William Roth

Mr. ROTH

Mr. ROTH. Mr. President, this morning the Senate will immediately resume consideration of the IRS reform conference report. It is expected that there will be lengthy debate during today's session on the conference report, with a final vote occurring by late afternoon. In addition to the conference report, the Senate may consider any other legislative or executive items that may be cleared for action. Members are reminded that a cloture motion was filed last night to the substitute amendment to the product liability bill. Therefore, Senators have until 1 p.m. today to file first-degree amendments to the substitute. The cloture vote will occur on Thursday, July 9, at a time to be determined by the two leaders. Once again, the majority leader would like to remind Members that July will be a busy month, with late night sessions and votes. The cooperation of all Members will be necessary for the Senate to complete its work prior to the August recess. I thank my colleagues for their attention.

Mr. ROTH

Mr. ROTH. Mr. President, I move to reconsider the vote by which the motion was agreed to.

Mr. ROTH. Regular order.

Mr. ROTH

Mr. ROTH. Mr. President, if my colleagues' July Fourth recess was anything like mine, then they heard a great deal from their constituents concerning the bill that we bring to the floor today. The Internal Revenue Service Restructuring and Reform Act of 1998 is legislation that not only has the interests but the support of Americans everywhere, and with good reason. For far too long, the Internal Revenue Service has been allowed to consolidate immense power without the counterbalance of accountability. For far too long, the agency has been allowed to operate in darkness, hiding behind section 6103 authority, using authority granted them by Congress to, in some cases, bludgeon taxpayers. Last summer, the National Commission on Restructuring the IRS, following an extensive review of the IRS, issued a report that called for major changes to the agency. In September, the Finance Committee held 3 days of hearings which identified numerous additional problems and some terrible, even unconscionable taxpayer and IRS-employee abuses within the IRS. Those hearings were followed by others which demonstrated clearly that the Service was in need of serious reform. And we heard from taxpayers, tax collectors, tax practitioners. We heard from small business men and women. We heard from innocent spouses. And we listened to outrageous stories from innocent Americans who, for no valid reason, got caught in the crosshairs of an organization that was driven by quotas and lacking in oversight. Our outrage knew no partisan line. Colleagues on both sides of the aisle were offended by many of the stories. To the witnesses--many of whom testified without knowing what their efforts would bring--we apologized as best we could. We said that we would press forward, and we promised reform. That, Mr. President, is what we are delivering today. This is the bipartisan conference agreement on a plan that will effectively change the way the Internal Revenue Service does business. It represents the most comprehensive overhaul of the IRS ever enacted. It combines the House and Senate bills and incorporates the many good suggestions offered by the Agency's new Commissioner, Charles Rossotti. Let me be clear on just how important Mr. Rossotti has been to our efforts. Following our Finance Committee hearings, he had courage enough to release a report that validated the concerns we raised. Rather than try to throw up a wall or confuse issues, he made a commitment to reform. Every step we have taken he has taken with us. Commissioner Rossotti and I have met on many occasions, and he has testified before our committee. We have attended taxpayer service days together. He has advocated a new management plan that could revolutionize the way the Internal Revenue Service does business. I am also grateful for the taxpayers and the many current and former IRS employees who came before our committee. These were courageous individuals, and without them, there would be no reform. And they represent only a fraction of those who met with us, who wrote to us, who called, and, in the process, moved our investigation forward. Likewise, I am grateful to my colleagues--Senator Moynihan, a defining presence in the Senate, if ever there was one. I am grateful to Senators Charles Grassley and Bob Kerrey and their efforts on the National Restructuring Commission. Working with Congressman Portman, and others, they got the ball rolling early on, and were leaders in this effort. I thank Chairman Bill Archer for the work he did on the Ways and Means Committee, for the spirit of cooperation he brought to the conference, and for the success he had two weeks ago in getting this legislation approved overwhelmingly in the House. Now, the time has come, Mr. President, to pass it here--legislation that will open the door to real restructuring and reform of what can only be considered the most powerful agency in the United States government. This legislation is built on four principles: The first principle is to establish independent oversight of the agency to prevent abuses against taxpayers and against employees. One of the major concerns we heard throughout our oversight initiative was that the taxpayers who get caught in the IRS hall of mirrors have no place to turn that is truly independent and structured to represent their concerns. This legislation requires the agency to establish an independent Office of Appeals--one that may not be influenced by tax collection employees or auditors. Appeals officers will be made available in every state, and they will be better able to work with taxpayers who proceed through the appeals process. Mr. President, agency employees made it clear that there is no dependable and consistent mechanism in place to represent taxpayer interests. Just as this bill will give the appeals process greater independence, it will also make the Office of Taxpayer Advocate as well as local problem resolution officers more independent. In the future, the Secretary of Treasury, rather than the Commissioner will appoint the National Taxpayer Advocate. And the Taxpayer Advocate will be just that. Criteria to fill this position will include that the Advocate must not be an IRS employee two years before and five years after holding this position. In addition, this bill provides the Advocate with greater ability to issue an assistance order to help taxpayers. To ensure that independent review and accountability become part of the IRS culture--top to bottom--our legislation creates a nine-member IRS Oversight Board--a board composed of six experts from various professional fields in the private sector, the Commissioner, the Secretary of Treasury, and a full-time Federal employee, or a representative of employees. This board will be independent of influence from management and the senior executive corps. It will be able to monitor and hold managers and executives accountable for their actions, and the actions of their employees. Under our legislation, the Oversight Board will have broad responsibility and will ensure that the IRS has procedures in place to carry out its mission. I anticipate that the Board will be able to nip problems in the bud so that the IRS will not have to endure embarrassing Congressional hearings that expose systemic problems that should have been identified and addressed. These measures will go a long way toward protecting taxpayers and IRS personnel. To further protect IRS employees, this legislation creates a new Treasury Inspector General for Tax Administration. We heard far too often in our hearings that the current IRS Office of Chief Inspector does not have sufficient independence to adequately fulfill its obligation. Likewise, the current Treasury Inspector General lacks resources and has experienced problems of its own in providing seamless oversight of