American Jobs Creation Act of 2004 - Conference Report

CONGRESSIONAL RECORD
SENATE
Oct. 11, 2004

AMERICAN JOBS CREATION ACT OF 2004-CONFERENCE REPORT

Mr. GRASSLEY. Mr. President, I am glad that Senator Frist and other Senators were able to work out the parliamentary maneuvering that it takes to get us to finality on this JOBS bill.

We obviously want to encourage the creation of jobs and manufacturing in America. We want to reduce reasons for outsourcing. This bill deals with all of those and some others as well.

Throughout this debate, I feel as though I was whipsawed in arguments trotted out by opponents of this bill. They complain about accommodations we have made to Members. Some of these accomplishments and accommodations have even helped folks in States of the critics. Then they complain about what is not in this bill that should have been included in this bill.

First of all, I don't know how many times I have to say this, but I think it needs to be continually said. This bill is revenue neutral. Yes, we decrease taxes for partnerships, family-owned businesses, and corporations that are involved in manufacturing, reducing that from 35 to 32 percent. Obviously, that brings in less revenue, but that does not mean the deficit of the United States is going to be increased. We pay for it by raising revenue from businesses, by closing corporate tax loopholes, and we collect that new revenue coming in to small businesses, especially to any size business that manufactures-large or small.

This bill is basically about manufacturing jobs. That is where the revenue in this bill goes.

There are those who talk about this bill as somewhat of a giveaway to business. You have some businesses not paying taxes because they are abusing the Tax Code through corporate loophole abuse, and they pay more money. Then you have the socially good provisions such as encouraging manufacturing in the United States to create jobs in the United States. I don't think people are correct in saying this is a giveaway to business because it balances out within the business sector of our country-some paying more and some not paying more. Because we are taxing them more, they are paying more because they can't cheat anymore. We are giving some benefits from that same revenue to create jobs in the United States.

Those who call this a giveaway for business need to put on their reading glasses and take a look at revenue tables produced by the nonpartisan Joint Committee on Taxation. These people aren't Republican or Democrat. They are professionals who decide how many changes are in the Tax Code, where revenue comes from. These tables show that this bill is revenue neutral; that financial reductions are paid for in new revenue coming in from the closing of corporate loophole abuse.

For those who are talking about this bill being a giveaway for business, I want them to stop using that argument. One statement was made last night that was egregiously in error. One of the hard-line opponents of this bill claimed that the tobacco buyout was paid for by the taxpayers.

I don't support the tobacco buyout but realize it was necessary to get this bill through the other body. I insisted on one of the Senate's positions in the tobacco buyout, and that position is that tobacco companies pay for this buyout. Opponents need to read this bill and the revenue tables. If they bother to do so they will see the buyout is paid for not by the taxpayers of America but by the companies that produce tobacco.

Now, let's put in context the mischaracterization of this bill as somewhat of a special interest bill. In part, the bill receives such widespread support because many Member items were accommodated. Literally dozens of tax benefits were adopted in committee and on the floor.

Let me define "Member items." Constituents of one State came to their Senator and said: This part of the Tax Code is wrong, it is hurtful; or they said: We think the Tax Code ought to be changed this way. Maybe they do not come to me. Maybe they do not go to the other 99 Senators; they go to 1 Senator. That Senator is a representative of his people. It is his responsibility to bring that issue to the Senate. He does not have to. He can say: I don't agree with you, I will not do that. If he feels his constituents are justified in what they are requesting, then the matter is brought to the committee that has jurisdiction. That is the Senate Finance Committee, which I chair. Somehow there is something negative or derogatory about a Member bringing forth an item for all to consider. If we think that Member is crazy, we do not have to do it. If we think there is some justification to what that Member brings before the Senate, we ought to consider that. That is how our representative system of government works.

Literally dozens of tax changes were adopted in committee or in the Chamber. Before the conference, Senator Baucus and I received letters from virtually every Member of the Senate. In some cases those letters asked for items from the Senate to be retained. In other cases those letters asked for the Senate to accept items from the House bill, and in still other cases Members wrote asking for items that were not in either bill. Finally, some Members asked us to not accept certain provisions not in either bill.

I have a stack of letters with me. These letters are not all the letters, of course. There is no sense carrying a pile of letters out here. But Members representing the interests of their State bring these issues for our consideration.

I will go to the first category and follow up items from the Senate bill.

National care scholarships for nurses-Senator Murray and CANTWELL asked for that. It is in the bill.

