Olympia Snowe

Ms. SNOWE

Ms. SNOWE. Mr. President, every year, the cost of higher education and vocational education increases dramatically. College tuition and fees have been rising more rapidly than household income over the past two decades. The divergence is particularly pronounced for low-income households. The sad result is that with every year more students and families are forced to decide whether they can afford higher education while knowing their choice is limited by price. It is imperative that Congress work to make higher education more accessible to all. Our Nation must make a solid commitment to ensure that every individual has the opportunity to pursue higher education, and our policies should reflect this commitment. Education has always been the great equalizer in our society that provides every American the same opportunity to succeed. That is why today I, along with Senator Schumer, am introducing legislation that would provide for a simpler, more borrower-friendly method for reporting and deducting capitalized interest and origination fees in connection with qualified education loans. In May 2004, the Treasury Department issued final regulations with respect to the student loan interest deduction under the tax code. Among other things, these Treasury regulations provide that the ``original issue discount rules'' (OID) shall apply for purposes of students claiming this deduction. In particular, they would apply to the portion of the student loan that relates to federally mandated student loan origination fees and the capitalized interest that does not accrue on the loan while the student attends school (i.e., the government essentially pays this interest for the student on the loan during the years the student attends school). OID rules are complicated and confusing. In general, these rules attempt to prevent taxpayers from claiming inflated interest deductions stemming from debt obligations. When a borrower issues a debt obligation at a discount, that is the note's face amount exceeds the amount that the lender advances to the borrower, the amount of the discount represents additional interest on the obligation. The OID rules reflect Congress' attempt to square the tax treatment of this unstated or disguised interest into conformity with economic reality. The OID rules, then, ``limit'' a borrower's tax deduction because whereas the tax code generally permits borrowers to deduct the interest they pay on debt obligations, such as student loans, the tax code generally prevents borrowers from deducting any OID they might pay on such debt. For example, assume that a corporation issues thirty-year bonds with a face value of $1,000 each and, according to their terms, paying 10 percent interest each year. Assume, though, that the corporation actually sells these bonds to investors for $850 because the 10 percent interest rate is below market rates. Under these facts, there is $150, $1,000 - $850, that the corporation essentially is ``re-classifying'' as interest that it will pay to the investor; that is, the investors would not be satisfied with a 10 percent return upon giving the corporation $1,000 so that the corporation essentially treats a portion of the principle, $150, as interest. The tax code classifies this $150 as OID. The $150 of OID serves the same function as the stated annual interest of $100, 10 percent of $1,000. As such, the $150 of OID is an additional cost to the corporation in borrowing $850 from the investor, and it is additional compensation that the corporation pays to the lender for lending that amount. The only differences to the parties are that the corporation is not required to pay the OID of $150 until the bond matures and that the investor does not receive the discount in cash until then, unless the bond is sold in the interim. As I noted earlier, the OID rules prevent borrowers from deducting the entire amount of ``interest'' they pay to a borrower on a loan. Specifically, in the previous example, although the parties treat the loan principle as being $850, the application of the OID rules treats the loan as $1,000, which is significant because it means the IRS classifies the $150 of OID as not being interest. In turn, the borrower cannot deduct this $150 payment to the borrower because it is a return of principle on the loan rather than interest. Consequently, applying OID rules to student loans would have several negative effects. First, with respect to students, they would not be able to deduct the entire amount of ``interest'' they pay to their lender. In general, whereas the tax code generally permits students to deduct student loan interest, subject to certain limitations, it does not permit taxpayers to deduct OID. The Treasury regulations, then, will reduce the cash flow of students who are repaying student loans by limiting their student loan interest deduction. In addition, applying the OID rules will have an enormous impact on the compliance burden. Indeed, the interaction of the OID rules and the loan provisions of the Higher Education Act greatly magnifies the complexity of rules that lenders must follow. As such, lenders and servicers will be forced to create accounting systems, at enormous expenses that ultimately will be passed on to student borrowers, to enable them to track and report the origination fees and capitalized interest in accordance with the OID rules. Furthermore, given that there is no track record of applying the OID rules to student lenders, there is no guarantee that they can preform these tasks accurately. Congress enacted the OID rules to prevent taxpayers, mostly large corporations, from altering the terms of loan agreements to claim inflated interest deduction. Clearly, applying them to student loans is unreasonable and frankly unintended. To remedy this problem, my legislation would permit lenders to account for the OID treatment of student loans under the ``immediate accrual method, which colloquially is referred to as the ``bucket method.'' Under this approach, the origination fee would accrue as soon as it is charged to or paid by the borrower, and capitalized interest would accrue under the terms of the promissory note. Accrued origination fee and capitalized interest would go into a ``bucket'' as soon as they accrue, until such time as the borrower begins to make payments on the loan. Amounts in the ``bucket'' would be applied against principal payments until the bucket is empty. Capitalized interest and origination fees would be reported to and deductible by the eligible taxpayer in the year in which they are paid. My legislation would, as I stated, provide for a simpler, more borrower-friendly method for reporting and deducting capitalized interest and origination fees in connection with qualified education loans. Consequently, it would not reduce the need to engage in the burdensome task of calculating the OID on loans, and the student borrowers would be able to deduct more of the interest they pay. This bill is good policy and common sense. Senator Schumer and I look forward to working with Finance Committee Chairman Grassley and Ranking Member Baucus in seeking swift action to resolve this issue.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise today to discuss the extremely unfortunate decision by the highest levels of the State Department to meet with Mehmet Ali Talat, the self-declared president of the so- called ``Turkish Republic of Northern Cyprus.'' For more than 30 years, it has been a tenet of U.S. foreign policy not to extend de jure or de facto recognition to this self-declared government, which exists only because of the forcible occupation of the northern one-third of Cyprus by more than 43,000 Turkish troops. Cyprus was divided by a Turkish invasion in 1974. With the exception of Turkey, all nations recognize that this invasion was illegal and have refused to recognize the ``Turkish Republic of Northern Cyprus,'' a rump state that proclaims itself the government of the occupied area. Far from honoring the invasion, the world recognizes only the Republic of Cyprus as the legitimate sovereign government for the entire island. Both international law and U.S. statutory law support the free government of Cyprus. Several U.N. Security Council resolutions implore nations neither to recognize nor support the self-declared government in the occupied area. Likewise, the U.S. Foreign Assistance Act establishes the U.S. policy of supporting a free government in Cyprus, demanding the withdrawal of all Turkish forces from Cyprus, and seeking the reunification of the island's communities. I rise today because I fear the State Department is now embarked on a different course, a course that may irreparably damage the prospects for a peaceful reunification of Cyprus. On Friday, October 28, 2005, the U.S. Secretary of State met with Mr. Mehmet Ali Talat. I have heard the State Department spokesperson try to justify this meeting by saying that the Secretary would only be meeting with Mr. Talat in his capacity as a leader of the Turkish-Cypriot community, and their session would not signal a change in U.S. policy toward Cyprus. These explanations are disappointing. In all likelihood, meeting Mr. Talat in the State Department's Harry S. Truman Building will be used by Turkey and the rump state as evidence that the United States is moving toward independent elevation of this self-declared government and the permanent dismemberment of Cyprus. Following the defeat of an U.N.-sponsored plan in 2004, the Republic of Cyprus has undertaken numerous initiatives designed to bring the two communities together. Since April 2003, when the movement restrictions through the cease-fire line were partially lifted, there have been more than 8 million crossings from both Greek and Turkish Cypriots. During the 4 million visits by Greek-Cypriots to the occupied area, approximately $100 million were spent to the benefit of Turkish Cypriots. Cyprus is contributing concretely to the economic uplifting of the Turkish Cypriot community--more than $43 million in social insurance, more than $9 million in medical care, and more than $343 million in free electricity during the last couple of years. According to Turkish Cypriot reports, one of the main reasons for the Turkish Cypriot economic growth is the opportunity that was provided to more than 10,000 Turkish Cypriots to work in the government-controlled areas after the lifting of the restrictions. These skilled workers, who continue to live in the occupied areas, earn approximately $180 million every year. The Republic of Cyprus has also unilaterally removed land mines in the cease-fire zone. More than 63,000 people in the occupied area have been issued Republic of Cyprus birth certificates, more than 57,000 have been issued Republic of Cyprus identity cards, and more than 32,000 have been issued Republic of Cyprus passports. Unfortunately, Turkey and its rump state have been working in the opposite direction. In Turkey's negotiation for EU accession, Turkey committed to extending its customs union to Cyprus, but then unilaterally backtracked on its commitment, stating that it does not even recognize the Republic of Cyprus. Turkey and the ``TRNC'' have pressed for the opening for direct airline flights and direct trade into the occupied area, both of which violate the Republic of Cyprus' sovereign power to designate ports of entry. Last month, the Prime Minister of Turkey said that he would only accept a solution on Cyprus that included a permanent division of the island into two states. ``One state in the north, one state in the south and a confederation . . . this is what [Cyprus President] Papadopoulos should accept, otherwise we cannot reach an agreement,'' the Prime Minister stated. Most egregiously, Turkey and the ``TRNC'' have increased the number of Turkish troops on the island--from about 36,000 to more than 40,000--in the past year. Turkey also intensified the influx of Turkish settlers in the island and at the same time, both Ankara and the Turkish Cypriot leadership continued their policy of immense exploitation of Greek Cypriot properties in northern occupied Cyprus. These are not the actions of parties committed to a peaceful resolution to the division. For more than 30 years, the United States has refused to reward Turkey's illegal invasion with an independent Turkish state on Cyprus. But the decision to extend to Mr. Talat unprecedented access to our government's most hallowed halls only serves to validate his and the Turkish Prime Minister's view that the ``TRNC'' should be treated as an independent entity. Because independent status is exactly what Turkey and the rump state seek, the meeting reduces the incentive for Turkey and Mr. Talat to engage in productive talks to resolve the division of Cyprus. And why should they negotiate if they are promised to be provided direct trade, direct flights, and separate treatment by the Secretary of State? I call on the State Department to abandon this ill-conceived meeting with the self-declared president of the ``TRNC,'' an illegal entity that, I repeat, the U.S. government does not recognize. The meeting will be viewed, and it will be used, as an elevation of the ``TRNC'' and a nod toward independent and separate status. The meeting is inconsistent with the United States' stated policy towards Cyprus, and it serves only to hinder efforts to resolve the division of Cyprus.

Ms. SNOWE

Ms. SNOWE. The former Secretary of HHS said: I would like to have had the opportunity to negotiate. Let us give this power to the Secretary to save money for the program and to save money for seniors.

Ms. SNOWE. Mr. President, I ask unanimous consent that Senator Clinton be added as a cosponsor.

