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UR
IB
U
U
E PL
NU
Congressional Record
M
S
United States
of America
PROCEEDINGS AND DEBATES OF THE
Vol. 141
104 th CONGRESS, FIRST SESSION
WASHINGTON, THURSDAY, FEBRUARY 16, 1995
No. 31
Senate
(Legislative day of Monday, January 30, 1995)
The Senate met at 9:30 a.m., on the
expiration of the recess, and was called
to order by the President pro tempore
[Mr. THURMOND].
The PRESIDENT pro tempore. Today’s prayer will be offered by our
guest chaplain, the Reverend Barbara
D. Henry, of the Episcopal Diocese of
Washington.
PRAYER
The guest chaplain, the Reverend
Barbara D. Henry, of the Episcopal Diocese of Washington, offered the following prayer:
Let us pray:
Almightly and everlasting God, Creator of the universe with all its marvelous order and complexity; You have
made us in Your image and given us
dominion over all the Earth. Give us
reverence for all Your creation—for the
Earth which supports us, for all the
myriad forms of life which inhabit this
planet, and especially for the wonderful
diversity of people and cultures in this
world.
Give to all those who hold authority
in this land, we pray, an awareness of
the many blessings You have bestowed
upon them. May our Senators be
blessed, in all their deliberations, with
ever new insight into Your purposes for
the human race, and with wisdom and
determination in making provisions for
the future of our Nation. Direct and
guide them in their words, which are
heard by so many, and in their decisions, which will affect so many.
For You, O God, are the source of all
wisdom, all power, all grace, and we
give You glory for ever and ever.
Amen.
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RECOGNITION OF THE ACTING
MAJORITY LEADER
The PRESIDENT pro tempore. Under
the previous order, the acting majority
leader is recognized.
SCHEDULE
Mr. LOTT. Mr. President, this morning following the time for the two leaders, the time until 10:30 will be equally
divided between the two leaders or
their designees for debate on the motion to invoke cloture on the constitutional balanced budget amendment.
For the information of all our colleagues, at the hour of 10:30 this morning, there will be a rollcall on invoking
cloture on the balanced budget amendment.
I now ask unanimous consent that at
the hour of 10 a.m., Senator DASCHLE
be recognized for up to 15 minutes, to
be followed by Senator DOLE for up to
15 minutes.
The PRESIDENT pro tempore. Without objection, it is so ordered.
Mr. LOTT. I further ask, Mr. President, that Senators have until 10:30
this morning to file any second-degree
amendments to House Joint Resolution
1, the constitutional balanced budget
amendment.
The PRESIDENT pro tempore. Without objection, it is so ordered.
Mr. LOTT. Mr. President, I would
like to observe once again, as the leader pointed out last night, he did file
cloture motions last night. Two of
them were filed. Those would ripen or
be available next Wednesday, the 22d,
and the leader indicated that we should
expect votes on those two cloture motions, if necessary to have the second
one, and other amendments during
that day unless some other agreement
is reached. I yield the floor.
f
RECOGNITION OF DEMOCRATIC
LEADER
The PRESIDENT pro tempore. Under
the previous order, the Democratic
leader is recognized.
Mr. DASCHLE. I thank the President
pro tempore. I wish him a good morning.
(Mr.
chair.)
COVERDELL
assumed
f
COMMITMENT TO HONEST
BALANCED BUDGET AMENDMENT
Mr. DASCHLE. Mr. President, the
first legislative action I took when I
came to Congress in 1979 was to introduce a constitutional amendment to
require a balanced budget.
I believed 16 years ago, as I believe
today, that Government must learn to
live within its means. I believed then,
as I believe now, that we must trim the
fat, cut the waste, and make the tough
choices necessary to control spending.
I supported a balanced budget amendment then and I remain committed to
an honest, fair, and forthright amendment now.
However, I have concluded I cannot
support the one which is now being
pushed through the body, without
amendment or compromise.
The magnitude of the decision about
how we propose to amend the Constitution should not be lost on anyone. A
balanced budget amendment, if passed
and ratified, will have a dramatic effect on the very nature of government
and its relationship to the American
people in all perpetuity. We cannot
come back next year or next Congress
and clean up our mistakes.
When we embark on such a path—to
amend the Constitution—we must
know that it is the best amendment we
can write, that it incorporates the best
ideas and the most carefully written
words we have to offer.
It is critical now, as we contemplate
amending the Constitution for only the
28th time, that we refuse to succumb to
the notion that what we do is, as the
old adage goes, ‘‘good enough for Government work.’’
This effort had a noble beginning. It
was the result of the tireless work of
the Senator from Illinois, the Senator
∑ This ‘‘bullet’’ symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor.
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from Utah, the Senator from Idaho,
and many others to enforce fiscal discipline, something we all recognize is
necessary.
The refusal to consider legitimate
amendments, amendments that would
make this constitutional amendment
even stronger, has reduced this effort
to something far less than our best.
When this debate began I expressed
my concerns about the balanced budget
amendment proposal before Members. I
expressed a sincere hope that we could
work together to address them and
craft the best constitutional amendment this Senate could write on behalf
of all the American people.
First, as many argued last year, Social Security should be viewed as an indelible contract between the Government and the American people, funded
by a dedicated trust fund that should
be left out of budgetary calculations.
As written, it is clear that the current
proposal uses the Social Security trust
fund to mask the true size of the deficit, something that is patently inconsistent with our goal to balance the
budget.
As a result it is estimated that $705
billion of Social Security trust fund
revenue will be used to mask the real
size of the national deficit between now
and the year 2002. In fact, that very
issue was confirmed again this morning
in the Wall Street Journal.
A speech that the majority leader
gave yesterday to a group indicated
that he saw the size of the deficit over
the course of the next 7 years to be
somewhere in the vicinity of $685 billion, which would require some form of
health care reductions to reduce that
deficit to below the $685 billion mark
he suggests. Mr. President, $685 billion,
if that is the size of the deficit as my
Republican colleagues would see it,
clearly implies that the $705 billion for
Social Security is still on the table in
spite of all of the best efforts made by
many Members on the other side to indicate the contrary.
Second, I believe that budgetary discipline, common sense, and our longterm investment goals warrant the establishment of a budget that distinguishes between investment and consumption. We ought to use this opportunity once and for all to establish the
same budgetary principles used by
businesses and by most State governments.
Finally, as we have argued at some
length during this debate, the American people have an absolute right to
know how we plan to fulfill the promise of a balanced budget before they are
called upon to ratify it. Working with
my Democratic colleagues, we have
proposed three balanced budget constitutional amendment approaches in a
good-faith attempt to address those
concerns and make the underlying
amendment more sound.
Unfortunately, each of those amendments has been rejected essentially
along party lines. The only way I can
interpret those votes is that the major-
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ity is saying, ‘‘We want our balanced
budget amendment or no amendment
at all.’’ They are telling the American
people to put their trust in good intentions and to live with consequences
that are yet unknown.
We should support a balanced budget
amendment. But we should never violate America’s contract with its senior
citizens merely because we are unwilling to make the tough choices now.
Balancing the budget by cutting Social
Security is no balanced budget at all.
Making tough choices is also an important part of what every family and
every business must do. When a family
balances its budget, we separate investments in our future, our home, our savings for our children’s education, from
the day-to-day expenditures on things
like food and clothing. We are willing
to borrow money to buy a home or pay
for college but we cannot afford to take
on too much debt because the interest
is part of our day-to-day expenses and
cannot exceed our income.
In short, we separate our capital
budget from our operating budget.
Nearly every State, nearly every business, small or large, does exactly the
same thing. Everybody separates these
two budgets except for the Federal
Government. Just yesterday we proposed an amendment that said, let’s be
honest with the American people about
the budget process. Separate investment from daily operating expenses.
Do at the Federal level what has always been done in the States. But that
proposal, too, was rejected.
I support a balanced budget amendment, but I also share the belief that
we owe it to the American people to
tell them how we will do what the
amendment requires. We must not substitute political slogans for straight
talk. We must not cover up the reality
with rhetoric. We must not ask South
Dakotans, or any Americans, to trust
us or future Congresses if we are not
willing to give them good reason to do
so.
We cannot build a house of credibility if we do not produce the blueprint first. Neither can we build that
house without knowing what tools to
use. The American people have a right
to know how we are going to achieve a
balanced budget by the year 2002.
Two years ago when a Democratic
Congress cut $500 billion from the deficit, we gave the Congress and the
country a blueprint of our list of budget-cutting tools—page after page of
painful cuts. Everyone recognizes what
an unpopular vote that was, how difficult it was to make those choices, to
lay out with specificity, line by line,
item by item, exactly what we were
going to do over the course of the next
5 years to reduce spending by $500 billion. And because it was tough, because
it was specific, it passed by a single
vote.
Today the American people have the
same right to know. They have a right
to know what is in the plan. They have
a right to know whether the majority
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February 16, 1995
plans to cut Medicare, student loans,
or veterans benefits.
Our deficit reduction target is at
least $1.2 trillion—$1.2 trillion—over
the course of the next 7 years. It is not
going to get smaller, and with each
year of delay, it is going to be exacerbated. It is a daunting goal, we all recognize that, but we all recognize, too,
that it must be met.
The question, frankly, is how. How
are we going to do it? How are we going
to do what the speech by the majority
leader yesterday suggested? Are we
going to keep Social Security on the
table and talk about a debt that is only
$685 billion? Are we going to include
everything, put it on the table, recognize that if we are going to increase defense spending, if we are going to cut
taxes, if we are going to protect Social
Security and do all of this in the next
7 years, that we are going to do it using
the tools that we have available to us?
Americans have a right to know. We
have a responsibility to tell them.
I proposed the right-to-know amendment to the Constitution that would
both require a balanced budget and require Democrats and Republicans to
work together to draft a plan and make
it public. But the amendment was defeated, and the result will be that this
Congress will collectively say ‘‘no’’ to
being honest with the American people,
leaving us with only the hope—only
the hope—that we can accomplish our
goals. No blueprint, no mechanism in
place, no real plan. Just a hope that
somehow we can do something in 7
years that we have not been able to do
in decades.
Everyone would agree that the idea
of a balanced budget in the abstract
has universal support. But no budget is
balanced in the abstract. Budgets are
balanced in the context of existing circumstances. We have a new majority in
Congress that claims it will cut taxes,
increase defense spending and balance
the budget, but refuses to explain how
and refuses to guarantee that it will be
accomplished fairly.
Last year, I supported a balanced
budget amendment. This year, in this
context, I cannot.
Last year, a Democratic Congress
was committed to protecting Social
Security and Medicare. This year, the
new majority has been unwilling to do
so in law. Last year, Congress honored
the people’s right to know. Last year,
Congress was committed to an open,
honest debate about how to reduce
Government spending.
Last year, Congress leveled with the
American people. This year, the majority refuses to acknowledge Americans’
right to know.
This country is in need of a serious,
principled debate about our future and
our increasing national indebtedness.
It should be a debate about the
generational debt that we owe our children and how best to discharge it. It
should be a debate about the ways past
Government commitments to Americans will always be kept. It should be a
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February 16, 1995
debate about rational fiscal policy,
about consumption versus investment,
savings over spending, and all of the
elements that together make up a
sound basis for future economic
growth. It should be a debate about
what we hold to be most important
now and in the future.
That debate may never come. Yet, I
deeply hope it will come, and when it
does, I hope we will have an opportunity to write an amendment to the
Constitution that represents our best
effort, one which will stand the test of
time, a balanced budget amendment
that honors our past commitments,
protects our future investment, and
tells the American people the truth. It
must be a serious obligation, not merely a statement made of good intentions.
Finally, while I believe we need an
honest and fair balanced budget
amendment, I know we need an honest
and fair balanced budget even more.
We can and we must get immediately
to the real work of deficit reduction. I
know I speak for my Democratic colleagues when I say we are ready to
work with the majority right now to
develop a budget resolution that cuts
spending and balances the budget. It is
an effort which requires bipartisan cooperation as well as concentration.
So, Mr. President, whatever the fate
of this amendment, it is time for us to
work together to fulfill that promise
and renew the hope of all American
people that at long last—at long last—
we can accomplish what we all want
and what our children deserve.
I yield the floor.
Mr. LOTT addressed the Chair.
The PRESIDING OFFICER. The
Chair recognizes the Senator from Mississippi.
Mr. LOTT. Mr. President, I ask unanimous consent that I be allowed to proceed for up to 10 minutes as in morning
business.
The PRESIDING OFFICER. Without
objection, it is so ordered.
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BALANCED BUDGET AMENDMENT
Mr. LOTT. Mr. President, I listened
very carefully to the distinguished
Democratic leader’s remarks. I know
he is very serious about the issue of
debts and the deficit that we have each
year. I know he is serious about a constitutional amendment for a balanced
budget because he voted for it just 1
year ago. And I believe and certainly
hope that in the end, he will vote for
the balanced budget amendment this
year.
I believe this has been a very serious,
principled debate. This legislation,
which is identical to the balanced
budget amendment the Democratic
leader voted for last year, has been
carefully drafted. I remind my colleagues that it passed the other body
by a vote of 300 to 132—an overwhelming bipartisan vote after serious
consideration in the debate before the
House of Representatives. Our own
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Senate Judiciary Committee reported
it out after careful consideration on a
bipartisan vote.
A number of amendments have been
offered, considered, debated, and voted
on, and all of them have been defeated
by bipartisan votes. On one of the votes
yesterday, there were actually nine
Democrats who voted to table it, while
eight Republicans voted against tabling it. So we are having a very serious debate here with Members voting
their conscience.
We are now in the 18th day of debate
on this constitutional amendment for a
balanced budget. Last year, we had an
extended floor debate and a vote on
this exact amendment. I think the high
water mark, up until this year, for debate on a constitutional amendment
for a balanced budget has been about 11
days. So we certainly are giving it
plenty of time for thoughtful consideration. And because of delays in getting
an agreement when we might bring
this to a conclusion, we apparently will
still be on this amendment next week.
It will have been a full month that we
have taken to consider this legislation.
That is fine because, in the end, I believe we are going to pass it with a
good, strong bipartisan vote.
Let me quote some very strong words
in support of the balanced budget
amendment:
To remedy our fiscal situation, we must
stop spending beyond our means. This will
not require the emasculation of important
domestic priorities as some suggest.
In this debate on a balanced budget amendment, we are being forced to face the consequences of our inaction. Quite simply, we
are building a legacy of debt for our children
and grandchildren and hamstringing our
ability to address pressing national priorities.
Those are the words of the distinguished Democratic leader just last
year, February 28, 1994, in support of a
balanced budget amendment to the
Constitution.
With regard to the right to know, we
need to work together on this. We cannot say today everything that we are
going to do in a budget resolution this
year or next year or in 5 or 7 years. It
will depend on the Budget Committee,
the vote and actions on the floor of the
Senate. It will take all of us working
together, no matter where we are from,
what party or what philosophy.
With regard to the right to know,
this is what the distinguished Democratic leader said just last year:
Congress and the President will have 7
years to address the current deficit and
reach a consensus on our Nation’s budget
priorities. We will have time to find ways to
live within our means and still meet existing
obligations to our citizens, particularly the
elderly.
I agree.
But this year, we debated the rightto-know amendment, and it was rejected with 56 votes against it—again a
bipartisan vote.
With regard to protecting our seniors, minority leader DASCHLE last year
said:
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Requiring the Government to operate
within its budget does not mean * * * we
would be forced to renege on our current obligations to America’s seniors. For my part,
such a requirement would not lessen our
commitment to * * * protecting Social Security.
I agree. Last year, the minority leader also said:
By the year 2020, most of the baby boom
generation will have retired, and those retirees will be supported by a smaller working
population. In order to ensure that we can
meet our commitments to future retirees
without jeopardizing the standard of living
of working men and women, we must seek to
maximize economic growth during the early
21st century. Our current budget deficit is
eating away at that growth and undermining
our economic potential.
The point the minority leader made
last year is that if we do not have a
balanced budget amendment, if we do
not get our fiscal house in order, the
people who will suffer the most are our
seniors. So I think the minority leader’s comments—and I have many others—just 1 year ago on the constitutional amendment for a balanced budget were excellent. I agree with them. I
voted with him then, and I hope we are
going to vote together this time because this is exactly the same amendment we both voted for just last year.
I remind my colleagues, too, that
just 1 year ago when I offered an
amendment to try to block tax increases on Social Security retirees,
some of the same people who are now
pleading their concern for our seniors
and their Social Security benefits,
where were they when we were trying
to block on a bipartisan vote tax increases on their retirement benefits?
Where were they last year? Why were
they not worried about Social Security
retirees, Medicare and Medicaid, then?
Where were they last year when the
President proposed billions of dollars
in cuts in Medicare in his health care
proposal? President Clinton proposed
to cut Medicare by $124 billion over 5
years in his health care plan. And in
1993, the President cut $53 billion from
Medicare as a part of his tax bill. Were
they not worried about the seniors
then? Were they not worried about
Medicare then?
Look, the issue of right-to-know is
another red herring; it is simply an attempt to scare seniors about Social Security. It boils down to a very simple
question: Are you for a constitutional
amendment for a balanced budget or
not? If you are, you vote yes. If you are
not, vote no. And the people will know
how you feel about this. Are you prepared to explain how this year you are
against the balanced budget amendment but last year you voted for it?
Why? Is it because there is a different
majority? I cannot believe that.
We have an opportunity here to do
what is right for our country—to have
the additional pressure on Congress to
control spending, not raise taxes.
Everybody keeps saying, Oh, we reduced the deficit in 1993. The so-called
1993 deficit reduction bill was attempted to reduce the deficit through
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massive tax increases. We can move
this whole debate in a different direction. And I have been here through 22
years of trying to deal with the deficit—through
Gramm–Rudman,
through the Gang of 17, and through
the budget negotiations at Andrews Air
Force Base. Congress has tried time
and time again to balance the budget,
but we never quite carry through with
it.
We need this constitutional amendment for a balanced budget. The American people support it overwhelmingly.
This is our opportunity. And we must,
must find a way to come together to
pass it. I know it is going to be a bipartisan vote; one of our key proponents
of the balanced budget amendment has
been the distinguished Senator from Illinois, Senator SIMON.
The balanced budget amendment has
already passed the House. It is up to
the Senate. If we vote now, it goes to
the States. The people will have a
chance to decide. The only thing standing between the people’s opportunity
to vote on this and its passage is how
the Senate will vote.
I urge my colleagues, let us begin to
bring this to a conclusion. Let us quit
talking about red herrings. Let us face
up to the real issue and vote for a constitutional amendment for a balanced
budget.
Mr. DASCHLE addressed the Chair.
The PRESIDING OFFICER. The
Chair recognizes the minority leader.
Mr. DASCHLE. My friend, the distinguished Senator from Mississippi,
made reference to some comments I
made last year. Let me respond briefly
because I know there are others waiting.
I made them in earnest last year, and
I stand by them this year. Nothing the
Senator from Mississippi said with regard to my comments last year are any
less true this year. What I said then applies now, and that is my whole point.
If we are going to have a balanced Federal budget, good intentions are not
enough. It is not enough to just say we
are going to do it. We must be serious
about it, and that is the question.
When I made those comments last
year, we were serious, and we proved
we were serious with a $500 billion deficit reduction plan that laid out with
specificity exactly what we were going
to do.
Where is the plan this year? How are
we going to do it this year? On just a
hope, somehow the expectation that it
is all going to magically come together?
That is what we are saying. That is
why this right to know amendment is
so important.
The PRESIDING OFFICER. The
Chair might intervene for a moment to
say to the distinguished Democratic
leader, his time has expired under the
previous order, and the time is now
under the control of the acting majority leader. If he chooses to yield time
to the minority leader to complete his
remarks, up until 10 o’clock, he may do
so.
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Mr. LOTT. Mr. President, I know our
two leaders will be speaking at 10 a.m.
for 15 minutes each. Unless there is a
problem with his other colleagues, I
will be glad to yield the remaining 4
minutes to the leader to conclude his
remarks.
Mr. DASCHLE. I appreciate very
much the willingness of the whip to do
so.
The PRESIDING OFFICER. The
Democratic leader may proceed, then.
Mr. DASCHLE. Let me finish very
briefly.
Mr. President, I agree with exactly
what the distinguished Senator from
Mississippi said about what the issue
is, with the exception of one word. He
said the issue is very simply do we support a balanced Federal budget, a constitutional amendment to balance the
budget.
I think that is a legitimate question,
and the answer should be yes. But it
should not be are we willing to support
any constitutional amendment to balance the Federal budget, any constitutional amendment. The answer is no.
This is going to be with us for all perpetuity, all posterity, and if it is going
to be with us that long and if it is that
important and will have that far-reaching a consequence, we had better do it
right because we will not get a second
chance.
With that, again, I thank the Senator
for yielding, and I yield the floor.
Mr. LOTT. Mr. President, if I may respond.
The PRESIDING OFFICER. The
Chair recognizes the Senator from Mississippi.
Mr. LOTT. Again, I refer to the distinguished Democratic leader’s comments last year because they were so
persuasive then, and I believe they are
now. I will just quote these two paragraphs and yield the time for others.
Some of my colleagues feel, as does President Clinton—
This is Senator DASCHLE speaking.
that we can make these tough budget
choices without amending the Constitution.
I wish they were right, but history indicates
they are not.
By adding a balanced budget amendment
to the Constitution, we as a nation are embracing the principle that government
should not spend beyond its means. This is a
principle worthy of inclusion in the document that sets forth the limits of governmental power and protects the rights of individual citizens.
Those are the words of Senator
DASCHLE, the distinguished Democratic
leader. They were only 1 year ago.
They were right then, and they are
right now. We must pass this balanced
budget amendment.
The PRESIDING OFFICER. The
Chair recognizes the Senator from Alabama.
Mr. HEFLIN. I ask the minority leader if he will yield me about 6 minutes
of time to speak on the Iwo Jima anniversary.
Mr. DASCHLE. Mr. President, I will
be happy to yield to the Senator from
Alabama.
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February 16, 1995
Mr. LOTT. Mr. President, may I inquire whether this would be from the 15
minutes the leader has?
Mr. DASCHLE. That would be my expectation, that I will yield 6 minutes I
have available on the cloture vote to
the Senator from Alabama to speak on
an issue of his choosing.
The PRESIDING OFFICER. The
Chair recognizes the Senator from Alabama.
f
THE DEADLY BATTLE ON IWO
JIMA
Mr. HEFLIN. Mr. President, I rise
today to remind Americans of one of
the costliest battles of World War II,
and the sacrifices made by the men of
the United States Marine Corps. This
Sunday will be the 50th anniversary of
the Marine Corps landing on Iwo Jima,
a place where, as Admiral Nimitz said
‘‘Uncommon valor was a common virtue.’’
After 36 days of fighting and at a cost
of 6,821 Americans killed and 19,217
wounded, the island was captured. The
cost to the Japanese defenders was
over 22,000 lives. Only about 1,000 Japanese survived the battle.
The Japanese had long prepared for
the February 19, 1945, invasion. After
the battle was over, it was revealed
that the enemy had constructed 642
blockhouses, pillboxes, and other gun
positions. The marines landing on Iwo
Jima were certainly stepping into the
very jaws of the enemy—and I might
say, the very jaws of hell.
At 9 o’clock in the morning, the massive assault wave of the 4th and 5th
Marine Divisions hit the beach at Iwo
Jima. A Japanese observer watching
the drama unfold from a cave on the
slopes of Mount Suribachi reported:
‘‘At 9 in the morning, several hundred
landing crafts with amphibious tanks
in the lead rushed ashore like an enormous tidal wave.’’ Within minutes,
6,000 marines were ashore, and initial
casualties were lighter than expected.
Then the pounding started as the
Japanese commander unleashed hundreds of heavy artillery pieces, giant
mortars, rockets, and antitank weapons that had been carefully arranged
around the landing beaches now
clogged with troops and materials. The
ensuing bombardment was as deadly
and terrifying as the marines had ever
experienced. Casualties mounted appallingly on what would become the
costliest single day in the U.S. Marine
Corps history. By the day’s end, nearly
2,500 Marines were killed or wounded.
Typical of the marine heroism and
sacrifice of that first day on Iwo Jima,
and not unlike what I had witnessed
while serving in the Marine Corps with
the 9th Regiment in the Pacific, were
the actions of legendary Marine Gunnery Sergeant John Basilone. ‘‘Manila
John,’’ as he was fondly called by his
fellow marines, had been awarded the
Congressional Medal of Honor in recognition of his outstanding heroism at
Guadalcanal. On Iwo Jima, Basilone
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single-handedly destroyed a Japanese
blockhouse while braving the deadly
assault of enemy heavy caliber fire.
For his exploits he was posthumously
awarded the Navy cross.
The battle for Iwo Jima raged for 36
long days, and on many days the advances of the American forces could be
measured in yards. Though I was not
there because I was recovering from a
wound I received during the battle of
Guam, my outfit, the 3rd Division,
served as the floating reserve for this
battle.
Entering the fray on February 21,
when the fighting was at its worst, the
soldiers of the 3rd Marine Division
were tasked with clearing the central
plateau of the island. This area held
many prepared enemy defensive positions, but very little cover for the advancing Marines. By the time the plateau was taken, the regimental casualties exceeded 50 percent. Some companies suffered casualty rates in excess of
200 percent, including my old company,
A Company, of the 9th Regiment.
Considering the magnitude of these
casualties, one may wonder what drove
these men to carry on. From my own
experience, I would say these men drew
their strength from the support of
their fellow marines, an esprit de corps
that is unique in military history, and
the knowledge that taking this island
was important to the war effort. Most
important, however, they fought because they knew they had to fight.
They had to take that hill, that they
had to take that island. The Commander in Chief had said it, and these
men knew it in their hearts, victory
was the only way home.
On March 26, 1945, finally, the Japanese were defeated and the island was
ours.
On Sunday, the 50th anniversary of
the landing on Iwo Jima, approximately 5,000 survivors of the battle will
gather at the Iwo Jima Memorial here
in Washington to remember and to pay
reverence to those who gave their lives.
Mount Suribachi, and the flag raising
on that mount, stands as a symbol of
the courage of the U.S. Marine Corps.
Mount Suribachi was 556 feet high. It
bristled with over 200 guns, and 21
blockhouses. It had to be taken, because it was delivering devastating fire
on the beaches and to the marines that
were below. The marines assigned were
willing to risk their lives for the sake
of their comrades and their country.
So, through personal courage and esprit de corps, on February 23 the Japanese defending Mount Suribachi were
overcome and the Stars and Stripes
were raised.
And as the flag was raised on that
mount, it gave additional strength to
the marines below to move forward, on
to victory. We salute the survivors of
Iwo Jima and wish them well as they
commemorate that very important
battle of World War II.
The PRESIDING OFFICER (Mr.
INHOFE). The Democratic leader.
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THE CLOTURE VOTE
Mr. DASCHLE. Mr. President, at
10:30, in less than 25 minutes, there will
be a vote on the majority leader’s cloture motion. I want to take a couple of
minutes to comment on that prior to
the time we vote.
I regret we have to take a vote at
this time. I believe, frankly, as I said
the other day, it is unnecessary. I am
concerned that it sends the wrong message to the American people about how
seriously we consider the process of
amending the U.S. Constitution.
The implicit suggestion behind the
motion is that shutting off debate on
this very serious and complicated issue
is necessary because Democratic Senators are filibustering the balanced
budget amendment and obstructing the
debate, when the truth is just the opposite. There is no filibuster here. There
have been very few quorum calls over
the last several days. The Senate floor
has been busy, virtually every minute.
Senators have been on the floor. They
have been here offering amendments,
debating the issues. They have been
busy doing exactly what we are all
elected to do, to consider carefully
some of the most far-reaching issues
that they and the American people
face.
Democratic Senators have not employed dilatory tactics. To the contrary, we have offered legitimate and
very serious amendments that ought to
be given serious consideration by all
Senators—several amendments that, in
my view, as I said just a moment ago,
would have made this particular balanced budget amendment much stronger. Unfortunately, the obstruction has
come from the other side. Every Democratic amendment has been tabled—
virtually along party lines. Anyone
who has been on or watched this debate
over the last several days knows very
well that the substance of these
amendments has been seemingly of little concern. They have been tabled, not
because of their content, but simply
because they were offered.
This issue is far too serious to simply
step aside and avoid the stampede.
Amending the Constitution is just
about the most serious step the Congress and States can take. It should
not be taken lightly. And it should reflect the most thoughtful and inclusive
debate that we have to offer. It should
reflect the best ideas we have to offer.
A vote to cut off this debate artificially is a vote to obstruct that
thoughtful and inclusive process. It is
premature, it is unnecessary, and,
under these circumstances, I view it as
a disservice to the American people.
It is also a direct threat to the rights
of all Democratic Senators, each of
whom have a right to offer amendments. As I said, there have been virtually no quorum calls; virtually every
amendment has been relevant. In recent days nearly every Democratic
Senator has agreed to a time limit on
the debate on his or her amendment.
And these have been important amendments.
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We debated, as we again talked this
morning, about the right to know, and
spelling out to the American people
how we are going to accomplish a balanced Federal budget—what kind of
blueprint we are going to use, what
kind of tools we will acquire and utilize
to accomplish a balanced budget in just
7 years.
We talked about Social Security and
the need to protect it, to take it off the
table to ensure that we are not going
to mask the size of the debt with the
size of the Social Security trust fund.
We talked about enforcement. Simply saying we are going to balance the
budget with no legal mechanism in
place to ensure that we are going to enforce what we say we are going to do
makes anyone wonder just how serious
we are about doing it in the first place.
We talked about the need to separate
operating capital from investments in
the future—how we do that in business,
how we do that in State governments,
how we need to compare apples and apples when we compare the Federal Government to the State government and
how a capital budget would allow us to
do that.
We talked about circumstances relating to natural disasters. The Senator
from California raised a very difficult
issue. How do we address serious problems relating to the disasters that
occur in every part of the country all
too frequently once we have a balanced
Federal budget?
It is very disconcerting that virtually every amendment was defeated
on a near party-line vote. Regardless of
the vote, there are many more very important, relevant amendments that deserve our careful consideration. Not all
amendments that are pending will be
offered. I know that mention was made
yesterday about how many amendments are still pending. Some of those
amendments were offered just to protect Democratic Senators in case there
is a cloture vote and it passes. We
know what happens when cloture votes
are filed. Amendments are also filed
simply to ensure that every Senator
has a right to protect himself or herself. That is really what has gone on in
the last couple of days. Senators want
to know that they have the opportunity to be involved in this debate and
to commit to a process by which these
issues can be raised. That is what filing
amendments is all about in situations
as we have this morning.
We may be able to come to some
agreement. In fact, I would almost ensure, to our colleagues on the other
side, that we will come to some agreement with regard to a finite list of
amendments and some way with which
to work through them as we have done
in several of our bills already this year.
The point is no one is trying to delay
a final vote. We know that the final
vote will come in the not too distant
future. But it is absolutely critical, especially on an issue of this importance,
that all Members have a right to be
heard.
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So this cloture vote is not necessarily reflective of how one will ultimately vote on the balanced budget
amendment. This vote is about whether Democratic Senators have a right to
raise legitimate issues that they believe would improve the amendment
before us.
So I certainly urge my colleagues to
reject the motion to invoke cloture at
this time.
I yield the floor.
Mr. HATCH addressed the Chair.
The PRESIDING OFFICER. The Senator from Utah.
Mr. HATCH. Mr. President, I have a
great deal of affection for the minority
leader, both as a person and as a leader. I think he is doing a very good job
for his side of the floor. I understand
that this is an important vote and that
it is more of a procedural vote this
morning. We all know how it is going
to turn out. But I will just say this. As
someone who has conducted a few filibusters in my 18 years, some of which
have been successful and some of which
have not, I know a filibuster when I see
one. I am sure the distinguished minority leader does not feel that his side is
filibustering or the opposition to the
amendment is filibustering. But last
evening, for instance, we wanted to go
to one more amendment before the
evening was up. We could not find one
person to offer an amendment that we
could vote on that evening.
Be that as it may, I am not going to
criticize what the distinguished minority leader has said, and we will have
more days of debate. That is only fair.
This is a very, very important amendment. And it involves the future of our
country. It involves the future of our
children and our grandchildren. It is
going to make a difference, if we pass
it, whether our children and grandchildren have a future. If we do not
pass it, I just say, ‘‘Katie, bar the
door.’’
Just to make that point a little bit
better, we are now in our 18th day on
this amendment. There are very few
things in the history of the Senate that
take 18 days. We are now in our 18th
day on our balanced budget amendment debt tracker, the increase as we
debate. There is a $4.8 trillion national
debt that we start with, and we are
now in our 18th day. I will put up the
information indicating the additional
debt that is going to accumulate by the
end of this day for the taxpayers to pay
and pay interest on it. It is almost $15
billion, just the amount of debt that
has accumulated since we started 18
days ago.
Mr. President, what about the vote
to bring this debate to a close? I think
we need to stop talking and start working on getting our fiscal house in order
by passing the balanced budget amendment and working together to balance
the budget. The American people want
and need us to do this.
Mr. President, our large national
debt and the yearly deficits that help it
grow hurt real people, average working
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people all across our country. And continuing down the path we are on will
only make matters worse for all of us
and our children.
Last week there was an article in the
Washington Post by James Glassman,
a person I have a great deal of regard
for, who I believe did an excellent job
of stating in an understandable way
how and why the deficit hurts the average working American. He called this
discussion ‘‘The Plain English Guide to
the Federal Budget,’’ and it began with
the sage assertion that ‘‘Big deficits
can make you poor. They tend to retard the growth of the private sector,
raise interest rates, and weaken our
economy.’’
We are talking about $15 billion just
in the 18 days that we have debated
here. We are fiddling while the country
is burning. That is really what is happening.
He says, ‘‘They tend to retard the
growth of the private sector, raise interest rates, and weaken our economy.’’
This is exactly why we need the balanced budget constitutional amendment—because Congress’ fiscal madness is destroying the ability of the
working American to make enough
money to survive.
Every year hard-working Americans
pay the price for our profligacy. The
Tax Foundation has calculated that in
1994 the average American worked from
January 1 to May 5 just to pay his or
her taxes—January 4 to May 5. They
did not get to keep 1 cent of the money
they earned until May 6. Is not that incredible? Put another way, in an 8-hour
work day, the average American works
the first 2 hours and 45 minutes just to
pay taxes. So for 8 hours we are working almost 3 to pay taxes. This is bad
enough. But it is not the end of the
story.
The increasing Federal debt will
force us to raise taxes to astronomical
rates just to keep the country solvent.
The National Taxpayers Union has estimated that a child born today, on average, will pay over $100,000 in extra
taxes over the course of his or her lifetime just to pay the interest on the national debt which accumulated in the
first 18 years of that child’s life. Just
think, Mr. President. By the time the
child becomes old enough to vote—I am
talking about our children and our
grandchildren—there will be a $100,000
tax bill looming on his or her horizon.
And that is only to pay the interest on
the debt accumulated in that child’s
first 18 years. That is pathetic. That is
the legacy we are leaving to our children and grandchildren.
The National Taxpayers Union has
determined that for every year we endure another $200 billion deficit—and
the President’s budget says we are
going to endure them ad infinitum, $200
billion budget deficits for 12 years—for
every year that we endure that, it costs
the average child over $5,000 over his or
her lifetime—every year we do that.
Mr. President, the budget submitted
by President Clinton projects $200 bil-
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February 16, 1995
lion deficits for each of the next 5
years—actually, each of the next 12
years. By conceding defeat on deficit
reduction, President Clinton is condemning every child in America to an
additional $25,000 in taxes racked up
just over the next 5 years. There is no
refuting that unless we do something
about it. We are, too, as a Congress,
unless we do something about it and
change.
But the bad news about the debt does
not end there either. The Competitiveness Policy Council has shown that rising budget deficits have led to a 15 percent decline in real wages in the last 15
years, and the National Taxpayers
Union has further calculated that in
the next 45 years, unless we get spending under control, after-tax incomes
will rise over that 45 years, cumulatively rise, $125—average incomes—unless we get the debt under control or
our spending under control. Can you
imagine? In 45 years the most you are
going to get out of the whole 45 years
is an additional $125. That is not a
year; that is over 45 years.
These deficits are strangling middleclass Americans throughout our country. How can people expect to bear the
burden of stagnating wages and higher
tax rates?
We simply cannot continue blindly
down this road to economic oblivion.
Look at those 18 days on the chart; 18
days, just going up like that. That is
the debt that is accumulating while we
fiddle here in Washington.
We must get the Government spending under control, and the only way to
do that is to change the way Congress
does business with a permanent unavoidable rule, and the only rule we
can get is the balanced budget amendment. It will force Congress to consider
the costs as well as the benefits of
every program in the Federal Government. We will lower the unbelievable
amount of Government spending and
bring the deficit under control.
All other attempts to balance the
budget have failed, and they have
failed miserably. Over the full 19 years
I have been here, we have had attempt
after attempt, and they have all failed
because they have been statutes and
the minute somebody passes a 51-percent majority vote, they are changed.
Every year the debt grows, relentlessly
sapping the life of the American economy as it does. Under the President’s
latest plan, the debt is going to grow—
under his best assertions, and these are
assuming optimistic assertions—another $1 trillion. By the end of the next
5 years we will be over $6 trillion in
debt, and we are complaining about $4.8
trillion now. Because it is going up almost $1 billion a day, we will be $6 trillion in debt. His budget is not an attempt to reduce the deficit. It is a recognition that unless we change the
budget process to eliminate Congress
spending bias, it is going to be impossible to reduce the deficit.
Mr. President, we have the opportunity to make a historic change here.
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We can pass the balanced budget
amendment and preserve the future for
our children, our grandchildren, and
this country. We can stop this runaway
Federal train of spending and taxing
that is out of control right now. I urge
my colleagues to support the balanced
budget amendment today so that we
and our children will have a prosperous
tomorrow.
This morning will end our third full
week of debate on this amendment. We
started debate on the subject matter
even before the bill was brought to the
floor during the unfunded mandates debate. We have had 11 votes on amendments and spent 14 days on floor debate
on this constitutional amendment so
far, more than we have ever spent debating a balanced budget amendment
before. Back in 1982, which was the
next toughest debate, we debated 11
days before passing the balanced budget amendment by 69 votes. I hope that
our longer debate this year will mean
our margin of victory will be proportionately higher.
As we have said, every day while we
talk, the debt we leave our children
and grandchildren continues going up
to a shocking point. This must end and
must end soon. Mr. President, let us
tell the American people in this cloture vote when we will stop talking
and start acting to bring this country
to fiscal sanity. Let us pass the balanced budget amendment to the States
for ratification and get on with balancing the budget.
We have had 11 votes, and every one
we have won on a bipartisan vote.
Democrats and Republicans have voted
with us, every one. There is nothing
partisan about this. Anybody who tries
to say this is a partisan debate just has
not watched it and has not looked at
the voters and has not realized that
this balanced budget amendment is a
bipartisan consensus, a Democrat-Republican effort, to save our country,
and to help our children and grandchildren have the futures that we all
had when we were born.
I was born in poverty. We did not
have indoor facilities. We lost our first
home shortly after I was born. We did
not have indoor facilities in the second
home for years. I thought all homes
were kind of brown and dark because
my dad built our home out of a torndown old burnt-out building. Frankly, I
thought everyone had a Pillsbury flour
sign on the side of their home. I
thought that was a pretty unique
thing, and it really was.