the agency. The new Treasury IG for Tax Administration will have greater independence than the IRS Chief Inspector. This provision is supported by Secretary Rubin and Commissioner Rossotti, and it will create a structure where the new Treasury IG for Tax Administration will not allow oversight to fall through the cracks. This new Treasury IG for Tax Administration will provide independent investigations of alleged IRS employee misconduct without management interference. The new Treasury IG will also respond in a timely manner to requests to investigate or audit made by the Commissioner or the IRS Oversight Board. Now, these measures will go a long way toward combating the intimidating culture that witnesses testified exists within the agency. They will provide independent protections and promote an agency that the public trusts--an agency that the employees can be proud of. The second principle incorporated in this legislation is to hold IRS employees accountable for their actions and to reward those who treat the taxpayer fairly. One of the problems we discovered in our hearings is that the Commissioner did not have the kind of authority that is necessary to streamline management and remove managers who contaminate the culture of the agency. Additionally, we found that the Commissioner does not have sufficient authority to hire those who will work toward making the kinds of changes that are necessary. This legislation changes that. It provides the Commissioner the tools he needs to hire top-flight managers who are experts in their field. It gives the Commissioner the wherewithal to transform the agency's work force by providing bonuses and other incentives, and to sufficiently discipline employees whose inappropriate actions harm the image and effectiveness of the agency. This bill requires the IRS to terminate an employee if it is proven that the employee willfully failed to obtain required authorization to seize a taxpayer's property, committed perjury material to a taxpayer's matter, or falsified or destroyed documents to conceal the employee's mistakes with respect to a taxpayer's case. It allows terminations to take place if an IRS employee engages in abuses or egregious misconduct. Conditions for which an employee can be dismissed include, but are not limited to, assaulting or battering a taxpayer or other IRS employee, violating the civil rights of a taxpayer or other IRS employee, or breaking the law, regulations, or IRS policies for the purpose of retaliating or harassing a taxpayer or other IRS employee. Our legislation also allows an employee to be fired for willfully misusing section 6103 authority to conceal information from Congress. As I have said before, an environment that allows employees guilty of these kinds of behaviors to continue to work within the system is not acceptable to me, the Finance Committee, or to the American people. We have heard enough excuses. The time has come for change. And this legislation allows needed changes to take place. The third principle advocated by this legislation is to ensure that taxpayers are protected, that they have due process during collections activities. This includes requiring the IRS to obtain court approval before seizing a home. It also ensures that the burden of proof be lifted off the shoulders of the taxpayer when it's appropriate and placed on the agency. It allows necessary and long-overdue reforms to the interest and penalty system. This will guard taxpayers against the outrageous and often overbearing financial liability that occurs when the agency moves too slowly. With this legislation, the burden of proof is shifted to the IRS if the taxpayer maintains records, cooperates with the agency, and provides credible evidence to the court. In addition, the IRS will have the burden of proving a taxpayer's income if it uses arbitrary statistics to determine that income. Another major taxpayer protection in this legislation is our provision to strengthen innocent spouse relief. Some of the most tragic stories our committee heard concerned innocent spouses whose lives have been ruined by the unrelenting pursuit of IRS collections officers. This legislation allows divorced or separated spouses to elect to limit their liability for a tax deficiency to the amount of the tax that is attributable to their income. In this way, they will not be held liable for income earned by their spouse. Beyond expanding innocent spouse relief, this legislation allows the Secretary of the Treasury to provide equitable relief if innocent spouse relief is otherwise unavailable. It makes relief retroactive to help those innocent spouses who are still being hounded by the IRS. Let me say, however, that relief will not be available in cases of fraud, or if the IRS proves the taxpayer claiming innocent spouse relief had actual knowledge of an item giving rise to the tax liability. Beyond this, with this legislation, we make necessary and important changes to how penalties and interest are applied. In order to prevent IRS employees from arbitrarily using penalties as leverage against taxpayers, this bill requires non-computer determined penalties to be approved by management. Furthermore, each notice to taxpayers which includes a penalty or interest must specify how the amount was calculated. If a taxpayer enters into an installment agreement, the monthly failure-to-pay- penalty is cut in half. Under this bill, if the IRS does not provide a notice of deficiency-- or other form of notification of the specific amount of taxes due-- within eighteen months after a return is timely filed, then interest and penalties will be suspended until the taxpayer is actually notified. This eighteen month period will be reduced to twelve months in the year 2004, as the agency improves its ability to notify taxpayers of their deficiencies. In this way it is the IRS, not the taxpayer, who bears the burden of IRS delay. These enhanced rights are meant to protect honest taxpayers. We do not excuse those who evade their responsibility or cheat on their income tax returns. The protections contained in this legislation exclude the failure to file, failure to pay, and penalties related to fraud. Finally, Mr. President, the fourth principle this legislation advances is to provide the Commissioner the tools necessary to take the IRS into the 21st century. It directs Commissioner Rossotti to eliminate the current national office, regional office and district office structure of the IRS. It gives him the authority to replace these antiquated management models with operating units that will directly serve particular groups of taxpayers, better meeting their needs and making the agency much more efficient and user-friendly. As I have said before, Commissioner Rossotti should be complimented on his tremendous work and managerial skills. His plan to restructure the agency is as bold as it is necessary, and this legislation gives him the authority he needs to move forward. And moving forward is what this legislation is all about--to usher the IRS into a new era of accountability--to provide taxpayers with the protections they deserve--to bring efficiency and modern management to an organizational structure that dates back to before the industrial age. With this legislation, we bring a promise of hope to honest taxpayers and hard-working employees who have waited far too long. We bring responsibility and greater openness. We focus on the need for service and fairness. With this legislation, Commissioner Rossotti will be able to transform the IRS, make it more effective and intolerant of corruption and abuse of power. I appreciate all the work that has gone into this bill--for the many hours and weekends given by Senators, Congressmen, and staff. Particularly, I want to thank Frank Polk, Mark Prater, Tom Roesser, Mark Patterson, Nick Giordano, and our committee investigators. I want to thank Lindy Paull, and the staff on the Joint Tax Committee--Barry Wold, Mel