Ms. SNOWE. Mr. President, I am offering this amendment on behalf of myself and Senator Wyden, who has offered considerable leadership on this issue over the years providing affordable medications to our seniors, along with Senator McCain and Senator Stabenow. So many of us in Congress have worked to make prescription drug coverage a part of the Medicare Program, but the fact remains that the costs are rising since the time we first created this program, from $523 billion to now up to $720 billion for the Part D Program. As we see in this first chart, the brand-named prices are consistently outpacing inflation because they have no competition. As we can see with the generic drugs, where there is competition, the price is lower. We want to give the Secretary of Health and Human Services the ability to negotiate prices, particularly for those seniors who will not have access to more than two prescription drug plans or where the plans ask for negotiating authority. This is not price setting. This is price saving. In fact, we have explicit language in the legislation that says this is not about price setting. It does not give the Secretary that authority. It allows him to save money for the Part D Program that is expected and projected to increase in cost by more than 8.5 percent as called for by the Congressional Budget Office. That is the CBO's very own numbers. Finally, 80 percent of seniors in America have called for the Secretary to have this authority.

Ms. SNOWE. Mr. President, I move to waive that. I ask for the yeas and nays.

Ms. SNOWE. Mr. President, I call up amendment 2371 and ask for its immediate consideration.

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

Ms. SNOWE. I ask unanimous consent to add Senator Kerry and Senator Dodd as cosponsors.

Ms. SNOWE

Ms. SNOWE. Mr. President, I respectfully ask unanimous consent that the following letter be printed in the Record.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise today to introduce a bill for the City of Saco, ME that concerns the town's ability to allow the mooring of boats on the Saco River. The bill changes the turning basin into an anchorage while managing a 50 foot channel within the anchorage. The town was not aware that it was in violation because of 21 moorings located in the Saco River Federal Navigational Project. In an effort to eliminate this encroachment, city officials have requested a modification or deauthorization of the Federal Navigational Project to resolve the issue. The U.S. Army Corps of Engineers has suggested language that re- designates the maneuvering basin into an anchorage area that will meet the needs of the community. The language, which I hope will be included in the Water Resources Development Act in this Congress, will allow for the legal moorage of boats, the fairway for which would be maintained by the City of Saco as is customary for towns with Federal anchorages. It is my understanding that the two mayors of the cities involved along with the Saco Yacht Club have agreed to the Corps' language.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise today to introduce a bill for the City of Saco, ME that concerns the town's ability to allow the mooring of boats on the Saco River. The bill changes the turning basin into an anchorage while managing a 50 foot channel within the anchorage. The town was not aware that it was in violation because of 21 moorings located in the Saco River Federal Navigational Project. In an effort to eliminate this encroachment, city officials have requested a modification or deauthorization of the Federal Navigational Project to resolve the issue. The U.S. Army Corps of Engineers has suggested language that re- designates the maneuvering basin into an anchorage area that will meet the needs of the community. The language, which I hope will be included in the Water Resources Development Act in this Congress, will allow for the legal moorage of boats, the fairway for which would be maintained by the City of Saco as is customary for towns with Federal anchorages. It is my understanding that the two mayors of the cities involved along with the Saco Yacht Club have agreed to the Corps' language.

