E. Shaw

Mr. SHAW

Mr. SHAW. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Missouri (Mr. Hulshof).

Mr. SHAW. Mr. Speaker, I yield 30 seconds to the gentleman from Texas (Mr. Brady).

Mr. SHAW. Mr. Speaker, I reserve the balance of my time to close.

Mr. SHAW. Mr. Speaker, I place in the Record a large number of letters in support from police groups, fire groups, AARP, and a number of other letters.

Mr. SHAW. Mr. Speaker, pursuant to House Resolution 168, I call up the bill (H.R. 743) to amend the Social Security Act and the Internal Revenue Code of 1986 to provide additional safeguards for Social Security and Supplemental Security Income beneficiaries with representative payees, to enhance program protections, and for other purposes, and ask for its immediate consideration.

Mr. SHAW. Mr. Speaker, I yield myself such time as I may consume. (Mr. SHAW asked and was given permission to revise and extend his remarks, and include extraneous material.)

Mr. SHAW. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Arizona (Mr. Hayworth), a distinguished member of the committee. (Mr. HAYWORTH asked and was given permission to revise and extend his remarks.)

Mr. SHAW. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I must say, and be sure that all the Members that are listening to this debate know, this debate has nothing to do with the Government Pension Offset that the last speaker was referring to. That particular provision has a price tag of $9 billion. As chairman of the Subcommittee on Social Security, I would like to correct that, or at least go halfway towards correcting that. But part of my job as chairman of this subcommittee is also to protect the integrity of the Social Security program itself. To go off willy-nilly and start throwing dollars out means the demise of the Social Security system. It will come up short well before 2016, which is the day on which the cash coming into the system is not enough to pay the benefits. We have to be concerned about that. We are going to have hearings on the Government Pension Offset, and try to find ways to pay for it. But we have to pay for it within the system. To do otherwise would be just plain reckless. Mr. Speaker, I yield 3 minutes to the gentleman from Missouri (Mr. Hulshof), a distinguished member of the subcommittee.

Mr. SHAW. Mr. Speaker, I yield 30 seconds to the gentleman from Missouri (Mr. Hulshof).

Mr. SHAW. Mr. Speaker, I yield 2 minutes to the gentleman from California (Mr. Herger), a member of the committee.

