Jumpstart Our Business Strength (JOBS) Act

JUMPSTART OUR BUSINESS STRENGTH (JOBS) ACT
The PRESIDING OFFICER. Under the previous order, the Senate will resume consideration of S. 1637, which the clerk will report.
The legislative clerk read as follows:
A bill (S. 1637) to amend the Internal Revenue Code of 1986 to comply with the World Trade Organization rulings on the FSC/ETI benefit in a manner that preserves jobs and production activities in the United States, to reform and simplify the international taxation rules of the United States, and for other purposes.
Pending:
Harkin amendment No. 2881, to amend the Fair Labor Standards Act of 1938 to clarify provisions relating to overtime pay.
McConnell motion to recommit the bill to the Committee on Finance, with instructions to report back forthwith the following amendment:
McConnell (for Frist) amendment No. 2886, in the nature of a substitute.
The PRESIDING OFFICER. The Senator from Iowa.
AMENDMENT NO. 2898
Mr. GRASSLEY. I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Iowa [Mr. GRASSLEY] proposes an amendment No. 2898 to the instructions to the motion to recommit S. 1637.
The amendment follows:
At the end of the instructions (Amdt. No. 2886) insert the following:
SEC. . This act shall become effective one day following enactment of the legislation.
Mr. GRASSLEY. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.
AMENDMENT NO. 2899
Mr. GRASSLEY. I send an amendment to the desk.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:
The Senator from Iowa [Mr. GRASSLEY] proposes an amendment No. 2899 to the amendment numbered 2898.
The amendment follows:
In the pending amendment strike "one" and insert "two".
Mr. GRASSLEY. Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, let me take a few moments to review where we are on this legislation.First, I don't want to sound melodramatic but this is an important bill. This bill would help to create and keep good manufacturing jobs where they should be; that is, in America.
We need to move this bill. The Senate conducted 3 days of debate on the bill, one of them a Monday without rollcall votes, and this is our fourth day on the bill. In that time, we might say, the Senate has considered and adopted a good number of amendments. Let me just list them.
We have adopted, first, the managers' amendment on leasing shelters; the managers' amendment making modifications to the revenue provisions; the committee substitute. We have also adopted the Bingaman amendment to expand the research credit; the Hatch-Murray amendment to extend the research and development credit. We have further adopted the McConnell amendment to protect American workers; the McCain amendment on defense; the Dodd amendment to protect American workers; the Bayh amendment to extend expiring provisions; the Bunning amendment to extend the net operating loss carryover provision; and the Bunning-Stabenow amendment to accelerate the phase-in of the manufacturing deduction.
That is quite a bit. A lot of legislation adopted, amendments passed already. Now, under the previous order, Senator Harkin has offered his amendment on the Department of Labor's overtime regulations and that is the pending first-degree amendment.
Regrettably, in my view, the assistant majority leader offered a motion to recommit the bill and filed cloture on that motion to recommit. This morning the majority filled that amendment tree by offering a couple of secondary amendments.
There may come a time, after full and fair debate and amendment on the bill, when I would support a motion to cut off debate. But under the current circumstances, I will oppose that cloture motion. This is a bill about jobs, about quality jobs here in America. Senator Harkin's amendment is also about the quality of jobs in America. This is not some amendment out of left field. The Senator from Iowa is not trying to change the subject, for example, to gun control or Medicare or reproductive choice, but rather he is staying on the subject. He is talking about jobs.
His amendment, although relevant, may not be strictly germane within the meaning of that term in Senate procedure. The effect of this cloture motion, if adopted, would be to block a vote on the Harkin amendment. I will not be a party to that effort. On a major bill such as this one, Senators deserve a full and fair opportunity to offer and get votes on amendments. We should allow that process to continue.
Even though this cloture motion has brought the Senate to something of an impasse, I remain hopeful. I am hopeful because I believe after the Senate recognizes that the votes are not there to block the Harkin amendment, the Senate can then reach an agreement limiting amendments to the bill to a reasonable number. I believe we can then work through this bill and bring it to completion by the end of the week. It is important that we do so. We need to respond to the European Union's sanctions, sanctions that impose a harmful tax on dozens of American products. Most importantly, we need to do what we can to help to create and keep jobs in America.
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I urge a prompt vote on the Harkin amendment, that we reach an agreement limiting amendments to a reasonable number, and then move on to complete this bill.
I yield the floor.