Ms. SNOWE

Ms. SNOWE. Mr. President, yesterday, a majority of Senators, 54 in fact, voted for an increase in funding for the Low Income Home Energy Assistance Program, or LIHEAP, to bring the funding to the authorized level of $5.1 billion we approved in the 2005 Energy bill. But because it was a procedural vote requiring 60 votes, this very important amendment failed. I want to thank my colleagues who voted with me as the days are relentlessly marching toward winter . . . the clock is ticking as the thermometer edges ever downward . . . snow and cold have already come to my State or Maine, raising the stakes for those who may have to choose between heating their homes and the other necessities of life. It would be unconscionable for Congress to adjourn for the year without providing critical, additional assistance for LIHEAP at a time of skyrocketing fuel because of the disruption of a vast amount of our energy infrastructure caused by disastrous hurricanes in the Gulf. I will continue to work with the White House to secure funding in the next supplemental appropriations bill. There should be no mistake--this is an emergency and a crisis we know is coming, and it would be an abrogation of our responsibility to stand by and allow it to occur. It does not take a crystal ball to predict the dire consequences when home heating oil in Maine is $2.52 per gallon, up 59 cents from a year ago . . . and kerosene prices average $2.95 a gallon, 75 cents higher than this time last year. Some projections have a gallon of heating oil reaching $3.00! And we are now informed that even rolling blackouts on very cold days this winter may be a possibility because of a high demand for electricity. So, understandably, we are already hearing the mounting concern-- ``how will I pay for home heating oil when it's 30 percent more than last year, and I struggled to make ends meet then?'' ``How will I afford to pay half again as much for natural gas?'' People need to know now that they can count on us for assistance. This is a necessity of life--so much so that 73 percent of households in a recent survey reported they would cut back on, and even go without, other necessities such as food, prescription drugs, and mortgage and rent payments. Churches, food pantries, local service organizations--they are all hearing the cry, and the leaves have barely fallen from the trees. The fact is, countless Americans, many on fixed incomes, don't have room in their budget for this sudden surge in home heating oil and natural gas prices but, surely, in looking at our national priorities, we can find room in our budget to help Americans stay warm this winter. Because of the supply disruptions caused by the hurricanes at a time when prices were already spiraling up, prices have been driven even higher and are directly affecting low income Mainers and how they will be able to pay for their home heating oil, natural gas, propane and kerosene this winter. A recent Wall Street Journal quoted Jo-Ann Choate, who heads up Maine's LIHEAP program. Ms. Choate said, ``This year we've got a very good chance of running out.'' Mr. President, 84 percent of the applicants for the LIHEAP program in my State use oil heat. Over 46,000 applied for and received State LIHEAP funds last winter. Each household received $480, which covered the cost of 275 gallons of heating oil. The problem this winter is that the same $480 will buy only 172 gallons, which a household will use up in the first 3 to 4 weeks. What will these people do to stay warm for the 4 or 5 months left of winter? The water pipes will freeze and then break, damaging homes. People will start using their stoves to get heat. The Mortgage Bankers Association e1ects that the steep energy costs could increase the number of missed payments and lost homes beginning later this winter. My State is expecting at least 48,000 applicants this winter season, so there will be less money distributed to each household unless we can obtain higher funding for the LIHEAP program. Ms. Choate says that Maine plans to focus on the elderly, disabled, and families with small children, and is studying how to move others to heated shelters. This is why our efforts are so very important. And it isn't just Maine, it is going to happen in all of the Nation's cold weather States. Quite simply, without increased funding, we are forcing the managers of State LIHEAP programs to make a Solomon's choice. The Federal Department of Energy has predicted that homeowners who use oil for heat and propane will spend 30 percent more this year than last, and natural gas users will spend 48 percent more. According to the National Energy Assistance Directors Association, heating costs for the average family using heating oil are projected to hit $1,666 for the upcoming winter. This represents an increase of $403 over last winter's prices and $714 over the winter heating season of 2003-2004. For families using natural gas, prices are projected to hit $1,568, which is an increase of $611 over last year's price and $643 over 2003- 2004. This is the largest increase in home heating prices in over 30 years. This is why passing our amendment was so very important. Congress recently passed an Energy bill which is now law. In that bill, we authorized $5.1 billion for the LIHEAP program. My goal is to see that this is totally funded. We simply have to show that we meant what we asked for--and totally fund the LIHEAP program. The facts are that LIHEAP is projected to help 5 million households nationwide this winter. But that's only about one-sixth of households across the country that qualify for the assistance. So this is a perennial fight we wage even when prices aren't as high as today. And now, that battle becomes all the more pivotal. The cold weather won't wait--and neither should we when it comes to helping citizens survive through the winter.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise to support the ``Small Business Investment and Growth Act of 2005,'' which I have introduced today to facilitate increased investments in small businesses throughout this country. I am pleased to be joined by my esteemed colleagues from Missouri, Senator Jim Talent and Senator Kit Bond, in sponsoring this bill. As Chair of the Senate Committee on Small Business and Entrepreneurship, I am committed to supporting our Nation's small businesses by increasing their access to capital. Small businesses comprise 99.7 percent of all businesses in the United States. Moreover, small businesses employ more than half, 57 percent, of the total private-sector workforce, and are responsible for the creation of more than two-thirds of all new jobs. Clearly, increasing investments in small businesses is crucial to our on-going economic success. This bill will reform and enhance the Small Business Administration's SBIC program, a program that is vital to fostering innovation, growth, and job creation in small businesses throughout our country. Small Business Investment Companies (SBICs) are privately-owned and managed venture capital investment companies that are licensed and regulated by the SBA. SBICs use their own capital, combined with funds borrowed from other private investors and supported by an SBA guarantee, to make equity and debt investments in qualifying small businesses. The SBA shares in the profits of SBICs. The structure of the program is unique and has been a model for similar public-private partnerships around the world. The program has been successful in mobilizing private venture capital investment, and leveraging that private investment with additional funds supported by SBA guarantees. According to the SBA's annual reports to Congress, the SBIC program has provided over $17.2 billion in financing to small businesses since the beginning of Fiscal Year 1999. Each year, this financing allows small businesses to create or retain tens of thousands of jobs. For instance, according to the SBA's Office of Advocacy, in 2004 alone SBIC investments helped small businesses create or retain approximately 81,042 jobs. There are currently two types of SBIC Programs, the Participating Securities Program and the Debenture Program. Unfortunately, the Participating Securities Program stopped issuing new financing to SBICs at the beginning of FY 2005 because the program had ceased to be a zero-subsidy program, and there were no Federal appropriations to support the program. The Debenture Program has not suffered similar losses, and is unaffected by this bill. This bill would create a third type of SBIC program, the ``Participating Debenture'' SBIC Program, that would replace the Participating Securities program. This new program would be a ``zero- subsidy'' program, with no Federal appropriations necessary, that would provide financing with equity characteristics to small businesses. In response to two major problems suffered by the Participating Securities Program, the new Participating Debenture program would seek to a, ensure that a participating debenture is considered a debt instrument for Federal budgetary purposes, and b, prevent financial losses by the SBA by increasing the SBA's share of SBICs' profits. Together with Senator Talent and Senator Bond, I plan to foster a debate in the Small Business Committee about this bill and move toward a successful rejuvenation of the equity portion of the SBIC program. I believe that a full discussion about the proposal by the SBA, the SBICs, and experts in the venture capital industry will be necessary to achieve this progress. In July 2005 a bill, H.R. 3429, was introduced in the House that would also create a new program to replace the Participating Securities program. The bill we are introducing has some elements in common with that House bill, but goes further to clarify the manner in which the SBIC program would operate, and to bring the program into greater compliance with budgetary guidelines. This bill will allow the SBA to guarantee the repayment of the redemption price, principal, and interest for a new type of security, a ``participating debenture,'' issued by a SBIC. This type of guarantee (of principal and interest for a security issued by an SBIC) existed in the two other SBIC programs, and for those other two programs it was explicitly authorized in the Small Business Investment Act of 1958 (the SBIA). This bill will also authorize the SBA to guarantee the repayment to an ``interim funding provider'' (an IFP) of any funds lost by the IFP because of the default of an SBIC during the period after the IFP has advanced monies to the SBIC, and before the IFP has been repaid for those funds. This type of guarantee existed in practice in the two other SBIC programs, but was not authorized by the SBIA Thus, this provision rectifies that problem and brings the new program into compliance with the Federal Credit Reform Act of 1990 (the FCRA). Another section of the bill authorizes the SBA to guarantee the payment of the redemption price and interest for a trust certificate issued by a trustee of a pool of PDs. This type of guarantee existed in the two prior SBIC programs, but was not authorized by the SBIA. Similar to the current Participating Securities and Debenture SBIC programs, the Participating Debenture (PD) program will raise funds by pooling the securities issued by SBICs into a pool and selling trust certificates that represent interests in that pool. Thus, this provision rectifies that problem and brings the new program more into compliance with the FCRA. Our bill includes all of the provisions of H.R. 3429 that address redemption and interest, and also includes several additional provisions. First, the bill includes repayment in default. It authorizes the SBA to guarantee repayment to IFPs for funds lost due to the default of an SBIC. The bill also authorizes the SBA to guarantee the payment of the redemption price and interest for trust certificates issued by a trustee of a pool of PDs. For each of the guarantees authorized here, the SBA is empowered to charge a fee. The fee authorized above will be sufficient to reduce to zero the net cost to the SBA of each guarantee. For the other two SBIC programs, the SBIA only explicitly authorized such a fee for the first guarantee, mentioned above, and did not authorize such a fee for the other two types of guarantees. Thus, this provision rectifies that problem and brings the new program into compliance with the FCRA. This section is not found in H.R. 3429. The obligations that each SBIC hold to repay the SBA will be identical, or ``matched'', in both size and timing to the obligations that the SBA holds to repay to the trust certificate holders that have purchased trust certificates in the pool that holds that particular SBICs' PDs. For advancing funds to an SBIC in accordance with the SBIC's license agreement with the SBA, an IFP shall have the right to receive interest from the SBIC. The manner of calculating and collecting this interest is specified. These sections is not found in H.R. 3429. The aggregate unpaid principal balance of the PDs issued by a SBIC must not exceed 200 percent of that company's private capital. In other words, the maximum ratio of the SBA's outstanding investment in the SBIC, when compared to the private investors' investment, is 2:1. This method would be identical to the two current SBIC programs. The bill permits the SBA may authorize a trust or pool acting on behalf of the SBA to purchase PDs from an SBIC. This practice occurs in the other two SBIC programs, but is not explicitly authorized by the SBIA. The principal balance of each PD will be payable in full not later than the tenth anniversary of the date of issuance of that PD. If a SBIC fails to make this payment they default immediately and are liquidated. This was not the case in the other two SBIC programs. Thus, both of these provisions bring this new program more into compliance with the FCRA. Our bill, unlike the House bill, adds that if an SBIC fails to repay the required principle and interest by a date no later than the tenth anniversary of the original issuance, the SBIC defaults immediately and must be liquidated. Beginning on the date of issuance, interest on the principal balance outstanding of a PD shall accrue on a daily basis, and unpaid accrued interest shall compound every six months. There are no interest payments during the first five years of a PD. All unpaid interest on a PD accruing during the first five years will be due and payable in full out of gross receipts on the fifth anniversary. Interest accruing on a PD after the fifth anniversary will be due and payable semi-annually. Interest payments used to be contingent on a SBIC's profitability. In this proposal, the payments are due regardless of a SBIC's financial situation and if a payment is missed the SBA has the right to liquidate the SBIC. Thus, this provision brings this new program more into compliance with the FCRA. In addition, the SBA is authorized to charge an additional fee, as necessary to reduce the cost of the program to zero, as that term is defined in the FCRA, but the fee is capped at 1.5 percent, this may need to be adjusted. This type of fee existed in the other two SBIC programs. If a SBIC fails to pay any principal or interest on a PD when due, the Administration, in addition to any other remedies that it may have, can demand immediate repayment of the principal balance and all accrued interest on all outstanding PDs of that SBIC. This was not the case in the other two programs; thus, this provision brings the new program more into compliance with the FCRA. If a default occurs, the SBA has the right to charge a default rate of interest. Again, this is an improvement on the existing program. Finally, if a default occurs, the SBA may apply the SBIC's private collateral, its private investments, to pay any interest or principal that the SBIC owes the SBA. Again, this is an improvement (a crucial improvement) on the existing program. The bill offers several additions, in this regard, to the House bill. If default occurs, the SBA can charge a default rate of interest. The SBA can also make use of private investments to pay any interest or principle owed to the SBA by the SBIC. In the event of a SBIC's liquidation, a PD will be senior in priority for all purposes to any equity interests, in other words, the SBA will have first priority to reimbursement. Also, the SBIC's private collateral may, at the option of the SBA, be applied to pay accrued interest and principal of outstanding PDs. In the event of a default by an SBIC, a PD will be senior in priority for all purposes to any equity interests, in other words, the SBA will have first priority to reimbursement. Also, the SBIC's private collateral may, at the option of the SBA, be applied to pay accrued interest and principal of outstanding PDs. The bill has an additional section for the defaults of the SBIC. The section creates rights for the SBA, in case of default, that are the same as the SBA's rights in liquidation. An SBIC also commits to invest private equity in small businesses, to match the capital raised by its PDs. An SBIC in this program shall have no other debt other than financing obtained pursuant to this program. Unless otherwise allowed by the SBA, an SBIC may used the proceeds of a PD issued by the company to pay the principal and interest due on outstanding Pds issued by that company, if the SBIC has outstanding private equity capital invested in an amount equal to that being refinanced. This section of the Senate bill adds that an SBIC may use proceeds of a PD if it has outstanding private equity capital invested in an amount equal to that be refinanced. Unless otherwise provided, an SBIC's gross receipts shall be used first for the payment of accrued interest on PDs, and then for repayment of PD principal and private investments into the SBIC, and then for profit distributions. Gross Receipts means all cash received by a SBIC, including proceeds of the sale of securities, management or other fees, and cash representing return of invested capital, other than capital contributed by partners, the proceeds of the issuance of PDs, and money borrowed from other sources, if any. Marketable Securities that the company distributes in kind will be distributed as if they were Gross Receipts. When an SBIC misses a payment, the SBA may choose not to liquidate the SBIC and the SBIC may continue to operate. In such a case, a SBIC must use Gross Receipts within 10 days after receipt to repay any outstanding past due interest and past due principal. If a SBIC has no outstanding past due interest or principal, it must use Gross Receipts to prepay accrued interest. Such prepayment will be due not later than the end of the calendar quarter during which such Gross Receipts were received. Failure to prepay accrued interest will be deemed a Payment Default. At such time as there is no unpaid, accrued interest or past due principal outstanding on a SBIC's PDs, the SBIC may use Gross Receipts to prepay PD principal that is not past due. If any Gross Receipts remain, they may be paid to private investors to repay their investments. As long as there are any outstanding PDs, a SBIC may distribute Gross Receipts to its limited partners but only if they distribute at least a pro-rata share simultaneously to the administration. If Gross Receipts remain after the payment of all required payments, remaining funds can be used for profit distributions. When all PD principal and all private capital has been repaid in full, post- amortization payments may made be made to the administration. The payments are 25 precent of their pro-rata share until private investors have received 100 percent of their principal; and thereafter, 50 percent of their pro-rata share. The order of payments are: interest payments, principal payments, pre-payments, pre-amortization payments, and post-amortization payments. This provision provides for tax distributions that are required by law, as necessary. No distribution may violate liquidity requirements or other restrictions imposed by the SBA's regulations or any State's law. At any time a SBIC is in restricted operation or liquidation by reason of capital impairment or regulatory violation, the maturity date of the SBIC's PDs, including principal and accrued interest, is subject to acceleration at the option of the administration, and whether or not there has been such an acceleration, up to 100 percent of all Gross Receipts and unfunded private investor commitments may, at the option of the administration, be required to be distributed to the administration until all accrued interest and principal on the SBIC's PDs have been paid in full. No distributions will be made to limited partners when a SBIC is in restricted operations or liquidation due to capital impairment or regulatory violation. This section of the bill details the procedures and requirements that would apply if an SBIC provided a partial repayment to the SBA in the form of securities, rather than cash. Another section details the schedule under which payments will be made to the SBA by an SBIC. Subject to SBA regulations and the permission of private investors, an SBIC may reinvest Gross Receipts back into small businesses. In addition, the bill provides that after re-payments have occurred in this program, the SBA's share of such re- payments shall not be reduced or recalculated. This section does not create any ownership interest for the SBA in any SBICs. Rather, the relationship is one of lender-borrower. I urge my colleagues to support this bill. Too much is at stake for small businesses, and the economy as a whole, to allow this critical legislation to languish. Congress must find essential agreement and fulfill its obligation to America's small businesses. Failing to advance this bill would diminish our chances for innovation, and stifle the entrepreneurial opportunities this program will produce. Instead, we have an opportunity to support these key attributes of American small businesses.