credit could be carried back for one year or forward for 20 years (the general business credit carryover rules). Tax credit for contributions. A non-refundable tax credit equal to 50% of employer contributions made on behalf of non-highly compensated employees would be available to small businesses with 50 or less employees during the first 5 years of a plan's operation. Only contributions of not more than 3% of compensation are eligible for the credit. This credit could be carried back for one year or forward for 20 years. Small business defined benefit plan. This plan will provide employees of small businesses with a secure, fully portable, defined retirement benefit without imposing the complex rules and regulations of normal defined benefit plans. This plan, called the Savings Are For Everyone (SAFE) plan, will provide a fully vested benefit that is fully funded, using conservative actuarial assumptions. The benefit will be based on an employee's salary and years of service and could be structured so that years of service prior to the establishment of the plan can be used in determining the benefit--which helps older, long service employees. The SAFE plan is meant to complement the successful SIMPLE defined contribution plan that is available for small businesses. Elimination of 25 percent of compensation limitation. Currently, the maximum amount that can be contributed to a defined contribution plan on behalf of an individual participant is the lesser of $30,000 or 25 percent of compensation. This includes both employee contribution and any matching contributions or profit sharing contributions made by the plan sponsor. This bill will eliminate the 25 percent of compensation limit, so that the maximum contribution that is made on behalf of any individual is $30,000. With the additional savings opportunities provided for all employees under this bill, it would be much more likely for employees-- especially low paid employees--to exceed this 25 percent of compensation limitation. This change will make sure that those employees will not be limited in fully providing for their retirement security, especially, if the employer also contributes toward the employee's retirement plan. Tax deduction for employee deferrals. Under current law, an employee pre-tax deferral is treated as employer contribution and is subject to the limits on how much an employer can take as a tax deduction on qualified plan contributions. With the increased amount of pre-tax savings that we anticipate employees will make after enactment of this bill, there is a concern that the maximum limit on deductible contributions will be reached. This bill will permit employer to fully deduct any employee pre-tax deferrals, without regard to the maximum limit on deductions. Other employer contributions to a plan, however, will continue to be subject to this deduction limitation. IRA contributions to an employer plan. The bill gives employers the opportunity to accept traditional IRA contributions as part of their regular employer plan. In addition, it gives employees the ability to have IRA contributions made directly to the employer-sponsored IRA as a payroll deduction. One advantage of using an employer plan as an IRA account is that the administrative costs in an employer plan are usually much less than the costs in a privately maintained plan. Another advantage is that contributions to the IRA will be made on a payroll deduction basis, which makes it more likely that the contributions will be made. Full funding limit increase. Defined benefit pension plans are also an important source of retirement income. Currently, amounts that can be deducted as contributions to a pension plan is limited to the lesser of the actuarial funding requirement amount or 150 percent of the current liability amount of the plan. The current liability amount does not take into account projected pension benefits. This 150 percent of current liability limitation is eliminated in this bill. This will result in better funded pension plans, since the articial limitation of 150 percent of current liability no longer applies. Both Senator Baucus and I hope that other Senators will join us in this effort to increase savings opportunities for all working Americans.