Sickle cell disease and Medicaid, consideration of sickle cell disease, which is not covered by Medicaid-Senators TALENT, SCHUMER, CAMPBELL, DAYTON, COCHRAN, BOND, SPECTER, MIKULSKI, CANTWELL, LANDRIEU, STABENOW, KENNEDY, SARBANES, VOINOVICH, LAUTENBERG, MURKOWSKI. It is in the bill.

Some are going to say that Members' provision brought to us under the leadership of Senator Talent should not be considered by this body, and I will explain why this is all in one bill. People watching might think if you have a sickle cell disease issue come before the Senate, maybe it ought to come up as a separate issue. On the next item up is a life insurance taxation issue; maybe it ought to come as a separate bill. Why doesn't it? Because under the rules of the Senate every little bill that comes out here could be amended by anything that is in the Tax Code. Eventually you have a little life insurance bill that becomes a vehicle for every member to bring up any bill they want to bring up.

So we saved the Senate from going through that exercise. That is what committees are about. We consider these issues-not always in committee; sometimes they are discussed when the bill comes to the Senate floor. Most of the time we give them a thorough study in the Senate Finance Committee. Sometimes we reject them and sometimes we include them. If we do not include them, maybe when they come to the Senate Chamber, that Senator is irritated with the chairman of the Senate Finance Committee and they add it on the Senate floor. They always end up in one bill.

Somehow that makes all of our journalists concerned, those who seem to not have an understanding of how the Senate works, pointing out that this bill is full of a lot of little things in it that are unrelated to the underlying bill. That is true, but that is how the Senate works.

The House of Representatives does not work that way. They put a bill together, they adopt a rule, and there is never an amendment. I shouldn't say never, but very seldom is a Member allowed to offer an amendment to a Ways and Means bill on the floor of the House. That is why the House of Representatives is like the House of Lords. That is why the Senate is like a House of Representatives. We allow the people of this country to bring anything they want to the floor of the Senate.

Another item is suspension of section 815, a life insurance company taxation issue. That was brought to us by Senator Specter. It is in the bill.

New York City revitalization tax benefits directly related to the attack of September 11, 2001, and the rebuilding of New York was brought to us by Senators SCHUMER and CLINTON-most of that, but not all of it, is in the bill.

Brownfields, unrelated business income tax relief-Senators LAUTENBERG, REED, JEFFORDS, STABENOW, SPECTER, SARBANES DOLE, AKAKA, CHAFEE, INHOFE-is in the bill. The use of green bonds for economic development in certain areas is something I was not for, but it is in the bill to satisfy Senators ALLARD, SCHUMER, MILLER, CLINTON, and CHAMBLISS.

We have IRS private debt collection. Senator Allen was pushing this. That is something I very definitely favor because this is one way of getting the private sector bringing in money from people who are tax cheats and are not paying their taxes.

Tribal government bonds-Senator Campbell, very active in the Senate Committee on Indian Affairs-was also a matter of importance to Senator Baucus and others, but it is not in the bill despite being raised in conference.

Comprehensive energy tax relief package-Senator Hutchison-is not in the bill despite being raised in conference because the House of Representatives took the position that there shouldn't be anything on energy in this bill because they think energy items need to be put together in a bill that ought to be dealt with separately, next session. Quite frankly, the House of Representatives passed a comprehensive energy bill last fall, and we were two votes short in the Senate because of a Democrat filibuster against the bill. They say that instead of doing the energy provisions in this bill before us now, the Senate ought to take up the bill that we obviously have a majority for-but because of a Democrat filibuster we are two votes short-and do the energy stuff there, not in bill before the Senate.

So I cannot blame the House of Representatives because they worked hard to get an energy bill passed, and it comes over here and you get a Democrat filibuster.

By the way, those two votes could be supplied by Senator Kerry and Senator Edwards because now they think we ought to have a national energy policy, and they did not vote last November. If they come in here before we go home and cast the 59th and 60th vote, we would have the comprehensive energy policy, not just little slivers of it that we get in a bill here and a bill there, but we would have a very comprehensive energy policy. They would be fulfilling what they are saying out there on the campaign trail we need to get done: have a national energy policy. We have 58 votes for it. We need a 59th and 60th vote, and they could be that. But at least I am telling you why we do not have the energy provisions in here that a Republican Senator, Senator Hutchison, wanted.

We have a request from Senators CRAPO, BINGAMAN, VOINOVICH, BIDEN, PRYOR, TALENT, ENZI, CHAFEE, CARPER, CLINTON, ALLARD, BOND, COLEMAN, SUNUNU, BENNETT, CHAMBLISS, HUTCHISON, HAGEL, NELSON of Florida, DAYTON, DOLE, REED of Rhode Island, DODD, KENNEDY, and LEVIN for mortgage revenue bonds liberalization. It is not in the bill, but it was raised in conference.

