The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS” mentioning the U.S. Dept. of Justice was published in the Senate section on pages S7574-S7580 on July 7, 1998.
The publication is reproduced in full below:
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. TORRICELLI (for himself and Mr. Wellstone):
S. 2265. A bill to amend the Social Security Act to waive the 24-
month waiting period for Medicare coverage of individuals disabled with amyotrophic lateral sclerosis (ALS), to provide Medicare coverage of drugs used for treatment of ALS, and to amend the Public Health Service Act to increase Federal funding for research on ALS; to the Committee on Finance.
amyotrophic lateral sclerosis (als) research, treatment, and assistance act of 1998
Mr. TORRICELLI. Mr. President, today I introduce legislation that will improve the lives of 30,000 Americans, 850 of whom live in my State of New Jersey, who are stricken with Amyotrophic Lateral Sclerosis (ALS). Many of us know ALS as the disease that struck down the famed Yankees 1st baseman, Lou Gehrig. Today, few of us are aware of the tragic effects ALS still has on its victims.
First diagnosed over 130 years ago, ALS is a fatal neurological disorder that usually strikes individuals over 50 years old. Each year, over 5,000 new cases are diagnosed, and tragically, life expectancy is only 3 to 5 years. The financial costs to families of persons with ALS can be up to $200,000 a year.
Mr. President, the legislation I introduce today addresses the need for the federal government to provide increased medical services and research for ALS. First, the bill waives the 24-month waiting period that ALS patients must endure in order to receive Medicare services. Since the life-expectancy for ALS patients is only a few short years, it is crucial that these individuals have access to Medicare services as soon as possible. It makes absolutely no sense to require individuals to wait two years to receive Medicare services when their life expectancy is only three to five years.
Next, the legislation will ensure Medicare provides coverage for all Food and Drug Administration (FDA) drugs used to treat ALS. Medicare typically does not provide coverage for drug therapies, but in the case of ALS, the need for an exception is clear. In addition, expanding Medicare coverage for ALS therapies will hopefully stimulate further research.
Finally, the bill recognizes the need to increase critical research into ALS by authorizing $25 million to the National Institutes of Health.
Mr. President, this legislation is simple, it's modest, and the logic is overwhelming. ALS is a disease that strikes at every community, with the potential for every American. No one is immune, and everyone is vulnerable. I am pleased to be joined by my colleague Senator Wellstone in introducing legislation that represents a first real step toward improving the quality of life for people with ALS while bringing us much closer to finding a cause and a cure.
Mr. President, I ask unanimous consent that the text of the bill, in its entirety, be printed in the Record.
There being no objection, the bill was ordered to be printed in the Record, as follows:
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; FINDINGS; PURPOSES.
(a) Short Title.--This Act may be cited as the
``Amyotrophic Lateral Sclerosis (ALS) Research, Treatment, and Assistance Act of 1998''.
(b) Findings.--Congress finds the following:
(1) Amyotrophic lateral sclerosis (ALS), commonly known as Lou Gehrig's Disease, is a progressive neuromuscular disease characterized by a degeneration of the nerve cells of the brain and spinal cord leading to the wasting of muscles, paralysis, and eventual death.
(2) Approximately 30,000 individuals in the United States are afflicted with ALS at any time, with approximately 5,000 new cases appearing each year.
(3) ALS usually strikes individuals who are 50 years of age or older.
(4) The life expectancy of an individual with ALS is 3 to 5 years from the time of diagnosis.
(5) There is no known cure or cause for ALS.
(6) Aggressive treatment of the symptoms of ALS can extend the lives of those with the disease. Recent advances in ALS research have produced promising leads, many related to shared disease processes that appear to operate in many neurodegenerative diseases.
(c) Purposes.--The purposes of this Act are--
(1) to assist individuals suffering from ALS by waiving the 24-month waiting period for medicare eligibility on the basis of disability for ALS patients and to provide medicare coverage for outpatient drugs and therapies for ALS; and
(2) to increase Federal funding of research into the cause, treatment, and cure of ALS.
SEC. 2. WAIVER OF 24-MONTH WAITING PERIOD FOR MEDICARE
COVERAGE OF INDIVIDUALS DISABLED WITH
AMYOTROPHIC LATERAL SCLEROSIS (ALS).
(a) In General.--Section 226 of the Social Security Act (42 U.S.C. 426) is amended--
(1) by redesignating subsection (h) as subsection (j); and
(2) by inserting after subsection (g) the following new subsection:
``(h) For purposes of applying this section in the case of an individual medically determined to have amyotrophic lateral sclerosis (ALS), the following special rules apply:
``(1) Subsection (b) shall be applied as if there were no requirement for any entitlement to benefits, or status, for a period longer than 1 month.