Schwarz, Cecily Rock and Mike Udell. Again, I am grateful to Senator Moynihan--for his leadership and dedication to this cause. I am grateful to my colleagues on both sides of the aisle who stood firm for legislation with teeth--who, in seeking change, demanded real change--real reforms. That's what we offer today. I am proud of this bill. Americans have every reason to celebrate. They have let their desire be known, and, Mr. President, they have been heard. Sec. 1101-IRS Oversight Board Mr. President, there has been substantial debate on whether a Treasury employees union representative should have a designated seat on the IRS Oversight Board. I agree with many of my colleagues that a representative of IRS employees should not be provided a position on the IRS Oversight Board because such member would be subject to a substantial conflict of interest. I did not include an IRS employee representative on the IRS Oversight Board in my original chairman's mark. However, the members of the Finance Committee voted to include an IRS employees representative on the board and to waive the criminal conflict of interest laws for this particular board member. Amendments to these provisions were considered by the full Senate and defeated. During conference negotiations, the Department of Justice opined that ``The employee-representative restriction in the bill would impermissiby limit the President's appointment power in violation of the Constitution.'' The Department of Justice suggested alternative language to avoid the Constitutional problem. In response to the Constitutional problems raised by the Department of Justice, the conferees agreed that one member of the IRS Oversight Board shall be a full time Federal employee or a representative of employees. The conferees also incorporated Justice's recommendation that this board member receive the same compensation as other board members who are not government employees. The Department of Justice also recommended that the employee representative should not be exempt from the conflict of interest laws. As a compromise, the conferees agreed to delete the provision which would exempt the employee representative from the conflict of interest laws. However, at the time of nominating this particular board member, the President could seek a waiver of the criminal conflict of interest laws to the extent such waiver is necessary to allow such member to participate in the decisions of the Board. Waiving criminal conflict of interest laws for one person is a very serious matter and should not be taken lightly. As such, the bill requires the President to submit a written intent of waiver along with the actual waiver language to the Senate with the nomination of such member. I anticipate that the President would seriously consider the ramifications of nonminating an individual with inherent conflicts of interests. If, in the President's judgment, such an individual must be on the IRS Oversight Board, the President must submit a written statement of intent to waive the criminal conflict of interest laws. To be effective, the waiver must be provided verbatim with the nomination of such individual. While I would have preferred the language in my original chairman's mark, this conference agreement addresses the competing concerns of my colleagues as well as the Constitutional problems raised by the Administration. In September 1997 and April 1998, the Finance Committee held several days of oversight hearings regarding IRS practices and procedures. These eye-opening hearing revealed improper and inappropriate IRS practices and in some situations violation of the law. I, along with those taxpayers who watched the hearings, was shocked and deeply troubled with the practices of the IRS. I believe that proper oversight by Congress and the Administration should have reduced or even prevented such activity from occurring. One of the most important functions of the IRS Oversight Board is to prevent taxpayer abuse. The Oversight Board must have access to information that will enable the board to reveal problems, bring problems to the attention of the Commissioner to address, and inform Congress if the Commissioner does not address problems. The Oversight Board should have ``big picture'' oversight authority over law enforcement activity, including examinations, collection activity, and criminal investigations. Taxpayers must be protected from improper and/or illegal activity. Hopefully, the Oversight Board, rather than a congressional committee, will nip problems in the bud and keep the IRS on a straight course. Sec. 1102--Commissioner and Other Officials The bill alters the reporting relationship between the IRS Chief Counsel and the Treasury General Counsel. The bill requires the IRS Chief Counsel to report directly to the Commissioner except for the extremely limited situations where an issue relates solely to tax policy. It is intended that ``tax policy'' would be limited to recommendations relating to tax legislation and the drafting of treaties. The Chief Counsel will report to both the Commissioner and to the Treasury General Counsel with respect to tax litigation and legal advice or interpretation of the tax law not relating solely to tax policy. In the rare circumstance where there is a dispute between the Commissioner and the Treasury General Counsel, the matter must be submitted to the Secretary or Deputy Secretary for resolution. The Commissioner, as the client, must be able to make a decision based upon the legal advice provided by the Chief Counsel. Neither the Treasury General Counsel nor any other Treasury official (other than the Secretary or Deputy Secretary) may overrule the Commissioner's decisions. The Secretary or Deputy Secretary may not delegate this authority to someone else. For example, the Commissioner should be able to decide whether to proceed with a litigation matter or recommend that a case be appealed. If the Treasury General Counsel disagrees, then the issue should be resolved only by the Secretary or Deputy Secretary. Furthermore, the Commissioner should have the ability to interpret the tax law and issue guidance in various forms. The Commissioner should be able to expeditiously issue guidance including regulations, revenue ruling and revenue procedures, technical advice and other similar memoranda, private letter rulings and other published guidance. Once again, if there is a disagreement between the Commissioner and the Treasury General Counsel, the issue must be resolved by the Secretary or the Deputy Secretary. sec. 1103--treasury inspector general for tax administration The bill transfers the IRS Office of Chief Inspector's function to a new Treasury Inspector General for Tax Administration which will provide more effective and efficient oversight over the IRS. The current system in which the Treasury Inspector General, with its limited resources and tax expertise, attempted to provide oversight along with the IRS Office of Chief Inspector which some believed lacked sufficient independence from management, simply did not provide adequate and independent oversight. I was appalled with the current system which allowed issues to fall through the cracks, included little or no ability to follow up on issues, or even to timely investigate media allegations of outrageous taxpayer abuse. The time has come to provide a new, credible Treasury Inspector General for Tax Administration which has the resources and expertise to independently audit and investigate problems within the IRS. Coupled with the IRS Oversight Board and a new more independent National Taxpayer Advocate, this provision in the bill will provide yet another check on the bureaucracy within the IRS to ensure that taxpayers and their problems don't slip through the cracks. While the vast majority of IRS employees are honest, hardworking, and law-abiding, enhanced oversight will help ensure that taxpayers are treated properly. Mr. MOYNIHAN addressed the Chair.

