E. Shaw

Mr. SHAW

Mr. SHAW. Mr. Chairman, I yield 3\1/2\ minutes to the gentlewoman from Washington [Ms. Dunn], a member of the committee.

Mr. SHAW. Mr. Chairman, I yield myself 20 seconds. Mr. Chairman, I would like to say to the gentleman on the floor, the gentleman from Georgia [Mr. Lewis]. There is no one in this House that I have had more respect for than you. But for you to come on this floor and compare the Republicans to the reign of the Nazis is an absolute outrage, and I'm surprised that anybody with your distinguished background would dare to do such a horrible thing. Mr. Chairman, I reserve the balance of my time. announcement by the chairman

Mr. SHAW. Mr. Chairman, I yield 3 minutes to the gentleman from New Jersey [Mr. Zimmer], a member of the committee. (Mr. ZIMMER asked and was given permission to revise and extend his remarks.)

Mr. SHAW. Mr. Chairman, I yield 3 minutes to the gentleman from Louisiana [Mr. McCrery], a member of the committee. (Mr. McCRERY asked and was given permission to revise and extend his remarks.)

Mr. SHAW. Mr. Chairman, I yield 2 minutes to a member of the committee, the gentleman from Michigan [Mr. Camp]. (Mr. CAMP asked and was given permission to revise and extend his remarks.)

Mr. SHAW. Mr. Chairman, I yield my remaining time to myself.

Mr. SHAW. Mr. Chairman, I yield myself 10 seconds to tell the gentleman that was just in the well praising the Deal deal that the Deal substitute would wipe out the work requirements in the Massachusetts law. It is a law that the gentleman should be very proud of and that he should protect. Mr. Chairman, I yield 2 minutes to the gentleman from New Jersey [Mr. Martini].

Mr. SHAW. Mr. Chairman, I yield 2 minutes to the gentlewoman from Kansas [Mrs. Meyers], a most important and valuable member of the majority in putting together this bill and one of the first advocates for the block grant approach.

Mr. SHAW. Mr. Chairman, I yield 3 minutes to the gentleman from Texas, Mr. Sam Johnson, a member of the committee.

Mr. SHAW. Mr. Chairman, I yield myself 5 minutes. Mr. Chairman, today we begin taking the final steps to revolutionize welfare. We are keeping our pledge to the American people to replace the current failed system with one that encourages personal responsibility, family unity, and work. Under our proposal dozens of programs are merged into block grants to provide States flexibility in meeting the cash welfare, child protection, child care, and nutrition needs of their residents. Overnight, States would have real incentives to get welfare recipients into work. States that are successful can save for recessions, expand child care, or invest in more job training. Individuals would have to work to keep cash welfare, food stamps and other benefits. Working families will stop seeing Federal tax dollars subsidize behavior they know is destructive: Unmarried children will not receive welfare checks and an apartment if they have a baby; families already on welfare will not get added payments for having more children they cannot support; and aliens will no longer be eligible for several welfare benefits. Welfare will be transformed into temporary help, not a way of life. Supplemental Security Income benefits are reformed to protect taxpayers and target help to the truly disabled. Drug addicts and alcoholics will no longer receive monthly disability checks because of their addiction. And by refocusing SSI children's benefits, we provide more help to severely disabled children while protecting taxpayers against fraud and abuse. Child support enforcement is strengthened to achieve better coordination between States, surer tracking of delinquent parents, and more efficient collection of support. All agree that holding absent fathers accountable is critical to any real welfare reform, and our proposal does just that. Under our proposal families on welfare are expected to work, just as taxpaying families must work to support themselves. So after a maximum of 2 years on welfare, and less if States choose, families must work or lose their welfare checks. After 5 years of cash welfare, families must become free of government dependence, period. Despite these unprecedented changes, Democrats, who won the White House pledging to reform welfare and then did nothing for 2 years, are charging that Republicans are soft on work. This charge is simply incorrect, for numerous reasons. Under the Democrat substitute offered by Congressman Deal, States are required to provide 2 years of education and training, not work, for all recipients. So States like Massachusetts that want to get welfare recipients into work after 2 months, not 2 years, would be barred from doing so. As a result, the Deal substitute would prolong, not shorten, families time on welfare. Further, under the Deal substitute, simply searching for a job satisfies the supposed requirement that people on welfare work first. Finally, because the Deal substitute allows States to count everyone who leaves welfare as meeting the work requirement, the number of people required to work by the bill is actually lowered by 500,000 per month. Even if a State somehow found a way to fail to meet this so-called requirement, no penalty would result. Whether these and other flaws in the Deal substitute are due to drafting errors, oversights, or intentional omissions, the effect is the same: the Deal substitute offers too little, too late on requiring work for those on welfare. This debate will bring that into focus for many of my colleagues who I know want to support real welfare reforms. Unfortunately, especially on work, the Deal substitute is right on rhetoric but wrong on substance. It's not hard to see which bill provides real welfare reform--the Personal Responsibility Act. Our plan is nothing short of a revolution in social policy that replaces the current failed welfare system with one that will better meet the needs of the poor and get millions into work and off welfare. That is the only way to solve the welfare mess, and we are here to deliver on our promise to do just that.