Mr. SHAW. Mr. Speaker, I yield myself such time as I may consume. This afternoon I am pleased to present to the House for its consideration the Social Security Protection Act of 2003, which is bipartisan legislation that fights fraud and abuse in Social Security programs. First, this bill protects nearly 8 million beneficiaries who cannot manage their own affairs and rely on representative payees appointed by the Social Security Administration. It does this by raising payee standards and by imposing stricter penalties on those who mismanage the benefits they are entrusted to administer. Second, this bill denies Social Security benefits to fugitive felons and probation and parole violators. Third, the Protection Act provides tools to further safeguard Social Security programs including new civil monetary penalties. Finally, this bill helps people with disabilities by giving greater access to legal representation when applying for benefits by improving work incentive programs and by expanding eligibility for the Work Opportunity Tax Credit to encourage more employers to hire individuals with disabilities. Despite the fact that a majority of the Members voted to pass this bill last month, the needed two-thirds approval required under suspension of the rules was not achieved. That is because special interest groups betrayed Social Security and America's seniors to appease the few who believe they could get special treatment and be allowed to exploit an unintended loophole that presently exists in the law. These groups misinformed both public and the Congress by falsely claiming that teachers and other public servants who pay into a public employee pension plan instead of Social Security are being singled out for unfair treatment. According to the General Accounting Office and the Social Security Administration, these claims are false. In fact, government workers who do not pay Social Security taxes receive higher spouse or widow benefits than workers who do, given equal retirement benefits from work. By taking advantage of the loophole, a select group of public employees receives full Social Security spouse and widow benefits that no other working spouse in America receives, including other teachers who pay into Social Security for their entire career. I want to share this example provided by the Social Security Administration because it shows so well that assertions of targeting public servants for unfair reduction in spousal benefits are just simply incorrect. As this placard will show, we are comparing two working couples, the Bakers and the Smiths. They have equal retirement benefits from their work. In both cases the husband receives a Social Security work benefit of $1,200 per month, and the wife receives $300 per month based on her work. They are equal in every way except that Mrs. Baker paid Social Security taxes and receives her benefits from Social Security, but Mrs. Smith paid into a public pension plan instead of Social Security and receives her benefits from that plan. Both Mrs. Baker's and Mrs. Smith's spouse benefits are reduced. Mrs. Baker's spouse benefits of $600, which is one half of her husband's benefit amount, is reduced $1 for every dollar of her Social Security benefit, providing her with a $300 spouse benefit. Mrs. Smith's spouse benefit, also $600, is reduced $2 for $3 by her public pension benefit, providing her with a $400 spouse benefit. The end result, Mrs. Smith's benefit is $100 higher than Mrs. Baker's, even though Mrs. Baker paid her whole career into Social Security. Clearly, Mrs. Smith is not being discriminated against because she paid into a public pension plan instead of Social Security. Mrs. Smith has a twin sister, Mrs. Jones, who is also a teacher; but Mrs. Jones was a teacher in Texas who switched to a school cafeteria job on the last day and paid Social Security taxes in for that last day. Mrs. Jones has an advantage over every other working spouse in America. She receives both her worker's benefit and full spousal benefit. As a result her spousal benefit would be $300 higher than Mrs. Baker's and $200 higher than her twin's. Clearly, for someone who worked 1 day under Social Security, that is just plain unfair. Every Member of Congress deeply appreciates the valuable contribution of teachers and public servants and all workers, whether they be in Texas, Georgia, Florida, or New York. However, no single group of workers should have an unfair advantage over workers in other school districts, in other pension systems, or all across this Nation. We absolutely need a full discussion of all Social Security provisions affecting public employees, which is why the Subcommittee on Social Security will have a hearing on these issues and legislative opportunities in the coming weeks. While we want to make Social Security fair for all workers, we must take care not to worsen Social Security's already bleak fiscal picture or undermine the principle of Social Security as an earned benefit. It is an earned benefit. That would negatively affect both government workers and all Americans who depend on Social Security. This bipartisan bill does the right thing and has the support of many organizations. It was developed using recommendations from and in cooperation with the Social Security Administration and the Social Security Inspector General. It is also supported by the AARP, Citizens Against Government Waste, the National Conference of State Social Security Administrators, the Consortium for Citizens with Disabilities, the National Alliance for the Mentally Ill, the Association of Administrative Law Judges, the National Organization of Social Security Claimants' Representatives, and numerous other national and local law enforcement agencies and organizations. We should protect senior citizens from unscrupulous representative payees skimming off of the top. We should prevent fugitive felons and probation or parole violators from using Social Security dollars to finance their illegal activity. We should pass H.R. 743 to stop this fraud and abuse in Social Security and in the process save the taxpayers $655 million over the next 10 years. Mr. Speaker, I reserve the balance of my time.

Mr. SHAW. Mr. Speaker, I yield myself such time as I may consume. Very, very briefly, what the gentleman from California said about people receiving bad information from the Social Security Administration is absolutely correct, and we are working on that. This came out at the hearing that we had, and this is something that our committee will be addressing. Now, the reason that the correction, as far as the unfair benefits being paid out to people who never really paid into Social Security more than one day of their working life, that information did not come out from the General Accounting Office until after we passed our bill last June. The Democrat-controlled Senate, however, did have the benefit of the General Accounting Office study when they passed their bill, and they passed it by unanimous consent and they attached this provision to it. This is not a partisan issue. I understand the problems within certain States and those are only two States, by the way, Texas and Georgia. However, for the rest of this country, it is looking at Georgia and Texas as an unfair abuse of the Social Security system because of the inartful drawing of that one provision. This is what we are trying to correct here this afternoon. Mr. Speaker, I would say to the gentleman from California (Mr. Matsui) that at this particular time I do not expect to use all of our time on general debate. We have already been through this on suspension. I would invite the gentleman to put a couple of speakers up at this time. Mr. Speaker, I reserve the balance of my time.

