Summary:

All articles in House section

EDUCATION SAVINGS ACT FOR PUBLIC AND PRIVATE SCHOOLS
(House of Representatives - October 23, 1997)

Text of this article available as: TXT PDF [Pages H9056-H9076] EDUCATION SAVINGS ACT FOR PUBLIC AND PRIVATE SCHOOLS Mr. ARCHER. Mr. Speaker, pursuant to House Resolution 274, I call up the bill (H.R. 2646) to amend the Internal Revenue Code of 1986 to allow tax-free expenditures from education individual retirement accounts for elementary and secondary school expenses, to increase the maximum annual amount of contributions to such accounts, and for other purposes, and ask for its immediate consideration. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. Sununu). The bill is considered read for amendment. The text of H.R. 2646 is as follows: H.R. 2646 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 ``Education Savings Act for Public and Private Schools''. SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS. (a) Tax-Free Expenditures for Elementary and Secondary School Expenses.-- (1) In general.--Section 530(b)(2) of the Internal Revenue Code of 1986 is amended to read as follows: ``(2) Qualified education expenses.-- ``(A) In general.--The term `qualified education expenses' means-- ``(i) qualified higher education expenses (as defined in section 529(e)(3)), and ``(ii) qualified elementary and secondary education expenses (as defined in paragraph (4)). Such expenses shall be reduced as provided in section 25A(g)(2). ``(B) Qualified state tuition programs.--Such term shall include amounts paid or incurred to purchase tuition credits or certificates, or to make contributions to an account, under a qualified State tuition program (as defined in section 529(b)) for the benefit of the beneficiary of the account.'' (2) Qualified elementary and secondary education expenses.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Qualified elementary and secondary education expenses.-- ``(A) In general.--The term `qualified elementary and secondary education expenses' means tuition, fees, tutoring, special needs services, books, supplies, equipment, transportation, and supplementary expenses required for the enrollment or attendance of the designated beneficiary of the trust at a public, private, or religious school. ``(B) Special rule for homeschooling.--Such term shall include expenses described in subparagraph (A) required for education provided for homeschooling if the requirements of any applicable State or local law are met with respect to such education. ``(C) School.--The term `school' means any school which provides elementary education or secondary education (through grade 12), as determined under State law.'' (3) Conforming amendments.--Subsections (b)(1) and (d)(2) of section 530 of such Code are each amended by striking ``higher'' each place it appears in the text and heading thereof. (b) Increase in Maximum Annual Contributions.-- (1) In general.--Section 530(b)(1)(A)(iii) of the Internal Revenue Code of 1986 is amended by striking ``$500'' and inserting ``$2,500''. (2) Conforming amendments.-- (A) Section 530(d)(4)(C) of such Code is amended by striking ``$500'' and inserting ``$2,500''. (B) Section 4973(e)(1)(A) of such Code is amended by striking ``$500'' and inserting ``$2,500''. (c) Waiver of Age Limitations for Children With Special Needs.--Paragraph 1 of section 530(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following flush sentence: ``The age limitations in the preceding sentence shall not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary).'' (d) Corporations Permitted To Contribute To Accounts.-- Paragraph (1) of section 530(c) of the Internal Revenue Code of 1986 is amended by striking ``The maximum amount which a contributor'' and inserting ``In the case of a contributor who is an individual, the maximum amount the contributor''. (e) Effective Date; References.-- (1) Effective date.--The amendments made by this section shall take effect as if included in the amendments made by section 213 of the Taxpayer Relief Act of 1997. (2) References.--Any reference in this section to any section of the Internal Revenue Code of 1986 shall be a reference to such section as added by the Taxpayer Relief Act of 1997. SEC. 3. OVERRULING OF SCHMIDT BAKING COMPANY CASE. (a) In General.--The Internal Revenue Code of 1986 shall be applied (other than with respect to severance pay) without regard to the result reached in the case of Schmidt Baking Company, Inc. v. Commissioner of Internal Revenue, 107 T.C. 271 (1996). (b) Regulations.--The Secretary of the Treasury or the Secretary's delegate shall prescribe regulations to reflect subsection (a). (c) Effective Date.-- (1) In general.--Subsections (a) and (b) shall apply to taxable years ending after October 8, 1997. (2) Change in method of accounting.--In the case of any taxpayer required by this section to change its method of accounting for its first taxable year ending after October 8, 1997-- (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as made with the consent of the Secretary of the Treasury, and (C) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account in such first taxable year. The SPEAKER pro tempore. Pursuant to House Resolution 274, the committee amendment in the nature of a substitute printed in the bill, modified by the amendment printed in part 1 of House Report 105-336, is adopted. The text of the committee amendment in the nature of a substitute, as modified by part 1 of House Report 105-336 pursuant to House Resolution 274, is as follows: H.R. 2646 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 ``Education Savings Act for Public and Private Schools''. SEC. 2 MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS. (a) Tax-Free Expenditures for Elementary and Secondary School Expenses.-- (1) In general.--Section 530(b)(2) of the Internal revenue Code of 1986 is amended to read as follows: ``(2) Qualfied education expenses.-- ``(A) In general.--The term `qualified education expenses' means-- ``(i) qualified higher education expenses (as defined in section 529(e)(3)), and ``(ii) qualified elementary and secondary education expenses (as defined in paragraph (4)) but only with respect to amounts in the account which are attributable to contributions for any taxable year ending before January 1, 2003, and earnings on such contributions: Such expenses shall be reduced as provided in section 25A(g)(2). [[Page H9057]] ``(B) Qualified state tuition programs.--Such term shall include amounts paid or incurred to purchase tuition credits or certificates, or to make contributions to an account, under a qualified State tuition program (as defined in section 529(b)) for the benefit of the beneficiary of the account.'' (2) Qualified elementary and secondary education expenses.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Qualified elementary and secondary education expenses.-- ``(A) In general.--The term `qualified elementary and secondary education expenses' means tuition, fees, tutoring, special needs services, books, supplies, computer equipment (including related software and services) and other equipment, transportation, and supplementary expenses required for the enrollment or attendance of the designated beneficiary of the trust at a public, private, or religious school. ``(B) Special rule for homeschooling.--Such term shall include expenses described in subparagraph (A) required for education provided for homeschooling if the requirements of any applicable State or local law are met with respect to such education. ``(C) School--The term `school' means any school which provides elementary education or secondary education (through grade 12), as determined under State law.'' (3) Conforming amendments.--Subsections (b)(1) and (d)(2) of section 530 of such Code are each amended by striking ``higher'' each place it appears in the text and heading thereof. (b) Temporary Increase in Maximum Annual Contributions-- (1) In general.--Section 530(b)(1)(A)(iii) of the Internal Revenue Code of 1986 is amended by striking ``$500'' and inserting ``the contribution limit for such taxable year''. (2) Contribution limit.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Contribution limit.--The term `contribution limit' means $2,500 ($500 in the case of any taxable year ending after December 31, 2002).'' (3) Conforming amendments.-- (A) Section 530(d)(4)(C) of such Code is amended by striking ``$500'' and inserting ``the contribution limit for such taxable year''. (B) Section 4973(e)(1)(A) of such Code is amended by striking ``$500'' and inserting ``the contribution limit (as defined in section 530(b)(4)) for such taxable year''. (c) Waiver of Age Limitations for Children With Special Needs.--Paragraph (1) of section 530(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following flush sentence: ``The age limitations in the preceding sentence shall not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary).'' (d) Corporations Permitted to Contribute to Accounts.-- Paragraph (1) of section 530(c) of the Internal Revenue Code of 1986 is amended by striking ``The maximum amount which a contributor'' and inserting ``In the case of a contributor who is an individual, the maximum amount the contributor''. (e) Effective Date; References.-- (1) Effective date.--The amendments made by this section shall take effect as if included in the amendments made by section 213 of the Taxpayer Relief Act of 1997. (2) References.--Any reference in this section to any section of the Internal Revenue Code of 1986 shall be a reference to such section as added by the Taxpayer Relief Act of 1997. SEC. 3. OVERRULING OF SCHMIDT BAKING COMPANY CASE. (a) In General.--The Internal Revenue Code of 1986 shall be applied without regard to the result reached in the case of Schmidt Baking Company, Inc. v. Commissioner of Internal Revenue, 107 T.C. 271 (1996). (b) Regulations.--The Secretary of the Treasury or the Secretary's delegate shall prescribe regulations to reflect subsection (a). (c) Effective Date.-- (1) In general.--Subsections (a) and (b) shall apply to taxable years ending after October 8, 1997. (2) Change in methods of accounting.--In the case of any taxpayer required by this section to change its method of accounting for its first taxable year ending after October 8, 1997-- (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as made with the consent of the Secretary of the Treasury, and (C) the next amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account in such first taxable year. The SPEAKER pro tempore. After 1 hour of debate on the bill, as amended, it shall be in order to consider the further amendment specified in part 2 of the report, if offered by the gentleman from New York [Mr. Rangel] or his designee, which shall be considered read and debatable for one hour, equally divided and controlled by the proponent and an opponent. The gentleman from Texas [Mr. Archer] and the gentleman from New York [Mr. Rangel] shall each control 30 minutes of debate on the bill. The Chair recognizes the gentleman from Texas [Mr. Archer]. {time} 1245 General Leave Mr. ARCHER. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous matter on H.R. 2646. The SPEAKER pro tempore (Mr. Sununu). Is there objection to the request of the gentleman from Texas? There was no objection. Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I was reading in the paper yesterday that our schoolchildren are unable to demonstrate a basic knowledge of science. The article said that more than half of the fourth graders who recently took a national science test could not even identify the Atlantic and Pacific Oceans. This is more than troublesome. If America is to remain competitive in the global arena, an arena whose battles are often fought with science and technology, we need to see that our children have the mental tools they need to succeed. In the balanced budget bill, we gave the parents the help that they need by college IRA's, IRA's to make college more affordable with the same income caps, the same levels as are in this bill. Today we extend that same type of help to parents with younger children in K through 12, elementary and secondary education. The legislation we consider allows parents, grandparents, and others to put up to $2,500 a year in education savings accounts where it can grow tax-free, and be used for a wide variety of educational uses. The bill is one of the best things, in my opinion, to happen to education. It is good for public schools, it is good for private schools, it is good for parochial schools, and it is good for home schooling. But most importantly, it is good for students everywhere, and that means that it is good for America's future. An estimated 14.3 million Americans will sign up for these accounts by the year 2002, and 75 percent, and I accentuate this, 75 percent of those families will have children in public schools. Here is how it works. If a child in public, private, or home schooling needs a tutor for science or for any other subject, a parent can tap the educational savings account. If a child in public, private, or home schooling needs books or supplies, a parent can tap the account. If a child has special needs, and our heart and help should go out to those children who are in special need, which often spans a lifetime, a parent can use the account. If a parent needs to provide transportation so a child can attend a good school, the account may be tapped. I cannot think of anything more important to the American people than their children and their children's educations. While this bill may not guarantee that fourth graders will know the location of oceans, it will help their parents improve the education opportunities. Is this bill a panacea for all of our education ills? Of course not. But we should not wait for the day when we have a magic solution to all of the ills, we should do what we can at this moment. This is a can-do proposition. Mr. Speaker, this concludes my remarks, but I take a moment to inform the Chamber that the gentleman from Illinois [Mr. Manzullo] asked to be included as a cosponsor of this measure, but was inadvertently left off the cosponsor list. Mr. Speaker, I reserve the balance of my time. Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume. I rise in opposition to H.R. 2646, Mr. Speaker. Mr. Speaker, let me join with the leadership of the House in stressing how important it is that we allow our young people to get access to a decent education as soon as we can. Mr. Speaker, when we dream about the economic opportunities that will be had for Americans, and those people that we intend to trade with in all parts of the world, one thing we take for granted is that academically our young people will be able to get the training in order to participate in what is going to be for history a revolutionary and exciting time. Yet, we go to that bargaining table with 1.6 million people in jail. God knows, I believe if you violate the law, [[Page H9058]] justice should take a hand and you should be removed from society. But why is this number of people continuing to explode? Why is it that 80 percent of the crimes are not violent? Why are they all drug-related? Why are all of the people in jail illiterate, unemployable? Why do they all seem to be coming from communities where the school system has failed? The answer has to be because it is out of these communities that there is no hope, there are no dreams, there are no opportunities. Life really does not mean that much, and jail is no real, serious threat. So now our country finds the U.S. Congress interfering with local schools by suggesting that we need more prisons than we need schools. It is sad, but that is how it is going to be recorded. Local and State governments are involved in prison-making, not making students prepared in order to get a decent education. Even our great President targeted colleges, and we are now trying to find some bridge to go from before school to be prepared for college. So I can see how Mr. Coverdell could respond to a tax initiative and say, let us make more money available for people to just spend, if they can find some reason to spend that money on a child before they go to college. I think that we cannot even call it an educational bill, because soon we will see that there is no education attached to this. It is bad tax law, because soon we will see that if we are looking for simplification, tell me what a taxpayer is going to have to put on the sheet in order to justify that they spent this money that they had in a tax-free account on education? We are going to have to look long and hard to find any education in this bill, but we do not have to look long and hard to find a tax break in this bill. Let us get to something that the gentleman from Texas [Mr. Archer] and I are working on now in a bipartisan way, the restructuring of the internal revenue system. Prior to pulling it up by its roots, we will restructure it. It is going to cost some money to restructure the Internal Revenue Service. Any decent American politician that wants to get reelected had better prepare some kind of way to get a good knock in there against the Internal Revenue Service. It is going to be good this year, and it will be better next year. So in order to restructure it, we need some money. We have come up with the money, at least the majority have, to pay for that. So I was surprised in asking the question, how are we going to pay for the education savings account? Guess what, we are going to use the same money. No, do not tell me we cannot use the same money to pay for two things, if it is the same amount of money. We are Ways and Means, we know that much. Which one do we want to fund out of this one source of money, Coverdell, or the restructuring of the IRS? We do not know, but we will spend the money on the first bill that reaches the President's desk and he signs. Let me tell the Members this, if they are for paying for the restructuring of the Internal Revenue Service, Members have to strike down Coverdell, because if we pass Coverdell and the money is spent for Coverdell, we have no money for Internal Revenue Service. But I assume this technical point will be explained by the majority, since they able to do that well. Let me say that what I am trying to do with my bill, which we will have an opportunity to vote for or against, is to allow the local school districts to recognize, in areas where they are failing, that they need some help. If they can successfully bring the private sector in and form a partnership in a special academy, where the curriculum is not just set by educators but by the business people, who know the skills that are going to be necessary to hire these people, we will be able with this very same money to allow them to issue bonds to rebuild the schools, to get the equipment. But under Coverdell, all we will be able to do is say that somebody that had the disposable income of up to $2,500, or a friend of theirs that may want to give a gift to the child and put it in to deposit it tax-free, will be able to withdraw this for tutors, for babysitters, for taxicabs, for movies, for anything that they think is necessary to make that child happy. Remember, the burden will be on the IRS, if we are able to find the money to restructure it, to prove that the money was used for an educational experience. Talk about a horror story, we are now about to hear it from Members that understand what is in this bill. Mr. Speaker, I reserve the balance of my time. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentleman from Arizona [Mr. Hayworth]. Mr. RANGEL. Mr. Speaker, I yield 30 seconds to the gentleman from Arizona. The SPEAKER pro tempore. The gentleman from Arizona [Mr. Hayworth] is recognized for 3 minutes and 30 seconds. Mr. HAYWORTH. Mr. Speaker, I thank the distinguished gentleman from Texas [Mr. Archer], the chairman of the committee, for yielding time to me, and for this opportunity to come to the well and engage in honest dialogue and debate concerning the future of our children. I listened with great interest to my colleague, the gentleman from New York, the distinguished ranking member, and listened also as he outlined literally the horrors that confront American families today in so many neighborhoods, including the neighborhood and the community that my colleague from New York represents. What we have here today, Mr. Speaker, is a historic opportunity to help those families, to help those parents seize control of the money they earn to direct an education in the way they see fit, whether it is choosing a school that the parents and family and others believe is best suited for the education of that child, or seeking outside help, remedial tutoring or extra-educational aid, such as textbooks or computers; to have a savings account, a tax-free interest-bearing account to put the control back in the hands of American parents. For those people should literally hold the destiny of their children in their hands, and this affords those parents the chance. Mr. Speaker, we have made great strides in allowing these educational accounts for college-bound students. Why, then, would we deprive children from kindergarten through the 12th grade of the same opportunity? Mr. Speaker, I would point out a special provision of this bill that I believe is vitally important, an ability for parents of children with special needs to look beyond the chronological age to continue to have money in these accounts to help those children. Mr. Speaker, one of my first cousins has Downs syndrome. My uncle and aunt were blessed that they lived in a community with a school district with the ability to help educate children with special needs. But the challenge is for parents of children with special needs that, in our situation today, quite literally many of those parents are at the mercy of the local school districts in terms of quality of education. Mr. Speaker, when we adopt this bill today we do not leave any parents, but especially those parents of children with special needs, literally at the mercy of the accident of geography, and where they happen to live in a school district. What we have, Mr. Speaker, with this bill, and I urge its passage and the creation of these special savings accounts, is the chance to give families the opportunity to make the choices to help benefit their children. I urge passage of this bill. {time} 1300 Mr. RANGEL. Mr. Speaker, will the gentleman yield? Mr. HAYWORTH. I yield to the gentleman from New York. Mr. RANGEL. Mr. Speaker, so that we can make certain that we confine our remarks to what is in the bill, does the gentleman have any idea where a child with special needs would be in the bill before us? I would urge the gentleman, please, not to place his arguments on special needs, because there is absolutely no description in this legislation as to what is a special needs child, which means that every parent, I would like to believe, would believe that their child has special needs and there is no way in the world to disprove it. Mr. ARCHER. Mr. Speaker, I yield myself 30 seconds. Mr. Speaker, the gentleman from Arizona, I am sure, intends to be accurate, but the accuracy is this bill provides for a lifetime ability for parents [[Page H9059]] with children that have special needs, rather than a cutoff at an age limit under current law. The definition of special needs is to be done by the Treasury, and it is a part of this bill. Mr. Speaker, I say that respectfully in response to the gentleman from New York. Mr. RANGEL. Mr. Speaker, I yield myself 30 seconds. Mr. Speaker, we do not know as we debate this bill what a special need is, but we can imagine and hope that Treasury will come up with something. And if the gentleman is talking about a lifetime, I do not know why he sunset the bill in 5 years, but I am sure he will have enough time to explain that. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Fazio]. Mr. FAZIO of California. Mr. Speaker, this piece of legislation is the confluence of two bad Republican ideas, one of which provides tax breaks for our wealthiest people and not for those in the middle class who truly need it, and the other is to emphasize private schools under the guise of reforming public education. Mr. Speaker, this bill is flawed for a number of reasons. I think we will hear more about the ability, for example, to buy a car under this proposal in order to transport students to school. But it is also flawed because it puts in the hands of people making over $93,000, 70 percent of all the benefits. In other words, it could be called the Prep School Promotion Act of 1997, more than a public school reform bill. Mr. Speaker, we ought to be putting resources into reducing class sizes, we ought to be putting resources into wiring our public schools, training our teachers. We have an understanding of what it takes to improve the infrastructure of our public school system, but we are going to take $4 billion over the next 10 years and divert it to people who would like to perhaps start or perhaps be subsidized in their attendance already in private institutions. We do not really help the average American with this bill. We hold out a carrot to an industry or to some few individuals, many of whom have the capacity to already engage in educating their children privately. It is a God-given American right to do so. We do not have to be diverting our hard-earned taxpayers' dollars to those families, while our public schools across the country are lacking basics. And I do not mean just in inner cities or rural areas; in high-growth suburbs as well. Mr. Speaker, we can make improvements in our public educational system and we ought to do it. This is a diversion and it is a travesty. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentleman from Texas, Mr. Sam Johnson, a respected member of the Committee on Ways and Means. (Mr. SAM JOHNSON of Texas asked and was given permission to revise and extend his remarks.) Mr. SAM JOHNSON of Texas. Mr. Speaker, has anyone noticed that the President will endorse any education initiative as long as it supports big government, like Goals 2000? Like national testing? This is the same President that threatens to veto any program that increases parental control over a child's education. Mr. Speaker, look at this administration's track record. They opposed education block grants to States, they oppose vouchers for the poorest, poorest 2,000 children, and now they oppose this bill, which gives parents the ability to invest up to $2,500 a year in their child's education so that they can attend the safest and most academically challenging school available. Why is the President against parents sending their children to the school of their choice? Surely he cannot believe that Washington bureaucrats are smarter than parents. And I hope it is not because he is so politically indebted to the special interests in Washington, like the National Education Association for instance, that he can no longer see what is best for America's kids. Well, whatever the reason, Mr. Speaker, this President is wrong to oppose this bill. This bill will not only strengthen our children's future by giving the parents a tool to make sure their children can attend a school that meets their needs, needs only a parent can determine. No one can seriously argue that there is anything wrong with giving parents, grandparents, and friends the power to invest in a child's education. America's future depends on our children, and we ought to provide those parents with whatever they need to make sure that their children are the most educated, productive, and successful in the world. Mr. Speaker, I would to urge the President to join us as we try to help parents help their children. I urge all of my colleagues here in the House to do the same. Vote for this bill. Give our children a chance to grow up to be great Americans. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from New York [Mr. Owens]. (Mr. OWENS asked and was given permission to revise and extend his remarks.) Mr. OWENS. Mr. Speaker, I rise in opposition to H.R. 2646. I think the credibility of the Congress is greatly injured by playing these kinds of college boy, sophisticated games around the edges of a crucial issue like education reform. Mr. Speaker, we are showing off with college boy sophistication while we reject the common sense of the American people. They want something real done about the education reform problem. They do not want us to continue to play games. Our credibility is now down to 36 percent. I understand this Congress dropped from 40 percent. This is the reason. We are not serious here. We like to show off among ourselves. Mr. Speaker, the voters out there clearly want decisive action on education reform and improvement. They keep saying it again and again and again. In this 105th Congress, instead of playing games, we should take advantage of this window of opportunity to do something significant. The people are saying they want a real effort by Congress to deal with the education problems. Instead of education savings accounts and other headline-seeking tricks, we should unite in launching a bipartisan omnibus bill around the things that both Republicans and Democrats already agree on. We agree that we need more teacher training and that Federal aid would greatly help that teacher training process. We agree we need more technology in the schools; both Republicans and Democrats are in favor of giving aid for more technology. We agree on charter schools. Instead of pushing vouchers and education savings accounts, why not unite in the areas that we agree? We are both in favor of charter schools, both parties. Why do we not move forward in some kind of way which is commensurate with the problem? Let us understand that schools are at the core of what should be a massive opportunity system in America which will generate the kind of educated population we need as we go into the 21st century. We are the indispensable Nation. We are going to have to continue to hold on to a leadership role. We cannot do that unless we have the most highly educated population. Mr. Speaker, let us stop playing games and let us have some real Federal aid to education that meets the common sense needs of the American people. Mr. ARCHER. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Pennsylvania [Mr. English], a respected Member of the Committee on Ways and Means. Mr. ENGLISH of Pennsylvania. Mr. Speaker, in my area of northwestern Pennsylvania one of the biggest challenges facing the middle class is the affordability of education, and this is something that affects middle-class families across a range of circumstances. It is the single biggest barrier to the next generation being able to penetrate through and achieve the American dream. Mr. Speaker, as a supporter of educational tax relief for all stages of schooling, I rise in strong support of this legislation, the Gingrich-Coverdale approach with education savings accounts for private and public schools. This legislation allows parents to establish a tax-free savings account to be used for a child's education at any school from kindergarten through high school on to college. This legislation will expand the education savings account provisions included in our tax bill of this year by, first of all, increasing from $500 to $2,500 per year the maximum amount of contributions [[Page H9060]] that can be made to an education savings account; second of all, to include elementary and secondary school expenses; third, to allow corporate entities as parties to be able to contribute to an ESA on someone's behalf. Mr. Speaker, I join my colleagues in supporting this legislation to renew our commitment to helping families afford the full range of educational expenses demanded through our children's lifetimes. There are no, to coin the term of the previous speaker, ``college boy sophisticated games'' here. This is tax relief that a broad range of families can access. Let me say, Mr. Speaker, I realize the left wing of this body hates this proposal. They think that any resources that are diverted into private institutions, even through tax-free accounts, is a use of public funds. Mr. Speaker, I would say to my Democrat colleagues, ``Folks, it is not your money.'' Mr. Speaker, if people want to send their kids with their resources to private or parochial schools, they should be able to through this tax-free account. This is critical to diversity in education, and it is critical to restoring the American dream. I realize this provision was originally in our tax bill and it was stripped out because the President threatened to veto the entire tax bill if this was in the bill. Mr. Speaker, today I want to say to the President, Go ahead, make our day. Veto this bill if you think it is bad for families to use their own resources to put their kids through school. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentlewoman from Oregon [Ms. Furse]. Ms. FURSE. Mr. Speaker, I want to know what happened to the idea that this country invests in education. Why are we now asking parents and grandparents to spend more money on the education of their children? I think they already pay enough in taxes. The problem is that this body does not want to spend those taxes wisely. Instead of asking people to spend more money, why not look at the way we spend money? This body spends, for every 7 cents it spends on education, it puts 52 cents to the Pentagon. So if we took $200,000 and invested in every elementary and secondary school in this country $200,000, we would come to a total of $26 billion. Well, Mr. Speaker, guess what? This Congress gave $26 billion to pay for nine more B-2 bombers that the Pentagon did not even ask for. So it is not a question of not being able to pay for education. We should invest in education. It is a national security issue. What it is a question of is are we going to spend the money that these American taxpayers send to the Congress wisely or are we going to waste it and then have to come to them and say now it is time they divvy up some of their own money to pay for education. It is a disgrace. Mr. Speaker, we have got to invest wisely. Every tax dollar should go to real national security: our children; their education. That is where we should be putting our money and we should not be asking through a gimmick in the Tax Code to make these parents pay for more money to the education of their children. It is a bad idea. We should vote this down, and we should vote for education every time we can and invest more money in education and less money in additional B-2 bombers that nobody needs, even the Pentagon does not want. Let us invest in America. Let us invest in America's children. Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentlewoman from Kentucky [Mrs. Northup]. Mrs. NORTHUP. Mr. Speaker, I appeal to my colleagues as a mother to support this bill. I think that we have demonstrated our commitment to education over many, many years of contributions, both State and local and Federal. {time} 1315 In fact, we have 729 programs that contribute to making educational systems in this country work better, to make sure that each child, every child has an opportunity for a good education. I think it is sort of amazing that the people that oppose this bill assume that every parent will make the choice to take their child out of public school and put them in a nonpublic school. I assume that many of our public schools are, in fact, great schools and that these parents, that many parents want to keep their child in public school. If they are not, we have got a much huger problem than what we do about these $2,500 school savings accounts. The reality is, there is not anything we can do at this level. There is not any check we can write at this level that helps each 6-year-old and each 7-year-old, each 10-year-old and each 18-year-old be successful. Each one of my six children took unique needs, unique intervention to help them go from the beginning years of school to successfully complete school. Some of them had a terrible time with math and they needed tutoring. Some of my children needed special help in other areas. I do have special needs children. I have adopted children with diagnosed special needs and I have biological children that are dyslexic and have been diagnosed every step of the way. There is not any education program, private or public, that has met my children's needs. I had to find the resources to provide tutoring, to provide special summer schools, to provide special opportunities for those children to be successful. Thank goodness my husband and I could find those resources. Some of those I found by going back to work myself, by making quilts and selling them to provide for those services. This gives those parents these opportunities. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from Maryland [Mr. Cardin], coauthor of the restructuring of the IRS bill that we are trying to protect the funding. Mr. CARDIN. Mr. Speaker, let me thank the gentleman from New York [Mr. Rangel] for yielding me this time. Mr. Speaker, there are many reasons to be opposed to the legislation before us. It will benefit just a few people, those who have wealth. It has very limited benefits. It diverts funds that otherwise could be available to improve education in our country. Let me just mention one fundamental problem with this bill that I hope we all would see. That is, how in the world will the IRS ever be able to administer this bill? Look at the definition that is included for which the money in this account can be used in order to get tax preference. It can be used for tuition, fees, tutoring, special needs services, books, supplies, computer equipment, including related software and services, that is going to be an easy one for the IRS to figure out, what software is educationally related, and other equipment. Transportation, does that include a car that one can buy for their child? Supplementary expenses required for enrollment or attendance, does that include peanut butter and jelly sandwiches for nutrition services? How will the IRS ever be able to administer this program without being completely intrusive into the lives of the taxpayers of this country? This bill cannot be enforced. Rather than being an A plus account, these are really A slush accounts. I would urge my colleagues to reject the notion. The good news is that this bill is not going to become law. It is not going to pass the other body and be signed by the President. We do have an opportunity today to do something for education that we can really help; that is, support the Rangel substitute. Then we can build upon the budget agreement that we reached this year and we can really put more money into education. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentlewoman from Washington [Ms. Dunn], another respected member of the Committee on Ways and Means. Ms. DUNN. Mr. Speaker, I thank the gentleman from Texas for yielding me this time. I would like to respond to the comments of gentlewoman from Oregon. This Nation's value is education. We have worked to support the public education system. The problem with the public education system right now is that it is not doing the job. Every parent wants to give the best education possible to his or her children. That is why some parents are saying they are willing to pay in effect double, if they decide voluntarily to take part in this program where we set aside money that can go into an education savings accounts to purchase the best education possible for their child, K [[Page H9061]] through 12. They also continue to pay all the expenses of public education. I know that this happens because I went through it when I was a young mother, divorced, single parent, two children, 6 and 8, determined that I preferred to send my children to a private school, really appreciated the fact that choice was involved, but could not pay for transportation. So I was in that kind of box of having to get my child to school at the same time that I started a job. I know what the feeling is in the pit of your stomach when you are late to work because you want to make sure your kids are well-protected on the school ground. What I like about this bill is that a parent who takes the choice of school into his or her hands can say, I am going to start at age zero with my child and every year save up to $2,500 in an account just in case of emergency. In my case, my child had a specific language disability. My child needed training every single day, five days a week for 6 years at $17 an hour. That is a pretty heavy hit these days where working parents have to be in jobs all day just to make the bottom line work out. So I think this is a great program. I admire those parents who are willing to continue to make the best education their top value. Americans of all stripes are alike in many ways. I believe that is why many Democrats have come over to us and said we want to support this legislation. Let me just tell my colleagues a number on this legislation we have discovered, that if a parent puts money into this account from the time his child is born, by the time that child gets to high school, there can be a total, it is just a $2,000, say 7\1/2\ percent interest, $46,000 in that account plus another additional $6,000 that comes because one does not have to pay tax on the interest of the account. Mr. Speaker, I think it is a great opportunity. It recognizes that our principal challenge, educationally, is no longer college, but to raise the standards of our grade school and our high school students. What are our choices? Our choices are do nothing and get the product that we have gotten. It is not good enough to prepare our youngsters for a global economy or we can act today by passing this bill and helping parents obtain the tools that are needed to ensure that their child, every single one of them gets the best possible education from kindergarten to college. Mr. RANGEL. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from North Carolina [Mr. Etheridge], an educator as well as a legislator. Mr. ETHERIDGE. Mr. Speaker, I thank the gentleman from New York for yielding me the time. Mr. Speaker, I rise today in strong opposition to this bill and to this latest attack on our public schools and, yes, on our children, their parents, and their communities. This legislation is the wrong approach to improving education for the 1.2 million children in the North Carolina public schools and the more than 45 million children all across this great Nation. As the first member of my family to graduate from college, I am grateful to the public schools of North Carolina for the opportunity I had to get an education. They did a tremendous job for our three children. I know firsthand that public education holds the key to the American dream. As a former superintendent elected for two terms, 8 years in North Carolina, I know what it takes to improve the public schools and to give our children the opportunity to make the very best of their God- given ability. This bill is the latest attempt to use the precious taxpayer resources that we have to subsidize private schools. It will take precious resources that we need to strengthen our schools and put it into the pockets of the wealthiest people to send them to private schools. According to the Joint Committee on Taxation, the original version of this bill would have cost the U.S. Treasury over $5 billion over the next 10 years. That money would have been better spent helping States and localities rebuild crumbling schools, constructing new schools to relieve overcrowding. In fact, the President proposed a plan to do just that, but the proponents of this bill stripped it out of the original budget bill that passed this body earlier this year. Mr. Speaker, I sought this office because I could not stand by and watch Congress launch attack after attack on our Nation's public schools. I saw that 2 years ago when this body stood up and said, we are going to abolish the Department of Education, we are going to do away with the school lunch programs and we are going to eliminate student loans. A member of the majority party just last week even, last month, compared our public schools, and I quote, to the Communist legacy. This bill is nothing more than an attempt to scapegoat our public schools once again. Mr. Speaker, abandoning our public schools will not improve public education in this country. This bill is a cowardly act of surrender. Vote against this latest attack and vote for the Rangel substitute. Mr. ARCHER. Mr. Speaker, I yield myself 30 seconds to respond to the gentleman because he obviously has not read the bill. The bill will provide assistance to families with children in public schools that is so badly needed today and public school teachers have come to me and begged for this because they say tutors are needed to help with the education of children in public schools. Seventy-five percent of the resources that this bill provides will go to families with children in public schools. Unfortunately, there is a group out there that does not want families to have any help for children who go into private schools. Mr. Speaker, I yield 2 minutes to the gentlewoman from Washington Mrs. Linda Smith. Mrs. LINDA SMITH of Washington. Mr. Speaker, I thank the gentleman for bringing this bill to the floor. I have listened to the debate here and think that sometimes you just have to go back to the original bill to remember what it is because we lose track in the debate. The education savings account for public and private schools allows parents and grandparents like me to open an account for each of my grandchild's education that can be used only, only the interest, the principal I still pay taxes on, but the interest can be used for a child's education needs while they are in school, for private school, just the interest, if their parents should choose, and from kindergarten through college. The $2,500 a year that I would put in each of the children's accounts as a grandparent, allowed under this bill, can be put in until they are 18 years old. If I take the money out that is now being used in our economy because savings is good for our economy, I have to pay a penalty on that. There is a great incentive for me to save for my grandchildren's education, not as great an incentive as an IRA where you can deduct the base $2,500 from your taxes, but a great incentive because I can save interest free for my grandchildren. As long as they spend the interest on college education, no one pays tax on the interest. This is not an attack on anything. It is a way of families getting involved in their kids' education. The great part about it is we know by all research families involved in their education gives the best education for children. Moms and grandmas making the choices gives the child the most personal education. I also wanted to say that as a grandma, I look at what is ahead for my grandkids. I do not want them to have to choose a public opportunity only. They might want to choose a private college. But if they do choose a public college, I would like to have them have options. With this, I want to encourage Members to look back at the bill and realize, this is a very good step toward reform and grandparents in America will like it. Mr. RANGEL. Mr. Speaker, I yield myself 30 seconds to say that the gentlewoman really did explain this bill in a very accurate way, in that I just wish I could better understand that if one puts the money in an account and one can spend the interest on that account and one does it for their child and their grandchild and the bill is going to sunset in 5 years, my God, how much interest will ever be there for them to spend? Mr. Speaker, I yield 2 minutes and 30 seconds to the gentleman from Indiana [Mr. Roemer]. {time} 1330 Mr. ROEMER. Mr. Speaker, I thank the gentleman from New York for [[Page H9062]] yielding me this time, and I rise in opposition to this legislation for three reasons: distribution, accountability, and fairness. First of all, distribution. The Department of the U.S. Treasury has said, by analysis, that 70 percent of the benefits go to 20 percent, the highest 20 percent, of Americans. Twenty percent of the benefits go to the highest 20 percent of Americans making money in this country. Now, that is one reason. Second, fairness. How many people making $25,000 a year, with their children in public schools, are going to be able to save $2,500 a year and benefit from this? Good question. Maybe not many. But third, I think, Mr. Speaker, the main reason here is accountability. Now, I just voted for three IRA's in the tax relief bill that we passed for Americans, and I was proud to do it: An education IRA, a Roth IRA, and expansion of the existing IRA. The education IRA can go for college tuition. We know that; the IRS knows that. This particular IRA can go for any of the following things: computers, books, supplies, equipment, transportation, and supplementary expenses. So if we want to buy measuring cups to teach our children at home about science, is that a tax writeoff? Should the IRS come in and audit that? Is that what the Republicans are saying? Is this the Auto Relief Act of 1997? What about buying our children a car? What about putting gasoline in the car? What about driving to and from school but also going to work? Now, do we want the IRS to look at those things? Are all those expenses or are they not? Should the IRS stay completely out of this or should they be nosing into every one of these situations? So from a position of accountability, we can buy software, we can have services, I understand we can pay one child to tutor another of our children under this act. Let us have some accountability, folks. If we are going to fix the IRS, as we have decided this week, let us fix it for everybody. We will do it in a bipartisan way, but with public education. What this act does is let us just fix it primarily for people making over $70,000 a year for them to drive their kids back and forth to school and buy some computers and some measuring cups. Let us fix public education for everybody. Let us fix the IRS for everybody. Mr. NUSSLE. Mr. Speaker, I yield 2 minutes to the gentleman from Ohio [Mr. Boehner], the distinguished chairman of the Republican conference. Mr. BOEHNER. Mr. Speaker, I thank my colleague from Iowa for yielding me this time. My colleagues, Republicans here in the House, have begun a bold campaign to strengthen and reform our Nation's education system. We are attempting to send more dollars directly to the classrooms, trying to return control of education to parents, teachers, and local communities, and giving working class parents and poor parents new educational choices. I think that is exactly what the Education Savings Act for Public and Private Schools does. The bill that we have today simply extends the popular and successful college education savings accounts to parents with kids in kindergarten through grade 12. All over the country, and certainly in my district, there are lower and middle-income families who struggle every day to make ends meet. These are exactly the type of families that these accounts are intended to help. The rich, as those on the other side of the aisle like to talk about, do not have to save to pay for a tutor if their kids are not doing well in math or reading. The rich, as they describe them, do not have to save to buy a new computer. They do not have to save in order to pay for SAT prep classes or summer education camps. These things are already available to them because they have the cash to do it. What we are trying to do is to help lower middle income and poor folks in America save the money that they can to help their children get a better education. Now, what is wrong with allowing American parents to keep more of what they earn so that they can help their children get the educational aids they need that will help them have a shot at the American dream? That is what we are trying to do today. We provide Pell grants for students in college. Private college, public college, it makes no difference. We provide student loans for college. Private, public, it makes no difference. But as soon as we try to do something to give parents greater control over the education of their children that are in grades 12 and under, there is a big stone wall. That is because the education bureaucracy in America rises up and says no, we are in charge of that. This bill today gives parents more choices. Mr. RANGEL. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Michigan [Mr. Levin], a member of the Committee on Ways and Means. (Mr. LEVIN asked and was given permission to revise and extend his remarks.) Mr. LEVIN. Mr. Speaker, let me just answer the gentleman from Ohio [Mr. Boehner]. Federal control, most of the money for secondary and elementary education that is appropriated here goes for special education and compensatory education that are under the control of local school districts. So that is an effort really to debate by demonization to say that we are trying to defend a Federal bureaucracy when most of the money that is appropriated goes to school districts. Second, the gentleman from Ohio and others say that their bill is an effort to help the working class. Look at the data. According to the Treasury Department analysis, under this bill a family with income $33,000 to $55,000 would get $7 a year help; a family $55,000 to $93,000, $32; and a family $93,000 and up would get $96, three times the family with half the income and 12 times a family with three to five times the income. Now, if the money is already available to the wealthy family, why are we giving them a tax break? Mr. NUSSLE. Mr. Speaker, will the gentleman yield? Mr. LEVIN. I yield to the gentleman from Iowa. Mr. NUSSLE. Mr. Speaker, does the gentleman have a copy of this? We would love to see this analysis. Mr. LEVIN. Reclaiming my time, Mr. Speaker, we would be glad to, and I would also tell the gentleman from Iowa that we distributed, in the Committee on Ways and Means, a study by the Federal Reserve that indicated that families $30,000 to $40,000 had nonretirement investment assets of $2,500. In other words, they did not have as much money, most of them, as the amount of money that could be put in by wealthier families. The wealthy family has that income available and those assets. And a family $40,000 to $50,000 has nonretirement investment assets, those under 35, of only $3,400. So we are saying put $2,500 a year in. Who can do that if they have assets of only $3,400 nonretirement assets? Now, this is an effort by the majority, in essence, to cover their weak flank: education. But they are covering it by helping wealthy families and hurting public education. That is a bad idea. The Rangel idea is a much better one. Let us vote for it. Mr. NUSSLE. Mr. Speaker, I yield 2 minutes to the gentleman from South Carolina [Mr. Inglis]. Mr. INGLIS of South Carolina. Mr. Speaker, I thank the gentleman for yielding me this time. The previous speaker said something about accountability and how we must have accountability in this matter. Really, accountability in this context, I think, more equates to control. On this side what we are talking about is choice, which equates to freedom. And that is the difference in this debate. The difference is whether control is going to remain with a bureaucracy, whether it is in Washington or in a county back home. The question is who controls education: Is it a bureaucracy, an education bureaucracy, or is it parents? So accountability on this side really equates into control. Choice on this side equates into freedom. But there is something that comes with this freedom. The freedom we are after on this side is the opportunity for parents to choose where to send their kids to school. That is our ultimate objective, or at least my ultimate objective: to allow every parent in America to choose where to send their child to school among all options available to them. Now, I realize that the education establishment does not like that, because [[Page H9063]] they do not want to give up that control. But consider what they are after: The education folks are always trying to create little programs at the Department of Education that are supposedly going to save the day, but we all know they will fall short. I think we are all coming to the conclusion, or I hope we are, that really the only way to educate kids is for parents to be involved. And the way for parents to be involved is to vest them with decisionmaking. Do not tell them by some formula worked out or map worked out in some bureaucrat's office somewhere where they are going to send their kids to school. Give them choice. Give them the opportunity to go to, say, Poly Williams School, where they have to sign a contract in order to have their kids there, and then what we will have is parental involvement because they are exercising their free choice. They are buying into the school. They are participating in Johnny's education, and Johnny is going to get educated that way. That is the change we need to bring, and I wholeheartedly support this small step toward that. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. Green]. (Mr. GREEN asked and was given permission to revise and extend his remarks.) Mr. GREEN. Mr. Speaker, I thank my ranking member for yielding me this time. Listening to the debate earlier, we all support education and all the ways we can do it, and the opportunity to help families have their children to be prepared for tomorrow, but it is frustrating, as a Member of the House, that last week the solution to the education problems was vouchers for the District of Columbia and this week it is for an educational IRA that will only be for a specific higher income. And those numbers that the members of the Committee on Ways and Means have been talking about are reflected in a graph that I have here that shows my district, whose medium income is about $22,000, that is about the average for the country, in some cases, I believe, but it shows if an individual makes $33,000 to $55,000 their only tax break will be $7. But today we are having a special that says, OK, we are going to solve education by giving $7 back to a family with an income of $33,000 to $55,000. I wish we had quick fixes to education problems, but we do not. It takes hard work. And there are millions of parents, teachers, and even school administrators who care and love those children and that are not looking for quick-fix gimmicks like vouchers or even this IRA. America has always had a commitment to education, whether it be in private, parochial or in home school, or particularly where 90 percent of the students go, which is public education. This bill allows parents to set up a tax-free IRA of $2,500 per year, per child. What this proposes is that it will only let the wealthiest families participate and take advantage of it. Ninety percent of the students attend public education, yet those parents of poorer incomes or moderate incomes, under the numbers I see from the Committee on Ways and Means, they have to buy school uniforms and computers, but they cannot take advantage of this. This is not the solution for our educational problems. It takes h

Major Actions:

All articles in House section

EDUCATION SAVINGS ACT FOR PUBLIC AND PRIVATE SCHOOLS
(House of Representatives - October 23, 1997)