``(2) The entitlement under such subsection shall begin with the first month (rather than twenty-fifth month) of entitlement or status.
``(3) Subsection (f) shall not be applied.''.
(b) Conforming Amendment.--Section 1837 of such Act (42 U.S.C. 1395p) is amended by adding at the end the following new subsection:
``(j) In applying this section in the case of an individual who is entitled to benefits under part A pursuant to the operation of section 226(h), the following special rules apply:
``(1) The initial enrollment period under subsection (d) shall begin on the first day of the first month in which the individual satisfies the requirement of section 1836(1).
``(2) In applying subsection (g)(1), the initial enrollment period shall begin on the first day of the first month of entitlement to disability insurance benefits referred to in such subsection.''.
(c) Effective Date.--The amendments made by this section shall apply to benefits for months beginning after the date of enactment of this Act.
SEC. 3. MEDICARE COVERAGE OF DRUGS TO TREAT AMYOTROPHIC
LATERAL SCLEROSIS (ALS).
(a) In General.--Section 1861(s)(2) of the Social Security Act (42 U.S.C. 1395x(s)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (S);
(2) by striking the period at the end of subparagraph (T) and inserting ``; and''; and
(3) by adding at the end the following:
``(U) any drug (which is approved by the Federal Food and Drug Administration) prescribed for use in the treatment or alleviation of symptoms relating to amyotrophic lateral sclerosis (ALS);''.
(b) Effective Date.--The amendments made by subsection (a) shall apply to drugs furnished on or after the first day of the first month beginning after the date of enactment of this Act.
SEC. 4. INCREASED FEDERAL FUNDS FOR RESEARCH INTO AMYOTROPHIC
LATERAL SCLEROSIS (ALS).
For the purpose of conducting or supporting research on amyotrophic lateral sclerosis through the National Institutes of Health, there are authorized to be appropriated
$25,000,000 for fiscal year 1999, and such sums as may be necessary for each of the fiscal years 2000 through 2003. Such authorization is in addition to any other authorization of appropriations that may be available for such purpose.
______
By Mr. THURMOND (for himself and Mr. Helms):
S. 2266. A bill to amend the Americans with Disabilities Act of 1990 and the Rehabilitation Act of 1973 to exempt State and local agencies operating prisons from the provisions relating to public services; to the Committee on Labor and Human Resources.
state and local prison relief act
Mr. THURMOND. Mr. President, I rise today to introduce legislation to address an undue burden that has arisen out of the Americans with Disabilities Act.
The purpose of the ADA to give disabled Americans the opportunity to fully participate in society and contribute to it. This was a worthy goal. But even legislation with the best of intentions often has unintended consequences. I submit that one of those is the application of the ADA to state and local prisons throughout America.
Last month, the Supreme Court ruled in Pennsylvania Department of Corrections versus Yeskey that the ADA applies to every state prison and local jail in this country. The circuit courts were split on the issue. The Fourth Circuit Court of Appeals, my home circuit, forcefully concluded that the ADA, as well as its predecessor and companion law, the Rehabilitation Act, did not apply to state prisoners, focusing on federalism concerns and the fact that the Congress did not make clear that it intended to involve itself to this degree in an activity traditionally reserved to the states.
However, the Supreme Court did not agree, holding that the language of the Act is broad enough to clearly cover state prisons. It is not an issue on the Federal level because the Federal Bureau of Prisons voluntarily complies with the Act. The Supreme Court did not say whether applying the ADA to state prisons exceeded the Congress' powers under the Commerce Clause or the Fourteenth Amendment, but we should not wait on the outcome of this argument to act. Although it was rational for the Supreme Court to read the broad language of the ADA the way it did, it is far from clear that we in the Congress considered the application of this sweeping new social legislation in the prison environment.
The Seventh Circuit recognized that the ``failure to exclude prisoners may well have been an oversight.'' The findings and purpose of the law seem to support this. The introductory language of the ADA states, ``The Nation's proper goals regarding individuals with disabilities are to assure quality of opportunity, full participation, independent living, and economic self-sufficiency'' to allow ``people with disabilities * * * to compete on an equal basis and to pursue those opportunities for which our free society is justifiably famous.'' Of course, a prison is not a free society, as the findings and purpose of the Act envisioned. Indeed, it is quite the opposite. In short, as the Ninth Circuit explained, ``The Act was not designed to deal specifically with the prison environment; it was intended for general societal application.''