Mr. SHAW. At this particular time I may close, depending on what I hear from the other side.

Mr. SHAW. Mr. Speaker, I claim the time in opposition, and I yield 7 minutes to the gentleman from Texas (Mr. Sam Johnson), a valuable member of the Subcommittee on Social Security of the Committee on Ways and Means.

Mr. SHAW. Mr. Speaker, I yield such time as he may consume to the gentleman from Texas (Mr. Brady), a member of the Subcommittee on Social Security.

Mr. SHAW. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I would point out to the gentleman that if somebody is enjoying a private pension in the private sector, they also paid into Social Security, which is something that the teachers that the gentleman is referring to are not doing. Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr. Brady).

Mr. SHAW. Mr. Speaker, I yield myself such time as I may consume to comment that I think the gentleman is figuring that all those soldiers are going to come back to Texas. That is nonsense. This has nothing to do with our soldiers. Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. Collins), a distinguished member of the Committee on Ways and Means.

Mr. SHAW. Mr. Speaker, I yield such time as he may consume to the gentleman from California (Mr. Thomas), the distinguished chairman of the Committee on Ways and Means.

Mr. SHAW

Mr. SHAW. Mr. Speaker, I rise today in strong support of H.R. 1308, and in particular, a provision I offered in the Ways and Means Committee during consideration of another tax measure. This provision is very simple, and very fair--it will provide tax benefits to the families of the victims of the Columbia Shuttle disaster. In the same manner our government provides benefits to the families of soldiers killed in the line of duty or to victims of terrorist attacks, I offered this provision to honor the spirit and courage of our nation's brave astronauts. Under current law, when a soldier is killed in the line of duty or a citizen is the victim of terrorism, our government views all income received in the year of their death, or the preceding year, as exempt from income tax. In addition, any death benefits paid by the U.S. Government or employers to the families of the victims are also exempt from taxation. And finally, we reduce the state tax of the heirs to 20%. H.R. 1308 would extend these modest benefits to all astronauts who die in the line of duty, beginning with the families and victims of the Columbia tragedy. These seven men and women gave their lives exploring the bounds of human experience. For their sacrifice and contributions to our nation and mankind, we wish to honor them by caring for the financial security of their loved ones. I would add that this provision was adopted in Committee without dissent. Although it would provide much needed, meaningful relief to the families of our astronauts, its revenue impact is negligible. Finally, Mr. Speaker, I would be remiss if I didn't commend our colleague Chet Edwards of Texas who originally filed legislation extending these benefits to astronauts. I appreciate his leadership on this most solemn and important measure. Mr. Speaker, I urge my colleagues to demonstrate their support for our astronauts by voting for H.R. 1308. Our nation is forever in their debt.

Mr. SHAW

Mr. SHAW. Mr. Speaker, I rise today in strong support of H.R. 5, the HEALTH Act. America's doctors are facing a full blown crisis. What's at stake is nothing less than the survival of the profession. What's to blame is astronomical medical liability insurance rates. Patients have watched helplessly as physicians have had to limit services or close their doors altogether and flee the state in search of more business friendly environments. Even worse, many young people who dreamed of studying medicine are choosing not to, realizing they won't be able to reconcile their dream with the reality of making a living. In my state of Florida, the situation is among the worst in the nation. The American Medical Association has labeled Florida as one of 19 ``in crisis'' regarding medical liability which can reach sums of over $200,000 annually. When it's easier to sue a doctor than to see a doctor, something has to be done. We know that the reforms in the HEALTH Act will actually lower the overall cost of healthcare. Doctors, laboring under a constant fear of being sued, have a natural tendency to practice defensive medicine-- ordering tests that may not be needed or refusing to perform more risky procedures. The direct cost of malpractice insurance and the indirect cost from defensive medicine raise the federal government's health care cost by at least $28 billion a year. It is clear that the current system of dispute resolution is not working. The entire industry suffers for the few bad eggs out there. Only 5% of doctors account for more than half of all the money paid out in malpractice suits, but all doctors pay the costs in their premiums. I believe it will take reform on the federal level to get the country's health system back on course and out of the courtroom and I therefore, support the HEALTH Act. I urge a ``yes'' vote on H.R. 5.