Mr. ROTH

Mr. ROTH. Mr. President, I rise in support of ``The Child Support Performance and Incentive Act of 1998'' now before the Senate as amended and urge its immediate adoption. Today we take another important step forward to help millions of children receive the financial and medical support owed to them by their absent parents. The child support enforcement system involves not only the federal, state, and local governments, but employers, financial institutions, and private sector agents and vendors as well. By continuing to improve the child support enforcement system, we will help families avoid and escape welfare dependency. Mr. President, when Congress passed welfare reform nearly two years ago, we sent a clear and unambiguous message that child support is indeed a personal responsibility. It has been with quiet determination that Republican and Democratic members have found common ground and worked together to strengthen and improve the child support enforcement system. The legislation before us today is directed at fulfilling the responsibilities of the states. The work on this legislation began shortly after the ``Personal Responsibility and Work Opportunity Reconciliation Act of 1996'' was signed into law. The 1996 welfare reform act required the Secretary of Health and Human Services to recommend to Congress a new, budget-neutral performance-based incentive system for the child support enforcement program. H.R. 3130 incorporates those recommendations which were developed in consultation with 26 representatives of state and local child support enforcement systems. The new incentive program is the centerpiece of this bill. Under current law, the federal government returns more than $400 million per year in child support collections to the states as incentive payments. But this incentive structure has been criticized for years as weak and inadequate. All states, regardless of actual performance, receive some incentive payments. But for more than a decade, performance has not been tied to the national goals of the program. H.R. 3130 breaks the past and creates five categories in which state performance will be evaluated and rewarded. The states will be measured according to their performance in paternity establishment, establishment of court orders, collections of current child support payments, collections on past due payments, and cost effectiveness. The new incentive structure is an important development not only for the child support enforcement system but also as a model for improving accountability and performance in government. The second major feature of this bill is to provide for an alternative penalty procedure for those states that have failed to meet federal child support data processing requirements. Less than half of the states have been certified as in compliance. Without this change, states face not only the loss of their entire child support grant, but all of their funds in the Temporary Assistance for Needy Families program as well. Such a result would obviously be crippling to a state and would ultimately hurt the very families these programs are intended to help. H.R. 3130 provides for a new mechanism under which HHS and the states will map out a strategic plan to meet the federal requirements. States which do not achieve compliance will face tough but fair penalties. The alternative penalty procedure is a new tool for both the state and federal governments to achieve compliance with federal requirements in the child support enforcement system. It is not intended to be a means of raising revenue at the expense of the state and potentially at the expense of the very families who rely on this system. H.R. 3130 also provides additional flexibility to the states in how they design their automated systems. In looking back over the history of automation, we find there were a number of mistakes made at both the federal and state levels which contributed to the delay in getting these systems operational. The child support enforcement system is a prime example of what can happen when regulations fail to keep pace with real world practices. H.R. 3130 recognizes the advances in technologies and allows states to take advantage of these improvements. It properly refocuses federal policy on function and results rather than on rigid rules. All of these changes will work together to get the states in compliance as quickly as possible. This will mean the child support enforcement system will work better for the families who depend on child support. Working with the states and employers, a bipartisan effort has yielded a three part approach to eliminate barriers to effective medical support enforcement. More children will no doubt gain access to their non-custodial parents' private health insurance plans because of H.R. 3130. Children and taxpayers alike will benefit from the medical child support provisions. H.R. 3130 also makes a correction in how penalties are applied under the new ``Adoption and Safe Families Act of 1997'' which became law last November. It is vitally important that the states be held accountable for assisting the children in foster care. When Congress passed this legislation last fall, it sent an important message across the country that a child should not be denied the opportunity to be adopted into a loving and caring family simply because the prospective parents live in the next county. The intent of Section 202, ``Adoptions Across State and County Jurisdictions'' is to ensure that states facilitate timely permanent placements for children so their wait in foster care be brief. A child should not be denied the opportunity to be adopted into a loving and caring family simply because the prospective parents live in the next county. The intent of P.L. 105-89 clearly is to remove interjurisdictional barriers to adoption. I am deeply concerned about recent reports that some states may in fact be erecting new barriers to families who are seeking to adopt. There are some disturbing reports that some states may be engaging in policies or practices that could create interjurisdictional barriers to adoption such as discontinuance of the registration of waiting families with adoption exchanges outside the state, refusal to share home studies across state lines, and refusal to respond to out-of-state inquiries. The Secretary should closely monitor any change in state policy or practice which discourages families from seeking to adopt children and take appropriate action if a state is not complying with the law. When the Department of Health and Human Services issues regulations on how the new penalties are enforced, it should of course provide the states with the opportunity to present evidence of how it complies with the new law. The review of this new requirement must be a fair and complete assessment of whether the law is being met. Mr. President, this is indeed an important, bipartisan bill which will prove itself to pay dividends for Americans' families. I urge its adoption. I ask unanimous consent that a legislative history be printed in the Record to reflect the Senate and House action on H.R. 3130. While there is a cost of $2,009 associated with printing this material, in the Record, it is important that our action be clearly explained. Furthermore, this history is in lieu of a conference report which would have been printed in the Record, so there is really no additional cost to the taxpayer.