In any event, now that the Supreme Court has spoken, it is time for the Congress to confront this issue. The Congress should act now to exempt state and local prisons from the ADA. If we do not, this law will have broad adverse implications for the management of these institutions. Prisoners will file an endless number of lawsuits demanding special privileges, which will involve Federal judges in the intricate details of running our state and local prisons.
Mr. President, we should continuously remind ourselves that the Constitution created a Federal government of limited, enumerated powers. Those powers not delegated to the Federal government were reserved to the states or the people. As James Madison wrote in Federalist No. 45, ``the powers delegated to the Federal government are few and definite. * * * [The powers] which are to remain in the State governments are numerous and indefinite.'' The Federal government should avoid intrusion into matters traditionally reserved for the states. We must respect this delicate balance of power. Unfortunately, federalism is more often spoken about than respected.
Although the entire ADA raises federalism concerns, the problem is especially acute in the prison context. There are few powers more traditionally reserved for the states than crime. The crime laws have always been the province of the states, and the vast majority of prisoners have always been housed in state prisons. The First Congress enacted a law asking the states to house Federal prisoners in their jails for fifty cents per month. The first Federal prison was not built until over 100 years later, and only three existed before 1925.
Even today, as the size and scope of Federal government has grown immensely, only about 6% of prisoners are housed in Federal institutions. Managing that other 94% is a core state function. As the Supreme Court has stated,
Maintenance of penal institutions is an essential part of one of government's primary functions--the preservation of societal order through enforcement of the criminal law. It is difficult to imagine an activity in which a State has a stronger interest, or one that is more intricately bound up with state laws, regulations, and procedures.
The primary function of prisons is to house criminals. Safety and security are the overriding concerns of prison administration. The rules and regulations, the daily schedules, the living and working arrangements--these all revolve around protecting prison employees, inmates, and the public. But the goal of the ADA is to take away any barrier to anyone with any disability. It requires the authorities to provide ``reasonable accommodation'' for essentially any disability unless doing so would impose an ``undue burden'' or ``a direct threat to the health or safety of others,'' as broadly defined by the courts. Accommodating inmates will interfere with the ability of prison administrators to keep safety and security their overriding concern.
The practical effect of the ADA will be that prison officials will have to grant special privileges to certain inmates and to excuse others from complying with generally-applicable prison rules.
The ADA presents a perfect opportunity for prisoners to try to beat the system, and use the courts to do it. There are over 1.6 million inmates in state prisons and local jails, and the numbers are rising every year. Indeed, the total prison population has grown about 6.5% per year since 1990. Prisons have a substantially greater percentage of persons with disabilities that are covered by the ADA than the general population, including AIDS, mental retardation, psychological disorders, learning disabilities, drug addiction, and alcoholism. Further, administrators control every aspect of prisoners' lives, such as assigning educational and vocational training, recreation, and jobs in prison industries. Combine these facts, and the opportunities for lawsuits are endless.
For example, in most state prison systems, inmates are classified and assigned based in part on their disabilities. This helps administrators meet the disabled inmates' needs in a cost-effective manner. However, under the ADA, prisoners probably will be able to claim that they must be assigned to a prison without regard to their disability. Were it not for their disability, they may have been assigned to the prison closest to their home, and in that case, every prison would have to be able to accommodate every disability. That could mean every prison having, for example, mental health treatment centers, services for hearing-impaired inmates, and dialysis treatment. The cost is potentially enormous.
Adequate funding is hard for prisons to achieve, especially in state and local communities where all government funds are scarce. The public is angry about how much money they have to spend to house prisoners. Even with prison populations rising, they do not want more of their money spent on prisoners. Often, there is simply not enough money to make the changes in challenged programs to accommodate the disabled. If prison administrators do not have the money to change a program, they will probably have to eliminate it. Thus, accommodation could mean the elimination of worthwhile educational, recreational, and rehabilitative programs, making all inmates worse off.
Apart from money, accommodation may mean modifying the program in such a way as to take away its beneficial purpose. A good example is the Supreme Court's Yeskey case itself. Yeskey was declared medically ineligible to participate in a boot camp program because he had high blood pressure. So, he sued under the ADA. The boot camp required rigorous physical activity, such as work projects. If the program has to be changed to accommodate his physical abilities, it may not meet its basic goals, and the authorities may eliminate it. Thus, the result could be that everyone loses the benefit of an otherwise effective correctional tool.
Another impact of the ADA may be to make an already volatile prison environment even more difficult to control. Many inmates are very sensitive to the privileges and benefits that others get in a world where privileges are relatively few. Some have irrational suspicions and phobias. An inmate who is not disabled may be angry if he believes a disabled prisoner is getting special treatment, without rationally accepting that the law requires it, and could take out his anger on others around him, including the disabled prisoner.