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise to support the ``Small Business Investment and Growth Act of 2005,'' which I have introduced today to facilitate increased investments in small businesses throughout this country. I am pleased to be joined by my esteemed colleagues from Missouri, Senator Jim Talent and Senator Kit Bond, in sponsoring this bill. As Chair of the Senate Committee on Small Business and Entrepreneurship, I am committed to supporting our Nation's small businesses by increasing their access to capital. Small businesses comprise 99.7 percent of all businesses in the United States. Moreover, small businesses employ more than half, 57 percent, of the total private-sector workforce, and are responsible for the creation of more than two-thirds of all new jobs. Clearly, increasing investments in small businesses is crucial to our on-going economic success. This bill will reform and enhance the Small Business Administration's SBIC program, a program that is vital to fostering innovation, growth, and job creation in small businesses throughout our country. Small Business Investment Companies (SBICs) are privately-owned and managed venture capital investment companies that are licensed and regulated by the SBA. SBICs use their own capital, combined with funds borrowed from other private investors and supported by an SBA guarantee, to make equity and debt investments in qualifying small businesses. The SBA shares in the profits of SBICs. The structure of the program is unique and has been a model for similar public-private partnerships around the world. The program has been successful in mobilizing private venture capital investment, and leveraging that private investment with additional funds supported by SBA guarantees. According to the SBA's annual reports to Congress, the SBIC program has provided over $17.2 billion in financing to small businesses since the beginning of Fiscal Year 1999. Each year, this financing allows small businesses to create or retain tens of thousands of jobs. For instance, according to the SBA's Office of Advocacy, in 2004 alone SBIC investments helped small businesses create or retain approximately 81,042 jobs. There are currently two types of SBIC Programs, the Participating Securities Program and the Debenture Program. Unfortunately, the Participating Securities Program stopped issuing new financing to SBICs at the beginning of FY 2005 because the program had ceased to be a zero-subsidy program, and there were no Federal appropriations to support the program. The Debenture Program has not suffered similar losses, and is unaffected by this bill. This bill would create a third type of SBIC program, the ``Participating Debenture'' SBIC Program, that would replace the Participating Securities program. This new program would be a ``zero- subsidy'' program, with no Federal appropriations necessary, that would provide financing with equity characteristics to small businesses. In response to two major problems suffered by the Participating Securities Program, the new Participating Debenture program would seek to a, ensure that a participating debenture is considered a debt instrument for Federal budgetary purposes, and b, prevent financial losses by the SBA by increasing the SBA's share of SBICs' profits. Together with Senator Talent and Senator Bond, I plan to foster a debate in the Small Business Committee about this bill and move toward a successful rejuvenation of the equity portion of the SBIC program. I believe that a full discussion about the proposal by the SBA, the SBICs, and experts in the venture capital industry will be necessary to achieve this progress. In July 2005 a bill, H.R. 3429, was introduced in the House that would also create a new program to replace the Participating Securities program. The bill we are introducing has some elements in common with that House bill, but goes further to clarify the manner in which the SBIC program would operate, and to bring the program into greater compliance with budgetary guidelines. This bill will allow the SBA to guarantee the repayment of the redemption price, principal, and interest for a new type of security, a ``participating debenture,'' issued by a SBIC. This type of guarantee (of principal and interest for a security issued by an SBIC) existed in the two other SBIC programs, and for those other two programs it was explicitly authorized in the Small Business Investment Act of 1958 (the SBIA). This bill will also authorize the SBA to guarantee the repayment to an ``interim funding provider'' (an IFP) of any funds lost by the IFP because of the default of an SBIC during the period after the IFP has advanced monies to the SBIC, and before the IFP has been repaid for those funds. This type of guarantee existed in practice in the two other SBIC programs, but was not authorized by the SBIA Thus, this provision rectifies that problem and brings the new program into compliance with the Federal Credit Reform Act of 1990 (the FCRA). Another section of the bill authorizes the SBA to guarantee the payment of the redemption price and interest for a trust certificate issued by a trustee of a pool of PDs. This type of guarantee existed in the two prior SBIC programs, but was not authorized by the SBIA. Similar to the current Participating Securities and Debenture SBIC programs, the Participating Debenture (PD) program will raise funds by pooling the securities issued by SBICs into a pool and selling trust certificates that represent interests in that pool. Thus, this provision rectifies that problem and brings the new program more into compliance with the FCRA. Our bill includes all of the provisions of H.R. 3429 that address redemption and interest, and also includes several additional provisions. First, the bill includes repayment in default. It authorizes the SBA to guarantee repayment to IFPs for funds lost due to the default of an SBIC. The bill also authorizes the SBA to guarantee the payment of the redemption price and interest for trust certificates issued by a trustee of a pool of PDs. For each of the guarantees authorized here, the SBA is empowered to charge a fee. The fee authorized above will be sufficient to reduce to zero the net cost to the SBA of each guarantee. For the other two SBIC programs, the SBIA only explicitly authorized such a fee for the first guarantee, mentioned above, and did not authorize such a fee for the other two types of guarantees. Thus, this provision rectifies that problem and brings the new program into compliance with the FCRA. This section is not found in H.R. 3429. The obligations that each SBIC hold to repay the SBA will be identical, or ``matched'', in both size and timing to the obligations that the SBA holds to repay to the trust certificate holders that have purchased trust certificates in the pool that holds that particular SBICs' PDs. For advancing funds to an SBIC in accordance with the SBIC's license agreement with the SBA, an IFP shall have the right to receive interest from the SBIC. The manner of calculating and collecting this interest is specified. These sections is not found in H.R. 3429. The aggregate unpaid principal balance of the PDs issued by a SBIC must not exceed 200 percent of that company's private capital. In other words, the maximum ratio of the SBA's outstanding investment in the SBIC, when compared to the private investors' investment, is 2:1. This method would be identical to the two current SBIC programs. The bill permits the SBA may authorize a trust or pool acting on behalf of the SBA to purchase PDs from an SBIC. This practice occurs in the other two SBIC programs, but is not explicitly authorized by the SBIA. The principal balance of each PD will be payable in full not later than the tenth anniversary of the date of issuance of that PD. If a SBIC fails to make this payment they default immediately and are liquidated. This was not the case in the other two SBIC programs. Thus, both of these provisions bring this new program more into compliance with the FCRA. Our bill, unlike the House bill, adds that if an SBIC fails to repay the required principle and interest by a date no later than the tenth anniversary of the original issuance, the SBIC defaults immediately and must be liquidated. Beginning on the date of issuance, interest on the principal balance outstanding of a PD shall accrue on a daily basis, and unpaid accrued interest shall compound every six months. There are no interest payments during the first five years of a PD. All unpaid interest on a PD accruing during the first five years will be due and payable in full out of gross receipts on the fifth anniversary. Interest accruing on a PD after the fifth anniversary will be due and payable semi-annually. Interest payments used to be contingent on a SBIC's profitability. In this proposal, the payments are due regardless of a SBIC's financial situation and if a payment is missed the SBA has the right to liquidate the SBIC. Thus, this provision brings this new program more into compliance with the FCRA. In addition, the SBA is authorized to charge an additional fee, as necessary to reduce the cost of the program to zero, as that term is defined in the FCRA, but the fee is capped at 1.5 percent, this may need to be adjusted. This type of fee existed in the other two SBIC programs. If a SBIC fails to pay any principal or interest on a PD when due, the Administration, in addition to any other remedies that it may have, can demand immediate repayment of the principal balance and all accrued interest on all outstanding PDs of that SBIC. This was not the case in the other two programs; thus, this provision brings the new program more into compliance with the FCRA. If a default occurs, the SBA has the right to charge a default rate of interest. Again, this is an improvement on the existing program. Finally, if a default occurs, the SBA may apply the SBIC's private collateral, its private investments, to pay any interest or principal that the SBIC owes the SBA. Again, this is an improvement (a crucial improvement) on the existing program. The bill offers several additions, in this regard, to the House bill. If default occurs, the SBA can charge a default rate of interest. The SBA can also make use of private investments to pay any interest or principle owed to the SBA by the SBIC. In the event of a SBIC's liquidation, a PD will be senior in priority for all purposes to any equity interests, in other words, the SBA will have first priority to reimbursement. Also, the SBIC's private collateral may, at the option of the SBA, be applied to pay accrued interest and principal of outstanding PDs. In the event of a default by an SBIC, a PD will be senior in priority for all purposes to any equity interests, in other words, the SBA will have first priority to reimbursement. Also, the SBIC's private collateral may, at the option of the SBA, be applied to pay accrued interest and principal of outstanding PDs. The bill has an additional section for the defaults of the SBIC. The section creates rights for the SBA, in case of default, that are the same as the SBA's rights in liquidation. An SBIC also commits to invest private equity in small businesses, to match the capital raised by its PDs. An SBIC in this program shall have no other debt other than financing obtained pursuant to this program. Unless otherwise allowed by the SBA, an SBIC may used the proceeds of a PD issued by the company to pay the principal and interest due on outstanding Pds issued by that company, if the SBIC has outstanding private equity capital invested in an amount equal to that being refinanced. This section of the Senate bill adds that an SBIC may use proceeds of a PD if it has outstanding private equity capital invested in an amount equal to that be refinanced. Unless otherwise provided, an SBIC's gross receipts shall be used first for the payment of accrued interest on PDs, and then for repayment of PD principal and private investments into the SBIC, and then for profit distributions. Gross Receipts means all cash received by a SBIC, including proceeds of the sale of securities, management or other fees, and cash representing return of invested capital, other than capital contributed by partners, the proceeds of the issuance of PDs, and money borrowed from other sources, if any. Marketable Securities that the company distributes in kind will be distributed as if they were Gross Receipts. When an SBIC misses a payment, the SBA may choose not to liquidate the SBIC and the SBIC may continue to operate. In such a case, a SBIC must use Gross Receipts within 10 days after receipt to repay any outstanding past due interest and past due principal. If a SBIC has no outstanding past due interest or principal, it must use Gross Receipts to prepay accrued interest. Such prepayment will be due not later than the end of the calendar quarter during which such Gross Receipts were received. Failure to prepay accrued interest will be deemed a Payment Default. At such time as there is no unpaid, accrued interest or past due principal outstanding on a SBIC's PDs, the SBIC may use Gross Receipts to prepay PD principal that is not past due. If any Gross Receipts remain, they may be paid to private investors to repay their investments. As long as there are any outstanding PDs, a SBIC may distribute Gross Receipts to its limited partners but only if they distribute at least a pro-rata share simultaneously to the administration. If Gross Receipts remain after the payment of all required payments, remaining funds can be used for profit distributions. When all PD principal and all private capital has been repaid in full, post- amortization payments may made be made to the administration. The payments are 25 precent of their pro-rata share until private investors have received 100 percent of their principal; and thereafter, 50 percent of their pro-rata share. The order of payments are: interest payments, principal payments, pre-payments, pre-amortization payments, and post-amortization payments. This provision provides for tax distributions that are required by law, as necessary. No distribution may violate liquidity requirements or other restrictions imposed by the SBA's regulations or any State's law. At any time a SBIC is in restricted operation or liquidation by reason of capital impairment or regulatory violation, the maturity date of the SBIC's PDs, including principal and accrued interest, is subject to acceleration at the option of the administration, and whether or not there has been such an acceleration, up to 100 percent of all Gross Receipts and unfunded private investor commitments may, at the option of the administration, be required to be distributed to the administration until all accrued interest and principal on the SBIC's PDs have been paid in full. No distributions will be made to limited partners when a SBIC is in restricted operations or liquidation due to capital impairment or regulatory violation. This section of the bill details the procedures and requirements that would apply if an SBIC provided a partial repayment to the SBA in the form of securities, rather than cash. Another section details the schedule under which payments will be made to the SBA by an SBIC. Subject to SBA regulations and the permission of private investors, an SBIC may reinvest Gross Receipts back into small businesses. In addition, the bill provides that after re-payments have occurred in this program, the SBA's share of such re- payments shall not be reduced or recalculated. This section does not create any ownership interest for the SBA in any SBICs. Rather, the relationship is one of lender-borrower. I urge my colleagues to support this bill. Too much is at stake for small businesses, and the economy as a whole, to allow this critical legislation to languish. Congress must find essential agreement and fulfill its obligation to America's small businesses. Failing to advance this bill would diminish our chances for innovation, and stifle the entrepreneurial opportunities this program will produce. Instead, we have an opportunity to support these key attributes of American small businesses.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise today, along with my colleagues Senators Thune and Collins, in support of an amendment to the Transportation, Treasury and Housing and Urban Development appropriations bill. I would like to commend the managers on both sides of the aisle for their efforts to shepherd along this extremely vital legislation to passage in the Senate. They have shown a great eagerness to work with Senators to improve the overall legislation, and have done so in a sincerely bipartisan way that is so rarely seen in the Senate nowadays. This amendment will offer some small measure of protection to employees at our flight service stations scattered across the country. In Bangor, ME, our flight service station, highly skilled workers decipher flight plans and help pilots navigate the tricky summer fog of coastal Maine and the constantly changing winter weather. As many of you know, our Nation's flight service stations have been contracted to Lockheed-Martin. While some may dispute the wisdom of such a decision, I do not come to the floor to discuss that issue. I do, however, wish to prevent unforeseen and serious damage to the financial future of many of our employees who have so diligently and skillfully protected our pilots and aviators for so many years. Hundreds of flight service station employees who are years, months, or in some cases weeks away from a well-deserved retirement would be, if not protected, stripped of their Federal pensions and benefits as the stations are transferred over to Lockheed-Martin. The aerospace company has operated in good faith, there can be no disputing that, but many of these individuals have been counting the days until their retirement, complete with the Federal benefits they have so rightly earned. To take those away from them, with but a few weeks to spare, is quite obviously cruel and uncalled for. This amendment would allow those workers who are eligible for retirement in 2 years or less to remain on the Federal Aviation Administration's payroll, to retire at the end of those 2 years, and receive the Federal retirement benefits they have worked so long to earn. This cost will be offset by reducing the payout of the contract to Lockheed-Martin. For years, pilots have been clamoring for better technology in our flight service stations, and Lockheed will do an excellent job providing that. What will be missing will be the local knowledge and eyes on the ground that those same pilots have come to rely on. This amendment, in its own small way, attempts to honor those individuals who have proven so reliable over the years. I urge my colleagues to support this very simple amendment, and would like to thank Senators Collins, Thune, Johnson, Santorum, and Specter for their steadfast efforts on this amendment as well.