Mr. ROTH

Mr. ROTH. Mr. President, I thank very much the distinguished Senator from Georgia for his courtesy. Let me once again applaud and congratulate him for the leadership he has provided in this matter of education, of helping us to show our parents throughout this country it is within reach financially. I think this legislation would never have reached this point had it not been for his active leadership.

Mr. ROTH. Mr. President, the Federal Government has a responsibility to promote policies and programs that make quality education accessible to students, to their parents, and to their families. Today, students and parents are under an enormous burden when it comes to paying for education. There is serious and legitimate concern about the accessibility of quality schools and teachers and materials necessary for success. And costs continue to rise. With the Taxpayer Relief Act of 1997 we succeeded in helping parents and students prepare for and even offset some of the escalating costs associated with higher education. For example: We created an education savings IRA to allow parents to save for higher education. We expanded the tax-deferred treatment of State-sponsored prepaid tuition plans. We restored the tax deduction on student loan interest. We extended the tax-free treatment of employer-provided educational assistance. And, we established tax credits--the HOPE scholarship and the Lifetime Learning Credite--for students to use in connection with their education. Each of these measures goes a long, long way toward helping our students and their families handle the financial burden associated with college life. But, Mr. President, we did not go far enough. Personally, I would like to have seen more powerful measures. The Senate version of the Taxpayer Relief Act of 1997 actually contained stronger provisions, but they were dropped as part of the conference agreement. I firmly believe in those stronger measures and so I introduced them as a separate bill on the very day that we passed the Taxpayer Relief Act. My objective then was the same as it is today--to help American families afford the costs of a quality education. I proposed to push the education IRA from its $500-a-year limit to $2,000 a year, and to allow withdrawals for elementary and secondary school; to make tax-free treatment of employer-provided educational assistance permanent and to reinstate it for graduate education; and to make State-sponsored prepaid tuition programs tax free, not just tax deferred. These were my objectives as 1997 came to a close, and I am happy to say that we have succeeded in adopting many of them with this bill, the Education Savings and School Excellence Act of 1998. This bill comes out of the Senate Finance Committee with bipartisan support. As I already indicated, the distinguished Senator from Georgia has played a leading role in helping shepherd this important piece of legislation through the Senate. Our bill allows families to increase their contributions to education IRAs from $500 to $2,000 per year. Not only will the $2,000 per year IRA contributions be available for college, but they can be used for students at any level--from kindergarten all the way through college. As such, the education IRA will be a tremendous asset to parents and students in grade schools and high schools. The money will be available to help cover the costs associated with both public and private schools. And the money can be used for a multitude of necessities--from buying school uniforms or books to purchasing a new computer. The bill also makes prepaid tuition programs tax free, meaning that students will be able to withdraw on a tax-free basis the savings that accumulate in their prepaid tuition accounts. Parents will have the incentive to put money away today, and their children will have the full benefit of that money tax free tomorrow. These innovative proposals will be a boon to higher education--to our students and families. Already, 44 States have prepaid tuition programs in effect. The other six have legislation to create a State plan, or they have implemented a feasibility study. Such programs will become increasingly more attractive to parents and students, as will individual retirement accounts that allow them to meet the educational needs of their family. As I have said before, these measures are an important step forward. They are important for our families--for our students--for the future. With this legislation, Congress is demonstrating its leadership on education. It is a very, very important step in the right direction. And I urge my colleagues to support it. Again, let me thank my distinguished colleague for his leadership and his courtesy in letting me make my statement at this time.

Mr. ROTH. Thank you.