Mr. GRASSLEY. Mr. President, last night the majority leader set up a process for moving this bill to a cloture vote. This is not our preferred route for moving what is clearly a bipartisan bill voted out of committee 19 to 2. The two dissenting votes happened to be Republicans, not Democrats. This is clearly a bipartisan bill. A bipartisan bill should not require a cloture vote to get passed.
I remain hopeful we will be able to work out an agreement on moving the bill forward without the need for this extraordinary parliamentary process, but if cloture is the only way to move this bill, then I hope everybody will support cloture. We need to support cloture in the same bipartisan manner we used to build this bill. It is urgent that we move this bill immediately.
This bill reduces the income tax on goods manufactured in the United States and sold overseas so we can create jobs in America. We give a priority on taxation to goods made in America.
Everybody in this body is concerned about outsourcing. If we want to do something about keeping jobs in America and adding to the number of jobs in America, this bill will do it. It is going to make our costs of operation less and consequently competitive with world competition. That is why we call it the JOBS bill.
The reason we are in a bad position right now is because under the international agreements we have on trade, the World Trade Organization has ruled that our pretax policy is an illegal export subsidy, and consequently the World Trade Organization has authorized Europe to do up to $4 billion a year in sanctions against U.S. exports.
It isn't just the case of our tax system causing us to not be competitive. On top of that, we now have $4 billion of sanctions to further weigh down our ability to compete in the export market. These sanctions began on March 1. These sanctions started at 5 percent, which is just like a 5-percent sales tax on the stuff we are going to sell. The rule of Economics 101 is if you tax something at a higher rate, you get less of it. But not only is it 5 percent now, it is going to be 5 percent for each month we do not conform our tax laws to our trade agreements.
Remember, we have trade agreements because the U.S. Congress enacted those trade agreements. It has been done by a majority of the representatives of the American people. One percent a month can take us all the way up to a maximum of 17 percent over the course of a year. By November, we are going to have a 12-percent tax on our exports. This is a very serious threat for all States because the sanctions hit a wide range of products-agricultural, timber, and manufacturing products that we sell overseas.
We need to get this issue behind us very soon or we will never get this bill passed and we will continue to have this mounting level of taxation on our products being exported to a point where we are even more uncompetitive, to a point where workers may be laid off; whereas just the opposite can happen if we pass this legislation. We are going to be able to make our manufacturing more competitive and across the board with a wider range-not just for big corporations in America but for individuals that export, for sole proprietorships that are in manufacturing; you name it. People are going to get the benefit of a lower rate of taxation if they manufacture in America-not if they have a company in America and they manufacture overseas but just American jobs, American products made in America, or if a company wants to come over here and invest in America and build a plant and hire American workers, they will get the benefit of it as well.
We had 3 or 4 days on this bill 2 weeks ago. We started on it again yesterday. I think it is very important that we move ahead on this legislation. But the opening debate and the procedural shenanigans confirm my worst fears because there are some on the other side who want to use this legislation to move things that are unrelated to making our industry competitive and unrelated to the motivations behind this bipartisan bill.
Senator Baucus and I agreed on an order of amendments that would improve the bill and broaden important relevant issues. That agreement was undermined by the process coming from the other side of the aisle.
It means Members there presumably do not know the importance of this legislation, do not want to debate the substance of the bill but debate everything else. In a sense, this bipartisan bill is being turned into a political football. That is inexcusable because we have worked hard throughout this process to make sure everyone's concerns, both Republican and Democrat, were incorporated into this bill. You do not play political games with a bipartisan bill that affects the jobs of manufacturing workers across this land.
I take a moment to talk about how bipartisan this bill is. It is bipartisan and was built that way from the ground up. It is the construction that began when my friend and colleague, Senator Baucus, was chairman of the Finance Committee. Senator Baucus held hearings on this issue in July 2002 to address the FSC/ETI controversy going on within the World Trade Organization. The title of the hearing was "The Role of the Extraterritorial Income Exclusion Act in the International Competitiveness of U.S. Commerce." Talk about a chairman taking his responsibilities seriously, Senator Baucus did.
Even then we were concerned about the outsourcing of jobs. We were concerned about American manufacturing being able to compete with the global environment we are in. We heard at that time vital testimony from a cross-section of industries that would be adversely affected by the repeal of this extraterritorial income act.
We also heard from U.S. companies that were clamoring for international tax reform more broadly than FSC/ETI because our tax rules were hurting their competitiveness in the foreign markets. If you want to create jobs in America, and we have a tax system that makes us uncompetitive, would you not expect the Congress of the United States to respond, and respond in a bipartisan way to that problem for our manufacturers? Or if you did not, why would you harangue about outsourcing? You need to do something about it.