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise today for one very simple reason, the days are relentlessly marching toward winter . . . the clock is ticking as the thermometer edges ever downward . . . and it would be unconscionable for Congress to adjourn for the year without providing critical, additional assistance for LIHEAP, the Low Income Home Energy Assistance Program, at a time of skyrocketing fuel prices. There should be no mistake, this is an emergency and a crisis we know is coming, and it would be an abrogation of our responsibility to stand by and allow it to occur. It does not take a crystal ball to predict the dire consequences when home heating oil in Maine is $2.52 per gallon, up 59 cents from a year ago . . . kerosene prices average $2.95 a gallon, 75 cents higher than this time last year, and it is not even winter yet. Some projections have a gallon of heating oil reaching $3.00. So understandably, we are already hearing the mounting concern ``how will I pay for home heating oil when it's 30 percent more than last year, and I struggled to make ends meet then?'' ``How will I afford to pay half again as much for natural gas?'' People need to know now that they can count on us for assistance. This is a necessity of life--so much so that 73 percent of households in a recent survey reported they would cut back on, and even go without, other necessities such as food, prescription drugs, and mortgage and rent payments. Churches, food pantries, local service organizations--they are all hearing the cry, and all the leaves aren't even yet off of the trees. The fact is, countless American's don't have room in their budget, many on fixed incomes, for this sudden surge in home heating prices but surely, in looking at our national priorities, we can find room in our budget to help Americans stay warm this winter. Because of the supply disruptions caused by the hurricanes at a time when prices were already spiraling up, prices have been driven even higher and are directly affecting low income Mainers and how they will be able to pay for their home heating oil, propane and kerosene this winter. A recent Wall Street Journal quoted Jo-Ann Choate, who heads up Maine's LIHEAP program. Ms. Choate said, ``This year we've got a very good chance of running out.'' Eighty-four percent of the applicants for the LIHEAP program in the State use oil heat. Over 46,000 applied for and received State LIHEAP funds last winter. Each household received $480, which covered the cost of 275 gallons of heating oil. The problem this winter is that the same $480 will buy only 172 gallons, which a household will use up in the first 3 to 4 weeks in Maine. What will these people do to stay warm for the four or five months left of winter? The water pipes will freeze and then break, damaging homes. People will start using their stoves to get heat. The Mortgage Bankers Association expects that the steep energy costs could increase the number of missed payments and lost homes beginning later this year. My State is expecting at least 48,000 applicants this winter, so there will be less money distributed to each household unless we can obtain higher funding for the LIHEAP program. Ms. Choate says that Maine plans to focus on the elderly, disabled, and families with small children, and is studying how to move others to heated shelters. This is why our efforts are so very important. And it isn't just Maine, it is happening in all of the Nation's cold weather States. Quite simply, without increased funding, we are forcing the managers of State LIHEAP programs to make a Solomon's choice. I request that the Wall Street Journal article of October 6, 2005 be printed for the Record.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise today to express my deep admiration for the indomitable George Hale, a man whose voice has danced over the airwaves of Maine television and radio over the last 50 years. George Hale has an exceptional ability of bringing unique personality and perspective to each and every broadcast. With a career in sports, George provides the listener with the personal stories of triumph that make competition enthralling. Maine can not take all the credit for George Hale. Born in Cleveland, OH, George had to decide whether to come to Bangor and work in television or accept a desk job in New York City. By my estimation, he made the right decision subsequently establishing himself as one of Maine's premier broadcasting personalities. The most famous story about George is the time that he predicted snow flurries in the evening weather forecast and the next day Bangor awoke to find itself buried in the biggest snowstorm in its history. To this day, residents refer to him as ``Flurries Hale''. I extend my most sincere congratulations to Mr. Hale on this milestone accomplishment.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise today to bring to the attention of the Senate a bill, the Small Business Hurricane Relief and Reconstruction Act of 2005, which provides a comprehensive package for immediate emergency resources to help the victims of Hurricane Katrina rebuild their lives and their businesses. As we are well aware, the entire gulf coast of the United States has been ravaged by the disaster of Hurricane Katrina. No natural disaster in this country in recent memory has carried with it the devastation and horror we have witnessed in the recent weeks. Many lives have been lost and damages are projected in the hundreds of billions of dollars. The President and Congress have already provided over $61 billion in emergency funds. While we work to reestablish communities and provide some stability to the affected areas, we must consider the enormous economic impact this catastrophe has had on the region and on our entire Nation. This impact is particularly pronounced for the vital small business sector. With over 800,000 firms damaged in the hurricane-affected region, employment in the Louisiana, Mississippi and Alabama area may be reduced by over a million jobs! Moreover, our economy which has recently recovered from recession, thanks largely to our small businesses which have created three-quarters of all new jobs, could be dampened by as much as a full percentage point. As chair of the Committee on Small Business and Entrepreneurship, I am committed to do everything in my power to provide immediate and necessary support to rebuild this region and to help sustain our economy. I want to ensure that every American affected by this hurricane has the resources to begin rebuilding their lives, their businesses, and their dreams. I would like to thank my colleagues, Senator Kerry, Senator Vitter, Senator Landrieu, Senator Talent, Senator Kennedy, Senator Cornyn, and Senator Bayh, for cosponsoring this bill. This bill includes all of the provisions that were in prior hurricane relief legislation that I introduced with Senator Vitter and Senator Talent but also includes several additional provisions and improvements to preexisting provisions. The provisions of this bill were contained in an amendment that I proposed, amendment No. 1717, to the Commerce, Justice, and Science Appropriations Act of 2005, H.R. 2862. I would like to thank my colleagues, Senator Kerry, Senator Vitter, Senator Landrieu, and Senator Talent, for cosponsoring that amendment. The amendment was approved in the Senate by a rollcall vote of 96 to 0 on September 15, 2006, and subsequently passed the Senate in the Commerce, Justice, and Science Appropriations Act on that same day. Senator Vitter, Senator Talent, and I also introduced the provisions of S.A. 1717 as a stand-alone bill, S. 1724, on September 19, 2005. We took this step in order to begin the process of enacting these provisions into law more quickly than might occur through the Commerce, Justice, and Science Appropriations Act, which must still complete its Senate-House conference. Today we are introducing an expanded package of provisions to increase the assistance provided to victims of the hurricane, who require immediate assistance. Because the Federal Disaster Loan program administered by the Small Business Administration issues disaster loans to businesses, homeowners, and renters, this legislation would have a significant impact on many facets of the efforts to rebuild the areas damaged by Hurricane Katrina. Because of the importance of this rebuilding challenge, I chaired a hearing in the Committee on Small Business and Entrepreneurship on September 22, 2005 to address the impact that Hurricane Katrina and Hurricane Rita have had on small businesses. At that hearing, the Committee heard testimony from the Administrator of the Small Business Administration, Hector Barreto, who explained the unprecedented scope of the SBA's response to these disasters. In addition, the director of the SBA's Disaster Assistance Program, Herb Mitchell, testified about the SBA's actions thus far, and its plans for the continuing recovery. The committee also heard testimony from seven representatives of small businesses, and of small business development centers, in the gulf coast region. These witnesses, who traveled from Louisiana, Mississippi, and Alabama for the hearing, described to the committee the devastation that has occurred to their businesses and communities and various steps they believe would assist in the rebuilding process. Many of their recommendations were contained in the legislation I had introduced last week, S. 1724, and the legislation I am introducing today includes other provisions stemming from the committee's hearing and their testimony. The Small Business Administration is and must be at the forefront of this massive relief effort, playing a significant role in assisting impacted communities. This bill will strengthen the SBA's resources and will enable them to pave the pathway to recovery. I have faith that American small businesses will persevere through these difficult times and help lead the region's recovery. It is essential that we work together here in Congress, and put forth the best possible proposal to stimulate our economy and foster job growth. I have spoken with SBA's Administrator Barreto concerning the various ways to respond to this disaster and assist with the recovery. He informed me that FEMA has referred over 500,000 cases for loan assistance to the SBA, and that the SBA is receiving up to 20,000 calls per day. This is a tremendous volume and a vital challenge that the SBA must satisfy. To date, the SBA has sent out almost 500,000 applications for loans to individuals and businesses, and has received 810 loan applications as of Monday morning, which demonstrates that much assistance is yet to be provided by the SBA. Therefore, it is critical that we act now. I have included many provisions in my bill that would assist hurricane victims applying for SBA disaster loans. My legislation increases the maximum size of an SBA disaster loan from $1.5 million per loan to $10 million per loan and makes it possible for non-profit institutions damaged by Hurricane Katrina to be eligible for disaster loans. I firmly believe this legislation is the best possible package to aid families, businesses, and communities through these challenging times. Small businesses must have a fighting chance to survive the economic disaster caused by Hurricane Katrina. For instance, the bill increases the share of small businesses in Federal prime contracts and subcontracts for rebuilding the damaged areas through meaningful goals, set-asides, subcontracting plans, outreach programs, and HUBZone preferences. The legislation also allows recipients of disaster loans to increase the size of their loan if the additional amounts would be spent on mitigation efforts, such as sea walls, storm shutters, or better drainage system to prepare for future disasters. This provision was suggested by the administration in its proposal to rebuild the gulf coast region. The bill also allows the Small Business Administration to offer economic injury disaster loans to small businesses throughout the country if the businesses suffered direct adverse economic impacts from the two hurricanes. The SBA offered these loans nationwide after the terrorist attacks of September 11, 2001. In addition, the bill protects future borrowers in the SBA's business loan programs from having to pay higher fees to compensate the Federal Government for any defaults that may occur because the businesses of some current borrower who had loans before the hurricane were destroyed in the hurricanes. SBA business loan programs utilize fees to pay for all or part of the programs' costs, and those businesses that default because of the hurricanes would not be included in the calculation of future program costs in the SBA's business loan programs. The bill addresses concerns about fraud and lack of competition by abolishing the excessive increase in the ``micro-purchase'' threshold to $250,000. This increase, slipped into the second hurricane Supplemental Appropriations Act in September 2005, allowed Federal officials to ignore small businesses in awarding contracts up to $250,000. Micro-purchases are generally strictly limited to $2,500 and to $15,000 in case of nuclear attack or military contingency. These purchases allow for convenient credit card transactions by the Federal Government, but are vulnerable to fraud and favoritism. I have also provided the SBA with the authority to grant victims of Hurricane Katrina up to 12 months to begin repaying their SBA disaster loans which would assist both small and large businesses, homeowners, and renters. This l2-month period could be extended to 24 months at the discretion of the SBA Administrator if he determines that Katrina victims would need additional time to begin repaying their loans. This would allow also homeowners and businesses additional time to get their lives and businesses restored before being required to begin repaying loans. This legislation also proposes lowering fees for the 7(a) program to make borrowing more affordable for small businesses both within and outside the disaster areas, many of which have been impacted by the disaster and are struggling to cover higher costs in health care and energy and rising interest rates. Recognizing the increased demand this disaster will place on all small business lending programs, the amendment proposes increasing the 7(a) lending program from a program level of $17 billion to $27 billion, and the 504 lending program from a program level of $7.5 billion to $12.5 billion. Both the 504 and 7(a) lending programs are funded entirely through fees, so the increases require no appropriation. Moreover, this bill increases the program level for SBA disaster loans--physical and economic injury--by approximately $800 million, requiring an appropriation of approximately $86 million. The committee is concerned there will not be enough funding for disaster loans available to meet the scope of this disaster, given that the economic injury disaster loans alone for the September 11 attacks amounted to about $1 billion, and the physical damage for Katrina is considered much more extensive. The bill also includes a provision requiring the SBA to treat these special provisions as separate from the regular programs, to avoid increasing future subsidy rates, and therefore, the costs for borrowers who rely on those programs. This same protection was provided for emergency 7(a) loans after the September 11 attacks, and for the special disaster loans made after those attacks. Additionally, many small businesses in the disaster areas will require relief from making payments and interest on 504 loans they had before Katrina hit. Therefore, this amendment includes a provision that authorizes the SBA to cover the payments and interest on existing loans until the small business can resume payments. Similar to the Supplementary Terrorist Activity Relief, STAR, loans enacted by Congress after September 11, this bill allows the SBA to provide similar loans with lower fees for small businesses located outside the disaster zones but are nonetheless indirectly impacted by Hurricane Katrina. The lowers fees also provides the lenders with an incentive to lend to these businesses. Importantly, the bill includes protections to mitigate recent reports of past misdirection of loans to nondisaster victims. The protections include requiring lenders to inform borrowers that they are receiving Katrina relief loans, requiring lenders to document to the SBA how the borrower was adversely affected by Hurricane Katrina, and for the SBA's inspector general to collect the explanations and report to the Senate Committee on Small Business and Entrepreneurship and House Committee on Small Business every 6 months, verifying loans are being used for the intended purposes. Finally, the bill would require the Government Accountability Office to review the implementation of the program, after its completion, and report its findings to Congress. These added protections will ensure that only applicants who really need these loans to recover from the horrific effects of Hurricane Katrina and Hurricane Rita will receive the loans. Furthermore, the legislation authorizes $450 million to the affected State governments of Louisiana, Mississippi, Alabama, Texas, and Florida to provide emergency bridge loans or grants to small businesses in the disaster areas that have been adversely impacted by Hurricane Katrina and require immediate access to capital until they can secure other loans or financial assistance. The goal is to disburse the funds quickly, and this measure is based on a successful program that helped victims of the hurricanes in Florida in past years. With the cost of Katrina relief and rebuilding estimated at over $100 billion, small businesses, particularly those located in the disaster area and that employ individuals in the affected areas, should receive their fair share of Federal contracting and subcontracting dollars. My bill also attempts to provide critical assistance to small businesses that have been operating in the areas devastated by the Hurricane Katrina by expanding access to Federal contract and subcontracts. Government projects provide solid business opportunities and prompt, steady pay for small businessmen and businesswomen. In addition, Government procurement would open doors for many local small businesses to participate in the long-term reconstruction work in the gulf coast areas. Prior to the disaster, small construction companies in Alabama, Mississippi, and Louisiana brought home nearly $500 million in Federal contracts a year. Total small business contracts in the gulf coast region exceeded $3 billion a year. While many small businesses would benefit from other forms of disaster assistance, many of them are ready to get back to work and into business as soon as possible. To that end, my bill designates the Hurricane Katrina disaster area as a HUBZone. A HUBZone designation would enable small businesses locating in the disaster area and employing people in that area to receive contracting preferences and price evaluation preferences to offset greater costs of doing business. The HUBZone program was created to direct federal contracting dollars to economically distressed areas. Extending the HUBZone designation to the gulf coast would bring needed businesses development tools to affected areas. In addition Mr. President, my bill would increase the maximum size of SBA surety bonds for small businesses from $2 million to $5 million, and authorizes the SBA to increase the size of these bonds further to $10 million. Small contractors vying for work need an increase in bonds to handle greater projects for Hurricane Katrina relief. Local small businesses in the gulf coast can use higher bonds to compensate for the damage to their assets from the hurricane. My bill would also direct the SBA, its resources partners, and the Federal offices of small and disadvantaged business utilization to create a contracting outreach program for small businesses located or willing to locate in the Katrina disaster area. Finally, my bill would establish small business contracting and subcontracting goals for all Katrina-related contracts and subcontracts to promote greater jobs creation and development, while providing reasonable flexibility to Federal agencies in meeting that goal in light of difficult circumstances on the ground. Finally I would also like to comment on the funding levels provided for the SBA in this bill. I have authorized the appropriation of $24.25 million for grants to increase business counseling in the damaged areas for several SBA entrepreneurial development programs including: Small Business Development Center, SBDCs; SCORE; Womens Business Centers, WBCs; Veteran's Business Centers, and Microloan Technical Assistance. Our Nation's 25 million small businesses prove time and again to breathe new life into our economy, by growing at twice the rate of all firms. And when a disaster strikes, the spirit, determination and will of America's small businesses help to create the firm economic foundation, propelling our Nation's economic growth. Therefore, we in turn must create an atmosphere favorable for small businesses and provide this emergency package to the SBA. We must allow our Nation's small businesses to do what they do best--create jobs. Mr. President, I urge my colleagues to support this bill. Too much is at stake for small businesses, and the economy as a whole, to allow this critical legislation to languish. Congress must find essential agreement and fulfill its obligation to America's small businesses. Clearly, if we strive for anything less, we fail to support the backbone of our economy, our hope for new innovation, and the entrepreneurs reach for the American dream. Thank you, Mr. President.