To make a long story short, I had a
future even though I was born in the
Depression, because Congresses had not
run the country totally into the ground
from a national debt standpoint. But
we have done it now, and we have to
change our way of doing things around
here.
I emphasize again that the first vote
was 56 to 44. There were a number of
Democrats voting with us. The Dole
amendment passed 87 to 10, a lot of
Democrats. The Reid amendment was
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defeated on a motion to table, 57 to 41,
a lot of Democrats with us. The next
was 70 to 28, a lot of Democrats. Then
66 to 32, 52 to 45, Senator HOLLINGS,
that was a close vote. Still a number of
Democrats helped to defeat that. Then
59 to 40, 59 to 40, and 52 to 47 last night;
eight or nine Democrats voted with us
on that. Then 51 to 38, 61 to 33, the last
vote, and a lot of Democrats voted on
that. This is a bipartisan effort. There
is no reason for a filibuster or delay
here. There is no reason not to get
about business. There is no reason not
to come up with amendments when the
time comes.
I am willing to proceed and happy to
proceed in any way our colleagues
want to do this. But do not try to
present this as partisan, a DemocratRepublican difference here. This is a
bipartisan effort. We have made it
that. I am proud of my Democratic colleagues that are standing up on this
amendment. All we need are 15 to stand
up and we will pass this, 15 out of 47.
That is all we need. Gee, there ought to
be 15 Democrats in the Senate out of 47
who will help us. I know of 13. I think
I know of 14. Who is going to be that
15th vote, or the one that defeats this,
if that is what happens? I do not believe it will.
I do not believe that our colleagues,
when we put forth this kind of a bipartisan, heartfelt, eager effort, are going
to shoot this down for the one time in
history, after the House of Representatives had the guts to pass it, with the
help of I believe 78 courageous Democrats in the House. We need 15 courageous Democrats here and I think we
will get them. I believe we will get
them, because this is the time in history when we can make a statement
against what has been going on, this
runaway train of Federal spending, this
abdication of responsibility, this rejection of our children’s and grandchildrens’ future. Let us do something
about it and quit talking partisan politics, and let us work together to get it
done.
To the extent that this delay and a
final vote will continue after today, let
us do the best we can to bring up as
many amendments as we can and debate them, and we are happy to do
that. I think the debate has been
healthy. I commend Senators on both
sides of the aisle for the excellent debate they have given to us, and I hope
our colleagues will vote for cloture
today so that we can end the delay and
have the responsible amendments that
are left brought up. And let us vote on
them and then let us pass the balanced
budget amendment for the benefit of
everybody—Democrats,
Republicans,
all loyal Americans—but most of all,
for our children and grandchildren.
f
BALANCED BUDGET AMENDMENT
TO THE CONSTITUTION
The PRESIDING OFFICER. The Senate will resume consideration of House
Joint Resolution 1, which the clerk
will report.
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The bill clerk read as follows:
A joint resolution (H.J. Res. 1) proposing a
balanced budget amendment to the Constitution of the United States.
The Senate resumed consideration of
the joint resolution.
Ms. MIKULSKI. Mr. President, I rise
today to oppose invoking cloture on
the balance budget amendment. Mr.
President, the Senate should not rush
to finish this measure—we are amending the Constitution of the United
States and there is still much we do
not know. We still do not know the impact of the balanced budget amendment on Social Security, Medicare, and
many other vital programs. I am voting to continue with robust and vigorous debate so the American people
fully understand the ramifications of
what we are doing and how it will affect their lives.
Mr. HATCH. Mr. President, I suggest
the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. HATCH. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without
objection, it is so ordered.
f
CLOTURE MOTION
The PRESIDING OFFICER. Under
the previous order, the hour of 10:30
a.m. having arrived, pursuant to rule
XXII, the Chair lays before the Senate
the pending cloture motion, which the
clerk will state.
The bill clerk read as follows:
CLOTURE MOTION
We the undersigned Senators in accordance
with the provisions of rule XXII of the
Standing Rules of the Senate do hereby
move to bring to a close debate on House
Joint Resolution 1, the constitutional balanced budget amendment:
Bob Dole, Orrin G. Hatch, Larry Craig,
Trent Lott, Bill Frist, R.F. Bennett,
Kay
Bailey
Hutchison,
Alfonse
D’Amato, Jon Kyl, Fred Thompson,
Ted Stevens, Olympia J. Snowe, John
Ashcroft, Craig Thomas, Conrad Burns,
Mike DeWine, Judd Gregg, Rick
Santorum, Rod Grams, Lauch Faircloth.
f
CALL OF THE ROLL
The PRESIDING OFFICER. By unanimous consent, the quorum call has
been waived.
f
VOTE
The PRESIDING OFFICER. The
question is, Is it the sense of the Senate that debate on House Joint Resolution 1, the balanced budget amendment
to the Constitution, shall be brought to
a close? The yeas and nays are required.
The clerk will call the roll.
The bill clerk called the roll.
Mr. LOTT. I announce that the Senator from Kansas [Mrs. KASSEBAUM] is
necessarily absent.
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The PRESIDING OFFICER. Are there
any other Senators in the Chamber
who desire to vote?
The yeas and nays resulted—yeas 57,
nays 42, as follows:
[Rollcall Vote No. 74 Leg.]
YEAS—57
Abraham
Ashcroft
Bennett
Bond
Brown
Burns
Campbell
Chafee
Coats
Cochran
Cohen
Coverdell
Craig
D’Amato
DeWine
Dole
Domenici
Faircloth
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hatch
Hatfield
Heflin
Helms
Hutchison
Inhofe
Jeffords
Kempthorne
Kohl
Kyl
Lott
Lugar
Mack
McCain
Akaka
Baucus
Biden
Bingaman
Boxer
Bradley
Breaux
Bryan
Bumpers
Byrd
Conrad
Daschle
Dodd
Dorgan
Exon
Feingold
Feinstein
Ford
Glenn
Graham
Harkin
Hollings
Inouye
Johnston
Kennedy
Kerrey
Kerry
Lautenberg
McConnell
Murkowski
Nickles
Packwood
Pell
Pressler
Roth
Santorum
Shelby
Simon
Simpson
Smith
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Warner
NAYS—42
Leahy
Levin
Lieberman
Mikulski
Moseley-Braun
Moynihan
Murray
Nunn
Pryor
Reid
Robb
Rockefeller
Sarbanes
Wellstone
NOT VOTING—1
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Kassebaum
The PRESIDING OFFICER. On this
vote, the yeas are 57, the nays are 42.
Three-fifths of the Senators duly chosen and sworn, not having voted in the
affirmative, the motion is rejected.
Under the previous order, the Senator from West Virginia is recognized
to offer an amendment.
Mr. BYRD. I thank the Chair. Mr.
President, it is my understanding that
the Senator from Nevada [Mr. BRYAN]
wishes to speak for not to exceed 7
minutes. I ask unanimous consent that
I may yield to the distinguished Senator for that purpose, not to exceed 7
minutes, and that I retain my right to
the floor.
The PRESIDING OFFICER. Without
objection, it is so ordered. The Senator
from Nevada is recognized for 7 minutes.
Mr. BRYAN. I thank the Chair.
(The remarks of Mr. BRYAN pertaining to the introduction of S. 429 are
located in today’s RECORD under Statements on Introduced Bills and Joint
Resolutions.)
The PRESIDING OFFICER (Mrs.
HUTCHISON). The Senator from West
Virginia.
Mr. BYRD. Madam President, I
thank the Chair.
May I take just a moment here to
compliment the Republican Senators
who have been sitting in the chair from
the very beginning of this session. In
the main, I think they have done very
well. They have presided over the Senate with dignity, except in a few cases
when there probably ought to be a lit-
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tle less talking up there at the desk because the cameras are often focused
right on that desk. State legislators,
professors, students, and the people at
large expect this Senate to be the premier deliberative body in the world. It
is not a State legislature. And I do not
say that to cast any aspersions on
State legislatures. I have been a member of both houses many years ago in
West Virginia.
Generally speaking, the presiding officers have been alert and have been
paying attention to the debate, as they
should.
Madam President, the original Constitution and the amendments heretofore adopted serve two basic functions: One, they create a structure of
government and establish three departments thereof: the Legislative, the Executive, and the Judicial, and they allocate the powers of government
among the three branches of the Federal Government and between the two
Houses of Congress.
The Constitution also prohibits the
States from taking certain actions, and
all powers that are not delegated to the
Congress by the Constitution shall be
reserved to the States or the people.
So this is a Constitutional system,
with checks and balances and a separation of powers, thus establishing an
equilibrium between and among the
three departments—the Legislative,
the Executive, and the Judicial.
Two, the original Constitution and
the amendments thereto, protect the
most fundamental individual rights,
such as life, liberty, and property; free
speech; freedom of assembly; freedom
of religion; freedom of the press; and
equal justice under law.
So the Framers wisely left the determination of fiscal policy to the elected
representatives of the people. Deciding
when or whether to balance the budget,
and whether and when to risk a deficit,
calls for a judgment of policy, the kind
of political judgment left by the
Founding Fathers to the majoritarian
processes of representative democracy.
The Constitution and the amendments
thereto do not undertake to resolve
questions of fiscal policy. And for 206
years, that Constitution has not been
amended to include fiscal policy.
Under the constitutional amendment
that the Senate has been debating,
such a judgment of fiscal policy, and
when or whether to apply countercyclical measures would, to a considerable degree, be inhibited. Section 3 of
the amendment, for example, would
fetter and hamstring the President in
the proper exercise of his powers.
Let me read section 3 of the proposed
amendment to the Constitution.
I quote. This is section 3, from the
constitutional amendment to balance
the budget.
February 16, 1995
Section 3. Prior to each fiscal year, the
President shall transmit to the Congress a
proposed budget for the United States Government for that fiscal year in which total
outlays do not exceed total receipts.
stitution, by virtue of section 3, would,
if adopted, hamper the President. It
would fetter the President. It would
hamstring the President in the proper
exercise of his powers by requiring him
to submit a balanced budget even
though he may consider a deficit to be
necessary as a countercyclical measure
to combat a recession that may be already underway. Countercyclical stabilizers are rendered even more difficult
in a period of economic decline by the
requirement of a supermajority vote to
waive the section 1 mandate for a balanced budget in every fiscal year. Such
requirement for a supermajority can
prove to be a very troubling recipe for
gridlock.
The amendment now being debated
by the Senate provides that outlays in
any given year shall not exceed receipts; that Congress may appropriate
money in excess of anticipated revenues only by a three-fifths vote of the
full membership of both Houses, and
not by lesser majorities; that Congress
may enact revenue increases only by
majority votes of the full membership
of both Houses on rollcall votes, and
not by lesser majorities.
Let me state that again.
The constitutional amendment that
is before the Senate requires that Congress may enact revenue increases only
by majority votes of the full membership of both Houses—of both Houses—
on rollcall votes.
In other words, in the Senate that
would mean by no less than 51 votes
and in the House that would mean no
less than 218 votes.
The amendment also provides that
Congress may raise the ceiling on the
national debt, but only by a threefifths vote of the full membership of
both Houses, and not by lesser majorities.
Justice Oliver Wendell Holmes was
right when he warned that the Constitution ought not ‘‘embody a particular economic theory.’’ In keeping
with that wisdom, the Framers remitted Federal fiscal policy, not to special
supermajorities, but rather to the crucible of ordinary majoritarian democratic politics. Article I, Section 8,
Clause 1, gives Congress the power to
tax and spend for the common defense
and general welfare, and to borrow
money on the credit of the United
States—all obviously by simple majorities.
So basic is the majoritarian premise
of Article I of the United States Constitution that it is barely mentioned,
except for the statement in Article I,
Section 5, Clause 1, that ‘‘a majority of
each House shall constitute a quorum
to do business.’’ The contemporaneous
history supports the majoritarian
premise, for the Framers entertained,
but rejected, the idea requiring that ordinary legislation on any particular
subject matter be passed by a supermajority. For example, Alexander
Hamilton, in the Federalist No. 22,
warned:
I think it is important that we recognize that this amendment to the Con-
To give a minority a negative upon the
majority—
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Which is always the case where more
than a majority is requisite to a decision—
is, in its tendency, to subject the sense of the
greater number to that of the lesser number.
. . . The public business must in some way or
other go forward.
This is Hamilton speaking.
If a pertinacious minority can control the
opinion of a majority respecting the best
mode of conducting it—
Meaning the public business.
the majority, in order that something may
be done, must conform to the views of the
minority; and thus—
Says Hamilton.
the sense of the smaller number will overrule
that of the greater, and give a tone to the
national
proceedings.
Hence,
tedious
delays—continual negotiation and intrigue—
contemptible compromises of the public
good. . . . For upon some occasions, things
will not admit of accommodation; and then
the measures of government must be injuriously suspended or fatally defeated. It is
often, by the impracticability of obtaining
the concurrence of the necessary number of
votes—
This is Hamilton speaking. Let me
begin again that sentence.
It is often, by the impracticability of obtaining the concurrence of the necessary number
of votes, kept in a state of inaction. Its situation must always savour a weakness—sometimes border upon anarchy.
That was Alexander Hamilton. Where
are all these Senators who are proponents of this amendment? It would
not hurt them to hear the Constitution
read today, from the beginning to the
end. I do not intend to inflict that kind
of punishment on them, but they certainly would do well to read and to
hear read those portions of the Constitution which impact upon this constitutional amendment on the balanced
budget.
Madison added his warning against
supermajorities, in the Federalist No.
58:
It has been said that more than a majority
ought to have been required for a quorum,
and in particular cases, if not in all, more
than a majority of a quorum for a decision.
. . . [But] . . . In all cases where justice or
the general good might require new laws to
be passed, or active measures to be pursued,
the fundamental principle of free government would be reversed. It would be no
longer the majority that would rule;
This is Madison speaking.
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the power would be transferred to the minority. Were the defensive privilege limited to
particular cases, an interested minority
might take advantage of it to screen themselves from equitable sacrifices to the general weal, or in particular emergencies, to
extort unreasonable indulgences.
That is Madison.
That is James Madison. He referred
to particular emergencies and the
supermajorities that are included in
this nefarious constitutional amendment to balance the budget to deal
with ‘‘particular emergencies.’’ I am
using Madison’s words—‘‘particular
emergencies.’’.
Let me read again what Madison
said.
Were the defensive privilege limited to particular cases, an interested minority might
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take advantage of it to screen themselves
from equitable sacrifices to the general weal,
or in particular emergencies, to extort unreasonable indulgences.
Where are the proponents of this
amendment? Why do they not interrogate James Madison? Why do they not
hearken to his words and Hamilton’s
words? No. They do not want to hear.
As was said in Homer’s Iliad, ‘‘Not if I
had 10 tongues and 10 mouths, a voice
that could not tire, lung of brass in my
bosom,’’ would they hear me. They
have eyes that cannot see and ears that
cannot hear, and minds that are unwilling to comprehend the warnings of
the Framers of the Constitution.
Should one conclude that they pretend
to be wiser men than those who wrote
the Constitution?
Mr. President, the balanced budget
amendment would reject the wisdom
both of Hamilton and Madison by
adopting supermajority requirements
that would transfer power from majorities to minority factions. And George
Washington in his Farewell Address
warned against parties and factions.
Sections 1 and 2 of the constitutional
amendment to balance the budget
would require that deficit spending and
increases in the statutory debt limit be
approved by three-fifths of the whole
number of each House. Section 4 would
impose a minisupermajority requirement, in that revenue increases must
be authorized by a majority of the
whole number of each House. Meaning
in the Senate, 51 votes would be required to increase revenues, and in the
House 218 votes would be required, 217
would not be enough, 218 votes would
be required to pass legislation in the
House to increase revenues—rather
than, as is usual, by a majority of
Members present and voting. Were the
Framers wise? To ask the question is
to answer it. This minisupermajority
that is required for revenue increases
flies in the face of Madison’s warning
against a requirement of ‘‘more than a
majority of a quorum for a decision.’’
Defenders of the balanced budget
amendment often say, what is so bad
about supermajority requirements?
After all, the Senate in its own rules
requires a supermajority for cloture on
filibusters. So why is it so bad to have
in the Constitution a requirement of a
supermajority? The proponents also
refer to the supermajorities that are
mentioned in the Constitution and the
amendments thereto. But these existing supermajority requirements furnish no precedent for those in the balanced budget amendment, for they are
fundamentally different in kind.
Rules on parliamentary procedures
that the Senate adopts for its own governance are surely no model for an alteration of the Nation’s fundamental
charter. Anybody who argues that
point simply does not, and has not
stopped to think, knows very little
about the Senate rules, and very little,
in all likelihood, about the Constitution. Such rules of the Senate can be
changed by the Senate acting itself
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alone, and are not comparable to an
amendment to the Constitution, which
requires the support of both Houses of
Congress by a two-thirds vote and
three-fourths of the State legislatures
for adoption.
Although the Constitution does impose some supermajority requirements,
it does so quite sparingly, and only for
good reasons, namely, to provide one
branch a check upon another branch
—for example, treaty ratification and
veto overrides. In the case of a treaty
approval, the legislative branch—one
component thereof; namely, the Senate—acts as a check upon the executive, in the ratification of treaties that
bind this Nation in its relations with
other nations. It is a check and balance. A supermajority is also required
for a veto override, and again provides
a check and balance between the executive and the legislative branch. One of
the Framers stated that the one reason
for the veto itself was that the President, the Executive, could provide protection for himself and his office,
against the legislative branch. So he
was given the veto. That is check and
balance. Other supermajorities in the
original Constitution were to protect
individual rights. For example, in the
case of the expulsion of a Member of
the Senate or of the House, a Member
cannot be expelled by a simple majority. It requires two-thirds of the Senate to expel a Senator, two-thirds of
the House to expel a House Member.
These supermajorities are provided for
the protection of individual rights, the
individual rights of the Members of the
two bodies, else a simple majority
could expel Members of the minority,
get rid of them, send them home, expel
them by a simple majority. A supermajority is there for the protection of
the individual rights of the elected representatives of the people.
The same is the case with impeachment. Were there not a supermajority
required, then an impulsive and partisan majority in the Senate could convict a President in an impeachment
trial. That almost happened with Andrew Johnson, as we all know. So that
supermajority is required to protect individual rights, the rights of a President, the rights of other officers who
may be impeached, the rights of Federal judges who may be impeached. The
supermajority required in article V is
to insure that the fundamental charter
of this Republic not itself be too freely
amended.
Amending the Constitution is provided for, but the Framers wisely established that amendments not be
adopted and ratified too freely. Thus,
we have only seen 17 amendments
added to the original Constitution and
Bill of Rights. They were wise men.
Then there are certain other supermajorities. Amendment XII of the Constitution deals with the election of a
Vice President by the Senate. In the
14th amendment, a supermajority is required to waive the disability upon individuals who, having previously taken
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the oath of office to support the Constitution, later engage in rebellion
against the United States. It requires a
supermajority in both Houses to lift
that disability from such individual. I
am not against amending the Constitution. Our forefathers provide for that
situation, and I have voted for five constitutional amendments to the Constitution.
Hence, there are nine supermajorities
of one kind or another in the original
Constitution and the amendments
thereto. I think it is very unwise, however, to provide a constitutional
amendment that requires a supermajority in the enactment of a fiscal
policy.
There is one other supermajority,
and that is the supermajority written
into the original Constitution that
dealt with the matter of a quorum in
the election of a President when such
election is thrown into the House of
Representatives.
So there you have it. These are all
structural concerns or, as I say, they
provide basic protections for individual
rights. They are structural concerns
that deal with the structure of this
form of government as established by
the original Framers—and the States
and people thereof, who ratified the
Constitution—or they deal with rights
of individuals.
The supermajority requirements of
this balanced budget amendment embody no such structural concerns and
no protections of individual rights.
Rather, the supermajority requirements to the balanced budget amendment would for the first time in our
constitutional history—the first time
in 206 years—inject a minority veto
into the ordinary processes of the determination of fiscal policy within the
legislative branch. The danger of supermajority requirements in this policymaking context is that a minority of
either House can hold the legislative
agenda hostage, blocking majority
choices until the minority factions obtain the policy concessions that they
want. James Madison described this
very danger in Federalist No. 58, where
he warned that supermajority requirements permit the minority—permit the
minority—to ‘‘extort unreasonable indulgences’’ from the majority. In the
business of budget balancing, permitting such minority vetoes might actually be counterproductive if it fostered
minority demands for expensive pet
programs as the price of deficit spending authorizations.
The rules laid down, therefore, are
those of parliamentary procedure,
which may belong in the rules of the
Senate and the House of Representatives, but not in the Constitution. To
insert parliamentary rules into the
Constitution cheapens—cheapens—that
basic charter and erodes the respect
upon which its vitality and usefulness
depend.
There would be years in which threefifths majorities of the full membership of both Houses of Congress author-
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ized spending in excess of receipts, and
there would be years in which expenditures outran receipts because actual
receipts fell short of honest and careful
estimates, or because actual expenditures exceeded the best and most careful estimates. As these deficit years
occur down the road, what would be
the reaction of the citizens who supported this amendment and who were
told that the amendment would
produce a balanced budget each year?
The result surely would be disillusionment, cynicism, distrust of those who
govern, and loss of confidence in our
basic, fundamental, organic law: the
Constitution of the United States.
The operation of the budget, appropriations, and revenue processes are so
highly complex that disputes are bound
to arise. Forecasts with regard to both
receipts and outlays vary so widely
that violations of the requirement that
outlays shall not exceed receipts in a
given year are bound—bound—to occur.
I have shown that. I have shown
charts that demonstrate that fact time
and time again.
Old disputes about the separation of
powers, reminiscent of the impoundment controversy of the Nixon administration, would be reopened.
How many Senators here today were
Members of this body when that controversy occurred? Very few.
The powers of the executive vis-a-vis
the legislative branch will, in all likelihood, be substantially enlarged.
Who are the proponents of this balanced budget amendment? Are they
monarchists? Are they monarchists
who want to see the power shifted to
the executive? Do they want an allpowerful, imperial President?
To rivet into the Constitution this
amendment calling for a balanced
budget annually would be to Constitutionalize fiscal policy, and would give
rise to disputes cast in Constitutional
terms, which must either go unresolved
or bring the courts into the determination of fiscal policy. Few judges, if any,
have expertise in such matters as fiscal
policy, budgets, and appropriations,
and lack the experience to guide their
decisions. The courts would lack judicially manageable standards to guide
their decisions, and drawing the Judiciary into budgetary, appropriations,
revenue and other fiscal matters would
mean an intrusion—an intrusion—into
an area that Congress and the President have long regarded as their—
their—exclusive domain. As a result,
the stage would be set to injure the
prestige and authority of the courts, as
well as to impair the effectiveness of
the Judiciary in preserving the ancient
framework of republican government
and protecting the Constitutional liberties of the nation’s citizens. The people’s faith in both the Judiciary and
the Constitution would be seriously
damaged.
Hence, the implications of an amendment for the constitutional structure
of our Government and for the status
of our Constitution as partisan law
would be very, very serious.
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February 16, 1995
That is what this amendment is. It is
a partisan amendment. It is a political
amendment supported by a political
party. It is the Republican Party as of
today in the Senate and the House that
is pressing for this amendment. And
they want to do it now, do it here—‘‘Do
it now; do it here; we can’t wait’’—because they have it in their so-called
Contract With America. That so-called
contract is supposed to supplant the
Constitution when it comes to this
amendment.
Should the measure be enforced by
the judiciary, it would produce an unprecedented restructuring of the balance of power among the three
branches of Government. There are no
two ways about it. It would produce an
unprecedented restructuring of the balance of power among the three
branches of Government.
To crucify the Constitution upon the
cross of the so-called Contract With
America is of little consequence, provided you will give us the Barabbas of
temporary partisan and political gain!
That Constitution bears the stains of
blood from thousands of men and
women throughout the history of this
Nation—men and women who gave
their lives at Valley Forge, at Saratoga, at Yorktown, at Lexington, and
Concord.
Nathan Hale. Who is he? Never heard
of him. Who was Nathan Hale?
Well, Nathan Hale was a young man,
21 years of age, who was a schoolteacher.
He responded to General George
Washington’s request for a volunteer to
go behind the British lines and to bring
back the drawings of fortifications. Nathan Hale responded as that old patriarch did in biblical times, ‘‘Speak
Lord, thy servant heareth.’’ Nathan
Hale responded, knowing that that
task was fraught with danger and
might cost him his life.
He went behind the British lines, disguised as a Dutch schoolmaster. His
mission was almost finished when, on
the night before he was ready to return
to the American lines, he was discovered with notes and letters on his person, and he was arrested. The next
morning, on September 22, 1776, he was
brought before the gallows. He saw before him the gallows. He saw to one
side, the wooden coffin which would
soon claim his lifeless body. He requested a Bible. His request was refused.
The British officer, who was a major
by the name of Cunningham said, ‘‘Do
you have anything to say?’’ Nathan
Hale replied, ‘‘I regret that I have only
one life to lose for my country.’’ The
British officer angrily commanded,
‘‘String the rebel up,’’ and Nathan Hale
died. He only had one life to give for
his country.
Yet, there are some who are unwilling to give one vote for their country—
one vote. Not everybody sees this as I
do, of course. I see it through the context of many, many years of dedicated
service to this institution, having
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February 16, 1995
sworn 13 times to support and defend
the Constitution—13 times over a period of 48 years. Some of those who
support this amendment are undoubtedly—undoubtedly—sincere, and they
conscientiously believe that this is the
only way to get deficits under control.
But not all, I would say—and I attempt to be the judge of no man and no
woman, but I have talked with many
Senators around here on this matter,
and some have expressed strange reasons for not supporting this amendment. Some think that we ought to
just wash our hands of it, let it go to
the States. ‘‘The States will not ratify
it,’’ they say. Some say if the States
ratify it, the backlash will destroy the
Republican Party in time.
Madam President, we cannot say,
‘‘Let this cup pass from me.’’ Harry
Truman, even if he were in the White
House today, could not say, ‘‘The buck
stops
here.’’
This
constitutional
amendment does not stop on its way to
the President. It does not go to the
President’s desk. So where does the
buck stop? The buck stops here—right
here in the Senate.
I hope that Senators will think
again, those who may be guided by political motives to vote for this amendment. I hope they will think again. Nathan Hale gave one life, and thousands
have given their lives to sustain the
freedoms that are guaranteed by the
Constitution of the United States.
That Constitution, as I say, is stained
with the blood of thousands.
There is not one proponent of this
amendment
to
the
Constitution
against whom the blood of that Constitution will not cry out as loudly as
did the blood of Abel against Cain, if it
is adopted. Not one!
There are those who say, ‘‘Well, he is
the chairman of the Appropriations
Committee. He is the chairman of the
Appropriations Committee. You would
not expect him to do anything else. He
is the ‘king of pork.’ No wonder he is
against this amendment.’’
Fie on such little men who think in
such little terms, who have themselves,
in all likelihood, never taken an oath
to support and defend the Constitution
of the United States. I have taken that
oath, and every other Member here—
man and woman—has taken that oath.
Montesquieu said when it came to
the oath, the Romans were the most
religious people on Earth. Marcus
Atilius Regulus, a Roman consul, captured by the Carthaginians in the year
258 B.C., was sent by the Carthaginians
with an embassy to Rome to plead the
case of the Carthaginians before the
Roman Senate and to attempt, if possible, to arrange for an exchange of
prisoners, also, to endeavor to bring
about a truce on terms that would be
favorable to the Carthaginians. Marcus
Atilius Regulus, however, when he
spoke to the Roman Senate, advised
the Senate against entering into any
such arrangement or agreement or
treaty with the Carthaginians, because
such an arrangement would not be beneficial to Rome.
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Regulus said, ‘‘I know that they will
know what I have said here and that I
will pay with my life.’’ The Roman
Senate offered to protect Regulus
against his being returned to Carthage.
But Regulus said, ‘‘No, I gave them my
word. I swore an oath to them, which
they made me do. I swore an oath to
them that I would return.’’ And he
said, ‘‘I will keep my oath, even when
given to the enemy.’’
Against the pleadings and the tears
of his wife and children, Marcus Atilius
Regulus returned to Carthage, and he
was tortured. He was forced to lie on
spikes in a specially-built enclosure
from which he could only see the Sun.
The Carthaginians cut off his eyelids,
and he was forced to look at the Sun
all day long. He soon perished!
He was a Roman who believed in
keeping his oath. So we can understand
what Montesquieu meant when he said
that when it comes to the oath, the Romans are the most religious people in
the world. I, too, am from a generation
that believed in keeping its oath, when
sworn before God and with one hand on
the Bible.
Mr. President, if this constitutional
amendment proves to be unenforceable,
it would create an equally troubling
hazard; namely, by inscribing an empty
promise into the fundamental charter
of our Government, thus breeding cynicism both toward our Government and
the Constitution as well for the rule of
law.
Before I diverted my thoughts to the
Romans, I talked about what our constitutional form of Government would
suffer in the event that the balanced
budget amendment were to be ratified
and enforced.
But now I say, on the other hand, if
the amendment proved to be unenforceable, it would create an equally
troubling hazard; namely, by inscribing
an empty promise into the fundamental charter of our Government,
thus breeding cynicism both toward
our Government and the Constitution,
as well as for the rule of law.
Keep in mind that not only would
Federal judges—keep in mind that not
only would Federal judges—become involved in fiscal policy, but State judges
would also be required to make fundamental decisions about taxing and
spending. And these are issues, I say to
my friend from Georgia, these are
issues that judges on both the State
and Federal levels lack the institutional capacity to decide in any remotely satisfactory manner.
Some proponents of the amendment
may be of the opinion that the ‘‘political question’’ doctrine or limitations
on standing would preclude litigation
that would ensnare the judiciary in the
thicket of budgetary politics.
Some recent decisions of the Supreme Court, however, suggest that the
Court is prepared—is prepared—to resolve questions that might once have
been considered political. For example,
in Missouri v. Jenkins, 1990, the Supreme Court upheld the power of a Fed-
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eral district court to order a local
board of education to levy higher taxes
to build magnate schools in order to
promote desegregation. And the Court
even held open as a last resort the possibility that the district court might
itself levy the taxes.
Now get that. ‘‘Oh,’’ they say, ‘‘the
courts won’t enter that political thicket.’’ It is not so much that it is a thicket, it is political. It is political. Judges
are not elected by the people. Judges
are not out there rubbing shoulders
and elbows with the American people
and hearing from them as to their advice on making law. But it is otherwise
with the elected representatives of the
people, who daily work and move in a
political thicket.
It might not happen, but if the proposed amendment is adopted and ratified, no one, no man, no man—it reminds me, may I say to my good friend,
one of the fine Senators who is on the
‘‘Republican response team’’—and I
love him, I think a lot of the senior
Senator from New Hampshire, I really
do—but it reminds me of Odysseus.
Odysseus, Senators will recall from
that great story, the ‘‘Odyssey,’’ written by Homer, who supposedly lived
circa 800 years before Christ, was blind,
blind like Milton who wrote ‘‘Paradise
Lost.’’ Homer was blind. But he went
around singing songs and poetry. Perhaps Homer’s words have come down to
us through the centuries, the early,
early centuries, by repetition, by other
men relating, speaking, and conveying
the thoughts and words of Homer.
But let us say it was ‘‘written’’ by
Homer. I think that is fair enough. The
‘‘Odyssey.’’ In the ‘‘Odyssey,’’ we will
remember that Odysseus found himself
imprisoned in a cave by the Cyclops,
the giant with one eye in the middle of
his forehead. He probably still had
more vision than some of the proponents of this amendment. In any
event, the Cyclopean giant asked Odysseus his name. Odysseus said, ‘‘No
Man.’’ His name was Noman. No-man.
Well, I will not proceed with the
story, but let me just say that no man,
and no woman, no one should be very
surprised to find a Federal court made
up of unelected judges, appointed for
life, enjoining expenditures selected by
the court or requiring the levy of a tax.
People up in New Hampshire would not
stand still for that, for unelected
judges levying a tax. We fought one
war over taxation without representation, and the people of New Hampshire
know about that.
Even if taxpayers and Members of
Congress were not granted standing,
the amendment could lead to litigation
by recipients whose benefits, mandated
by law, were curtailed by the President
through impoundment of funds or a
line-item veto, in reliance upon the
amendment. The President might well
conclude that the Constitutional command that ‘‘total outlays for any fiscal
year shall not exceed total receipts’’
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must take precedence over mere statutes, including appropriation bills, entitlement laws, and the Impoundment
Act of 1974.
If a Presidential decision were made
to order a reduction in pension payments, or in social security payments,
or in Medicare payments, or in veterans compensation payments, the
President could argue in defense of his
action that there was a conflict between the statutes requiring these outlays and the Constitutional provision
commanding that ‘‘total outlays shall
not exceed total receipts,’’ and that to
execute the spending statutes would result in the Constitution’s being violated.
Assuming that a President concludes
that his duty to comply with the Constitutional amendment implicitly includes the impoundment power or enhanced rescissions power or a line-item
veto power necessary to ensure that
the budget is in fact balanced, the result would be an inevitable shift of
power from the Legislative Branch to
the Executive Branch. At the very
heart of our Constitutional system of
government is the proposition that
power over the raising of revenues and
the appropriation of funds rests with
the people’s elected representatives in
Congress. The shift to unrestrained
Presidential impoundment and lineitem veto or rescissions authority
would effectively take from Congress
the ‘‘power over the purse’’ and confer
that power on the President.
The placing of the power of the purse
in the hands of the Legislative
Branch—and not in the hands of the
Executive or Judicial Branches—was a
decision that was not lightly made by
the Framers of the Constitution.
James Madison wrote in the 58th Federalist:
This power over the purse may, in fact, be
regarded as the most effectual weapon with
which any Constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for
carrying into effect every just and salutary
measure.
That was Madison. Let me state it
again. James Madison wrote in the 58th
Federalist:
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This power over the purse may, in fact, be
regarded as the most effectual weapon with
which any Constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for
carrying into effect every just and salutary
measure.
So the Framers, Mr. President,
explicity rejected the notion that such
a crucial power should rest either with
the Executive or with the Judiciary.
As I have already stated, the Courts
lack not only the experience and the
resources, but also the close link to the
general public needed for responsible
budgetary decisions. It would be a profound—a profound—mistake for Congress to adopt an amendment to the
Constitution that could transfer such a
vital Legislative power to an unelected
Judiciary.
The Framers were well acquainted
with the history of England. They were
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very familiar with the long and bloody
struggle in which the English people
had wrested from tyrannical monarchs
the power of the purse and vested that
power in the elected representatives of
the people in Parliament. The Framers,
consequently, considered that the appropriations of money were a bulwark
against Executive usurpations, and
they, therefore, carefully wrote into
the organic law the provisions of Article I, Section 9, which guarantee that
no monies shall be drawn from the
Treasury but in consequence of appropriations made by the laws of Congress.
It is hard to imagine that the possibility of such a dramatic reform of the
basic structure of our government
would be contemplated in this amendment, by the Members of both Houses
of Congress, all of whom have sworn an
oath to support and defend the Constitution of the United States.
On the other hand, if the amendment
is to be only an empty promise welded
into the fundamental charter of our
government, only to have this new provision of the Constitution routinely
violated, it would inevitably make all
other provisions of the Constitution
seem far less inviolable. Let us soberly
reflect on that.
As Alexander Hamilton noted in Federalist No. 25:
Wise politicians will be cautious about fettering the government with restrictions that
cannot be observed, because they know that
every breach of the fundamental laws,
though dictated by necessity, impairs that
sacred reverence which ought to be maintained in the breast of rulers toward the
Constitution of a country, and forms a precedent for other breaches where the same plea
of necessity does not exist at all, or is less
urgent and palpable.
Mr. President, unless a Senator has a
question of me, I am prepared to yield
to the Senator from Arkansas for not
to exceed 15 minutes without losing my
right to the floor. I do not intend to
hold the floor all afternoon, but I do
have some other things that I wish to
say in opposition to the amendment to
balance the budget.
Do not forget, I support a balanced
budget. I supported lowering the deficits in the 1993 deficit reduction bill.
So I support the goal of achieving balanced budgets. But I do not support the
prostitution and rape of the Constitution of the United States by a Constitutional amendment that will not
achieve a balanced budget but will destroy the very form of our government
with its separation of powers and
checks and balances.
Mr. President, I ask unanimous consent that I may yield to the Senator
from Arkansas [Mr. PRYOR], for not to
exceed 15 minutes without losing my
right to the floor.
The PRESIDING OFFICER (Mr.
KEMPTHORNE). Is there objection? The
Chair hears none, and it is so ordered.
The Senator from Arkansas is recognized.
Mr. PRYOR. Mr. President, I thank
the Chair, and I thank the distinguished Senator from West Virginia for
yielding this amount of time to me.
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February 16, 1995
The other afternoon I was down visiting on the steps, the steps in the Senate where the pages sit. I gathered up
four or five of the pages who diligently
serve us around here and perform
many, many wonderful duties for this
institution and for us individually and
collectively. I gathered them up and I
said:
Ladies and gentlemen, I want you to remember something. When I speak, or when a
lot of us speak in the Senate, maybe from
time to time you do not have to listen too
carefully to what some of us have to say. But
remember that when Senator BYRD of West
Virginia speaks, you take time, and you listen, and listen intently to what he has to
say, because you will learn something. You
will learn something about this body, you
will learn something about this country, you
will learn something about the Constitution,
and you will learn something about what
makes the Senate one of the unique institutions in the world. I learn from the Senator
constantly.
I thank him not only for his message
today but his continuing message on
this issue, relative to the balanced
budget amendment.
When I was young and growing up in
Camden, AR, I remember at birthday
parties we used to play a game. In fact,
when I raised my sons, they played the
same game. Perhaps other Members of
this body played a game called pin the
tail on the donkey. One of us would be
blindfolded, and we would be given the
donkey’s tail and someway or another
we would try to go up to the wall or
the board and find the proper place to
attach the tail on the donkey. Sometimes, because we could not see it—we
were blindfolded—we would not even be
near our destination, or near our target.
In the last several weeks, relative to
this debate—not only in this Chamber
but in the other body and on the talk
shows, in the media, in the public,
wherever—somehow or another I am
reminded of that game once again, of
pin the tail on the donkey.
I think there is a lot of blame being
passed around—the Democrats blame
the Republicans, the Republicans
blame the Democrats. We might blame
this Senator or that Congressman, we
blame this act or this particular time
or effort or law or regulation as to why
we got to this point and how we got to
this point at this time in our country’s
history.
We are in trouble. We are in deep
trouble. And this morning I heard the
distinguished majority whip, Senator
LOTT, as he quoted a statement that
Senator DASCHLE had made 1 year ago
in this debate on the constitutional
amendment. At that time, Senator
DASCHLE voted for that amendment,
and Senator DASCHLE was quoted as
giving the reasons why he was supporting that amendment.
Mr. President, I invite the distinguished Republican whip to go back to
1982, to go back to 1986, and he can find
some statements of this Senator from
the State of Arkansas who at that time
also not only spoke on this floor but
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February 16, 1995
back in my home State, as to why at
that moment in our history, that window of opportunity, that I thought we
had to support a balanced budget
amendment to the Constitution. I believed it then. I believed it in 1982. I believed it in 1986.
Not long after those votes, I also
voted for two extremely far-reaching,
extremely strict, you might say, proposals that would have frozen spending
across the board. In the early 1980’s, I
supported those particular freezes.