These companies that testified in the summer of 2002 told us their foreign competitors were running circles around them because of our antiquated international taxing rules. During this hearing, we had our colleagues, Senator Bob Graham of Florida and Senator Hatch of Utah, express concerns about how our international tax laws were impairing the competitiveness of U.S. companies. After some discussion on forming a blue-ribbon commission to study this problem, we all decided that decisive action was more important than the usual commission approach that usually ends up with a lot of public relations and high talk but no action.
During that hearing, then-Chairman Baucus formed an international tax working group that was joined by Senator Graham, Senator Hatch, and this Senator, and was open to any other Finance Committee Senator interested in this issue. The bipartisan Finance Committee working group formed the basis for the bill we are debating this very minute. We directed our staff to engage in an exhaustive analysis of many international reform proposals that have been offered. Our efforts were intended to glean the very best ideas from as many sources as possible.
Senator Baucus and I also formed a bipartisan, bicameral working group with the chairman and ranking member of the Ways and Means Committee of the other body in an effort to find some common ground on dealing with this repeal of FSC/ETI. Obviously, that did not go so well because the other body has come out with legislation somewhat different than ours. Consequently, they are finding it very difficult to get the votes to pass it in the other body. That is another reason, if we move quickly, maybe we can impress upon the House of Representatives that this body can function, this body works; we have a good product and maybe that will encourage bipartisanship in the House of Representatives.
Through this working group we continued our efforts in cooperation with Senator Hatch, Senator Bob Graham, and other members of the Finance Committee who wanted to do what was fair and what was right in complying with this World Trade Organization ruling. We continued our bipartisan efforts when I became chairman in 2003. In July last year, we held two hearings on the FSC/ETI and international reform issues. One hearing focused on: "An Examination of the United States Tax Policy and Its Effect on Domestic and International Competitiveness of United States-Based Operations," building upon the very successful hearing that chairman BAUCUS had in 2002.
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Our second hearing was entitled "United States Tax Policy and Its Effects on International Competitiveness of United States-Owned Foreign Operations," as opposed to United States-based operations in the first hearing. These two hearings concluded our final bipartisan effort in reviewing all of the policy options that led to the creation of the bill that is before the Senate right now.
Let me again emphasize there is not one provision in this JOBS bill that was not agreed to by both Republicans and Democrats. We have acted in good faith. We have acted in the best of faith to produce a bill that takes American manufacturing jobs and ensures that our companies remain the global competitors we want them to be. We did this in a fully bipartisan manner, which is what the American people expect on such an important issue as manufacturing jobs in our Nation's economic health.
These efforts that have been expended to bring this bill to this point are apparently not enough for some. They still view this whole process as political punt, pass, and kick competition. I now realize there are some who do not want this bill to pass, and maybe not having it passed will serve their political end. They want economic downturns that continued sanctions will produce to continue economic doldrum.
Several weeks ago, an article in the Washington Post quoted a Democratic tax aide as saying: "There is not a lot of incentive for us to figure out this problem." The Democratic aide went on to say that allowing the extraterritorial income controversy to fester would yield increased sanctions that somehow would benefit the Democrats in November. That is an appalling statement because we hear the concern that is legitimately expressed about outsourcing.
We have a bill before the Senate that can do something about outsourcing. We have a situation before the Senate that if we do not pass this bill, not only will we not have some tax advantage we thought we once had, but we will have the sanctions on top of that to weight down American industry so more people are laid off.
How can Members one day give a speech about outsourcing and the next day slow down a bill that does something about outsourcing? Outsourcing only comes as a matter of competition. There is not any American businessperson sitting around anyplace that decides, I want Mary's job to go to India. I want Pete's job to go to China. I want Ralph's job to go to Russia.
There is not any American businessman who speaks in terms of: I don't want this American to have a job, because they would not have hired them in the first place.
This outsourcing happens because they look at what their competition is paying to produce a product. In the economics of business, when you are a businessperson, wherever in the world, if you do not make a profit, you are not going to be in business. So a businessperson seeing that he is not competitive, that is where you lead to outsourcing.
Now these American manufacturers come and testify before our committee. They tell us what makes them noncompetitive. One is the cost of capital in America being high. We have an opportunity to reduce the cost of capital and, at the same time, encourage manufacturing in America. That is what this bill does.