Mr. SHAW. Mr. Chairman, I yield 2 minutes to the gentleman from Florida [Mr. Foley].

Mr. SHAW. Mr. Chairman, I yield 4 minutes to the gentleman from Georgia [Mr. Collins], a member of the committee.

Mr. SHAW. Mr. Chairman, I yield 2 minutes to the gentleman from North Carolina [Mr. Ballenger].

Mr. SHAW. Mr. Chairman, we have heard now for over 2 hours many speakers from the minority side to come before this body in a desperate attempt to rewrite, not only rewrite history, but to rewrite the Republican bill. The gentleman from Florida [Mr. Gibbons] said there was a filibuster last year. I do not know of anyplace you can have a filibuster in the House of Representatives. The gentleman from Florida [Mr. Gibbons] filed the President's bill, that is true. In the subcommittee we had one or two hearings, that is true. The bill never came to a markup. It was never presented to the full committee. We never had a hearing in the full committee. This simply did not happen. And where the filibuster occurred, I have no earthly idea. But I do know that the minority side has chosen not to introduce the President's bill this year, for some reason unknown to me. Now, the President does not have any bill that is before the House of Representatives, and I feel that the President should, because the President did advance this debate 2 years ago in his campaign. In fact, last summer in Florida the President asked me if I thought we could get welfare done last year, and I said, ``Only if you tell the people on the Committee on Ways and Means that that is exactly what you want.'' But instead, all we found was that the whole process was stonewalled. We never got a bill to the full committee. We never got a bill out of the subcommittee, and we never got a bill to the floor. Nothing happened. Nothing happened the year before, the year before, the year before, the year before. For the last 40 years, nothing has happened. The Democrats have blocked and blocked and blocked anything to be done to change welfare as we know it today, to genuinely reform welfare. Now, we have heard speakers come down. One speaker compared the Republican bill to the Holocaust. Read the bill. You want to know where the work provision is? It starts on about 23 and goes on. You want to know where it is in the Deal bill? The Deal bill says if you are looking for a job, you have to get cash benefits. You know, there are some States that will require work in the first 2 years. You talk about State flexibility. The Deal bill will destroy that. Massachusetts has a plan where they try to put people to work during the first 2 years. I think Michigan either does or is working on such a plan, and the States should have that flexibility. The Deal bill said, huh uh, huh uh, you cannot do that, you cannot require them as long as they are looking for a job. That is making out a resume, that you have to give them their benefits. These are just some of the things that have been misstated. Talk about mean to children, this bill has a 40-some-percent increase in the funding, a 40-percent-something increase in the funding, and the gentleman from Florida [Mr. Gibbons] said something about well, what about inflation. Forty percent? My goodness, that is over 5 years. That is way above the level of inflation, the anticipation of inflation. I would ask the committee, read the bills. Do not listen to just the rhetoric, because the rhetoric is just simply wrong. Support the Responsibility Act. Support the Republican bill.

Mr. SHAW. Mr. Chairman, I yield 2 minutes to the gentleman from Maryland [Mr. Bartlett]. (Mr. BARTLETT of Maryland asked and was given permission to revise and extend his remarks.)

Mr. SHAW. Mr. Chairman, I yield such time as he may consume to the gentleman from Pennsylvania [Mr. Gekas].

Mr. SHAW

Mr. SHAW. Mr. Speaker, will the gentleman yield?

Mr. SHAW. Mr. Speaker, I would like to mention to the gentleman, you have not only been a tremendous and a very valuable member of the team which has been working over the last year to craft the bill and to get us where we are today, but your model, the Delaware model, which is continuing now under the present Governor, but from the seeds that you planted in Delaware, you have set the pattern, as a few other Governors have in this country, in what welfare should be, and taking it from a program of dependence to a program promoting independence. I would just like to compliment the gentleman in the well for the great work he has done as a Governor and a Member of this House in reforming this very difficult task of reforming welfare as we know it today.