But, Mr. President, something has
happened since that period of time.
Something has happened to have dramatically and drastically changed the
economic and fiscal landscape of America. What has happened is very simple,
and I will use the analogy that after
the mid-1980’s we let the horse get out
of the barn.
The horse got out of the barn, and
today, we are being asked for support
by our wonderful friends, like Senator
SIMON of Illinois, who believes with all
of his heart that this constitutional
amendment is the way to get this horse
back in the barn.
Mr. President, I respect my friend
from Illinois. I respect my friend from
New Hampshire. I respect my friend
from Utah—in their belief that a constitutional amendment, where we
would balance the budget in the next 7
years is the proper way to get the horse
back in the barn. I truly believe it is
wrong to attempt to amend the Constitution to bring the horse back in the
barn. I think what we are doing, if I
may use this analogy, is we are attempting with a constitutional amendment to lasso an elephant with a piece
of thread. It cannot be done.
The trouble is not in the Constitution. This is not where the trouble is.
It is not in the Constitution that was
passed in Philadelphia over 200 years
ago. The trouble is in us. That is where
the problem lies.
The problem is in me, Senator PRYOR
from Arkansas. In 1981, I voted for
then-President Ronald Reagan’s proposal to increase spending and to decrease taxes. There were 11 Members of
the U.S. Senate who voted against that
package, and I wish I could say today I
had been one of those 11, or that I had
made number 12. I was not. I bought on
to the idea: We have a new President,
let us give him an opportunity to show
us what he can do. And I supported
President Reagan’s package.
In retrospect, I was wrong. So I
would like to stand here today and
take blame. I will take the blame for
making a mistake that helped cause
these massive deficits and this gargantuan, absolutely awesome national
debt.
So here we are, almost on the eve of
voting whether or not we want to refer
to the States an amendment to cause,
demand, and mandate a balanced budget.
Last Friday morning, I happened to
be in this body, fortunately enough, as
the Senate was opened with a prayer
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by Rev. Richard C. Halverson, Jr. I
thought the prayer was timely, and I
thought it was poignant. I would like
to quote, if I might, Mr. President,
from that prayer of Dr. Halverson.
Once again, in the urgency of this hour, we
beseech Thee for divine assistance. We pray
for a hedge of enlightened restraint around
this ‘‘necessary fence’’ of the Senate. For
through this body, regulations must pass
that will either strengthen or weaken our
country.
Dr. Halverson’s ‘‘necessary fence,’’ of
course, is a reference to James Madison
who called the Senate, this body, this
institution, ‘‘a necessary fence to protect the rights and property of its citizens against an impetuous public.’’
Mr. President, James Madison feared
that the Congress from time to time
might act impetuously to please the
public. Reverend Halverson continued
in his prayer last Friday morning, and
once again I quote.
As pressures mount for instant solutions to
complex problems, grant those who hold this
‘‘senatorial trust’’ the calm resolve to be not
driven by public restlessness, nor drifting in
stubborn idleness, but drawn by Thy vision
of righteousness—which upholdeth the Nation.
That was an insightful prayer, Mr.
President. I hope that Dr. Halverson’s
prayer are the words that set the tone
for this debate. The public is restless.
They are demanding instant solutions.
They are demanding action, and one instant answer is this very imperfect balanced-budget amendment is before us
today.
It is like a bottle of snake oil because
it promises to solve all of our budget
problems. But what it delivers are
loopholes and false hopes. It gives politicians the easy and the temporary
cover to go back home and to say we
have voted to balance the budget.
There are loopholes, Mr. President,
throughout this proposal. And their inclusion assures that false hopes will be
created and this is just what our country and just what Americans do not
need right now.
Loophole No. 1. Right at the top of
this balanced-budget amendment is the
three-fifths loophole. Section 1 says
that three-fifths of the House and
three-fifths of the Senate can vote to
completely waive the balanced-budget
requirement for a year. I believe the
framers of the Constitution placed provisions in the Constitution which they
held inviolate.
For example, in the first amendment
of the Constitution, it does not say
that ‘‘Congress shall make no laws respecting an establishment of religion
unless three-fifths of each House passes
legislation specifying otherwise.’’
The 13th amendment, for example,
does not provide that slavery or involuntary servitude shall exist in the
United States unless three-fifths of
each House passes legislation specifying otherwise.
Mr. President, the reason that the
three-fifths requirement sounds ridiculous is because it is ridiculous.
I do not believe that we should pass
this amendment. I do not believe we
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should pass it with or without this particular loophole. But if the supporters
of the balanced budget amendment
think it is the panacea to all of our
problems, why create a three-fifths
loophole? Why not, if we are going to
require a balanced budget? Why do we
not require a balanced budget, period?
This is the second loophole, Mr.
President. That loophole is the definitions game. Section 6 of the balanced
budget amendment provides that estimates of outlays and receipts may be
used by Congress when drafting legislation to enforce and implement the provisions of this amendment. Nowhere in
this amendment before this body
today, and nowhere in the Constitution, are the words ‘‘outlays or receipts’’ defined.
Why would the word ‘‘outlays’’ need
to be defined? Because outlays are the
moneys that the Government spends.
And without an airtight definition of
what constitutes spending we had better realize that clever lawyers are
going to find many ways to circumvent
the intention of this amendment, whatever it may be.
The same goes for the definition of
‘‘receipts.’’
Take the example of sales of Government assets. If someone were to propose that we sell Mount Rushmore,
would the money collected when we
sold Mount Rushmore represent a receipt under this amendment? It might
and it might not.
How about user fees? Will moneys
collected from new user fees be considered a receipt? They might. But they
might not.
It is no wonder that Judge Bork has
recently said that we had better anticipate not only hundreds but perhaps
thousands of lawsuits and other forms
of litigation in this particular area.
Mr. President, I wonder if the distinguished Senator will yield me perhaps 5
additional minutes?
Mr. BYRD. Mr. President, I ask unanimous consent that I may yield an additional 5 minutes to the distinguished
Senator from Arkansas [Mr. PRYOR]
under the same terms as heretofore
agreed to.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. PRYOR. The Senator is very generous. I thank him.
Mr. President, what we are doing
today is looking at a possibility of
adopting perhaps the greatest sea
change in the relationship between the
judiciary, the executive branches of
Government,
and
the
legislative
branches of Government that we have
ever concerned ourselves with. The
definitional games are going to be
played necessarily on what is or is not
an outlay or what is or is not a receipt.
But the definition games will not be
limited to just these issues. And I can
say, in my opinion, there are not going
to be any winners in this definitional
game under these false promises.
Mr. President, there is a third loophole. There are many loopholes. But
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No. 3 is, I think, one of the more serious—determining what an estimate is.
Who makes those estimates? If one
estimator’s ‘‘estimate’’ comes out one
way, the budget may be in balance. If
we use another estimator’s estimate,
we will no doubt have different estimates and then be out of balance. More
lawsuits will ensue.
It sounds like estimators, not Congress, would control the measure of our
outlays and receipts, and ultimately,
the decisions effecting our lives.
The point is that estimates can differ, and they can differ drastically. Estimates can be flat wrong. Human nature being what it is, estimates can
also be manipulated. In any case, do we
really want something as unreliable as
economic estimates to become the underpinning of the United States Constitution? I do not believe, notwithstanding that the people of our country
want us to balance the budget, that
they want to underpin the U.S. Constitution with something this illusory.
The estimation game is one more
loophole through which runaway Government spending is going to continue.
It will take the decisionmaking process
out of the hands of the people and the
Congress, and place it in the hands of
the economists and the estimators who
seldom agree on anything.
The fourth loophole, Mr. President—
Let us assume that all of our numbers,
estimates, statistics and forecasts are
correct, and we are struggling to meet
the requirement of a balanced budget.
Then what Congress will do is probably
start playing budget games.
Is there not one of us who has been
here for any length of time who has
seen the game of putting certain functions of Government on budget or off
budget? Mr. President, I predict under
this constitutional amendment, if it
were a part of our Federal Constitution, that we would spend the majority
of our time not balancing the budget,
but figuring out which Government
programs were on budget and off budget, which programs raise money, and
which programs cost money. And we
will have many, many heated debates
on what should and should not be included in that budget.
The temptation to take deficit programs ‘‘off budget’’ is going to be
great. For example, today under section 13301 of the Budget Enforcement
Act, we forbid the use of Social Security trust fund surpluses to offset the
Federal deficit.
However, under this constitutional
amendment, we are going to apparently use Social Security surpluses for
that purpose. Many, many experts are
predicting that in the year 2013, Social
Security will begin to run its own deficit. At that point, the temptation will
be to put Social Security off budget in
order to meet the balanced budget constitutional requirement.
Nothing in this amendment prevents
this chicanery, and we all know it will
occur. Will this inspire confidence? No.
Will it balance the budget? No.
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Mr. President, there are big questions about this amendment. I have
discussed just a few loopholes and gimmicks. This amendment to the Constitution deserves as much time as necessary to clear the air.
I am almost out of time. But I want
to simply state that I think this has
been a splendid debate. I think that we
have not, in any way, caused anyone to
truly believe that we are attempting a
filibuster on this side of the aisle. We
have had very few quorum calls. We
have had, in my opinion, a debate that
is one that will go down in the record
books. I truly believe it is one of the
better debates that the U.S. Senate has
ever engaged in.
Once again, Mr. President, I do not
feel that our situation today with regard to these awesome Federal deficits
is the fault of the Constitution. It is
our fault and it is our obligation to
cure those problems by making the
hard decisions, the tough decisions
that all of us know we have to make to
balance the budget.
Mr. BYRD. I thank the distinguished
Senator from Arkansas [Mr. PRYOR] for
his lucid, incisive observations.
Mr. President, I yield to the distinguished Senator from New Hampshire,
[Mr. SMITH] with the understanding
that I do not lose my right to the floor.
The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
Mr. SMITH. Mr. President, I do appreciate the Senator yielding briefly to
me. In the spirit of friendly debate, I
ask the Senator if there was any significance to the fact that when I happened to come on the floor to give relief to Senator HATCH, who has been
out here many hours during this debate, he mentioned Cyclops. I wondered
whether there was any significance to
that fact that when he saw me on the
floor, immediately the debate went to
Cyclops. I think he is a better expert
on history than I am, for sure, but the
Cyclops had one eye, as I remember. I
suppose there is some relevance here,
because it is going to take more than
one eye to stay focused on where this
debate is going and where this debt is
going in this country.
I do not know if the Senator wishes
to respond, but I did take notice of
that fact that immediately, Cyclops
became the topic of discussion when I
came on the floor.
Mr. BYRD. If the Senator will indulge me briefly.
Mr. President, I will try to answer
the Senator’s question. Indeed, the
Senator’s appearance did not have any
part in my reference to the Cyclopean
giant. I just wish that, if I ever became
involved in a street brawl in this city,
the distinguished Senator from New
Hampshire would be around close by. If
I could have him and Senator HOLLINGS
there to help me, I would feel like
fighting rather than running. He is a
genuinely congenial Senator and I have
enjoyed my service here with him. We
have often talked and discussed mat-
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February 16, 1995
ters together. I value his friendship and
his advice and counsel. I do not always
follow it, but I certainly listen to what
he has to say. I will say that I really
was pleased to see him come on the
floor, because he is one of those distinguished Members of the ‘‘Republican
response team,’’ and he is a very worthy one. He has been around here a
while. I consider him as a formidable
and respectable protagonist of the constitutional amendment to balance the
budget.
I think that answers the question, except there is one further matter he
mentioned, the matter of having one
eye. The giant in the story by Homer
had one eye, and the distinguished Senator referred to the national debt,
namely that an individual would need
more than one eye to see the national
debt because it is so high.
I remember that during the early
first
administration
of
President
Reagan, I saw the President on television. He was very effective. He had a
chart and he pointed to that chart
which had a line drawn to represent
the national debt at that time, in
terms of $1,000 bills. He said, if I recall,
that if one had $1,000 bills stacked 4
inches high, the stack of $1,000 bills
would represent $1 million. Mr. Reagan
indicated by the chart that the stack
of $1,000 bills necessary to reach the
then sum of the national debt, which at
that time was just a little under $1 trillion, would require a stack of $1,000
bills 63 miles high.
That was the last time Mr. Reagan
ever appeared on television using that
chart, because when he left office at
the conclusion of his second administration, that stack of bills, using his
chart, would by then have reached
about 237 or 240 miles into the stratosphere—because the Nation had added
to its debt almost an additional $3 trillion during his 8 years in office. And
then, of course, under the administration of Mr. Bush, the debt continued to
grow.
I thank the Senator for reminding
me of that chart.
Mr. SMITH. Will the Senator continue to yield to me?
Mr. BYRD. Yes.
Mr. SMITH. The Senator mentioned
he might like to have me on his side in
a fight at some point. This is my fifth
year in the Senate. It does not come
anywhere near the number of years the
distinguished Senator has served here,
but I am hoping that someday before
either one of our terms is over in the
Senate we might be on the same side
on an issue, as he is a very worthy adversary.
The Senator referred to a comment
that I made a few days ago that made
the national press; that it was our goal
to wear the Senator from West Virginia out so we could get the balanced
budget amendment to a vote. And the
Senator is a very worthy adversary, because we have not been able to do that
yet. Even though we have had a number of us out here relieving one another, the Senator still stands on his
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feet and still continues to debate,
which is really the great thing about
the Senate.
Over behind my desk, there is the
desk of Daniel Webster, one of the
greatest orators in the Senate. The
Senator from West Virginia certainly
ranks up there in oratorical skills with
those great Senators of that time—
Clay, Webster, Calhoun, and so many
others.
But it does remind you that the time
we spend here is very fleeting; that we
are only temporary stewards of this
country.
But I think, in that perspective, if
the Senator would continue to yield
just for a moment, it is important to
realize the significance of this debate. I
think this is a debate of historical significance.
The Senator from West Virginia and
the Senator from Arkansas mentioned
the fact that the debt went up significantly during the Reagan years when
Reagan was President. That is accurate.
However, during those years, there
were a lot in the Senator’s party in
Congress who certainly contributed to
that. All of the Reagan budgets, at
least from when I was here from 1985
through 1988–89 during the Reagan
years, they were always dead on arrival
and so predicted before they got here.
And then they were increased by the
party in power in the Congress. So the
debt went up, true, while Reagan was
President, but whether or not it went
up all because of Ronald Reagan I
think is something that I would take
pretty sharp issue on with the Senator.
Mr. BYRD. Will the Senator yield on
that point?
Mr. SMITH. It is the time of the Senator from West Virginia.
Mr. BYRD. Number one, the Senator
has stated that all of the Reagan budgets were dead on arrival. I call the distinguished Senator’s attention to the
fact that some of those budgets were
subjected to a vote in this body or the
other body or both and the Republican
Members did not vote for those Reagan
budgets. I believe I am correct in that.
If I am not, I will be glad for someone
to correct me.
Second, the Senator is in error—I
know this to be a fact—when he indicated, as I thought I understood him to
so indicate, that in the case of all of
Mr. Reagan’s budgets the Congress increased those budgets. That is not the
case, if I understood the Senator correctly.
Mr. SARBANES. The Congress reduced them.
Mr. BYRD. The Congress reduced Mr.
Reagan’s budgets in some of those
years, in some of the Reagan years.
Going back to 1945, the accumulated
requests of all the Presidents exceeded
the accumulated appropriations by the
Congress—exceeded the accumulated
appropriations by the Congress—over
that same period.
But precisely under Mr. Reagan, I
say again, the Congress did not exceed
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his budgets in every year. In fact, in
some years Congress appropriated less
than the budget requests.
Mr. SARBANES. Will the leader
yield?
Mr. SMITH. But the Senator knows,
as an expert on the Constitution, that
the Congress of the United States controls the purse strings. The President
does not spend any money without the
approval of Congress.
So I think, to be fair about it, it
would be fair to say that Congress is
ultimately responsible, not the President, for increasing the debt. The
President’s budget is purely advisory.
We do not have to agree to it. We can
increase it, decrease it, ignore it, kill
it, do whatever we want to do with it.
But the Congress appropriates the
money. The Congress authorizes the
spending. And it is the spending that
drove the debt up over that period of
years.
And I would accept that there is certainly enough blame to go around between the two parties. But my point is,
I think it is unfair to say that Ronald
Reagan alone was responsible for the
debt that we have today.
Mr. BYRD. As the Senator says,
there is enough blame to go around.
But the President, Mr. Reagan, never
once submitted a balanced budget to
the Congress.
Mr. SMITH. That is accurate. He
should have, but he did not. The Senator is right. And neither did the Congress.
Mr. BYRD. Pardon?
Mr. SMITH. Neither did the Congress.
Mr. BYRD. Well, President Carter
did. President Carter once submitted a
balanced budget.
I sat right over here in room 211. I
was then the majority leader of the
Senate. I sat over in room 211 on a
weekend, brought my little paper bag,
with some coal miner’s ‘‘steaks’’—
slices of baloney—in that little paper
bag. We had the Secretary of the Treasury, the Director of the Office of Management and Budget, and others. We
had the President’s men in that room,
and we sat through Saturday and Sunday—and I believe Senator SARBANES
of Maryland, who is now on the floor,
was there at that time—and we hammered out a balanced budget.
But, the President also has a veto
pen. And Mr. Reagan never once vetoed
any appropriation bill for that reason,
in particular. He vetoed some bills for
other reasons.
Mr. SMITH. Will the Senator yield
for just a brief response to that?
Mr. BYRD. Yes.
Mr. SMITH. That is true. But, as the
Senator knows, the Congress during
those years rolled these huge continuing resolutions in to the President
with everything from Social Security
to defense and every little program
that could possibly hurt anybody in
America all rolled into one, essentially
saying, ‘‘Well, Mr. President, if you
veto this, then we will shut the Gov-
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ernment down and stop the Social Security checks.’’
So, as I say, I think the reason we are
here today is because of the irresponsibility, essentially, of the Congress,
not any President, over the years.
As we debate today right now on the
floor of the Senate, $9,600 a second the
national debt increases. It increases
$576,000 a minute, $34,560,000 an hour,
and $829 million a day—almost a $1-billion-a-day increase as this debate continues.
Mr. BYRD. Senator, ‘‘You cram these
words into mine ears against the stomach of my sense.’’
The Senator spoke of the omnibus
continuing resolution. I have a little
grandson who would say, ‘‘Do you
know what?’’
Well, do you know what? On that
continuing resolution that was so
heavy and that Mr. Reagan dropped on
the table before a joint session of the
Congress, do you know what? He asked
that those appropriations be sent to
him in one bill. I was here. I know. He
asked that they be given to him in one
bill.
Any further questions?
Mr. SMITH. Well, you did not give
him any choice.
(Mr. KYL assumed the chair.)
Mr. BYRD. Oh, yes. He asked for it.
Mr. SMITH. Not really. If Congress
controls the purse strings, I say to the
Senator from West Virginia, and the
national debt increased $3 trillion during those years, how can we blame the
President? I mean, whose responsibility is it?
Mr. BYRD. Well, there is enough to
go around, but in the case of the 1993
budget deficit reduction package, I
would shift the blame in large measure,
to those who did not support that deficit reduction package.
They sat here in the Senate. They sat
in the House. We had a 1993 deficit reduction package that reduced the deficit over a period of 5 years by $482 billion. Somewhere between $450 and $500
billion. Not one Republican Senator
voted for that deficit reduction package.
Actually, the deficits have been reduced more than that. They have come
down 3 consecutive years. Not one Republican Senator voted for that package. Why?
Mr. SMITH. Mr. President, I would be
happy to answer on behalf of the Senator from New Hampshire. The Senator
from New Hampshire voted against
that package for a number of reasons.
One, $250 billion in increased taxes on
the American people was in it. No. 2,
the projections beyond the 5 years in
that budget that the Senator mentioned, the deficits go up. As we see
from the follow-on budget that the
President has sent, we are looking at
an annual average increase of $200 billion a year. And the deficits will add
$1.5 trillion more to the debt by the
turn of the century. He did not take
the corrective action that was necessary to continue the downward spiral.
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True, deficits went down for over a 5year projected period, largely due to
the tax increases, not a lot of spending
cuts. When we look at the outyears,
the six, seventh, the eighth, they go
like this, and under the President’s
projections those deficits will be over
$350 billion as we turn into the 21st
century.
That is not making the corrective decisions that need to be made to turn
the country around, which is why we
need the amendment. If Congress had
the discipline we would not be here.
They do not have the discipline. This
chart proves it.
There are a number of attempts at
balancing the budget of congressional
action over the years that were taken
but they never got the job done. One of
the more recent ones is Gramm-Rudman-Hollings. Lot of fanfare. What
happened? We walked away from it because Congress did not have the discipline to do it.
A comparison or analogy would be
the Base Closing Commission. Congress
did not have the courage to close bases
that we did not need, so they created a
commission. Some said we should create a commission to balance the budget. The point is the amendment forces
us. It is unfortunate, I agree with the
Senator. I wish we would not have to
be here saying we needed a balanced
budget amendment to clutter the Constitution to balance the Federal budget. We should do it. But we do not do it,
and we will not do it until we have the
amendment.
That is why we have to have it. If we
do not, I would say to the Senator, our
grandchildren are going to have a
country that I cannot imagine. I can
imagine a press conference by a President in the future, maybe not too
many years, where he comes on television and says, ‘‘My fellow Americans,
I have some very dismal news to share.
We cannot meet our fiscal obligations,
and I will go to Mexico and Japan and
China, who knows where, and see if I
cannot borrow some money to meet
our obligations.’’
That is going to happen, I say to the
Senator from West Virginia, because he
knows we have to meet obligations. We
are going to get to the point where we
cannot. Interest is consuming us. Interest is now 16 percent of our budget.
Sixteen percent of our budget, and defense is 16 percent of our budget. Interest is going this way and defense is
going this way.
I would say to the Senator, where do
we stop it?
Mr. BYRD. Will the Senator allow me
to answer the question?
Where do we stop? We have to, in
order to stop it, we will have to swallow some tough medicine. We have already seen the Republican Senators
turn tail and run when it came to
tough medicine in the 1993 budget deficit reduction package.
Well, that was tough medicine. I assume, by what my friend has said, it
was tough medicine because it raised
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taxes. The Senator must come to a
conclusion at some point in time that
this budget cannot be balanced simply
by cutting, cutting, cutting. Discretionary spending has been cut to the
bone.
There has to be at some point in
time, a combination of cuts and tax increases. There has to be.
I heard a Senator on the Republican
side of the aisle the other day say he
would never, never vote for a tax increase. Well, he has the right to take
that position if that is the way he
feels.
That kind of an attitude is never
going to get this budget in balance.
The Senator talks about our children
and grandchildren. I suppose then, that
rather than vote for a tax increase we
should just put this burden of debt over
on our children and grandchildren. I
have children, I have grandchildren.
Are we going to stand here and say to
them, ‘‘You children, you future generations will have to raise taxes because we do not have the guts to do
it’’?
We have been on a national credit
card since 1981. I can remember those
good-feel messages that used to be
issued during the Reagan years from
the oval office. Every morning. ‘‘Good
morning in America, everything is
fine.’’ There really is a free lunch.
But we say we will not raise taxes.
We have more than one tool by which
to bring budgets into balance. That effort must not be limited simply to cutting programs. I have voted to cut
spending programs. I will vote further
to cut spending programs. But we cannot put aside the tool of revenue increases. The men who framed the Constitution provided for revenues to be
increased to pay the debts to provide
for the common defense and the general welfare.
But if we are going to take the position that the only thing we will support is to cut, cut, cut, programs but
we will not raise taxes, then we are
cheating our children and grandchildren.
I say we have to combine these tools
if we really, really, really mean business.
Mr. SMITH. Mr. President, would the
Senator yield for one more point?
Mr. BYRD. Mr. President, let me
first yield to Mr. SARBANES. He has
been asking me to yield, and then I will
be happy to yield to the Senator.
Mr. SARBANES. Mr. President, I
wanted to direct an inquiry to the distinguished Senator from West Virginia
with respect to the supermajorities
that are provided for in this amendment.
As the distinguished Senator has
very ably pointed out, the Founding
Fathers rejected supermajorities. Both
Hamilton and Madison are very explicit in the Federalist Papers about
the dangers of supermajorities and the
power we place in the hands of minorities.
The argument has been made here on
the floor by proponents of this amend-
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February 16, 1995
ment that they have certain waiver
provisions in the amendment and if we
ever found ourselves in the difficult
circumstance clearly a waiver would be
obtained and we would be able to address issues of national importance.
The Senator earlier talked about the
fiscal provisions, but I wanted to direct
his attention to another section, and
that is the national security section. I
submit to my colleagues that this is
very serious business and it is time to
stop playing games. The Senator from
West Virginia just pointed out one
game. People are for the balanced
budget amendment but they will not
vote for the deficit reduction package.
There is a tough deficit reduction
package and they say, ‘‘No, I cannot
vote for that but I am for amending the
Constitution to require a balanced
budget.’’
Let me leave that for a moment and
let me talk about the national security
section which is section 5. I want Members to stop and think about this very
carefully because we obviously need to
stop, look, and listen before we place
ourself into any framework that could
conceivably endanger the national security of our country.
The provision says that Congress
may waive the provisions of this article for any fiscal year in which a declaration of war is in effect.
We do not have many declarations of
war. We can get involved in a situation
we have to deal with, but we do not
have a declaration of war. It then goes
on to say:
The provisions of this article may be
waived for any fiscal year in which the
United States is engaged in military conflict
which causes an imminent and serious military threat to national security and if so declared by a joint resolution, adopted by a
majority of the whole number of each House,
which becomes law.
In other words, if you are facing a
threat, an imminent threat the amendment may be waived. The amendment
does not even address the situation in
which we are not yet engaged in military conflict.
I ask the distinguished Senator from
New Hampshire, who is on the floor,
suppose we are not engaged in a military conflict, there is just the danger
of a military conflict breaking out
which requires us to take action involving the expenditure of moneys.
Could you waive that with a joint resolution? I ask the Senator from West
Virginia.
Mr. BYRD. Mr. President, I ask unanimous consent that I may yield to the
distinguished Senator from Maryland
for the purpose of his engaging in a colloquy, if they so wish, with the Senator
from New Hampshire, without my losing the right to the floor.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. SARBANES. I ask the Senator. It
says, if engaged in military conflict,
you may waive it. Suppose you are not
engaged in military conflict but you
need to prepare for a possible engagement in military conflict; you need to
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take actions which will cost money,
which will unbalance your budget, in
order to deter the potential of a forthcoming military conflict. Can you
waive that under this provision?
Mr. SMITH. Would the Senator like
me to respond to that?
Mr. SARBANES. Certainly.
Mr. SMITH. The Senator knows very
well that this debate is simply an attempt to divert attention from the real
problem. You just mentioned a moment ago the tough deficit reduction——
Mr. SARBANES. No, no, I yield to
the Senator to respond to my question.
The question is on the national security issue. The question is specifically
addressed to section 5 of House Joint
Resolution 1, and it specifically goes to
the question of whether you could have
a waiver where we were not engaged in
military conflict but needed to take
action in order to address a potential
military conflict.
Mr. SMITH. Well, since the Senator
wants me to respond to certain parameters rather than the parameters I prefer to respond, I say: ‘‘Declaration of
war is intended to be construed in the
context of the powers of the Congress
to declare war under article I, section
8. The committee intends that ordinary
and prudent preparations for a war perceived by Congress to be imminent
would be funded fully within the limitations imposed by the amendment, although the Congress could establish
higher level of spending or deficits for
these or any other purposes under section 1.’’
Mr. SARBANES. I know the Senator
from New Hampshire is reading the report, but it does not really answer the
question. The first provision says that
Congress may waive it for any fiscal
year in which a declaration of war is in
effect. I am addressing a situation in
which a declaration of war is not in effect.
Mr. SMITH. I can read it——
Mr. SARBANES. I am addressing a
situation in which we are not actually
engaged in military conflict, but we
want to take actions to forestall a
military conflict. Can you waive it?
Mr. SMITH. Is that not ordinary and
prudent preparations for war? Yes, that
is ordinary and prudent.
Mr. SARBANES. You can waive it?
Mr. SMITH. It did not say waive it.
‘‘The committee intends that ordinary
and prudent preparations for a war perceived by Congress to be imminent
would be funded fully * * *’’ There is
nothing to waive.
Mr. SARBANES. Fully funded; in
other words, you can violate the requirements of the balanced budget
amendment.
Mr. SMITH. Not at all. That is not
what this says. The truth of the matter
is, there will not be any funds even to
conduct war if we continue along the
lines that the Senator from Maryland
would like to go, which is literally to
bankrupt the United States of America. We will not have any money to
spend on defense.
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Mr. SARBANES. What does the Senator make of this waiver provision?
What is its intention to be in section 5?
Mr. SMITH. This is the time of the
Senator from West Virginia. I am not
going to engage the Senator on the
time of the Senator from West Virginia.
Mr. SARBANES. I see. I regret the
Senator does not want to respond. If
the Senator from West Virginia will
continue to yield?
Mr. BYRD. Yes.
Mr. SARBANES. I regret the Senator
from New Hampshire does not want to
address that question. Let me just
point out to the Senate that when you
really get down to some of these hard
questions, the proponents of this
amendment just slide off them and
they say, ‘‘Oh, well, we would get a
waiver.’’
The waiver that is required here is
declared by joint resolution adopted by
a majority of the whole number of each
House and, as the very able Senator
from West Virginia has pointed out,
this is contrary to what the Constitution now requires.
What this waiver means is that you
would have to have 51 votes in the Senate and 218 votes in the House. I have
heard the proponents stand on the floor
and say, ‘‘Don’t worry, no problem. If a
situation arises, clearly the Members
will vote for the waiver and we will be
able to address it, we will get these
votes, there is no problem.’’
I just want to recount one story, because this is very serious business, I
suggest to the Members.
On August 12, 1941, the House of Representatives was confronted with the
issue of extending the time of service
of those members of the armed services
who had been drafted the year before.
In the summer of 1940, the Congress
had passed the Selective Training and
Service Act, and, under it, people
called up were to serve for 1 year—the
President could extend the period indefinitely if Congress declared that the
national interest is in peril.
On July 21, 1941, with the prospect of
war increasing, President Roosevelt
acted. In a special message to Capitol
Hill, he asked Congress to declare a national emergency that would allow the
Army to extend the service of draftees.
The President came to the Congress
and asked them to make this extension. Everyone is telling us that ‘‘if we
had a national emergency, surely the
Congress would act.’’ The measure regarding the draft for World War II
passed the House of Representatives by
a vote of 203 to 202. It passed the Senate by a vote of 45 to 30.
Now, just think of this. We are literally a few months away from the outbreak of World War II. The President
has said to the Congress, ‘‘There is a
national emergency. I ask you to extend the time of duty of those who had
been drafted the previous year for a 12month period. The storm clouds are on
the horizon for all to see. We need to
take action.’’
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In many ways, it is comparable to envisioning a waiver situation for national security under this amendment
for which the proponents say, ‘‘Oh, if
there is a real problem, we’ll get the
waiver and we’ll address our national
security situation.’’
At that time, the vote in the Senate
was 45 to 30; in the House of Representatives, 203 to 202. Neither of those votes
meets the requirement of section 5 of
this balanced budget amendment proposal. Even though in both instances a
majority of those voting on this draft
question voted to extend it, 45 to 30 in
the Senate, 203 to 202 in the House,
with Speaker Rayburn going into the
well of the House in order to bring
about that vote, neither of those votes
is a majority of the whole number of
each House, which is what this amendment requires.
So I ask my friends, the proponents
of this proposition, how have they provided for the national security of the
Nation? I am giving you an absolute,
specific demonstration of an instance
in which anyone looking back upon it
would say clearly there was an important national security question that
needed to be addressed and yet the vote
to address it would not carry the day
under the requirements of section 5 of
this balanced budget amendment. The
section states ‘‘So declared by a joint
resolution adopted by a majority of the
whole number of each House,’’ which
means you have to have 218 votes in
the House—it carried in the House 203
to 202; it did not have 218 votes—and
means you would have had to have 49
votes in the Senate. It carried in the
Senate 45 to 30, but it did not have the
necessary 49 votes in the Senate. There
were 48 states in the Union during
World War II and 96 Senators; therefore, the whole number would be 49.
Now, this is the absolute harm which
supermajorities can potentially do to
the national security of our Nation.
Mr. SMITH. Will the Senator allow
me to respond to that?
Mr. SARBANES. Sure.
Mr. SMITH. The point is, it is very
clear in the language that I have just
indicated on the amendment as well as
article I of the amendment. The Senator is correct that it does take a
three-fifths vote. Now, the point is——
Mr. SARBANES. Will the Senator
yield at that point? This requirement,
as I understand it, does not take a
three-fifths vote.
Mr. BYRD. Right, it does not.
Mr. SARBANES. This requirement
requires the supermajority in the sense
that it required that it be adopted by a
majority of the whole number of each
House.
You see, this is very important, and I
am glad we are having this discussion
because it is important to know exactly what this resolution provides and
how it would work in real-life situations. There is a great tendency to just
brush it all aside, and in fact I think
this exchange illustrates that because I
am not now focusing on the three-fifths
requirement. That is a different issue.
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Mr. SMITH. It is not a different
issue.
Mr. SARBANES. I am focusing on
the section 5 provision, and its supermajority requirement of the majority
of the whole number of each House.
Mr. SMITH. But the Senator is focusing on that and ignoring article I,
which allows you to raise the debt if
you need to raise the debt in order to
deficit spend, in order to deal with the
emergency that the Senator is talking
about.
Mr. SARBANES. By a three-fifths
vote.
Mr. SMITH. That is what the Senator
chooses to ignore, because that answers his question.
Mr. SARBANES. By a three-fifths
vote.
Mr. SMITH. That is right.
Mr. SARBANES. That underscores
my point even more. If the Senator’s
answer to me is you can waive it on a
three-fifths vote, then in neither of
these instances in the Senate or the
House for the extension of the draft did
they come anywhere close to the threefifths vote. They did not have the
three-fifths vote.
Mr. SMITH. It goes right back to the
issue of priorities, which is why we are
dealing with a balanced budget amendment to begin with, I say to the Senator from Maryland. Priorities are, if
you are at war or need to go to war to
defend the national interest of the
United States of America, and you
need a three-fifths vote to do it and
you cannot get it, you will cut spending somewhere else; you will take out
some pork or some wasteful spending
that we never can get out of this budget, which is the reason we are in this
mess.
You set priorities. What is more important, the national security of the
United States or funding the Education
Department or funding the Commerce
Department or HUD? You make decisions, just like everybody else has to
do in America.
That is the problem. The Senator has
gone right to the heart of it. That is
exactly why we are here today, because
of this mess, because of the point the
Senator makes. Nobody wants to set
priorities anymore.
You set priorities. If I am a Senator
and this happens, and the President of
the United States, whoever he or she
may be, needs money, needs forces,
needs to protect the national security
of the United States or the troops in
the field, I am going to cut somewhere;
you bet I am going to cut somewhere,
and I am going to do it quickly if I cannot get the three-fifths.
I say to the Senator, I think we
would get the three-fifths because the
Senate and the House of Representatives, speaking on behalf of the American people, with our Armed Forces in
jeopardy, are certainly not going to
deny them the protection they need
and the materials they need to protect
themselves in the field or the national
security interests of the United States.
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It is a weak argument, and the Senator knows it. It is just a way to obfuscate this issue, to deny those who are
out here saying we need this amendment. We do need it, and that is exactly why we do need it, because nobody wants to set priorities. No priorities can be set here—only in the
household budgets, only in business,
only in the cities of America, only in
the States but not in the Congress of
the United States. Oh, no; we have to
spend more than we take in, year after
year after year after year, $18,500 per
American. That is the share of the national debt. It goes up, up, up, up.
The Senator talked about the guts to
support the President’s budget. The
President’s budget did not resolve it. If
it resolved it, why are we looking at
$200 billion more in annual deficits?
How are you going to defend America
when we get $20 trillion in debt? Where
do you draw the line? Where do you
draw the line?
The Senators talked about taxes. We
can raise the tax rate, the Senator
from West Virginia said—36 percent, 50
percent, 70 percent, 100 percent? That
is what is going on in Washington, DC,
right now. The taxes are so high they
cannot pay them anymore. They are
asking the Federal Government to
come in and take over the city.
Mr. SARBANES. Let me bring the
Senator back to the very real-life problem that I wish to discuss with him
based on a very clear example in history, because what the Senator has
just done is what is consistently done
here. If we try to focus, in a toughminded way, on a particular problem
they say, ‘‘Oh, well, don’t worry about
it; somehow or other it is going to be
taken care of.’’
Now, I want the Senator to come
with me for just a moment or two and
to look at some history, and I want to
read from this article that appeared in
the summer of 1991.
Fifty years ago last Monday, on August 12,
1941, House Speaker Sam Rayburn saved the
draft from legislative defeat and kept the
U.S. Army intact to fight a war that was
only 4 months away.
The reason I am citing this story is
because we are constantly told that if
we have an emergency situation, we
will get this waiver. The Senator from
New Hampshire has just told me we are
going to get a three-fifths waiver. He
left the section I was focusing on that
required a majority of the whole number, namely you had to actually have
218 votes in the House or actually have
51 votes in the Senate, and he has now
gone to three-fifths of the whole number. So you have to have 290 votes in
the House and 60 votes in the Senate in
order to address the crisis. He says if
we have a crisis, we obviously will address it. I am going to point to a lesson
in history in which I think people
would now agree we had a crisis that
had to be addressed. We did address it.
But if we had been operating with
these requirements, either one of them,
we would not have addressed it because
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February 16, 1995
we would not have gotten the vote that
was necessary to do it.
Let me read on from the article.
The margin of victory was a single vote.
And the battle could have been lost as easily
as won except for Rayburn’s personality and
leadership and mastery of parliamentary
procedure. If Rayburn had failed, the Army
stood to lose about two-thirds of its strength
and three-fourths of the officer corps. At
issue was whether to extend the 12-month
service obligation of more than 600,000 draftees already in the Army, thousands of others
being inducted every day, and the activeduty term of several thousand National
Guardsmen and Reservists who had been
called up for 1 year. Without an extension,
the obligations of both the draftees and the
Guardsmen and Reservists would begin expiring in the fall. The United States had
adopted its first peacetime draft during the
previous summer after weeks of heated and
acrimonious debates in both congressional
Chambers.
The article then goes on to point out:
Although the legislation limited the draftees’ terms of service to 12 months, it provided that the President could extend the period indefinitely if Congress declared that
the national interest is imperiled.
On July 21, 1941, with the prospect of war
increasing, Roosevelt acted. In a Special
Message to Capitol Hill, he asked Congress
to declare a national emergency that would
allow the Army to extend the service of
draftees, guardsmen and reservists for whatever period the legislators deemed appropriate.
Despite the measure’s unpopularity and
strong lobbying by isolationist forces, the
Senate approved a joint resolution on August 7, declaring the existence of a national
emergency and authorizing the President to
extend the service of most Army personnel
by 18 months.
The vote was 45 to 30, I say to my
good friend from New Hampshire; 45 to
30. That vote would not have qualified
under the amendment that he is proposing. That vote was inadequate. You
needed 49 now you would need 51, if you
did it by the whole number, or 60 if you
are doing the three-fifths. I am now
quoting the article.