We have heard a lot about Senator Landrieu's Guard and Ready Reserve amendment. That was raised by Senators LANDRIEU, BOND, PRYOR, MURRAY, DODD, AKAKA, CANTWELL, DORGAN, SCHUMER, MIKULSKI, NELSON of Florida, LAUTENBERG, JOHNSON, FEINGOLD, LEAHY, DAYTON, LEVIN, SARBANES, WYDEN, and DURBIN. We discussed that provision a lot, and like the three items above, this item was raised at conference and rejected by the other body.

Mr. President, the letters I have cited reflect items Members raised. On some items we were able to reach agreement with the House, other items the House of Representatives rejected.

Let me point out that I offered three amendments that I filed. I won one and lost two. The House accepted an amendment I put in for rural letter carriers. The House rejected an amendment I had dealing with energy-efficient home appliances. The House rejected another amendment dealing with elderly housing connected to the Warrior Hotel in Sioux City, IA.

As the list above shows, a lot of Members of this body are satisfied because their items are in here; other Members are not satisfied. But that is not an unusual situation when you reach compromise. It also shows that for all of the unfair carping about this bill being a special interest bill, nearly every Member raised narrow-interest provisions. So if there is some fault about different provisions coming up, we all share that. We all do it. There is an old saying. It is: People who live in glass houses should not throw stones. We have a group of Members throwing stones at this JOBS bill. A lot of them are living in glass houses.

I will continue the discussion of Member items. We had the State sales tax deduction. Senators CANTWELL and HUTCHISON wrote Senator Baucus and me asking us to include the House sales tax deduction provision in the conference agreement. We also received letters from delegations of other States where the State tax base is a sales tax base. The House sales tax deduction is in this bill because we decided for our Senators from several States that it ought to be included.

We had timber tax relief provisions: Senators CHAMBLISS, PRYOR, CANTWELL, SESSIONS, SHELBY, COCHRAN, COLLINS, CRAPO, CRAIG, COLEMAN, GRAHAM of South Carolina, WYDEN, CORNYN, LUGAR, and MURRAY.

As many of these Senators know, the timber industry has been hard hit by the tax on our exports going to Europe. By the way, when this bill passes, those taxes go away. The industry is finally recovering from a long recession. Timber mills are reopening. Mill workers are returning to the mills. The House timber provisions are in this bill.

Charitable whaling activities. Senator Murkowski wrote, asking us to accept the House provision that allows a deduction for charitable whaling activities. Now, some will criticize this provision, but it is important to the Natives of Alaska. Senator Murkowski is looking out for the Natives of Alaska. She ought to be applauded for bringing that to our attention. This is in the bill. But it has also passed the Senate several times.

Senator Baucus and I received letters from Members asking us to take Senate provisions out of the conference agreement. One example is Senator Stabenow's letter regarding a revenue raiser involving donations of cars. As you heard yesterday, Senator Hatch shares Senator Stabenow's concerns. The conferees retained the Senate revenue raiser.

There is another category of letters that we received. An example is a letter from Senator McCain and Senator Reed of Rhode Island. In that letter they asked me to keep out a provision dealing with the church tax exemption and political activities. The provision was not in either bill. Chairman Thomas and I kept provisions that were outside the scope of the bill out of the conference entirely. No matter what the merits of that proposal were, we played fair by Senator McCain and Senator Reed of Rhode Island.

The final category of requests dealt with the opposite of the MCCAIN and REED of Rhode Island request; that is, we had requests for items to be included that were not in either bill. I will give you a couple of sympathetic examples: a liberalization of tax-exempt rules as applied to charitable hospitals. Senator Akaka raised this issue. Unfortunately, this provision was outside of scope.

Another example is penalty-free withdrawals from IRAs for hurricane victims. Right now, if you are hit by four hurricanes in Florida, who is going to argue with Senator Nelson of Florida bringing that to our conference? He asked us to raise this item. It was not in either the House or Senate bill. It would have been an entirely new item that we could have put in in conference. However, there was no way to address the proposal without then opening the door for a lot of other items that were not in either bill that somebody would want included at the last minute.