We must keep in mind that it is judges who will be making these policy decisions. To determine what vague phrases like ``reasonable accommodation'' and ``undue burden'' mean, judges must get involved in intricate, fact-intensive issues, Essentially, the ADA requires judges to micromanage prisons. Judges are not qualified to second-guess prison administrators and make these complex, difficult decisions. Prisons cannot be run by judicial decree.
The Supreme Court in recent years has recognized this. In apply Constitutional rights to prisoners, the Court has tried to get away from micromanagement and has viewed prisoner claims deferentially in favor of the expertise of prison officials. It has stated that we will not ``substitute our judgment on difficult and sensitive matters of institutional administration for the determinations of those charged with the formidable task of running a prison. This approach ensures the ability of corrections officials to anticipate security problems and to adopt innovative solutions to the intractable problems of prison administration, and avoid unnecessary intrusion of the judiciary into problems particularly ill suited to resolution by decree.''
Take for example a case from the Fourth Circuit, my home circuit, from 1995. The Court explained that a morbidly obese inmate presented corrections officials ``with a lengthy and ever-increasing list of modifications which he insisted were necessary to accommodate his obese condition. Thus, he demanded a larger cell, a cell closer to support facilities, handrails to assist him in using the toilet, wider entrances to his cell and the showers, non-skid matting in the lobby area, and alternative outdoor recreational activities to accommodate his inability to stand or walk for long periods.'' It is not workable for judges to resolve all of these questions.
It is noteworthy that a primary purpose of the Prison Litigation Reform Act was to stop judges from micromanaging prisons and to reduce the burdens of prison litigation. As the Chief Justice of the Supreme Court recently recognized, the PLRA is having some success. However, this most recent Supreme Court decision will hamper that progress.
Moreover, the ADA delegated to Federal agencies the authority to create regulations to implement the law. State and local correction authorities must fall in line behind these regulations. In yet another way, we will have the Justice Department exercising regulatory oversight over our state and local communities.
Prisons are fundamentally different from other places in society. Prisoners are not entitled to all of the rights and privileges of law-
abiding citizens, but they often get them. They have cable television. They have access to better gyms and libraries than most Americans. The public is tired of special privileges for prisoners. Applying the ADA to prisons is a giant step in the wrong direction. Prisoners will abuse the ADA to get privileges they were previously denied, and the reason will be the overreaching hand of the Federal government. We should not let this happen.
Mr. President, the National Government has gone full circle. We have gone from asking the states to house Federal prisoners to dictating to the states how they must house their own prisoners. There must be some end to the powers of the Federal government, and to the privileges it grants the inmates of this Nation. I propose that we start by passing this important legislation.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the Record, as follows:
S. 2266
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``State and Local Prison Relief Act''.
SEC. 2. EXEMPTIONS FOR STATE AND LOCAL AGENCIES OPERATING
PRISONS.
(a) Americans with Disabilities Act of 1990.--Section 201(1) of the Americans with Disabilities Act of 1990 (42 U.S.C. 12131(1)) is amended by adding at the end the following: ``The term `public entity' does not include any department, agency, district, or instrumentality of a State or local government that operates a prison, as defined in section 3626(g) of title 18, United States Code, with respect to the services, programs, or activities relating to the prison.''.
(b) Rehabilitation Act of 1973.--Section 504(b) of the Rehabilitation Act of 1973 (29 U.S.C. 794(b)) is amended by adding at the end of the following: ``Notwithstanding the preceding sentence, for the purposes of this section, the term `program or activity' does not include any operations relating to a prison, as defined in section 3626(g) of title 18, United States Code, by any entity described in any of paragraphs (1) through (4).''.
______
By Mr. D'AMATO (for himself and Mr. Murkowski):
S. 2267. A bill to amend the Internal Revenue Code of 1986 to grant relief to participants in multiemployer plans from certain section 415 limits on defined benefit pension plans; to the Committee on Finance.
multiemployer defined benefit pension legislation
Mr. D'AMATO. Mr. President, today I introduce legislation with my friend and colleague, Senator Murkowski, to correct an inequity in the Tax Code that deprives working people of hard earned pension benefits. The problem is section 415 of the Internal Revenue Code, which sets compensation based limits and a dollar limit on pension plans. In effect, these section 415 limits discourage retirement savings.