In the House it was a different story. The
Republican leadership viewed opposition to
draft extension as a political opportunity too
good to ignore. Others had their own reasons
for opposing the measure.
It then discusses what Rayburn went
through, and of course the final vote
was 203 to 202. Mr. President, I say to
the distinguished Senator from New
Hampshire, 203 votes is not enough
under the provisions of the proposal
that he is now seeking to place in the
Constitution of the United States.
So, here we have a real situation.
This is not hypothetical. This was a
critical issue. It was carried under the
provisions of the Founding Fathers,
which the very distinguished Senator
from West Virginia has been expounding. Under the provisions of the Founding Fathers, the Congress was able to
make a decision. You had a majority in
both Houses for it, 45 to 30 in the Senate, 203 to 202 in the House of Representatives. They addressed the situation. Under this proposal, we would not
have been able to address that crisis.
Mr. SMITH. If I might just respond
to the Senator, his point is well taken.
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However we have a situation where I
think we are mixing apples and oranges. The Senator is assuming—we
did not have an amendment at the
time, we did not have a $5 trillion national debt in 1941. We did not have a
situation where the Members who were
debating knew that they would need a
certain number of votes to get over the
top to be able to declare war. It is an
entirely different situation. You cannot compare 1941 with 1995—you can,
but I do not believe it is a fair comparison.
I think things were different then.
The situation was different. The debate
was different. The issues were different. I think in this particular case if
the emergency was such, under the
amendment—if the emergency were
such that we needed to do something in
the area of national security, it could
be done either by a three-fifths vote of
both parties to deficit spend to take
care of it—which is one option. If they
do not want to do that, then they have
other options. But I think to say 1941
when Roosevelt declared war is the
same as it is today is simply wrong.
The issue is, we can deficit spend.
That is the first option. Or we can cut
spending somewhere else. And that is
exactly what most responsible people
would do in the future, who are here on
the floor of the Senate or in the House,
wherever the debate takes place—in
both places. They would make the responsible decision, surely, to protect
the national security of the United
States. They would cut something if
they did not agree to go the threefifths route to deficit spend to do it. I
think that is very well protected under
the Constitution. It makes complete
sense. It is common sense. We are the
representatives of the American people. If we decide we cannot muster
three-fifths votes then I assume the
American people do not feel it is a national security problem for us.
If we still believe that they are
wrong, we can then cut spending somewhere else with a simple majority. I do
not see what the Senator’s problem is.
Mr. SARBANES. Mr. President, I say
to my colleague we are just being given
these kind of bland assurances. ‘‘Surely
this would happen. No question this
would be done. It is common sense that
we would respond.’’ Yet I am giving
you a real, live, historical example.
There was nothing hypothetical about
it, nothing conjectural about it. It happened at a critical time in American
history. We were faced in the Congress
with a very fateful decision. We are
talking literally months before Pearl
Harbor. Literally months. And the
Congress was faced with this difficult
decision.
The Congress reacted, I think, appropriately. But by very narrow margins.
And neither of the margins in the Senate nor the House are adequate to meet
the requirements contained in your
proposal, which only dramatizes the
point that the Senator from West Virginia has made so effectively here this
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morning about the danger of going
against the Founding Fathers, against
Madison and Hamilton, and writing in
these supermajority requirements.
The real danger to the Republic is
that you will not be able to deal with
crisis situations when they emerge.
The Senator says, ‘‘Oh, no, we will
take care of those. Do not worry about
it. Do not worry about it. Surely we
would respond.’’
I am saying to the Senator: I am giving an example right out of history
where we, under his standards, would
not have taken care of it. Fortunately
the standard was the one laid down by
the founders, the one that the Senator
from West Virginia propounded here. In
other words, we decide things by majority. We were able to address the situation. But with your provisions here
that situation could not have been addressed. It is clear on its face.
Mr. SMITH. Mr. President, if the
Senator will yield for a response, there
are a couple of points here. First of all,
the Senator is assuming something he
does not know to be the fact. In 1941 we
did not have a three-fifths situation. In
1941, I would assume that the American
people would have wanted us to support the President of the United
States, which we did, to go to war when
we were attacked.
Mr. SARBANES. Will the Senator
yield on that? Is the Senator telling me
that on a measure that passed the
House 203 to 202, that if at the time
there had been a three-fifths requirement of the entire membership of the
House of Representatives—which would
be 261 votes?
Mr. SMITH. I did not do the math. I
will take the Senator’s word for it.
Mr. SARBANES. It is 261.
Mr. BYRD. Let me tell the Senator,
175 votes could defeat it; two-fifths
could defeat it.
Mr. SARBANES. It is 261. Are you
telling me that a good number of the
202 who voted against it then would
have voted for it, so you would have
had 261 votes? Where are you going to
come up with these? You barely got 203
votes. It almost lost. It passed by one
vote. And now you are telling me,
‘‘They did not have the three-fifths requirements then. If they had the threefifths requirement somehow, miraculously they would have gotten the
other votes in order to do it when they
voted against it at the time?’’ They almost beat it. They almost beat it on a
straight up or down vote: 203 to 202.
And now you are telling me, ‘‘Well,
they did not have the three-fifths requirements. If they would have had the
three-fifths requirement, namely that
he had to get 261 votes then a big
chunk of these 202 who voted against it
then, to prevent it from happening,
would have switched over and voted for
it?’’ Is that what the Senator is telling
me? I cannot believe it.
Mr. SMITH. The Senator did not listen to me very carefully. That is not
exactly what I said. What I said is
there are two options. One, those peo-
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ple, if they had the three-fifths provision, I think, would have looked at it a
lot differently, and they may have gotten more votes.
Let us assume the Senator’s position
and say that did not happen. If it did
not happen and this amendment were,
in 1941, part of the Constitution, we
then would have gone and spent money
by taking money from someplace else
in the budget because we would have
believed that the national security interests of the United States should
come first ahead of subsidies to apples
or whatever else.
Mr. SARBANES. How do you know
they would have done that?
Mr. SMITH. Because it takes 51 percent to do it. That is why.
Mr. SARBANES. My dear friend.
Mr. SMITH. That is exactly why. It
is the same numbers.
Mr. SARBANES. The Senator from
New Hampshire is my dear friend. But
how can the Senator stand here and
say, ‘‘We easily would have gone somewhere else and found the money’’ when
at the time, on the very issue itself
without that constraint, without that
additional complication in terms of
getting support for the measure, without the further complication of the dynamics of trying to achieve a majority
vote, when at the time they only
passed it by one vote, 203 to 202? That
was the vote.
Mr. HATCH. Will the Senator yield?
Mr. SARBANES. Speaker Rayburn
walked the Halls of the Congress. I am
now quoting this article.
The vote was set for Monday, August 11.
But Rayburn put it off for one day out of respect for a Republican Member who had died
over the weekend.
I must say those were the days when
there was a degree of civility that prevailed in the workings of the Congress.
With the President out of town meeting secretly in New Foundland with British Prime
Minister Winston Churchill to frame the Atlantic Charter, Rayburn spent the additional
day roaming the corridors of Capitol Hill
trying to win over recalcitrant Democrats
and wavering Republicans. His lobbying
style was like the man himself, honest, direct and intensely personal without a hint of
intimidation. The debate went on for 10
hours in the House. Finally at 8:05 p.m. the
reading clerk began calling the roll.
I reach back into history to try to
bring you a real, live example.
Mr. HATCH. Will the Senator yield?
Mr. SARBANES. Certainly.
Mr. BYRD. Mr. President, I ask unanimous consent that I may yield for
such colloquy without losing my right
to the floor.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. HATCH. I apologize. I did not realize my distinguished friend from
West Virginia had the floor.
Let me just say this. That is what
was created 203 to 202. There were
times when that could have happened.
It was extraordinary. In the Senate,
there were only 96 Senators sitting at
that time. The vote was 45 to 30. So
there were 21 Senators that were missing. We could have had a constitutional
majority in this case.
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Mr. SARBANES. How could you have
had it? Those votes could not qualify
under your amendment. Is that correct? Neither of those votes qualifies
under your amendment.
Mr. HATCH. You could not with
those two votes.
Mr. SARBANES. Either in the Senate or the House.
Mr. HATCH. The Senator was talking
about Senators walked. They walked
there. There were 30 that walked in the
House. There were 21 in the Senate; 96
in the Senate; only 75 voted. So even
under a minority vote, people can
walk, if they want to.
But the point is we have a constitutional majority in here for one reason,
and it has been accepted by both Democrats and Republicans in the House and
the Senate; and that is so that we
would have tax-limiting effect. I think
it is going to be a tax-limiting effect.
That is the purpose of it.
Mr. SARBANES. If the Senator will
yield, you have it in section 5 to do a
waiver for a military conflict you require a whole number of each House.
Mr. HATCH. That is right.
Mr. SARBANES. The whole number.
Let me go back. There were only 48
States then. So there were 96 Senators.
Mr. HATCH. Right.
Mr. SARBANES. The whole number
would be 49 in that circumstance. Is
that correct?
Mr. HATCH. That is right.
Mr. SARBANES. The vote in the Senate was 45 to 30. That does not qualify.
Correct?
Mr. HATCH. Right.
Mr. SARBANES. In the House, they
had 218.
Mr. HATCH. 203 to 202.
Mr. SARBANES. 218.
Mr. HATCH. No. It was 203 to 202.
Mr. SARBANES. In any event, it will
not qualify there either.
Mr. HATCH. It would have, had they
not walked.
My point is the Senator is saying
they might walk under this constitutional majority. They walked then
under a regular majority vote.
Mr. SARBANES. That is right.
Mr. HATCH. But in both cases, had
they not walked, you could have had a
constitutional majority. I think these
votes are going to be heightened votes,
and nobody is going to miss them.
Mr. SARBANES. If I could say to my
dear friend from Utah, the Founders
specifically discussed this. They debated whether the quorum should be
more than a majority of the body and
they rejected the notion that it should
be more than a majority. They said
then that you would prevail on a measure by majority of those present and
voting.
Mr. HATCH. That is right.
Mr. SARBANES. Assuming you had a
quorum. You have escalated the number, and you have done it in such a way
as to negatively effect very critical decisions, as I have indicated by the history of World War II. A measure that
was before the body that I would argue
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very strenuously was needed to provide
for the national security of our Nation
would have failed, not because a majority of those present and voting did not
support it—they did support it—but because you have introduced supermajority requirements. And these
votes would not have met your supermajority requirements.
Mr. HATCH. Will the Senator from
West Virginia yield once more to me?
Mr. BYRD. Mr. President, yes. I do.
Mr. HATCH. Keep in mind, I do not
think that we can use votes in 1941.
There was not a constitutional amendment in effect then. Keep in mind, one
of the other things our Founding Fathers did—they did it very carefully—
was to put article V into the Constitution which provides for constitutional
amendments, and for changes that are
needed. We are asserting that this
change is needed because of the way
Congress has been profligate over the
last 60 years.
But let us say the last 26 years during which time we have—could I finish?
Let me finish this one thought. The
point is that one of the most important
aspects of the balanced budget amendment is that these two votes, if they
are taken every year, are going to be
the votes nobody is going to be able to
miss. If you vote on increasing taxes,
there are going to have to be 100 Senators here because it is going to be a
vote that everybody in the country is
going to pay attention to. If you vote
on increasing the deficit, there had better be 100 Senators here. There are not
going to be any walks. Anybody who
walks is not going to be there in the
next Congress.
That is one thing this amendment
will do.
Mr. SARBANES. Let us assume that.
Let us assume in 1941 in the House of
Representatives that everyone who
walked would have voted for the measure. It is a big assumption. Let us assume that. Everyone who did not vote
would have voted for it.
Mr. HATCH. You would have had a
constitutional majority——
Mr. SARBANES. No, you would not
have had the three-fifths——
Mr. HATCH. Not to increase spending.
Mr. SARBANES. Which the Senator
from New Hampshire was making reference to.
Mr. HATCH. I said a constitutional
majority for increasing taxes.
Mr. SARBANES. The point I want to
get across to my colleague is that
there is the assumption that issues of
national security will not be a matter
of controversy. In other words, he is
saying clearly, if there is a problem, we
are going to get these supermajorities
in order to do what needs to be done. I
am demonstrating that we had an instance in which there was clearly a national security question and you are
not commanding the supermajority.
Mr. HATCH. The fact that you cannot command a supermajority is part
of what is going to happen here. What
we are saying is, look.
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I think a better illustration, if the
Senator wants me to substitute one for
him, would be the vote last year on the
tax package which the President
brought up here. It is an interesting
constitutional question that I know
will intrigue my dear friend from West
Virginia who has spent a lifetime
studying the Constitution—for whom I
have a lot of respect—in that area,
among many others. That is, that vote
last year did not have one Republican.
We have been excoriated by Members
of the other side of the floor as Republicans because we did not vote for that
tax increase, or the deficit reduction
part of it either. We did not because we
did not want taxes to increase. And
some stood up and said, ‘‘We stood up
and did something about the deficit.’’
Well, I suspect that is true. We just did
not happen to agree. But now that vote
was a 50–50 tie in the Senate.
I want the attention of my dear
friend from West Virginia. It was a 50–
50 tie. Had this constitutional amendment been in effect, would that bill
have become law today? Or would it
have become law at that time? We did
not have a majority of the whole number of the U.S. Senate. It took the Vice
President to break the tie.
There are two ways of looking at
that. One is that 50 of us could have
thwarted the tax increase. I think that
would have been a terrific thing to do,
and that is what we tried to do. We lost
because of the fact that under the Constitution the Vice President could
vote. But the other point would be—
Mr. SARBANES. Will the Senator
yield?
Mr. HATCH. Let me finish and I will
be glad to. The other point—with the
delegation given to me from our colleague—is that, from your standpoint,
a simple majority was not allowed to
win, and that this would make it even
more difficult because you would have
to have 51 actual votes of the whole
number here.
Mr. SARBANES. Is that your reading
of section 4 of this balanced budget
amendment?
Mr. HATCH. Not necessarily. I am
raising—
Mr. SARBANES. What is your interpretation? What does it mean? Section
4 says, ‘‘No bill to increase revenue
shall become law unless approved by a
majority of the whole number of each
House by a rollcall vote.’’ Take the situation you just described. It is a 50–50
split. The Vice President is entitled to
cast his vote. Would this negate the
vote-casting power of the Vice President?
Mr. HATCH. No. He could cast his
vote, but since you did not have 51
votes of the majority of the whole
number, the tax bill would have gone
down to defeat.
Mr. SARBANES. That is your understanding of the meaning of that?
Mr. HATCH. That is my interpretation. I thought I would give you a good
illustration.
Mr. SARBANES. I wanted to have
that on the record.
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Mr. HATCH. We would not have had
that highest tax increase in history
had this amendment been in effect.
Mr. SARBANES. That is right. You
are saying if this amendment were
passed, the August vote would have
been negated.
Mr. HATCH. That is my interpretation. It would have meant that we
would have had to have gotten that 51
votes to increase taxes, and we probably would have been faced with having
to reduce the deficit more.
Mr. BYRD. Mr. President, what it
also means is that in a situation such
as the distinguished Senator from
Maryland has raised—and he has focused on a section which I am going to
reach a little later, but he has done it
much better than I would have done it.
What my Republican friends are saying—and I hope I will have the attention of both of my friends—what our
friends here have just said is that in
the event we are in a situation which
jeopardizes the national security——
Mr. HATCH. No, that is not what I
said.
Mr. BYRD. Wait. That is, in essence,
what you are saying. You have not let
me finish what I am going to say. How
do you know what I am going to say?
Be a little patient.
Mr. HATCH. I will.
Mr. BYRD. What they are, in essence,
saying is that you have to have 51
votes in the Senate—no matter how
many take a walk; you have to have 51
Senators, not including the Vice President, who would be willing to stand up
and vote for a resolution which authorizes the Commander in Chief in a situation where there is a declaration of war
or——
Mr. HATCH. No, no——
Mr. BYRD. Just let me finish. This is
one Senator who is not going to be befuddled or frustrated by interruptions.
I will be very happy to yield to my
friend when I have finished.
Let me start again. We will learn
over a period of time that there are
some Senators who will just not be
rushed.
‘‘Congress may waive the provisions
of this article for any fiscal year in
which a declaration of war is in effect.’’
In the last 48 years, this country has
fought three wars and engaged in several military conflicts that were of a
lesser nature. Not one time was there a
declaration of war. Not one time.
The provisions of this article may be
waived for any fiscal year in which the
United States is engaged in military conflict
which causes an imminent and serious military threat to national security and is so declared by a joint resolution adopted by a majority of the whole number of each House
which becomes law.
Therein lies a tale—many tales, as a
matter of fact. First, there has to be a
resolution passed. There has to be a
joint resolution passed, even considering the fact that we might have a filibuster conducted on such a resolution
because the opposition could be very
strong in the Senate on that occasion
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There could be a filibuster. The President could veto the resolution when it
reaches him. How much time do we
have? My friend from New Hampshire—
I believe, if I did not misunderstand
him—said in that kind of a situation,
we would make cuts, we would make
cuts from other programs. We would
adjust priorities.
We do not have time to make cuts
when the Nation is faced with a military threat. We do not have time to
search through various programs and
come up with cuts. And besides, the domestic discretionary programs have already been pared to the bone. When the
Nation is put in jeopardy, there must
be a resolution passed. It must be enacted into law by the President’s signature, and the Nation’s security is in the
balance. We do not have time to make
cuts. It takes time.
Secondly, in the event there is a 50–
50 tie, under the Constitution as it is
written, the Vice President could cast
a vote breaking the tie. Under this section of the amendment, the Vice President, representing the President and
his administration, is not permitted to
cast a vote to break a tie, while the
Nation’s security is in the balance. No,
it has to be a Senator. The amendment
says you have to have 51 Senators.
Mr. President, this section 5, plays
Russian roulette with the national security of this country. You do not have
the time to look at some programs providing research on apples, or mushrooms, or whatever it may be. You do
not have time for that. And that is
small chicken feed, that is small; you
are talking about pennies in comparison with the billions of dollars that
military threats to our security will
cost. It puts the Nation’s security into
a gamble.
Mr. President, does the distinguished
Senator wish me to yield to him again?
Mr. HATCH. I would appreciate it. I
appreciate what the Senator is saying.
This amendment is not going to allow
business as usual. It is going to require
a constitutional majority to increase
taxes, which is a tax-limiting approach. I suspect that that will be
more difficult to get than a three-fifths
majority to increase the debt. I really
suspect that that is so.
The distinguished Senator from West
Virginia—as he always is—was very accurate in stating that section 5 says
that during a declared war, Congress
can waive this provision. That only
takes a majority vote. However, if you
get into a military conflict which
causes an imminent and serious military threat, then it will take a constitutional majority.
I cannot imagine any Congress that
would not grant a constitutional majority under those circumstances. But
be that as it may, if it does not, then
that will be the right of the Congress.
(Mr. GREGG assumed the chair.)
Mr. SARBANES. Will the Senator
yield for a question?
Mr. HATCH. Yes, I will.
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Mr. SARBANES. The people who are
against it do not even have to show up;
is that correct?
Mr. HATCH. Yes.
Mr. SARBANES. Now the way the
Constitution is written, if a matter is
put to a vote, let us say four or five
Members are missing, they may be ill,
they may be in the hospital, they may
be sick, they may have gone to a family funeral, so they cannot be here. It
is not unheard of. In fact, it has happened on occasion. You take a vote
amongst those that are here. It passes
47 to 46, and that is that. Under your
provision you need 51 votes.
Mr. HATCH. Right.
Mr. SARBANES. Suppose you had a
vote 50 to nothing, just to draw the
most extreme hypothetical, 50 are for,
zero against. The rest are all absent.
That does not carry; is that correct?
Mr. HATCH. You would wait until
the next day when you had 51. You can
come up with hypotheticals in every
situation, but that does not change reality. This body has increased the debt
ceiling.
Mr. SARBANES. But the people that
are against do not have to vote; right?
Mr. HATCH. That is right.
Mr. SARBANES. They are not required to be here to make a difference.
Because the standard is not between
those that are for and those that are
against, you have to get so many affirmative votes; is that correct?
Mr. HATCH. You could use the same
logic. It does not—Mr. SARBANES. Or it could be the
three-fifths where you have —Mr. HATCH. You have to have 51 here
to constitute a quorum, so it would not
have passed anyway. That could be
under any hypothetical.
Mr. BYRD. No, no, no. You can have
51 here, which is a quorum, under the
constitutional amendment that presently obtains and 26 Senators would be
a majority.
Mr. SARBANES. If you had 51
present so you had a quorum and the
vote was say 48 to 3.
Mr. HATCH. Then you would not
have the requisite number.
Mr. SARBANES. It would not pass;
right?
Mr. HATCH. No.
Mr. SARBANES. You would have a
quorum and you would not pass it.
The more you probe into this, the
more of a Rube Goldberg contraption it
is.
Actually what happens is, the more
we debate this section, the more you
come to understand and a appreciate
the perceptions and the wisdom of the
drafters of the Constitution.
It is incredible that we are out here
playing games with a document that
has withstood 206 years of scrutiny and
was put together by a group of men
whom Gladstone, the great British
Prime Minister, regarded as the greatest assemblage of statesmen in the history of the world. That was his comment about them in framing the Constitution of the United States. Yet, we
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are playing games with it all throughout here.
You have a three-fifths of the whole
number requirement, you have a majority of the whole number requirement, you have a waiver requirement.
You are negating the tie-breaking vote
given to the Vice President of the
United States, as I understand it, under
another provision of the Constitution.
Mr. HATCH. Not really.
Mr. SARBANES. The Senator told
me on a vote of 50 to 50, in which the
Vice President sought to cast the tiebreaking vote, would not qualify under
your proposal.
Mr. HATCH. Only under that instance. In other instances it who qualify.
Let me make this point. The game
that is being played is business as
usual. We are running this country
right into bankruptcy.
Mr. SARBANES. No, that is not the
case.
Mr. HATCH. Let me finish.
Mr. SARBANES. No, I am going to
reclaim my time. I am not going to let
the Senator——
Mr. HATCH. He yielded to me.
The PRESIDING OFFICER. Does the
Senator from West Virginia yield the
floor?
Mr. BYRD. Let me get it perfectly
clear. I yielded to both Senators for a
colloquy, with the understanding that I
would not lose my right to the floor,
into which colloquy I presume I can intervene at any point I wish.
Mr. HATCH. That is right.
If I could finish my remarks, I would
be happy to allow the Senator from
Maryland to respond.
My problem is, you can find fault
with almost anything. The reason we
brought this balanced budget amendment before us is because we have a
runaway train of Federal spending. We
have a runaway train that is not treating our taxpayers fairly. The answers
always seem to be more spending and
more taxing.
This amendment is an amendment
that does not require a balanced budget, but it does require us to at least
make priority choices.
If we are going to spend, then we are
going to have to stand up and vote to
do so. You have to vote. We do not
have to now. If we are going to tax,
then you have to stand up and vote to
tax. We do not have to do that right
now. We can do it through voice votes.
I just want to add this to it: If you
are going to tax more, by gosh, I think
you are going to find these two votes—
a vote to increase taxes, a vote to increase the deficit—from this point on,
if this balanced budget amendment
passes both Houses and becomes ratified, you are going to find that those
two votes are going to have 100 Senators every time, because nobody could
fail to vote on them. And if they do,
they are in jeopardy of losing their
seat. It is going to highlight the importance of these votes around here. We
will not have any more of these 51
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votes or 26 to 25. We have not had any
of those as long as I have been here.
The point is that when the Senator
mentioned that in his hypothetical, he
said 50 votes. I am saying that would
not have been acceptable; 51, if you
have 26 votes, yes.
Mr. SMITH. Will the Senator from
West Virginia yield?
Mr. SARBANES. If I could just engage in this colloquy further.
The game that is being played, I say
to my friend, is very clear today because the other side has been very
clear that they have drafted this in a
way that would have knocked out the
deficit reduction package of August
1993.
Now, I understand that the Senator
was not for that. I was for it. I disagree
with him. The Senator portrays it as a
tax increase on all the American people. The fact of the matter is, it was a
tax cut on the top 2 percent of the income, other than the gasoline tax. But
the income tax rates affected the top 2
percent.
Now, I understand the Senators on
the other side have a very soft spot for
the top 2 percent, but it seemed to me
reasonable to do this and to try to address some of our Nation’s problems.
In any event, the situation could
have been reversed. You could have
been trying to push through a deficit
reduction package that I opposed for
one reason or another.
The question is whether you are
going to skew the Constitution in a
way that a majority is not going to be
able to make decisions. The Founding
Fathers very carefully constructed this
document and they are very explicit,
both Madison and Hamilton in the Federalist Papers, in pointing out in the
documents about a supermajority.
Let me just read what Madison said
in Federalist 58. Because he is the father of our Constitution and a man of
great reason and fairness. He would
recognize the other arguments and try
to deal with them rationally, which is
what we are trying very hard to do
here today. Let me just quote him.
This is Madison now, in the Federalist 58:
It has been said that more than a majority
ought to have been required for a quorum;
and in particular cases, if not in all, more
than a majority of the quorum for a decision.
That some advantages might have resulted
from such a precaution cannot be denied. It
might have been an additional shield to some
particular interests, and another obstacle
generally to hasty and partial measures. But
these considerations are outweighed by the
inconveniences in the opposite scale. In all
cases where justice or the general good
might require new laws to be passed, or active measures to be pursued, the fundamental principle of free Government would
be reversed. It would be no longer the majority that would rule: the power would be
transferred to the minority. Were the defensive privilege limited to particular cases, an
interested minority might take advantage of
it to screen themselves from equitable sacrifices to the general weal, or, in particular
emergencies, to extort unreasonable indulgences.
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Now, I agree with Gladstone’s evaluation of the Founding Fathers. This
amendment is fraught with peril. The
more we go into it and the more we develop it and the more we measure it
against historical experience, the more
I find wrong with the amendment.
The Senator asserted earlier that
surely three-fifths would vote to raise
the debt limit. I invite my colleague to
go back through the votes on raising
debt limits in the past to spot the ones
where three-fifths did not. It is not so
obvious.
In many of these issues it is a struggle to get the simple majority to make
the decision. These are controversial
issues. They are recognized as controversial. The August 1993 package
was controversial. You disagreed with
it. I supported it. I think it has proven
itself out. I think all the subsequent
history supports a decision to have
passed it.
Those decisions ought to be made by
majority vote. That is what the Founding Fathers intended. That is what I
think we should stick with.
I yield the floor.
Mr. SMITH. Mr. President, will the
Senator from West Virginia yield?
Mr. BYRD. Mr. President, I yield.
Mr. SMITH. The Senator has been
very generous for all Members here on
his time for which this Senator is
grateful.
I would like to pick up on something
that Senator HATCH said, and say to
the Senator from Maryland, the Senator has pointed out some points which
are well taken regarding this debate
and this amendment. I would also say
to the Senator that Winston Churchill
once said, ‘‘Democracy is not perfect,
but it is the best thing going.’’
The issue here is the Founding Fathers were not infallible. We are not infallible. There are reasonable decisions
that have to be made from time to
time. The Dred Scott decision in 1857
when a Supreme Court said a slave was
property and therefore could not sue in
Federal court. That came in under the
Constitution. Is that right? No. But it
happened. So we are an infallible people.
So my point is, what Senator HATCH
was alluding to, if we look at what is
happening we are talking about a situation where a national emergency
might emerge. The Senator is correct.
He made some very good points about
what might happen if that national
emergency were to come about.
The other point is, if we are looking
at where the debt is going and how
much of the debt is being consumed,
how much of the budget is being consumed by interest on the debt, and
looking at where it is today, 16 percent
roughly of that budget is interest on
the debt and 16 percent is national defense.
I would say to the Senator, with all
due respect, if we did not stop it, if we
do not stop this runaway train of debt
and deficit spending, we are not going
to have any money for national defense. We are not going to have any
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money for any emergency under any
situation because, and the Senator
knows, that the commission, which
was a bipartisan commission, on entitlements headed by Senator Bob
KERREY, Democrat, and Senator Jack
DANFORTH, Republican, said by the
year 2013 at the latest, this country
will be spending 100 percent of its budget on interest on the debt and entitlements. There is not going to be any
money for defense.
I would just say to the Senator if this
is fallible, this amendment, then tell
me what the alternative is when we get
to 2013 and we do not have any money—
none, zero—to defend our national security or our national interests.
Mr. SARBANES. Mr. President, I will
tell the Senator. First of all, it boggles
the imagination that we are hearing
this argument from someone who voted
against the 1993 deficit reduction package. All of the situation that the Senator is talking about would be far
worse had the Senator prevailed on
that vote.
There are tough decisions to be
made. Everyone recognizes that. Because they are tough to make it is very
difficult to get a majority for them.
What the Senator is doing is escalating
the standard from a majority to a
supermajority. So the Senator is making it even tougher to make the tough
decisions, not easier. The Senator is
putting more power into the hands of
the minority to frustrate or to thwart
the effort.
Where I disagree with the Senator is,
in his assumption, that all of these
waivers will be granted in a time of crisis. If we go back through our history,
it does not support the Senator. Historically, when we come up against
these situations they are often very divisive and very controversial and action in the end is taken by a bare majority. I went through at great length
earlier the example of the extension of
the service requirement under the draft
in 1940.
Clearly, that was important to the
national security of the country. I am
quoting from that article:
In an effort to depoliticize the issue as
much as possible, Roosevelt and Secretary of
War Henry Stimson designated Army Chief
of Staff George Marshall as the administration’s point man on the Hill. Marshall
worked tirelessly but found converts difficult to come by despite his tremendous
prestige on Capitol Hill. ‘‘You put the case
very well,’’ one Republican Congressman
told him, ‘‘but I will be damned if I am going
to go along with Mr. Roosevelt.’’
The vote was set for Monday August 11,
but Rayburn put it off for one day out of respect for a Republican Member who had died
over the weekend. With the President out of
town meeting secretly in Newfoundland with
British Prime Minister Winston Churchill, to
nail the Atlantic Charter, Rayburn spent the
additional day roaming the corridors of Capitol Hill trying to win over recalcitrant
Democrats and wavering Republicans. His
lobbying style was like the man himself,
honest, direct, and intensely personal without a hint of intimidation.
Here is Rayburn himself, walking the
corridors. Here is General Marshall,
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one of the really great statesmen of
American history, a man for whom I
have enormous respect and admiration,
working—as they say here ‘‘Worked
tirelessly but found converts difficult
to come by despite his tremendous
prestige on Capitol Hill.’’ When the
vote came, it was 203–202. That vote
would not qualify under the provisions
of your balanced budget amendment
proposition here.
We would not have been able to respond to this national crisis. The Senator earlier said to me if they had
known they needed a three-fifths requirement they would have gotten
more votes. I said to the Senator, it defies belief that a sizable chunk of the
202 who voted against it would switch
over because they knew there was a
three-fifths requirement. They voted
against it when there was a simple majority requirement and the thing would
have gone down, and it would have
been a disaster for the Nation had it
happened.
All I am saying is that these tough
decisions need to be made by majority
vote just as is provided for in the Constitution. The Founding Fathers could
foresee these things and that is why
they provided it. This is, as the distinguished Senator from West Virginia
said, playing Russian roulette with the
national security of the United States.
Mr. SMITH. Mr. President, if I could
have a last response, I promise the Senator from West Virginia.
The Founding Fathers also provided
for an amendment process to the Constitution because they knew that it
would need that flexibility, because it
could not predict the future nor foresee
the future. The Senator knows that.
That is why we are here.
I also would respond to the Senator
on the point of the budget agreement
of 1993. This debate is, essentially, a
nonpartisan debate on the issue of
whether or not we need an amendment,
constitutional amendment, to balance
the Federal budget. But the Senator introduced a partisan matter on the issue
of the budget agreement.
Just because this Senator and the remaining Republican Senators in the
Senate at the time did not agree with
the Senator from Maryland that the
way to bring the deficit down was to
increase taxes $250 billion, but rather
bring spending down $250 billion to
move the budget deficit down, that
does not make me opposed to bringing
the deficit or the debt down.
The truth of the matter is, those on
this side who voted against that wanted to cut spending, not raise taxes.
The second point is, which we have
already gone into on the floor many
times before, not only during this debate, but the truth of the matter is the
correction that needed to be taken to
reduce the debt was not taken with
that budget agreement, for the same
reason it was not taken with any of
these other agreements that are on
this chart from 1921 all the way up to
Gramm–Rudman-Hollings
and
the
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budget agreement of 1993. The truth of
the matter is, Congress walks away
from them.
The President of the United States,
President Clinton, just submitted a
budget, the follow-on to this budget,
which increases the national debt by
$1.6 trillion over the next 5 years. Since
this agreement has been passed, we
have increased the national debt another one-half trillion dollars. So
where is the progress?
This Senator fails to understand
where the progress is being made. I
hear about all these great agreements,
we have had all these budget agreements, we are bringing the debt down,
bringing the deficit down. We are not
bringing it down. It is going up, up, up,
up, and the reason why is because we
need this amendment because Congress
will not do it without it. That is absolutely evident.
The Senator talks about a national
emergency. I do not know whether he
has a commission out there somewhere
that defines a national emergency or
whether he has to read it in the newspaper that it is a national emergency.
If the Congress of the United States
does not think it is a national emergency or the President does not think
it is, I do not know how you define a
national emergency.
So I assume, by definition, if the
Congress does not vote to say it is a national emergency and provide the funding to go to war, maybe they do not
think we should go to war. That is the
prerogative of the U.S. Congress. That
is the prerogative. That is exactly
what the Founding Fathers meant that
‘‘Congress shall have the power to declare war.’’
This argument that somehow we are
going to defend the right of the United
States to protect itself by voting
against the balanced budget amendment is the most nonsensical thing I
heard since I have been here.
By the time this debate is over, we
are going to add tens of billions, hundreds of billions of dollars to the national debt; $9,600 per second as we debate the debt goes up. Interest on the
debt is now going to pass defense. What
we spend on defense and interest is
going this way, just like that, and defense is going this way. And by the
year 2013, by most admissions of a bipartisan commission, we will be spending 100 percent on interest and 100 percent on entitlements.
Mrs. BOXER. Will the Senator yield?
Mr. SMITH. That is what is going to
threaten the national security of the
United States of America, not a constitutional amendment to balance the
budget.
Mrs. BOXER. Will the Senator yield
to me to ask a question?
The PRESIDING OFFICER. The Senator from West Virginia has the time.
Mrs. BOXER. If the Senator will
yield for a short period of time.
Mr. BYRD. Mr. President, I ask that
I may continue to yield with the understanding that I not lose the floor for
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the purpose of a colloquy to include
now the distinguished Senator from
California [Mrs. BOXER].
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mrs. BOXER. I thank you very much.
I was not planning to participate, but
something the Senator said makes me
want to, and that is during the discussion with the Senator from Maryland
on the vote on the deficit reduction
package, which the Senator from New
Hampshire says is, in fact, not working, every expert in the country says
that the deficit would have been $500
billion higher. But let us not even get
into that because what I want to ask
the Senator are two basic questions.
First of all, the Senator said at that
time he did not like the package that
the President sent over, the deficit reduction package, because it contained
some tax increases of which he did not
approve. We also know it contained a
large tax cut for the working poor and
far many more people are affected in a
positive way from that tax cut. But let
us put that aside.
The Senator said he would have preferred instead of raising taxes—and he
puts it at $250 billion—he would have
cut spending $250 billion.
So my question is, did the Senator
offer an amendment to cut $250 billion
and show us how he was going to cut
$250 billion from the deficit? I do not
recall it.
Mr. SMITH. If the Senator will allow
me to respond, you know the situation
as well as I do with regard to the debate and the politics, what was going
on. The truth of the matter is, there
were many discussions on our side,
many attempts to redirect that in committee. The distinguished Senator from
New Hampshire, who is in the chair,
was involved in a number of efforts in
the Budget Committee to reprioritize
that whole budget, and the Senator
from California knows that.
The truth of the matter is, the position of the President and the majority
in the Senate at the time, and in the
House, was that the best way to deal
with the deficit was to raise taxes on
the American people. My point is, the
best way to deal with the deficit would
be to reduce spending and to continue
that spending on a downward trend.
Mrs. BOXER. So the answer to
my——
Mr. SMITH. My final point. My only
point is we did not do what we needed
to do to correct it. Even with the tax
increase you did not correct it. If you
want to take the position, which I happen to disagree with, that we can continue to raise taxes forever until we
balance the budget, you have a right to
that position. But there is only so
much you can get.
Mrs. BOXER. My question to the
Senator was, he said at the time he
would have preferred to cut spending
$250 billion instead of raising the taxes.
The President’s plan did raise taxes on
the wealthy, and it also cut taxes much
more broadly on the working poor.
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Mr. SARBANES. It also cut spending.
Mrs. BOXER. And it cut spending the
other $250 billion. But the point I want
to make, in conclusion, and then I will
yield back the time to the good Senator and thank him once again for his
leadership on this: The Senator himself
said he was working on some plans. I
am sure he is. I have never seen that
plan.
I wrote to every single Republican
who is in the leadership, heads committees when this debate started. I said,
‘‘Show me your plan. You want this
balanced budget to go into effect. I
want to know if it is going to hurt the
people of California, the people I represent. I want to know what is going to
happen if there is a disaster or a war.’’
You have a three-fifths supermajority built into this, as the Senator
from West Virginia and the Senator
from Maryland have stated. They do
not agree with it. I do not agree with
it. I think it shows a mistrust for the
people, that is what I think about
supermajorities. They show a mistrust
for the people. They give too much
power to the minority, and I do not
think that is what America is all
about.
But putting all that aside for this
conversation, I have to stand up and
say to my friend from West Virginia
that when Senators on that side criticize those of us on this side for voting
for deficit reduction, which was the
largest package in history and it is
working, for them not to show what
their plan is and to hide behind this
figleaf of a balanced budget amendment, trying to tell the American people, because of that, they are going to
be the ones to balance the budget, I
find it very problematical. And I rose
today to add my voice.
They did not vote for the right to
know. They did not vote to exclude Social Security. I think this is a dangerous, dangerous balanced budget
amendment.
By the way, I wanted to vote for a
balanced budget amendment. I wanted
to vote for one over on the House side,
I say to my friend from West Virginia.
He would not have agreed with me. I
did, in fact, do that because it was
flexible, it took Social Security off the
table, it did not have a supermajority,
and we tried to fix this amendment.
As the Senator from Maryland has
stated so eloquently, the more you
look at this amendment—and that is
why I appreciate the time we have here
in the Senate to do that—the worse it
gets for the American people and the
people that I came here to fight for,
the people of California.
Mr. SMITH. May I ask the Senator
one question?
Mrs. BOXER. Does the Senator continue to yield?
Mr. SMITH. One final question.
Under your definition of ‘‘exemption,’’
if Social Security and other entitlements get to 100 percent of the budget,
do you still support the exemption?
Mrs. BOXER. Let me say to——
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February 16, 1995
Mr. SMITH. Answer yes or no.
Mrs. BOXER. I will answer it. I agree
with the Republicans who have said
over and over again by vote, ‘‘You’re
not going to touch Social Security.’’
Mr. SMITH. But when you exempt
it——
Mrs. BOXER. The answer is I am not
for touching Social Security either,
and because I believe that, I think it is
a compact with the people who paid
into it.