Mr. SHAW. I thank the gentleman for yielding me the time. Mr. Speaker, in listening to the debate from this side of the aisle, you would think that one of the words that really sticks in my head was one of the speakers, the gentlewoman from Illinois, for whom I have a great deal of respect, referred to our idea as something having to do with Attila the Hun. I hear the gentleman from Tennessee refer to us as mean. And I hear the other speakers refer to us as being tough on children and weak on work. I would notice, however, a resounding silence in this Hall when it comes to anybody defending the system that we have today, defending the system that we were unable and unwilling to change while the Democrats controlled this body. You look back at some of the good welfare proposals that have come down the pike, some that really helped. Take the earned income tax credit. That was a Republican proposal. Take the child care that has been put in place. And remember the great fight that we had with the committee, and we worked together on that particular bill. That was bipartisan in nature, and it was signed into law by a Republican President. Now the time has come to change the balance of the program, to change, truly change welfare as we know it today. For the Republicans to carry forward, to fulfill the 1992 platform pledge of the Democrat Party. This is the Republicans carrying through on the pledge of the Democrats because of the Democrats' failure to do this. We are going to, I hope and pray that we do pass a welfare bill, that we get rid of the cruelest system that has ever been known. The cruelest system that is out here on the floor is existing law and we must change it, we must work together, we must move this process forward. We have worked long and hard on the Republican side in order to change welfare. The bill of the gentleman from Georgia [Mr. Deal], which will I understand be offered as a substitute sometime later this week, that bill itself comes a long way from where the Democrat party was just a few short months ago when we could not get a bill to the floor, when we could not reform welfare. A few short months ago in the last years when the Democrats were in charge, we would have been glad to come forward and work on a bill such as that. But I tell all of my colleagues to read it carefully; come in with specifics. The Republican bill is weak on work? Read the Deal bill. The Republican bill is the bill that stands for work. It stands for real reform and it stands for the empowerment of people. Let us break the chains of slavery that we have created with welfare in this country and let us work together for a better America.

Mr. SHAW

Mr. SHAW. Mr. Speaker, I am pleased to introduce, along with my Ways and Means Committee colleague Mr. Rangel, long overdue tax legislation to reform the cost recovery rules associated with leasehold improvements. Simply stated, our legislation would enable building owners to more closely match the expenses incurred to construct these improvements with the income the improvements generate under the lease. Office, retail, or other commercial rental real estate is typically reconfigured, changed or somehow improved on a regular basis to meet the needs of new and existing tenants. Internal walls, ceilings, partitions, plumbing, lighting and finish each are elements that might be the type of improvement made within a building to accommodate a tenant's requirements, and thereby ensure that the work or shopping space is as modern, efficient, and environmentally responsible as possible. Logically, the time period during which the costs associated with constructing leasehold improvements are recovered, through depreciation deductions, should match the time period during which the improvement is useful. Unfortunately, today's depreciation rules do not differentiate between the economic useful life of a building improvement--which typically corresponds with a tenant's lease-term-- and the life of the overall building structure. The result is that current tax law dictates a depreciable life for leasehold improvements of 39 years--the depreciable life for the entire building--even though most commercial leases typically run for a period of 7 to 10 years. Correcting this mismatch between income and expense is the goal of our legislation. Compounding this problem is confusion in the marketplace today concerning whether a building owner may close out and deduct currently any unrecovered costs remaining at the time a leasehold improvement is destroyed. It seems almost absurd, but the current rules are in some cases being interpreted to deny the ability of a building owner to ``close out'' its investment for tax purposes even though the improvement has been scrapped, demolished or otherwise permanently retired from service. Theoretically, in 30 years a building owner could have had 6 different 5-year tenants, each requiring different improvements to accommodate their individual business needs. Because of the current confusion, the owner may be required to depreciate improvements that in fact no longer exist. In addition to more closely recovering the costs of the improvements with the income generated by them, this close out issue needs to be addressed. As a result of today's flawed depreciation rules in this area, the after-tax cost of reconfiguring, or building out, office, retail, or other commercial space to accommodate new tenants or modernizing work places is artificially high. This is because building owners are unable to fully deduct the economic costs expended on leasehold improvements over the period in which the improvements actually generate income. In addition, the current policy hinders urban reinvestment and construction job opportunities as improvements are delayed or not undertaken at all. Especially given the absence of new building construction in many markets, opportunities for the Nation's seven million construction and building trades workers in the remainder of the decade will largely be tied to the renovation and rehabilitation of existing commercial space. Moreover, a widespread shift to more energy-efficient, environmentally sound building elements is discouraged by the current tax system because of their typically higher expense. For example, the Natural Resources Defense Council notes that commercial lighting alone consumes more than one-third of the electrical energy produced in the United States. If a greater conservation potential of energy-efficient lighting were to be realized, the demand for the equivalent of one hundred 1,000-mega-watt power plants could be eliminated, with corresponding reductions in air pollution and global warming. To address this issue, our legislation would establish a new depreciation recovery period of 10 years for a carefully defined category of interior building improvements. In general, to qualify under the legislation the improvement must be constructed by a lessor or lessee in the tenant-occupied space. In an effort to ensure that the legislation is as cost efficient as building, such as elevators, escalators, and lobbies, would not qualify; nor would improvements made to new buildings. Equally important, our legislation would clarify that building owners are permitted to fully deduct and close out any unrecovered leasehold improvement expenses remaining at the time a lease expires and the improvement is demolished. Our legislation should be enacted this year. This would acknowledge the fact that improvements constructed for one tenant are rarely suitable for another, and that when a tenant leaves, the space is typically built-out all over again for a new tenant. It is important to note that prior to 1981 our tax laws allowed these improvement costs to be deducted over the life of the lease. Subsequent legislation, however, abandoned this policy as part of a move to simplify and shorten building depreciation rules in general to 15 years. Given that buildings are now required to be depreciated over 39 years, it is time to face economic reality and reinstate a separate depreciation period for building improvements to tenant occupied space. I am pleased that several members of the Ways and Means Committee have joined me today in introducing this legislation. I urge all members of the House to review and support this important job producing, urban revitalization legislation, and I look forward to working with the Ways and Means Committee to enact this bill.