Mr. ROTH

Mr. ROTH. Mr. President, one question many Americans ask themselves is this: Will I have enough to live on when I retire. According to a study published by the Employee Benefit Research Institute, about one third of Americans are not confident that they will have enough to live on in their retirement years. Social Security is an important component of an individual's retirement income, but savings--whether through personal accounts or through employer-provided retirement plans--will help provide for a better life at retirement. Another troubling factor is that if you are employed by a small business you are far less likely to be eligible for a retirement plan. There must be ways to get more Americans interested in providing for their retirement years and to get small businesses interested in providing retirement benefits for their employees. This is a concern that spreads across party lines; everyone knows that there must be incentives for promoting retirement savings. Despite these concerns, we have a strong system of tax favored savings plans in place. For savings through the workplace, there are 401(k) plans, 403(b) plans and 457 plans, each of which can be sponsored by different types of employers. For individual savings, there is either the traditional IRA or the Roth IRA. And all these different savings vehicles have different limits on how much individuals can save. However, our current system can do more and the limitations that we placed on retirement savings in times of budgetary restraints should be re-examined now. In addition, we should capitalize on some of the successful savings incentives and use them to broaden our savings base. Both Senator Baucus and I are pleased to introduce a new bill, the Retirement Savings Opportunity Act of 1999, which will build upon the strengths of our current system, yet provide new opportunities for people to save for retirement. In addition, this bill would also increase the incentives that would help small businesses start and maintain retirement plans for its employees. These are issues that Senator Baucus is very concerned about and I join him in providing these important incentives for small businesses. The provisions of this bill are as follows: Increase IRA dollar limit. The maximum contribution limit for IRAs (both traditional IRAs and Roth IRAs) is $2,000. This limit, which has been in place since 1982, has never been indexed for inflation. If the IRA limit were indexed for inflation it would be close to $5,000. In this bill, the limit for all IRAs (both traditional IRAs and Roth IRAs) will be increased to $5,000 per year. In addition, this limit will be adjusted annually for cost of living increases, in $100 increments, so that the amount that taxpayers can save with an IRA will never again be reduced due to the impact of cost of living increases. It is important to remember who makes IRA contributions. An estimated 26 percent of American households how own a traditional IRA, according to a 1998 survey by the Investment Company Institute. In 1993 (the most recent year for which comprehensive aggregate data is available) 52 percent of all IRA owners earned less than $50,000. This same group made about 65 percent of all IRA contributions in 1985. We know that people at all income levels are limited by the $2,000 cap on contributions. For example, IRS statistics show that the average contribution level in 1993 for people with less than $20,000 in income was $1,500. Clearly this means that there were lower income people who wanted to make contributions of more than the $2,000 limit. In addition, IRAs are the only tax-favored savings vehicle for many taxpayers. According to the Bureau of Labor Statistics, only 48 percent of individuals who work in small business establishments were eligible for any retirement plan in 1994. This is a problem that both Senator Baucus and I try to address elsewhere in this bill by providing greater incentives to business for establishing employer-sponsored retirement savings plans. However, regardless of the incentives that we may provide, not all employers will establish retirement plans for their employees. Furthermore, not all employees will stay with one employer long enough to receive a benefit. Under current law, the maximum amount that an individual can save is too low to provide adequate savings for retirement. In order to spur an increase in savings, we believe that an increase in the IRA limit is warranted. Increase IRA income caps. There are different and confusing caps on contributions to traditional and Roth IRAs. They are as follows: Tax deductible contributions to traditional IRAs. If an individual is an active participant in an employer provided pension plan, the amount of a deductible contribution that an individual can make is confusing. First of all the $2,000 contribution amount is reduced if the adjusted gross income of the taxpayer is over $51,000, if the taxpayer is filing a joint return. If the taxpayer is a single or head of household filer, the $2,000 contribution amount is reduced if adjusted gross income exceeds $31,000. These income limits are scheduled to increase annually until the year 2007 when the joint filer limit will be $80,000 and the single and head of household filer limit will be $50,000. Married taxpayers who file separately are precluded from making deductible contributions