Mr. ROTH

Mr. ROTH. I thank the Senator. I appreciate his offer as I am in a conference on IRS and it is important that I get back there as promptly as possible. I appreciate the opportunity to speak briefly on this most important amendment. Mr. President, as you know, Senator Jeffords and I are offering an amendment today that will restore funding for renewable energy programs in the fiscal year 1999 energy and water appropriation's bill. The renewable energy program has been cut by 33 percent below the administration request and $27 million below fiscal year 1998 levels. This amendment would add $70 million back to the renewable budget restoring all programs to fiscal year 1998 levels and boosting some programs 10-20 percent more. Even with these increases, America's investment in wind, solar, biomass, and other clean energy technologies will be well below the funding levels of 3 years ago. Mr. President, renewable energy technologies represent our best hopes for reducing air pollution, creating jobs and decreasing our reliance on imported oil and finite supplies of fossil fuels. Whatever one's position on the issue of climate change--these programs promise to supply economically competitive and commercially viable exports. I believe that the nation should be looking toward alternative forms of energy, not taking a step backward by cutting funding for these important programs. My own state of Delaware has a long tradition in solar energy. In 1972, the University of Delaware established one of the first photovoltaic laboratories in the nation. The university has been instrumental in developing photovoltaic cells, the same type of technology that powers solar watches and calculators. Delaware has a major solar energy manufacturer, Astro Power, which is now the fastest growing manufacturer of photovoltaic cells in the world. In collaboration with the University of Delaware and Astro Power, Delaware's major utility--Delmarva Power & Light--has installed an innovative solar energy system that has successfully demonstrated the use of solar power to satisfy peak electrical demand. Through this collaboration, my State has demonstrated that solar energy technology can be an economically competitive and commercially viable energy alternative for the utility industry. It is vital that we continue to manufacture these solar cell products with the high performance, high quality, and low costs required to successfully compete worldwide. Investment in Department of Energy solar and renewable energy programs has put us on the threshold of explosive growth. Continuation of the present renewable energy programs is required to achieve the goal of a healthy photovoltaic industry in the United States. While the solar energy industries might have evolved in some form on their own Federal investment has accelerated the transition from the laboratory bench to commercial markets in a way that has already accrued valuable economic benefits to the nation. Solar energy companies--like Astro Power--have already created thousands of jobs and helped to reduce our trade deficit through exports of solar energy systems overseas, mostly to developing nations, where 2 billion people are still without access to electricity. International markets for solar energy systems are virtually exploding, due to several key market trends. Most notably, solar energy is already one of the lowest cost options available to developing countries that cannot afford to build large, expensive centralized power generation facilities with elaborate distribution systems. The governments of Japan, Germany, and Australia are investing heavily in aggressive technology and market development in partnership with their own solar energy industries. Until recently, Japan and Germany held the lead in world market share for photovoltaics; the United States has only recently recaptured international market dominance. Cutting funding for commercializing these technologies would have a chilling effect on the U.S. industry's ability to compete on an international scale in these billion-dollar markets of today and tomorrow. The employment potential of renewables represents a minimum of 15,000 new jobs this decade with nearly 120,000 the next decade. Mr. President, I might also add biomass is another form of renewable energy with great potential. While traditionally biomass includes the use of wood chips and trash to create electricity, Maryland and Delaware are exploring the opportunities to use poultry manure as a biomass fuel. Manure used in this manner would not be spread on fields, a practice implicated by some as a cause of the recent outbreaks of pfiesteria. The electricity generated by the plant could then be sold to electric companies, the ash from the burning manure could be marketed as an environmentally sensitive fertilizer. In England the poultry litter fueled electric plants produce over 38.5 megawatts of power and burn 440,000 tons of chicken manure a year. The Jeffords/Roth amendment will restore the renewable energy accounts so that poultry manure fired plants and other renewable opportunities may become a real possibility in the future. It is imperative that this Senate support renewable energy technologies and be a partner to an energy future that addresses our economic needs in an environmentally acceptable manner. My State has done and will continue to do its part. I hope my colleagues in the Senate will look to the future and do their part in securing a safe and reliable energy future by supporting this amendment. I yield the floor.

Mr. ROTH

Mr. ROTH. Mr. President, the Kerry amendment once again raises the fundamental questions as to why the United States Senate is considering this tobacco settlement bill. Is its purpose to reduce the number of children who will become addicted to nicotine, or it is cover for another Washington power grab? In recent days, the Senate has debated various amendments which affect the agreement Senator McCain reached with the nations' governors to secure their support for this legislation. Members have voiced opposition to amendments on the grounds that it violates the agreement reached between the governors and the White House. There can be no doubt that the Kerry Amendment fractures that agreement. On a bipartisan basis, Governor Voinovich of Ohio and Governor Carper of Delaware have issued a letter opposing the Kerry amendment. Their May 19 letter states, ``the National Governors' Association strongly opposes the Kerry amendment which dictates state funding choices.'' Governor Carper and Governor Voinovich go on to state, ``This fundamentally undercuts the agreement included in the manager's amendment and would make it impossible for Governors to continue to support this agreement. ``In addition, by locking states into a specific child care requirement, the Kerry amendment would prevent states from meeting other compelling needs as their particular circumstances dictate.'' Mr. President, the Kerry amendment is the old broken record that Washington knows best. Only Washington can set the priorities. Mr. President, by imposing this restriction on the states, the Kerry amendment has changed the rules of welfare reform. The effect of the Kerry amendment is to increase the state matching requirement for receiving funds out of the child care and development block grant. Why are we imposing such a policy on a tobacco bill? If the Kerry amendment is adopted, the tobacco bill will contain two completely contradictory policies. The McCain May 18 modification already establishes new rules for claiming additional federal dollars for child care. Under section 452, ``Grants to States,'' the bill now changes the federal match rate for new child care dollars to 80 percent. This is a higher match rate than any state receives for the Medicaid Program. Why must the federal government bribe the states to claim federal dollars for child care by lowering the cost to the states? Simple. Because the states are not spending all of the child care dollars already available to them. In fiscal year 1997, the states spent only 72 percent of what they could have spent out of the child care and development block grant. The tobacco bill includes this higher match rate at insistence of the White House. The Clinton administration fully understands it must change the rules in order to pump more dollars into child care. Mr. President, this administration proposal is so troublesome to me because the White House is blowing hot and cold air at the same time on the issue of child care. The White House proposed cutting funds for child care under the title XX program. The President's budget requested a reduction in this important program for fiscal year 1999 and in the years beyond. Under the Clinton administration's budget, the SSBG would receive $1 billion less than what is authorized under welfare reform in 2003. Mr. President, you cannot profess to be for child care when you propose to reduce the social services block grant. The two ideas are mutually exclusive. Every state uses SSBG funds to provide day care for children. Mr. President, the Kerry amendment does not define who is for child care or who is against child care. The Clinton administration has acted in a contradictory way and those who voted to cut the social services block grant have acted in a contradictory manner. If we are serious about child care, the first priority should be to restore the social services block grant. If the Kerry amendment is adopted, the U.S. Senate will be saying that the state match for child care funds is both too high and too low. Mr. President, this simply does not make sense. The Kerry amendment is not needed. The states are free to spend their entire amount of unrestricted funds on child care if they so choose. Of the 50 percent of funds which are restricted, child care is one of the options the states can spend their tobacco funds on. Mr. President, Delaware is considering using its tobacco funds for expanding health insurance to low-income families. The Kerry amendment would substitute the judgment of the U.S. Senate about what priorities should be funded for the judgment of the elected men and women of Delaware. That is a mistake we should not make.