Workers are being denied the full benefits that they have earned through many years of labor and on which they and their spouses have counted in planning their retirement. We can all appreciate the frustration and anger of workers who are told, upon applying for their pension, that the federal government won't let their pension plan pay them the full amount of the benefits that they earned under the rules of their plan. For some workers, this benefit cutback means that they will not be able to retire when they wanted or needed to. For other workers, it means retirement with less income to live on, and in some cases, retirement without health care coverage and other necessities of life.
The bill that Senator Murkowski and I are introducing today will give these workers relief from the most confiscatory provisions of section 415 and enable them to receive the full measure of their retirement savings, consistent with the policy goals of the National Summit on Retirement Savings recently sponsored by the President and the Congress.
Mr. President, Congress has recognized and corrected the adverse effects of section 415 on government employee pension plans. In fact, as part of the Small Business Jobs Protection Act of 1996 and the Tax Relief Act of 1997, we exempted government employee pension plans from the compensation-based limit, from certain early retirement limits, and from other provisions of section 415. Relief measures for workers covered by multiemployer plans have been passed three times by the Senate, most recently in the Senate version of the Taxpayer Relief Act of 1997. Unfortunately, those changes were not maintained in the Senate/House Conference Report.
Section 415 was enacted more than two decades ago when the pension world was quite different than today. The section 415 limits were designed to contain the tax-sheltered pensions that could be received by highly paid executives and professionals. The passage of time and Congressional action has stood this original design on its head. Today, the limits are forcing cutbacks in the pensions of rank-and-file workers. Executives and professionals are now able to receive pensions far in excess of the section 415 limits by establishing non-qualified supplemental retirement programs.
Generally, section 415 limits the benefits payable to a worker by defined benefit pension plans to the lesser of (1) the worker's average annual compensation for the three consecutive years when his compensation was the highest (the compensation-based limit); and (2) a dollar limit that is sharply reduced if a worker retires before the Social Security normal retirement age of 65 or 66.
The compensation-based limit assumes that the pension earned under a plan is linked to each worker's salary, as is typical in corporate pension plans (e.g., a percentage of the worker's final year's salary for each year of employment). That assumption is wrong as applied to multiemployer pension plans. Multiemployer plans, which cover more than ten million individuals, have long based their benefits on the collectively bargained contribution rates and years of covered employment with one or more of the multiple employers which contribute to the plan. In other words, benefits earned under a multiemployer plan generally have no relationship to the wages received by a worker from the contributing employers. The same benefit level is paid to all workers with the same contribution and covered employment records regardless of their individual wage histories.
A second assumption underlying the compensation based limit is that workers' salaries increase steadily over the course of their careers so that the three highest salary years will be the last three consecutive years. While this salary history may be the norm in the corporate world, it is unusual in the multiemployer plan world. In multiemployer plan industries like building and construction, a worker's wage earnings typically fluctuate from year-to-year according to several variables including the availability of covered work and whether the worker is unable to work due to illness or disability. An individual worker's wage history may include many dramatic ups-and-downs. Because of these fluctuations, the three highest years of compensation for many multiemployer plan participants are not consecutive. Consequently, the section 415 compensation-based limit for these workers is artificially low; lower than it should be if they were covered by corporate plans.
The dollar limit under section 415 is forcing severe cutbacks in the earned pensions of workers who retire under multiemployer pension plans before they reach age 65. For example, construction work is physically hard, and is often performed under harsh climatic conditions. Workers are worn down sooner than those in most other industries. Often, early retirement is a must. Multiemployer pension plans accommodate these needs of their covered worker by providing for early retirement, disability, and service pensions that provide a subsidized, partial or full pension benefit.
As it stands now, section 415 is forcing cutbacks in these pensions because the dollar limit is severely reduced for each year you are under the normal Social Security retirement age. For a worker who retires at age 50, the dollar limit restricts their pension at about
$40,000 per year.
This reduced limit applies regardless of the circumstances under which the worker retires and regardless of his plan's rules regarding retirement age. A multiemployer plan participant who becomes disabled and is forced into early retirement is nonetheless subject to the reduced limit. In addition, a construction worker who, after 30 years of demanding labor, has well-earned a 30-and-out service pension at age 50, is nonetheless subject to the reduced limit.
Our bill will ease this early retirement benefit cutback by extending to workers covered by multiemployer plans some of the more favorable early retirement rules that now apply to government employee pension plans and other retirement plans. These rules still provide for a reduced dollar limit for retirements earlier than age 62, but the reduction is less severe than under the current rules that apply to multiemployer plans.