Text of this article available as: TXT PDF [Pages H9056-H9076] EDUCATION SAVINGS ACT FOR PUBLIC AND PRIVATE SCHOOLS Mr. ARCHER. Mr. Speaker, pursuant to House Resolution 274, I call up the bill (H.R. 2646) to amend the Internal Revenue Code of 1986 to allow tax-free expenditures from education individual retirement accounts for elementary and secondary school expenses, to increase the maximum annual amount of contributions to such accounts, and for other purposes, and ask for its immediate consideration. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. Sununu). The bill is considered read for amendment. The text of H.R. 2646 is as follows: H.R. 2646 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 ``Education Savings Act for Public and Private Schools''. SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS. (a) Tax-Free Expenditures for Elementary and Secondary School Expenses.-- (1) In general.--Section 530(b)(2) of the Internal Revenue Code of 1986 is amended to read as follows: ``(2) Qualified education expenses.-- ``(A) In general.--The term `qualified education expenses' means-- ``(i) qualified higher education expenses (as defined in section 529(e)(3)), and ``(ii) qualified elementary and secondary education expenses (as defined in paragraph (4)). Such expenses shall be reduced as provided in section 25A(g)(2). ``(B) Qualified state tuition programs.--Such term shall include amounts paid or incurred to purchase tuition credits or certificates, or to make contributions to an account, under a qualified State tuition program (as defined in section 529(b)) for the benefit of the beneficiary of the account.'' (2) Qualified elementary and secondary education expenses.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Qualified elementary and secondary education expenses.-- ``(A) In general.--The term `qualified elementary and secondary education expenses' means tuition, fees, tutoring, special needs services, books, supplies, equipment, transportation, and supplementary expenses required for the enrollment or attendance of the designated beneficiary of the trust at a public, private, or religious school. ``(B) Special rule for homeschooling.--Such term shall include expenses described in subparagraph (A) required for education provided for homeschooling if the requirements of any applicable State or local law are met with respect to such education. ``(C) School.--The term `school' means any school which provides elementary education or secondary education (through grade 12), as determined under State law.'' (3) Conforming amendments.--Subsections (b)(1) and (d)(2) of section 530 of such Code are each amended by striking ``higher'' each place it appears in the text and heading thereof. (b) Increase in Maximum Annual Contributions.-- (1) In general.--Section 530(b)(1)(A)(iii) of the Internal Revenue Code of 1986 is amended by striking ``$500'' and inserting ``$2,500''. (2) Conforming amendments.-- (A) Section 530(d)(4)(C) of such Code is amended by striking ``$500'' and inserting ``$2,500''. (B) Section 4973(e)(1)(A) of such Code is amended by striking ``$500'' and inserting ``$2,500''. (c) Waiver of Age Limitations for Children With Special Needs.--Paragraph 1 of section 530(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following flush sentence: ``The age limitations in the preceding sentence shall not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary).'' (d) Corporations Permitted To Contribute To Accounts.-- Paragraph (1) of section 530(c) of the Internal Revenue Code of 1986 is amended by striking ``The maximum amount which a contributor'' and inserting ``In the case of a contributor who is an individual, the maximum amount the contributor''. (e) Effective Date; References.-- (1) Effective date.--The amendments made by this section shall take effect as if included in the amendments made by section 213 of the Taxpayer Relief Act of 1997. (2) References.--Any reference in this section to any section of the Internal Revenue Code of 1986 shall be a reference to such section as added by the Taxpayer Relief Act of 1997. SEC. 3. OVERRULING OF SCHMIDT BAKING COMPANY CASE. (a) In General.--The Internal Revenue Code of 1986 shall be applied (other than with respect to severance pay) without regard to the result reached in the case of Schmidt Baking Company, Inc. v. Commissioner of Internal Revenue, 107 T.C. 271 (1996). (b) Regulations.--The Secretary of the Treasury or the Secretary's delegate shall prescribe regulations to reflect subsection (a). (c) Effective Date.-- (1) In general.--Subsections (a) and (b) shall apply to taxable years ending after October 8, 1997. (2) Change in method of accounting.--In the case of any taxpayer required by this section to change its method of accounting for its first taxable year ending after October 8, 1997-- (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as made with the consent of the Secretary of the Treasury, and (C) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account in such first taxable year. The SPEAKER pro tempore. Pursuant to House Resolution 274, the committee amendment in the nature of a substitute printed in the bill, modified by the amendment printed in part 1 of House Report 105-336, is adopted. The text of the committee amendment in the nature of a substitute, as modified by part 1 of House Report 105-336 pursuant to House Resolution 274, is as follows: H.R. 2646 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 ``Education Savings Act for Public and Private Schools''. SEC. 2 MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS. (a) Tax-Free Expenditures for Elementary and Secondary School Expenses.-- (1) In general.--Section 530(b)(2) of the Internal revenue Code of 1986 is amended to read as follows: ``(2) Qualfied education expenses.-- ``(A) In general.--The term `qualified education expenses' means-- ``(i) qualified higher education expenses (as defined in section 529(e)(3)), and ``(ii) qualified elementary and secondary education expenses (as defined in paragraph (4)) but only with respect to amounts in the account which are attributable to contributions for any taxable year ending before January 1, 2003, and earnings on such contributions: Such expenses shall be reduced as provided in section 25A(g)(2). [[Page H9057]] ``(B) Qualified state tuition programs.--Such term shall include amounts paid or incurred to purchase tuition credits or certificates, or to make contributions to an account, under a qualified State tuition program (as defined in section 529(b)) for the benefit of the beneficiary of the account.'' (2) Qualified elementary and secondary education expenses.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Qualified elementary and secondary education expenses.-- ``(A) In general.--The term `qualified elementary and secondary education expenses' means tuition, fees, tutoring, special needs services, books, supplies, computer equipment (including related software and services) and other equipment, transportation, and supplementary expenses required for the enrollment or attendance of the designated beneficiary of the trust at a public, private, or religious school. ``(B) Special rule for homeschooling.--Such term shall include expenses described in subparagraph (A) required for education provided for homeschooling if the requirements of any applicable State or local law are met with respect to such education. ``(C) School--The term `school' means any school which provides elementary education or secondary education (through grade 12), as determined under State law.'' (3) Conforming amendments.--Subsections (b)(1) and (d)(2) of section 530 of such Code are each amended by striking ``higher'' each place it appears in the text and heading thereof. (b) Temporary Increase in Maximum Annual Contributions-- (1) In general.--Section 530(b)(1)(A)(iii) of the Internal Revenue Code of 1986 is amended by striking ``$500'' and inserting ``the contribution limit for such taxable year''. (2) Contribution limit.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Contribution limit.--The term `contribution limit' means $2,500 ($500 in the case of any taxable year ending after December 31, 2002).'' (3) Conforming amendments.-- (A) Section 530(d)(4)(C) of such Code is amended by striking ``$500'' and inserting ``the contribution limit for such taxable year''. (B) Section 4973(e)(1)(A) of such Code is amended by striking ``$500'' and inserting ``the contribution limit (as defined in section 530(b)(4)) for such taxable year''. (c) Waiver of Age Limitations for Children With Special Needs.--Paragraph (1) of section 530(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following flush sentence: ``The age limitations in the preceding sentence shall not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary).'' (d) Corporations Permitted to Contribute to Accounts.-- Paragraph (1) of section 530(c) of the Internal Revenue Code of 1986 is amended by striking ``The maximum amount which a contributor'' and inserting ``In the case of a contributor who is an individual, the maximum amount the contributor''. (e) Effective Date; References.-- (1) Effective date.--The amendments made by this section shall take effect as if included in the amendments made by section 213 of the Taxpayer Relief Act of 1997. (2) References.--Any reference in this section to any section of the Internal Revenue Code of 1986 shall be a reference to such section as added by the Taxpayer Relief Act of 1997. SEC. 3. OVERRULING OF SCHMIDT BAKING COMPANY CASE. (a) In General.--The Internal Revenue Code of 1986 shall be applied without regard to the result reached in the case of Schmidt Baking Company, Inc. v. Commissioner of Internal Revenue, 107 T.C. 271 (1996). (b) Regulations.--The Secretary of the Treasury or the Secretary's delegate shall prescribe regulations to reflect subsection (a). (c) Effective Date.-- (1) In general.--Subsections (a) and (b) shall apply to taxable years ending after October 8, 1997. (2) Change in methods of accounting.--In the case of any taxpayer required by this section to change its method of accounting for its first taxable year ending after October 8, 1997-- (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as made with the consent of the Secretary of the Treasury, and (C) the next amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account in such first taxable year. The SPEAKER pro tempore. After 1 hour of debate on the bill, as amended, it shall be in order to consider the further amendment specified in part 2 of the report, if offered by the gentleman from New York [Mr. Rangel] or his designee, which shall be considered read and debatable for one hour, equally divided and controlled by the proponent and an opponent. The gentleman from Texas [Mr. Archer] and the gentleman from New York [Mr. Rangel] shall each control 30 minutes of debate on the bill. The Chair recognizes the gentleman from Texas [Mr. Archer]. {time} 1245 General Leave Mr. ARCHER. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous matter on H.R. 2646. The SPEAKER pro tempore (Mr. Sununu). Is there objection to the request of the gentleman from Texas? There was no objection. Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I was reading in the paper yesterday that our schoolchildren are unable to demonstrate a basic knowledge of science. The article said that more than half of the fourth graders who recently took a national science test could not even identify the Atlantic and Pacific Oceans. This is more than troublesome. If America is to remain competitive in the global arena, an arena whose battles are often fought with science and technology, we need to see that our children have the mental tools they need to succeed. In the balanced budget bill, we gave the parents the help that they need by college IRA's, IRA's to make college more affordable with the same income caps, the same levels as are in this bill. Today we extend that same type of help to parents with younger children in K through 12, elementary and secondary education. The legislation we consider allows parents, grandparents, and others to put up to $2,500 a year in education savings accounts where it can grow tax-free, and be used for a wide variety of educational uses. The bill is one of the best things, in my opinion, to happen to education. It is good for public schools, it is good for private schools, it is good for parochial schools, and it is good for home schooling. But most importantly, it is good for students everywhere, and that means that it is good for America's future. An estimated 14.3 million Americans will sign up for these accounts by the year 2002, and 75 percent, and I accentuate this, 75 percent of those families will have children in public schools. Here is how it works. If a child in public, private, or home schooling needs a tutor for science or for any other subject, a parent can tap the educational savings account. If a child in public, private, or home schooling needs books or supplies, a parent can tap the account. If a child has special needs, and our heart and help should go out to those children who are in special need, which often spans a lifetime, a parent can use the account. If a parent needs to provide transportation so a child can attend a good school, the account may be tapped. I cannot think of anything more important to the American people than their children and their children's educations. While this bill may not guarantee that fourth graders will know the location of oceans, it will help their parents improve the education opportunities. Is this bill a panacea for all of our education ills? Of course not. But we should not wait for the day when we have a magic solution to all of the ills, we should do what we can at this moment. This is a can-do proposition. Mr. Speaker, this concludes my remarks, but I take a moment to inform the Chamber that the gentleman from Illinois [Mr. Manzullo] asked to be included as a cosponsor of this measure, but was inadvertently left off the cosponsor list. Mr. Speaker, I reserve the balance of my time. Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume. I rise in opposition to H.R. 2646, Mr. Speaker. Mr. Speaker, let me join with the leadership of the House in stressing how important it is that we allow our young people to get access to a decent education as soon as we can. Mr. Speaker, when we dream about the economic opportunities that will be had for Americans, and those people that we intend to trade with in all parts of the world, one thing we take for granted is that academically our young people will be able to get the training in order to participate in what is going to be for history a revolutionary and exciting time. Yet, we go to that bargaining table with 1.6 million people in jail. God knows, I believe if you violate the law, [[Page H9058]] justice should take a hand and you should be removed from society. But why is this number of people continuing to explode? Why is it that 80 percent of the crimes are not violent? Why are they all drug-related? Why are all of the people in jail illiterate, unemployable? Why do they all seem to be coming from communities where the school system has failed? The answer has to be because it is out of these communities that there is no hope, there are no dreams, there are no opportunities. Life really does not mean that much, and jail is no real, serious threat. So now our country finds the U.S. Congress interfering with local schools by suggesting that we need more prisons than we need schools. It is sad, but that is how it is going to be recorded. Local and State governments are involved in prison-making, not making students prepared in order to get a decent education. Even our great President targeted colleges, and we are now trying to find some bridge to go from before school to be prepared for college. So I can see how Mr. Coverdell could respond to a tax initiative and say, let us make more money available for people to just spend, if they can find some reason to spend that money on a child before they go to college. I think that we cannot even call it an educational bill, because soon we will see that there is no education attached to this. It is bad tax law, because soon we will see that if we are looking for simplification, tell me what a taxpayer is going to have to put on the sheet in order to justify that they spent this money that they had in a tax-free account on education? We are going to have to look long and hard to find any education in this bill, but we do not have to look long and hard to find a tax break in this bill. Let us get to something that the gentleman from Texas [Mr. Archer] and I are working on now in a bipartisan way, the restructuring of the internal revenue system. Prior to pulling it up by its roots, we will restructure it. It is going to cost some money to restructure the Internal Revenue Service. Any decent American politician that wants to get reelected had better prepare some kind of way to get a good knock in there against the Internal Revenue Service. It is going to be good this year, and it will be better next year. So in order to restructure it, we need some money. We have come up with the money, at least the majority have, to pay for that. So I was surprised in asking the question, how are we going to pay for the education savings account? Guess what, we are going to use the same money. No, do not tell me we cannot use the same money to pay for two things, if it is the same amount of money. We are Ways and Means, we know that much. Which one do we want to fund out of this one source of money, Coverdell, or the restructuring of the IRS? We do not know, but we will spend the money on the first bill that reaches the President's desk and he signs. Let me tell the Members this, if they are for paying for the restructuring of the Internal Revenue Service, Members have to strike down Coverdell, because if we pass Coverdell and the money is spent for Coverdell, we have no money for Internal Revenue Service. But I assume this technical point will be explained by the majority, since they able to do that well. Let me say that what I am trying to do with my bill, which we will have an opportunity to vote for or against, is to allow the local school districts to recognize, in areas where they are failing, that they need some help. If they can successfully bring the private sector in and form a partnership in a special academy, where the curriculum is not just set by educators but by the business people, who know the skills that are going to be necessary to hire these people, we will be able with this very same money to allow them to issue bonds to rebuild the schools, to get the equipment. But under Coverdell, all we will be able to do is say that somebody that had the disposable income of up to $2,500, or a friend of theirs that may want to give a gift to the child and put it in to deposit it tax-free, will be able to withdraw this for tutors, for babysitters, for taxicabs, for movies, for anything that they think is necessary to make that child happy. Remember, the burden will be on the IRS, if we are able to find the money to restructure it, to prove that the money was used for an educational experience. Talk about a horror story, we are now about to hear it from Members that understand what is in this bill. Mr. Speaker, I reserve the balance of my time. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentleman from Arizona [Mr. Hayworth]. Mr. RANGEL. Mr. Speaker, I yield 30 seconds to the gentleman from Arizona. The SPEAKER pro tempore. The gentleman from Arizona [Mr. Hayworth] is recognized for 3 minutes and 30 seconds. Mr. HAYWORTH. Mr. Speaker, I thank the distinguished gentleman from Texas [Mr. Archer], the chairman of the committee, for yielding time to me, and for this opportunity to come to the well and engage in honest dialogue and debate concerning the future of our children. I listened with great interest to my colleague, the gentleman from New York, the distinguished ranking member, and listened also as he outlined literally the horrors that confront American families today in so many neighborhoods, including the neighborhood and the community that my colleague from New York represents. What we have here today, Mr. Speaker, is a historic opportunity to help those families, to help those parents seize control of the money they earn to direct an education in the way they see fit, whether it is choosing a school that the parents and family and others believe is best suited for the education of that child, or seeking outside help, remedial tutoring or extra-educational aid, such as textbooks or computers; to have a savings account, a tax-free interest-bearing account to put the control back in the hands of American parents. For those people should literally hold the destiny of their children in their hands, and this affords those parents the chance. Mr. Speaker, we have made great strides in allowing these educational accounts for college-bound students. Why, then, would we deprive children from kindergarten through the 12th grade of the same opportunity? Mr. Speaker, I would point out a special provision of this bill that I believe is vitally important, an ability for parents of children with special needs to look beyond the chronological age to continue to have money in these accounts to help those children. Mr. Speaker, one of my first cousins has Downs syndrome. My uncle and aunt were blessed that they lived in a community with a school district with the ability to help educate children with special needs. But the challenge is for parents of children with special needs that, in our situation today, quite literally many of those parents are at the mercy of the local school districts in terms of quality of education. Mr. Speaker, when we adopt this bill today we do not leave any parents, but especially those parents of children with special needs, literally at the mercy of the accident of geography, and where they happen to live in a school district. What we have, Mr. Speaker, with this bill, and I urge its passage and the creation of these special savings accounts, is the chance to give families the opportunity to make the choices to help benefit their children. I urge passage of this bill. {time} 1300 Mr. RANGEL. Mr. Speaker, will the gentleman yield? Mr. HAYWORTH. I yield to the gentleman from New York. Mr. RANGEL. Mr. Speaker, so that we can make certain that we confine our remarks to what is in the bill, does the gentleman have any idea where a child with special needs would be in the bill before us? I would urge the gentleman, please, not to place his arguments on special needs, because there is absolutely no description in this legislation as to what is a special needs child, which means that every parent, I would like to believe, would believe that their child has special needs and there is no way in the world to disprove it. Mr. ARCHER. Mr. Speaker, I yield myself 30 seconds. Mr. Speaker, the gentleman from Arizona, I am sure, intends to be accurate, but the accuracy is this bill provides for a lifetime ability for parents [[Page H9059]] with children that have special needs, rather than a cutoff at an age limit under current law. The definition of special needs is to be done by the Treasury, and it is a part of this bill. Mr. Speaker, I say that respectfully in response to the gentleman from New York. Mr. RANGEL. Mr. Speaker, I yield myself 30 seconds. Mr. Speaker, we do not know as we debate this bill what a special need is, but we can imagine and hope that Treasury will come up with something. And if the gentleman is talking about a lifetime, I do not know why he sunset the bill in 5 years, but I am sure he will have enough time to explain that. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Fazio]. Mr. FAZIO of California. Mr. Speaker, this piece of legislation is the confluence of two bad Republican ideas, one of which provides tax breaks for our wealthiest people and not for those in the middle class who truly need it, and the other is to emphasize private schools under the guise of reforming public education. Mr. Speaker, this bill is flawed for a number of reasons. I think we will hear more about the ability, for example, to buy a car under this proposal in order to transport students to school. But it is also flawed because it puts in the hands of people making over $93,000, 70 percent of all the benefits. In other words, it could be called the Prep School Promotion Act of 1997, more than a public school reform bill. Mr. Speaker, we ought to be putting resources into reducing class sizes, we ought to be putting resources into wiring our public schools, training our teachers. We have an understanding of what it takes to improve the infrastructure of our public school system, but we are going to take $4 billion over the next 10 years and divert it to people who would like to perhaps start or perhaps be subsidized in their attendance already in private institutions. We do not really help the average American with this bill. We hold out a carrot to an industry or to some few individuals, many of whom have the capacity to already engage in educating their children privately. It is a God-given American right to do so. We do not have to be diverting our hard-earned taxpayers' dollars to those families, while our public schools across the country are lacking basics. And I do not mean just in inner cities or rural areas; in high-growth suburbs as well. Mr. Speaker, we can make improvements in our public educational system and we ought to do it. This is a diversion and it is a travesty. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentleman from Texas, Mr. Sam Johnson, a respected member of the Committee on Ways and Means. (Mr. SAM JOHNSON of Texas asked and was given permission to revise and extend his remarks.) Mr. SAM JOHNSON of Texas. Mr. Speaker, has anyone noticed that the President will endorse any education initiative as long as it supports big government, like Goals 2000? Like national testing? This is the same President that threatens to veto any program that increases parental control over a child's education. Mr. Speaker, look at this administration's track record. They opposed education block grants to States, they oppose vouchers for the poorest, poorest 2,000 children, and now they oppose this bill, which gives parents the ability to invest up to $2,500 a year in their child's education so that they can attend the safest and most academically challenging school available. Why is the President against parents sending their children to the school of their choice? Surely he cannot believe that Washington bureaucrats are smarter than parents. And I hope it is not because he is so politically indebted to the special interests in Washington, like the National Education Association for instance, that he can no longer see what is best for America's kids. Well, whatever the reason, Mr. Speaker, this President is wrong to oppose this bill. This bill will not only strengthen our children's future by giving the parents a tool to make sure their children can attend a school that meets their needs, needs only a parent can determine. No one can seriously argue that there is anything wrong with giving parents, grandparents, and friends the power to invest in a child's education. America's future depends on our children, and we ought to provide those parents with whatever they need to make sure that their children are the most educated, productive, and successful in the world. Mr. Speaker, I would to urge the President to join us as we try to help parents help their children. I urge all of my colleagues here in the House to do the same. Vote for this bill. Give our children a chance to grow up to be great Americans. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from New York [Mr. Owens]. (Mr. OWENS asked and was given permission to revise and extend his remarks.) Mr. OWENS. Mr. Speaker, I rise in opposition to H.R. 2646. I think the credibility of the Congress is greatly injured by playing these kinds of college boy, sophisticated games around the edges of a crucial issue like education reform. Mr. Speaker, we are showing off with college boy sophistication while we reject the common sense of the American people. They want something real done about the education reform problem. They do not want us to continue to play games. Our credibility is now down to 36 percent. I understand this Congress dropped from 40 percent. This is the reason. We are not serious here. We like to show off among ourselves. Mr. Speaker, the voters out there clearly want decisive action on education reform and improvement. They keep saying it again and again and again. In this 105th Congress, instead of playing games, we should take advantage of this window of opportunity to do something significant. The people are saying they want a real effort by Congress to deal with the education problems. Instead of education savings accounts and other headline-seeking tricks, we should unite in launching a bipartisan omnibus bill around the things that both Republicans and Democrats already agree on. We agree that we need more teacher training and that Federal aid would greatly help that teacher training process. We agree we need more technology in the schools; both Republicans and Democrats are in favor of giving aid for more technology. We agree on charter schools. Instead of pushing vouchers and education savings accounts, why not unite in the areas that we agree? We are both in favor of charter schools, both parties. Why do we not move forward in some kind of way which is commensurate with the problem? Let us understand that schools are at the core of what should be a massive opportunity system in America which will generate the kind of educated population we need as we go into the 21st century. We are the indispensable Nation. We are going to have to continue to hold on to a leadership role. We cannot do that unless we have the most highly educated population. Mr. Speaker, let us stop playing games and let us have some real Federal aid to education that meets the common sense needs of the American people. Mr. ARCHER. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Pennsylvania [Mr. English], a respected Member of the Committee on Ways and Means. Mr. ENGLISH of Pennsylvania. Mr. Speaker, in my area of northwestern Pennsylvania one of the biggest challenges facing the middle class is the affordability of education, and this is something that affects middle-class families across a range of circumstances. It is the single biggest barrier to the next generation being able to penetrate through and achieve the American dream. Mr. Speaker, as a supporter of educational tax relief for all stages of schooling, I rise in strong support of this legislation, the Gingrich-Coverdale approach with education savings accounts for private and public schools. This legislation allows parents to establish a tax-free savings account to be used for a child's education at any school from kindergarten through high school on to college. This legislation will expand the education savings account provisions included in our tax bill of this year by, first of all, increasing from $500 to $2,500 per year the maximum amount of contributions [[Page H9060]] that can be made to an education savings account; second of all, to include elementary and secondary school expenses; third, to allow corporate entities as parties to be able to contribute to an ESA on someone's behalf. Mr. Speaker, I join my colleagues in supporting this legislation to renew our commitment to helping families afford the full range of educational expenses demanded through our children's lifetimes. There are no, to coin the term of the previous speaker, ``college boy sophisticated games'' here. This is tax relief that a broad range of families can access. Let me say, Mr. Speaker, I realize the left wing of this body hates this proposal. They think that any resources that are diverted into private institutions, even through tax-free accounts, is a use of public funds. Mr. Speaker, I would say to my Democrat colleagues, ``Folks, it is not your money.'' Mr. Speaker, if people want to send their kids with their resources to private or parochial schools, they should be able to through this tax-free account. This is critical to diversity in education, and it is critical to restoring the American dream. I realize this provision was originally in our tax bill and it was stripped out because the President threatened to veto the entire tax bill if this was in the bill. Mr. Speaker, today I want to say to the President, Go ahead, make our day. Veto this bill if you think it is bad for families to use their own resources to put their kids through school. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentlewoman from Oregon [Ms. Furse]. Ms. FURSE. Mr. Speaker, I want to know what happened to the idea that this country invests in education. Why are we now asking parents and grandparents to spend more money on the education of their children? I think they already pay enough in taxes. The problem is that this body does not want to spend those taxes wisely. Instead of asking people to spend more money, why not look at the way we spend money? This body spends, for every 7 cents it spends on education, it puts 52 cents to the Pentagon. So if we took $200,000 and invested in every elementary and secondary school in this country $200,000, we would come to a total of $26 billion. Well, Mr. Speaker, guess what? This Congress gave $26 billion to pay for nine more B-2 bombers that the Pentagon did not even ask for. So it is not a question of not being able to pay for education. We should invest in education. It is a national security issue. What it is a question of is are we going to spend the money that these American taxpayers send to the Congress wisely or are we going to waste it and then have to come to them and say now it is time they divvy up some of their own money to pay for education. It is a disgrace. Mr. Speaker, we have got to invest wisely. Every tax dollar should go to real national security: our children; their education. That is where we should be putting our money and we should not be asking through a gimmick in the Tax Code to make these parents pay for more money to the education of their children. It is a bad idea. We should vote this down, and we should vote for education every time we can and invest more money in education and less money in additional B-2 bombers that nobody needs, even the Pentagon does not want. Let us invest in America. Let us invest in America's children. Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentlewoman from Kentucky [Mrs. Northup]. Mrs. NORTHUP. Mr. Speaker, I appeal to my colleagues as a mother to support this bill. I think that we have demonstrated our commitment to education over many, many years of contributions, both State and local and Federal. {time} 1315 In fact, we have 729 programs that contribute to making educational systems in this country work better, to make sure that each child, every child has an opportunity for a good education. I think it is sort of amazing that the people that oppose this bill assume that every parent will make the choice to take their child out of public school and put them in a nonpublic school. I assume that many of our public schools are, in fact, great schools and that these parents, that many parents want to keep their child in public school. If they are not, we have got a much huger problem than what we do about these $2,500 school savings accounts. The reality is, there is not anything we can do at this level. There is not any check we can write at this level that helps each 6-year-old and each 7-year-old, each 10-year-old and each 18-year-old be successful. Each one of my six children took unique needs, unique intervention to help them go from the beginning years of school to successfully complete school. Some of them had a terrible time with math and they needed tutoring. Some of my children needed special help in other areas. I do have special needs children. I have adopted children with diagnosed special needs and I have biological children that are dyslexic and have been diagnosed every step of the way. There is not any education program, private or public, that has met my children's needs. I had to find the resources to provide tutoring, to provide special summer schools, to provide special opportunities for those children to be successful. Thank goodness my husband and I could find those resources. Some of those I found by going back to work myself, by making quilts and selling them to provide for those services. This gives those parents these opportunities. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from Maryland [Mr. Cardin], coauthor of the restructuring of the IRS bill that we are trying to protect the funding. Mr. CARDIN. Mr. Speaker, let me thank the gentleman from New York [Mr. Rangel] for yielding me this time. Mr. Speaker, there are many reasons to be opposed to the legislation before us. It will benefit just a few people, those who have wealth. It has very limited benefits. It diverts funds that otherwise could be available to improve education in our country. Let me just mention one fundamental problem with this bill that I hope we all would see. That is, how in the world will the IRS ever be able to administer this bill? Look at the definition that is included for which the money in this account can be used in order to get tax preference. It can be used for tuition, fees, tutoring, special needs services, books, supplies, computer equipment, including related software and services, that is going to be an easy one for the IRS to figure out, what software is educationally related, and other equipment. Transportation, does that include a car that one can buy for their child? Supplementary expenses required for enrollment or attendance, does that include peanut butter and jelly sandwiches for nutrition services? How will the IRS ever be able to administer this program without being completely intrusive into the lives of the taxpayers of this country? This bill cannot be enforced. Rather than being an A plus account, these are really A slush accounts. I would urge my colleagues to reject the notion. The good news is that this bill is not going to become law. It is not going to pass the other body and be signed by the President. We do have an opportunity today to do something for education that we can really help; that is, support the Rangel substitute. Then we can build upon the budget agreement that we reached this year and we can really put more money into education. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentlewoman from Washington [Ms. Dunn], another respected member of the Committee on Ways and Means. Ms. DUNN. Mr. Speaker, I thank the gentleman from Texas for yielding me this time. I would like to respond to the comments of gentlewoman from Oregon. This Nation's value is education. We have worked to support the public education system. The problem with the public education system right now is that it is not doing the job. Every parent wants to give the best education possible to his or her children. That is why some parents are saying they are willing to pay in effect double, if they decide voluntarily to take part in this program where we set aside money that can go into an education savings accounts to purchase the best education possible for their child, K [[Page H9061]] through 12. They also continue to pay all the expenses of public education. I know that this happens because I went through it when I was a young mother, divorced, single parent, two children, 6 and 8, determined that I preferred to send my children to a private school, really appreciated the fact that choice was involved, but could not pay for transportation. So I was in that kind of box of having to get my child to school at the same time that I started a job. I know what the feeling is in the pit of your stomach when you are late to work because you want to make sure your kids are well-protected on the school ground. What I like about this bill is that a parent who takes the choice of school into his or her hands can say, I am going to start at age zero with my child and every year save up to $2,500 in an account just in case of emergency. In my case, my child had a specific language disability. My child needed training every single day, five days a week for 6 years at $17 an hour. That is a pretty heavy hit these days where working parents have to be in jobs all day just to make the bottom line work out. So I think this is a great program. I admire those parents who are willing to continue to make the best education their top value. Americans of all stripes are alike in many ways. I believe that is why many Democrats have come over to us and said we want to support this legislation. Let me just tell my colleagues a number on this legislation we have discovered, that if a parent puts money into this account from the time his child is born, by the time that child gets to high school, there can be a total, it is just a $2,000, say 7\1/2\ percent interest, $46,000 in that account plus another additional $6,000 that comes because one does not have to pay tax on the interest of the account. Mr. Speaker, I think it is a great opportunity. It recognizes that our principal challenge, educationally, is no longer college, but to raise the standards of our grade school and our high school students. What are our choices? Our choices are do nothing and get the product that we have gotten. It is not good enough to prepare our youngsters for a global economy or we can act today by passing this bill and helping parents obtain the tools that are needed to ensure that their child, every single one of them gets the best possible education from kindergarten to college. Mr. RANGEL. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from North Carolina [Mr. Etheridge], an educator as well as a legislator. Mr. ETHERIDGE. Mr. Speaker, I thank the gentleman from New York for yielding me the time. Mr. Speaker, I rise today in strong opposition to this bill and to this latest attack on our public schools and, yes, on our children, their parents, and their communities. This legislation is the wrong approach to improving education for the 1.2 million children in the North Carolina public schools and the more than 45 million children all across this great Nation. As the first member of my family to graduate from college, I am grateful to the public schools of North Carolina for the opportunity I had to get an education. They did a tremendous job for our three children. I know firsthand that public education holds the key to the American dream. As a former superintendent elected for two terms, 8 years in North Carolina, I know what it takes to improve the public schools and to give our children the opportunity to make the very best of their God- given ability. This bill is the latest attempt to use the precious taxpayer resources that we have to subsidize private schools. It will take precious resources that we need to strengthen our schools and put it into the pockets of the wealthiest people to send them to private schools. According to the Joint Committee on Taxation, the original version of this bill would have cost the U.S. Treasury over $5 billion over the next 10 years. That money would have been better spent helping States and localities rebuild crumbling schools, constructing new schools to relieve overcrowding. In fact, the President proposed a plan to do just that, but the proponents of this bill stripped it out of the original budget bill that passed this body earlier this year. Mr. Speaker, I sought this office because I could not stand by and watch Congress launch attack after attack on our Nation's public schools. I saw that 2 years ago when this body stood up and said, we are going to abolish the Department of Education, we are going to do away with the school lunch programs and we are going to eliminate student loans. A member of the majority party just last week even, last month, compared our public schools, and I quote, to the Communist legacy. This bill is nothing more than an attempt to scapegoat our public schools once again. Mr. Speaker, abandoning our public schools will not improve public education in this country. This bill is a cowardly act of surrender. Vote against this latest attack and vote for the Rangel substitute. Mr. ARCHER. Mr. Speaker, I yield myself 30 seconds to respond to the gentleman because he obviously has not read the bill. The bill will provide assistance to families with children in public schools that is so badly needed today and public school teachers have come to me and begged for this because they say tutors are needed to help with the education of children in public schools. Seventy-five percent of the resources that this bill provides will go to families with children in public schools. Unfortunately, there is a group out there that does not want families to have any help for children who go into private schools. Mr. Speaker, I yield 2 minutes to the gentlewoman from Washington Mrs. Linda Smith. Mrs. LINDA SMITH of Washington. Mr. Speaker, I thank the gentleman for bringing this bill to the floor. I have listened to the debate here and think that sometimes you just have to go back to the original bill to remember what it is because we lose track in the debate. The education savings account for public and private schools allows parents and grandparents like me to open an account for each of my grandchild's education that can be used only, only the interest, the principal I still pay taxes on, but the interest can be used for a child's education needs while they are in school, for private school, just the interest, if their parents should choose, and from kindergarten through college. The $2,500 a year that I would put in each of the children's accounts as a grandparent, allowed under this bill, can be put in until they are 18 years old. If I take the money out that is now being used in our economy because savings is good for our economy, I have to pay a penalty on that. There is a great incentive for me to save for my grandchildren's education, not as great an incentive as an IRA where you can deduct the base $2,500 from your taxes, but a great incentive because I can save interest free for my grandchildren. As long as they spend the interest on college education, no one pays tax on the interest. This is not an attack on anything. It is a way of families getting involved in their kids' education. The great part about it is we know by all research families involved in their education gives the best education for children. Moms and grandmas making the choices gives the child the most personal education. I also wanted to say that as a grandma, I look at what is ahead for my grandkids. I do not want them to have to choose a public opportunity only. They might want to choose a private college. But if they do choose a public college, I would like to have them have options. With this, I want to encourage Members to look back at the bill and realize, this is a very good step toward reform and grandparents in America will like it. Mr. RANGEL. Mr. Speaker, I yield myself 30 seconds to say that the gentlewoman really did explain this bill in a very accurate way, in that I just wish I could better understand that if one puts the money in an account and one can spend the interest on that account and one does it for their child and their grandchild and the bill is going to sunset in 5 years, my God, how much interest will ever be there for them to spend? Mr. Speaker, I yield 2 minutes and 30 seconds to the gentleman from Indiana [Mr. Roemer]. {time} 1330 Mr. ROEMER. Mr. Speaker, I thank the gentleman from New York for [[Page H9062]] yielding me this time, and I rise in opposition to this legislation for three reasons: distribution, accountability, and fairness. First of all, distribution. The Department of the U.S. Treasury has said, by analysis, that 70 percent of the benefits go to 20 percent, the highest 20 percent, of Americans. Twenty percent of the benefits go to the highest 20 percent of Americans making money in this country. Now, that is one reason. Second, fairness. How many people making $25,000 a year, with their children in public schools, are going to be able to save $2,500 a year and benefit from this? Good question. Maybe not many. But third, I think, Mr. Speaker, the main reason here is accountability. Now, I just voted for three IRA's in the tax relief bill that we passed for Americans, and I was proud to do it: An education IRA, a Roth IRA, and expansion of the existing IRA. The education IRA can go for college tuition. We know that; the IRS knows that. This particular IRA can go for any of the following things: computers, books, supplies, equipment, transportation, and supplementary expenses. So if we want to buy measuring cups to teach our children at home about science, is that a tax writeoff? Should the IRS come in and audit that? Is that what the Republicans are saying? Is this the Auto Relief Act of 1997? What about buying our children a car? What about putting gasoline in the car? What about driving to and from school but also going to work? Now, do we want the IRS to look at those things? Are all those expenses or are they not? Should the IRS stay completely out of this or should they be nosing into every one of these situations? So from a position of accountability, we can buy software, we can have services, I understand we can pay one child to tutor another of our children under this act. Let us have some accountability, folks. If we are going to fix the IRS, as we have decided this week, let us fix it for everybody. We will do it in a bipartisan way, but with public education. What this act does is let us just fix it primarily for people making over $70,000 a year for them to drive their kids back and forth to school and buy some computers and some measuring cups. Let us fix public education for everybody. Let us fix the IRS for everybody. Mr. NUSSLE. Mr. Speaker, I yield 2 minutes to the gentleman from Ohio [Mr. Boehner], the distinguished chairman of the Republican conference. Mr. BOEHNER. Mr. Speaker, I thank my colleague from Iowa for yielding me this time. My colleagues, Republicans here in the House, have begun a bold campaign to strengthen and reform our Nation's education system. We are attempting to send more dollars directly to the classrooms, trying to return control of education to parents, teachers, and local communities, and giving working class parents and poor parents new educational choices. I think that is exactly what the Education Savings Act for Public and Private Schools does. The bill that we have today simply extends the popular and successful college education savings accounts to parents with kids in kindergarten through grade 12. All over the country, and certainly in my district, there are lower and middle-income families who struggle every day to make ends meet. These are exactly the type of families that these accounts are intended to help. The rich, as those on the other side of the aisle like to talk about, do not have to save to pay for a tutor if their kids are not doing well in math or reading. The rich, as they describe them, do not have to save to buy a new computer. They do not have to save in order to pay for SAT prep classes or summer education camps. These things are already available to them because they have the cash to do it. What we are trying to do is to help lower middle income and poor folks in America save the money that they can to help their children get a better education. Now, what is wrong with allowing American parents to keep more of what they earn so that they can help their children get the educational aids they need that will help them have a shot at the American dream? That is what we are trying to do today. We provide Pell grants for students in college. Private college, public college, it makes no difference. We provide student loans for college. Private, public, it makes no difference. But as soon as we try to do something to give parents greater control over the education of their children that are in grades 12 and under, there is a big stone wall. That is because the education bureaucracy in America rises up and says no, we are in charge of that. This bill today gives parents more choices. Mr. RANGEL. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Michigan [Mr. Levin], a member of the Committee on Ways and Means. (Mr. LEVIN asked and was given permission to revise and extend his remarks.) Mr. LEVIN. Mr. Speaker, let me just answer the gentleman from Ohio [Mr. Boehner]. Federal control, most of the money for secondary and elementary education that is appropriated here goes for special education and compensatory education that are under the control of local school districts. So that is an effort really to debate by demonization to say that we are trying to defend a Federal bureaucracy when most of the money that is appropriated goes to school districts. Second, the gentleman from Ohio and others say that their bill is an effort to help the working class. Look at the data. According to the Treasury Department analysis, under this bill a family with income $33,000 to $55,000 would get $7 a year help; a family $55,000 to $93,000, $32; and a family $93,000 and up would get $96, three times the family with half the income and 12 times a family with three to five times the income. Now, if the money is already available to the wealthy family, why are we giving them a tax break? Mr. NUSSLE. Mr. Speaker, will the gentleman yield? Mr. LEVIN. I yield to the gentleman from Iowa. Mr. NUSSLE. Mr. Speaker, does the gentleman have a copy of this? We would love to see this analysis. Mr. LEVIN. Reclaiming my time, Mr. Speaker, we would be glad to, and I would also tell the gentleman from Iowa that we distributed, in the Committee on Ways and Means, a study by the Federal Reserve that indicated that families $30,000 to $40,000 had nonretirement investment assets of $2,500. In other words, they did not have as much money, most of them, as the amount of money that could be put in by wealthier families. The wealthy family has that income available and those assets. And a family $40,000 to $50,000 has nonretirement investment assets, those under 35, of only $3,400. So we are saying put $2,500 a year in. Who can do that if they have assets of only $3,400 nonretirement assets? Now, this is an effort by the majority, in essence, to cover their weak flank: education. But they are covering it by helping wealthy families and hurting public education. That is a bad idea. The Rangel idea is a much better one. Let us vote for it. Mr. NUSSLE. Mr. Speaker, I yield 2 minutes to the gentleman from South Carolina [Mr. Inglis]. Mr. INGLIS of South Carolina. Mr. Speaker, I thank the gentleman for yielding me this time. The previous speaker said something about accountability and how we must have accountability in this matter. Really, accountability in this context, I think, more equates to control. On this side what we are talking about is choice, which equates to freedom. And that is the difference in this debate. The difference is whether control is going to remain with a bureaucracy, whether it is in Washington or in a county back home. The question is who controls education: Is it a bureaucracy, an education bureaucracy, or is it parents? So accountability on this side really equates into control. Choice on this side equates into freedom. But there is something that comes with this freedom. The freedom we are after on this side is the opportunity for parents to choose where to send their kids to school. That is our ultimate objective, or at least my ultimate objective: to allow every parent in America to choose where to send their child to school among all options available to them. Now, I realize that the education establishment does not like that, because [[Page H9063]] they do not want to give up that control. But consider what they are after: The education folks are always trying to create little programs at the Department of Education that are supposedly going to save the day, but we all know they will fall short. I think we are all coming to the conclusion, or I hope we are, that really the only way to educate kids is for parents to be involved. And the way for parents to be involved is to vest them with decisionmaking. Do not tell them by some formula worked out or map worked out in some bureaucrat's office somewhere where they are going to send their kids to school. Give them choice. Give them the opportunity to go to, say, Poly Williams School, where they have to sign a contract in order to have their kids there, and then what we will have is parental involvement because they are exercising their free choice. They are buying into the school. They are participating in Johnny's education, and Johnny is going to get educated that way. That is the change we need to bring, and I wholeheartedly support this small step toward that. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. Green]. (Mr. GREEN asked and was given permission to revise and extend his remarks.) Mr. GREEN. Mr. Speaker, I thank my ranking member for yielding me this time. Listening to the debate earlier, we all support education and all the ways we can do it, and the opportunity to help families have their children to be prepared for tomorrow, but it is frustrating, as a Member of the House, that last week the solution to the education problems was vouchers for the District of Columbia and this week it is for an educational IRA that will only be for a specific higher income. And those numbers that the members of the Committee on Ways and Means have been talking about are reflected in a graph that I have here that shows my district, whose medium income is about $22,000, that is about the average for the country, in some cases, I believe, but it shows if an individual makes $33,000 to $55,000 their only tax break will be $7. But today we are having a special that says, OK, we are going to solve education by giving $7 back to a family with an income of $33,000 to $55,000. I wish we had quick fixes to education problems, but we do not. It takes hard work. And there are millions of parents, teachers, and even school administrators who care and love those children and that are not looking for quick-fix gimmicks like vouchers or even this IRA. America has always had a commitment to education, whether it be in private, parochial or in home school, or particularly where 90 percent of the students go, which is public education. This bill allows parents to set up a tax-free IRA of $2,500 per year, per child. What this proposes is that it will only let the wealthiest families participate and take advantage of it. Ninety percent of the students attend public education, yet those parents of poorer incomes or moderate incomes, under the numbers I see from the Committee on Ways and Means, they have to buy school uniforms and computers, but they cannot take advantage of this. This is not the solution for our educational problems. It takes hard work. Let us get away from