Mr. ROTH

Mr. ROTH. Mr. President, the pending amendment begins to address tax relief in two important areas. The first is the marriage penalty that exists in the code. The second is health care costs. This amendment begins to give back to the people some of the money that is raised through the tobacco tax in the bill. And for these reasons I intend to support the pending amendment. Personally, I think the spending is still too high in the tobacco bill. More of the revenue should be returned to the taxpayer. In addition, there are many measures that the Finance Committee recommended which are not adequately included in the final bill. For example, the tobacco bill is inconsistent with the work of the Finance Committee, which has jurisdiction over the Medicaid program. The tobacco bill also re-opens the Balanced Budget Act by increasing spending beyond the $24 billion we have already provided for the State Children's Health Insurance Program. Another aspect of the overall bill which concerns me is the way that the international trade provisions are drafted. Mr. President, there have been media reports that the tobacco bill is in trouble because the managers have to accommodate so many factions within the Senate and that today they have to accommodate the tax- cutters to make progress on the bill. I take exception with the suggestion that tax relief is just another nuisance to be accommodated. My perspective on this bill is quite different. It is repeatedly asserted that this bill's purpose is to reduce teen smoking. That is a very desirable goal. I support that goal. However, in the bill I find only two policies that bear on that goal. The first one--the tax increase--is said to bring in $65 billion over 5 years. The second one--under $1 billion in the President's budget--is a cessation program for teenagers. In my opinion, we have accomplished the goal with $64 billion left on the table. That money should be returned to the people, not be used as a slush fund to make government bigger. Making government bigger is not the goal of this legislation. But it seems to be the effect. In my opinion, the debate on this bill should center on how we rebate excess revenues to the people not on how we can fund government spending increases that cannot survive the traditional discipline of the budget and appropriations process. I support this amendment because it is philosophically the only legitimate course, in my opinion, for the Senate to take. The pending amendment provides tax relief in two specific ways. First, it partially reduces the inequity of the marriage tax penalty. As my colleagues know, this penalty places an unfair burden on two- earner married couples. According to a recent Congressional Budget Office study, a married couple filing a joint tax return in 1996 could face a tax bill more than $20,000 higher than they would pay if they were not married and could file individual tax returns. The same study estimated that according to one measure of the marriage penalty more than 21 million married couples paid an average of nearly $1,400 in additional taxes in 1996 because they filed jointly. Marriage tax penalties totaled $29 billion in 1996. Let me take a few minutes to describe the history of the penalty-- which has been around for almost 30 years. Before 1948, all taxpayers filed as single individuals. In that year, Congress gave taxpayers the ability to file jointly--meaning that a couple had the benefit on income splitting. The tax bracket for married couples was double the bracket for single individuals. Because of complaints that singles were being unfairly penalized, in 1969, Congress devised a special rate schedule and standard deduction amounts for singles. This new rate schedule created a marriage penalty for some taxpayers. Because of changing demographics and the prevalence of two-earner couples in America, the marriage tax penalty has become an even greater concern. Moreover, after being reduced during the 1980s, the tax increases and creation of additional tax brackets in 1990 and 1993 have made it much worse today. In the current tax code, there are over 65 examples of provisions causing the marriage tax penalty. The most obvious and dramatic one is the rate structure itself. But there are numerous others, all of which can have a significant effect on the pocketbook of a married couple. The penalty provisions are built into deductions, exemptions, credits, and other facets of the code. What the pending amendment does is take a step toward providing some relief for this inequitable condition. It provides a deduction, up to an amount of roughly $3,400, for married couples. This deduction is phased in over 10 years. It will partially alleviate the burden, and toward doing this, I am a strong advocate. However, I regret that this relief does not go far enough. The phased-in deduction is only available to couples with an adjusted gross income of less than $50,000. In other words, Mr. President, someone who works in the Chrysler or GM plant in Delaware and whose spouse is a school teacher would have too high an income to qualify for marriage penalty relief. That doesn't seem fair. I would have liked to see us give relief from the marriage penalty to many more Americans. Frankly, I would like to see us get rid of the marriage penalty altogether. The second major component of tax relief in this amendment is in the area of health care. The amendment provides self-employed individuals next year with a 100 percent deduction for their health insurance. This is long over-due. It will help farmers, small business people, and others who buy their own health insurance. Because of this amendment, 3 million taxpayers and their families will have more affordable health care, and you cannot overstate how important this is. This is a good first step. But I want to be clear that I do not consider it to be everything we must do. There are 18 million other Americans who lack health insurance, some are unemployed, others are elderly, and many have jobs. Simply put, I would like to see these individuals receive an above-the-line deduction for the cost of their health care. This is something I have worked on for some time. When the Finance Committee marked up the tobacco legislation I placed before the committee a two-part proposal in the area of health care. The first part was an immediate increase to 100 percent deductibility for health insurance for the self-employed. The second part provided the same benefit to the other 18 million Americans who need health insurance. This attempt was a natural follow-on to my successful efforts in 1995 to raise the deductible percentage from 25 to 30 percent and to make it permanent. Unfortunately, this time my tax cut proposal was not approved by the Finance Committee. I intended to offer the same tax cut amendment on the floor, and I was pleased that several members--Republicans and Democrats--agreed to support it. This proposal was also supported by farmers and small business, and I am pleased that it is reflected in the amendment before us now. Though, again, I want to go further. This is a good start, but I hope that in the future we revisit this with a mind to making health insurance more affordable for millions more of American workers. It is the same with the marriage penalty. It is egregious that married couples are penalized by our tax code. I believe this sends the wrong message in more ways than one, and it must be addressed. We have attempted to do this in the past. For example, in 1995, in the Balanced Budget Act, Congress approved a proposal to phase out the marriage penalty in the standard deduction. Our legislation was vetoed by President Clinton. I realize that at this point we are constrained by financial limitations and other priorities, and I compliment my colleagues for moving as far as they have with this bill. But I want all of my colleagues to agree with me that this should be seen as only the beginning. There is no justification for a married couple to be penalized just because they are married. Mr. President, though it is not perfect, and while it does not go as far as I would like, I intend to support this amendment. It sends the right message. It does provide partial relief. And it is a step in the right direction. I encourage my colleagues to support this effort. Mr. MURKOWSKI addressed the Chair.