Mr. President, I am particularly concerned that early retirees who suffer pension benefit cutbacks will not be able to afford the health care coverage that they need. Workers who retire before they become eligible for Medicare are typically required to pay all or a substantial part of the cost of their health insurance. Section 415 pension cutbacks deprive workers of income they need to bear these health care costs. This is contrary to the sound public policy of encouraging workers and retirees to responsibly provide for their health care.
I urge my colleagues on both sides of the aisle to cosponsor this important and necessary legislation.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the Record, as follows:
S. 2267
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415
LIMIT ON DEFINED BENEFIT PENSION PLAN BENEFITS.
(a) Dollar Limit Reduction.--Subparagraph (F) of section 415(b)(2) of the Internal Revenue Code of 1986 (relating to plans maintained by governments and tax-exempt organizations) is amended--
(1) by striking ``and tax-exempt organizations'' in the heading and inserting ``, tax-exempt organizations, and multiemployer plans'', and
(2) by inserting in the first sentence ``a multiemployer plan (as defined in section 414(f)),'' after ``subtitle''.
(b) Average Compensation Limit.--Paragraph (11) of section 415(b) of such Code (relating to a special limitation rule for governmental plans) is amended to read as follows:
``(11) Special limitation rule for governmental and multiemployer plans.--In the case of a governmental plan (as defined in section 414(d)) or a multiemployer plan (as defined in section 414(f)), subparagraph (B) of paragraph (1) shall not apply.''.
(c) Combining and Aggregation of Plans.--
(1) Combining of plans.--Subsection (f) of section 415 of such Code (relating to combining of plans) is amended by adding at the end the following:
``(3) Exception for multiemployer plan.--Notwithstanding paragraph (1) and subsection (g), a multiemployer plan (as defined in section 414(f)) shall not be combined or aggregated with any other plan maintained by an employer for purposes of applying the limitations established in this section.''.
(2) Conforming amendment for aggregation of plans.--Subsection (g) of section 415 of such Code (relating to aggregation of plans) is amended by striking ``The Secretary'' and inserting ``Except as provided in subsection
(f)(3), the Secretary''.
(d) Effective Date.--The amendments made by this section shall apply to plan years beginning after December 31, 1997.
______
By Mr. BINGAMAN:
S. 2268. A bill to amend the Internal Revenue Code of 1986 to improve the research and experimentation tax credit, and for other purposes; to the Committee on Finance.
research and experimentation tax credit legislation
Mr. BINGAMAN. Mr. President, last Tuesday, June 30, 1998, the research and experimentation tax credit expired, once again. Once again, U.S. industry was left in a state of uncertainty as to how to value its investments in research and development, which are really investments in the economic future of our country. Today, I am introducing a bill to extend permanently and improve the research and experimentation tax credit. It is the fruit of analysis from the staff of the Joint Economic Committee, of which I am the ranking member. It is also the product of consultations with a spectrum of groups who share my concern for our Nation's future scientific and technological strength. The bill would, briefly, make the existing R&E tax credit permanent, improve the economic efficiency and practicality of the alternative incremental credit, convert the existing basic research credit into a flat credit, and accompany the basic research credit
(which is aimed mostly at research in universities) with a new credit for nonprofit research consortia. The bill also makes a number of technical and clarifying adjustments to the basic research credit, so that it will be easier to use.
I am not the first Member of this body to propose to make the R&E tax credit permanent, or to propose improvements in its functioning. I plan to work with other similarly-minded Senators in the days to come to see if we can construct an even broader coalition to make these permanent improvements in the R&E tax credit a reality this year.
I ask unanimous consent that the text of this bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the Record, as follows:
S. 2268
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled.
SECTION 1. PERMANENT EXTENSION OF RESEARCH CREDIT.
(a) In General.--Section 41 of the Internal Revenue Code of 1986 (relating to credit for increasing research activities) is amended by striking subsection (h).
(b) Conforming Amendment.--Section 45C(b)(1) of the Internal Revenue Code of 1986 is amended by striking subparagraph (D).
SEC. 2. IMPROVED ALTERNATIVE INCREMENTAL CREDIT.
(a) In General.--Section 41 of the Internal Revenue Code of 1986 (as amended by section 1 of this Act) is amended by adding at the end the following new subsection:
``(h) Election of Alternative Incremental Credit.--
``(1) In general.--At the election of the taxpayer, the credit under subsection (a)(1) shall be determined under this subsection by taking into account the modifications provided by this subsection.
``(2) Determination of base amount.--
``(A) In general.--In computing the base amount under subsection (c)--
``(i) notwithstanding subsection (c)(3), the fixed-based percentage shall be equal to 85 percent of the percentage which the aggregate qualified research expenses of the taxpayer for the base period is of the aggregate gross receipts of the taxpayer for the base period, and
``(ii) the minimum base amount under subsection (c)(2) shall not apply.