if their adjusted gross income is above $10,000, unless the couple has not lived together for the entire year. Finally, if an individual is not an active participant in an employer's plan and the individual's spouse is, an individual is not able to make a deductible contribution to an IRA if the couple's income is $150,000 or above. These are too many restrictions. The bill will eliminate these conflicting and confusing income limits for deductible IRAs. What this will mean is that all individuals who have earned income can make full deductible contributions to a traditional IRA. In addition, a homemaker without earnings will be able to make IRA contributions. Contributions to Roth IRAs. A full $2,000 contribution can only be made to a Roth IRA if a single taxpayer's adjusted gross income is less than $95,000 and married taxpayer's adjusted gross income is less than $150,000. If a taxpayer is married and files separately from his or her spouse, the taxpayer cannot make a Roth IRA contribution if his or her adjusted gross income exceeds $10,000, unless they live apart for the entire year. The bill will eliminate these income limits for Roth IRA contributions, so that all taxpayers can make a contribution to a Roth IRA. Remember, however, that a taxpayer cannot make a full contribution to a Roth IRA and also make a full contribution to a traditional IRA; amounts contributed to one type of IRA reduce the amounts that can be contributed to the other type of IRA. Conversion to Roth IRAs. In order to convert to a Roth IRA, an individual's adjusted gross income must not exceed $100,000 regardless of whether the individual is married filing jointly or single. Married individuals who are filing separately cannot convert to a Roth IRA, unless they live apart for the entire year. The bill will raise the income cap for conversions to $1 million. The current income limitations relating to IRAs are needlessly complex and are confusing to taxpayers. As we heard at the recent Senate Finance Committee hearing on retirement savings, these limits are confusing to taxpayers with the result that taxpayers do not fully utilize these products. By eliminating these income limitations, which affect only a small percentage of taxpayers, we can increase the use of IRAs. When Congress restricted the deductibility of IRA contributions in 1986, the IRS reported that the level of IRA contributions fell from $38 billion to $14 billion in 1987. Will taxpayers increase the amount of their savings to IRAs if the savings opportunities were increased? According to a 1997 survey conducted on behalf of the Savings Coalition, increasing the IRA limits would result in more savings for retirement. Sixty-four percent said that they would increase the rate of their personal savings with IRAs. Economic studies also have shown that increasing the tax incentives for savings should result in substantial increases in savings due to increases in the net return. See, for example, Lawrence H. Summers, ``Capital Taxation and Accumulation in a Life Cycle Growth Model,'' American Economic Review, 71, September 1981. The staff of the Joint Committee on Taxation noted in its description of Present Law and Background Relating to Tax Incentives for Savings prepared for the Finance Committee hearing (JCX-7-99), there are many reasons for this increase in savings due to increased limits, including the psychological incentives to save and the increased advertising by banks and other financial institutions of tax-benefitted savings vehicles may influence people's savings decisions. Increase other dollar-based benefit limitations. Currently, the maximum pre-tax contribution to a 401(k) plan or a 403(b) annuity is $10,000. In addition, the maximum contribution to a 457(b) plan (a salary deferral plan for employees of government and tax exempt organizations) is $8,000. Finally, the maximum contribution to a SIMPLE plan (a simplified defined contribution plan available only to small employers) is $6,000. These limits are indexed for cost of living increases. There has traditionally been a differential in contribution limits among the various types of plans: IRAs (which are individual plans) having the lowest limits; SIMPLE plans having a greater limit-- but not as much as a 401(k) plan; and 401(k) and 403(b) plans having the highest limits, but the greatest number of regulations. Since the IRA limit will be raised to $5,000, the bill will increase limits for 401(k) and 403(b) plans to $15,000 and for SIMPLE plans to $10,000; thereby continuing the differential. The limit for 457(b) plans for government employees will increase to $12,000. As stated before, there is a clear need to increase the IRA limit above the current $2,000 contribution level. But increasing that level without increasing the savings opportunity levels for employer provided plans will result in some business owners eliminating their employer provided plans and saving only for themselves in an IRA. By increasing the employer provided plan limits, business owners will still have the incentive to maintain a plan for employees if only to avail themselves of the higher plan limits for employer provided plans. This does not mean that business executives can automatically take advantage of these higher contribution limits. First, it is important to remember that contributions can only be made on the first $160,000 of compensation. In addition, in order for a business owner or other highly compensated employee to take advantage of these limits, a number of non-highly compensated employees must also benefit under the plan. An example should show how these non-discrimination rules work. In a company, there is one person--let's say the owner of the business--who makes over $160,000 and that person wants to contribute the full $15,000 to the company 401(k) plan. He could only contribute the full $15,000 if (i) low paid employees as a group contribute 8% of their compensation to the 401(k) plan, (ii) all low paid employees receive a fully vested contribution from the employer equal to 3% of their compensation or (iii) all low paid employees would be eligible to receive matching contributions of 100% of their contribution to the 401(k) plan of their first 3% contribution and 50% of their next 2% of compensation contribution. Clearly, business owners and high paid employees cannot benefit with this new higher contribution limits unless the amount of savings that low paid people make--either on their own or with the help of the employer--increases. Roth 401(k) or 403(b) plan. We have heard testimony before the Finance Committee that the results of the first year of the Roth IRA has been successful. And we have all seen the television and print ads touting the benefits of the Roth IRA. The opportunity for tax-free investment returns has clearly caught the fancy of the American people. In less than five months after the Roth IRA became available, the Investment Company Institute estimated that approximately 3 percent of American households owned a Roth IRA. In addition, the survey found that the typical Roth IRA owner was 37 years old, significantly younger than the traditional IRA owner who is about 50 years old, and that 30 percent of Roth IRA owners indicated that the Roth IRA was the first IRA they had ever owned. This bill will harness the power of the Roth IRA and give it to participants in 401(k) plans and 403(b) plans. Companies will have the opportunity to give participants in 401(k) plans and 403(b) plans the ability to contribute to these plans on an after-tax basis, with the earnings on such contributions being tax-free when distributed, like the Roth IRA. More than the maximum Roth IRA contribution amount can be contributed under this option; employees would be limited to the maximum 401(k) or 403(b) contribution amount. The regular non-discrimination rules that apply to 401(k) and 403(b) plans will also apply to these after-tax contributions. Consequently, in order for business owners and highly compensated employees to take full advantage of these new savings opportunities, low paid employees must also benefit. The regular distribution rules (rather than the Roth IRA distribution rules) would apply to these types of plans. However, these after-tax accounts could be rolled into a Roth IRA when the individual retires. And unlike Roth IRAs, there would not be an opportunity for 401(k) or 403(b) plan participant to convert their current 401(k) and 403(b) account balances into the new non-taxable balances. Catch-up contributions. This provision will provide an additional savings opportunity to those individuals who are close to retirement. According to a study by the Employee Benefit Research Institute, older workers tend to have their contributions constrained by maximum limits which are either plan limits on how much can be contributed or legal limits on how much can be contributed. EBRI believes that this is probably due to the fact that they are more focused on retirement and are thus more likely to contribute at a higher level. We all know that there can be other pressing financial needs earlier in life--school loans, home loans, taking time off to raise the kids--which limit the amount that we may have available to save for retirement. The closer that we get to retirement, the more we want to put away for those years when we are not working. However, the current law limitations on how much may be contributed to tax qualified savings vehicles may restrict people's ability to save at this time in their lives. The bill will give those who are near retirement--age 50--the opportunity to contribute an additional amount in excess of the annual limits equal to an additional 50% of the annual limit. Catch-up contributions will be allowed in 401(k) plans, 403(b) plans, 457(b) plans and IRAs. For IRAs, this will mean that someone age 50 could contribute $7,500 each year rather than $5,000. For employer provided plans, the catch contribution will be available to anyone who is age 50 or above and who is limited in the amount that he or she can contribute to the plan by a plan limit, the maximum contribution limit or the nondiscrimination rules that apply to highly paid employees. This additional catch-up contributions to employer provided plan will not be subject to the normal non-discrimination rules for other contributions. Consequently, if a highly paid employee is limited by the nondiscrimination rules to only contributing $9,000 to a 401(k) plan, the employee will be able to contribute an additional $7,500 annually in the years after he attains age 50. This way, an employee is able to make contributions to provide for his or her retirement security when he or she is best able to afford to make these contributions