Summary:

All articles in House section

EDUCATION SAVINGS ACT FOR PUBLIC AND PRIVATE SCHOOLS
(House of Representatives - October 23, 1997)

Text of this article available as: TXT PDF [Pages H9056-H9076] EDUCATION SAVINGS ACT FOR PUBLIC AND PRIVATE SCHOOLS Mr. ARCHER. Mr. Speaker, pursuant to House Resolution 274, I call up the bill (H.R. 2646) to amend the Internal Revenue Code of 1986 to allow tax-free expenditures from education individual retirement accounts for elementary and secondary school expenses, to increase the maximum annual amount of contributions to such accounts, and for other purposes, and ask for its immediate consideration. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. Sununu). The bill is considered read for amendment. The text of H.R. 2646 is as follows: H.R. 2646 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 ``Education Savings Act for Public and Private Schools''. SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS. (a) Tax-Free Expenditures for Elementary and Secondary School Expenses.-- (1) In general.--Section 530(b)(2) of the Internal Revenue Code of 1986 is amended to read as follows: ``(2) Qualified education expenses.-- ``(A) In general.--The term `qualified education expenses' means-- ``(i) qualified higher education expenses (as defined in section 529(e)(3)), and ``(ii) qualified elementary and secondary education expenses (as defined in paragraph (4)). Such expenses shall be reduced as provided in section 25A(g)(2). ``(B) Qualified state tuition programs.--Such term shall include amounts paid or incurred to purchase tuition credits or certificates, or to make contributions to an account, under a qualified State tuition program (as defined in section 529(b)) for the benefit of the beneficiary of the account.'' (2) Qualified elementary and secondary education expenses.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Qualified elementary and secondary education expenses.-- ``(A) In general.--The term `qualified elementary and secondary education expenses' means tuition, fees, tutoring, special needs services, books, supplies, equipment, transportation, and supplementary expenses required for the enrollment or attendance of the designated beneficiary of the trust at a public, private, or religious school. ``(B) Special rule for homeschooling.--Such term shall include expenses described in subparagraph (A) required for education provided for homeschooling if the requirements of any applicable State or local law are met with respect to such education. ``(C) School.--The term `school' means any school which provides elementary education or secondary education (through grade 12), as determined under State law.'' (3) Conforming amendments.--Subsections (b)(1) and (d)(2) of section 530 of such Code are each amended by striking ``higher'' each place it appears in the text and heading thereof. (b) Increase in Maximum Annual Contributions.-- (1) In general.--Section 530(b)(1)(A)(iii) of the Internal Revenue Code of 1986 is amended by striking ``$500'' and inserting ``$2,500''. (2) Conforming amendments.-- (A) Section 530(d)(4)(C) of such Code is amended by striking ``$500'' and inserting ``$2,500''. (B) Section 4973(e)(1)(A) of such Code is amended by striking ``$500'' and inserting ``$2,500''. (c) Waiver of Age Limitations for Children With Special Needs.--Paragraph 1 of section 530(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following flush sentence: ``The age limitations in the preceding sentence shall not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary).'' (d) Corporations Permitted To Contribute To Accounts.-- Paragraph (1) of section 530(c) of the Internal Revenue Code of 1986 is amended by striking ``The maximum amount which a contributor'' and inserting ``In the case of a contributor who is an individual, the maximum amount the contributor''. (e) Effective Date; References.-- (1) Effective date.--The amendments made by this section shall take effect as if included in the amendments made by section 213 of the Taxpayer Relief Act of 1997. (2) References.--Any reference in this section to any section of the Internal Revenue Code of 1986 shall be a reference to such section as added by the Taxpayer Relief Act of 1997. SEC. 3. OVERRULING OF SCHMIDT BAKING COMPANY CASE. (a) In General.--The Internal Revenue Code of 1986 shall be applied (other than with respect to severance pay) without regard to the result reached in the case of Schmidt Baking Company, Inc. v. Commissioner of Internal Revenue, 107 T.C. 271 (1996). (b) Regulations.--The Secretary of the Treasury or the Secretary's delegate shall prescribe regulations to reflect subsection (a). (c) Effective Date.-- (1) In general.--Subsections (a) and (b) shall apply to taxable years ending after October 8, 1997. (2) Change in method of accounting.--In the case of any taxpayer required by this section to change its method of accounting for its first taxable year ending after October 8, 1997-- (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as made with the consent of the Secretary of the Treasury, and (C) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account in such first taxable year. The SPEAKER pro tempore. Pursuant to House Resolution 274, the committee amendment in the nature of a substitute printed in the bill, modified by the amendment printed in part 1 of House Report 105-336, is adopted. The text of the committee amendment in the nature of a substitute, as modified by part 1 of House Report 105-336 pursuant to House Resolution 274, is as follows: H.R. 2646 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 ``Education Savings Act for Public and Private Schools''. SEC. 2 MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS. (a) Tax-Free Expenditures for Elementary and Secondary School Expenses.-- (1) In general.--Section 530(b)(2) of the Internal revenue Code of 1986 is amended to read as follows: ``(2) Qualfied education expenses.-- ``(A) In general.--The term `qualified education expenses' means-- ``(i) qualified higher education expenses (as defined in section 529(e)(3)), and ``(ii) qualified elementary and secondary education expenses (as defined in paragraph (4)) but only with respect to amounts in the account which are attributable to contributions for any taxable year ending before January 1, 2003, and earnings on such contributions: Such expenses shall be reduced as provided in section 25A(g)(2). [[Page H9057]] ``(B) Qualified state tuition programs.--Such term shall include amounts paid or incurred to purchase tuition credits or certificates, or to make contributions to an account, under a qualified State tuition program (as defined in section 529(b)) for the benefit of the beneficiary of the account.'' (2) Qualified elementary and secondary education expenses.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Qualified elementary and secondary education expenses.-- ``(A) In general.--The term `qualified elementary and secondary education expenses' means tuition, fees, tutoring, special needs services, books, supplies, computer equipment (including related software and services) and other equipment, transportation, and supplementary expenses required for the enrollment or attendance of the designated beneficiary of the trust at a public, private, or religious school. ``(B) Special rule for homeschooling.--Such term shall include expenses described in subparagraph (A) required for education provided for homeschooling if the requirements of any applicable State or local law are met with respect to such education. ``(C) School--The term `school' means any school which provides elementary education or secondary education (through grade 12), as determined under State law.'' (3) Conforming amendments.--Subsections (b)(1) and (d)(2) of section 530 of such Code are each amended by striking ``higher'' each place it appears in the text and heading thereof. (b) Temporary Increase in Maximum Annual Contributions-- (1) In general.--Section 530(b)(1)(A)(iii) of the Internal Revenue Code of 1986 is amended by striking ``$500'' and inserting ``the contribution limit for such taxable year''. (2) Contribution limit.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Contribution limit.--The term `contribution limit' means $2,500 ($500 in the case of any taxable year ending after December 31, 2002).'' (3) Conforming amendments.-- (A) Section 530(d)(4)(C) of such Code is amended by striking ``$500'' and inserting ``the contribution limit for such taxable year''. (B) Section 4973(e)(1)(A) of such Code is amended by striking ``$500'' and inserting ``the contribution limit (as defined in section 530(b)(4)) for such taxable year''. (c) Waiver of Age Limitations for Children With Special Needs.--Paragraph (1) of section 530(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following flush sentence: ``The age limitations in the preceding sentence shall not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary).'' (d) Corporations Permitted to Contribute to Accounts.-- Paragraph (1) of section 530(c) of the Internal Revenue Code of 1986 is amended by striking ``The maximum amount which a contributor'' and inserting ``In the case of a contributor who is an individual, the maximum amount the contributor''. (e) Effective Date; References.-- (1) Effective date.--The amendments made by this section shall take effect as if included in the amendments made by section 213 of the Taxpayer Relief Act of 1997. (2) References.--Any reference in this section to any section of the Internal Revenue Code of 1986 shall be a reference to such section as added by the Taxpayer Relief Act of 1997. SEC. 3. OVERRULING OF SCHMIDT BAKING COMPANY CASE. (a) In General.--The Internal Revenue Code of 1986 shall be applied without regard to the result reached in the case of Schmidt Baking Company, Inc. v. Commissioner of Internal Revenue, 107 T.C. 271 (1996). (b) Regulations.--The Secretary of the Treasury or the Secretary's delegate shall prescribe regulations to reflect subsection (a). (c) Effective Date.-- (1) In general.--Subsections (a) and (b) shall apply to taxable years ending after October 8, 1997. (2) Change in methods of accounting.--In the case of any taxpayer required by this section to change its method of accounting for its first taxable year ending after October 8, 1997-- (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as made with the consent of the Secretary of the Treasury, and (C) the next amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account in such first taxable year. The SPEAKER pro tempore. After 1 hour of debate on the bill, as amended, it shall be in order to consider the further amendment specified in part 2 of the report, if offered by the gentleman from New York [Mr. Rangel] or his designee, which shall be considered read and debatable for one hour, equally divided and controlled by the proponent and an opponent. The gentleman from Texas [Mr. Archer] and the gentleman from New York [Mr. Rangel] shall each control 30 minutes of debate on the bill. The Chair recognizes the gentleman from Texas [Mr. Archer]. {time} 1245 General Leave Mr. ARCHER. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous matter on H.R. 2646. The SPEAKER pro tempore (Mr. Sununu). Is there objection to the request of the gentleman from Texas? There was no objection. Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I was reading in the paper yesterday that our schoolchildren are unable to demonstrate a basic knowledge of science. The article said that more than half of the fourth graders who recently took a national science test could not even identify the Atlantic and Pacific Oceans. This is more than troublesome. If America is to remain competitive in the global arena, an arena whose battles are often fought with science and technology, we need to see that our children have the mental tools they need to succeed. In the balanced budget bill, we gave the parents the help that they need by college IRA's, IRA's to make college more affordable with the same income caps, the same levels as are in this bill. Today we extend that same type of help to parents with younger children in K through 12, elementary and secondary education. The legislation we consider allows parents, grandparents, and others to put up to $2,500 a year in education savings accounts where it can grow tax-free, and be used for a wide variety of educational uses. The bill is one of the best things, in my opinion, to happen to education. It is good for public schools, it is good for private schools, it is good for parochial schools, and it is good for home schooling. But most importantly, it is good for students everywhere, and that means that it is good for America's future. An estimated 14.3 million Americans will sign up for these accounts by the year 2002, and 75 percent, and I accentuate this, 75 percent of those families will have children in public schools. Here is how it works. If a child in public, private, or home schooling needs a tutor for science or for any other subject, a parent can tap the educational savings account. If a child in public, private, or home schooling needs books or supplies, a parent can tap the account. If a child has special needs, and our heart and help should go out to those children who are in special need, which often spans a lifetime, a parent can use the account. If a parent needs to provide transportation so a child can attend a good school, the account may be tapped. I cannot think of anything more important to the American people than their children and their children's educations. While this bill may not guarantee that fourth graders will know the location of oceans, it will help their parents improve the education opportunities. Is this bill a panacea for all of our education ills? Of course not. But we should not wait for the day when we have a magic solution to all of the ills, we should do what we can at this moment. This is a can-do proposition. Mr. Speaker, this concludes my remarks, but I take a moment to inform the Chamber that the gentleman from Illinois [Mr. Manzullo] asked to be included as a cosponsor of this measure, but was inadvertently left off the cosponsor list. Mr. Speaker, I reserve the balance of my time. Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume. I rise in opposition to H.R. 2646, Mr. Speaker. Mr. Speaker, let me join with the leadership of the House in stressing how important it is that we allow our young people to get access to a decent education as soon as we can. Mr. Speaker, when we dream about the economic opportunities that will be had for Americans, and those people that we intend to trade with in all parts of the world, one thing we take for granted is that academically our young people will be able to get the training in order to participate in what is going to be for history a revolutionary and exciting time. Yet, we go to that bargaining table with 1.6 million people in jail. God knows, I believe if you violate the law, [[Page H9058]] justice should take a hand and you should be removed from society. But why is this number of people continuing to explode? Why is it that 80 percent of the crimes are not violent? Why are they all drug-related? Why are all of the people in jail illiterate, unemployable? Why do they all seem to be coming from communities where the school system has failed? The answer has to be because it is out of these communities that there is no hope, there are no dreams, there are no opportunities. Life really does not mean that much, and jail is no real, serious threat. So now our country finds the U.S. Congress interfering with local schools by suggesting that we need more prisons than we need schools. It is sad, but that is how it is going to be recorded. Local and State governments are involved in prison-making, not making students prepared in order to get a decent education. Even our great President targeted colleges, and we are now trying to find some bridge to go from before school to be prepared for college. So I can see how Mr. Coverdell could respond to a tax initiative and say, let us make more money available for people to just spend, if they can find some reason to spend that money on a child before they go to college. I think that we cannot even call it an educational bill, because soon we will see that there is no education attached to this. It is bad tax law, because soon we will see that if we are looking for simplification, tell me what a taxpayer is going to have to put on the sheet in order to justify that they spent this money that they had in a tax-free account on education? We are going to have to look long and hard to find any education in this bill, but we do not have to look long and hard to find a tax break in this bill. Let us get to something that the gentleman from Texas [Mr. Archer] and I are working on now in a bipartisan way, the restructuring of the internal revenue system. Prior to pulling it up by its roots, we will restructure it. It is going to cost some money to restructure the Internal Revenue Service. Any decent American politician that wants to get reelected had better prepare some kind of way to get a good knock in there against the Internal Revenue Service. It is going to be good this year, and it will be better next year. So in order to restructure it, we need some money. We have come up with the money, at least the majority have, to pay for that. So I was surprised in asking the question, how are we going to pay for the education savings account? Guess what, we are going to use the same money. No, do not tell me we cannot use the same money to pay for two things, if it is the same amount of money. We are Ways and Means, we know that much. Which one do we want to fund out of this one source of money, Coverdell, or the restructuring of the IRS? We do not know, but we will spend the money on the first bill that reaches the President's desk and he signs. Let me tell the Members this, if they are for paying for the restructuring of the Internal Revenue Service, Members have to strike down Coverdell, because if we pass Coverdell and the money is spent for Coverdell, we have no money for Internal Revenue Service. But I assume this technical point will be explained by the majority, since they able to do that well. Let me say that what I am trying to do with my bill, which we will have an opportunity to vote for or against, is to allow the local school districts to recognize, in areas where they are failing, that they need some help. If they can successfully bring the private sector in and form a partnership in a special academy, where the curriculum is not just set by educators but by the business people, who know the skills that are going to be necessary to hire these people, we will be able with this very same money to allow them to issue bonds to rebuild the schools, to get the equipment. But under Coverdell, all we will be able to do is say that somebody that had the disposable income of up to $2,500, or a friend of theirs that may want to give a gift to the child and put it in to deposit it tax-free, will be able to withdraw this for tutors, for babysitters, for taxicabs, for movies, for anything that they think is necessary to make that child happy. Remember, the burden will be on the IRS, if we are able to find the money to restructure it, to prove that the money was used for an educational experience. Talk about a horror story, we are now about to hear it from Members that understand what is in this bill. Mr. Speaker, I reserve the balance of my time. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentleman from Arizona [Mr. Hayworth]. Mr. RANGEL. Mr. Speaker, I yield 30 seconds to the gentleman from Arizona. The SPEAKER pro tempore. The gentleman from Arizona [Mr. Hayworth] is recognized for 3 minutes and 30 seconds. Mr. HAYWORTH. Mr. Speaker, I thank the distinguished gentleman from Texas [Mr. Archer], the chairman of the committee, for yielding time to me, and for this opportunity to come to the well and engage in honest dialogue and debate concerning the future of our children. I listened with great interest to my colleague, the gentleman from New York, the distinguished ranking member, and listened also as he outlined literally the horrors that confront American families today in so many neighborhoods, including the neighborhood and the community that my colleague from New York represents. What we have here today, Mr. Speaker, is a historic opportunity to help those families, to help those parents seize control of the money they earn to direct an education in the way they see fit, whether it is choosing a school that the parents and family and others believe is best suited for the education of that child, or seeking outside help, remedial tutoring or extra-educational aid, such as textbooks or computers; to have a savings account, a tax-free interest-bearing account to put the control back in the hands of American parents. For those people should literally hold the destiny of their children in their hands, and this affords those parents the chance. Mr. Speaker, we have made great strides in allowing these educational accounts for college-bound students. Why, then, would we deprive children from kindergarten through the 12th grade of the same opportunity? Mr. Speaker, I would point out a special provision of this bill that I believe is vitally important, an ability for parents of children with special needs to look beyond the chronological age to continue to have money in these accounts to help those children. Mr. Speaker, one of my first cousins has Downs syndrome. My uncle and aunt were blessed that they lived in a community with a school district with the ability to help educate children with special needs. But the challenge is for parents of children with special needs that, in our situation today, quite literally many of those parents are at the mercy of the local school districts in terms of quality of education. Mr. Speaker, when we adopt this bill today we do not leave any parents, but especially those parents of children with special needs, literally at the mercy of the accident of geography, and where they happen to live in a school district. What we have, Mr. Speaker, with this bill, and I urge its passage and the creation of these special savings accounts, is the chance to give families the opportunity to make the choices to help benefit their children. I urge passage of this bill. {time} 1300 Mr. RANGEL. Mr. Speaker, will the gentleman yield? Mr. HAYWORTH. I yield to the gentleman from New York. Mr. RANGEL. Mr. Speaker, so that we can make certain that we confine our remarks to what is in the bill, does the gentleman have any idea where a child with special needs would be in the bill before us? I would urge the gentleman, please, not to place his arguments on special needs, because there is absolutely no description in this legislation as to what is a special needs child, which means that every parent, I would like to believe, would believe that their child has special needs and there is no way in the world to disprove it. Mr. ARCHER. Mr. Speaker, I yield myself 30 seconds. Mr. Speaker, the gentleman from Arizona, I am sure, intends to be accurate, but the accuracy is this bill provides for a lifetime ability for parents [[Page H9059]] with children that have special needs, rather than a cutoff at an age limit under current law. The definition of special needs is to be done by the Treasury, and it is a part of this bill. Mr. Speaker, I say that respectfully in response to the gentleman from New York. Mr. RANGEL. Mr. Speaker, I yield myself 30 seconds. Mr. Speaker, we do not know as we debate this bill what a special need is, but we can imagine and hope that Treasury will come up with something. And if the gentleman is talking about a lifetime, I do not know why he sunset the bill in 5 years, but I am sure he will have enough time to explain that. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Fazio]. Mr. FAZIO of California. Mr. Speaker, this piece of legislation is the confluence of two bad Republican ideas, one of which provides tax breaks for our wealthiest people and not for those in the middle class who truly need it, and the other is to emphasize private schools under the guise of reforming public education. Mr. Speaker, this bill is flawed for a number of reasons. I think we will hear more about the ability, for example, to buy a car under this proposal in order to transport students to school. But it is also flawed because it puts in the hands of people making over $93,000, 70 percent of all the benefits. In other words, it could be called the Prep School Promotion Act of 1997, more than a public school reform bill. Mr. Speaker, we ought to be putting resources into reducing class sizes, we ought to be putting resources into wiring our public schools, training our teachers. We have an understanding of what it takes to improve the infrastructure of our public school system, but we are going to take $4 billion over the next 10 years and divert it to people who would like to perhaps start or perhaps be subsidized in their attendance already in private institutions. We do not really help the average American with this bill. We hold out a carrot to an industry or to some few individuals, many of whom have the capacity to already engage in educating their children privately. It is a God-given American right to do so. We do not have to be diverting our hard-earned taxpayers' dollars to those families, while our public schools across the country are lacking basics. And I do not mean just in inner cities or rural areas; in high-growth suburbs as well. Mr. Speaker, we can make improvements in our public educational system and we ought to do it. This is a diversion and it is a travesty. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentleman from Texas, Mr. Sam Johnson, a respected member of the Committee on Ways and Means. (Mr. SAM JOHNSON of Texas asked and was given permission to revise and extend his remarks.) Mr. SAM JOHNSON of Texas. Mr. Speaker, has anyone noticed that the President will endorse any education initiative as long as it supports big government, like Goals 2000? Like national testing? This is the same President that threatens to veto any program that increases parental control over a child's education. Mr. Speaker, look at this administration's track record. They opposed education block grants to States, they oppose vouchers for the poorest, poorest 2,000 children, and now they oppose this bill, which gives parents the ability to invest up to $2,500 a year in their child's education so that they can attend the safest and most academically challenging school available. Why is the President against parents sending their children to the school of their choice? Surely he cannot believe that Washington bureaucrats are smarter than parents. And I hope it is not because he is so politically indebted to the special interests in Washington, like the National Education Association for instance, that he can no longer see what is best for America's kids. Well, whatever the reason, Mr. Speaker, this President is wrong to oppose this bill. This bill will not only strengthen our children's future by giving the parents a tool to make sure their children can attend a school that meets their needs, needs only a parent can determine. No one can seriously argue that there is anything wrong with giving parents, grandparents, and friends the power to invest in a child's education. America's future depends on our children, and we ought to provide those parents with whatever they need to make sure that their children are the most educated, productive, and successful in the world. Mr. Speaker, I would to urge the President to join us as we try to help parents help their children. I urge all of my colleagues here in the House to do the same. Vote for this bill. Give our children a chance to grow up to be great Americans. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from New York [Mr. Owens]. (Mr. OWENS asked and was given permission to revise and extend his remarks.) Mr. OWENS. Mr. Speaker, I rise in opposition to H.R. 2646. I think the credibility of the Congress is greatly injured by playing these kinds of college boy, sophisticated games around the edges of a crucial issue like education reform. Mr. Speaker, we are showing off with college boy sophistication while we reject the common sense of the American people. They want something real done about the education reform problem. They do not want us to continue to play games. Our credibility is now down to 36 percent. I understand this Congress dropped from 40 percent. This is the reason. We are not serious here. We like to show off among ourselves. Mr. Speaker, the voters out there clearly want decisive action on education reform and improvement. They keep saying it again and again and again. In this 105th Congress, instead of playing games, we should take advantage of this window of opportunity to do something significant. The people are saying they want a real effort by Congress to deal with the education problems. Instead of education savings accounts and other headline-seeking tricks, we should unite in launching a bipartisan omnibus bill around the things that both Republicans and Democrats already agree on. We agree that we need more teacher training and that Federal aid would greatly help that teacher training process. We agree we need more technology in the schools; both Republicans and Democrats are in favor of giving aid for more technology. We agree on charter schools. Instead of pushing vouchers and education savings accounts, why not unite in the areas that we agree? We are both in favor of charter schools, both parties. Why do we not move forward in some kind of way which is commensurate with the problem? Let us understand that schools are at the core of what should be a massive opportunity system in America which will generate the kind of educated population we need as we go into the 21st century. We are the indispensable Nation. We are going to have to continue to hold on to a leadership role. We cannot do that unless we have the most highly educated population. Mr. Speaker, let us stop playing games and let us have some real Federal aid to education that meets the common sense needs of the American people. Mr. ARCHER. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Pennsylvania [Mr. English], a respected Member of the Committee on Ways and Means. Mr. ENGLISH of Pennsylvania. Mr. Speaker, in my area of northwestern Pennsylvania one of the biggest challenges facing the middle class is the affordability of education, and this is something that affects middle-class families across a range of circumstances. It is the single biggest barrier to the next generation being able to penetrate through and achieve the American dream. Mr. Speaker, as a supporter of educational tax relief for all stages of schooling, I rise in strong support of this legislation, the Gingrich-Coverdale approach with education savings accounts for private and public schools. This legislation allows parents to establish a tax-free savings account to be used for a child's education at any school from kindergarten through high school on to college. This legislation will expand the education savings account provisions included in our tax bill of this year by, first of all, increasing from $500 to $2,500 per year the maximum amount of contributions [[Page H9060]] that can be made to an education savings account; second of all, to include elementary and secondary school expenses; third, to allow corporate entities as parties to be able to contribute to an ESA on someone's behalf. Mr. Speaker, I join my colleagues in supporting this legislation to renew our commitment to helping families afford the full range of educational expenses demanded through our children's lifetimes. There are no, to coin the term of the previous speaker, ``college boy sophisticated games'' here. This is tax relief that a broad range of families can access. Let me say, Mr. Speaker, I realize the left wing of this body hates this proposal. They think that any resources that are diverted into private institutions, even through tax-free accounts, is a use of public funds. Mr. Speaker, I would say to my Democrat colleagues, ``Folks, it is not your money.'' Mr. Speaker, if people want to send their kids with their resources to private or parochial schools, they should be able to through this tax-free account. This is critical to diversity in education, and it is critical to restoring the American dream. I realize this provision was originally in our tax bill and it was stripped out because the President threatened to veto the entire tax bill if this was in the bill. Mr. Speaker, today I want to say to the President, Go ahead, make our day. Veto this bill if you think it is bad for families to use their own resources to put their kids through school. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentlewoman from Oregon [Ms. Furse]. Ms. FURSE. Mr. Speaker, I want to know what happened to the idea that this country invests in education. Why are we now asking parents and grandparents to spend more money on the education of their children? I think they already pay enough in taxes. The problem is that this body does not want to spend those taxes wisely. Instead of asking people to spend more money, why not look at the way we spend money? This body spends, for every 7 cents it spends on education, it puts 52 cents to the Pentagon. So if we took $200,000 and invested in every elementary and secondary school in this country $200,000, we would come to a total of $26 billion. Well, Mr. Speaker, guess what? This Congress gave $26 billion to pay for nine more B-2 bombers that the Pentagon did not even ask for. So it is not a question of not being able to pay for education. We should invest in education. It is a national security issue. What it is a question of is are we going to spend the money that these American taxpayers send to the Congress wisely or are we going to waste it and then have to come to them and say now it is time they divvy up some of their own money to pay for education. It is a disgrace. Mr. Speaker, we have got to invest wisely. Every tax dollar should go to real national security: our children; their education. That is where we should be putting our money and we should not be asking through a gimmick in the Tax Code to make these parents pay for more money to the education of their children. It is a bad idea. We should vote this down, and we should vote for education every time we can and invest more money in education and less money in additional B-2 bombers that nobody needs, even the Pentagon does not want. Let us invest in America. Let us invest in America's children. Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentlewoman from Kentucky [Mrs. Northup]. Mrs. NORTHUP. Mr. Speaker, I appeal to my colleagues as a mother to support this bill. I think that we have demonstrated our commitment to education over many, many years of contributions, both State and local and Federal. {time} 1315 In fact, we have 729 programs that contribute to making educational systems in this country work better, to make sure that each child, every child has an opportunity for a good education. I think it is sort of amazing that the people that oppose this bill assume that every parent will make the choice to take their child out of public school and put them in a nonpublic school. I assume that many of our public schools are, in fact, great schools and that these parents, that many parents want to keep their child in public school. If they are not, we have got a much huger problem than what we do about these $2,500 school savings accounts. The reality is, there is not anything we can do at this level. There is not any check we can write at this level that helps each 6-year-old and each 7-year-old, each 10-year-old and each 18-year-old be successful. Each one of my six children took unique needs, unique intervention to help them go from the beginning years of school to successfully complete school. Some of them had a terrible time with math and they needed tutoring. Some of my children needed special help in other areas. I do have special needs children. I have adopted children with diagnosed special needs and I have biological children that are dyslexic and have been diagnosed every step of the way. There is not any education program, private or public, that has met my children's needs. I had to find the resources to provide tutoring, to provide special summer schools, to provide special opportunities for those children to be successful. Thank goodness my husband and I could find those resources. Some of those I found by going back to work myself, by making quilts and selling them to provide for those services. This gives those parents these opportunities. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from Maryland [Mr. Cardin], coauthor of the restructuring of the IRS bill that we are trying to protect the funding. Mr. CARDIN. Mr. Speaker, let me thank the gentleman from New York [Mr. Rangel] for yielding me this time. Mr. Speaker, there are many reasons to be opposed to the legislation before us. It will benefit just a few people, those who have wealth. It has very limited benefits. It diverts funds that otherwise could be available to improve education in our country. Let me just mention one fundamental problem with this bill that I hope we all would see. That is, how in the world will the IRS ever be able to administer this bill? Look at the definition that is included for which the money in this account can be used in order to get tax preference. It can be used for tuition, fees, tutoring, special needs services, books, supplies, computer equipment, including related software and services, that is going to be an easy one for the IRS to figure out, what software is educationally related, and other equipment. Transportation, does that include a car that one can buy for their child? Supplementary expenses required for enrollment or attendance, does that include peanut butter and jelly sandwiches for nutrition services? How will the IRS ever be able to administer this program without being completely intrusive into the lives of the taxpayers of this country? This bill cannot be enforced. Rather than being an A plus account, these are really A slush accounts. I would urge my colleagues to reject the notion. The good news is that this bill is not going to become law. It is not going to pass the other body and be signed by the President. We do have an opportunity today to do something for education that we can really help; that is, support the Rangel substitute. Then we can build upon the budget agreement that we reached this year and we can really put more money into education. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentlewoman from Washington [Ms. Dunn], another respected member of the Committee on Ways and Means. Ms. DUNN. Mr. Speaker, I thank the gentleman from Texas for yielding me this time. I would like to respond to the comments of gentlewoman from Oregon. This Nation's value is education. We have worked to support the public education system. The problem with the public education system right now is that it is not doing the job. Every parent wants to give the best education possible to his or her children. That is why some parents are saying they are willing to pay in effect double, if they decide voluntarily to take part in this program where we set aside money that can go into an education savings accounts to purchase the best education possible for their child, K [[Page H9061]] through 12. They also continue to pay all the expenses of public education. I know that this happens because I went through it when I was a young mother, divorced, single parent, two children, 6 and 8, determined that I preferred to send my children to a private school, really appreciated the fact that choice was involved, but could not pay for transportation. So I was in that kind of box of having to get my child to school at the same time that I started a job. I know what the feeling is in the pit of your stomach when you are late to work because you want to make sure your kids are well-protected on the school ground. What I like about this bill is that a parent who takes the choice of school into his or her hands can say, I am going to start at age zero with my child and every year save up to $2,500 in an account just in case of emergency. In my case, my child had a specific language disability. My child needed training every single day, five days a week for 6 years at $17 an hour. That is a pretty heavy hit these days where working parents have to be in jobs all day just to make the bottom line work out. So I think this is a great program. I admire those parents who are willing to continue to make the best education their top value. Americans of all stripes are alike in many ways. I believe that is why many Democrats have come over to us and said we want to support this legislation. Let me just tell my colleagues a number on this legislation we have discovered, that if a parent puts money into this account from the time his child is born, by the time that child gets to high school, there can be a total, it is just a $2,000, say 7\1/2\ percent interest, $46,000 in that account plus another additional $6,000 that comes because one does not have to pay tax on the interest of the account. Mr. Speaker, I think it is a great opportunity. It recognizes that our principal challenge, educationally, is no longer college, but to raise the standards of our grade school and our high school students. What are our choices? Our choices are do nothing and get the product that we have gotten. It is not good enough to prepare our youngsters for a global economy or we can act today by passing this bill and helping parents obtain the tools that are needed to ensure that their child, every single one of them gets the best possible education from kindergarten to college. Mr. RANGEL. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from North Carolina [Mr. Etheridge], an educator as well as a legislator. Mr. ETHERIDGE. Mr. Speaker, I thank the gentleman from New York for yielding me the time. Mr. Speaker, I rise today in strong opposition to this bill and to this latest attack on our public schools and, yes, on our children, their parents, and their communities. This legislation is the wrong approach to improving education for the 1.2 million children in the North Carolina public schools and the more than 45 million children all across this great Nation. As the first member of my family to graduate from college, I am grateful to the public schools of North Carolina for the opportunity I had to get an education. They did a tremendous job for our three children. I know firsthand that public education holds the key to the American dream. As a former superintendent elected for two terms, 8 years in North Carolina, I know what it takes to improve the public schools and to give our children the opportunity to make the very best of their God- given ability. This bill is the latest attempt to use the precious taxpayer resources that we have to subsidize private schools. It will take precious resources that we need to strengthen our schools and put it into the pockets of the wealthiest people to send them to private schools. According to the Joint Committee on Taxation, the original version of this bill would have cost the U.S. Treasury over $5 billion over the next 10 years. That money would have been better spent helping States and localities rebuild crumbling schools, constructing new schools to relieve overcrowding. In fact, the President proposed a plan to do just that, but the proponents of this bill stripped it out of the original budget bill that passed this body earlier this year. Mr. Speaker, I sought this office because I could not stand by and watch Congress launch attack after attack on our Nation's public schools. I saw that 2 years ago when this body stood up and said, we are going to abolish the Department of Education, we are going to do away with the school lunch programs and we are going to eliminate student loans. A member of the majority party just last week even, last month, compared our public schools, and I quote, to the Communist legacy. This bill is nothing more than an attempt to scapegoat our public schools once again. Mr. Speaker, abandoning our public schools will not improve public education in this country. This bill is a cowardly act of surrender. Vote against this latest attack and vote for the Rangel substitute. Mr. ARCHER. Mr. Speaker, I yield myself 30 seconds to respond to the gentleman because he obviously has not read the bill. The bill will provide assistance to families with children in public schools that is so badly needed today and public school teachers have come to me and begged for this because they say tutors are needed to help with the education of children in public schools. Seventy-five percent of the resources that this bill provides will go to families with children in public schools. Unfortunately, there is a group out there that does not want families to have any help for children who go into private schools. Mr. Speaker, I yield 2 minutes to the gentlewoman from Washington Mrs. Linda Smith. Mrs. LINDA SMITH of Washington. Mr. Speaker, I thank the gentleman for bringing this bill to the floor. I have listened to the debate here and think that sometimes you just have to go back to the original bill to remember what it is because we lose track in the debate. The education savings account for public and private schools allows parents and grandparents like me to open an account for each of my grandchild's education that can be used only, only the interest, the principal I still pay taxes on, but the interest can be used for a child's education needs while they are in school, for private school, just the interest, if their parents should choose, and from kindergarten through college. The $2,500 a year that I would put in each of the children's accounts as a grandparent, allowed under this bill, can be put in until they are 18 years old. If I take the money out that is now being used in our economy because savings is good for our economy, I have to pay a penalty on that. There is a great incentive for me to save for my grandchildren's education, not as great an incentive as an IRA where you can deduct the base $2,500 from your taxes, but a great incentive because I can save interest free for my grandchildren. As long as they spend the interest on college education, no one pays tax on the interest. This is not an attack on anything. It is a way of families getting involved in their kids' education. The great part about it is we know by all research families involved in their education gives the best education for children. Moms and grandmas making the choices gives the child the most personal education. I also wanted to say that as a grandma, I look at what is ahead for my grandkids. I do not want them to have to choose a public opportunity only. They might want to choose a private college. But if they do choose a public college, I would like to have them have options. With this, I want to encourage Members to look back at the bill and realize, this is a very good step toward reform and grandparents in America will like it. Mr. RANGEL. Mr. Speaker, I yield myself 30 seconds to say that the gentlewoman really did explain this bill in a very accurate way, in that I just wish I could better understand that if one puts the money in an account and one can spend the interest on that account and one does it for their child and their grandchild and the bill is going to sunset in 5 years, my God, how much interest will ever be there for them to spend? Mr. Speaker, I yield 2 minutes and 30 seconds to the gentleman from Indiana [Mr. Roemer]. {time} 1330 Mr. ROEMER. Mr. Speaker, I thank the gentleman from New York for [[Page H9062]] yielding me this time, and I rise in opposition to this legislation for three reasons: distribution, accountability, and fairness. First of all, distribution. The Department of the U.S. Treasury has said, by analysis, that 70 percent of the benefits go to 20 percent, the highest 20 percent, of Americans. Twenty percent of the benefits go to the highest 20 percent of Americans making money in this country. Now, that is one reason. Second, fairness. How many people making $25,000 a year, with their children in public schools, are going to be able to save $2,500 a year and benefit from this? Good question. Maybe not many. But third, I think, Mr. Speaker, the main reason here is accountability. Now, I just voted for three IRA's in the tax relief bill that we passed for Americans, and I was proud to do it: An education IRA, a Roth IRA, and expansion of the existing IRA. The education IRA can go for college tuition. We know that; the IRS knows that. This particular IRA can go for any of the following things: computers, books, supplies, equipment, transportation, and supplementary expenses. So if we want to buy measuring cups to teach our children at home about science, is that a tax writeoff? Should the IRS come in and audit that? Is that what the Republicans are saying? Is this the Auto Relief Act of 1997? What about buying our children a car? What about putting gasoline in the car? What about driving to and from school but also going to work? Now, do we want the IRS to look at those things? Are all those expenses or are they not? Should the IRS stay completely out of this or should they be nosing into every one of these situations? So from a position of accountability, we can buy software, we can have services, I understand we can pay one child to tutor another of our children under this act. Let us have some accountability, folks. If we are going to fix the IRS, as we have decided this week, let us fix it for everybody. We will do it in a bipartisan way, but with public education. What this act does is let us just fix it primarily for people making over $70,000 a year for them to drive their kids back and forth to school and buy some computers and some measuring cups. Let us fix public education for everybody. Let us fix the IRS for everybody. Mr. NUSSLE. Mr. Speaker, I yield 2 minutes to the gentleman from Ohio [Mr. Boehner], the distinguished chairman of the Republican conference. Mr. BOEHNER. Mr. Speaker, I thank my colleague from Iowa for yielding me this time. My colleagues, Republicans here in the House, have begun a bold campaign to strengthen and reform our Nation's education system. We are attempting to send more dollars directly to the classrooms, trying to return control of education to parents, teachers, and local communities, and giving working class parents and poor parents new educational choices. I think that is exactly what the Education Savings Act for Public and Private Schools does. The bill that we have today simply extends the popular and successful college education savings accounts to parents with kids in kindergarten through grade 12. All over the country, and certainly in my district, there are lower and middle-income families who struggle every day to make ends meet. These are exactly the type of families that these accounts are intended to help. The rich, as those on the other side of the aisle like to talk about, do not have to save to pay for a tutor if their kids are not doing well in math or reading. The rich, as they describe them, do not have to save to buy a new computer. They do not have to save in order to pay for SAT prep classes or summer education camps. These things are already available to them because they have the cash to do it. What we are trying to do is to help lower middle income and poor folks in America save the money that they can to help their children get a better education. Now, what is wrong with allowing American parents to keep more of what they earn so that they can help their children get the educational aids they need that will help them have a shot at the American dream? That is what we are trying to do today. We provide Pell grants for students in college. Private college, public college, it makes no difference. We provide student loans for college. Private, public, it makes no difference. But as soon as we try to do something to give parents greater control over the education of their children that are in grades 12 and under, there is a big stone wall. That is because the education bureaucracy in America rises up and says no, we are in charge of that. This bill today gives parents more choices. Mr. RANGEL. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Michigan [Mr. Levin], a member of the Committee on Ways and Means. (Mr. LEVIN asked and was given permission to revise and extend his remarks.) Mr. LEVIN. Mr. Speaker, let me just answer the gentleman from Ohio [Mr. Boehner]. Federal control, most of the money for secondary and elementary education that is appropriated here goes for special education and compensatory education that are under the control of local school districts. So that is an effort really to debate by demonization to say that we are trying to defend a Federal bureaucracy when most of the money that is appropriated goes to school districts. Second, the gentleman from Ohio and others say that their bill is an effort to help the working class. Look at the data. According to the Treasury Department analysis, under this bill a family with income $33,000 to $55,000 would get $7 a year help; a family $55,000 to $93,000, $32; and a family $93,000 and up would get $96, three times the family with half the income and 12 times a family with three to five times the income. Now, if the money is already available to the wealthy family, why are we giving them a tax break? Mr. NUSSLE. Mr. Speaker, will the gentleman yield? Mr. LEVIN. I yield to the gentleman from Iowa. Mr. NUSSLE. Mr. Speaker, does the gentleman have a copy of this? We would love to see this analysis. Mr. LEVIN. Reclaiming my time, Mr. Speaker, we would be glad to, and I would also tell the gentleman from Iowa that we distributed, in the Committee on Ways and Means, a study by the Federal Reserve that indicated that families $30,000 to $40,000 had nonretirement investment assets of $2,500. In other words, they did not have as much money, most of them, as the amount of money that could be put in by wealthier families. The wealthy family has that income available and those assets. And a family $40,000 to $50,000 has nonretirement investment assets, those under 35, of only $3,400. So we are saying put $2,500 a year in. Who can do that if they have assets of only $3,400 nonretirement assets? Now, this is an effort by the majority, in essence, to cover their weak flank: education. But they are covering it by helping wealthy families and hurting public education. That is a bad idea. The Rangel idea is a much better one. Let us vote for it. Mr. NUSSLE. Mr. Speaker, I yield 2 minutes to the gentleman from South Carolina [Mr. Inglis]. Mr. INGLIS of South Carolina. Mr. Speaker, I thank the gentleman for yielding me this time. The previous speaker said something about accountability and how we must have accountability in this matter. Really, accountability in this context, I think, more equates to control. On this side what we are talking about is choice, which equates to freedom. And that is the difference in this debate. The difference is whether control is going to remain with a bureaucracy, whether it is in Washington or in a county back home. The question is who controls education: Is it a bureaucracy, an education bureaucracy, or is it parents? So accountability on this side really equates into control. Choice on this side equates into freedom. But there is something that comes with this freedom. The freedom we are after on this side is the opportunity for parents to choose where to send their kids to school. That is our ultimate objective, or at least my ultimate objective: to allow every parent in America to choose where to send their child to school among all options available to them. Now, I realize that the education establishment does not like that, because [[Page H9063]] they do not want to give up that control. But consider what they are after: The education folks are always trying to create little programs at the Department of Education that are supposedly going to save the day, but we all know they will fall short. I think we are all coming to the conclusion, or I hope we are, that really the only way to educate kids is for parents to be involved. And the way for parents to be involved is to vest them with decisionmaking. Do not tell them by some formula worked out or map worked out in some bureaucrat's office somewhere where they are going to send their kids to school. Give them choice. Give them the opportunity to go to, say, Poly Williams School, where they have to sign a contract in order to have their kids there, and then what we will have is parental involvement because they are exercising their free choice. They are buying into the school. They are participating in Johnny's education, and Johnny is going to get educated that way. That is the change we need to bring, and I wholeheartedly support this small step toward that. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. Green]. (Mr. GREEN asked and was given permission to revise and extend his remarks.) Mr. GREEN. Mr. Speaker, I thank my ranking member for yielding me this time. Listening to the debate earlier, we all support education and all the ways we can do it, and the opportunity to help families have their children to be prepared for tomorrow, but it is frustrating, as a Member of the House, that last week the solution to the education problems was vouchers for the District of Columbia and this week it is for an educational IRA that will only be for a specific higher income. And those numbers that the members of the Committee on Ways and Means have been talking about are reflected in a graph that I have here that shows my district, whose medium income is about $22,000, that is about the average for the country, in some cases, I believe, but it shows if an individual makes $33,000 to $55,000 their only tax break will be $7. But today we are having a special that says, OK, we are going to solve education by giving $7 back to a family with an income of $33,000 to $55,000. I wish we had quick fixes to education problems, but we do not. It takes hard work. And there are millions of parents, teachers, and even school administrators who care and love those children and that are not looking for quick-fix gimmicks like vouchers or even this IRA. America has always had a commitment to education, whether it be in private, parochial or in home school, or particularly where 90 percent of the students go, which is public education. This bill allows parents to set up a tax-free IRA of $2,500 per year, per child. What this proposes is that it will only let the wealthiest families participate and take advantage of it. Ninety percent of the students attend public education, yet those parents of poorer incomes or moderate incomes, under the numbers I see from the Committee on Ways and Means, they have to buy school uniforms and computers, but they cannot take advantage of this. This is not the solution for our educational problems. It takes h