Mr. SMITH. You are going to destroy
it without the——
Mrs. BOXER. No.
Mr. SMITH. You certainly are.
Mr. SARBANES. If the Senator will
yield, the Social Security System is
paying its way.
Mrs. BOXER. Exactly right.
Mr. SARBANES. The Social Security
System is not only paying its way, it
is, in fact, running a surplus.
Mr. SMITH. And the Treasury is borrowing all the money to fund the debt,
and the Senator knows it.
Mr. SARBANES. That has nothing to
do with the Social Security System. It
is terribly important for the American
people to understand this because a
game may well be played with the Social Security trust fund, as was just indicated, in effect, by my colleague
from New Hampshire, if they do not
understand.
The Social Security trust fund is
more than paying for itself. People receiving Social Security owe no apology
on the deficit question, because the
trust fund currently is not only paying
its way, it is running surpluses, which
in an accounting sense are used to offset the size of the deficit.
Now, the other side would obviously
want to use those, and many of us feel
that should not be done. In the 1980’s,
when the Social Security trust fund
ran into some difficulties, we took the
measures of reducing benefits and raising Social Security taxes in order to
put the Social Security trust fund back
into a healthy position.
That is exactly what we did. This is
an effort to raid the Social Security
trust fund. It is implicit in this balanced budget amendment, and to some
extent was made explicit the other day
with the tabling of the Reid amendment, which sought to make it very
clear that it could not be tapped or
drawn on. It needs to be understood the
Social Security system is paying its
way. We have other so-called entitlements that are not, but the Social Security trust fund is more than paying
its way. That needs to be understood,
and this assault on the Social Security
system needs to be repudiated.
Mrs. BOXER. I say to my friend—and
I thank him for continuing to yield—
the reason I answered the question the
way I did to my friend, the good Senator from New Hampshire, is because
the Republicans are trying to have it
both ways.
It is really extraordinary, and I am
glad we have this chance, because on
the one hand they have passed motion
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after motion stating that they will
never touch Social Security or the benefits and it is off the table and they are
not going to look at it. On the other
hand, they vote against the Reid
amendment, the Reid-Feinstein amendment, which would have clearly taken
Social Security out of this balanced
budget requirement.
So they are talking two ways. And
what was so interesting right here this
afternoon just a few minutes ago is the
good Senator from New Hampshire
says to me, Senator, are you saying
that even if Social Security and the
other entitlements are 100 percent of
the problem, that you are not going to
touch them?
Well, that is what they have been
saying. They have been saying they are
not going to touch them. But if you listen very carefully, it is a very clear
threat to Social Security, as clear as
the nose on your face.
I say that this amendment is very
dangerous. It is very dangerous to the
stability of this Nation because it is so
inflexible, and my Republican friends
have voted almost unanimously—we
came close on the Johnston amendment on the Court issue, but basically
they have walked down the aisle with
this rigid supermajority requirement
amendment that puts Social Security
in jeopardy, it puts our States in jeopardy, and it puts our people in jeopardy.
I wish to thank the Senator from
West Virginia for his generosity in
yielding to me.
Mr. BYRD. I thank the distinguished
Senator from California [Mrs. BOXER].
Mr. President, when all is said and
done, our friends on the other side of
the aisle have not answered the question put to them by Senator SARBANES.
He brought up the language in Section
5 of the constitutional amendment to
balance the budget:
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The Congress may waive the provisions of
this article for any fiscal year in which a
declaration of war is in effect. The provisions
of this article may be waived for any fiscal
year in which the United States is engaged
in military conflict which causes an imminent and serious military threat to national
security and is so declared by a joint resolution, adopted by a majority of the whole
number of each House, which becomes law.
Of course, then the proponents of the
amendment, not wishing to focus on
section 5 and the questions asked by
the distinguished Senator from Maryland related thereto, wish to talk
about the seriousness of the budget
deficits and the seriousness of the debt,
and so on.
We are all concerned about those
deficits and the debt. There is no disagreement as to the desired goal to
reach a balanced budget and to reduce
the deficits and ultimately to begin
paying the principal on the debt and
hopefully reducing the interest that is
paid on that debt.
The proponents do not want to focus
on this section 5. I will ask the question: If the country ‘‘is engaged in a
military conflict,’’ short of a war that
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has been declared, ‘‘engaged in a military conflict that causes an imminent
and serious military threat to national
security and is so declared by a joint
resolution, adopted by a majority number of the whole number of each House,
which becomes law,’’ does that language mean that once the joint resolution referred to in that section is
adopted by a majority of the whole
number of each House and becomes
law, and in the event that the military
conflict which causes an imminent and
serious military threat to national security continues over a period of another year or 2 years or subsequent
years, does this language mean that
Congress will have to waive the provisions of this article by way of a joint
resolution in each and every subsequent fiscal year in which that threat
to the national security exists? Does
that mean we have to do it over and
over again?
I am waiting on the Republican response team to respond. Does that
mean that we have to go through this
obstacle course every year, every subsequent year after that first year, or
that first occasion in which the joint
resolution is adopted by a majority of
the whole number of each House? Do
we have to do that over and over
again?
Suppose the support for the Commander in Chief’s position, suppose the
national support wavers?
Initially, people having been supportive, through their representatives,
of adopting the joint resolution are—
suppose that threat to the national security continues into a subsequent fiscal year, and then again into another
fiscal year? Does this language make it
incumbent upon the Congress to continue, with each new fiscal year, to
pass a joint resolution by a majority of
the whole number of each House? What
does this mean?
The Commander in Chief and the
military forces which he may have
committed as he did in Desert Storm,
or as President Truman did in Korea—
suppose that initial support of the people lessens? What does the Commander
in Chief do? He is left out there hanging. He has men on distant battlefields.
He has ships plying the waves of the
several seas. He has planes transporting Marines and soldiers. He has an
Air Force out there that is flying in
various areas of the world. What does
it mean? Do we have to pass another
joint resolution in the next fiscal year?
Suppose this emergent situation
should arise in August, with the close
of the fiscal year imminent on September 30. There is not time to pass a
joint resolution and look for cuts in
other areas of the budget, to which my
friends on the other side of the aisle
have alluded. What happens? The fiscal
year is closed on September 30 and the
total outlays have exceeded the total
receipts for that fiscal year. You have
men out there in the field facing danger. Their lives are on the line, their
lives are in jeopardy, and the security
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of this country is in jeopardy. What are
we going to do? Are we going to be entertained by a wide-ranging debate in
both Houses on a joint resolution every
fiscal year that that situation continues? And, in addition, we have to
have a majority of the whole number
elected to each House for passage.
Mr. THOMAS. Will the Senator yield
for a question?
Mr. BYRD. Yes, I yield.
Mr. THOMAS. Senator, I am not as
familiar as you are with the process,
but it seems to me that now there has
to be approval, there has to be approval
annually for the budget, there has to
be approval for the President’s move in
terms of military activities.
Mr. BYRD. There was not any approval in the case of his invasion of
Haiti. The invasion actually started.
Mr. THOMAS. There was in Desert
Storm, as you will recall.
Mr. BYRD. Wait just a second. The
invasion of Haiti started. The President called it off—in midair, almost. I
was not supportive of that invasion.
Mr. THOMAS. Nor was I.
I guess further I would say, I am not
sure I am confounded by the Congress
each year approving this. I do not
think that is an unusual kind of thing.
Do you not think the Congress represents the people——
Mr. BYRD. When the Senator is
around here long enough he may find
himself confounded. If we get into a
situation where the Nation’s security
is in the balance, we may all feel confounded by the necessity of acting expeditiously, because we have the lives
of men and women in dire peril. And
then, under this amendment, we are
going to require a majority of the Senators who are chosen and sworn to pass
a resolution in a situation like that—
we are going to explain that away by
talking about the budget deficits?
Mr. THOMAS. I have a little more
confidence in the Members of this body
than to ignore an issue of that kind. It
just seems to me that the evidence is
that we need to do something different
than we have been doing. I constantly
hear we cannot change things. But the
record is, we have to if we want different results.
Mr. BYRD. Senator, I am talking
about section 5.
Mr. THOMAS. I understand.
Mr. BYRD. Let us stay with it. Let
us not talk about, at the moment—I
will be glad to yield later to the Senator, if he wants to broaden the discussion.
We are talking about section 5. As
Napoleon said, there were men on his
council who were far more eloquent
than he, but that he won every argument simply by saying 2 plus 2 equals
4. It is pretty simple.
So I want to say to my friend, as Napoleon might have, he would say let us
stick with the question. Let us stick
with section 5. That is the question
that has been raised this afternoon, in
the main, on this floor.
So, is the Senator telling me that we
should run the risk of adopting a joint
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resolution each fiscal year in which our
national security is in jeopardy? We
should run the risk of adopting a joint
resolution and that he is willing to
subject this country’s security to the
necessity of a supermajority vote—a
mini-supermajority vote, a majority of
those Senators chosen and sworn?
Mr. THOMAS. I have, I guess—and I
do not suggest I know the answers—but
I have a good deal of confidence. What
does it say? It says, ‘‘* * * this article
may be waived for any fiscal year in
which the United States is engaged in
military conflict which causes an imminent and serious militarily threat
* * *’’ I have a hunch that most of us,
a supermajority of us, would respond to
that.
Mr. BYRD. Is that the Senator’s answer?
Mr. THOMAS. Yes, sir.
Mr. BYRD. Well, Mr. President, that
is the kind of answer that the proponents of this ill-advised constitutional amendment continue to make.
‘‘Well, I have confidence that the Congress would do thus and so.’’ Or ‘‘The
intent of the proponents of this constitutional amendment is thus and so—
the intent.’’ Or ‘‘That would never happen.’’ Or ‘‘I am sure that the Senate
and House will rise to meet the needs
of providing—by providing supermajorities.’’
Senators do not know that. Senators
do not know what the intent of a future Congress may be. Senators do not
know with enough certitude to give me
confidence that Congress will act in a
given situation that may be years
away, as it might act at this moment
or in this year of Our Lord 1995.
Mr. President, this is the typical response: ‘‘I have confidence.’’ That is it.
‘‘I have confidence. I am willing to
trust our colleagues.’’ Well, I am willing to trust colleagues also. I am willing also to trust the good judgment of
a majority of the representatives of the
people, if the people are adequately informed. I am willing to trust the opinions of the American people if they are
properly informed. But we cannot cavalierly push away this sobering question
nor the serious questions that arise
with respect to this Constitutional
amendment simply by saying, ‘‘Well, I
am sure it won’t happen,’’ or ‘‘I am
willing to trust’’ so and so and ‘‘a future Congress’’ and ‘‘this is not the intent.’’
Read what the amendment says.
That is what the court is going to go
by. It is going to first look at the four
corners of the document.
Section 1:
Total outlays for any fiscal year shall not
exceed total receipts for that fiscal year.
Then in section 5:
The provisions of this article—
Meaning section 1.
may be waived for any fiscal year in which
the United States is engaged in military conflict which causes an imminent and serious
military threat to national security.
Who is going to determine what is an
‘‘imminent
and
serious
military
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threat’’ to the national security? Obviously, there are going to be differences
of opinion.
Mr. THOMAS. That is what I am suggesting; that is, that is the role of Congress, and I think it is a legitimate role
and one that is not unusual, one that I
have perceived has been done for a
number of years.
Mr. BYRD. Absolutely. But for a
number of years it has not been required.
Mr. THOMAS. It should be required.
Mr. BYRD. For 206 years it has not
been required that there be a majority
of the whole number in each House to
pass a resolution.
Mr. THOMAS. Where does the President get the money, if the majority of
the Congress does not agree?
Mr. BYRD. Where does he get the
money?
Mr. THOMAS. Yes.
Mr. BYRD. Let me ask the Senator.
Suppose the President needs a new tax.
Suppose he needs to raise taxes to meet
that serious military conflict, that serious military threat to the United
States. Suppose he needs to increase
taxes. Then what? Would the Senator
be willing to raise taxes?
Mr. THOMAS. The President does not
raise taxes.
Mr. BYRD. That is not the question
which I asked the Senator.
Mr. THOMAS. I think there is a system in which the President can move.
But the President then comes to the
Congress for either a declaration or for
the money, or he, as he is doing now,
comes for a supplemental budget. The
Congress has to be involved to make
this decision.
Mr. BYRD. Of course. This Senator
has never said the Congress should not
be involved. This Senator is saying
simply that the Congress ought to continue to be involved under the present
Constitution which has provided very
well for congressional actions to meet
all emergencies that have occurred
throughout the 206-year history of this
country.
Mr. THOMAS. I understand that.
Mr. BYRD. But now we are going to
be in a very different situation if this
Constitution is going to be amended.
And it will not be amended for just a
year or so; it will be changed from now
until kingdom come, unless the American people and Congress repeal this
amendment once it is in the Constitution. The Senator knows that. It is not
easy once it is in there. It is not like a
statute which can be repealed by the
same Congress that enacted it in the
first place.
I am asking the Senator. Suppose we
get into a situation where this Nation’s
security is in peril and more money is
needed and the necessity arises for an
increase in taxes. Then what are my
friends on the other side going to do in
that situation?
Mr. THOMAS. That is why this provision is there to waive.
Mr. BYRD. Yes. By what vote?
Mr. THOMAS. By a supermajority
vote.
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Mr. BYRD. Yes. That is just the question. Why subject this country’s security to the necessity of a supermajority
vote when the Nation’s very life is in
danger, the security of the American
people are in danger, the security of
the troops in the field are in danger,
and the security of the planes in the
air is in danger? Why subject a decision
at that critical moment to a supermajority? The Framers, in their wisdom, did not do it. And we have fought
a good many wars.
Mr. THOMAS. I understand. This is
the basis of what we are talking about.
Of course, the Senator says leave it as
it is. Others say we need to change it.
That is what it is, whether we change
or whether we do not. Many people
think that there needs to be a change.
Many people think the performance is
such that there needs to be a change.
And I respect greatly the Senator’s
wisdom and knowledge. But that is the
issue. And the Senator does not want it
changed. I understand that. Others do.
That is what it is all about.
Mr. BYRD. It is about more than
that. That is why we need to take the
time to probe and to explore these provisions that are in this amendment to
balance the budget. We are all in agreement, I say to the Senator, with the
goal of a balanced budget. We are all in
agreement. I am in agreement that we
need to reduce the deficits. And I agree
that it is going to require some pain. I
also am of the opinion that we do not
need to wait 7 years. We started in 1990.
We took a great step beyond that in
1993. We need to do more.
Why cannot we continue on that
course of enacting multiyear budget
deficit reduction bills? Do you know
why? Because of the pain, and part of
that pain may just have to be an increase in taxes. I do not like to vote to
increase taxes. I have been in political
office 48 years, and I know it is not
easy to vote to increase taxes. It is always easy to cut taxes. It was easy to
cut taxes in 1981 when Mr. Reagan
asked for a tax cut in one package involving 3 successive years of cuts, 5
percent the first year, 10 the next, and
10 the next. It does not take courage to
vote to cut taxes.
But in a situation—I keep getting
back to this section 5. What is the Senator’s answer? Is he willing to put this
Nation’s security in peril by requiring
a supermajority consisting of a majority of the Senators and House Members
elected? The Framers did not think
that was wise. We had just come
through the Revolutionary War. We
had still ahead of us the War of 1812.
We had ahead of us the Mexican War of
1848, the Civil War, the war with Spain
in 1898, the First World War, the Second World War, Korea, Vietnam, and
the Persian Gulf. In addition to these,
there were several military conflicts
that were not wars, of that magnitude,
by any stretch of the imagination.
There was never, until this amendment comes along, any thought of requiring a mini-supermajority to pass a
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resolution in a moment of dire peril to
deal with our Nations’s security. We
get nothing from the proponents when
we direct the question at them, ‘‘Would
you be willing to raise the revenues to
meet the needs in that moment of
peril?’’ ‘‘Would you be willing to raise
taxes?’’
Mr. LEVIN. Will the Senator yield
for a question.
Mr. BYRD. Yes, shortly. What we get
is what the Senator from Maryland got
a while ago when he tried to pin Senators down on the other side of the
aisle with his questions concerning section 5. Section 5 has not been talked
about much in the Senate. It needs to
be talked about. What we get are
speciocities, irrelevancies, platitudes,
well-wishes, and expressions of good intent. We do not know what the ‘‘intent’’ of the Senators who sit at these
desks will be 2 years form now, 3 years
from now. Perhaps they will be the
same Senators. How can we say what
their intent will be? We need to read
the words of the amendment. They
speak for themselves when they say
‘‘total outlays shall not exceed total
receipts in any fiscal year.’’ That does
not leave any wiggling room. The proponents say, yes, it does, because you
can waive that by a three-fifths majority.
It is a dangerous amendment. Section 5—I would not want to risk the
lives of my grandsons on that kind of
language, requiring 51 Senators in this
Chamber to pass such a resolution, denying the Vice President of the United
States his vote to break a tie, if there
should be a tie. This amendment would
deny the Vice President of his vote
that is accorded him in the current
Constitution——
Mr. LEVIN. Will the Senator yield?
Mr. BYRD. To vote to break a tie. I
yield.
Mr. LEVIN. I understand that the
Senator from Utah said that the Vice
President would be denied, in his opinion, a vote to break a 50–50 tie. But he
also said it was an ‘‘open question.’’ I
do not think we ought to have an open
question in a constitutional amendment, because this is a life and death
matter.
Mr. BYRD. You have a constitutional
crisis when you have this open question.
Mr. LEVIN. It will, in fact, plunge
this constitutional amendment into
the courts to interpret as to whether or
not he Vice President can break a tie.
It should not be left open. It should be
resolved in this amendment as to
whether or not the Vice President’s
vote counts to break a 50–50 tie. I think
it is irresponsible to write a constitutional amendment knowing that that
question is left open.
By the way, that is not some theoretical question. Last year’s deficit reduction bill, as it has been debated
here this afternoon, was a 51–50 vote,
based on the Vice President’s vote. So
this is not some theory that we are arguing here in a civics class. This is the
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reality of the U.S. Senate, and life and
death matters can be resolved on
whether or not the Vice President’s
vote counts to break a tie.
It was the opinion of the Senator
from Utah, as I understand it, stated
earlier this afternoon, that the Vice
President’s vote would not count in
this provision. And yet, the chief sponsor of this language that is in front of
us, Representative DAN SCHAEFER of
Colorado, says the Vice President’s
vote would count. Yesterday, we had
the same problem. We had, on this side,
the chief sponsor saying that there
would be no standing, do not worry
about it. We had the chief sponsor on
the other side—this is the SchaeferStenholm substitute. Representative
SCHAEFER has said that there would be
standing for Members of Congress to
sue. I had a big board up, and my friend
from Pennsylvania who is managing
the bill now saw where we had the
prime sponsor of this language quoted
in a very formal document, by the way.
These were not casual comments.
These were questions and answers he
submitted for the RECORD, in the
HOUSE CONGRESSIONAL RECORD, where
he made statements which were exactly contrary to what the opinion of
the Senator from Utah is—exactly contrary on critical issues on the role of
the court.
Representative SCHAEFER said, in a
formal answer, that a court could
throw out an appropriations bill or a
tax bill, as being unconstitutional. But
we were told by the Senator from Utah
that it was his opinion that a court
could not involve itself in the budgetary process.
My question of my friend from West
Virginia is this—and I want to read
now into the RECORD the statement of
Representative SCHAEFER on the question of whether or not the Vice President’s vote counts. It is on page 758 of
the CONGRESSIONAL RECORD of January
26. This is a formal interpretation of
section 4. And, again, this is a formal
question and answer presentation that
was supplied for the RECORD by Representative SCHAEFER:
This language is not intended to preclude
the Vice President in his or her constitutional capacity as President of the Senate
from casting a tie-breaking vote that would
produce a 51–50 result.
He goes on to say:
Nothing in section 4 of the substitute
takes away the Vice President’s right to
vote under such circumstances.
Mr. SARBANES. Will the Senator
yield?
Mr. LEVIN. I do not have the floor,
but——
Mr. BYRD. Mr. President, the courts
are going to decide that. It does not
make any difference what my intent is
or what the intent of the House Member was who was addressing himself to
that question, or what he intent of any
other Senator is. It is the court, and it
will be a constitutional crisis. Once we
constitutionalize this fiscal policy by
writing this amendment into the Con-
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stitution, it is an open invitation to
the courts to come into this equation.
There is nothing in this amendment
that prohibits or forbids the courts
from intervening.
Mr. SARBANES. Will the Senator
yield on that point?
Mr. BYRD. Yes.
Mr. SARBANES. I think the Senator
from West Virginia is absolutely correct. But what is going to draw the
court in even more is the fact that two
principal sponsors of this measure give
absolutely contrary views as to the
meaning of this clause, as the Senator
from Michigan has pointed out. One of
the chief House sponsors says that
under section 4 the Vice President
would have the tie-breaking vote. The
distinguished Senator from Utah,
chairman of the Judiciary Committee
and the lead manager for this bill, very
explicitly stated on the floor of the
Senate not too long ago that you would
have to produce 51 votes out of 100 in
this body in order for section 4 to
apply. A 50–50 vote with the Vice President supposedly casting a tie-breaking
vote would not work. In effect, you
have negated the tie-breaking vote of
the Vice President.
This is important in underscoring all
of the pitfalls that are contained in
this provision. I am certain it will
bring about what the Senator from
West Virginia has just stated, and that
is the involvement of the courts, because the legislative history on this is
absolutely contradictory on the part of
its proponents.
Mr. LEVIN. I thank the Senator from
Maryland. My point here is that this is
being left——
Mr. BYRD. I ask unanimous consent
that I may continue to yield the floor,
retaining my rights to the floor, for
colloquies. I do not intend to hold the
floor all afternoon. My feet are getting
tired.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. BYRD. I call attention to the
fact that we have a fresh new Member
here from the Republican response
team. They are sending them in in relays.
Yes, I would be glad to yield.
Mr. LEVIN. The Senator has eloquently pointed out the reasons why
we should not require majorities, and
on that there is a difference of opinion.
I happen to share the opinion of the
Senator from West Virginia for the reasons that he has given that we should
not require a supermajority.
But the issue that I raise, the Senator from Maryland has raised, and the
Senator from Utah has raised relates
to that question. It is, what is a supermajority and whether the Vice President’s vote counts? And on that one, I
think 100 of us ought to agree.
Maybe there is a disagreement as to
whether or not we should have a supermajority—and there is a disagreement—but there should be no disagreement, there ought to be absolute unanimity on a determination that this
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constitutional amendment be clear on
the question as to whether or not the
Vice President can break a tie and
count towards the 51 votes. We should
not leave that ambiguous.
This is not a matter where there is a
difference of opinion as to whether or
not a supermajority is appropriate in
order to raise revenues or not. This is
a question of writing a constitutional
amendment, knowing that a question,
a critical question, is left open. It
should not be left open.
Because if it is, this constitutional
crisis, which the Senator from West
Virginia and the Senator from Maryland talked about, is something that
we are inviting. And we should not
only not invite it, we should close the
door on any such constitutional crisis
by making that clear.
That will not resolve the question
that the Senator from West Virginia
has raised as to whether or not it is desirable that there be a requirement for
a supermajority, and I happen to,
again, share his view on that. But,
again, we should clarify the question.
I ask unanimous consent at this
point, Mr. President, that the statement of the prime sponsor of the joint
resolution in front of us, Representative SCHAEFER, that appears on page
H758 of the CONGRESSIONAL RECORD of
January 26 of this year, be printed in
the RECORD.
There being no objection, the material was ordered to be printed in the
RECORD, as follows:
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This language is not intended to preclude
the Vice President, in his or her constitutional capacity as President of the Senate,
from casting a tie-breaking vote that would
produce a 51–50 result. This is consistent
with Article I, Section 3, Clause 4, which
states: ‘‘The Vice President of the United
States shall be President of the Senate, but
shall have no Vote, unless they be equally divided.’’ Nothing in Section 4 of the substitute takes away the Vice President’s right
to vote under such circumstances.
Mr. LEVIN. Mr. President, I do not
have the floor, but I think it would be
very desirable for the Senator from
Pennsylvania to respond, should the
Senator from West Virginia so yield.
Mr. BYRD. Mr. President, of course, I
would not want to shut out from this
electrifying moment in this very illuminating debate a Member of the ‘‘Republican response team.’’
I ask unanimous consent that my
previous request include the Senator
from Pennsylvania and any other Member of the response team.
The PRESIDING OFFICER. Without
objection, it is so ordered.
The Senator from Pennsylvania.
Mr. SANTORUM. I thank the Senator
and I thank the Chair.
I was going to refer you to the 12th
amendment that uses the same language that is used in section 5 and section 2, which refers to the whole number of the Senate. In one case, it says
the whole number or two-thirds of the
whole number of the Senators, the
same language that we use here only
we say in each House.
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If you have questions about the ability of the Vice President to cast votes
with respect to this, then I suspect you
have questions as to whether the Vice
President can cast votes under the 12th
amendment, because it is word for
word what is put in this document.
Mr. LEVIN. If the Senator will yield,
I do not have a question about it.
The Senator from Utah, who is the
principal sponsor on that side, said
that the Vice President’s vote would
not count. Now that is coming from a
pretty authoritative source here.
Senator HATCH said—and I was not
on the floor, but I understand that he
said—two things about this question.
Number one, it is an open question.
That means what it says. It is an open
question, presumably left for the
courts or left for somebody to decide.
But then Senator HATCH said—it was
reported to me, and I was not on the
floor; I believe the Senators from West
Virginia and Maryland were here—Senator HATCH apparently then said that,
in his opinion, in his opinion, the Vice
President’s vote would not count toward the 51 votes. And I think that is
what the Senator from West Virginia
reflected in his statement.
Mr. BYRD. Yes.
Mr. LEVIN. So it is not the Senator
from Michigan who is raising the question—I think we ought to button down
the issue—it is the principal sponsor of
the amendment here in the Senate who
has rendered that opinion.
Mr. SARBANES. Will the Senator
yield to me? Because the analogy—
Mr. BYRD. Before I yield, may I
point out to the Member of the response team who just, I believe, indicated that the supermajority in amendment No. 12 would be a parallel to the
situation which we have been discussing—namely, as the Vice President’s vote would be involved—I point
out to the junior Senator from Pennsylvania, who perhaps has not read the
12th amendment lately, that that is
what that amendment is all about.
There is no Vice President.
Mr. SANTORUM. Right.
Mr. BYRD. There is no Vice President to cast a vote under the 12th
Amendment. The reason for that
amendment is to provide for the election of a Vice President by the U.S.
Senate when the Vice President’s seat
is vacant.
Mr. SARBANES. If the Senator will
yield, that was exactly the point I was
going to make.
The Senator from Pennsylvania got
up and said, ‘‘Well, if you want to know
what this language means here of the
majority of the whole number, just
refer to amendment 12.’’
Now, amendment 12 has to deal with
picking the Vice President. There is
not a Vice President. And it says——
Mr. SANTORUM. Does that not make
it obvious.
Mr. SARBANES. It says:
The Senate shall choose the Vice President; a quorum for the purpose shall consist
of two-thirds of the whole number of Sen-
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February 16, 1995
ators, and a majority of the whole number
shall be necessary to a choice.
But the choice is picking the Vice
President. It does not answer the question that the Vice President can cast
the tie-breaking vote.
Mr. SANTORUM. If the Senator will
yield, I think it makes that very point.
Obviously, the Vice President is not
considered part of it because there is
no Vice President. So the whole number must mean that it is the Members
of the Senate, absent the Vice President. Otherwise, this would make no
sense. I mean, I think that is the reason I used it, because it is apparent.
Mr. SARBANES. Once a Vice President has been chosen——
Mr. SANTORUM. The Vice President
is a Member of the Senate.
Mr. SARBANES. Once the Vice President has been chosen——
Mr. BYRD. He is not a Member of the
Senate. The Vice President is never a
Member of the Senate.
Mr. SANTORUM. I rest my case.
Mr. SARBANES. We take a vote——
Mr. BYRD. That is not the case.
Mr. SARBANES. Once the Vice President is chosen and we take a vote, a 50–
50 vote, can the Vice President break
the tie?
Mr. LEVIN. Under this amendment.
Mr. SANTORUM. If we compare it to
the language in the amendment it parallels, my opinion would be no.
Mr. LEVIN. He cannot?
Mr. SANTORUM. Correct.
Mr. LEVIN. So you disagree with
Congressman SCHAEFER?
Mr. SANTORUM. I do.
Mr. LEVIN. Then in that case, we
have the prime sponsors in the Senate
and we have the prime sponsor in the
House, whose name is on top of this
constitutional amendment—this is the
Schaefer amendment—we have the
sponsors here and the sponsor there in
total disagreement on an absolutely
fundamental question as to whether or
not the Vice President’s vote can be
counted to break a 50–50 tie. And that
determines the outcome of the whole
deficit reduction package last year.
That should not be an open question.
Whatever side of this issue you are on,
whether or not you believe in supermajorities or you do not, we should not
leave an ambiguity that huge in the
Constitution as to whether or not the
Vice President’s vote counts. And I
think it ought to be clarified. It ought
to be clarified one way or the other,
but it ought to be clarified because,
otherwise, it is an invitation for a constitutional crisis.
I yield the floor and I thank my
friend.
Mr. BYRD. Mr. President, I have
been unable to get a question answered
here, and perhaps the Senator from
Pennsylvania can answer it.
My question being: If the threat to
our national security should continue
into the next fiscal year, or the next
calendar year after the year in which
the joint resolution referred to in this
section is adopted by a minimajority of
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a majority of all the Members of the
Senate and all the Members of the
House chosen and sworn, if that threat
continues, and we are in a second fiscal
year does such a joint resolution have
to be passed again by both Houses?
If not, do both Houses have to waive
the requirements of section 1, which requires a three-fifths majority? Does
Congress have to continue to waive for
each fiscal year during which we have
the military threat? Does that mean
that every new fiscal year in which the
threat continues, we have to have
three-fifths to waive the requirements
of section 1? Or does it require that
every fiscal year we pass another joint
resolution requiring a majority of the
total membership of both Houses as referred to in section 5? Or does it require that both sections be waived?
Mr. President, I ask unanimous consent that I may propound a question to
the Senator, even though I hold the
floor.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. SANTORUM. Mr. President, section 5 reads: ‘‘The Congress may waive
the provisions of this article for any
fiscal year in which a declaration of
war is in effect.’’ So it would seem very
obvious to me the Congress has the
availability to raise it for the fiscal
year or any subsequent fiscal year in
which the war is in effect.
That is pretty much what it says.
Mr. BYRD. I am glad we are going by
what the amendment says for once.
Now, what do you think it says?
What does the Senator think it says?
Mr. SANTORUM. I think that is what
it says.
Mr. SARBANES. I ask the Senator,
what does it mean? What is your understanding of the meaning? Would you
have to have a waiver for each fiscal
year?
Mr. SANTORUM. I am stupefied that
the plain reading of this language is
not apparent to the Senator from
Maryland. I think it is very serious.
Mr. SARBANES. I have to say to the
Senator from Pennsylvania perhaps I
am not as quick as he is to pick up the
plain language. I thought the question
was a good question. The question, as I
understood it is, must you have a waiver in each fiscal year since?
Mr. SANTORUM. It says, ‘‘The Congress may waive in any year.’’
Mr. SARBANES. For any fiscal year
in which the United States is engaged.
So, we may waive it for that fiscal
year.
Mr. SANTORUM. Or next fiscal year.
Mr. SARBANES. The next fiscal year
comes along. Then what?
Mr. SANTORUM. It says we may
waive for any fiscal year. It does not
say we have to waive for this fiscal
year. We could pass—it says ‘‘any fiscal
year.’’ It could be for next fiscal year,
the one afterward, as long as the declaration of war is in effect, we can raise
for any fiscal year.
Mr. SARBANES. So you think it
means any and all?
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Mr. SANTORUM. As long as the declaration of war is continuing, I assume
that is what the Congress can do.
Mr. SARBANES. What about the
next sentence?
Mr. BYRD. There are two different
situations there.
Mr. SARBANES. What about the
next sentence? Same interpretation.
Mr. SANTORUM. Obviously, in one
case we have declaration of war. That
is, a declaration of war has a certain
time limit, then the declaration of war
ceases.
In this case——
Mr. BYRD. Would the Senator say
that again?
Mr. SANTORUM. The declaration of
war at some point ends.
Mr. BYRD. What causes it to end?
What terminates a war?
Mr. SANTORUM. A signing of a treaty to end the war.
Mr. BYRD. What terminates the declaration of war?
Mr. SANTORUM. I ask the Senator,
since I was not around the last time we
declared war, I assume it would be
some act of Congress to end the declaration.
Mr. SARBANES. But it was the Senator that asserted that the declaration
of war would end. How does that happen?
Mr. SANTORUM. I just responded.
Mr. BYRD. The Senator was responding to a question. His response, I do not
understand.
Mr. SANTORUM. As long as a declaration is in effect, however long that
may be, that Congress can, under this
provision, waive this amendment.
Mr. BYRD. How long was the declaration of war in World War II in effect?
Mr. SANTORUM. I yield to the Senator from West Virginia.
Mr. BYRD. I am asking a question. I
want to be informed.
Mr. SANTORUM. I do not know the
answer.
Mr. BYRD. The ready response team
should have all the answers.
How long was the declaration of war
in World War I in effect? The war is
over. Suppose declaration of war is still
in effect. What happens in a situation
like this?
Mr. SANTORUM. I think it would be
apparent that at some point the Congress would rescind the declaration of
war and then this article would no
longer be operative.
Mr. BYRD. Congress did not rescind
all previous declarations of war. Why
does the Senator not help me find the
answer to that question?
Mr. SANTORUM. I will do my best.
Mr. SARBANES. Would the Senator
address the second question? Let us
move beyond the declaration of war.
What is your understanding of the second sentence? This is not a declaration
of war in which the United States is
engaged in military conflict, so declared by a joint resolution. Would we
have to get a joint resolution the following year?
Mr. SANTORUM. My opinion on that
is that the—according to the plain
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reading of the constitutional amendment—Congress would have to, each
year, go through the process of exempting itself from this provision because
of that conflict.
Mr. SARBANES. How can the phrase
‘‘for any fiscal year,’’ which is identically the same phrase in sentence 1 and
sentence 2, be given diametrically opposite definitions?
You just told me that the phrase ‘‘for
any fiscal year’’ in sentence 1, linked
to a declaration of war, means that it
can be waived for not only the current
fiscal year but fiscal years beyond
that.
Now the Senator tells me in sentence
2, ‘‘waive for any fiscal year’’ means
only the fiscal year in which you find
yourself and not subsequent fiscal
years.
Now, how can the Senator give that
phrase an entirely different interpretation?
Mr. SANTORUM. Let me give you
the committee report which says: ‘‘For
any fiscal year, in effect, is intended in
the first sentence of this section to require a separate waiver of the provisions of any amendment each year.’’
Mr. SARBANES. For which sentence?
Mr. SANTORUM. For the first usage.
Mr. SARBANES. In section 5.
That is not what you told me a few
minutes ago.
Is that right?
Mr. SANTORUM. That is correct.
Mr. SARBANES. Which is correct
then, your answer or the committee report?
Mr. SANTORUM. I refer to the committee report.
Mr. SARBANES. So, the answer you
gave me earlier is not correct?
Mr. SANTORUM. According to the
committee report, that is correct.
Mr. SARBANES. Well, what is your
view? Is your view the committee’s report or is your view the answer which
you gave yourself just a couple minutes ago?
Mr. SANTORUM. My view is that the
committee report, having had the time
to study it longer than I, is probably
the accurate view.
Mr. BYRD. Was there a minority
view on this particular question in that
report?
Mr. SANTORUM. Not that I am
aware. I will have someone check.
Mr. BYRD. Let me ask the Senator.
Mr. SANTORUM. By the way, I would
further read that the meaning in the
second sentence, the second use, is also
the same, that in every fiscal year the
Congress would have to extend this
waiver.
Mr. SARBANES. I say to the Senator
that is certainly a consistent reading
of the meaning ‘‘for any fiscal year.’’
At least it is being read the same way
in the second sentence as it was read in
the first sentence according to the
committee report.
Now, that is not the answer the Senator was giving us because he was giving a completely opposite view of the
meaning ‘‘any fiscal year’’ in sentence
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1 and in sentence 2. But it only underscores the problems with this amendment.
The distinguished Senator from
Pennsylvania came to manage the bill
during this time period. The Senator
had—I assume now it has changed—a
perception of the meaning of this proposed amendment to the Constitution
which I am now told he is withdrawing.
Mr. SANTORUM. If the Senator will
yield, that is why it is very important
to have committee reports and implementing legislation that is called for in
the article; that we have implementing
legislation to clear up these kinds of
doubts that may exist with respect to
specific provisions of the act.
So I suggest to the Senator that a lot
of this debate is useful. In fact, it is illuminating. I find it to be such, not
just on this point, but on many others.
But what is important to note is the
ability of this Senate to come back, as
it will, and implement this act and further specify the meanings of how this
constitutional amendment will be implemented.
Mr. SARBANES. I ask the Senator
from Pennsylvania, do you think that
the implementing legislation could be
used to clarify the discrepancy in view
that was outlined here earlier on the
floor as to whether a Vice President
has the power to break a tie? Could
that be clarified by the implementing
legislation?
Mr. SANTORUM. I guess I would
defer to answer on that. I do not know
whether the implementing legislation
would do that or not, to be honest. I
think that would be a matter of interpretation.
Mr. SARBANES. Let me just carry
the question a step further. Do you
think that implementing legislation
can rewrite provisions of a constitutional amendment?
Mr. SANTORUM. Obviously not, but
they certainly can clarify points of a
constitutional amendment. Obviously,
constitutional amendments, particularly of this nature, are not meant to
stand on their own. There has to be
some legislation that is going to allow
this to be complied with.
Mr. BYRD. Will the Senator allow me
on that point?
Mr. SARBANES. Certainly.
Mr. BYRD. Implementing legislation
may be repealed in the very same session—for that matter, in the very same
month—in which the original legislation was enacted. Does this mean then
that we are going to trust to the hands
of shifting opinions in the country and
in this body the interpretation of the
amendment if we are going to do it by
implementing legislation?
Does this mean that we are going to
put at risk the Nation’s security by
leaving this up to the implementing
legislation, which can be changed, as I
say, by even the same Senators in a
subsequent year? Are we going to place
the Nation’s security at risk by falling
back on the language that talks about
implementing legislation?
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Mr. SARBANES. Will the Senator
yield?
Mr. BYRD. Yes.
Mr. SARBANES. He is making an extremely important point. Suppose one
Congress comes along and passes implementing legislation saying that the
Vice President cannot cast a tie-breaking vote. Then a new Congress comes in
and they pass implementing legislation
saying the Vice President can cast a
tie-breaking vote.
I say to the Senator from Pennsylvania, I do not see how this particular
provision can bounce back and forth
with the implementing legislation. I
just do not understand how that could
happen. It is obvious that a court
would have to come in to decide it if it
is not decided here, and we have directly conflicting views.
Let me just read you—I do not know
whether the Senator is acquainted with
what Congressman SCHAEFER on the
House side said about this.
Mr. SANTORUM. If the Senator will
yield, again, I am a little bit perplexed.
I look at, for example, section 8 powers
under article I that are given to the
Congress to borrow money, to regulate
commerce. Does it say how we regulate
commerce or do we leave that to implementing legislation? And if we do
change that, does that mean we somehow violate the Constitution, or is that
somehow dangerous upon our society?