Mr. SHAW

Mr. SHAW. Mr. Speaker, I have been sitting here listening to the speakers that came before me here this morning on the House floor criticizing the Republicans for what they are trying to do that is to reform welfare, criticizing the Republicans for bringing a child support bill to the floor and saying that it was not tough enough. I will say to my friends in the Democrat Party you had 40 years to bring welfare reform to the floor and you never brought it; you had 40 years to bring a child support bill to the floor that was tough, and you never did it. Now we are looking to you and we are reaching out to you as we are to the President, who gave a speech within the last hour on welfare reform, we are reaching out and saying come now and join with us because we are moving it forward. We are going to have welfare reform. It is going to pass this House. We are going to have a lot of Democrats that are going to be joining the Republicans who are pushing this agenda forward. And you know what? We are going to be doing things for the poor that you never did. We are going to be doing things for the children that you neglected and we are going to reform welfare.

Mr. SHAW

Mr. SHAW. Mr. Speaker, I have joined with my colleague, Ben Cardin, to reintroduce legislation that would restore the capital gains tax treatment on the sale of market discount bonds. As a result of an amendment contained in the Omnibus Budget Reconciliation Act of 1993, the gain is taxed at the ordinary income rate rather than at the capital gains rate. This bill was originally introduced last June in response to the rise in interest rates that had precipitated, among other things, a noticeable loss of market liquidity for market discount bonds. Since that time, interest rates have continued to climb and there has been a corresponding increase in the volume of market discount bonds in the marketplace. The restoration of capital gains tax treatment for market discount bonds is an appropriate and timely way to reduce the borrowing costs to State and local issuers by improving market liquidity. As a former mayor, I have a tremendous appreciation for tax-exempt municipal financing and the role bonds play in meeting public needs. In the State of Florida last year, there were over $7.6 billion in long- term bonds issued. Infrastructure requirements like secondary roads, bridges, water and sewer systems, airports, and public schools are all financed and built by State and local governments using tax-exempt municipal bonds. Bonds are used to leverage and argument Federal construction grants, revolving loans and other direct assistance programs. I believe tax-exempt bonds are an important tool in empowering States and localities to address public needs and consistent with the message of ``New Federalism'' contained in the Contract With America. Prior to 1993, the proceeds from the sale of a bond purchased at discount were treated as capital gains. The 1993 Budget Reconciliation Act contained the provision that amended the tax treatment of municipal securities purchased at a market discount. As a result, when an investor sells market discount bonds, they now pay the ordinary income tax rates of up to 39.6 percent rather than the maximum capital gains rate of 28 percent. The sharp rise in interest rates, beginning last February, lead to a dramatic increase in the amount of market discount bonds. Market discount generally exists when a bond is purchased on the secondary market at a price below par, or, in the case of bonds with an original issue discount, below the adjusted issue price. Market discount is the difference between the purchase price of a bond and its stated redemption price at maturity or its adjusted issue price. Since rules took effect in 1993, demand for discount bonds in the secondary market has suffered. The change in the market discount rules adds significant complexity to reporting by bond dealers. For example, a single zero-coupon bond purchased at a discount could generate tax-exempt income, ordinary income, and a capital gain. Such complicated tax treatment poses problems for dealers and funds which must issue summary reports to the IRS and investors. The market discount rules also have a very real negative effect on market liquidity. For instance, certain tax-exempt mutual funds have simply stopped buying discounted bonds altogether. In addition, the new market discount rules could result in higher capital costs for State and local municipal bond issuers, raise extremely complex financial consideration that repel investors, and provide little or no revenue gain to the Federal Government. For all of these reasons, I believe repeal of the new market discount rules is appropriate. Such a change would be consistent with efforts for overall capital gains reform. I urge all of my colleagues to cosponsor this important municipal bond legislation.