and not be limited because other younger employees do not make contributions. Small business incentives. According to the most recent Bureau of Labor Statistics figures, only 48 percent of employees in a small business are likely to be covered by any retirement plan, while 78 percent of employees of large or medium size businesses are likely to be covered. Since employees of small businesses are less likely to be covered by a retirement plan, we needed to find incentives for small businesses to want to establish plans. This is an issue that Senator Baucus is particularly interested in and these small business incentives represent some of his ideas on how to expand the small business market for retirement plans. The bill will assist small businesses in establishing retirement plans in the following ways: Tax credit for start-up costs. A non-refundable tax credit of up to $500 would be available to small businesses with up to 100 employees to defray the administrative costs of establishing a new retirement plan. This credit would only be available for the first three years of operation of the plan. This credit could be carried back for one year or forward for 20 years (the general business credit carryover rules). Tax credit for contributions. A non-refundable tax credit equal to 50% of employer contributions made on behalf of non-highly compensated employees would be available to small businesses with 50 or less employees during the first 5 years of a plan's operation. Only contributions of not more than 3% of compensation are eligible for the credit. This credit could be carried back for one year or forward for 20 years. Small business defined benefit plan. This plan will provide employees of small businesses with a secure, fully portable, defined retirement benefit without imposing the complex rules and regulations of normal defined benefit plans. This plan, called the Savings Are For Everyone (SAFE) plan, will provide a fully vested benefit that is fully funded, using conservative actuarial assumptions. The benefit will be based on an employee's salary and years of service and could be structured so that years of service prior to the establishment of the plan can be used in determining the benefit--which helps older, long service employees. The SAFE plan is meant to complement the successful SIMPLE defined contribution plan that is available for small businesses. Elimination of 25 percent of compensation limitation. Currently, the maximum amount that can be contributed to a defined contribution plan on behalf of an individual participant is the lesser of $30,000 or 25 percent of compensation. This includes both employee contribution and any matching contributions or profit sharing contributions made by the plan sponsor. This bill will eliminate the 25 percent of compensation limit, so that the maximum contribution that is made on behalf of any individual is $30,000. With the additional savings opportunities provided for all employees under this bill, it would be much more likely for employees-- especially low paid employees--to exceed this 25 percent of compensation limitation. This change will make sure that those employees will not be limited in fully providing for their retirement security, especially, if the employer also contributes toward the employee's retirement plan. Tax deduction for employee deferrals. Under current law, an employee pre-tax deferral is treated as employer contribution and is subject to the limits on how much an employer can take as a tax deduction on qualified plan contributions. With the increased amount of pre-tax savings that we anticipate employees will make after enactment of this bill, there is a concern that the maximum limit on deductible contributions will be reached. This bill will permit employer to fully deduct any employee pre-tax deferrals, without regard to the maximum limit on deductions. Other employer contributions to a plan, however, will continue to be subject to this deduction limitation. IRA contributions to an employer plan. The bill gives employers the opportunity to accept traditional IRA contributions as part of their regular employer plan. In addition, it gives employees the ability to have IRA contributions made directly to the employer-sponsored IRA as a payroll deduction. One advantage of using an employer plan as an IRA account is that the administrative costs in an employer plan are usually much less than the costs in a privately maintained plan. Another advantage is that contributions to the IRA will be made on a payroll deduction basis, which makes it more likely that the contributions will be made. Full funding limit increase. Defined benefit pension plans are also an important source of retirement income. Currently, amounts that can be deducted as contributions to a pension plan is limited to the lesser of the actuarial funding requirement amount or 150 percent of the current liability amount of the plan. The current liability amount does not take into account projected pension benefits. This 150 percent of current liability limitation is eliminated in this bill. This will result in better funded pension plans, since the articial limitation of 150 percent of current liability no longer applies. Both Senator Baucus and I hope that other Senators will join us in this effort to increase savings opportunities for all working Americans.