Major Actions:

All articles in House section

EDUCATION SAVINGS ACT FOR PUBLIC AND PRIVATE SCHOOLS
(House of Representatives - October 23, 1997)

Text of this article available as: TXT PDF [Pages H9056-H9076] EDUCATION SAVINGS ACT FOR PUBLIC AND PRIVATE SCHOOLS Mr. ARCHER. Mr. Speaker, pursuant to House Resolution 274, I call up the bill (H.R. 2646) to amend the Internal Revenue Code of 1986 to allow tax-free expenditures from education individual retirement accounts for elementary and secondary school expenses, to increase the maximum annual amount of contributions to such accounts, and for other purposes, and ask for its immediate consideration. The Clerk read the title of the bill. The SPEAKER pro tempore (Mr. Sununu). The bill is considered read for amendment. The text of H.R. 2646 is as follows: H.R. 2646 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 ``Education Savings Act for Public and Private Schools''. SEC. 2. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS. (a) Tax-Free Expenditures for Elementary and Secondary School Expenses.-- (1) In general.--Section 530(b)(2) of the Internal Revenue Code of 1986 is amended to read as follows: ``(2) Qualified education expenses.-- ``(A) In general.--The term `qualified education expenses' means-- ``(i) qualified higher education expenses (as defined in section 529(e)(3)), and ``(ii) qualified elementary and secondary education expenses (as defined in paragraph (4)). Such expenses shall be reduced as provided in section 25A(g)(2). ``(B) Qualified state tuition programs.--Such term shall include amounts paid or incurred to purchase tuition credits or certificates, or to make contributions to an account, under a qualified State tuition program (as defined in section 529(b)) for the benefit of the beneficiary of the account.'' (2) Qualified elementary and secondary education expenses.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Qualified elementary and secondary education expenses.-- ``(A) In general.--The term `qualified elementary and secondary education expenses' means tuition, fees, tutoring, special needs services, books, supplies, equipment, transportation, and supplementary expenses required for the enrollment or attendance of the designated beneficiary of the trust at a public, private, or religious school. ``(B) Special rule for homeschooling.--Such term shall include expenses described in subparagraph (A) required for education provided for homeschooling if the requirements of any applicable State or local law are met with respect to such education. ``(C) School.--The term `school' means any school which provides elementary education or secondary education (through grade 12), as determined under State law.'' (3) Conforming amendments.--Subsections (b)(1) and (d)(2) of section 530 of such Code are each amended by striking ``higher'' each place it appears in the text and heading thereof. (b) Increase in Maximum Annual Contributions.-- (1) In general.--Section 530(b)(1)(A)(iii) of the Internal Revenue Code of 1986 is amended by striking ``$500'' and inserting ``$2,500''. (2) Conforming amendments.-- (A) Section 530(d)(4)(C) of such Code is amended by striking ``$500'' and inserting ``$2,500''. (B) Section 4973(e)(1)(A) of such Code is amended by striking ``$500'' and inserting ``$2,500''. (c) Waiver of Age Limitations for Children With Special Needs.--Paragraph 1 of section 530(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following flush sentence: ``The age limitations in the preceding sentence shall not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary).'' (d) Corporations Permitted To Contribute To Accounts.-- Paragraph (1) of section 530(c) of the Internal Revenue Code of 1986 is amended by striking ``The maximum amount which a contributor'' and inserting ``In the case of a contributor who is an individual, the maximum amount the contributor''. (e) Effective Date; References.-- (1) Effective date.--The amendments made by this section shall take effect as if included in the amendments made by section 213 of the Taxpayer Relief Act of 1997. (2) References.--Any reference in this section to any section of the Internal Revenue Code of 1986 shall be a reference to such section as added by the Taxpayer Relief Act of 1997. SEC. 3. OVERRULING OF SCHMIDT BAKING COMPANY CASE. (a) In General.--The Internal Revenue Code of 1986 shall be applied (other than with respect to severance pay) without regard to the result reached in the case of Schmidt Baking Company, Inc. v. Commissioner of Internal Revenue, 107 T.C. 271 (1996). (b) Regulations.--The Secretary of the Treasury or the Secretary's delegate shall prescribe regulations to reflect subsection (a). (c) Effective Date.-- (1) In general.--Subsections (a) and (b) shall apply to taxable years ending after October 8, 1997. (2) Change in method of accounting.--In the case of any taxpayer required by this section to change its method of accounting for its first taxable year ending after October 8, 1997-- (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as made with the consent of the Secretary of the Treasury, and (C) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account in such first taxable year. The SPEAKER pro tempore. Pursuant to House Resolution 274, the committee amendment in the nature of a substitute printed in the bill, modified by the amendment printed in part 1 of House Report 105-336, is adopted. The text of the committee amendment in the nature of a substitute, as modified by part 1 of House Report 105-336 pursuant to House Resolution 274, is as follows: H.R. 2646 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 ``Education Savings Act for Public and Private Schools''. SEC. 2 MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS. (a) Tax-Free Expenditures for Elementary and Secondary School Expenses.-- (1) In general.--Section 530(b)(2) of the Internal revenue Code of 1986 is amended to read as follows: ``(2) Qualfied education expenses.-- ``(A) In general.--The term `qualified education expenses' means-- ``(i) qualified higher education expenses (as defined in section 529(e)(3)), and ``(ii) qualified elementary and secondary education expenses (as defined in paragraph (4)) but only with respect to amounts in the account which are attributable to contributions for any taxable year ending before January 1, 2003, and earnings on such contributions: Such expenses shall be reduced as provided in section 25A(g)(2). [[Page H9057]] ``(B) Qualified state tuition programs.--Such term shall include amounts paid or incurred to purchase tuition credits or certificates, or to make contributions to an account, under a qualified State tuition program (as defined in section 529(b)) for the benefit of the beneficiary of the account.'' (2) Qualified elementary and secondary education expenses.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Qualified elementary and secondary education expenses.-- ``(A) In general.--The term `qualified elementary and secondary education expenses' means tuition, fees, tutoring, special needs services, books, supplies, computer equipment (including related software and services) and other equipment, transportation, and supplementary expenses required for the enrollment or attendance of the designated beneficiary of the trust at a public, private, or religious school. ``(B) Special rule for homeschooling.--Such term shall include expenses described in subparagraph (A) required for education provided for homeschooling if the requirements of any applicable State or local law are met with respect to such education. ``(C) School--The term `school' means any school which provides elementary education or secondary education (through grade 12), as determined under State law.'' (3) Conforming amendments.--Subsections (b)(1) and (d)(2) of section 530 of such Code are each amended by striking ``higher'' each place it appears in the text and heading thereof. (b) Temporary Increase in Maximum Annual Contributions-- (1) In general.--Section 530(b)(1)(A)(iii) of the Internal Revenue Code of 1986 is amended by striking ``$500'' and inserting ``the contribution limit for such taxable year''. (2) Contribution limit.--Section 530(b) of such Code is amended by adding at the end the following new paragraph: ``(4) Contribution limit.--The term `contribution limit' means $2,500 ($500 in the case of any taxable year ending after December 31, 2002).'' (3) Conforming amendments.-- (A) Section 530(d)(4)(C) of such Code is amended by striking ``$500'' and inserting ``the contribution limit for such taxable year''. (B) Section 4973(e)(1)(A) of such Code is amended by striking ``$500'' and inserting ``the contribution limit (as defined in section 530(b)(4)) for such taxable year''. (c) Waiver of Age Limitations for Children With Special Needs.--Paragraph (1) of section 530(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following flush sentence: ``The age limitations in the preceding sentence shall not apply to any designated beneficiary with special needs (as determined under regulations prescribed by the Secretary).'' (d) Corporations Permitted to Contribute to Accounts.-- Paragraph (1) of section 530(c) of the Internal Revenue Code of 1986 is amended by striking ``The maximum amount which a contributor'' and inserting ``In the case of a contributor who is an individual, the maximum amount the contributor''. (e) Effective Date; References.-- (1) Effective date.--The amendments made by this section shall take effect as if included in the amendments made by section 213 of the Taxpayer Relief Act of 1997. (2) References.--Any reference in this section to any section of the Internal Revenue Code of 1986 shall be a reference to such section as added by the Taxpayer Relief Act of 1997. SEC. 3. OVERRULING OF SCHMIDT BAKING COMPANY CASE. (a) In General.--The Internal Revenue Code of 1986 shall be applied without regard to the result reached in the case of Schmidt Baking Company, Inc. v. Commissioner of Internal Revenue, 107 T.C. 271 (1996). (b) Regulations.--The Secretary of the Treasury or the Secretary's delegate shall prescribe regulations to reflect subsection (a). (c) Effective Date.-- (1) In general.--Subsections (a) and (b) shall apply to taxable years ending after October 8, 1997. (2) Change in methods of accounting.--In the case of any taxpayer required by this section to change its method of accounting for its first taxable year ending after October 8, 1997-- (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as made with the consent of the Secretary of the Treasury, and (C) the next amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account in such first taxable year. The SPEAKER pro tempore. After 1 hour of debate on the bill, as amended, it shall be in order to consider the further amendment specified in part 2 of the report, if offered by the gentleman from New York [Mr. Rangel] or his designee, which shall be considered read and debatable for one hour, equally divided and controlled by the proponent and an opponent. The gentleman from Texas [Mr. Archer] and the gentleman from New York [Mr. Rangel] shall each control 30 minutes of debate on the bill. The Chair recognizes the gentleman from Texas [Mr. Archer]. {time} 1245 General Leave Mr. ARCHER. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous matter on H.R. 2646. The SPEAKER pro tempore (Mr. Sununu). Is there objection to the request of the gentleman from Texas? There was no objection. Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I was reading in the paper yesterday that our schoolchildren are unable to demonstrate a basic knowledge of science. The article said that more than half of the fourth graders who recently took a national science test could not even identify the Atlantic and Pacific Oceans. This is more than troublesome. If America is to remain competitive in the global arena, an arena whose battles are often fought with science and technology, we need to see that our children have the mental tools they need to succeed. In the balanced budget bill, we gave the parents the help that they need by college IRA's, IRA's to make college more affordable with the same income caps, the same levels as are in this bill. Today we extend that same type of help to parents with younger children in K through 12, elementary and secondary education. The legislation we consider allows parents, grandparents, and others to put up to $2,500 a year in education savings accounts where it can grow tax-free, and be used for a wide variety of educational uses. The bill is one of the best things, in my opinion, to happen to education. It is good for public schools, it is good for private schools, it is good for parochial schools, and it is good for home schooling. But most importantly, it is good for students everywhere, and that means that it is good for America's future. An estimated 14.3 million Americans will sign up for these accounts by the year 2002, and 75 percent, and I accentuate this, 75 percent of those families will have children in public schools. Here is how it works. If a child in public, private, or home schooling needs a tutor for science or for any other subject, a parent can tap the educational savings account. If a child in public, private, or home schooling needs books or supplies, a parent can tap the account. If a child has special needs, and our heart and help should go out to those children who are in special need, which often spans a lifetime, a parent can use the account. If a parent needs to provide transportation so a child can attend a good school, the account may be tapped. I cannot think of anything more important to the American people than their children and their children's educations. While this bill may not guarantee that fourth graders will know the location of oceans, it will help their parents improve the education opportunities. Is this bill a panacea for all of our education ills? Of course not. But we should not wait for the day when we have a magic solution to all of the ills, we should do what we can at this moment. This is a can-do proposition. Mr. Speaker, this concludes my remarks, but I take a moment to inform the Chamber that the gentleman from Illinois [Mr. Manzullo] asked to be included as a cosponsor of this measure, but was inadvertently left off the cosponsor list. Mr. Speaker, I reserve the balance of my time. Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume. I rise in opposition to H.R. 2646, Mr. Speaker. Mr. Speaker, let me join with the leadership of the House in stressing how important it is that we allow our young people to get access to a decent education as soon as we can. Mr. Speaker, when we dream about the economic opportunities that will be had for Americans, and those people that we intend to trade with in all parts of the world, one thing we take for granted is that academically our young people will be able to get the training in order to participate in what is going to be for history a revolutionary and exciting time. Yet, we go to that bargaining table with 1.6 million people in jail. God knows, I believe if you violate the law, [[Page H9058]] justice should take a hand and you should be removed from society. But why is this number of people continuing to explode? Why is it that 80 percent of the crimes are not violent? Why are they all drug-related? Why are all of the people in jail illiterate, unemployable? Why do they all seem to be coming from communities where the school system has failed? The answer has to be because it is out of these communities that there is no hope, there are no dreams, there are no opportunities. Life really does not mean that much, and jail is no real, serious threat. So now our country finds the U.S. Congress interfering with local schools by suggesting that we need more prisons than we need schools. It is sad, but that is how it is going to be recorded. Local and State governments are involved in prison-making, not making students prepared in order to get a decent education. Even our great President targeted colleges, and we are now trying to find some bridge to go from before school to be prepared for college. So I can see how Mr. Coverdell could respond to a tax initiative and say, let us make more money available for people to just spend, if they can find some reason to spend that money on a child before they go to college. I think that we cannot even call it an educational bill, because soon we will see that there is no education attached to this. It is bad tax law, because soon we will see that if we are looking for simplification, tell me what a taxpayer is going to have to put on the sheet in order to justify that they spent this money that they had in a tax-free account on education? We are going to have to look long and hard to find any education in this bill, but we do not have to look long and hard to find a tax break in this bill. Let us get to something that the gentleman from Texas [Mr. Archer] and I are working on now in a bipartisan way, the restructuring of the internal revenue system. Prior to pulling it up by its roots, we will restructure it. It is going to cost some money to restructure the Internal Revenue Service. Any decent American politician that wants to get reelected had better prepare some kind of way to get a good knock in there against the Internal Revenue Service. It is going to be good this year, and it will be better next year. So in order to restructure it, we need some money. We have come up with the money, at least the majority have, to pay for that. So I was surprised in asking the question, how are we going to pay for the education savings account? Guess what, we are going to use the same money. No, do not tell me we cannot use the same money to pay for two things, if it is the same amount of money. We are Ways and Means, we know that much. Which one do we want to fund out of this one source of money, Coverdell, or the restructuring of the IRS? We do not know, but we will spend the money on the first bill that reaches the President's desk and he signs. Let me tell the Members this, if they are for paying for the restructuring of the Internal Revenue Service, Members have to strike down Coverdell, because if we pass Coverdell and the money is spent for Coverdell, we have no money for Internal Revenue Service. But I assume this technical point will be explained by the majority, since they able to do that well. Let me say that what I am trying to do with my bill, which we will have an opportunity to vote for or against, is to allow the local school districts to recognize, in areas where they are failing, that they need some help. If they can successfully bring the private sector in and form a partnership in a special academy, where the curriculum is not just set by educators but by the business people, who know the skills that are going to be necessary to hire these people, we will be able with this very same money to allow them to issue bonds to rebuild the schools, to get the equipment. But under Coverdell, all we will be able to do is say that somebody that had the disposable income of up to $2,500, or a friend of theirs that may want to give a gift to the child and put it in to deposit it tax-free, will be able to withdraw this for tutors, for babysitters, for taxicabs, for movies, for anything that they think is necessary to make that child happy. Remember, the burden will be on the IRS, if we are able to find the money to restructure it, to prove that the money was used for an educational experience. Talk about a horror story, we are now about to hear it from Members that understand what is in this bill. Mr. Speaker, I reserve the balance of my time. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentleman from Arizona [Mr. Hayworth]. Mr. RANGEL. Mr. Speaker, I yield 30 seconds to the gentleman from Arizona. The SPEAKER pro tempore. The gentleman from Arizona [Mr. Hayworth] is recognized for 3 minutes and 30 seconds. Mr. HAYWORTH. Mr. Speaker, I thank the distinguished gentleman from Texas [Mr. Archer], the chairman of the committee, for yielding time to me, and for this opportunity to come to the well and engage in honest dialogue and debate concerning the future of our children. I listened with great interest to my colleague, the gentleman from New York, the distinguished ranking member, and listened also as he outlined literally the horrors that confront American families today in so many neighborhoods, including the neighborhood and the community that my colleague from New York represents. What we have here today, Mr. Speaker, is a historic opportunity to help those families, to help those parents seize control of the money they earn to direct an education in the way they see fit, whether it is choosing a school that the parents and family and others believe is best suited for the education of that child, or seeking outside help, remedial tutoring or extra-educational aid, such as textbooks or computers; to have a savings account, a tax-free interest-bearing account to put the control back in the hands of American parents. For those people should literally hold the destiny of their children in their hands, and this affords those parents the chance. Mr. Speaker, we have made great strides in allowing these educational accounts for college-bound students. Why, then, would we deprive children from kindergarten through the 12th grade of the same opportunity? Mr. Speaker, I would point out a special provision of this bill that I believe is vitally important, an ability for parents of children with special needs to look beyond the chronological age to continue to have money in these accounts to help those children. Mr. Speaker, one of my first cousins has Downs syndrome. My uncle and aunt were blessed that they lived in a community with a school district with the ability to help educate children with special needs. But the challenge is for parents of children with special needs that, in our situation today, quite literally many of those parents are at the mercy of the local school districts in terms of quality of education. Mr. Speaker, when we adopt this bill today we do not leave any parents, but especially those parents of children with special needs, literally at the mercy of the accident of geography, and where they happen to live in a school district. What we have, Mr. Speaker, with this bill, and I urge its passage and the creation of these special savings accounts, is the chance to give families the opportunity to make the choices to help benefit their children. I urge passage of this bill. {time} 1300 Mr. RANGEL. Mr. Speaker, will the gentleman yield? Mr. HAYWORTH. I yield to the gentleman from New York. Mr. RANGEL. Mr. Speaker, so that we can make certain that we confine our remarks to what is in the bill, does the gentleman have any idea where a child with special needs would be in the bill before us? I would urge the gentleman, please, not to place his arguments on special needs, because there is absolutely no description in this legislation as to what is a special needs child, which means that every parent, I would like to believe, would believe that their child has special needs and there is no way in the world to disprove it. Mr. ARCHER. Mr. Speaker, I yield myself 30 seconds. Mr. Speaker, the gentleman from Arizona, I am sure, intends to be accurate, but the accuracy is this bill provides for a lifetime ability for parents [[Page H9059]] with children that have special needs, rather than a cutoff at an age limit under current law. The definition of special needs is to be done by the Treasury, and it is a part of this bill. Mr. Speaker, I say that respectfully in response to the gentleman from New York. Mr. RANGEL. Mr. Speaker, I yield myself 30 seconds. Mr. Speaker, we do not know as we debate this bill what a special need is, but we can imagine and hope that Treasury will come up with something. And if the gentleman is talking about a lifetime, I do not know why he sunset the bill in 5 years, but I am sure he will have enough time to explain that. Mr. Speaker, I yield 2 minutes to the gentleman from California [Mr. Fazio]. Mr. FAZIO of California. Mr. Speaker, this piece of legislation is the confluence of two bad Republican ideas, one of which provides tax breaks for our wealthiest people and not for those in the middle class who truly need it, and the other is to emphasize private schools under the guise of reforming public education. Mr. Speaker, this bill is flawed for a number of reasons. I think we will hear more about the ability, for example, to buy a car under this proposal in order to transport students to school. But it is also flawed because it puts in the hands of people making over $93,000, 70 percent of all the benefits. In other words, it could be called the Prep School Promotion Act of 1997, more than a public school reform bill. Mr. Speaker, we ought to be putting resources into reducing class sizes, we ought to be putting resources into wiring our public schools, training our teachers. We have an understanding of what it takes to improve the infrastructure of our public school system, but we are going to take $4 billion over the next 10 years and divert it to people who would like to perhaps start or perhaps be subsidized in their attendance already in private institutions. We do not really help the average American with this bill. We hold out a carrot to an industry or to some few individuals, many of whom have the capacity to already engage in educating their children privately. It is a God-given American right to do so. We do not have to be diverting our hard-earned taxpayers' dollars to those families, while our public schools across the country are lacking basics. And I do not mean just in inner cities or rural areas; in high-growth suburbs as well. Mr. Speaker, we can make improvements in our public educational system and we ought to do it. This is a diversion and it is a travesty. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentleman from Texas, Mr. Sam Johnson, a respected member of the Committee on Ways and Means. (Mr. SAM JOHNSON of Texas asked and was given permission to revise and extend his remarks.) Mr. SAM JOHNSON of Texas. Mr. Speaker, has anyone noticed that the President will endorse any education initiative as long as it supports big government, like Goals 2000? Like national testing? This is the same President that threatens to veto any program that increases parental control over a child's education. Mr. Speaker, look at this administration's track record. They opposed education block grants to States, they oppose vouchers for the poorest, poorest 2,000 children, and now they oppose this bill, which gives parents the ability to invest up to $2,500 a year in their child's education so that they can attend the safest and most academically challenging school available. Why is the President against parents sending their children to the school of their choice? Surely he cannot believe that Washington bureaucrats are smarter than parents. And I hope it is not because he is so politically indebted to the special interests in Washington, like the National Education Association for instance, that he can no longer see what is best for America's kids. Well, whatever the reason, Mr. Speaker, this President is wrong to oppose this bill. This bill will not only strengthen our children's future by giving the parents a tool to make sure their children can attend a school that meets their needs, needs only a parent can determine. No one can seriously argue that there is anything wrong with giving parents, grandparents, and friends the power to invest in a child's education. America's future depends on our children, and we ought to provide those parents with whatever they need to make sure that their children are the most educated, productive, and successful in the world. Mr. Speaker, I would to urge the President to join us as we try to help parents help their children. I urge all of my colleagues here in the House to do the same. Vote for this bill. Give our children a chance to grow up to be great Americans. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from New York [Mr. Owens]. (Mr. OWENS asked and was given permission to revise and extend his remarks.) Mr. OWENS. Mr. Speaker, I rise in opposition to H.R. 2646. I think the credibility of the Congress is greatly injured by playing these kinds of college boy, sophisticated games around the edges of a crucial issue like education reform. Mr. Speaker, we are showing off with college boy sophistication while we reject the common sense of the American people. They want something real done about the education reform problem. They do not want us to continue to play games. Our credibility is now down to 36 percent. I understand this Congress dropped from 40 percent. This is the reason. We are not serious here. We like to show off among ourselves. Mr. Speaker, the voters out there clearly want decisive action on education reform and improvement. They keep saying it again and again and again. In this 105th Congress, instead of playing games, we should take advantage of this window of opportunity to do something significant. The people are saying they want a real effort by Congress to deal with the education problems. Instead of education savings accounts and other headline-seeking tricks, we should unite in launching a bipartisan omnibus bill around the things that both Republicans and Democrats already agree on. We agree that we need more teacher training and that Federal aid would greatly help that teacher training process. We agree we need more technology in the schools; both Republicans and Democrats are in favor of giving aid for more technology. We agree on charter schools. Instead of pushing vouchers and education savings accounts, why not unite in the areas that we agree? We are both in favor of charter schools, both parties. Why do we not move forward in some kind of way which is commensurate with the problem? Let us understand that schools are at the core of what should be a massive opportunity system in America which will generate the kind of educated population we need as we go into the 21st century. We are the indispensable Nation. We are going to have to continue to hold on to a leadership role. We cannot do that unless we have the most highly educated population. Mr. Speaker, let us stop playing games and let us have some real Federal aid to education that meets the common sense needs of the American people. Mr. ARCHER. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Pennsylvania [Mr. English], a respected Member of the Committee on Ways and Means. Mr. ENGLISH of Pennsylvania. Mr. Speaker, in my area of northwestern Pennsylvania one of the biggest challenges facing the middle class is the affordability of education, and this is something that affects middle-class families across a range of circumstances. It is the single biggest barrier to the next generation being able to penetrate through and achieve the American dream. Mr. Speaker, as a supporter of educational tax relief for all stages of schooling, I rise in strong support of this legislation, the Gingrich-Coverdale approach with education savings accounts for private and public schools. This legislation allows parents to establish a tax-free savings account to be used for a child's education at any school from kindergarten through high school on to college. This legislation will expand the education savings account provisions included in our tax bill of this year by, first of all, increasing from $500 to $2,500 per year the maximum amount of contributions [[Page H9060]] that can be made to an education savings account; second of all, to include elementary and secondary school expenses; third, to allow corporate entities as parties to be able to contribute to an ESA on someone's behalf. Mr. Speaker, I join my colleagues in supporting this legislation to renew our commitment to helping families afford the full range of educational expenses demanded through our children's lifetimes. There are no, to coin the term of the previous speaker, ``college boy sophisticated games'' here. This is tax relief that a broad range of families can access. Let me say, Mr. Speaker, I realize the left wing of this body hates this proposal. They think that any resources that are diverted into private institutions, even through tax-free accounts, is a use of public funds. Mr. Speaker, I would say to my Democrat colleagues, ``Folks, it is not your money.'' Mr. Speaker, if people want to send their kids with their resources to private or parochial schools, they should be able to through this tax-free account. This is critical to diversity in education, and it is critical to restoring the American dream. I realize this provision was originally in our tax bill and it was stripped out because the President threatened to veto the entire tax bill if this was in the bill. Mr. Speaker, today I want to say to the President, Go ahead, make our day. Veto this bill if you think it is bad for families to use their own resources to put their kids through school. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentlewoman from Oregon [Ms. Furse]. Ms. FURSE. Mr. Speaker, I want to know what happened to the idea that this country invests in education. Why are we now asking parents and grandparents to spend more money on the education of their children? I think they already pay enough in taxes. The problem is that this body does not want to spend those taxes wisely. Instead of asking people to spend more money, why not look at the way we spend money? This body spends, for every 7 cents it spends on education, it puts 52 cents to the Pentagon. So if we took $200,000 and invested in every elementary and secondary school in this country $200,000, we would come to a total of $26 billion. Well, Mr. Speaker, guess what? This Congress gave $26 billion to pay for nine more B-2 bombers that the Pentagon did not even ask for. So it is not a question of not being able to pay for education. We should invest in education. It is a national security issue. What it is a question of is are we going to spend the money that these American taxpayers send to the Congress wisely or are we going to waste it and then have to come to them and say now it is time they divvy up some of their own money to pay for education. It is a disgrace. Mr. Speaker, we have got to invest wisely. Every tax dollar should go to real national security: our children; their education. That is where we should be putting our money and we should not be asking through a gimmick in the Tax Code to make these parents pay for more money to the education of their children. It is a bad idea. We should vote this down, and we should vote for education every time we can and invest more money in education and less money in additional B-2 bombers that nobody needs, even the Pentagon does not want. Let us invest in America. Let us invest in America's children. Mr. ARCHER. Mr. Speaker, I yield 2 minutes to the gentlewoman from Kentucky [Mrs. Northup]. Mrs. NORTHUP. Mr. Speaker, I appeal to my colleagues as a mother to support this bill. I think that we have demonstrated our commitment to education over many, many years of contributions, both State and local and Federal. {time} 1315 In fact, we have 729 programs that contribute to making educational systems in this country work better, to make sure that each child, every child has an opportunity for a good education. I think it is sort of amazing that the people that oppose this bill assume that every parent will make the choice to take their child out of public school and put them in a nonpublic school. I assume that many of our public schools are, in fact, great schools and that these parents, that many parents want to keep their child in public school. If they are not, we have got a much huger problem than what we do about these $2,500 school savings accounts. The reality is, there is not anything we can do at this level. There is not any check we can write at this level that helps each 6-year-old and each 7-year-old, each 10-year-old and each 18-year-old be successful. Each one of my six children took unique needs, unique intervention to help them go from the beginning years of school to successfully complete school. Some of them had a terrible time with math and they needed tutoring. Some of my children needed special help in other areas. I do have special needs children. I have adopted children with diagnosed special needs and I have biological children that are dyslexic and have been diagnosed every step of the way. There is not any education program, private or public, that has met my children's needs. I had to find the resources to provide tutoring, to provide special summer schools, to provide special opportunities for those children to be successful. Thank goodness my husband and I could find those resources. Some of those I found by going back to work myself, by making quilts and selling them to provide for those services. This gives those parents these opportunities. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from Maryland [Mr. Cardin], coauthor of the restructuring of the IRS bill that we are trying to protect the funding. Mr. CARDIN. Mr. Speaker, let me thank the gentleman from New York [Mr. Rangel] for yielding me this time. Mr. Speaker, there are many reasons to be opposed to the legislation before us. It will benefit just a few people, those who have wealth. It has very limited benefits. It diverts funds that otherwise could be available to improve education in our country. Let me just mention one fundamental problem with this bill that I hope we all would see. That is, how in the world will the IRS ever be able to administer this bill? Look at the definition that is included for which the money in this account can be used in order to get tax preference. It can be used for tuition, fees, tutoring, special needs services, books, supplies, computer equipment, including related software and services, that is going to be an easy one for the IRS to figure out, what software is educationally related, and other equipment. Transportation, does that include a car that one can buy for their child? Supplementary expenses required for enrollment or attendance, does that include peanut butter and jelly sandwiches for nutrition services? How will the IRS ever be able to administer this program without being completely intrusive into the lives of the taxpayers of this country? This bill cannot be enforced. Rather than being an A plus account, these are really A slush accounts. I would urge my colleagues to reject the notion. The good news is that this bill is not going to become law. It is not going to pass the other body and be signed by the President. We do have an opportunity today to do something for education that we can really help; that is, support the Rangel substitute. Then we can build upon the budget agreement that we reached this year and we can really put more money into education. Mr. ARCHER. Mr. Speaker, I yield 3 minutes to the gentlewoman from Washington [Ms. Dunn], another respected member of the Committee on Ways and Means. Ms. DUNN. Mr. Speaker, I thank the gentleman from Texas for yielding me this time. I would like to respond to the comments of gentlewoman from Oregon. This Nation's value is education. We have worked to support the public education system. The problem with the public education system right now is that it is not doing the job. Every parent wants to give the best education possible to his or her children. That is why some parents are saying they are willing to pay in effect double, if they decide voluntarily to take part in this program where we set aside money that can go into an education savings accounts to purchase the best education possible for their child, K [[Page H9061]] through 12. They also continue to pay all the expenses of public education. I know that this happens because I went through it when I was a young mother, divorced, single parent, two children, 6 and 8, determined that I preferred to send my children to a private school, really appreciated the fact that choice was involved, but could not pay for transportation. So I was in that kind of box of having to get my child to school at the same time that I started a job. I know what the feeling is in the pit of your stomach when you are late to work because you want to make sure your kids are well-protected on the school ground. What I like about this bill is that a parent who takes the choice of school into his or her hands can say, I am going to start at age zero with my child and every year save up to $2,500 in an account just in case of emergency. In my case, my child had a specific language disability. My child needed training every single day, five days a week for 6 years at $17 an hour. That is a pretty heavy hit these days where working parents have to be in jobs all day just to make the bottom line work out. So I think this is a great program. I admire those parents who are willing to continue to make the best education their top value. Americans of all stripes are alike in many ways. I believe that is why many Democrats have come over to us and said we want to support this legislation. Let me just tell my colleagues a number on this legislation we have discovered, that if a parent puts money into this account from the time his child is born, by the time that child gets to high school, there can be a total, it is just a $2,000, say 7\1/2\ percent interest, $46,000 in that account plus another additional $6,000 that comes because one does not have to pay tax on the interest of the account. Mr. Speaker, I think it is a great opportunity. It recognizes that our principal challenge, educationally, is no longer college, but to raise the standards of our grade school and our high school students. What are our choices? Our choices are do nothing and get the product that we have gotten. It is not good enough to prepare our youngsters for a global economy or we can act today by passing this bill and helping parents obtain the tools that are needed to ensure that their child, every single one of them gets the best possible education from kindergarten to college. Mr. RANGEL. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from North Carolina [Mr. Etheridge], an educator as well as a legislator. Mr. ETHERIDGE. Mr. Speaker, I thank the gentleman from New York for yielding me the time. Mr. Speaker, I rise today in strong opposition to this bill and to this latest attack on our public schools and, yes, on our children, their parents, and their communities. This legislation is the wrong approach to improving education for the 1.2 million children in the North Carolina public schools and the more than 45 million children all across this great Nation. As the first member of my family to graduate from college, I am grateful to the public schools of North Carolina for the opportunity I had to get an education. They did a tremendous job for our three children. I know firsthand that public education holds the key to the American dream. As a former superintendent elected for two terms, 8 years in North Carolina, I know what it takes to improve the public schools and to give our children the opportunity to make the very best of their God- given ability. This bill is the latest attempt to use the precious taxpayer resources that we have to subsidize private schools. It will take precious resources that we need to strengthen our schools and put it into the pockets of the wealthiest people to send them to private schools. According to the Joint Committee on Taxation, the original version of this bill would have cost the U.S. Treasury over $5 billion over the next 10 years. That money would have been better spent helping States and localities rebuild crumbling schools, constructing new schools to relieve overcrowding. In fact, the President proposed a plan to do just that, but the proponents of this bill stripped it out of the original budget bill that passed this body earlier this year. Mr. Speaker, I sought this office because I could not stand by and watch Congress launch attack after attack on our Nation's public schools. I saw that 2 years ago when this body stood up and said, we are going to abolish the Department of Education, we are going to do away with the school lunch programs and we are going to eliminate student loans. A member of the majority party just last week even, last month, compared our public schools, and I quote, to the Communist legacy. This bill is nothing more than an attempt to scapegoat our public schools once again. Mr. Speaker, abandoning our public schools will not improve public education in this country. This bill is a cowardly act of surrender. Vote against this latest attack and vote for the Rangel substitute. Mr. ARCHER. Mr. Speaker, I yield myself 30 seconds to respond to the gentleman because he obviously has not read the bill. The bill will provide assistance to families with children in public schools that is so badly needed today and public school teachers have come to me and begged for this because they say tutors are needed to help with the education of children in public schools. Seventy-five percent of the resources that this bill provides will go to families with children in public schools. Unfortunately, there is a group out there that does not want families to have any help for children who go into private schools. Mr. Speaker, I yield 2 minutes to the gentlewoman from Washington Mrs. Linda Smith. Mrs. LINDA SMITH of Washington. Mr. Speaker, I thank the gentleman for bringing this bill to the floor. I have listened to the debate here and think that sometimes you just have to go back to the original bill to remember what it is because we lose track in the debate. The education savings account for public and private schools allows parents and grandparents like me to open an account for each of my grandchild's education that can be used only, only the interest, the principal I still pay taxes on, but the interest can be used for a child's education needs while they are in school, for private school, just the interest, if their parents should choose, and from kindergarten through college. The $2,500 a year that I would put in each of the children's accounts as a grandparent, allowed under this bill, can be put in until they are 18 years old. If I take the money out that is now being used in our economy because savings is good for our economy, I have to pay a penalty on that. There is a great incentive for me to save for my grandchildren's education, not as great an incentive as an IRA where you can deduct the base $2,500 from your taxes, but a great incentive because I can save interest free for my grandchildren. As long as they spend the interest on college education, no one pays tax on the interest. This is not an attack on anything. It is a way of families getting involved in their kids' education. The great part about it is we know by all research families involved in their education gives the best education for children. Moms and grandmas making the choices gives the child the most personal education. I also wanted to say that as a grandma, I look at what is ahead for my grandkids. I do not want them to have to choose a public opportunity only. They might want to choose a private college. But if they do choose a public college, I would like to have them have options. With this, I want to encourage Members to look back at the bill and realize, this is a very good step toward reform and grandparents in America will like it. Mr. RANGEL. Mr. Speaker, I yield myself 30 seconds to say that the gentlewoman really did explain this bill in a very accurate way, in that I just wish I could better understand that if one puts the money in an account and one can spend the interest on that account and one does it for their child and their grandchild and the bill is going to sunset in 5 years, my God, how much interest will ever be there for them to spend? Mr. Speaker, I yield 2 minutes and 30 seconds to the gentleman from Indiana [Mr. Roemer]. {time} 1330 Mr. ROEMER. Mr. Speaker, I thank the gentleman from New York for [[Page H9062]] yielding me this time, and I rise in opposition to this legislation for three reasons: distribution, accountability, and fairness. First of all, distribution. The Department of the U.S. Treasury has said, by analysis, that 70 percent of the benefits go to 20 percent, the highest 20 percent, of Americans. Twenty percent of the benefits go to the highest 20 percent of Americans making money in this country. Now, that is one reason. Second, fairness. How many people making $25,000 a year, with their children in public schools, are going to be able to save $2,500 a year and benefit from this? Good question. Maybe not many. But third, I think, Mr. Speaker, the main reason here is accountability. Now, I just voted for three IRA's in the tax relief bill that we passed for Americans, and I was proud to do it: An education IRA, a Roth IRA, and expansion of the existing IRA. The education IRA can go for college tuition. We know that; the IRS knows that. This particular IRA can go for any of the following things: computers, books, supplies, equipment, transportation, and supplementary expenses. So if we want to buy measuring cups to teach our children at home about science, is that a tax writeoff? Should the IRS come in and audit that? Is that what the Republicans are saying? Is this the Auto Relief Act of 1997? What about buying our children a car? What about putting gasoline in the car? What about driving to and from school but also going to work? Now, do we want the IRS to look at those things? Are all those expenses or are they not? Should the IRS stay completely out of this or should they be nosing into every one of these situations? So from a position of accountability, we can buy software, we can have services, I understand we can pay one child to tutor another of our children under this act. Let us have some accountability, folks. If we are going to fix the IRS, as we have decided this week, let us fix it for everybody. We will do it in a bipartisan way, but with public education. What this act does is let us just fix it primarily for people making over $70,000 a year for them to drive their kids back and forth to school and buy some computers and some measuring cups. Let us fix public education for everybody. Let us fix the IRS for everybody. Mr. NUSSLE. Mr. Speaker, I yield 2 minutes to the gentleman from Ohio [Mr. Boehner], the distinguished chairman of the Republican conference. Mr. BOEHNER. Mr. Speaker, I thank my colleague from Iowa for yielding me this time. My colleagues, Republicans here in the House, have begun a bold campaign to strengthen and reform our Nation's education system. We are attempting to send more dollars directly to the classrooms, trying to return control of education to parents, teachers, and local communities, and giving working class parents and poor parents new educational choices. I think that is exactly what the Education Savings Act for Public and Private Schools does. The bill that we have today simply extends the popular and successful college education savings accounts to parents with kids in kindergarten through grade 12. All over the country, and certainly in my district, there are lower and middle-income families who struggle every day to make ends meet. These are exactly the type of families that these accounts are intended to help. The rich, as those on the other side of the aisle like to talk about, do not have to save to pay for a tutor if their kids are not doing well in math or reading. The rich, as they describe them, do not have to save to buy a new computer. They do not have to save in order to pay for SAT prep classes or summer education camps. These things are already available to them because they have the cash to do it. What we are trying to do is to help lower middle income and poor folks in America save the money that they can to help their children get a better education. Now, what is wrong with allowing American parents to keep more of what they earn so that they can help their children get the educational aids they need that will help them have a shot at the American dream? That is what we are trying to do today. We provide Pell grants for students in college. Private college, public college, it makes no difference. We provide student loans for college. Private, public, it makes no difference. But as soon as we try to do something to give parents greater control over the education of their children that are in grades 12 and under, there is a big stone wall. That is because the education bureaucracy in America rises up and says no, we are in charge of that. This bill today gives parents more choices. Mr. RANGEL. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Michigan [Mr. Levin], a member of the Committee on Ways and Means. (Mr. LEVIN asked and was given permission to revise and extend his remarks.) Mr. LEVIN. Mr. Speaker, let me just answer the gentleman from Ohio [Mr. Boehner]. Federal control, most of the money for secondary and elementary education that is appropriated here goes for special education and compensatory education that are under the control of local school districts. So that is an effort really to debate by demonization to say that we are trying to defend a Federal bureaucracy when most of the money that is appropriated goes to school districts. Second, the gentleman from Ohio and others say that their bill is an effort to help the working class. Look at the data. According to the Treasury Department analysis, under this bill a family with income $33,000 to $55,000 would get $7 a year help; a family $55,000 to $93,000, $32; and a family $93,000 and up would get $96, three times the family with half the income and 12 times a family with three to five times the income. Now, if the money is already available to the wealthy family, why are we giving them a tax break? Mr. NUSSLE. Mr. Speaker, will the gentleman yield? Mr. LEVIN. I yield to the gentleman from Iowa. Mr. NUSSLE. Mr. Speaker, does the gentleman have a copy of this? We would love to see this analysis. Mr. LEVIN. Reclaiming my time, Mr. Speaker, we would be glad to, and I would also tell the gentleman from Iowa that we distributed, in the Committee on Ways and Means, a study by the Federal Reserve that indicated that families $30,000 to $40,000 had nonretirement investment assets of $2,500. In other words, they did not have as much money, most of them, as the amount of money that could be put in by wealthier families. The wealthy family has that income available and those assets. And a family $40,000 to $50,000 has nonretirement investment assets, those under 35, of only $3,400. So we are saying put $2,500 a year in. Who can do that if they have assets of only $3,400 nonretirement assets? Now, this is an effort by the majority, in essence, to cover their weak flank: education. But they are covering it by helping wealthy families and hurting public education. That is a bad idea. The Rangel idea is a much better one. Let us vote for it. Mr. NUSSLE. Mr. Speaker, I yield 2 minutes to the gentleman from South Carolina [Mr. Inglis]. Mr. INGLIS of South Carolina. Mr. Speaker, I thank the gentleman for yielding me this time. The previous speaker said something about accountability and how we must have accountability in this matter. Really, accountability in this context, I think, more equates to control. On this side what we are talking about is choice, which equates to freedom. And that is the difference in this debate. The difference is whether control is going to remain with a bureaucracy, whether it is in Washington or in a county back home. The question is who controls education: Is it a bureaucracy, an education bureaucracy, or is it parents? So accountability on this side really equates into control. Choice on this side equates into freedom. But there is something that comes with this freedom. The freedom we are after on this side is the opportunity for parents to choose where to send their kids to school. That is our ultimate objective, or at least my ultimate objective: to allow every parent in America to choose where to send their child to school among all options available to them. Now, I realize that the education establishment does not like that, because [[Page H9063]] they do not want to give up that control. But consider what they are after: The education folks are always trying to create little programs at the Department of Education that are supposedly going to save the day, but we all know they will fall short. I think we are all coming to the conclusion, or I hope we are, that really the only way to educate kids is for parents to be involved. And the way for parents to be involved is to vest them with decisionmaking. Do not tell them by some formula worked out or map worked out in some bureaucrat's office somewhere where they are going to send their kids to school. Give them choice. Give them the opportunity to go to, say, Poly Williams School, where they have to sign a contract in order to have their kids there, and then what we will have is parental involvement because they are exercising their free choice. They are buying into the school. They are participating in Johnny's education, and Johnny is going to get educated that way. That is the change we need to bring, and I wholeheartedly support this small step toward that. Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. Green]. (Mr. GREEN asked and was given permission to revise and extend his remarks.) Mr. GREEN. Mr. Speaker, I thank my ranking member for yielding me this time. Listening to the debate earlier, we all support education and all the ways we can do it, and the opportunity to help families have their children to be prepared for tomorrow, but it is frustrating, as a Member of the House, that last week the solution to the education problems was vouchers for the District of Columbia and this week it is for an educational IRA that will only be for a specific higher income. And those numbers that the members of the Committee on Ways and Means have been talking about are reflected in a graph that I have here that shows my district, whose medium income is about $22,000, that is about the average for the country, in some cases, I believe, but it shows if an individual makes $33,000 to $55,000 their only tax break will be $7. But today we are having a special that says, OK, we are going to solve education by giving $7 back to a family with an income of $33,000 to $55,000. I wish we had quick fixes to education problems, but we do not. It takes hard work. And there are millions of parents, teachers, and even school administrators who care and love those children and that are not looking for quick-fix gimmicks like vouchers or even this IRA. America has always had a commitment to education, whether it be in private, parochial or in home school, or particularly where 90 percent of the students go, which is public education. This bill allows parents to set up a tax-free IRA of $2,500 per year, per child. What this proposes is that it will only let the wealthiest families participate and take advantage of it. Ninety percent of the students attend public education, yet those parents of poorer incomes or moderate incomes, under the numbers I see from the Committee on Ways and Means, they have to buy school uniforms and computers, but they cannot take advantage of this. This is not the solution for our educational problems. It takes hard work. Let us get away from