The Constitution, as the Senator will
tell you, is a contract of principles, not
as to how to.
Mr. SARBANES. Will the Senator
yield on that very point?
Mr. SANTORUM. We continually
change how to.
Mr. SARBANES. That is absolutely
wrong. That is absolutely wrong. The
Constitution is very specific in describing how, in terms of the process, decisions will be made. It is not specific
about the substance of the decision to
be made, but it is very specific about
how we are to do our business. The
Framers were very careful about that.
They spelled out what would be a
quorum, then a majority of the quorum
could pass the legislation. It is all laid
out.
I want to give you a real-life situation. A bill is before this body. It is a
controversial, closely fought bill. We
take a vote on it. The vote is 50–50, and
the Vice President is sitting in the
chair.
Now, it is very clear under current
procedure in that circumstance, the
Vice President can cast a tie-breaking
vote. It does not have to be 50–50, it can
be 48–48, whatever. And I have been in
this body when that has happened, not
only on the 1993 deficit reduction bill,
but on other measures as well. I have
seen the Vice President in the chair
casting a tie-breaking vote.
What is the outcome in that situation?
Let me read to you what Congressman SCHAEFER says the outcome would
be. This is the Republican lead sponsor
on the House side:
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This language is not intended to preclude
the Vice President in his or her constitutional capacity as President of the Senate
from casting a tie-breaking vote that will
produce a 51-to-50 result. This is consistent
with article I, section 3, clause 4 which
states: ‘‘The Vice President of the United
States shall be President of the Senate but
shall have no vote unless they be equally divided.’’ Nothing in section 4 of the substitute
takes away the Vice President’s right to
vote under such circumstances.
The Senator, I take it, has told us
that he disagrees with that; is that correct? That is not his view of the meaning of article 4.
Mr. SANTORUM. It is apparent from
the committee report that refers to, as
I did, the 12th amendment and refers to
that being similar to what the 12th
amendment would be. That would be
my answer.
Mr. BYRD. In the 12th amendment
there is no Vice President——
Mr. SANTORUM. It is obvious as to
what——
Mr. BYRD. To cast any kind of vote,
whether it is a deciding vote or anything else. That is why we have the
12th amendment, to fill the vacancy in
the Vice Presidency.
Mr. SARBANES. What is the reference in the committee report to
which the Senator is referring?
Mr. SANTORUM. Page 15, about
three-quarters of the way down, ‘‘the
whole number of each House.’’
Mr. SARBANES. That does not answer the question. That just makes a
statement.
The whole number of each House is intended to be consistent with the phrase ‘‘the
whole number of Senators’’ in the 12th
amendment to the Constitution * * *
But that does not answer my question, since the 12th amendment to the
Constitution was a situation in which
there was no Vice President. It addresses a situation in which you are
choosing a Vice President, not the situation after which the Vice President
has been chosen. And once the Vice
President is chosen under article I, section 3, clause 4 of the Constitution, he
has a vote in an equally divided situation.
So what the Senator from Pennsylvania is doing is drawing an analogy
from a situation that governs circumstances in which a Vice President
has not been picked and you are picking a Vice President. It does not then
answer the question of the vote-casting
power of the Vice President once he
has been chosen.
Mr. SANTORUM. If the Senator will
yield, I think the Senator from West
Virginia, in fact, helped me answer this
question when, if you look at, again,
what the committee report says, ‘‘The
whole number of each House is intended to be consistent with the phrase
‘the whole number of Senators * * *’ ’’
The Vice President is not a Senator.
I quote the Senator from West Virginia, just a few minutes ago. So it
would be obvious to any reader that a
whole number of Senators must be 51,
assuming there are 100 Senators.
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Mr. SARBANES. I just make this observation to my friend.
You must be desperate about the 1993
legislation to be so driven that you
want to deny the Vice President of the
United States his tie-breaking power to
cast a vote which has been in the Constitution from the very beginning.
Now, I know Members on the other
side are unhappy about that legislation, but it seems to me it is carrying
your differences over the substance of a
piece of legislation much too far when
you start tinkering, really assaulting,
the Constitution of the United States
in this fashion. We end up getting two
completely differing interpretations of
the application of this provision as interpreted by the lead House Republican
sponsor of this measure and by the answers that I am now receiving in the
Chamber of the Senate.
Mr. BYRD. Mr. President, I ask unanimous consent that notwithstanding
the fact that I have the floor, I may
propound a question to another Senator without losing my right to the
floor.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. BYRD. Let me ask the distinguished Senator from Pennsylvania, in
a situation in which in a given fiscal
year the United States is engaged in
military conflict which causes an imminent and serious military threat to
national security, and that threat continues into the next fiscal year, is it
section 1 that would have to be waived
in the subsequent fiscal year or years?
Would section 1 have to be waived in
the subsequent fiscal year or years?
Mr. SANTORUM. I am not too sure—
if the Senator is asking for an answer,
I am not too sure I understand what
the question is. Is he suggesting that
the second year would be treated differently than the first year of the conflict?
Mr. BYRD. Why would it not? It is a
new fiscal year. And the constitutional
amendment on the balanced budget requires that the outlays not exceed receipts in any fiscal year. So we are into
a new fiscal year. And yet the threat to
the security of this country is still in
effect. What do we do? Do we have to
waive section 1 again in the new fiscal
year?
Mr. SANTORUM. According to the
committee report, a joint resolution of
Congress would be required in order to
have this provision be eligible to be
waived, this amendment to be waived.
Mr. BYRD. The Senator is talking
about two things there. The Senator is
talking about the joint resolution in
section 5 that would have to be enacted
into law which would require a majority of the whole number of Members in
each House. But section 1 requires a
vote, in order to be waived, of threefifths of the whole number of each
House.
Mr. SANTORUM. And section 5 provides an exception to section 1.
Mr. BYRD. To section 1.
Mr. SANTORUM. In other words, section 1 binds us with the exception of, as
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outlined in section 5, when we have a
declaration of war or——
Mr. BYRD. But my question is, if
that military threat continues into a
second fiscal year——
Mr. SANTORUM. We would be required then to pass a separate waiver
of this amendment.
Mr. BYRD. Congress would have to
pass a joint resolution in each and
every fiscal year that ensued following
the fiscal year of the first joint resolution?
Suppose there is not a declaration of
war in effect. The first sentence of section 5 addresses the situation in which
there is a declaration of war. Now, I
will read it:
Congress may waive the provisions of this
article—
Meaning section 1——
for any fiscal year in which a declaration of
war is in effect.
Now, the country has fought three
major wars and engaged in several
military conflicts during the past 48
years without declaring any war. Suppose there is not a declaration of war
in effect. Then let us see what it says.
Provisions of this article may be waived
for any fiscal year in which the United
States is engaged in military conflict which
causes an imminent and serious military
threat to national security and is so declared
by joint resolution, adopted by a majority of
the whole number of each House, which becomes law.
Now, I have two or three questions I
wish to ask the Senator. I will ask
them singly or I will ask them en bloc.
One. Does this mean that in each
subsequent fiscal year—let us imagine
that a military threat develops in August, which is only 2 months preceding
the close of the fiscal year. A threat is
imminent. The Commander in Chief
asks for a resolution, and Congress,
notwithstanding the rules providing for
unlimited debate in the United States
Senate, quickly passes such a joint resolution for that fiscal year.
Then let us imagine that the threat
continues over into the next fiscal
year, January, February, March, April.
Is another joint resolution required by
the Congress?
Third question. Suppose that the response of the Congress to the President’s request is favorable and the
President launches his planes and
ships, his troops, and vast expenditures
of money are entailed. The fiscal year
ends. The outlays exceed the receipts.
The threat continues throughout the
next fiscal year. There is no declaration of war but expenditures run into
the billions of dollars—billions. What
are we going to do?
This amendment says outlays shall
not exceed receipts in any fiscal year.
What are we going to do about the fact
that the deficits rose greatly in the
previous fiscal year, the one in which
the threat first made itself clear and
the deficit of the second year amounted
to billions of dollars? What are we
going to do? And suppose that passions
within the Congress and in the country
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in the early-on support for the war
dwindled away and left the Commander
in Chief out there with his men in farflung seas and lands, with their lives
on the line. What do we do? No war has
been declared.
Do we require that in order to
waive—in order to waive section 5
there must be a majority of the Members elected in both bodies to waive.
And you do not have that majority.
What are you going to do? You have already run in excess, many—$10 billion,
$15—who knows what? It cost billions,
the Persian Gulf War, what do you do,
Senator?
Mr. SANTORUM. I would answer the
question——
Mr. BYRD. Are you going to raise
taxes?
Mr. SANTORUM. I would answer that
question the same as I would with any
war. The Congress has the responsibility of funding the war and appropriating the dollars. The President cannot continue to execute a war if the
Congress does not provide the funds to
do so by a majority vote. So we already
have, already, an existing requirement
that Members of Congress vote by a
majority to fund the war.
So I guess I do not see the complication. If we are going to go ahead by a
majority vote and fund the war
through an appropriations process, and
we have the support to do that, why
would we not continue very consistently, almost an afterthought, to go
ahead and waive this provision of the
Constitution, recognizing the imminent threat to our national security?
Mr. BYRD. Except that a majority is
not a majority is not a majority, under
this new amendment to the old Constitution. A majority under the current
Constitution is not a majority under
this constitutional amendment to balance the budget.
So the deficits have been increased,
the debt has gone through the stratosphere, and we have people overseas
with their lives on the line. What are
we going to do?
You have an administration under
the control of one party and the leadership of the Congress under the control
of the other. You are putting our Nation’s security in peril——
Mr. SANTORUM. Senator, what you
are suggesting——
Mr. BYRD. Requiring a mini-supermajority for such a critical time.
Mr. SANTORUM. Is what the Senator
is suggesting that this body or the
other body would pass appropriations
bills to fund the conflict, our participation in the conflict, and then not come
back and waive the requirement for a
balanced budget to allow us to do that?
Is that what the Senator is suggesting?
Mr. BYRD. I am not suggesting it.
The Senator——
Mr. SANTORUM. Same vote——
Mr. BYRD. The amendment the Senator is so avidly supporting requires
that in each fiscal year——
Mr. SANTORUM. As we do with appropriations——
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Mr. BYRD. Outlays shall not exceed
receipts.
Mr. SANTORUM. Except——
Mr. BYRD. Suppose that in order to
make that work, we had to have a tax
to fund this threat—to protect us
against the threat to the security of
the Nation. I have heard Senators on
that side of the aisle say they will not
vote for a tax, ever. What about the
deficits that have already been run up
in the previous fiscal years, for which a
majority of the Members chosen and
sworn have voted to waive? Does that
mean we have to go back and put on a
retroactive tax? How would the Senator feel about that?
Mr. SANTORUM. How I would feel
about it is, as you know, every year we
have to appropriate money for the Defense Department. Particularly in time
of war we would have to appropriate
money through an appropriation process; we would have to go through both
sides, it would have to be passed by a
majority vote. In addition, we have put
an additional hurdle—yes, of this section—which requires a simple majority, not a three-fifths or constitutional
majority, but a majority of the whole
number of each House——
Mr. BYRD. That is not a simple majority.
Mr. SANTORUM. A majority of the
whole number of each House.
Mr. BYRD. Which is not a simple majority.
Mr. SANTORUM. Which would be
slightly higher, possibly slightly higher burden in the House, and potentially
higher, depending on interpretation,
vote here in the Senate. But certainly
consistent with the passage of the appropriations bill.
Mr. BYRD. Slightly higher, but it
does not necessarily mean it would be
slightly easier.
Would the Senator recommend that
in order to deal with the deficits that
had been built up as a result of the
waiver of the article in previous fiscal
years—does he suggest there might
have to be a retroactive tax?
Mr. SANTORUM. There is nothing
here in this constitutional amendment
that requires us to pay back deficits
that have been incurred since the enactment of this constitutional amendment, that have occurred as a result of
a waiver of this amendment. So there
is no requirement in the constitutional
amendment to require the payment of
existing debt.
Mr. BYRD. Oh, there is not? There is
not?
The other day, the Senator from
Pennsylvania stated with reference to
dealing with the deficit for a year that
has ended, the Senator stated: ‘‘We
could, as has been done here, retroactively tax.’’ I do not believe the Senator would have made that statement
without having given it long and serious thought. So the question that naturally occurred to me today, again, is
would the Senator be willing, in that
situation, to vote for a retroactive tax?
We are talking about a fiscal year or
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fiscal years that have ended and the estimate for the deficits for that year or
those years have gone wrong by virtue
of the sudden imminence of a serious
military threat to our national security.
Is the Senator willing—he would not
be willing, I do not believe, to vote for
a package to reduce the deficits, such
as the one we enacted in 1993. But in a
situation like this, in which the Nation’s security is imperiled, would he
be willing to vote to increase taxes? I
heard a Republican Senator stand over
there on the floor and say he would not
vote to increase a tax, ever.
I do not believe the Senator from
Pennsylvania’s feet are in such concrete. But I am just wondering, in the
light of what he said about a retroactive tax the other day, whether or
not he would suggest that, in a situation like this? In order to go back and
wipe out those deficits?
Mr. SANTORUM. Would I in fact vote
for a retroactive tax? If we needed to
tax in order to meet the needs of war,
I think we would have broad bipartisan
support, as we would—as we do now,
with appropriations bills.
Mr. BYRD. And he would vote for a
retroactive tax?
Mr. SANTORUM. I do not know what
the need would be for a retroactive tax
but if that is what would be required, I
would certainly consider it, if our
country was at war. Certainly.
Mr. BYRD. How would the taxpayers
of this country ever know how to fill
out an income tax form, if we are going
to go back and enact retroactive taxes?
How are they going to know what the
tax requirements are when they fill out
their income tax forms and whether
they may have to pay back taxes?
Mr. SANTORUM. That was our argument against the retroactive tax in
1993.
Mr. BYRD. But the other day—I am
talking about the Senator’s statement
the other day, when he suggested there
might be a retroactive tax.
SANTORUM. I said that is an option
available to future Congress, if necessary.
Mr. BYRD. And I am asking the Senator.
Mr. SANTORUM. I would not recommend that option.
Mr. BYRD. But you would be willing——
Mr. SANTORUM. In a time of war,
Senator, I would be willing to do things
that otherwise I would not be willing
to do at other times.
Mr. BYRD. What I am concerned
about is in a time of serious military
threat to this country, under this
amendment a majority of the Senators
and House Members elected and sworn
would be required in order to waive the
requirements of this amendment, under
such dire extremities, and could not do
so by a simple majority vote.
May I say, for the information of the
Senate, I have an amendment which is
at the desk.
I would be willing to agree to a vote
on that amendment on the day that the
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February 16, 1995
Senate returns following this weekend—be willing to agree to a vote on or
in relation to the amendment. I say ‘‘in
relation’’ because the amendments
around here to this constitutional
amendment do not get up-or-down
votes. Motions to table are made.
There have been several amendments
offered and debated to this constitutional amendment. There have been no
up-or-down votes, and all of the amendments succumbed to the motion to
table. That certainly is within the
right of Senators to move to table.
I would be willing to offer my amendment, and it will be germane, if cloture
is invoked. I would be willing to offer
that amendment today, and agree to a
time on it for debate and vote on or in
relation to it, which includes the tabling motion, to take place on next
Wednesday. I have not offered the
amendment yet. So it cannot be tabled
today. But I can offer it. So if the manager of the bill would like to respond,
I will yield.
Mr. HATCH. Mr. President, will my
dear friend yield?
Mr. BYRD. Yes. I am happy to yield.
Mr. HATCH. As I understand it, the
Senator from West Virginia is willing
to lay down his amendment as long as
it is not tabled today, and willing to
have the vote on it at a time certain
when we get back on Wednesday.
Mr. BYRD. Yes.
Mr. HATCH. Can the Senator tell me
what time the distinguished Senator
would desire? Could we keep it short?
Mr. BYRD. Let me modify my request. Let me offer this modification,
or possible modification. I believe a
unanimous-consent order was entered
for the recognition of the Senator from
West Virginia immediately upon the
disposition of the cloture vote today to
call up amendment No. 252, and that
amendment would eliminate the threefifths supermajority contained in section 1.
I would like to have the privilege of
calling up that amendment, laying it
down today, or calling up instead an
amendment which is equally germane,
in the event cloture is invoked, to deal
with section 5, which the Senators
from Maryland and Michigan and I and
other Senators have been discussing
this afternoon—with the understanding
that there would be no tabling motion
offered today, and that the vote on or
in relation to that amendment, whichever of the two it is, would not occur
until next Wednesday.
There is a cloture vote, I believe,
that will occur, possibly even two of
them, on that day. As I understand it,
the majority leader laid down two cloture motions last night—say 2 hours of
debate, equally divided. Of course, if
cloture is invoked, we will operate
under the rule.
Mr. HATCH. Will the Senator be willing, if our side takes only 15 minutes,
to reduce that time to an hour? He
would almost have the same amount of
time as 2 hours equally divided. It
would be 15 minutes less. But I would
be 45 minutes less.
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Mr. BYRD. The Senator is most generous.
Mr. HATCH. I have tried. What I am
trying to do with my dear colleague is
get moving on the amendment process,
face whatever we have to face on this
amendment, and try to bring this matter to a close sometime within the near
future so that we can alleviate delays
as much as possible. We are willing. As
the Senator from West Virginia can
see, we have been willing to take very
little time on our side and allow plenty
of time on the opposite side of this
issue as an accommodation to try to
move things along.
Mr. BYRD. Mr. President, accommodations do not matter to this Senator——
Mr. HATCH. I understand that. It is
just a request.
Mr. BYRD. —when it comes to
amending the Constitution. There is
probably too much accommodation
around here, in any event. But, nevertheless, it is characteristic of the distinguished Senator to want to accommodate.
What I was amused about was the
offer to let the proponents of my
amendment have 1 hour of debate and
the opponents have 15 minutes. That is
an indication to me that there is not
much serious thought being given to
my amendment. It is going to suffer
the same fate as have other amendments around here—that they have
been debated a little bit, and a motion
to table is then made. They are not accorded serious debate.
Mr. HATCH. Will the Senator yield
on that?
Mr. BYRD. I am not directing this at
the Senator. I am simply saying that it
says something about the debate on
this constitutional amendment.
Mr. HATCH. Will the Senator yield?
Mr. BYRD. Yes.
Mr. HATCH. No, it does not, because
the amendment the Senator is going to
call up we are fully cognizant of. We
spent a lot of time analyzing it. We believe we can answer it in a reasonable
period of time. I feel we can answer it
in 15 minutes. If we cannot, I would be
happy to—but I think we can.
On the second amendment, I do not
know what amendment that would be.
So we might have to grant some more
time on that. But our problem is not so
much that we do not want to give
enough time on this. We have been giving hours and hours. We have given. It
is now 14 days of Senate floor time;
long hours. I am not complaining. I am
willing to be here as long as the distinguished Senator wants to debate any of
these issues. But we have spent 14 days,
which is 3 more than was spent on any
balanced budget amendment in history.
Like I say, I am willing to spend
more, but it is to accommodate my colleagues who are on the other side of
this issue. So it is not a matter of giving a short shrift. We believe some of
the amendments in the past have not
deserved a lot of consideration from a
constitutional standpoint. And we felt
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as though we had full debate, even with
the limited amount of time we have allocated to ourselves, and we felt as if
we made the case enough. But so far,
we have been successful in tabling motions.
One last thing. Every amendment
that has been brought forth has been a
significant amendment, in my eyes.
I have wondered why some were
brought forth, perhaps, but I still hope
that they are substantively significant
amendments. We cannot constitutionally answer some of them in less
time than it takes for others. We are
hopeful that on the amendment that
we believe the Senator will call up before the end of today we can shorten
the time. If the Senator wants 2 hours
equally divided, I am not sure that the
majority leader would not grant him
that. But I am trying to accommodate
the Senate and accommodate the opponents so they can bring up their
amendments and yet still make sure
that the record is made constitutionally on these important issues.
I add that the distinguished Senator
from West Virginia always brings up
important, substantive issues that are
important not only to himself but to
others as well, and they are certainly
important to me. I admire and appreciate his desire to at all times uphold
the Constitution and at all times do
what is right, in his view, under the
Constitution. That is all we are trying
to do here—to do what is right.
We have spent 14 days of full Senate
floor time, and compared to other balanced budget amendment debates, we
have had far less amendments. So we
have given adequate time to these
amendments, and we have spent far
more time than on prior amendments.
But we cannot be governed just by
prior debates. I am happy to spend
whatever time it takes. I am sure the
Senator understands the majority leader is asking me to try to move it along
as fast as I can.
Mr. BYRD. Let me say——
Mr. HATCH. I am trying to accommodate the Senator. I will have to ask
the majority leader. I felt like it was
an attempt to accommodate by giving
the Senator most of the time, almost
as much as he would get with 2 hours
equally divided, while we would try to
make our arguments—as feeble as they
might be—in a shorter time.
Mr. SARBANES. Why could the Senator not—if the request was 2 hours
equally divided and the Senator’s suggestion is that the Senator from West
Virginia have 1 hour and he have 15
minutes, why would the Senator not
agree to the 2 hours and not use all his
time if it was not necessary in the debate? I mean, give the Senator from
West Virginia time to debate at the
time, and you might discover on that
occasion that you might need more
than 15 minutes. You can always yield
back your time.
Mr. HATCH. This is not a demand.
This is a suggestion. If the Senator
from West Virginia does not agree——
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Mr. SARBANES. I was just seeing a
way where you could get where you
want to go.
Mr. HATCH. Anything that will move
the debate forward I am happy to try
to do. In any event, we will have to see
what the majority leader wants to do
next Wednesday. We have that cloture
vote, and I am not sure when he is
going to have that cloture vote; I am
not aware. But we will have to put in a
quorum call and decide. I understand
the Senator’s request, that he would
like to bring up one of two amendments——
Mr. BYRD. At this point.
Mr. HATCH. Could the Senator inform us what the other amendment is?
I believe you said it is No. 252.
Mr. BYRD. I said it pertained to section 5. That has been discussed all
afternoon here.
Mr. HATCH. I thought you mentioned there might be two amendments
and you would make your choice between the two.
Mr. BYRD. I mentioned amendment
No. 252 and an amendment No. 256.
Amendment No. 256 deals with section
5. I believe I have 7 or 8 or 9 or 10
amendments at the desk.
Mr. HATCH. You would choose
whichever one you want, but there
would be no amendments to the amendment in order by either side?
Mr. BYRD. Well, if cloture is invoked, I suppose if I were able to qualify, or if other Senators were able to
qualify, they could have second-degree
amendments at the desk.
Mr. HATCH. Unless we agree to a
time agreement with those terms. That
is what I am asking.
Mr. BYRD. I am not quarreling with
the hour that I am to be given. I have
had a good bit of time this afternoon.
But I think it is indicative of the lack
of interest on the part of the proponents in seriously trying to improve
the constitutional amendment that is
before the Senate when they say, well,
we will take 15 minutes, you can have
your hour. I know what is going to happen; the amendment is going to be tabled. That is certainly the right of the
manager of the resolution, or the leader, or any other Senator.
Mr. HATCH. Will the Senator yield?
Mr. BYRD. Yes.
Mr. HATCH. Surely, I do not believe
the Senator is suggesting that I am not
taking his amendment seriously or
that I have not taken any amendment
seriously, is he? I have taken them all
extremely seriously. This is the Constitution we are working on and nobody takes it more seriously than the
distinguished Senator from West Virginia, unless it is the Senator from
Utah. I would not claim to take it
more seriously than the Senator, but I
do not think anybody takes it more seriously than either of us. I will try to
do my best to answer.
Mr. SARBANES. If the Senator will
yield, can I be included in that duo, to
make it a trio of people who take the
Constitution seriously?
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Mr. HATCH. We just do not feel that
people on the east coast—I am kidding.
Yes.
Mr. SARBANES. Let us make it a
trio.
Mr. HATCH. Let us make it 100 of us.
We are all serious. The fact of the matter is let us see what we can do to get
Senator DOLE to resolve this.
Will the Senator yield for a unanimous-consent request?
Mr. BYRD. Yes.
f
PROVIDING FOR AN ADJOURNMENT OF THE TWO HOUSES—
HOUSE CONCURRENT RESOLUTION 30
Mr. HATCH. Mr. President, I ask
unanimous consent that the Senate
temporarily lay aside the pending business and turn to the consideration of
House Concurrent Resolution Res 30,
the adjournment resolution.
The PRESIDING OFFICER. Is there
objection to the immediate consideration of the concurrent resolution?
There being no objection, the Senate
proceeded to consider the concurrent
resolution.
Mr. HATCH. Mr. President, I ask
unanimous consent that concurrent
resolution be agreed to and that the
motion to reconsider be laid upon the
table.
The PRESIDING OFFICER. Without
objection, it is so ordered.
So the concurrent resolution (H. Con.
Res. 30) was agreed to; as follows:
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H. CON. RES. 30
Resolved by the House of Representatives (the
Senate concurring), That when the House adjourns on the legislative day of Thursday,
February 16, 1995, it stand adjourned until
12:30 p.m. on Tuesday, February 21, 1995, or
until noon on the second day after Members
are notified to reassemble pursuant to section 2 of this concurrent resolution, whichever occurs first; and that when the Senate
recesses or adjourns at the close of business
on Thursday, February 16, 1995, pursuant to a
motion made by the Majority Leader or his
designee, in accordance with this resolution,
it stand recessed or adjourned until noon, or
at such time on that day as may be specified
by the Majority Leader or his designee in the
motion to recess or adjourn, on Wednesday,
February 22, 1995, or until noon on the second day after Members are notified to reassemble pursuant to section 2 of this concurrent resolution, whichever occurs first.
SEC. 2. The Speaker of the House and the
Majority Leader of the Senate, acting jointly
after consultation with the Minority Leader
of the House and the Minority Leader of the
Senate, shall notify the Members of the
House and Senate, respectively, to reassemble whenever, in their opinion, the public interest shall warrant it.
f
BALANCED BUDGET AMENDMENT
TO THE CONSTITUTION
The Senate continued with the consideration of the joint resolution.
Mr. HATCH. I ask that the Senate resume the pending bill.
Mr. BYRD. While the distinguished
Senator is making an inquiry of the
majority leader, let me just say for the
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RECORD that the distinguished Senator
from Utah talks about this amendment
that is presently before the Senate as
having had 14 days of debate.
Mr. HATCH. Will the Senator yield,
and I will make a unanimous consent
request on the Senator’s request, if it
is all right?
Mr. BYRD. On the request that we
have been discussing, yes.
f
UNANIMOUS CONSENT
AGREEMENT
Mr. HATCH. Mr. President, I ask
unanimous consent that the time prior
to a motion to table amendment No.
252, the Byrd amendment, be limited to
2 hours to be equally divided, and that
no amendments be in order prior to the
motion to table. As I understood it, the
Senator wanted it after the cloture
vote?
Mr. BYRD. Yes. Would the Senator
provide for the alternative of amendment No. 256, either/or?
Mr. HATCH. Could the Senator give
me a copy of amendment No. 256?
Mr. BYRD. I ask that the clerk state,
for the edification of the Senate,
amendment No. 256.
The PRESIDING OFFICER (Mr.
SMITH). The clerk will report the
amendment for the information of the
Senate.
The assistant legislative clerk read
as follows:
Amendment 256: On page 2, lines 24 and 25,
strike ‘‘adopted by a majority of the whole
number of each House.’’
Mr. HATCH. Would the Senator agree
to bring up the amendment and have
the 2 hours, if there are two cloture
votes, after the second cloture vote, if
necessary?
Mr. BYRD. Yes. I have no desire to
interfere with cloture votes.
Mr. HATCH. Then let us add either
No. 252 or No. 256 to the request. The
Senator will have his choice on amendments.
Mr. BYRD. Yes.
The PRESIDING OFFICER. Is there
objection? Without objection, it is so
ordered.
Mr. BYRD. I thank the distinguished
Senator.
May I say briefly that I want to yield
to Senator PELL for 10 minutes and
then I am going to yield the floor.
The distinguished Senator from
Utah—and he is a distinguished Senator—has talked about the 14 days that
we have spent on this constitutional
amendment. Well, so what? The constitutional Framers spent 116 days—116
days in closed session at the Constitutional Convention—116 days. And now
we have spent, the Senator said, 14
days. So what? What is 14 days as between us Senators, 14 days to amend
the Constitution in a way which can
destroy the separation of powers and
checks and balances—14 days.
The other body spent all of 2 days on
this constitutional amendment. I believe that is right, 2 days. What a joke!
Two days in adopting this constitu-
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February 16, 1995
tional amendment. Why, any town
council in this country would spend 2
days in determining whether or not it
should issue a permit to build a golf
course.
Two days to amend the Constitution.
I will not say any more than that
now.
I ask unanimous consent that I may
yield to the distinguished Senator from
Rhode Island. He has an ambassador
waiting on him in his office. I understand he wishes 10 minutes.
Mr. PELL. Thank you very much.
Mr. HATCH. Reserving the right to
object, would the distinguished Senator allow me just a few seconds to just
make a closing comment on what the
distinguished Senator just said?
Yes, they did spend over 100 days to
arrive at the full Constitution, without
the Bill of Rights. And we have spent
19 years working on this amendment.
This amendment is virtually the same
as we brought up in 1982, 1986, and last
year. We have had weeks of debate on
this amendment. It is a bipartisan
amendment. It has been developed in
consultation between Democrats and
Republicans in the House and in the
Senate. It has had a lot of deliberation,
consideration, negotiation, and debate
on the floor.
Admittedly, I am sure the distinguished Senator from West Virginia
would agree that the constitutional
convention did not debate this on the
floor of the Senate at the time, nor
would it have taken that much time
had there been a debate on the floor of
the Senate. But be that as it may, if it
had, we are living today with an
amendment that is one amendment to
the whole Constitution that, if adopted, would become the 28th amendment
to the Constitution.
We have spent 14 days on the floor. I
am willing to spend more. I am not
complaining, and I do want to have a
full and fair debate, but I also believe
that we are reaching a point where
there is deliberate delay here, not by
the distinguished Senator from West
Virginia necessarily, but I believe reasonable people can conclude that there
is a desire to delay this amendment for
whatever purpose that may be and that
is the right of Senators if they want to
do it.
The majority leader has filed a cloture motion which we voted on today.
We had 57 Senators who wanted to end
this debate and make all matters germane from this point on. Next Wednesday, we will vote on cloture again. And
if there are 60 Senators who vote for
cloture, then that will bring a large
part of this debate to a closure.
I think I would be remiss if I did not
say, on behalf of the majority leader
and others on our side who are working
hard to move this amendment, that we
believe that is a reasonable period of
time and we believe that every person
here has had a chance to bring up their
amendments.
We tried to get to an amendment up
last night. We were willing to work
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later. We could not get one person to
put up an amendment.
So we have reached a point where we
can go along with more amendments.
But once cloture is invoked then only
those that are germane will be considered and then only for a limited period
of time.
But I just want to make the record
straight that this is not a rewriting of
the whole Constitution, although it is
important and it will have a dramatic
imprint and impact on how we spend
and how we tax in America from that
point on if this amendment is passed
through both Houses of Congress by the
requisite two-thirds vote and ratified
by three-quarters of the States. It is
very important. Those who are for it
are very concerned about it and those
who are opposed are rightly very concerned about it.
We have had a very healthy debate.
We intend to continue as long as is necessary to bring this matter to closure.
But I do not want anybody thinking
that anybody has been cut off here or
that anybody has been mistreated or
that anybody has not been given their
chance to bring up amendments, because they have. We have tabled those
amendments. We feel that that is certainly within our right to do that. We
have tried to treat every amendment
with the dignity and the prestige that
it deserves.
Finally, I would like to encourage
my colleagues next Wednesday to vote
for cloture. Because we all know where
it stands. We all know the arguments
on both sides. This is not just 14 days.
Since I have been here, we are in our
19th year debating this matter, in the
Judiciary Committee now four times
and stopped a number of other times in
the Judiciary Committee before we
could even get it to the floor.
So this is not an unusual situation.
We actually have worked hard. Everybody here knows what is involved in
this amendment. Everybody here
knows the arguments against it. And
everybody here knows that we voted on
some very substantial and very important amendments thus far, and those
who are in a bipartisan way thus far
have been successful in maintaining
the integrity of the House-passed
amendment; I might add just one more
time, a House-passed amendment for
the first time in the history of this
country. And I have to say that is historic.
Now we have the opportunity of passing it through here and submitting it
to the States. And those of us who support it hope that 38 States will ratify
it. We hope all 50 will, but at least 38,
three-quarters. And if they do, then
this will become the 28th amendment
to the Constitution.
But I just wanted to make those
points. I am sorry I delayed the distinguished Senator from Rhode Island.
Mr. BYRD. Mr. President, I do not
want to leave the record standing as
the distinguished Senator from Utah
has left it. I believe he indicated he
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thought there was a deliberate effort to
delay.
Mr. HATCH. I said not by the distinguished Senator from West Virginia. I
would not impute that to you and I
hope that is not the case.
But I do not think many reasonable
people would conclude that we have
not given an extensive amount of time
to this debate. And I think people
might conclude that now that we have
gone through one cloture vote that
there may be a desire of some here to
delay this matter from a filibuster
standpoint. I hope that is not true. But
that is the way it looks to me.
I admit that I am not nearly as experienced here as the distinguished Senator from West Virginia, but I have
been here 19 years and I have observed.
I can remember the majority leader,
Senator Mitchell, calling filibusters
filibusters in less than a day. And here
we have had 14 days, so it is 3 solid
weeks of Senate debate on this, and extensive amendments, although not as
many as the 1982, where there were 31
amendments. But we did that in 11
days. I think people could reasonably
conclude that there is a filibuster
going on.
Mr. BYRD. Mr. President, I disagree
with that statement.
The Senator from Utah was not here
during the debate on the Civil Rights
Act, which lasted 103 days, covered a
total of 103 days between the date of
the motion to proceed on March 9, 1964,
and the date on which the final vote
occurred on the civil rights bill on
June 19. March 9, June 19th—103 days
transpired. The Senate was on the bill
itself 77 days and debated the bill 57
days in which there were included six
Saturdays.
The Senator implies that there may
be a deliberate effort here to delay this
measure. Nobody has engaged, that I
know of, in obstructionist tactics.
Imagine what one could do if he wanted
to. There have been no dilatory
quorum calls. There have been no dilatory motions to reconsider, and the
asking for the yeas and nays on a motion to reconsider, and then put in a
quorum call and send for the Sergeant
at Arms and have the Sergeant at
Arms arrest Members, as I had to do.
Nothing dilatory has been done.
Nobody has objected to any time limits on amendments. Not one objection
that I know about. I have had every
amendment that has been called up
here and time request that has been
brought to me, brought to me because
I am a Senator. I have not objected to
any such request.
The majority leader has a right to
offer cloture motions. I think he has
been fairly reasonable in this situation.
He has not been pressing out here daily
for action on this constitutional
amendment.
I am not against Senator HATCH. I
am not against Senator DOLE. I am just
against this amendment. Nobody has
attempted to deliberately delay this.
Let me debunk that idea from any Senator’s mind.
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I want to see this come to an end. It
is going to come to an end. I will have
no more to say unless the Senator
wants to carry on this bit of subject
matter further.
Mr. HATCH. Mr. President, I appreciate my colleague offering that opportunity. All I have to say is that the
rules today are considerably different
than they were during the civil rights
debates when they went 103 days. Cloture can be invoked. There is no such
thing as a postcloture filibuster today.
Mr. BYRD. There could be.
Mr. HATCH. But a lot different from
the old days.
Mr. BYRD. Does the Senator know
why it is different? Because I, as majority leader, laid down certain points
of order that were upheld by the then
Presiding Officer, and we established
precedents that make it much more
difficult to carry on a postcloture filibuster.
Mr. HATCH. How well aware I am,
and I compliment the distinguished
Senator from West Virginia for his
knowledge of the rules.
Mr. BYRD. I thank the Senator for
that compliment. I hope I have a little
knowledge of a few things other than
just the rules of the Senate.
Mr. HATCH. I have to confess that I
think the distinguished Senator is a
fine Senator, a great Senator.
I know that he knows the rules very
well and I think he knows the Constitution quite well, although I do
think earlier in the day he said there
were no amendments dealing with the
economy.
Mr. BYRD. No, no. I said no amendments dealing with fiscal policy.
Mr. HATCH. I believe the contract
laws, I believe the 16th amendment do
deal with fiscal policy.
Mr. BYRD. It does not attempt to
write fiscal policy, fiscal theory, about
which Justice Oliver Wendell Holmes
said there is no place in the Constitution for fiscal theory.
Mr. HATCH. I agree with that, if you
consider that fiscal policy.
Mr. BYRD. I consider this amendment which, by the way, I think contains about 465 words.
Mr. HATCH. It does.
Mr. BYRD. The entire first 10 amendments in the Bill of Rights contain
only about 385 words. This amendment
alone contains about 465 words. The entire 10 amendments in the Bill of
Rights contained only around 385.
What I am saying is this nefarious
amendment that is proposed here has
only about 80 fewer words than do the
10 amendments to the Bill of Rights.
The 10 amendments contain, I think,
about 465 words, and this monstrosity
contains about 385. So there are only
about 80 words difference.
My math may be off a little bit this
afternoon. I have not had any lunch,
and my feet are getting a little tired.
Mr. HATCH. I am happy to yield the
floor.
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Mr. BYRD. Mr. President, I ask unanimous consent that Mr. PELL be recognized for 10 minutes, and that he be followed by Senator MURRAY, not to exceed 5 minutes.
I thank Senator HATCH for his gracious manner and his characteristic
friendliness and conviviality. He is a
fine Senator. I enjoy working with
him.
The PRESIDING OFFICER. Without
objection, it is so ordered.
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f
MAJORITY RULE
Mr. PELL. Mr. President, I rise in
support of the amendment offered by
the distinguished and learned Senator
from West Virginia [Mr. BYRD] to
amend the proposed constitutional
amendment to allow a majority, rather
than a supermajority to determine
when a deficit can be incurred.
The concept of majority rule is so
deeply embedded in our society and in
almost every organized group proceeding—from fraternal and social
groups to corporations large and small
and government at the village, county,
city, and State level—that many Americans might be very surprised to realize
the extent to which the Congress of the
United States is sometimes ruled by a
minority, and could become more so in
the future.
We have before us the balanced budget amendment which contains not just
one but two supermajority requirements—one requiring a three-fifths
vote of the entire membership of each
House to permit outlays to exceed receipts and the other a three-fifths vote
of the entire membership of each House
to increase the public debt limit.
And we may soon have before us a
line-item veto proposal which would
subject congressional disapproval of a
rescission to a two-thirds supermajority veto override, as opposed to
an alternative plan under would a simple majority could block a rescission.
If approved, these supermajority requirements would join others already
in place: the Senate cloture rule, the
new rule of the House of Representatives on votes of that body to raise income taxes, and the statutory supermajority requirement for waiving
points of order under the Balanced
Budget and Emergency Deficit Control
Act of 1985, better known as GrammRudman-Hollings.
Mr. President, these flirtations with
supermajorities are leading us astray
from the apparent intent of the wise
men who wrote the Constitution two
centuries ago. For them the principle
of majority rule was so self-evident
that they apparently saw no need to
state it explicitly.