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise today to bring to the attention of the Senate a bill, the Small Business Hurricane Relief and Reconstruction Act of 2005, which provides a comprehensive package for immediate emergency resources to help the victims of Hurricane Katrina rebuild their lives and their businesses. As we are well aware, the entire gulf coast of the United States has been ravaged by the disaster of Hurricane Katrina. No natural disaster in this country in recent memory has carried with it the devastation and horror we have witnessed in the recent weeks. Many lives have been lost and damages are projected in the hundreds of billions of dollars. The President and Congress have already provided over $61 billion in emergency funds. While we work to reestablish communities and provide some stability to the affected areas, we must consider the enormous economic impact this catastrophe has had on the region and on our entire Nation. This impact is particularly pronounced for the vital small business sector. With over 800,000 firms damaged in the hurricane-affected region, employment in the Louisiana, Mississippi and Alabama area may be reduced by over a million jobs! Moreover, our economy which has recently recovered from recession, thanks largely to our small businesses which have created three-quarters of all new jobs, could be dampened by as much as a full percentage point. As chair of the Committee on Small Business and Entrepreneurship, I am committed to do everything in my power to provide immediate and necessary support to rebuild this region and to help sustain our economy. I want to ensure that every American affected by this hurricane has the resources to begin rebuilding their lives, their businesses, and their dreams. I would like to thank my colleagues, Senator Kerry, Senator Vitter, Senator Landrieu, Senator Talent, Senator Kennedy, Senator Cornyn, and Senator Bayh, for cosponsoring this bill. This bill includes all of the provisions that were in prior hurricane relief legislation that I introduced with Senator Vitter and Senator Talent but also includes several additional provisions and improvements to preexisting provisions. The provisions of this bill were contained in an amendment that I proposed, amendment No. 1717, to the Commerce, Justice, and Science Appropriations Act of 2005, H.R. 2862. I would like to thank my colleagues, Senator Kerry, Senator Vitter, Senator Landrieu, and Senator Talent, for cosponsoring that amendment. The amendment was approved in the Senate by a rollcall vote of 96 to 0 on September 15, 2006, and subsequently passed the Senate in the Commerce, Justice, and Science Appropriations Act on that same day. Senator Vitter, Senator Talent, and I also introduced the provisions of S.A. 1717 as a stand-alone bill, S. 1724, on September 19, 2005. We took this step in order to begin the process of enacting these provisions into law more quickly than might occur through the Commerce, Justice, and Science Appropriations Act, which must still complete its Senate-House conference. Today we are introducing an expanded package of provisions to increase the assistance provided to victims of the hurricane, who require immediate assistance. Because the Federal Disaster Loan program administered by the Small Business Administration issues disaster loans to businesses, homeowners, and renters, this legislation would have a significant impact on many facets of the efforts to rebuild the areas damaged by Hurricane Katrina. Because of the importance of this rebuilding challenge, I chaired a hearing in the Committee on Small Business and Entrepreneurship on September 22, 2005 to address the impact that Hurricane Katrina and Hurricane Rita have had on small businesses. At that hearing, the Committee heard testimony from the Administrator of the Small Business Administration, Hector Barreto, who explained the unprecedented scope of the SBA's response to these disasters. In addition, the director of the SBA's Disaster Assistance Program, Herb Mitchell, testified about the SBA's actions thus far, and its plans for the continuing recovery. The committee also heard testimony from seven representatives of small businesses, and of small business development centers, in the gulf coast region. These witnesses, who traveled from Louisiana, Mississippi, and Alabama for the hearing, described to the committee the devastation that has occurred to their businesses and communities and various steps they believe would assist in the rebuilding process. Many of their recommendations were contained in the legislation I had introduced last week, S. 1724, and the legislation I am introducing today includes other provisions stemming from the committee's hearing and their testimony. The Small Business Administration is and must be at the forefront of this massive relief effort, playing a significant role in assisting impacted communities. This bill will strengthen the SBA's resources and will enable them to pave the pathway to recovery. I have faith that American small businesses will persevere through these difficult times and help lead the region's recovery. It is essential that we work together here in Congress, and put forth the best possible proposal to stimulate our economy and foster job growth. I have spoken with SBA's Administrator Barreto concerning the various ways to respond to this disaster and assist with the recovery. He informed me that FEMA has referred over 500,000 cases for loan assistance to the SBA, and that the SBA is receiving up to 20,000 calls per day. This is a tremendous volume and a vital challenge that the SBA must satisfy. To date, the SBA has sent out almost 500,000 applications for loans to individuals and businesses, and has received 810 loan applications as of Monday morning, which demonstrates that much assistance is yet to be provided by the SBA. Therefore, it is critical that we act now. I have included many provisions in my bill that would assist hurricane victims applying for SBA disaster loans. My legislation increases the maximum size of an SBA disaster loan from $1.5 million per loan to $10 million per loan and makes it possible for non-profit institutions damaged by Hurricane Katrina to be eligible for disaster loans. I firmly believe this legislation is the best possible package to aid families, businesses, and communities through these challenging times. Small businesses must have a fighting chance to survive the economic disaster caused by Hurricane Katrina. For instance, the bill increases the share of small businesses in Federal prime contracts and subcontracts for rebuilding the damaged areas through meaningful goals, set-asides, subcontracting plans, outreach programs, and HUBZone preferences. The legislation also allows recipients of disaster loans to increase the size of their loan if the additional amounts would be spent on mitigation efforts, such as sea walls, storm shutters, or better drainage system to prepare for future disasters. This provision was suggested by the administration in its proposal to rebuild the gulf coast region. The bill also allows the Small Business Administration to offer economic injury disaster loans to small businesses throughout the country if the businesses suffered direct adverse economic impacts from the two hurricanes. The SBA offered these loans nationwide after the terrorist attacks of September 11, 2001. In addition, the bill protects future borrowers in the SBA's business loan programs from having to pay higher fees to compensate the Federal Government for any defaults that may occur because the businesses of some current borrower who had loans before the hurricane were destroyed in the hurricanes. SBA business loan programs utilize fees to pay for all or part of the programs' costs, and those businesses that default because of the hurricanes would not be included in the calculation of future program costs in the SBA's business loan programs. The bill addresses concerns about fraud and lack of competition by abolishing the excessive increase in the ``micro-purchase'' threshold to $250,000. This increase, slipped into the second hurricane Supplemental Appropriations Act in September 2005, allowed Federal officials to ignore small businesses in awarding contracts up to $250,000. Micro-purchases are generally strictly limited to $2,500 and to $15,000 in case of nuclear attack or military contingency. These purchases allow for convenient credit card transactions by the Federal Government, but are vulnerable to fraud and favoritism. I have also provided the SBA with the authority to grant victims of Hurricane Katrina up to 12 months to begin repaying their SBA disaster loans which would assist both small and large businesses, homeowners, and renters. This l2-month period could be extended to 24 months at the discretion of the SBA Administrator if he determines that Katrina victims would need additional time to begin repaying their loans. This would allow also homeowners and businesses additional time to get their lives and businesses restored before being required to begin repaying loans. This legislation also proposes lowering fees for the 7(a) program to make borrowing more affordable for small businesses both within and outside the disaster areas, many of which have been impacted by the disaster and are struggling to cover higher costs in health care and energy and rising interest rates. Recognizing the increased demand this disaster will place on all small business lending programs, the amendment proposes increasing the 7(a) lending program from a program level of $17 billion to $27 billion, and the 504 lending program from a program level of $7.5 billion to $12.5 billion. Both the 504 and 7(a) lending programs are funded entirely through fees, so the increases require no appropriation. Moreover, this bill increases the program level for SBA disaster loans--physical and economic injury--by approximately $800 million, requiring an appropriation of approximately $86 million. The committee is concerned there will not be enough funding for disaster loans available to meet the scope of this disaster, given that the economic injury disaster loans alone for the September 11 attacks amounted to about $1 billion, and the physical damage for Katrina is considered much more extensive. The bill also includes a provision requiring the SBA to treat these special provisions as separate from the regular programs, to avoid increasing future subsidy rates, and therefore, the costs for borrowers who rely on those programs. This same protection was provided for emergency 7(a) loans after the September 11 attacks, and for the special disaster loans made after those attacks. Additionally, many small businesses in the disaster areas will require relief from making payments and interest on 504 loans they had before Katrina hit. Therefore, this amendment includes a provision that authorizes the SBA to cover the payments and interest on existing loans until the small business can resume payments. Similar to the Supplementary Terrorist Activity Relief, STAR, loans enacted by Congress after September 11, this bill allows the SBA to provide similar loans with lower fees for small businesses located outside the disaster zones but are nonetheless indirectly impacted by Hurricane Katrina. The lowers fees also provides the lenders with an incentive to lend to these businesses. Importantly, the bill includes protections to mitigate recent reports of past misdirection of loans to nondisaster victims. The protections include requiring lenders to inform borrowers that they are receiving Katrina relief loans, requiring lenders to document to the SBA how the borrower was adversely affected by Hurricane Katrina, and for the SBA's inspector general to collect the explanations and report to the Senate Committee on Small Business and Entrepreneurship and House Committee on Small Business every 6 months, verifying loans are being used for the intended purposes. Finally, the bill would require the Government Accountability Office to review the implementation of the program, after its completion, and report its findings to Congress. These added protections will ensure that only applicants who really need these loans to recover from the horrific effects of Hurricane Katrina and Hurricane Rita will receive the loans. Furthermore, the legislation authorizes $450 million to the affected State governments of Louisiana, Mississippi, Alabama, Texas, and Florida to provide emergency bridge loans or grants to small businesses in the disaster areas that have been adversely impacted by Hurricane Katrina and require immediate access to capital until they can secure other loans or financial assistance. The goal is to disburse the funds quickly, and this measure is based on a successful program that helped victims of the hurricanes in Florida in past years. With the cost of Katrina relief and rebuilding estimated at over $100 billion, small businesses, particularly those located in the disaster area and that employ individuals in the affected areas, should receive their fair share of Federal contracting and subcontracting dollars. My bill also attempts to provide critical assistance to small businesses that have been operating in the areas devastated by the Hurricane Katrina by expanding access to Federal contract and subcontracts. Government projects provide solid business opportunities and prompt, steady pay for small businessmen and businesswomen. In addition, Government procurement would open doors for many local small businesses to participate in the long-term reconstruction work in the gulf coast areas. Prior to the disaster, small construction companies in Alabama, Mississippi, and Louisiana brought home nearly $500 million in Federal contracts a year. Total small business contracts in the gulf coast region exceeded $3 billion a year. While many small businesses would benefit from other forms of disaster assistance, many of them are ready to get back to work and into business as soon as possible. To that end, my bill designates the Hurricane Katrina disaster area as a HUBZone. A HUBZone designation would enable small businesses locating in the disaster area and employing people in that area to receive contracting preferences and price evaluation preferences to offset greater costs of doing business. The HUBZone program was created to direct federal contracting dollars to economically distressed areas. Extending the HUBZone designation to the gulf coast would bring needed businesses development tools to affected areas. In addition Mr. President, my bill would increase the maximum size of SBA surety bonds for small businesses from $2 million to $5 million, and authorizes the SBA to increase the size of these bonds further to $10 million. Small contractors vying for work need an increase in bonds to handle greater projects for Hurricane Katrina relief. Local small businesses in the gulf coast can use higher bonds to compensate for the damage to their assets from the hurricane. My bill would also direct the SBA, its resources partners, and the Federal offices of small and disadvantaged business utilization to create a contracting outreach program for small businesses located or willing to locate in the Katrina disaster area. Finally, my bill would establish small business contracting and subcontracting goals for all Katrina-related contracts and subcontracts to promote greater jobs creation and development, while providing reasonable flexibility to Federal agencies in meeting that goal in light of difficult circumstances on the ground. Finally I would also like to comment on the funding levels provided for the SBA in this bill. I have authorized the appropriation of $24.25 million for grants to increase business counseling in the damaged areas for several SBA entrepreneurial development programs including: Small Business Development Center, SBDCs; SCORE; Womens Business Centers, WBCs; Veteran's Business Centers, and Microloan Technical Assistance. Our Nation's 25 million small businesses prove time and again to breathe new life into our economy, by growing at twice the rate of all firms. And when a disaster strikes, the spirit, determination and will of America's small businesses help to create the firm economic foundation, propelling our Nation's economic growth. Therefore, we in turn must create an atmosphere favorable for small businesses and provide this emergency package to the SBA. We must allow our Nation's small businesses to do what they do best--create jobs. Mr. President, I urge my colleagues to support this bill. Too much is at stake for small businesses, and the economy as a whole, to allow this critical legislation to languish. Congress must find essential agreement and fulfill its obligation to America's small businesses. Clearly, if we strive for anything less, we fail to support the backbone of our economy, our hope for new innovation, and the entrepreneurs reach for the American dream. Thank you, Mr. President.