``(B) Start-up and small taxpayers.--In computing the base amount under subsection (c), the gross receipts of a taxpayer for any taxable year in the base period shall be treated as at least equal to $1,000,000.
``(C) Base period.--For purposes of this subsection, the base period is the 8-taxable year period preceding the taxable year (or, if shorter, the period the taxpayer (and any predecessor) has been in existence).
``(3) Qualified research.--
``(A) In general.--Notwithstanding subsection (d), the term
`qualified research' means research with respect to which expenditures are treated as research and development costs for the purposes of a report or statement concerning such taxable year--
``(i) to shareholders, partners, or other proprietors, or to beneficiaries, or
``(ii) for credit purposes.
Such term shall not include any research described in subparagraph (F) of (H) of subsection (d)(4).
``(B) Financial accounting standards.--
``(i) In general.--Subparagraph (A) shall only apply to the extent that the treatment of expenditures as research and development costs is consistent with the Statement of Financial Accounting Standards No. 2 Accounting for Research and Development Costs.
``(ii) Significant changes.--If the Secretary determines that there is any significant change in the accounting standards described in clause (i) after the date of enactment of this subsection--
``(I) the Secretary shall notify the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate of such change, and
``(II) such change shall not be taken into account for any taxable year beginning before the date which is 1 year after the date of notice under subclause (I).
``(C) Transition rule.--At the election of the taxpayer, this paragraph shall not apply in computing the base amount for any taxable year in the base period beginning before January 1, 1999.
``(4) Election.--An election under this subsection shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the Secretary.''
(b) Assistance to Small and Start-Up Businesses.--The Secretary of the Treasury or his delegate shall take such actions as are appropriate to--
(1) provide assistance to small and start-up businesses in complying with the requirements of section 41 of the Internal Revenue Code of 1986, and
(2) reduce the costs of such compliance.
(c) Conforming Amendment.--Section 41(c) of the Internal Revenue Code of 1986 is amended by striking paragraph (4) and redesignating paragraphs (5) and (6) as paragraphs (4) and
(5), respectively.
(d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 1998.
SEC. 3. MODIFICATIONS TO CREDIT FOR BASIC RESEARCH.
(a) Elimination of Incremental Requirement.--
(1) In general.--Paragraph (1) of section 41(e) of the Internal Revenue Code of 1986 is amended to read as follows:
``(1) In general.--The amount of basic research payments taken into account under subsection (a)(2) shall be determined in accordance with this subsection.''.
(2) Conforming amendments.--
(A) Section 41(a)(2) of such Code is amended by striking
``determined under subsection (e)(1)(A)'' and inserting ``for the taxable year''.
(B) Section 41(e) of such code is amended by striking paragraphs (3), (4), and (5) and by redesignating paragraphs
(6) and (7) as paragraphs (3) and (4), respectively.
(C) Section 41(e)(4) of such Code (as redesignated) is amended by striking subparagraph (B) and by redesignating subparagraphs (C), (D), and (E) as subparagraphs (B), (C), and (D), respectively.
(D) Clause (i) of section 170(e)(4)(B) of such Code is amended by striking ``section 41(e)(6)'' and inserting
``section 41(e)(3)''.
(b) Basic Research.--
(1) Specific commercial objective.--Section 41(e)(4) of the Internal Revenue Code of 1986 (relating to definitions and special rules) is amended by adding at the end the following new subparagraph:
``(F) Specific commercial objective.--For purposes of subparagraph (A), research shall not be treated as having a specific commercial objective if all results of such research are to be published in such a manner as to be available to the general public prior to their use for a commercial purpose.''
(2) Exclusions from basic research.--Section 41(e)(4)(A) of the Internal Revenue Code of 1986 (as redesignated by subsection (a)) is amended by striking clause (ii) and inserting the following:
``(ii) basic research in the arts or humanities.''
(c) Expansion of Credit to Research at Federal Laboratories.--Section 41(e)(3) of the Internal Revenue Code of 1986 (as redesignated by subsection (a)(2)(C) of this section) is amended by adding at the end the following new subparagraph:
``(E) Federal laboratories.--Any organization which is a federal laboratory within the meaning of that term in section 4(6) of the Stevenson-Wydler Technology Innovation Act of 1980 (15 U.S.C. 3703(6)).''
(d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 1998.
SEC. 4. CREDIT FOR EXPENSES ATTRIBUTABLE TO CERTAIN
COLLABORATIVE RESEARCH CONSORTIA.