So at this point, Mr. President, I ask unanimous consent that these letters be printed in the RECORD.
BREAK IN TEXT

Mr. GRASSLEY. Mr. President, I have spent a little time going through a sample of the many items that Members weighed in with at the conference. This is a small sample of those items raised. Many others were brought to the attention of Senator Baucus and this Senator through letters or oral communications. It is safe to say, Senator Baucus and I can relate to what Senator Byrd and Chairman Stevens go through on the appropriations bills.

My point is, those who want to distort this bill by describing it as a special interest bill are ignoring a couple things. One, they are ignoring-perhaps conveniently, perhaps deliberately-their own efforts to advance their interests. Secondly, as I have said before, this bill is paid for by raising revenue, largely by closing abusive corporate tax loopholes.

Let the record be clear that this bill is fair, this bill is balanced. It is a balanced effort at resolving four objectives. One objective is ending the European tax on our exports going to Europe that are legal and legitimate, even though I disagree that it should have been done. I disagree with that decision. The United States lost a World Trade Organization decision that our previous tax laws were violating the agreements that Congress had made with Europe, Congress made, because we passed these trade agreements as law.

If anybody thinks, well, it is wrong for Europe to levy a tax against us, we won a case against Europe on beef because they don't let our beef into Europe because we use hormones in the development of our beef, in the feed the cattle eat or that they are injected with, and Europe does not like that. But they are violating our right to send beef to Europe because they don't have a scientific basis for doing it. That is what the World Trade Organization said. But they still don't take our beef. So we put a tax on products coming from Europe to the United States to retaliate the same way they are retaliating for the reasons behind this bill.

This bill ends that European tax because we are conforming our tax laws to the international trading agreements Congress passed 10 years ago. We are also going beyond doing away with an impediment to our exports so that we lose jobs here in America because of that tax. We are putting a replacement benefit to manufacturers in the United States so jobs will be created here by lowering the corporate rate from 35 to 32.

No. 3, we are providing international tax reforms that will aid domestic manufacturers so we can compete in the global marketplace.

And lastly, we achieve these policy ends in a revenue-neutral way through the curtailment of abusive corporate tax shelters and abusive corporate loopholes by closing them.

I hope everybody agrees this bill is a well-balanced bill, accomplishing a goal we should have accomplished a year and a half ago, at least no later than March when these European taxes started on our products. I apologize to any Americans who have been laid off because our products are not competitive in Europe because of that tax and why it takes Congress so long to wake up, particularly when there are Members of Congress always complaining about outsourcing.

We started on this bill in March. It took us 15 days, over a period of 3 months, to get this bill through the Senate. And then we were a long period of time before the minority party agreed we could go to conference. But once we got to conference, thanks to the good cooperative working relationship between Senator Baucus and me for the Senate and between Mr. Baucus and me and Congressman Thomas, chairman of the House Ways and Means Committee, we have this bill.

But for those laid-off workers, I am embarrassed this bill couldn't have been passed a long time ago and that we ran up against all of the impediments. Why? Because certain Members of this body don't want a Republican President signing a jobs bill a few days before the election.

I yield the floor.

BREAK IN TEXT

Mr. GRASSLEY. Mr. President, today is a historic day in the world of tax policy. We are about to pass the most significant reform of American business taxation since 1986. I am not talking about large corporate reforms. This bill contains some of the most important small business reforms in years. This bill represents the most comprehensive agricultural, small business, rural community tax incentive package ever written by Congress. The bill contains far-reaching measures to revive the manufacturing base in America by cutting taxes and creating incentives to invest and create jobs in the United States. This manufacturing tax goes to large and small corporations, family-held S corporations, partnerships, sole proprietorships, farmers, and co-ops.

This is the football season. With apologies to the Senate's chart expert, my colleague from North Dakota, Mr. Conrad, I am going to use one last chart for this bill. This chart behind me is about the football. It is a chart that I used about 7 months ago. During that time, spring drills were about the only football activity. The chart shows several sets of goalposts. As this important bill has wound its way through the legislative process, at each stage the goalposts were moved and moved and moved. Sometimes we had to call timeout. But at each stage we held on to the ball. We had an overtime regulation goalpost. We had a trade adjustment assistance goalpost. We had an unemployment insurance goalpost. Those were Senate floor goalposts. We passed each goalpost. Then we got to conference. In conference we ran into the Food and Drug Administration tobacco buyout goalpost.

We have passed the final goalpost now. In this bill we had to go straight over the tackle, and we did, just like good old-fashioned Big Ten football. I will see the Senator from Minnesota the last Saturday of November. We are finally now in the end zone.

Now I would like to thank the team that got us over the goal line. The first is Senator Baucus. I am certain that we would not be here without his good work and cooperation. In addition, I thank all other members of the Senate Finance Committee for their time and energy in making this bill a reality.