Ms. SNOWE

Ms. SNOWE. Mr. President, today I rise to introduce legislation that would re-authorize the New Markets Tax Credit for five additional years. I'd like to thank the Senator from West Virginia, Jay Rockefeller, for cosponsoring this legislation, as well as Senator Jim Bunning. Their strong support is appreciated, and this program will help revitalize many communities all across America. The New Markets Tax Credit was enacted in December 2000 as part of the Community Renewal Tax Relief Act and offers a seven-year, 39 percent Federal credit made through investment vehicles known as Community Development Entities (CDEs). CDEs combine private investment dollars with capital raised through the incentive to make loans to or investments in businesses in low-income communities. In its brief period of existence, the New Markets Tax Credit has had a tremendous success in strengthening and revitalizing communities. In Maine, Coastal Enterprises, Inc. issued a $31.5 million long-term NMTC loan to Katahdin Forest Management, which provided additional working capital for two large pulp and paper mills. These investments resulted in the direct employment of 650 people and potential jobs for another 200. The Katahdin Project has helped to diversify the area economy through the development of new, high-value wood processing enterprises and recreational tourism. CDEs have also invested in a new child care facility on Chicago's west side, the first new supermarket and shopping center in inner-city Cleveland in 30 years and a new aerospace facility in rural Oklahoma. All of these projects demonstrate the revitalization and strengthening of communities that the Credit is helping to make possible. In only 3 years, CDEs have raised $2 billion of capital for direct investment in economically distressed communities across the Nation. This impressive activity over a short period of time points to the need and opportunity for such investment in low-income communities. Unfortunately, as effective as the New Markets Tax Credit has been, demand for the incentive has far exceeded supply. In fact, the average demand in the first three rounds was a staggering 10 times the amount of available credits. The Treasury Department awarded the first round of $2.5 billion in tax credits in March 2003, a second round of $3.5 billion in May 2004, and a third round worth $2 billion in May 2005. Despite the track record of the New Markets Tax Credit and continued demand for the incentive, it will expire at the end of 2007. Congress must reauthorize this Credit to ensure investment capital continues to flow to our most disadvantaged communities. Our bill renews this valuable incentive for 5 additional years, through 2012, with an annual credit volume of $3.5 billion per year, adjusted for inflation. It is critical that Congress act to renew the New Markets Tax Credit. It is a modest incentive that clearly works for our most vulnerable communities. I look forward to working with Finance Committee Chairman Grassley to re-authorize the Credit and to ensure that it includes all areas of the country, including rural areas underserved by traditional investments. I ask unanimous consent that the text of the bill be printed in the Record.