(a) Credit for Expenses Attributable to Certain Collaborative Research Consortia.--Subsection (a) of section 41 of the Internal Revenue Code of 1986 (relating to credit for increasing research activities) is amended by--
(1) striking ``and'' at the end of paragraph (1);
(2) striking the period at the end of paragraph (2) and inserting ``, and''; and
(3) adding at the end the following new paragraph:
``(3) 20 percent of the amounts paid or incurred during the taxable year (including as contributions) to a qualified research consortium.''
(b) Qualified Research Consortium Defined.--Subsection (f) of such Code is amended by adding at the end the following new paragraph:
``(6) Qualified research consortium.--The term `qualified research consortium' means any organization which--
``(A) is described in section 501(c)(3) and is exempt from tax under section 501(a).
``(B) is organized and operated primarily to conduct scientific or engineering research,
``(C) is not a private foundation,
``(D) to which at least 15 unrelated persons paid or incurred (including as contributions), during the calendar year in which the taxable year of the organization begins, amounts to such organization for scientific or engineering research,
``(E) to which no 3 unrelated persons paid or incurred
(including as contributions) during such calendar year more than 50 percent of the total amounts received by such organization during such calendar year for scientific or engineering research, and
``(F) to which no single person paid or incurred (including as contributions) more than 25 percent of such total amounts.
All persons treated as a single employer under subsection (a) or (b) of section 52 shall be treated as related persons for purposes of subparagraphs (D) and (E), and as a single person for purposes of subparagraph (F).''
(c) Conforming Amendment.--Paragraph (3) of section 41(b) of such Code is amended by striking subparagraph (C).
(d) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 1998.
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By Mr. FAIRCLOTH:
S. 2270. A bill to amend the Federal Deposit Insurance Act with respect to raising the level of the Deposit Insurance Fund reserve ratio and with respect to refunds of excess assessments, and for other purposes; to the Committee on Banking, Housing, and Urban Affairs.
Legislation to Provide a Refund of Excess Reserves in the Bank
Insurance Fund
Mr. FAIRCLOTH. Mr. President, in 1991, the Congress reformed the FDIC and mandated that the fund keep a reserve to deposit ratio of 1.25%. Fortunately, no government funds were used to keep the FDIC solvent when this was mandated in 1991. It was thought by many that it would take years for the fund to reach that level, but, enough funds flowed into the Bank Insurance Fund that this reserve level was met relatively quickly.
What has been happening for the past few years, however, is that the Fund is generating billions in interest and is now well over the designated reserve ratio of 1.25%. The Fund can only be used to provide for losses to the insurance fund, however, because the BIF is considered on budget these excess funds are effectively being used to exaggerate the government surplus. The law envisioned a stop in the need for additional premiums once that fund hit its legal limit, but it never made provisions for excess reserves building and building year after year.
Rather than this money piling up in the Bank Insurance Fund, I think it would be put to greater use if these funds were recycled back into the banking system, and back into our economy.
Today, I am introducing legislation that would require that the Fund provide a refund of this excess revenue when it reaches a reserve level of 1.5%. This means that the Fund could maintain a cushion of 20% above the level that is required by law, but once that outer level is reached, the excess would have to be refunded.
Mr. President, the Bank Insurance Fund is composed entirely of non-
government funds. The money in this Fund is derived from assessments on the banking industry. The Congress chose a level at which the Fund could operate safely, and that level is being met, in fact, it is being exceeded. At the end of 1997, the Fund held nearly
$28 billion. I think it is wrong, however, to use the money paid by the banking industry to earn revenue for the government and not recycle that money back into the economy. The Fund earned nearly $1.5 billion in interest last year.
If this amount of money were put back into the economy, $1.5 billion in capital could sustain another $15 billion in loans.
I do not know when the Fund will reach 1.5% reserve to deposit ratio. The FDIC is projecting that the reserve ratio could be anywhere between 1.36% and 1.43% by the end of this year. Clearly, my legislation means that sometime within the next two years, there will be a level reached at which this money will be put back into the economy.
When I first came to Washington, I noticed that many believed money was simply appropriated. Actually, money has to be created. Somebody, somewhere had to do something, drive a truck, wait on a table, build a house--somebody had to create wealth. This is the point of this legislation--we need to send money back into the private sector so that it can be used to create new wealth, new jobs and new opportunities. Letting this money accumulate in Washington will not create new opportunities for the American people. That is why I am introducing this legislation, which I think is balancing the need for both a safe and sound deposit insurance fund and the need to keep dollars in banking system for new lending and new growth.
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