Mr. ROTH

Mr. ROTH. Mr. President, one week ago today, the Finance Committee unanimously voted to support legislation to protect from eviction nursing home residents who rely on Medicaid. Our bill, S. 494, the Nursing Home Residential Security Act of 1999, is supported by both the nursing home industry and senior citizens' advocates. Yesterday, the House of Representatives passed H.R. 540, companion legislation to our bill, by a vote of 392 to 12. I call on my colleagues now to join me in voting in support of this important legislation. Let us send it to the President and make it the first piece of health care legislation to become law this year. Our legislation prohibits nursing homes that withdraw from participation in the Medicaid program from evicting the Medicaid residents who are already in the facility. Essentially, we provide for a phase-down rather than an immediate termination of participation in Medicaid. Sixty-eight percent of all nursing home residents eventually end up on Medicaid. Our bill protects these vulnerable senior citizens and individuals with disabilities from finding themselves evicted. The bill goes a long way toward assuring residents and their families that they will continue to receive quality nursing home care without fear of inappropriate eviction. S. 494/H.R. 540 is a modest but important proposal that will promote the peace of mind of millions of Americans. I ask my colleagues for their support.

Mr. ROTH

Mr. ROTH. Mr. President, pursuant to paragraph 2 of Rule XXXVI, Standing Rules of the Senate, I submit for printing in the Congressional Record the Rules of the Committee on Finance for the 106th Congress. The Rules follow: Committee on Finance

Mr. ROTH

Mr. ROTH. Mr. President, today, I am pleased to join with Senator Moynihan, Senator Graham, and Senator Grassley to introduce important legislation to protect some of our most vulnerable citizens--nursing home residents. Our bill will keep nursing home residents who rely on Medicaid from being ``dumped'' out of the facility they call home, should that facility decide to drop participation in the Medicaid program. The problem we will solve with this bill does not occur often. In fact, nearly 90 percent of all nursing homes participate in the Medicaid program. Pullouts are very rare and usually result from facilities deciding to close. But when a still-functioning facility decides to stop serving Medicaid clients, our bill will ensure that current residents do not find themselves pushed out of the place they view as home. Recently, Medicaid beneficiaries in facilities in Indiana and Florida found themselves in precisely this horrible situation. They were forced out of nursing homes that decided to drop participation in the Medicaid program. Residents' well-being was disrupted and families were forced to scramble to develop other care alternatives. Our new legislation, and H.R. 540, its companion bill in the House, will protect current residents from displacement. The bill simply requires that facilities withdrawing from the Medicaid program continue to care for current residents under the terms and conditions of the Medicaid program until those residents no longer require care. Facilities would essentially phase-down participation in Medicaid rather than dropping from the program overnight. Both the nursing home industry and senior citizens' advocates support our legislation. This is a common sense, good-government bill that will enhance the peace of mind of low-income elderly and disabled individuals. I applaud the House Conference Committee for having already held a hearing on H.R. 540, and Representatives Bilirakis and Davis are to be congratulated for their leadership on this important issue. As we introduce our bill in the Senate today, I would like to particularly thank Senator Bob Graham, whose commitment to this legislation has been pivotal. Working with him, Senator Moynihan, Senator Grassley, and other original Finance Committee cosponsors Senators Chafee, Mack, Rockefeller, Breaux, Bryan, and Kerrey, I look forward to taking up the bill up in our committee.

Mr. ROTH

Mr. ROTH. Mr. President, today, I am pleased to join with Senator Moynihan, Senator Graham, and Senator Grassley to introduce important legislation to protect some of our most vulnerable citizens--nursing home residents. Our bill will keep nursing home residents who rely on Medicaid from being ``dumped'' out of the facility they call home, should that facility decide to drop participation in the Medicaid program. The problem we will solve with this bill does not occur often. In fact, nearly 90 percent of all nursing homes participate in the Medicaid program. Pullouts are very rare and usually result from facilities deciding to close. But when a still-functioning facility decides to stop serving Medicaid clients, our bill will ensure that current residents do not find themselves pushed out of the place they view as home. Recently, Medicaid beneficiaries in facilities in Indiana and Florida found themselves in precisely this horrible situation. They were forced out of nursing homes that decided to drop participation in the Medicaid program. Residents' well-being was disrupted and families were forced to scramble to develop other care alternatives. Our new legislation, and H.R. 540, its companion bill in the House, will protect current residents from displacement. The bill simply requires that facilities withdrawing from the Medicaid program continue to care for current residents under the terms and conditions of the Medicaid program until those residents no longer require care. Facilities would essentially phase-down participation in Medicaid rather than dropping from the program overnight. Both the nursing home industry and senior citizens' advocates support our legislation. This is a common sense, good-government bill that will enhance the peace of mind of low-income elderly and disabled individuals. I applaud the House Conference Committee for having already held a hearing on H.R. 540, and Representatives Bilirakis and Davis are to be congratulated for their leadership on this important issue. As we introduce our bill in the Senate today, I would like to particularly thank Senator Bob Graham, whose commitment to this legislation has been pivotal. Working with him, Senator Moynihan, Senator Grassley, and other original Finance Committee cosponsors Senators Chafee, Mack, Rockefeller, Breaux, Bryan, and Kerrey, I look forward to taking up the bill up in our committee.