So everyone on both sides of the aisle who talks about outsourcing-I do myself-needs to band together if we are serious about doing something about outsourcing and get behind this effort to get the bill passed because manufacturers tell us this bill will help. And, for sure, they know these sanctions that are on American manufacturing now are an additional burden they cannot withstand.
America's farmers and manufacturing workers must not pay the price for the sort of stonewalling we are seeing. Efforts to delay this bipartisan bill with unrelated measures is a bad excuse. Why would they raise political issues that are unrelated to this bill in an attempt to undermine the JOBS Act?
Delay will allow sanctions to continue and drive down our economy. That will allow sanctions to increase to 12 percent by the November elections. Maybe that is too tempting for some people who are worried about the election instead of the next generation to pass up.
I am hopeful we will see the best politics ends up being good policy. That is what we have with this bill. We help domestic manufacturers. We help U.S. companies compete overseas. Putting politics ahead of good policy is exactly the wrong approach. In effect, this political game does not help those who face the sanctions. It does not help domestic manufacturers and workers in those industries.
A vote against this bill is a vote to continue European Union sanctions, already at 5 percent-6 percent in April, 7 percent in May, 8 percent in June, 9 percent in July, 10 percent in August, 11 percent in September, 12 percent in November.
We are here to represent the interests of the United States. On this bill, we are here to represent the interests of jobs in America. We are here to represent the symbol "Made in America."
If we do not pass this bill, whether people realize it, they are representing the interests of the European Union, because it is the European Union which is going to benefit with European jobs.
We have 5.6 percent unemployment in America, which is probably less unemployment than most of my life in politics as an index of how the economy is going. But still, it is bad to have 5.6 percent unemployment. What is worse than the 5.6 percent unemployment is the people who are complaining about the 5.6 percent unemployment and not passing this bill that is going to make employment in America better.
Oh, maybe they are looking over to Germany. Their unemployment rate went up last month to 10.7 percent. By not passing this bill, we might help some German workers get a job, some of the German unemployed get a job. Well, I do not think we ought to put the interests of the European Union first.
The only way to honor our trade obligations and to make American business competitive and to create jobs in America is to pass this bill and repeal the extraterritorial income provisions of our law. It is very simple. It is so simple that is why this is a bipartisan bill. As I said before, I hope the leadership of this body can cooperate, both Republican and Democrat, to focus on this legislation, to focus on the task at hand, and particularly on the other side where all the amendments are coming from, to know the importance of passing this bill, not stalling this bill, and moving forward.
Repealing FSC/ETI raises about $55 billion over 10 years, and 89 percent of that money comes from manufacturing. It gives us an opportunity to use that $55 billion to emphasize American manufacturing, the creation of jobs in America, and to use that $55 billion as an incentive to American manufacturers to manufacture here and not to manufacture overseas.
We need to send that money back to the manufacturing sector because if we do not, then besides these sanctions, we have a $50 billion tax increase on American manufacturing.
The Congressional Budget Office says we have lost 3 million manufacturing jobs since July of 2000. Is this manufacturing decline something the Bush administration did? No. It started in July of 2000. A $50 billion tax increase will not stimulate manufacturing jobs.
Again, simple principles of economics 101: If you tax something more, you get less of it.
The JOBS bill uses all of the money from the FSC/ETI repeal to give a 3 percentage point tax cut on all income derived from manufacturing in the United States. Let me emphasize: just in the United States. It is not for manufacturing by American companies overseas.
The relief applies not only to big manufacturers but sole proprietors, partnerships, farmers, individuals, family businesses, multinational corporations if they are manufacturing in America, and also plain big or small foreign companies that set up manufacturing plants in the United States.
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We also include international tax reforms, mostly in the foreign tax area, and most of which benefit manufacturing.
Our bill also includes the Homeland Reinvestment Act, which has broad support in both bodies of the Congress.
The Finance bill is revenue neutral. That is another thing we have to do: have it carefully crafted in order to get bipartisan support for this legislation and not add to the deficit; there are both Republicans and Democrats who do not want to pass a tax bill that loses revenue. So we have the ability, by extending Customs user fees-and, more importantly, by shutting down illicit tax shelters, corporate tax shelters, and closing abusive corporate tax loopholes-to raise money to do even more than we have described to be able to do some reform of the international taxing regime generally beyond just FSC/ETI.
As with all bills, there is never complete agreement on this approach. That is even considering the fact it was voted out of committee in a bipartisan way 19 to 2. Remember, all Democrats voted for this bill to come out of committee.