Since the Constitution provides for
supermajorities only in specific instances—such as overriding vetoes,
Senate consent to treaties, Senate verdicts on impeachment, expulsion of
Members, determination of Presidential disability and amending the
Constitution itself—it seems clear that
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the Framers intended that all other
business should be transacted by a majority.
And since the Constitution gives the
Vice President the power to break ties
when the Senate is ‘‘equally divided,’’
Framers again evidenced a clear intent
that business was to be transacted by a
majority. We carry forward that intent
in the structural organization of Congress itself, whereby the party that
controls 50 percent plus one seat assumes control.
The time may be coming when the
only way to prevent further violence to
the Framers intent will be to enshrine
this most basic principle of governance—majority rule itself—as a constitutional provision.
Mr. President, I offer these reflections today from the vantage point of
34 years service in this body. As I stated here a few days ago, I have cast 327
votes for cloture during those years, so
I am no stranger to the impact and
consequences of a supermajority requirement in the Senate.
I would point out, in that regard,
that cloture by majority rule would
not cancel out rule XXII of the Senate—it would simply lower the margin
for invoking cloture to the threshold
envisioned by the Founding Fathers for
the transaction of business. And we
should make no mistake about the fact
that the rules of proceedings now have
such sweeping substantive effect that
they do in fact constitute an important
element in the business of the Senate.
Mr. President, in the haste to fulfill
the expectations and promises of this
new Congress, many of which are of
great merit, we must take special care
to preserve basic principles of our democracy which may be brushed aside in
the rush to reform. The principle of
majority rule is the basic cornerstone
of the edifice, whether it applies to
rules of proceedings or the substance of
legislation. It must be preserved and
protected from all assaults. Perhaps
the time is coming when it too should
be enshrined in the Constitution.
I ask unanimous consent that three
articles entitled ‘‘The Three-Fifths
Rule: A Dangerous Game’’ by David
Broder, ‘‘Super-Majority Simple-Mindedness’’ by Lloyd N. Cutler, and ‘‘On
Madison’s Grave’’ by Anthony Lewis,
be printed in the RECORD.
There being no objection, the articles
are ordered to be printed in the
RECORD, as follows:
[From the New York Times, Jan. 30, 1995]
ON MADISON’S GRAVE
(By Anthony Lewis)
BOSTON.—‘‘Miracle at Philadelphia,’’ Catherine Drinker Bowen called her book on the
Constitutional Convention of 1787. And it
was a political miracle. The delegates produced a document that has ordered a huge
country for 200 years, balancing state and
nation, government power and individual
rights.
The Constitution has been amended 27
times. Some of the changes have been profound: the Bill of Rights, the end of slavery.
But none has altered the fundamental structure, the republican systems designed by
James Madison and the others. Until now.
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Now the House of Representatives has approved an amendment that would make a
revolutionary change in the Madisonian system. It is call the Balanced Budget Amendment. A more honest name would be the Minority Rule Amendment.
The amendment does not prohibit unbalanced budgets. It requires, rather, that a decision to spend more in any fiscal year than
anticipated receipts be made by a vote of
three-fifths of the whole House and Senate.
The same vote would be required to increase
the debt limit.
The result would be to transfer to minorities effective control over many, perhaps
most, significant legislative decisions. For
the impact would not be limited to the overall budget resolution. Most legislation that
comes before Congress bears a price tag. If a
bill would unbalance a budget, a three-fifths
vote would be required to fund it.
In short, a minority of just over 40 percent—175 of the 435 representatives, 41 of the
100 Senators—could block action. It takes no
great imagination to understand what is
likely to happen. Members of the blocking
minority will have enormous power to extract concessions for their votes: a local
pork project, a judgeship for a friend. * * *
Just think about the debt-ceiling provision. Even with the best of intentions to stay
in balance, the Government may find itself
in deficit at any moment because tax receipts are lagging. Then it will have to do
some short-term borrowing or be unable to
meet its obligations. Instead of a routine
vote for a temporary increase in the debt
ceiling, there will be a session of painful bargaining for favors.
The amendment is also a full-employment
measure for lawyers. Suppose the figures
that produce a balanced budget are suspect,
or suppose the demand for balance is ignored. How would the amendment be enforced? Sponsors say it would be up to the
courts. So this proposal, labeled conservative, would turn intensely political issues
over to judges!
It is in fact a radical idea, one that would
subvert majority rule and turn the fiscal debates that are the business of democratic
legislatures into constitutional and legal arguments. How did a conservative polity like
ours ever get near the point of taking such a
step?
The answer is plain. The enormous Federal
budget deficits that began in the Reagan
years have frightened us—all of us, conservative and liberal. We do not want our children and grandchildren to have to pay for
our profligacy. We are not strong-minded
enough to resist deficit temptation, so we
are going to bind ourselves as Ulysses did to
resist the lure of the Sirens.
The binding would introduce dangerous
economic rigidities into our system. In times
of recession government should run a deficit,
to stimulate the economy. But the amendment would force spending cuts because of
declining tax receipts, digging us deeper into
the recession.
The rigidities of the amendment would
also inflict pain on millions of Americans.
The target year for balancing the budget,
2002, could not be met without savage cuts in
middle-class entitlements such as Social Security and Medicare.
‘‘It’s a bad idea whose time has come,’’
Senator Nancy L. Kassebaum, Republican of
Kansas, said. ‘‘It’s like Prohibition; we may
have to do it to get it our of our system.’’
If someone as sensible as Nancy Kassebaum can succumb to such counsels of despair, we have truly lost Madison’s faith in
representative government. Madison knew
that majorities can go wrong; that is why he
and his colleagues put so many protections
against tyranny in their Constitution. But
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they also left government the flexibility to
govern.
Their design, the miracle that has sustained us for 200 years, is now at risk.
SUPER-MAJORITY SIMPLE-MINDEDNESS
(By Lloyd N. Cutler)
The Republican majority has proposed
amending House Rule XXI to require the affirmative vote of three-fifths of the members
present to pass a bill ‘‘carrying a federal income tax rate increase.’’ If all 435 members
show up, 261 votes would be needed for passage. As Post columnist David Broder and
Rep. David Skaggs (D-Colo.) have already observed, such a rule would be unconstitutional. Even if it were constitutional, it
would still be unworkable.
It would be unworkable because tax bills
usually contain multiple provisions reducing
some rates of tax, increasing other rates and
adjusting the base numbers—e.g., wages,
profits and capital gains less various credits,
exemptions and deductions—to which these
rates are applied. Almost every two-year
Congress enacts major tax revision laws to
close loopholes, correct inequities, adjust
rates, hold down the budget deficit and manage the economy for noninflationary growth.
If the rules are changed to require a threefifths affirmative vote, it may not be practicable to pass any major tax bill. Any such
bill is bound to contain some provisions that
can be called tax rate increases. What about
a tax bill that reduces rates for incomes
below, say, $200,000 and raises rates for incomes above that figure? What about tax bill
provisions eliminating charitable or home
mortgage interest deductions, or reducing
the allowed exemptions for dependents or
lengthening the required holding period for
long-term capital gains? Any one of these
would have the same effect on many taxpayers as an increase in income tax rates. As
a result, the proposed three-fifths requirement could well apply to any major income
tax revision bill that follows adoption of the
proposed rules change.
Let us suppose that a stubborn minority of
175 members will be mustered to prevent a
three-fifths majority and thus defeat any bill
including some income tax increases. Let us
also suppose that a simple majority (218 if all
435 are present) will vote against an amendment that eliminates any such increase.
There is still a budget deficit to contend
with, and 218 members may think that a
broad reduction in income tax rates should
be at least partially offset by some tax increases. In that event, no major tax bill
could be passed at all, and the government
would be unable to make needed changes in
national fiscal policy.
With the House floor debate on the proposal about to begin, it may also be useful to
spell out the main reasons why a super-majority requirement for the vote on passage of
a bill is unconstitutional. In United States v.
Ballin, decided a century ago, the Supreme
Court said that a simple majority governs
‘‘all parliamentary bodies,’’ except when the
basic charter requires some form of supermajority, which our Constitution does in five
cases (plus two added by subsequent amendments) and no others. The seven exceptions
are: the overriding of a presidential veto, the
Senate’s consent to a treaty, the Senate’s
verdict on an impeachment, the expulsion of
a senator or congressman, an amendment of
the Constitution, the 14th Amendment vote
on removing the disqualification for office of
participants in a rebellion and the 25th
Amendment vote on whether to allow a disabled president to resume his office. All of
these are special cases, not involving the
mere passage of a bill or resolution for presentation to the president.
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Except in these cases, the Framers were
against allowing a minority of either house
to block legislative action. That is the reason why Article I, Section 5, states that ‘‘a
Majority of each [house] shall constitute a
quorum to do Business.’’ As James Madison
explained, the Framers rejected a proposal
that a super-majority be required for a
quorum because: ‘‘In all cases where justice
or the general good might require new laws
to be passed, or active measures to be pursued, the fundamental principle of free government would be reversed. It would be no
longer the majority that would rule: the
power would be transferred to the minority.’’
(The Federalist Papers, No. 58.)
The vote of the House on whether to pass
a bill is certainly the doing of ‘‘Business.’’
And contrary to the Framers’ intent, a
super-majority requirement would certainly
give a minority the power to rule over such
business.
Another constitutional provision confirms
this understanding of the Framers. Article I,
Section 3, states that the vice president shall
be the president of the Senate, ‘‘but shall
have no vote unless they be equally divided.’’
The Framers must have intended that in the
Senate at least, a simple majority was sufficient to pass a bill. The Federalist Papers
strongly support this view. According to
Hamilton, the vice president was given the
tie-breaking vote in the Senate ‘‘to secure at
all times the possibility of a definitive resolution of that body.’’ (Federalist No. 68.)
There is no logical reason why the Framers
would have thought differently about the
House. And a ‘‘definitive resolution’’ of the
House could not be ‘‘secured’’ under the proposed three-fifths rule.
Proponents of a super-majority requirement will make two points in rebuttal. One
is to say that they are following a precedent
of Senate Rule XXII, which has long required
super-majority votes to close debate and proceed to a vote on a bill or an amendment of
a Senate rule. As I have argued on a previous
occasion, Rule XXII itself is constitutionally
suspect. But even if Rule XXII passed constitutional muster, that would not save the
proposed House rule. It applies to the up-ordown vote on a bill, while Senate Rule XXII,
as its defenders take pains to point out, applies only to a procedural motion to close debate on a bill. Here is arch-defender George
Will, writing on this page in April 1993:
‘‘The Constitution provides only that,
other than in the five cases, a simple majority vote shall decide the disposition by each
house of business that has consequences beyond each house, such as passing legislation
or confirming executive or judicial nominees.’’
Will Newt Gingrich flout George Will?
The proponents’ second point will be that
the Gramm-Rudman-Hollings Act includes
Senate and House rules changes that require
a super-majority to pass any bill that
‘‘breaks’’ a budget law or resolution previously enacted. This provision is also constitutionally suspect, but at least it lacks
the critical vice of making it impossible to
enact any budget resolution in the first
place. This still requires only a simple majority.
The biggest question of all is why a majority party with 230 of the 435 seats would want
to adopt a super-majority rule requiring 261
votes to pass a tax bill. Such a rule could
prevent the Republicans from passing a
major tax bill favored by a simple majority
it could readily muster, even though it
might be unable to muster a super-majority
of 261. One is tempted to conclude that the
present majority party does not expect to
keep its majority for very long.
The Republicans have also proposed an
even more egregious change in House Rule
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XXI, one that would prevent the House from
even considering any measure that would
retroactively increase tax rates, even if
three-fifths of the members were in favor.
This would deprive the House, and therefore
the entire Congress, of its most fundamental
express power under the Constitution, the
power to lay and collect revenues including
taxes on income. It would also have the effect of overruling the numerous Supreme
Court decisions upholding the constitutionality of retroactive tax laws, subject
only to a due-process standard.
Both of these proposed rules changes are so
manifestly
unconstitutional
that
they
should not be adopted. If the Republicans use
their majority to adopt them anyway, the
courts would have ample reason to set them
aside.
[From The Washington Post, Dec. 18, 1994]
THE THREE-FIFTHS RULE: A DANGEROUS GAME
(By David S. Broder)
Among many useful and well-designed reforms proposed by the new Republican majority in the House, one suggested change bespeaks neither confidence nor foresight. It is
the proposal that future income tax rate increases would require a three-fifths vote for
passage.
The purpose is plainly to make it harder
for Congress to boost taxes. Since revenue
measures must originate in the House of
Representatives, the three-fifths, rule would
hamper future majorities in both the House
and Senate from enacting such measures.
Some question the constitutional propriety of such a rule. Rep. David Skaggs (D–
Colo.) has circulated a letter to his colleagues arguing that ‘‘the principle of majority rule has governed this nation for over
two centuries and is fundamental to our democracy.’’ Skaggs asserts that the threefifths rule is unconstitutional. Bruce Ackerman, a professor of law and political science
at Yale, has expressed the same view in a
New York Times op-ed article. Common
Cause and congressional scholar Norman
Ornstein also have taken up that side of the
argument.
Others disagree, Rep. Jerry Solomon (R–
N.Y.), who will be the new chairman of the
Rules Committee, argues that when the Constitution says that ‘‘each house [of Congress]
may determine the rules of its proceedings,’’
the authority is intentionally broad. Lawyers and experts inside congress and out, to
whom I put the question, say it would be difficult to predict how the courts would regard
such a rule—or even whether they would accept jurisdiction if its constitutionality were
challenged.
The experts I consulted agree that there is
no precedent for Congress requiring a supermajority for final action on any measure, except where specified by the Constitution.
The Constitution says it takes a two-thirds
majority to override a presidential veto, ratify a treaty, remove an official from office,
expel a representative or senator or propose
an amendment to the Constitution.
The other instances in which Congress
itself has required more than a majority for
some action all involve procedural matters.
The House requires a two-thirds vote to suspend the rules and pass a measure without
delay; the Senate requires a three-fifths vote
to impose cloture or end debate. In the last
decade, budget resolutions have required a
three-fifths vote to override a point of order
against any change that would increase the
deficit beyond the agreed-upon target for the
year. This is a procedural motion, but it
clearly affects the substance of economic
policy decisions, and sponsors of the new
House rule claim it as a model for their proposal.
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But abandoning the principle of majority
rule on final passage of a bill is not something the House should do lightly—or rest on
a questionable precedent. If the three-fifths
rule is intended as a safeguard against rash
tax-raising by this incoming Congress, it
seems unnecessary. Republicans will have a
25-seat majority in January and they have
promised tax cuts, not increases. The president has joined them and so has the leader of
House Democrats, Rep. Richard Gephardt
(Mo.). So where is the threat?
Fiddling with the rules always arouses suspicion. Two years ago, when the majority
Democrats changed the rules to allow the
delegates from the District of Columbia,
American Samoa, Guam and the Virgin Islands and the resident commissioner from
Puerto Rico (all Democrats) to vote on the
House floor on everything but final passage
of bills, I said they were tampering with the
game. Such criticism forced the Democrats
to agree that there would be another vote—
without the five delegates—on any issue
where their votes decided the outcome. The
federal courts upheld that version of their
rule, saying that the change the Democrats
had made was merely ‘‘symbolic’’ and essentially ‘‘meaningless.’’
That cannot be said of the proposed threefifths rule. It is consequential—and unprincipled. The Republicans themselves juggled
the wording to create loopholes for shifting
other tax rates by simple majority.
The precedent they will set is one they will
come to regret. If this Congress puts a rules
roadblock around changes in income rates,
nothing will prevent future Congresses with
different majorities from erecting similar
barriers to protect labor laws, civil rights
laws, environmental laws—or whatever else
the party in power wants to put off-limits for
political purposes.
There is something fundamentally disquieting and even dishonorable about the
majority of the moment rewriting the rules
to allow a minority to control the House’s
decisionmaking. You can easily imagine future campaigns in which politicians will
promise that if they gain power, they will
abolish majority rule on this issue or that—
a whole new venue for pandering to constituencies that can be mobilized around a single
issue.
This is a dangerous game the Republicans
are beginning. And it raises questions about
their values. Let them answer this question:
Why should it be harder for Congress to raise
taxes than declare war? Does this proud new
Republican majority wish to say on its first
day in office: We value money more than
lives?
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Mr. PELL. I yield the floor.
Mrs. MURRAY addressed the Chair.
The PRESIDING OFFICER. By a previous order of the Senate, the Senator
from Washington is recognized for 5
minutes.
Mrs. MURRAY. Mr. President, I ask
unanimous consent to speak as in
morning business.
The PRESIDING OFFICER. Without
objection, it is so ordered.
f
DR. HENRY FOSTER, SURGEON
GENERAL NOMINEE
Mrs. MURRAY. Mr. President, Dr.
Henry Foster has been nominated by
President Clinton to be the U.S. Surgeon General. I rise today to express
my support for Dr. Foster, and to urge
my colleagues to give him a full and
fair hearing.
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Yesterday, I had the pleasure of
meeting with Dr. Foster, and I am very
impressed.
Dr. Foster is a physician with vast
experience who has dedicated his life to
maternal and child health. He is a man
who speaks from the heart, a person
who cares deeply about the health of
families across this Nation.
Dr. Foster is one of the country’s
leading experts on preventing teen
pregnancy and drug abuse, as well as
reducing infant mortality. He is a public health professional with vision.
I urge my colleagues to meet with
Dr. Foster, to talk with him, to ask
him tough questions. I have. I believe
they too will be very impressed.
Dr. Foster has tested his ideas about
public health interventions that can
greatly benefit this Nation. He wants
to continue his career-long focus on
maternal and child health, on adolescents, and the on prevention of teen
pregnancy. He wants to fight AIDS,
and combat the epidemic of violence
that has taken hold across our Nation.
I also want to stress the importance
and relevance of Dr. Foster’s practice
area. For far too long, women’s health
concerns have been neglected by this
Nation. I am heartened that our next
Surgeon General can be a physician
who has dedicated his life to women’s
health—an obstetrician/gynecologist.
Women’s health is critical to every
family—every man, woman, and child—
in this Nation. As a woman, and a
mother with a son and daughter, I find
the selection of Dr. Foster reassuring. I
urge my colleagues to stop and think
about the importance of women’s
health to families everywhere.
I look forward to working with my
colleagues on the Labor Committee as
they prepare hearings for Dr. foster. I
believe when my colleagues and the
American public get to know Dr. Foster, they will be as excited as I am to
have him as our Nation’s next Surgeon
General. You, too, will recognize his
honesty, his passion, and his commitment to children and families.
I thank you and yield back the remainder of my time.
f
BALANCED BUDGET AMENDMENT
TO THE CONSTITUTION
The Senate continued with the consideration of the joint resolution.
Mr. HATCH. Mr. President, we are
now in our 14th day of debate. I was
very interested in the chart of the distinguished Senator from New Hampshire, ‘‘Statutes Don’t Work.’’
I hear people on the other side constantly saying we ought to just do it;
we ought to just balance the budget;
we ought to have the guts to do it. Almost invariably they are the people
who are the biggest spenders around
here. Almost invariably.
It is the biggest joke on Earth, after
26 straight years of not balancing the
budget, to have these people tell us, we
just have to do it ourselves. That is the
biggest joke around here to everybody
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who knows anything about budgetary
policy in the Federal Government.
Do not think the people are stupid
out there. They know what is going on.
They know doggone well that if we do
not have this balanced budget amendment, we will never get fiscal control
of this country, we will never make
priority choices among competing programs, and we will just keep spending
and taxing like never before.
I have heard Senators on the other
side of this issue, and some who even
support us, beat their breast on how
they voted for that large tax increase
last year, and that deficit spending
thing they did. Anytime you increase
taxes, if you can hold on to spending at
all, you are going to bring down the
budget deficit. The problem is that at
best, their approach starts up dramatically in 1996 and really dramatically at
the turn of the century to a $400 billion
annual deficit.
These people are always saying we
just have to do it. They are the same
people who say we could do it with the
Budget and Accounting Act of 1921, the
Revenue Act of 1964, the Revenue Act
of 1968, Humphrey-Hawkins in 1978, the
Byrd amendment in 1978. I was here for
most of those. From 1978 on, I was certainly here, and I have to tell you, I
voted for that Byrd amendment and I
was really thrilled. Here is the U.S.
Senate, this august body of people who
mean so much to this country, voting
to say that in 1980, we are going to balance this budget.
Back then, we probably could have if
we had really gotten serious about it.
But it was almost the next bill that
came up that a 51 percent majority
vote changed that. The distinguished
Senator from New Hampshire really
makes a great point here.
The debt limit increase, why, I was
here for that, too. We promised, ‘‘Boy,
we’re going to balance the budget.’’
The Bretton Woods agreement; again,
Byrd II; recodification of title 31; Byrd
III; Gramm–Rudman-Hollings, I remember what a fight that was to get
that through. My gosh, at last we are
going to do something for this country;
we are going to get spending under control; we are going to help our country.
It helped a little bit, darn little.
We had to go to Gramm–RudmanHollings II, II because the little it did
help was just too much for these people
around here, just too much for these
budget balancers who say we simply
ought to do it.
Let me tell you, I am tired of saying
we simply ought to do it. I heard it
from the White House. What do we get
from the White House? A budget for
the next 5 years that will put us over $6
trillion; that the annual deficits for the
next 12 years are $190 billion a year
plus.
Now tell me they mean business. No
way in this world. This game is up.
Those who vote for this are people who
are serious about doing something for
our country, about getting spending
and taxing policies under control. I
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said spending and taxing. We are not
just worried about spending, we are
worried about these people who think
the last answer to everything is to tax
the American people more. And anybody who thinks that last tax policy
was just the upper 2 percent, they just
have not looked at what they have
done. They even taxed Social Security.
People just do not realize because
sometimes the big lie is told around
here so much that people cannot figure
out what is going on. That is why baseball is the No. 1 issue in this country
right now. I happen to know. I happen
to be in the middle of that one, too.
But I have to tell you, as important as
baseball is, it is not a fly, a flea on the
backside of an elephant compared to
what this problem is.
When we went to Gramm–RudmanHollings II, that did not work, either.
It was a simple statute that we just
amended and amended.
We have done some things here.
There are some heroes here to me on
both sides of the floor who are trying
to do their best. I do not mean to find
any fault with any individual Senator.
We all have our problems. But, by gosh,
the point I am making is, we are not
going to do it unless we have a fiscal
mechanism in the Constitution that requires us to at least make priority
choices among competing programs before we spend this country into bankruptcy. That is what this amendment
will do. This chart is a beautiful illustration of why statutes do not work.
They may work for a short period of
time, but sooner or later we are going
to spend us just blind again.
In fact, there are those who worry
even if we put the balanced budget into
the Constitution, there will be some in
this body and certainly some in the
other who will try to find every excuse
they can to get around it.
That is fine. But they are going to
have a rough time because a lot of us
are going to be here to make sure that
there are no ways of getting around it;
that we have to face the problems of
this country. And right now I have to
say we are not facing them. As much as
people feel they are, we are not. We are
with $200 billion deficits ad infinitum,
well into the next century, and we are
selling our kids into bankruptcy. It
just makes me sick.
Elaine and I have six children and 15
grandchildren—the 15th is on its way,
but I count that child as if it has been
born. It is only a month or so away—15
grandchildren. The fact of the matter
is every one of those kids is going to be
saddled with irresponsible debt because
we keep fiddling while Rome is burning. Our balanced budget tracker poster sure shows that. We are now up to
$15 billion in increased debt just in the
18 days we have been on this amendment—18 days.
We have runaway spending in this
country. We have a destructive welfare
system that is tearing the fabric of our
country apart, our families apart, that
encourages immorality and promis-
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cuity and children born out of wedlock
to the point where today in this country in some cities there are more children born out of wedlock than there
are in. As a matter of fact, in some cities in this country there are more kids
aborted than there are kids that are
born. And you wonder why we are losing our moral fiber? You wonder why
this country has problems?
We have a Tax Code that does not
work. Everybody knows it. We all feel
picked on. Most people in this country
hate the IRS. Those are loyal, dedicated public servants just trying to enforce what is a ridiculous set of incomprehensible, massive laws. We can
make it simpler. We could put a lot of
the tax lawyers out of business and a
lot of the tax accountants out of business and get more revenues in the process because people would feel more like
paying them because they would be
treated fairly.
However, we will not do it because we
do not have a fiscal mechanism in the
Constitution that requires us to do it,
or at least point us in the right direction.
This Washington bureaucracy has
grown every year. I get a kick out of
some saying how much they are going
to cut it back. It just goes on and on at
tremendous cost, to the point where
welfare in this country, by the time we
get our tax dollars set aside for welfare
to the people who need them, you have
28 percent of the dollar left, 28 cents on
a dollar because it is eaten up right
here in the bureaucracy because we
will not do anything about it. We have
these people standing around saying we
will do it; we have the guts to do it.
And invariably they are the very same
people who are against this amendment. They do not want to do it.
Oh, I should not be so harsh. There
are some who really do want to do it,
but they just do not have the capacity
to do it, and I think we all know who
they are. We have to get Washington
put together. We have to restore the
American dream and give our kids a
chance. We have to give our grandchildren a chance.
If there is any big, bloated, amorphous mass I would like to put on a
diet, it would be this Federal budget,
and I think we would all be better off.
We would have more money with which
we would be able to do more things. We
could expand businesses, have more
jobs, actually have more revenues if we
just got incentives restored again.
I said early in the debate that the
Federal Government could really stand
being anorexic for a while. It would
probably do this country good. We
could cut the fat, cut the waste, get rid
of a lot of things that really do not
work, and reform and improve those
things that do.
Now, if people do not think I know
what I am talking about, when I became chairman of the Labor Committee back in 1981, the youngest committee chairman in the history of a
major committee, my ranking member
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was none other than Ted KENNEDY, the
distinguished Senator from Massachusetts, with six other very liberal Senators. So there were seven liberals on
the Democrat side. We had seven conservatives on my side, plus two liberal
Republicans whose hearts, in many
ways, were with the liberal Democrats
on the committee.
But we were challenged to cut back
on the most liberal committee in the
Senate’s jurisdiction, the most liberal
committee in the Senate. We were
challenged to cut back on spending. We
went to work. We block granted in part
six of the seven block grants. We
worked to refine and reform the thousands of programs that they had in
that committee. We cut that committee’s multibillions of dollars of budgetary jurisdiction by 25 percent in real
terms over the 6 years I was chairman,
with all of those liberals on the committee. And I have to give Senator
KENNEDY and others a lot of credit for
helping us to do it. They were willing
to work with us. They knew we had the
majority and they were fair. But we
cut that jurisdiction 25 percent in real
terms over those 6 years. And if every
other committee in the Congress had
done that, we would have had a $150
billion surplus by the end of those 6
years.
So I know what I am talking about.
It can be done. And do you know what
else? Even though we cut the jurisdiction 25 percent in real terms, because
we went to work and reformed the system, reformed those thousands of programs, we actually got more money to
more people in better ways than ever
before. You cannot tell me we could
not do with a good haircut of the Federal Government today in all of these
programs.
Almost all of them are well intentioned, almost all of them are well
meaning. The fact of the matter is that
we are unwilling to do what needs to be
done, and the reason we are is not because we are awful people or we are not
good people or that it is just Democrats or just Republicans. It is both of
us. Frankly, it is because we do not
have a fiscal mechanism that encourages us to do it.
Now, this balanced budget amendment is that fiscal mechanism. It is
not perfect. I have said it is not. There
is nothing that is perfect in the eyes of
all 535 Members of Congress. There is
no way you can do that. But it is as
perfect as we can get—worked on for a
decade or more, about 14 years, by
Democrats and Republicans. I know; I
have been right in the middle of those
negotiations every step of the way.
And nobody in particular should be
able to take complete credit for it or
blame for it.
Mr. President, I have to tell you
something. It is the hope of millions
out there in America, a high percentage of people who may be with the balanced budget amendment and we can
get this mess under control.
I just hope with everything I have
that we can get those 15 Democrats
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that we need to vote with us—15 out of
47. That is all we need. Go ahead, 32 of
you vote against it, but 15 of you we
need to pass this balanced budget
amendment. That is all; 52 out of 53 Republicans are going to vote for this.
That is really something. I think we
will get those 15, and we may even get
more. I am going to do everything in
my power to see that we do so that we
have to face the music, so that we have
to face reality, so that we have to understand more than ever before it is
time to quit selling the future of our
children and our grandchildren down
the drain. I want them to have at least
close to the opportunities that our generation had when we were coming up
and not born in poverty. I just want
them to have the same chance.
I notice the distinguished Senator
from New Mexico is here. I did not
mean to take so much time. I will be
happy to yield the floor.
The PRESIDING OFFICER (Mr.
BENNETT). The Senator from New
Mexico.
Mr. BINGAMAN. Mr. President, I
spoke yesterday about my concerns regarding the context in which we find
ourselves debating the constitutional
amendment to balance the budget this
year. I would like to take a few minutes of the Senate’s time to elaborate
on those concerns and to announce how
I will vote when this matter comes to
a vote, finally, next week.
Mr. President, during the time I have
served here in the Senate, from January 1983 until the present, one of the
great shortcomings in our national policy has been our failure to pursue
sound fiscal policy. During the 1980’s
and continuing now into the 1990’s the
Federal Government, each year, has
operated substantially in deficit.
During the last 12 years there have
been several serious efforts to deal
with that problem and I have supported
each of those. The deficit reduction efforts in 1987, 1989, 1990, and 1993 have all
had my support. Those were deficit reduction efforts under President Reagan
and President Bush, and now under
President Clinton.
If another serious deficit reduction
effort occurs, as I hope it will during
this term of my service in the Senate,
I expect to support that as well. I share
the goal of most Americans to reach a
balanced budget at the earliest possible
date.
But the question we have to answer
is: Will the passage of this amendment
in the context it is presented today advance our prospects for achieving
sound and fair fiscal policy, or retard
those prospects?
As I stated yesterday, the amendment comes to us in a very politicized
environment where many of its proponents clearly see the amendment as
a way to advance their political agenda
of less taxation for certain taxpayers.
In the much discussed Contract With
America the Republican leadership in
the House of Representatives promised
to pass the balanced budget amend-
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ment with a three-fifths supermajority
requirement for any tax increase. That
supermajority requirement was not in
fact included in the amendment sent to
the Senate by the House in the form of
House Joint Resolution 1. However,
those who put the Contract With
America together have not abandoned
their commitment.
There are troubling indications that
the effort still goes forward not only to
reach a balanced budget, which we all
support, but to reach it in a particular
way, and to reach it in a way that
shields certain Americans from sharing
equitably in that pain.
I discussed at length yesterday the
House rule adopted before the balanced
budget amendment was sent to the
Senate—which requires three-fifths
supermajority vote to raise income tax
rates and income tax rates alone.
Under the House rule other taxes can
still be raised by a simple majority—
taxes that impact many of the people I
represent most heavily—the working
families of my State.
The gas tax, for example, the social
security tax, various excise taxes. In
order for a bill to become law it must
pass in both houses.
This House rule gives the minority in
the House a veto over efforts by either
house to use the income tax our most
progressive tax to raise revenues for
deficit reduction.
This rule undermines genuine efforts
at deficit reduction. The purpose of
this rule is clearly to protect individuals and corporations in the upper tax
brackets and to regain any increases in
revenue to occur by increases in regressive taxes that affect middle income
families most directly.
I proposed yesterday to amend the
proposed constitutional amendment to
correct this problem—but unfortunately my amendment was defeated.
So with that defeat, we are faced
with a proposed constitutional amendment being presented while the House
has in place a rule which makes it
clear that middle-income families will
likely see their taxes raised to balance
the budget—but unlike that wealthy
individuals and corporations will share
in that sacrifice to the same extent.
A second troubling indication that
the balanced budget amendment is seen
by its proponents as a device to pursue
a political agenda to advantage certain
groups in our society—is the commitment of the Republican leadership in
the House to bring the proposed constitutional provillion four three-fifths
supermajority requirement for tax increases to the House floor for a vote
prior to April 15 of next year.
And in fact yesterday there was a
colloquy here on the Senate floor
where the Senator from Utah agreed to
proceed here in the Senate with hearings on a constitutional amendment
imposing that same supermajority requirement for tax increases.
So the context in which we are considering this amendment has changed
from what it was in previous Con-
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February 16, 1995
gresses. We now are not just talking
about how to balance the budget, we
are now talking about writing into the
constitution, provisions which will determine whose ox will be gored as we
proceed to balance the budget. In this
context and with these ground rules in
place the people whose ox will be gored
are the working people—those who pay
the most gas taxes, the social security
taxes, and those who pay excise taxes.
What are the consequences that
would flow from the balanced budget
amendment in this new environment
with this new change in the House
rules.
I believe we can predict 3 consequences from proceeding with the
amendment given percent groundworks.
First, with a three-fifths supermajority requirement in place to raise
income taxes it will be much more difficult for us to reach the goal of a balanced budget by 2002. As I stated yesterday, almost all the experts who have
looked at the issue seriously agree that
a balanced budget will only be reached
as other deficit reduction efforts have
been achieved, with a combination of
spending cuts and revenue increases.
And with this provision in place those
revenue increases will come from regressive taxes, rather than from the
only progressive tax we have, the income tax.
Second, if we do take steps to reach
a balanced budget, with that supermajority for income tax increases in
place, most of the burden of deficit reduction will fall on working families
who can least afford to carry that additional burden.
And the third consequence is that
States like my home State of New
Mexico with relatively low per capita
income will be those most badly hurt.
At this very time our State legislature in Santa Fe is struggling with the
question of a gasoline tax. A balanced
budget amendment adopted, with the
House Rule in effect protecting incomes taxes from change, almost certainly insures that we in Washington
will be adding substantially to the gas
tax as one of the only available sources
of revenue. The same can be said of Social Security taxes and other regressive taxes.
Mr. President, if I represented a
wealthy State with many high income
taxpayers, I could see an argument for
why I should vote for the amendment—
in spite of the House rule. But my
State is not wealthy and we have very
few taxpayers who will be treated fairly under this new set of ground rules.
CONCLUSION
Mr. President when the final vote is
called on the balanced budget amendment next week I will vote ‘‘no.’’
I will do so because I believe we
should leave the question of how to
achieve sound fiscal policy to a vote of
a majority here in Congress at any particular time. We should not try, by rule
or other provision, to determine how
future Congresses choose to reduce the
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deficit: We should not dictate whether
they cut spending or raise taxes. We
should not try to predetermine for future Congresses which group of taxpayers will pay the taxes and which
group will suffer the spending cuts.
The Framers of the Constitution
were wise to limit the use of the supermajority requirement in the Constitution. They chose to leave the Constitution neutral as to how we accomplish
sound fiscal policy at any particular
time in our history. We are well advised to defer to their good judgment
on that subject, to cease our efforts to
solve this problem by changing the
Constitution, and, instead, to solve it
as all previous generations have, by
demonstrating the political courage to
make unpopular decisions about spending cuts and taxes.
Mr. President, I yield the floor.
Mr. DORGAN addressed the Chair.
Mr. BINGAMAN. Mr. President, I
suggest the absence of a quorum.
The PRESIDING OFFICER. Does the
Senator withhold his quorum call request?
Mr. BINGAMAN. I withhold.
Mr. DORGAN. Mr. President, I understand the Senate is near the completion of its business today. I will not
take a great length of time, I was intending to offer today an amendment
but I was intending to offer an amendment today and now obviously I intend
to offer an amendment when we reconvene, whenever that might be, on this
constitutional amendment to balance
the budget.
I spoke the other day on the floor of
my concern about the process by which
we are selecting a new Director of the
Congressional Budget Office. I made it
clear when I spoke that it is not my intent to tarnish the image of the person
who apparently has been advanced as
the one to be selected. I do not know
the person. I do not have a judgment
about the person’s qualifications because I have not met with that person.
But I certainly have a judgment about
the way this process has worked and I
am concerned about it, and sufficiently
concerned that I want the Congress to
be able to evaluate this appointment in
a more considered way.
This is not just the usual appointment. It is not just a run-of-the-mill
appointment. The head of the Congressional Budget Office, in effect, becomes
the referee on a wide range of budget
questions and on a wide range of scoring issues. As all of us know, how a
proposal is scored can have an enormous impact on whether or not that
proposal meets with favor or disfavor
in the U.S. Senate. For example, one
might say, ‘‘I have a certain budget
proposal that recommends certain
things.’’ And CBO says, ‘‘Well, we
would score that in a dynamic way, or
a static way.’’ You would reach very
different results perhaps. So you develop scoring rules, and how you select
the people to perform these duties is
very, very important.
I can remember in 1981, the first year
I served in the Congress, in which we
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had some very dynamic scoring by the
Office of Management and Budget.
David Stockman, a fresh, new face, was
selected to head the Office of Management and Budget. They came up with a
strategy that said, ‘‘Well, if we do the
following things, we will produce enormous new revenue, and we will balance
the budget by 1984.’’ He subsequently
wrote a book after he left the Government that said none of that was realistic and it was a horrible mistake. I
have sometimes used quotes from his
book because he gave an interesting insight into what the mindset was when
they were using these dynamic scoring
approaches to come up with these results. It seemed wildly unrealistic at
the time anyway. But, nonetheless, dynamic scoring was used to justify a
new fiscal policy.
The point is we have been through
periods where people have developed
new scoring approaches, new devices,
that have been unrealistic and have
caused this country great problems and
left us with significant debt and deficits. Especially given this constitutional amendment to balance the budget and the vigorous battles that will
occur, I am sure, over budget resolutions that come before the Senate, our
referee, the Congressional Budget Office, must be led by someone who commands universal respect, someone
whose methods do not lead to questions
about judgment.
Again, I do not know the circumstances of the person who has apparently been tapped to be the new Director of the CBO. So I do not know
whether that person meets this test.
But I do know this: We have had people
who have led the Congressional Budget
Office—Alice Rivlin, Rudy Penner, Bob
Reischauer—all of whom, Members of
the Senate would almost universally
say, are people at the top of their field
whose impartiality allows them to call
them as they see them. These previous
Directors have, I think, received nearly
universal respect and support.
The selection of these three Directors
was generally a process in which the
two parties together make a judgment.
In fact, I am told—I will not recite the
chapter and verse on this, I will do that
later—that previously the minority
had difficulty with several candidates,
and really, said, ‘‘Well, this is not acceptable to us.’’ And that just meant
that candidate did not go forward.
That was the way it was because there
was a need to develop a consensus on a
candidate.
I am told that this process on this
candidate resulted in an announcement
in the House of Representatives, of who
the appointee would be, prior to the
ranking minority member in the House
Budget Committee ever meeting the
person. That is not a process, it seems
to me, that is consultative. That is not
a process in which both sides have
come together to jointly figure out
who has the stature and the ability and
the authority to do this job.
So I am concerned about the process.
I do not think this is the right process.
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I really think with the Director of the
Congressional Budget Office, there
ought to be a resolution of approval by
both the House and the Senate. I know
that is not the current circumstance.
But I intend to offer an amendment
that would require that. I hope very
much that at this juncture the majority would not appoint a Director at
this point until I have had an opportunity to offer the resolution. I probably will offer it and discuss it on this
amendment, although it would be better to offer it to the very next bill that
comes to the floor of the Senate after
the balanced budget amendment.