Mr. SHAW

Mr. SHAW. Mr. Speaker, along with my colleague, Mark Foley, I am introducing a bill that would eliminate a trap for the unwary that was inadvertently created with the Taxpayer Act of 1997. The bill would clarify the treatment for foreign tax credit limitation purposes of the income inclusions that arise upon a transfer of intangible property to a foreign corporation. Section 367(d) of the Internal Revenue Code provides for income inclusions in the form of deemed royalties upon the transfer of intangible property by a U.S. person to a foreign corporation. Prior to the 1997 Act, these income inclusions under section 367(d) were deemed to be U.S.-source income and thus were not eligible for foreign tax credits. The international joint venture reforms included in the 1997 Act eliminated this special source rule and provided that deemed royalties under section 367(d) are treated as foreign source income for foreign tax credit purposes to the same extent as an actual royalty payment. The amendments made by the 1997 Act were intended to eliminate the penalty that was provided by the prior-law deemed U.S. source rule and that had operated to discourage taxpayers from transferring intangible property in a transaction that would be covered by section 367(d). Prior to the 1997 Act, in order to avoid this penalty, taxpayers licensed intangible property to foreign corporations instead of transferring such property in a transaction that would be subject to section 367(d). The 1997 Act's elimination of the penalty source rule of section 367(d) was intended to allow taxpayers to transfer intangible property to a foreign corporation in a transaction that gives rise to deemed royalty payments under section 367(d) instead of having to structure the transaction with the foreign corporation as a license in exchange for actual royalty payments. However, the intended goal of the 1997 Act provision is achieved only if the deemed royalty payments under section 367(d) not only are sourced for foreign tax credit purposes in the same manner as actual royalty payments, but also are characterized for foreign tax credit limitation purposes in the same manner as actual royalty payments. Without a clarification that deemed royalty payments are characterized for foreign tax credit limitation purposes in the same manner as an actual royalty payment, there is a risk in many cases that such deemed royalties would be characterized in a manner that leads to a foreign tax credit result that is equally as disadvantageous as the result that arose under the penalty source rule that was intended to be eliminated by the 1997 Act. The bill I am introducing today provides the needed clarification that deemed royalties under section 367(d) are treated for foreign tax credit limitation purposes in the same manner as an actual royalty, ensuring that the penalty that was intended to be eliminated with the 1997 Act is in fact eliminated. Without this clarification, a taxpayer that transfers intangible property in reliance on the 1997 Act will find that its transfer is in fact effectively subject to the penalty that the taxpayer believed had been eliminated. Without the clarification, those taxpayers that have structured their transactions in reliance on the 1997 Act provision will be worse off than they would have been if the purported repeal of the penalty source rule had never occurred and they had continued to structure their transactions to avoid that penalty. This bill will achieve the intended goals of the 1997 Act and prevent a terrible trap for the unwary that has been inadvertently created.

Mr. SHAW

Mr. SHAW. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks on H.R. 743.

Mr. SHAW

Mr. SHAW. Mr. Speaker, I yield 2 minutes to the gentleman from Arizona (Mr. Hayworth), another valued member of the Subcommittee on Social Security of the Committee on Ways and Means.

Mr. SHAW. Mr. Speaker, I yield back the balance of my time.

Mr. SHAW. Mr. Speaker, I yield myself such time as I may consume to say to the gentlewoman from Texas that this levels the playing field and treats the people, or the teachers in Texas as other teachers throughout the entire country. Mr. Speaker, I yield 3 minutes to the gentleman from Missouri (Mr. Hulshof), another valued member of the Committee on Ways and Means.