Ms. SNOWE

Ms. SNOWE. Mr. President, today I rise to introduce legislation that would re-authorize the New Markets Tax Credit for five additional years. I'd like to thank the Senator from West Virginia, Jay Rockefeller, for cosponsoring this legislation, as well as Senator Jim Bunning. Their strong support is appreciated, and this program will help revitalize many communities all across America. The New Markets Tax Credit was enacted in December 2000 as part of the Community Renewal Tax Relief Act and offers a seven-year, 39 percent Federal credit made through investment vehicles known as Community Development Entities (CDEs). CDEs combine private investment dollars with capital raised through the incentive to make loans to or investments in businesses in low-income communities. In its brief period of existence, the New Markets Tax Credit has had a tremendous success in strengthening and revitalizing communities. In Maine, Coastal Enterprises, Inc. issued a $31.5 million long-term NMTC loan to Katahdin Forest Management, which provided additional working capital for two large pulp and paper mills. These investments resulted in the direct employment of 650 people and potential jobs for another 200. The Katahdin Project has helped to diversify the area economy through the development of new, high-value wood processing enterprises and recreational tourism. CDEs have also invested in a new child care facility on Chicago's west side, the first new supermarket and shopping center in inner-city Cleveland in 30 years and a new aerospace facility in rural Oklahoma. All of these projects demonstrate the revitalization and strengthening of communities that the Credit is helping to make possible. In only 3 years, CDEs have raised $2 billion of capital for direct investment in economically distressed communities across the Nation. This impressive activity over a short period of time points to the need and opportunity for such investment in low-income communities. Unfortunately, as effective as the New Markets Tax Credit has been, demand for the incentive has far exceeded supply. In fact, the average demand in the first three rounds was a staggering 10 times the amount of available credits. The Treasury Department awarded the first round of $2.5 billion in tax credits in March 2003, a second round of $3.5 billion in May 2004, and a third round worth $2 billion in May 2005. Despite the track record of the New Markets Tax Credit and continued demand for the incentive, it will expire at the end of 2007. Congress must reauthorize this Credit to ensure investment capital continues to flow to our most disadvantaged communities. Our bill renews this valuable incentive for 5 additional years, through 2012, with an annual credit volume of $3.5 billion per year, adjusted for inflation. It is critical that Congress act to renew the New Markets Tax Credit. It is a modest incentive that clearly works for our most vulnerable communities. I look forward to working with Finance Committee Chairman Grassley to re-authorize the Credit and to ensure that it includes all areas of the country, including rural areas underserved by traditional investments. I ask unanimous consent that the text of the bill be printed in the Record.

Ms. SNOWE

Ms. SNOWE. Mr. President, today Congress is confronted with how to best provide tax relief to American families earning slightly more than the minimum wage. We can do that by expanding the availability of the child tax credit to more working families. In 2001, I pushed to make the child tax credit refundable for workers making around the minimum wage. As enacted in 2001, a portion of a taxpayer's child tax credit would be refundable--up to 10 percent of earnings above $10,000. Last year, Congress passed the Working Families Tax Relief of 2004, which increased from 10 percent to 15 percent the portion of the child tax credit that is refundable. Although the legislation increased the amount of the refundable child credit, it failed to increase the number of families eligible for the benefit. The consequences are serious for low-income Americans living paycheck to paycheck. It means that tens of thousands of low-income families will be completely ineligible for a credit they should receive. This year, because the income threshold is indexed, only taxpayers earning over $11,000 are eligible to receive the refundable portion of the child tax credit. Low-income families earning less than $11,000 are shut out of the child tax credit completely. For example, a single mother who earns the minimum wage and works a 40 hour week for all 52 weeks of the year fails to qualify for the refundable portion of the child tax credit. Since the mother earns $10,700, she is a mere $300 away from qualifying for the credit. Worse, if the single mother does not receive a raise the following year, it will be even tougher to qualify because the $11,000 she originally needed to earn is adjusted for inflation and will increase. I am introducing legislation, the Working Family Child Assistance Act, with Senators Lincoln, Chafee, Obama, and Rockefeller that will enable more hard-working, low-income families to receive the refundable child credit this year. My legislation returns to $10,000 the amount of income a family must earn to qualify for the credit. Moreover, my bill would ``deindex'' the $10,000 threshold for inflation, so families failing to get a raise each year would not lose benefits. Most notably, my bill is identical to the refundable child credit proposal the Senate passed in May 2001 as part of its version of that year's tax bill. Although I was able to ensure that a refundable child credit would be part of the final bill sent to President Bush, conferees did index the $10,000 threshold to inflation despite my best efforts. The staff of the Joint Committee on Taxation estimates that this legislation will allow an additional 600,000 families to benefit from the refundable child tax credit. For example, the legislation provides a $113 child credit to a mom who earns $10,750 per year. That's money she could use to buy groceries, rent, school books and other family necessities. The Commerce Department recently reported that between August 2004 and August 2005 average weekly wages adjusted for inflation fell 1.1 percent. Obviously, families need all the help we can give them. Our families and our country are better off when government lets people keep more of what they earn. Parents deserve their per-child tax credit, and this bill rewards families for work. I am committed to this issue and have called on President Bush to work with Congress so we can help an additional one million children, whose parents and guardians struggle every day to take care of them. I ask unanimous consent that the text of the bill be printed in the Record.

Ms. SNOWE

Ms. SNOWE. Mr. President, today Congress is confronted with how to best provide tax relief to American families earning slightly more than the minimum wage. We can do that by expanding the availability of the child tax credit to more working families. In 2001, I pushed to make the child tax credit refundable for workers making around the minimum wage. As enacted in 2001, a portion of a taxpayer's child tax credit would be refundable--up to 10 percent of earnings above $10,000. Last year, Congress passed the Working Families Tax Relief of 2004, which increased from 10 percent to 15 percent the portion of the child tax credit that is refundable. Although the legislation increased the amount of the refundable child credit, it failed to increase the number of families eligible for the benefit. The consequences are serious for low-income Americans living paycheck to paycheck. It means that tens of thousands of low-income families will be completely ineligible for a credit they should receive. This year, because the income threshold is indexed, only taxpayers earning over $11,000 are eligible to receive the refundable portion of the child tax credit. Low-income families earning less than $11,000 are shut out of the child tax credit completely. For example, a single mother who earns the minimum wage and works a 40 hour week for all 52 weeks of the year fails to qualify for the refundable portion of the child tax credit. Since the mother earns $10,700, she is a mere $300 away from qualifying for the credit. Worse, if the single mother does not receive a raise the following year, it will be even tougher to qualify because the $11,000 she originally needed to earn is adjusted for inflation and will increase. I am introducing legislation, the Working Family Child Assistance Act, with Senators Lincoln, Chafee, Obama, and Rockefeller that will enable more hard-working, low-income families to receive the refundable child credit this year. My legislation returns to $10,000 the amount of income a family must earn to qualify for the credit. Moreover, my bill would ``deindex'' the $10,000 threshold for inflation, so families failing to get a raise each year would not lose benefits. Most notably, my bill is identical to the refundable child credit proposal the Senate passed in May 2001 as part of its version of that year's tax bill. Although I was able to ensure that a refundable child credit would be part of the final bill sent to President Bush, conferees did index the $10,000 threshold to inflation despite my best efforts. The staff of the Joint Committee on Taxation estimates that this legislation will allow an additional 600,000 families to benefit from the refundable child tax credit. For example, the legislation provides a $113 child credit to a mom who earns $10,750 per year. That's money she could use to buy groceries, rent, school books and other family necessities. The Commerce Department recently reported that between August 2004 and August 2005 average weekly wages adjusted for inflation fell 1.1 percent. Obviously, families need all the help we can give them. Our families and our country are better off when government lets people keep more of what they earn. Parents deserve their per-child tax credit, and this bill rewards families for work. I am committed to this issue and have called on President Bush to work with Congress so we can help an additional one million children, whose parents and guardians struggle every day to take care of them. I ask unanimous consent that the text of the bill be printed in the Record.

Ms. SNOWE

Ms. SNOWE. Mr. President, I rise today with the support of many of my colleagues on the Committee on Commerce, Science and Transportation to introduce legislation to encourage the deployment of next generation wireless services in rural areas. Cell phones have become a vital part of so many lives. Today, there are over 194 million wireless subscribers in the United States--a subscribership that continues to grow. I want to be sure we foster an environment where this technology and future wireless technologies can flourish. Along with mobility, convenience and safety, cell phones today also have benefits of information access and entertainment. While wireless phones have been rapidly adopted by the general public, wireless service is far from being without flaws. I myself become frustrated while home in Maine when I cannot get cell phone and blackberry service. Something must be done in order to improve the wireless services that so many people rely on. Wireless services, such as cell phones, wireless handheld devices and some Internet services utilize frequencies on the radio spectrum to transfer voice and data from one user to another. It is the job of the service provider to turn these airwaves into the valuable services that consumers demand. The quality of service in a given place depends on how much investment the service provider has put into infrastructure. More urban locations tend to have better service because the return on investment is much higher due to the concentration of customers. This does not mean that rural areas are left without service. Viable business models exist that can sustain service in these more remote locations. Oftentimes smaller, local wireless companies can serve these areas better than nationwide service providers. One of the greatest barriers to entry in the wireless industry is acquiring a spectrum license in which a service can be operated. Companies bid up to billions of dollars for rights to one of Nation's most important resources. The digital television transition will soon release new spectrum into the marketplace. Currently, the Federal Communications Commission is slated to auction off the spectrum in licenses that cover large geographic areas. While this may be the preferred size for national wireless carriers, smaller companies will be unable to compete in the bidding process. The bill I introduce today aims to address this problem by directing the Federal Communications Commission to reevaluate its current bandplan for the 700 MHz spectrum that will be auctioned as a result of the digital television transition. In this reevaluation, the FCC must divide some of the frequency allocations into smaller area licenses so that local and regional wireless companies can have an opportunity to compete in the bidding process. The proper balance of large and small licenses will encourage the deployment of advanced services throughout all parts of the United States. This bill is not meant to circumvent the expertise of the Federal Communications Commission. It merely directs the FCC to use its expertise to develop a plan that will benefit the entire nation. Rural America deserves the same benefits of wireless technologies that are available in urban areas. This Act gives those best able to serve remote areas the tools needed to deploy services.