Our bill contains a haircut on the rate reduction some of us would like to remove and others would like to retain. Some Members prefer a reduction in the top corporate rate across the board in place of the international reforms and the manufacturer's rate cut in this bill. I understand the desire for this simpler approach cutting taxes, but a top level rate cut would only go to the biggest corporations of America. Local family-held S corporations and partnerships, which presently get some extraterritorial income benefits, get nothing from this. If we redirect FSC/ETI money to an across-the-board corporate cut, then the manufacturing sector will be the revenue offset. In other words, we are going to be shifting from tax advantages from manufacturing to services where we have some problem, but I think we generally agree not as much of a problem as we have in manufacturing.
The international tax reforms largely fix problems our domestic companies face with the complexities of the foreign tax credit. These reforms are necessary if we are to level the playing field for U.S. companies that compete with our trading partners. The Finance Committee bipartisan bill has been improved with an amendment to extend the research and development tax credit through the end of 2005. That is a domestic tax benefit that incentives research and development, makes our businesses competitive and prepared for the next generation of technology. This, however, translates also into good, high-paying jobs for workers in America and not overseas.
In addition to the previously agreed upon R&D amendment, there are several additional provisions to improve this bill. We have the amendment by Senators BUNNING and STABENOW, a bipartisan amendment to accelerate the manufacturing deduction. This amendment ensures the tax relief and related economic benefits of the bill are provided more quickly to those hurt by the repeal of FSC/ETI. This is now part of the bill.
Second, there is an amendment I offered with Senator Baucus to extend for 2 years tax provisions that have expired. Some expired in 2003, some this year. This includes items such as the work opportunity tax credit and the welfare-to-work tax credit which have been merged and simplified into a single credit as proposed by Senator Santorum and others in the bill S. 1180. This is now a part of the legislation.
A third provision on net operating losses is also included. This provision allows companies that operated at losses during the difficult economic conditions of last year to offset those losses against their income of the previous 5 years. So this provision is going to accelerate tax relief to companies that need it to continue operations and to continue their recovery from the recent economic difficulties. This provision is now in the bill.
The JOBS bill before us also contains many other items that are widely supported by the Members. We have enhanced the amount of transition relief for U.S. manufacturing companies that will be harmed by the FSC/ETI repeal. We have enhanced depreciation provisions, brownfield revitalization, mortgage revenue bonds. We allow deductions from private mortgage insurance for people struggling to afford a home.
The bill includes tax benefits for reservist employees that provides a tax credit to employers for wages paid to reservists who have been called up to active duty. We have extended and enhanced the Liberty Zone Bonds for the rebuilding of New York City, particularly requested by its two Senators. We have increased industrial development bond levels to spur economic development. We have included the Civil Rights Tax Fairness Act. We have provided for rail infrastructure and broadband.
All of these benefits are being held hostage because some Members are pushing politically motivated votes on an issue that is not even in this bill. Let's get on with the business at hand and finish it. Let's put good economic policy first in the Senate.
We do have the issue of cloture which comes up periodically when we have to get to the completion of legislation. I, for one, was hoping this cloture would not be filed. That is the way Senator Baucus and I hoped it would happen. I have to deal with the fact it is filed. My colleague Senator Baucus has to deal with that fact as well. This needs to be dealt with on a little higher plain than from bill to bill.
I propose to the leadership of the Republican and Democratic caucuses that somehow, if we are going to get between now and adjournment this fall, without a lot of waste of time on the part of the Senate and the 100 Members equally affected, that we get a list of the so-called amendments I referred to as politically motivated. I think the other side sees they have certain issues that ought to get before the American people, ought to be discussed. Republicans have some of those issues as well that Democrats would just as soon we not bring up. I don't know why there can't be some agreement unrelated to a specific bill before the Senate that certain of these issues are going to be brought up, and we will find someplace to handle one on this bill, one on another bill, a third one on another bill, so they don't get dumped at one time all on one piece of legislation. Then we know ahead of time what the situation is; there will be a plan for the functioning of the Senate.
I should not speak for Senator Baucus but I believe I can. He comes from a philosophy that this place ought to work, that it ought to make product. We ought to do our job. And I am sure that even though he might have a different view than I do on this issue of cloture, he wishes it were not that way. I wish it were not that way. He wishes there was a plan before us to move every important piece of legislation in an expeditious way because that is what we are sent here to do. We all ought to want to make this place work because when it does not work, it makes all of us look bad. It puts the good of the American people secondary to politics, whether it is Republican politics or Democratic.
I yield the floor.