I would like to point out a special thanks to a couple senior members of the Senate Finance Committee, Senator Nickles and Senator JOHN BREAUX.

Senator Nickles has been a Finance Committee member since 1995. He has left a big impact on trade, tax, health care issues that have come before the committee. He and I have not always seen eye to eye on all issues, but he is a hard-working, tenacious Member of the Senate. He takes the work of the committee seriously.

Senator Breaux has been on the Senate Finance Committee since 1990. He succeeded Senator Long in the Senate. Senator Long was a legendary member of the Finance Committee, the longest serving chairman it has ever had, a major architect of much tax legislation. Senator Long left a legacy on the Finance Committee. Senator Breaux followed up on the legacy of Senator Long, taking the practical, constructive, and creative approach of Senator Long. Senator Breaux has blazed his own trail on the Senate Finance Committee.

In many cases, the Senate is paralyzed by partisan politics. I am proud that the Finance Committee is still a workshop of bipartisan problem-solving. Senator Breaux has been a key element at that continuing bipartisan tradition. Hopefully, the Democratic caucus, which has been steadily moving to the left over the years, will replace him with a like-kind pragmatist. The country will be better off for it.

Over the last couple of years, the States of Oklahoma and Louisiana have been well represented on the Finance Committee. Unfortunately, there will be a bit of a vacuum with the departure of Senators NICKLES and BREAUX. I am pleased that this bill contains many priorities of these two Senators. For Senator Nickles, there was the depreciation change that he has fought for over the years. For Senator Breaux, important priorities for his State of Louisiana included significant changes in the tax treatment of key Louisiana interests such as agriculture, aquaculture, energy production, shipbuilding, forestry, and shipping. It is a fitting tribute to these two members of the Finance Committee.

We are also saying goodbye to Senator Bob Graham of Florida. Senator Graham has been on the Finance Committee since 1995. In the 1990s, Senator Graham was also a bipartisan bridge builder on tax and trade issues. Senator Graham faithfully attended to Florida's interests during his service on the committee.

I thank also Senator Frist for backing me all the way on this bill. He took months to get it to the Senate floor. At times many of our Republican caucus questioned whether it was worth the price of unrelated controversial amendments that were thrown our way. Our leader stayed the course. I appreciate that very much.

I would like to thank my staff on the Senate Finance Committee as well: Kolan Davis, our staff director; Mark Prater, chief tax counsel, and the other tax counsels-Ed McClellan, Elizabeth Paris, Dean Zerbe, Christy Mistr, and John O'Neill, as well as John's predecessor, Diann Howland. These individuals, along with Adam Freed, the staff assistant for the tax team, have been the workhorses for the committee-keeping the lights burning long into the night to make this bill possible.

Finally, thanks go to the hard-working interns and law clerks. I refer to Casey August, Grant Menke, and Peter Jordan. Grant took the summer off to call balls and strikes as an umpire in the New York-Penn league. Grant helped us with this bill in the spring and returned in time for the conference.

Let me extend my thanks also to George Yin and the staff of the Joint Committee on Taxation for providing guidance in this effort. I want to particularly point out the good work of Ray Beeman, David Noren, and Gray Fontenot. The Finance Committee tax staff refers to this trio of specialists as the "three amigos." The three amigos helped us find a lot of gold out there in corporate loophole land. Brian Meighan recently left the three amigos for the private sector.

I would like to thank the leadership staff for all their assistance. From Senator FRIST's staff, I thank Lee Rawls, Eric Ueland, Ronit Kumar, and Libby Jarvis. I also thank our Senate leadership team and their staffs, especially our able whip, Senator McConnell.

Finally my thanks to go Jim Fransen, Mark Mathiesen, Mark McGunable and their capable staff at legislative counsel for taking on our ideas and drafting them into statutory language. These talented lawyers are the true wizards of the legislative process. They handle enormous pressure with professionalism and amazing dexterity.

I invite everybody to relax a bit today. After the vote tonight, everyone should go home and get a good night's sleep. As for me, now we are getting ready to wrap up. I am looking forward to going home to Iowa. It is harvesttime in the fields. I have some work to do on the farm. We also have a bit of an election coming up. God willing, the good folks of Iowa will send me back here to continue to do the people's business.

I yield the floor.

The PRESIDING OFFICER. All time has expired.

The question is on agreeing to the conference report to accompany H.R. 4520.

Mr. GRASSLEY. Mr. President, I ask for the yeas and nays.