Mr. ROTH

Mr. ROTH. Mr. President, in coordination with the Treasury Department, Senator Moynihan and I are introducing a bill today to eliminate an unwarranted tax benefit which involves the liquidation of a Regulated Investment Company (``RIC'') or Real Estate Investment Trust (``REIT''), where at least 80 percent of the liquidating RIC or REIT is owned by a single corporation. Identical legislation is being introduced in the House of Representatives by Congressman Archer. The RIC and REIT rules allow individual shareholders to invest in stock and securities (in the case of RICs) and real estate assets (in the case of REITs) with a single level of tax. The single level of tax is achieved by allowing RICs and REITs to deduct the dividends they pay to their shareholders. Some corporations, however, have attempted to use the ``dividends paid deduction'' in combination with a separate rule that allows a corporate parent to receive property from an 80 percent subsidiary without tax when the subsidiary is liquidating. Taxpayers argue that the combination of these two rules permits income deducted by the RIC or REIT and paid to the parent corporation to be entirely tax-free during the period of liquidation of the RIC or REIT (which can extend over a period of years). The legislation is intended to eliminate this abusive application of these rules by requiring that amounts which are deductible dividends to the RIC or REIT are consistently treated as dividends by the corporate parent. RICs and REITs are important investment vehicles, particularly for small investors. The RIC and REIT rules are designed to encourage investors to pool their resources and achieve the type of investment opportunities, subject to a single level of tax, that would otherwise be available only to a larger investor. This legislation will not affect the intended beneficiaries of the RIC and REIT rules. Mr. President, I ask unanimous consent that the text of the bill and a technical explanation be printed in the Record.

Mr. ROTH

Mr. ROTH. Mr. President, in coordination with the Treasury Department, Senator Moynihan and I are introducing a bill today to eliminate an unwarranted tax benefit which involves the liquidation of a Regulated Investment Company (``RIC'') or Real Estate Investment Trust (``REIT''), where at least 80 percent of the liquidating RIC or REIT is owned by a single corporation. Identical legislation is being introduced in the House of Representatives by Congressman Archer. The RIC and REIT rules allow individual shareholders to invest in stock and securities (in the case of RICs) and real estate assets (in the case of REITs) with a single level of tax. The single level of tax is achieved by allowing RICs and REITs to deduct the dividends they pay to their shareholders. Some corporations, however, have attempted to use the ``dividends paid deduction'' in combination with a separate rule that allows a corporate parent to receive property from an 80 percent subsidiary without tax when the subsidiary is liquidating. Taxpayers argue that the combination of these two rules permits income deducted by the RIC or REIT and paid to the parent corporation to be entirely tax-free during the period of liquidation of the RIC or REIT (which can extend over a period of years). The legislation is intended to eliminate this abusive application of these rules by requiring that amounts which are deductible dividends to the RIC or REIT are consistently treated as dividends by the corporate parent. RICs and REITs are important investment vehicles, particularly for small investors. The RIC and REIT rules are designed to encourage investors to pool their resources and achieve the type of investment opportunities, subject to a single level of tax, that would otherwise be available only to a larger investor. This legislation will not affect the intended beneficiaries of the RIC and REIT rules. Mr. President, I ask unanimous consent that the text of the bill and a technical explanation be printed in the Record.

Mr. ROTH

Mr. ROTH. Mr. President, further parliamentary inquiry---- Mr. MOYNIHAN addressed the Chair.

Mr. ROTH. The modification contains settlement payments and health fees. Is it true that these provisions, no matter how they are designated, are revenue measures, and, thus, within the jurisdiction of the Finance Committee?

Mr. ROTH. Mr. President, Senator Moynihan and myself would like to note for the record that the modification of the Commerce Committee substitute violates Rule 15 of the Standing Rules of the Senate. Neither Senator Moynihan nor I will raise the point of order because, even if we did raise the point of order, the leaders or managers could accomplish the same result by offering the identical text as a floor amendment. Mr. President, I ask unanimous consent that additional material be printed in the Record. This material is the technical explanation that describes the amendments made by the Committee on Finance to S. 1415, as reported by the Committee on Commerce, Science, and Transportation.

Mr. ROTH. Parliamentary inquiry, Mr. President.

Mr. ROTH. Mr. President, I rise to make a parliamentary inquiry on behalf of my distinguished ranking member, Senator Moynihan, and myself, as chairman of the Finance Committee. The Senate has before it a modification to the Commerce Committee substitute and Finance Committee amendment to S. 1415, the National Tobacco Policy and Youth Smoking Reduction Act. If the modification were introduced as a bill, would it be referred to the Finance Committee?

Mr. ROTH

Mr. ROTH. Mr. President, I move to lay it on the table. The motion to lay on the table was agreed to.

Mr. ROTH

Mr. ROTH. Let me say, as long as the two of us are members of that committee, I am sure it will happen.

Mr. ROTH. Mr. President, I ask unanimous consent that the pending motion be laid aside and a vote occur on or in relation to the amendment at a time to be determined by the majority manager after notification of the Democratic manager, with no amendments in order.

Mr. ROTH

Mr. ROTH. Mr. President, I ask unanimous consent to withdraw amendment No. 2365 and amendment No. 2366.

Mr. ROTH. I move to lay that motion on the table. The motion to lay on the table was agreed to. Amendments Nos. 2365 and 2366, Withdrawn

Mr. ROTH. Mr. President, the second amendment of Senator Craig would limit the disclosure and use of Federal tax return information to the States to purposes necessary to administer State income-tax laws. I send the amendment to the desk.

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