Mr. ROTH

Mr. ROTH. Mr. President, I reluctantly rise to oppose the amendment offered by Senator Graham. I say reluctantly because I strongly agree with the premise that it is important to pay for this important bill, the Soldiers', Sailors', Airmen's and Marines' Bill of Rights Act of 1999. However, Senator Graham's amendment is not the way to do it. This is an authorization bill. It is not a tax bill. And if we adopt Senator Graham's amendment, we turn the bill into a revenue bill. Neither Senator Graham's amendment nor any other potential amendments will have come through the Finance Committee, which is the appropriate committee to review all tax legislation in the Senate. But most importantly, adoption of the amendment would subject the entire bill to a blue slip from the House of Representatives, effectively dooming the important policies embodied in S. 4. So I say to those of you who support this important piece of legislation--and I do--I think it is important that we kill this amendment; otherwise, as I say, it becomes a tax bill and will be blue-slipped on the House side. I yield back the remainder of my time.

Mr. ROTH. May I ask the distinguished Senator from Virginia, is it appropriate to make some remarks on the amendment on the veterans Medicare subvention amendment?

Mr. ROTH. I just want to say to the distinguished Senator from Minnesota that we are all sympathetic to trying to do something to help the veterans hospitals. We are all interested in assuring that the veterans have the best care possible. But he misunderstood what I said. The fact is, the study that is about to come out, which is to be performed by the Secretaries of Health and Human Services and Veterans Affairs, is to submit a detailed implementation plan for a veterans subvention demonstration. The purpose of it is not to await the results of a defense program and see how it works out. The fact is that there are two different systems, and what may work for defense will not necessarily be efficient or effective as far as the veterans are concerned. All I was saying is that the Balanced Budget Act of 1997 does require the Secretaries of Health and Human Services and Veterans Affairs to submit a plan, and that we should not act and move forward until we have that report. When we get that report, then we should be in a position to create a demonstration program that meets the necessities, the peculiarities, and the problems that are inherent in the current veterans plan. So I just wanted to make clear we are not awaiting the results of the Department of Defense intervention program. Mr. WELLSTONE addressed the Chair.

Mr. ROTH. Mr. President, parliamentary inquiry. Has the distinguished Senator from Florida sent his amendment to the desk?

Mr. ROTH. Mr. President, I thank the distinguished Senator from Virginia for his comments. I must say, I rise in opposition to the amendment. As the distinguished Senator from Virginia well knows, the Balanced Budget Act of 1997 requires the Health and Human Services Administration and Veterans Affairs to submit to Congress a detailed implementation plan for a veterans subvention demonstration. This report has not yet been submitted to Congress and is due at the end of this year. Frankly, a veterans subvention demonstration at this time would be premature. The Department of Defense Medicare subvention demonstration enacted in the Balanced Budget Act of 1997 was carefully crafted in a bipartisan fashion between the committees of jurisdiction in the House and Senate, as well as the administering Secretary to address complex budgetary and design issues. It is very, very important, Mr. President, that the veterans subvention demonstration should undergo the same process in order to ensure a successful demonstration for all Medicare-eligible veterans. Finally, as you are aware, the Medicare Part A trust fund is facing an insolvency date of 2008. This is a most serious, critical matter, and the Bipartisan Commission on the Future of Medicare is meeting this afternoon to continue to address the current solvency issue. I cannot overemphasize how important, in light of this problem of solvency, is careful consideration of the budgetary implication associated with the veterans subvention demonstration in order to prevent the solvency of the trust fund from being further jeopardized. I will be happy to assure the parties supporting and author of this legislation that we will be glad to work with them in the future in trying to work out legislation that seems appropriate under the circumstances. As I said, it is critically important that it be carefully crafted because the Medicare legislation is in deep trouble. As I said, it faces insolvency by 2008. We have set up a special commission headed by Senator Breaux to try to find a solution to assuring the continued solvency of this program. And to add to the difficulty, the complexity of that problem, by including now a new proposal on veterans Medicare subvention makes little or no sense. For that reason, I strongly support the motion to table suggested by the chairman of the defense committee. Mr. WELLSTONE addressed the Chair.

Mr. ROTH. My understanding is you have not yet sent the amendment to the desk.