But I, as others, am concerned and
want to speak on it. I want to make a
case about the process. My case is not
a case that says this person is the
wrong person. I do not know. But I
know that whoever heads CBO is going
to have an impact on my legislative
life and an impact on the legislative
life of everyone in this body and in the
House. And I would like very much for
the selection of the new head of the
CBO to be a selection that represents a
consensus between the majority and
the minority; a consensus on two
points:
First, that this person is someone of
great quality, who is at the top of the
field and has the credentials to command respect;
And, second, that this person is
someone who will provide an impartial
analysis of the type that we have been
used to.
I must admit that I, like probably
the Senator in the chair, have from
time to time had to hold my brow as I
received something from CBO. I have
said, ‘‘Lord, I do not agree with that.
That is not the answer I was looking
for.’’ But I respect Mr. Reischauer. I respect Mr. Penner. I respect Alice
Rivlin. I do not know the current candidate. And I am not making judgments here. But I am making judgments about the process. This process
is wrong. It is a flawed process when we
have circumstances where the appointment is announced prior to the minority ranking member even being able to
discuss particulars with the candidate.
I am not going to talk about the
process on the Senate side. But I do
know that the minority on the Senate
side of the Budget Committee sent a
letter saying we think we should look
further for other candidates. So they
obviously were making some kind of a
judgment. I think that we ought not
proceed until we have responded to this
as a body. I hope very much that prior
to my offering the amendment when we
return, that the majority will not proceed to make this appointment.
Again, let me emphasize for the third
time as I take the floor that I do not
intend to make a judgment about this
candidate at this point. I may at some
point. But I do not know enough to
make a judgment. I know what I have
read in the papers. I have been in politics long enough to understand that
that is not enough. I want to understand the facts. I want to understand
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the circumstances and the quality of
this candidate. But I also want to understand that when we finish this process the selection of this very important
person will be a selection by consensus
among the majority and minority of
the House and the Senate. I do not
think that is the case today.
So, I had intended to offer this
amendment today and because other
amendments took most of the day, this
will be put over until next week, or
whenever we return—I guess the first
legislative day when we return. But I
wanted to take the floor at this moment to alert my colleagues that I intend to do this, and to urge the majority not to proceed until we have had a
chance to express ourselves on this
issue.
Mr. President, I appreciate the Senate’s indulgence.
I yield the floor.
Mrs. HUTCHISON addressed the
Chair.
The PRESIDING OFFICER. The Senator from Texas is recognized.
Mrs. HUTCHISON. Mr. President, I
would like to talk as we end this third
week of debate on the balanced budget
amendment about the importance of
this vote and what it really means to
America.
I have listened for the last 3 weeks to
the debate, and I want to say that I
think we are in a filibuster. I think
there can be no doubt of it. Our leader
has been patient. Senator DOLE wanted
everyone to have an opportunity to
have his or her say to talk about the
issue, because it is a major issue. It is
probably the most important vote I
will ever make in my career.
I think the leader has given ample
time for every person to talk about
views, to differ on views, and to put in
amendments. I think Senator HATCH
and Senator CRAIG, who are the distinguished managers of this joint resolution, have been very patient. But this
is a filibuster, and there is a fundamental difference about whether we
should move forward with the mandate
that we have to change the things we
have been doing in Washington, or
whether we are in fact doing what we
have been doing year after year after
year in this Congress—that is, spending
beyond our means. That is what has
been happening.
We are at the end of the third week
of debate. All of us who support the
balanced budget amendment thought
we would be finished, thought we would
leave town for a 3-day recess knowing
that we had done the most important
thing we could do for the future of our
children and grandchildren. But we are
not there yet. We are not there because
there is a fundamental difference and
because many who disagree with the
balanced budget amendment have decided to delay it through filibuster.
I support the right of everyone to
delay. That is part of the Senate rules.
But I think it is time to call it what it
is. I think it is time that people realize
this is a delaying tactic, that we are no
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longer into substantive differences—
and reasonable people can differ—we
are into trying to delay what clearly
the majority of this body wants to do,
and that is to say that we are going to
amend this Constitution and say to future generations: You are not going to
have to pay our bills.
Every baby that is born into this
country has an $18,000 debt to pay.
That is what we have racked up with
our over $4 trillion of debt. Some people say, ‘‘Let us do it by statutes. We
can pass laws, we can act responsibly.’’
And, of course, we point out that over
the last 30-plus years we, in fact, have
not been able to do that. So if you put
the practical experience in the mix, it
is clear that we are not going to do it
by statute.
But let us talk about what is the role
of the Constitution of our country. The
Constitution of our country should not
be something that we can do by statute. It should be the framework of our
Government. It should be what we
think the parameters of our Government should be, not for the 104th Congress, but for all the Congresses in the
future—something that is so well settled in our policies that it should not
be subject to change. That is what we
are debating, whether we will amend
our Constitution with a fundamental
policy decision that should not be
changed by future generations.
Mr. President, that is what a balanced budget amendment is, and it
does meet the test. It should be a fundamental policy of this country that
we will not spend money we do not
have, unless we are in a crisis, in a war,
and that is the exception—the one exception—that all of us would agree to.
Other than that, we are not going to
spend money we do not have for programs that we would like, for programs
that are good programs, but programs
we do not have the money to pay for.
It comes down to the fundamentals
that every State, every city, every
business, and every household in America understands, and that is: I would
like to take my family to dinner tonight, but maybe I do not have the
money to do it and I have to make that
decision based on whether I have the
discretionary money to do it. I would
like to send my child to college. Do I
have the funds to do it? I would like to
have many things that, perhaps, I cannot afford and therefore I do not acquire. That is a fundamental decision
that every American makes every day.
The only American institution that
really does not is the United States
Government. That is a fundamental
policy that we must put in place that
should not change with the wind or the
times—that is, that my priorities are
more important than the priorities of
future Congresses.
I think it is very important, as we
leave today for this recess, that the
people of America understand that this
is a filibuster. The people who are
doing it have the perfect right to do it,
but they are delaying this vote; they
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are delaying what I think the people of
America want, what they have said repeatedly they want, and that is for us
to start the very tough process of balancing our budget over the next 7
years, so that by the year 2002, if we
start right now, we will be able to then
begin the adventure of being able to
pay back the $4 trillion debt, so that
we will not be in that continuing deficit position.
In fact, I think that if we do not act
on this in the next week when we get
back, it is not that it will pass in time
and we will not pass it ever again. I
disagree with people that say this is
our only chance. I think if we do not
pass it this time, we will have a bigger
mandate in 1996 and we will pass it.
The difference will be, Mr. President,
that we will have two more years of accumulating debt, and we have seen the
charts for the last week showing every
day that we have been debating and
talking and talking in the Senate debating society, the debt has gone up because we have not begun to turn that
ship on a different course.
So if we do not do it this year, we
will do it 2 years from now, 3 years
from now, because we will have the
mandate. But we will have missed 2
years of opportunity to begin this process of responsibility for our future generations. That is what we will miss if
we fail to do so.
So as we leave these hallowed halls, I
hope all of us will think carefully
about the monumental decision that
we will make next week to stop this filibuster, to stop the delays, to stop the
nuance differences and say that we are
going to take this first step of amending the greatest Constitution that has
ever been written in any society in all
of civilization; that we are going to
amend it with a fundamental policy decision of responsible spending, to protect our future generations from our
decisions, which may not be theirs.
So it is a great opportunity for us,
and I hope all of us will go home and
come back next week ready to make
the decision that is ours to make, to
change the course of this country and
begin the process of responsible governing.
Thank you, Mr. President.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. BREAUX. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded, and I be
allowed to speak out of order.
The PRESIDING OFFICER. Without
objection, it is so ordered.
f
OIL RELIANCE THREATENS
NATIONAL SECURITY
Mr. BREAUX. Mr. President, and my
colleagues, I would think that if any
government is presented with evidence
that their country is under a national
security threat that they would institute immediately a full-scale investigation to determine what the threat
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is and what action is needed to prevent
that threat from becoming an all-out
emergency, or a conflict that we could
not ultimately solve. That is the purpose of government. Ultimately to protect the security of the citizens of our
country.
Therefore, when I read a release that
I received today from the U.S. Department of Commerce which clearly states
that they have made a finding that
growing U.S. reliance on oil imports
threatens the national security of the
United States by making it vulnerable
to interruptions in foreign oil supplies,
I would immediately gather all of my
advisers around me and say, ‘‘All right,
what are we going to do about this?’’
I am deeply disturbed that as I read
the release and talk to people who
know about this problem and find that,
essentially, nothing is being done. I
think we as a nation are making a terrible mistake.
Let me try and point out what I
think the problem is in a very clear
fashion. If we in this Nation were suddenly told that we are now importing
50 percent of all of the food that we
consume in this country, and much of
it from nations that are very undependable as far as being allies of the
United States, I would predict that the
next day there would be lines of people
surrounding the White House and surrounding this Capitol saying, ‘‘My
goodness, this is a terrible threat that
we are now having to import half of the
food that we consume from countries
that are not dependable as allies of the
United States.’’
Yet this is exactly what is happening
when it comes to energy security. I
will tell Members how this came about,
Mr. President. That is, that the Department of Commerce, under existing
rules and regulations, were responding
to a petition that was filed by the Independent Petroleum Association of
America that was filed on March 11,
1994, alleging that ‘‘Increasing U.S. dependence on foreign oil threatened the
national security of the United
States.’’
They pointed out in their request
that imports of crude oil products were
estimated through 1994 to average 8.8
million barrels of foreign oil coming
into the United States every day. This
represents a 200,000-barrel-a-day increase compared to 8.6 million barrels a
day in 1993.
The estimated import ratio has now,
for the first time ever, broken the
‘‘peril point level’’ of 50 percent of foreign imports coming into this country.
There is no dispute about that fact.
The IPAA presented information. No
one objected to that. The Commerce
Department finds, after looking at all
this information, clearly that U.S. reliance on oil imports now threatens national security by making us vulnerable to interruptions in foreign oil supplies.
The Commerce Department recommended, however, that the President not use his authority that he has
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under section 232 of the Trade Expansion Act of 1962 to adjust these foreign
oil imports through the imposition of
tariffs, because the economic costs of
such a move outweigh the potential
benefits and because current administration energy policies will limit the
growth of imports.
Mr. President, I disagree with that,
and I disagree with it strongly. I think
current administration energy policies
in this administration, in the last administration and in the administration
before that, in Republican administrations and in Democratic administrations, have clearly allowed us to get to
the point where today we are importing half of the oil that we use in this
country.
I guess it has been an easy thing for
administrations to do because we have
been getting cheap oil, but does anybody remember what happened in the
early 1970’s when we had lines of Americans sitting in their cars waiting to
buy the precious gas that was left at
the stations to run their cars and run
this country? Because at that time, the
Middle Eastern oil suppliers turned the
faucets off just a little bit and literally
brought this country to our knees, because at that time, we were importing
about 30 percent of the oil we use.
Today, we are importing 50 percent,
and just turning that faucet a little bit
in 1995 will bring this country to our
knees in a much more serious fashion
than we were brought to our knees in
1973.
Unfortunately, it seems that all the
administrations since then did not
learn the lesson, and the lesson is very
simple: That we should never be dependent on something that is important to our national security; we
should never be dependent on other nations to supply it, particularly nations
that are not necessarily our friends nor
our allies, that we cannot trust to be
reliable when we have a need for a
product that they have, whether it be
food, as I mentioned earlier, or whether
it be energy to run our plants, our factories, to heat our homes, to cool our
homes in the summer, to run our cars,
to run our trucks, to keep up with the
commerce demands of a great Nation.
Yet today, for all of those needs, we
are now dependent on foreign nations
for over half of those energy needs. And
the thing that bothers me the most is
that after recognizing that there is a
national security threat—and these are
not my words, these are the words of
the Commerce Department when they
made the findings—that the situation
today presents a national security
threat to the United States but we are
not going to do anything in terms of
setting a tariff to try and reduce the
amount of imports coming in in order
to encourage greater domestic exploration and production right here in
this country.
I think that that is something that is
not acceptable, because there are some
things that we can do. I do not suggest
that maybe oil import tariffs are the
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only answer. I have advocated them for
a number of years. But there are a lot
of other things that they could have
said we are going to recommend that
needs to be done, other than just saying we are going to rely on current policy. Because, folks, it is clear that current policy has us in the predicament
we are in. Current policy has allowed
us to have imports increase up to the
point where they now constitute 50 percent of all the energy we have in this
country.
Imports increased this year from last
year by 200,000 barrels a day more than
the year before. That is under current
policy. And to say that we are going to
continue to stay with current policy,
there is no trend line to suggest that is
going to solve the problem. The trend
line is that imports will continue to increase under current policy.
So I suggest to my friends in this administration that they take the Commerce Department’s findings that
there is a national security threat to
make some recommendations on new
things that should be done in order to
prevent a national catastrophe from
falling on this country.
I suggest that there are a number of
things that I would have hoped that
the administration would have been
able to say we are recommending instead of maintaining the status quo.
First, they could have recommended
that the administration will actively
support what the industry calls geological and geophysical expensing,
which simply says that oil and gas operators in this country would be able
to expense the cost of exploring and
producing a well, whether that well is
a dry well, a dry hole, which they can
do now, or whether it is a producing
well. That would encourage a substantial increase in domestic production in
this country to reduce that 50 percent
number to what would be a more acceptable number.
I look over the recommendations and
that is not there.
They could have, second, suggested
that we move toward and support
OPRA 90 reform. OPRA is the Oil Pollution Act that this Congress passed in
1990, but the way it is being implemented is not the way this Congress intended it to be implemented, and legislation is necessary to clarify what we
meant. Here is the simple problem:
Congress never intended when we
passed that Oil Pollution Control Act
that onshore facilities would have to
carry insurance of $150 million per
well. We were talking about major offshore activity that had the potential to
pollute if a catastrophic event occurred. We never intended that any facility onshore that may be very, very
small, with only very limited potential
to cause any pollution, would also have
to have $150 million of liability insurance. But that is how our folks in the
bureaucracy have interpreted it.
An amendment, a legislative fix for
this problem would allow independent
operators who produce oil onshore to
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do it in a fashion that they could afford. We are going to run independents
out of business if we do not do something legislatively to fix this problem.
That would have been the second thing
that could have been recommended and
should have been recommended.
The third is to have recommended
some type of broad-based royalty reform to encourage exploration and production in difficult areas where it is
more expensive to find oil, where many
times a day it costs more to explore
than it would pay them if they found a
producing well, because the price of oil
per barrel, partly because of cheap foreign imports, is less than it costs to
find that oil. Broad-based royalty relief
would have made a major impact on
helping to increase domestic production. But there is no recommendation
for that type of activity.
The fourth is to do something about
the Alaska export ban on oil that is
produced in Alaska. When Congress
passed that law saying that oil that is
found in Alaska could never be exported outside the United States, it
probably made sense at that time. But
it does not make sense today.
If oil from Alaska can be sold in
other areas at a higher price, it would
give companies greater amounts of
money to explore for and find additional fields domestically in North
America—in Alaska, in the gulf coast
area—which would increase the domestic production and thereby lower that
50 percent import figure that we have.
Mr. President, not one of those proposals, not one of those initiatives is
found in the Commerce Department’s
finding and recommendation as to
what should be done.
I will just close by saying that it is
insufficient, in my opinion, for a department of our Government to make a
finding that there is a national security threat to this Nation, which they
have made, and then to say we are not
going to recommend anything new to
address that threat. That is an abdication of responsibility. It is unacceptable. This Member, and I know other
Members, will take their finding and
offer constructive suggestions to, in
fact, address what is now clearly established as a national security threat to
the United States of America.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. CONRAD. Mr. President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without
objection, it is so ordered.
f
BALANCED BUDGET AMENDMENT
TO THE CONSTITUTION.
The Senate continued with the consideration of the joint resolution.
Mr. CONRAD. Mr. President, I will be
very brief so that colleagues will know
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that we can end the day, especially the
desk staff will know that they can get
home to their loved ones.
I did want to bring to the attention
of my colleagues that yesterday in the
Budget Committee, when Secretary
Christopher was there, inadvertently a
Republican staff document was attached to part of his testimony and
was handed out. I might say that it is
a very interesting document. The document that has been prepared by the
majority on the Budget Committee
shows function 150, International Affairs. It is headlined, ‘‘Fiscal Year 1996
Balanced Budget Resolution.’’ Down in
the corner it says, ‘‘For Internal Purposes Only.’’ But it was handed out inadvertently.
What I think is interesting about
this document is it suggests that the
majority has a plan to move towards a
balanced budget, and I commend them
for that. I hope they do have a plan.
But I would say to my colleagues that
if they have a plan, then we should revisit the question of the right to know
provision that we sought to add to the
balanced budget amendment.
We sought to add a provision that
called on the Republican majority to
produce their plan on how they intended to balance the budget so that
the States could be advised of that before they had to vote to ratify it, and
so that our colleagues who are about to
vote on a balanced budget amendment
could know what was the outline of the
plan.
The Republican majority resisted
that right-to-know effort by saying
they could not say what a long-term
plan was because there were so many
things, it would be hard to determine
and hard to project and hard to forecast. And yet we find in this document,
which was released inadvertently, that
at least with respect to one function of
the budget they do have a detailed
plan, very specific as to what they have
in mind; terminating a set of programs,
reducing other programs in order to reduce the 150 function, which, of course,
is the international affairs function.
This suggests at the very least that
other functions for other areas have a
plan, something that is in the works,
something that is available, that could
provide some guidance as to where the
majority is going with respect to a
plan to balance the budget over the
next 7 years.
I would just say to my colleagues
that if in fact there are plans for other
functional areas, as there clearly is for
the international affairs section, we
ought to have a chance to see it. We
ought to have a chance before we vote
on a balanced budget amendment. The
American people ought to have a
chance to see what the plan is.
What does the Republican majority
have in mind for how they intend to
balance this budget? I think that would
certainly influence some votes in this
debate.
Let me just say that I am one Member who is undecided on the question of
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February 16, 1995
how I will vote on a balanced budget
amendment. I am not being coy. I am
seriously undecided at this point. I
want to see what is the final provision
on which we will vote.
Let me just add that I am absolutely
convinced we must balance the budget
in the next 7 years. It is absolutely imperative that we do so. Whether we
have a balanced budget amendment to
the Constitution or not, this Senator
believes we have to balance the budget
because we have a window of opportunity here before the baby boomers
retire, at which time Government
spending will skyrocket. And that will
put enormous pressure on the economy
of this country.
So we have a chance here in the next
7 years to get our fiscal house in order.
That must be done. But I have reservations about the elements of this constitutional amendment in terms of the
provision that would provide for
looting the Social Security trust fund
in order to balance the operating budget, the involvement of courts. The last
thing I wish to see happening is the Supreme Court of the United States writing the budget of the United States. No
judge was ever elected to do that.
I am also concerned about the lack of
a capital budget. The vast majority of
States that have a balanced budget requirement provide for a capital budget.
You can pay for big investments over a
period of time. That is what State governments do. That is what we do in our
own personal lives. I know very few
people who buy a house for cash. Most
people take out a mortgage.
So those are, I think, legitimate concerns. But beyond that, I think we also
have the question of how we do it. How
do we balance the budget? And if our
Republican colleagues, in fact, have a
plan, one that they have not released
and not revealed—and I think the fact
that they clearly have one with respect
to one function of the budget suggests
they probably have it for other functions of the budget—that is something
that could form the basis for an important discussion and debate about how
we accomplish a balanced budget.
Let me just conclude by saying I
would very much like to see us structure a means to require both sides to
put down a plan to balance this budget
simultaneously.
What is going on is we have a bit of
Alphonse and Gaston, the chicken and
the egg; nobody wants to go first. And
I am working on legislation now that
would require us, if the balanced budget amendment fails, to have the budget
committees of both Houses and the
President put down a plan to balance
the budget over the next 7 years and to
lay it down by May 1—have both sides
be required to come to the table and
lay down their plans to balance the
budget. It is clear to me now the Republican majority is working on such a
plan. Perhaps they have one completed,
at least in preliminary outline. I think
it would be very important for that to
be shared with our colleagues and with
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February 16, 1995
the rest of the country as we consider
this very important matter of a balanced budget amendment to the Constitution.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The legislative clerk proceeded to
call the roll.
Mr. BYRD. Mr. President, I ask unanimous consent that the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without
objection, it is so ordered.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
f
SENATOR J. WILLIAM FULBRIGHT
Mr. BYRD. Mr. President, I was
sworn in as a Member of this body on
January 7, as I recall, 1959, the 1,579th
Member to have been elected or appointed to the Senate since its beginning on March 4, 1789. As of today, 1,826
men and women have borne the title of
United States Senator. When I came to
the Senate, some of the other Members
were Clinton P. Anderson of New Mexico, Styles Bridges of New Hampshire,
Paul Douglas of Illinois, Allen Ellender
of Louisiana, Hubert Humphrey of Minnesota, Lyndon Johnson of Texas,
Estes Kefauver of Tennessee, Richard
Russell of Georgia, Lister Hill of Alabama, George Aiken of Vermont, Everett McKinley Dirksen of Illinois, Carl
Hayden of Arizona, Wayne Morse of Oregon, Harry Flood Byrd, Sr. of Virginia, Spessard Holland of Florida,
Henry Jackson of Washington, John F.
Kennedy of Massachusetts, William
Langer of North Dakota, Robert Kerr
of Oklahoma, and others, including J.
William Fulbright of Arkansas.
All of these men have now passed
from this earthly stage and gone on to
their eternal reward. The last of these
whom I have mentioned, Bill Fulbright, died last week.
J. William Fulbright was born in
Sumner, MO, on April 9, 1905, and
moved with his parents to Fayetteville,
AR, the following year. He attended
the public schools in Arkansas and
graduated from the University of Arkansas at Fayetteville in 1925; as a
Rhodes Scholar from Oxford University, England, in 1928, and from the
Law Department of George Washington
University, here in Washington, DC, in
1934. He was admitted to the District of
Columbia Bar in 1934, and served as an
attorney in the U.S. Department of
Justice, Antitrust Division, in 1934–
1935. He was an instructor in law at the
George Washington University in 1935,
and he was a lecturer in law at the University of Arkansas during the years
1936–1939. He served as President of the
University of Arkansas from 1939 to
1941. He was engaged in the newspaper
business, in the lumber business, in
banking, and in farming, and was elected as a Democrat to the 78th Congress,
where he served from January 3, 1943,
to January 3, 1945. He was not a candidate for renomination to the House,
but was elected to the United States
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Senate in 1944, and re-elected in 1950,
1956, 1962, and in 1968, where he served
until his resignation on December 31,
1974. He was an unsuccessful candidate
for renomination in 1974. He served on
the Committee on Banking and Currency in the Senate and on the Committee on Foreign Relations.
Bill Fulbright was an outstanding
Senator. He served with many other
outstanding Senators, some of whom I
have named as having ended their sojourn in this early life, and there were
other extraordinary men such as John
Pastore of Rhode Island, Mike Mansfield of Montana, and Russell Long of
Louisiana, all of whom are still among
the living. But I have taken the floor
today to say that one by one, the old
landmarks of our political life have
passed away. One by one, the links
which connect the glorious past with
the present have been sundered.
‘‘Passing away!
’Tis told by the leaf which chill autumn
breeze,
Tears ruthlessly its hold from wind-shaken
trees;
’Tis told by the dewdrop which sparkles at
morn,
And when the noon cometh
’Tis gone, ever gone.’’
It was my pleasure to serve with Senator Fulbright. I always held him in
the highest esteem. He was a gentleman with great courage and unwavering patriotism, a wise and courageous statesman, affable in his temperament, and regarded as one of the
outstanding lawyers in the Senate and
one of the best informed upon questions regarding international affairs.
He was both morally and intellectually
honest, simple in his habits, and devoid
of all hypocrisy and deceit. He never
resorted to the tricks of a demagog to
gain favor and, although he was a partisan Democrat, he divested himself of
partisanship when it came to serving
the best interests of his country. Peace
to his ashes!
The potentates on whom men gaze
When once their rule has reached its goal,
Die into darkness with their days.
But monarchs of the mind and soul,
With light unfailing, and unspent,
Illumine flame’s firmament.
Socrates, Plato, Aristotle, Cicero,
and other great Grecian and Roman
philosophers, by pure reason and logic
arrived at the conclusion that there is
a creating, directing, and controlling
divine power, and to a belief in the immortality of the human soul. Throughout the ages, all races and all peoples
have instinctively so believed. It is the
basis of all religions, be they heathen,
Mohammedan, Hebrew, or Christian. It
is believed by savage tribes and by
semi-civilized and civilized nations, by
those who believe in many gods and by
those who believe in one God. Agnostics and atheists are, and always have
been, few in number. Does the spirit of
man live after it has separated from
the flesh? This is an age-old question.
We are told in the Bible that when God
created man from the dust of the
ground, ‘‘He breathed into his nostrils
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the breath of life, and man became a
living soul.’’
When the serpent tempted Eve, and
induced her to eat of the forbidden
fruit of the tree of knowledge, he said
to her, ‘‘ye shall not surely die.’’
Job asked the question, ‘‘If a man
die, shall he live again?’’ Job later answered the question by saying, ‘‘Oh,
that my words were written and engraved with an iron pen upon a ledge of
rock forever, for I know that my redeemer liveth and someday He shall
stand upon the Earth; and though after
my skin worms destroy this body, yet
in my flesh shall I see God; whom I
shall see for myself and mine eyes shall
behold, and not another; though my
reins’’—meaning my heart, my kidneys, my bodily organs—‘‘be consumed
within me.’’
Scientists cannot create matter or
life. They can mould and develop both,
but they cannot call them into being.
They are compelled to admit the truth
uttered by the English poet Samuel
Roberts, when he said:
‘‘That very power that molds a tear
And bids it trickle from its source,
That power maintains the earth a sphere
And guides the planets in their course.’’
That power is one of the laws—one of
the immutable laws, the eternal laws—
of God, put into force at the creation of
the universe. From the beginning of recorded time to the present day, most
scientists have believed in a divine creator. I have often asked physicians,
‘‘Doctor, with your knowledge of the
marvelous intricacies of the human
body and mind, do you believe that
there is a God?’’ Not one physician has
ever answered, ‘‘No.’’ Each has answered, readily and without hesitation,
‘‘Yes.’’ Some may have doubted some
of the tenets of the theology of orthodoxy, but they do not deny the existence of a creator. Science is the
handmaiden of true religion, and confirms our belief in the Creator and in
immortality.
‘‘Whoever plants a seed beneath the sod
And waits to see it break away the clod
Believes in God.’’
Mr. President, as Longfellow said, ‘‘It
is not all of life to live, nor all of death
to die.’’ Rather, as Longfellow says:
‘‘There is no death! What seems so is transition;
This life of mortal breath
Is but a suburb of the life Elysian,
Whose portal we call death.’’
Mr. President, life is only a narrow
isthmus between the boundless oceans
of two eternities. All of us who travel
that narrow isthmus today, must one
day board our little frail barque and
hoist its white sails for the journey on
that vast unknown sea where we shall
sail alone into the boundless ocean of
eternity, there to meet our Creator
face to face in a land where the rose
never withers and the rainbow never
fades. To that bourne, from which no
traveller ever returns, J. William Fulbright has now gone to be reunited
with others who once trod these marble
halls, and whose voices once rang in
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this Chamber—voices in this earthly
life that have now been forever stilled.
Peace be to his ashes!
I recall the words of Thomas Moore:
‘‘Oft, in the stilly night,
Ere slumber’s chain has bound me,
Fond Memory brings the light
Of other days around me:
The smiles, the tears
Of boyhood’s years,
The words of love then spoken;
The eyes that shone,
Now dimm’d and gone,
The cheerful hearts now broken!
Thus, in the stilly night,
Ere slumber’s chain has bound me,
Sad Memory brings the light
Of other days around me.
When I remember all
The friends, so link’d together,
I’ve seen around me fall
Like leaves in wintry weather,
I feel like one
Who treads alone
Some banquet-hall deserted,
Whose lights are fled,
Whose garlands dead,
And all but he departed!
Thus, in the stilly night,
Ere slumber’s chain has bound me,
Sad Memory brings the light
Of other days around me.’’
Mr. President, I yield the floor. I suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The bill clerk proceeded to call the
roll.
Mr. MURKOWSKI. Madam President,
I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Ms.
SNOWE). Without objection, it is so ordered.
Mr. MURKOWSKI. Madam President,
I ask unanimous consent to speak as in
morning business for a reasonable period.
The PRESIDING OFFICER. Without
objection, it is so ordered.
f
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INCREASED DEPENDENCE ON
IMPORTED OIL
Mr. MURKOWSKI. Madam President,
I just have been advised of the release
by the White House of the Department
of Commerce’s findings concerning the
question of our increased dependence
on imported oil. Today in that report,
our President reported to the Congress
that, indeed, our growing dependence
on imported oil is a threat to our national security. However, it is rather
disturbing to note that the President
failed to propose any new action, direct
or indirect, to alleviate this threat. It
is the opinion of this Senator from
Alaska that such action is unprecedented and wholly unacceptable.
I ask unanimous consent that the
press release be printed in the RECORD.
There being no objection, the material was ordered to be printed in the
RECORD, as follows:
[From the White House, Office of the Press
Secretary, Feb. 16, 1995]
STATEMENT BY THE PRESIDENT
I am today concurring with the Department of Commerce’s finding that the na-
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tion’s growing reliance on imports of crude
oil and refined petroleum products threaten
the nation’s security because they increase
U.S. vulnerability to oil supply interruptions. I also concur with the Department’s
recommendation that the Administration
continue its present efforts to improve U.S.
energy security, rather than to adopt a specific import adjustment mechanism.
This action responds to a petition under
Section 232 of the Trade Expansion Act of
1962, which was filed by the Independent Petroleum Association of America and others
on March 11, 1994. The Act gives the President the authority to adjust imports if they
are determined to pose a threat to national
security. The petitioners sought such action,
claiming that U.S. dependence on oil imports
had grown since the Commerce Department
last studied the issue in response to a similar, 1988 petition.
In conducting its study, the Department
led an interagency working group that included the Departments of Energy, Interior,
Defense, Labor, State, and Treasury, the Office of Management and Budget, the Council
of Economic Advisers, and the U.S. Trade
Representative. The Commerce Department
also held public hearings and invited public
comment. Following White House receipt of
the Commerce Department’s report, the National Economic Council coordinated additional interagency review.
As in the case of its earlier study, the
Commerce Department found that the potential costs to the national security of an oil
import adjustment, such as an import tariff,
outweigh the potential benefits. Instead, the
Department recommended that the Administration continue its current policies, which
are aimed at increasing the nation’s energy
security through a series of energy supply
enhancement and conservation and efficiency measures designed to limit the nation’s dependence on imports. Those measures include:
Increased investment in energy efficiency.
Increased investment in alternative fuels.
Increased government investment in technology, to lower costs and improve production of gas and oil and other energy sources.
Expanded utilization of natural gas.
Increased government investment in renewable energy sources.
Increased government regulatory efficiency.
Increased emphasis on free trade and U.S.
exports.
Maintenance of the Strategic Petroleum
Reserve.
Coordination of emergency cooperation
measures.
Finally, led by the Department of Energy
and the National Economic Council, the Administration will continue its efforts to develop additional cost-effective policies to enhance domestic energy production and to revitalize the U.S. petroleum industry.
Mr. MURKOWSKI. Madam President,
if we look at the specifics of the recommendation, as indicated in the press
release, the specific highlights include
increased investment in energy efficiency, certainly a worthy and laudable goal; increased investment in alternative fuels, likewise; increased
Government investment in technology
to lower costs and improve production
of gas and oil and other energy resources; expanded utilization of natural gas; increased Government investment in renewable energy sources; increased Government regulatory efficiency; increased emphasis on free
trade and U.S. exports; maintenance of
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February 16, 1995
the
Strategic
Petroleum
Reserve
which, obviously, is there for emergencies; and coordination for emergency cooperation measures.
Notable by its absence is any mention of efforts to stimulate domestic
drilling and production in the United
States. I find that extraordinary. I
wonder just who is advising the President. I cannot believe that the President himself does not support domestic
exploration, development, the creation
of jobs. One of the bases of America’s
industrial might has been our ability
to produce energy sources, specifically
oil and gas. But there is no mention of
exploration for oil. There is no mention
of stimulating exploration in the Gulf
of Mexico where a good portion of our
current resources are coming from.
As we go deeper out in the gulf and
invest in new technology, it requires
greater engineering, greater risk, but,
obviously, the industry is willing to
make those commitments and that investment. This is what we call deepwater drilling. It requires substantial
capital and substantial incentives.
Furthermore, we have frontier areas
where onshore there are no pipelines,
no infrastructure, and to encourage the
industry to go in those areas and explore, again, may require some concessions, some type of moratorium relative to the application of taxation.
None of these are mentioned, and I
find that rather curious. We have the
overthrust belt; no mention of opening
up areas for oil and gas exploration.
It is rather curious, and I guess it is
appropriate, that I be a little sensitive
on this because my State of Alaska has
been supplying this country with about
24 percent of the total crude oil that is
produced in the United States for the
last 16 to 17 years. That area where
most of that oil comes from is called
Prudhoe Bay. It is a huge investment
by three major international companies—Exxon, BP and ARCO. They operate the fields. They produce about 1.6
million barrels of oil per day. That is
down from approximately 2 million
barrels a few years ago. The field is declining. But the significance is, as it
declines we are increasing our imports.
Where do our oil imports come from?
Why, it comes from the Mideast. It
comes to our shores in foreign flag
ships, manned by foreign crews. Many
of the corporations that operate those
ships are relatively alike in their corporate structure. Some suggest they
are even shell corporations.
It is interesting to look at our trade
deficit, Madam President, of about $167
billion. A good portion of that is
Japan, a portion of it is China, but almost half is the price of imported oil.
So we are exporting our dollars, exporting our jobs and becoming more
and more dependent on other parts of
the world.
I find this trend relatively unnerving;
that we should have to depend to such
an extent on imported petroleum products and then recognize that it is
called to our attention by this special
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study done by the Department of Commerce that we have been waiting for an
extended period of time to identify
that, indeed, our national security interests are at stake.
I look at my State of Alaska with the
potential to supply more oil as
Prudhoe Bay declines, and it is rather
ironic, Madam President, that on this
floor today was a bill to take the most
promising area in North America,
namely ANWR, and put it in a permanent wilderness.
We have always had a difficult time
trying to keep Alaska in perspective
relative to its size and the type of development and the control that our
State as well as the Federal agencies
have in developing the resources from
the North Slope and the Arctic. And as
we reflect on that, the technology that
developed Prudhoe Bay is now 20 to 25
years old, but some new technology
came along about 10 years ago and resulted in the development of a field
called Endicott. Endicott was an expansion of Prudhoe Bay in one sense,
but the technology was entirely new. It
came on as a production facility, the
tenth largest producing field in the
United States at about 107,000 barrels a
day. Today it is the seventh largest at
about 120,000 barrels a day. But that
technology, Madam President, resulted
in a footprint of 56 acres. That is a
pretty small area. That is the size of
the footprint. But the contribution to
our energy security, our jobs, was significant.
The last area that has been identified
by geologists as potentially carrying
the capability of a major discovery is
ANWR, but what are the parameters of
ANWR?
First of all, there are about 19 million acres in the area. Over 17 million
acres are basically set aside in wilderness in perpetuity. That is a pretty
good-sized chunk of real estate. We are
looking at an area the size of Oregon
and Washington put together. Industry
tells us that if they can find the oil
necessary to develop the field—and
they have to find a lot of oil because
you do not develop small fields in the
Arctic—the footprint would be about
12,500 acres. To put that in perspective,
that is about the size of the Dulles
International Airport complex in Virginia, assuming the rest of Virginia
were a wilderness.
The arguments against opening
ANWR are the same arguments that
prevailed nearly 20 years ago when we
talked about opening Prudhoe Bay:
What is going to happen to the caribou? What is going to happen to the
moose? What is going to happen to the
wildlife?
Well, we have had some 17 or 18 years
to observe the process. The caribou
herds in Prudhoe Bay were 4,000 to
5,000; now they are 17,000 to 18,000. The
growth of those herds is as a consequence of the realization that those
areas are absolutely off limits to subsistence hunting of any kind. The Eskimo people in the region do not hunt
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in those areas, and caribou is a very
adaptable animal. If chased down by a
snow machine or hunter, obviously it
runs away. The common sight of modest activity associated with exploration and development has absolutely
no effect. A person can go up there
today and observe this process.
So as we reflect on what some of the
alternatives are, I wonder if we are
really not selling America short. As I
said before, they are the same arguments of 17 years ago we are hearing
today, that somehow this is the
Serengeti of the Arctic—12,500 acres
out of 19 million acres is what we are
talking about—somehow the native
people of the area will be affected. But
I can tell you, Madam President, the
native people of the area have been
given an opportunity that they never
had before, and many of them have
chosen the opportunity to have gainful
employment, have a tax base, have
first-class schools. Schools in Barrow,
AK, are the finest schools in the United
States bar none. In areas where we
have intense climates, we have indoor
play areas. As a consequence of the
contribution of oil and the fact that
the native people have been able to tax
the oil, have been able to tax the pipeline, they have been able to have an alternative to a subsistence lifestyle
which jobs offer but never would have
been prevalent in the area.
I think we are shortchanging America’s ingenuity to suggest we cannot
open it safely. There is absolutely no
scientific evidence to suggest that we
cannot open it safely. The technology
is advanced. The footprint is smaller.
The environmental concerns, the restoration, are all set in place by the
State and the Federal Government. So
the risk is diminished dramatically. So
why the hesitation?
Well, to some degree, Madam President, it is associated with a cause, and
that cause is that Alaska is far away.
ANWR has been identified by many of
the national environmental groups as
an issue where they can challenge; people cannot go up there and see for
themselves. It generates revenue. It
generates a cause. And as a consequence, they would suggest to you
that this area cannot be opened up
safely. They do not address the opportunities for employment, the opportunities for new engineering technology
and expertise but, rather, that Americans cannot meet a challenge. I find
this very, very distressing, but it is
something that perhaps Alaskans and
others who come from energy States
have become uncomfortably accustomed to.
Now, where do we go from here,
Madam President? Well, I happen to be
chairman of the Energy and Natural
Resources Committee, and we are
going to hold a number of hearings on
this matter as we look at our growing
dependence on imported oil and the effect that it has on our national security and look to alternatives.
But, Madam President, we are not
going to look to the alternatives sug-
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gested by the White House, which are
nothing but words.
I can remember coming into this
body in 1981 when we were running in
the high 30’s, low 40’s percentile dependence on imported oil. There was
concern then. There was an expression
if it ever got to the area where it would
be approaching 50 percent we would
have to do something drastic, we would
have to stimulate our industry somehow with incentives. But we went on
and on and became more dependent and
now 51 percent of our total consumption is imported oil. And now we are
told that our national security is at
stake.
Out of these hearings I hope we get
the experts—not the wordsmiths from
the White House who are simply selling
America short, relative to its capability to produce additional discoveries
of oil and gas within the United States.
It is truly distressing to read this report. We knew it was coming. We suspected what it said. And each time we
made an inquiry we were advised that
the report was still under review because the administration chose, for obvious reasons, to put it off as long as
they could. I find it rather coincidental
that it comes in at a time when we are
almost out for the Presidents’ Day extended weekend.
But I think it is time for this body
and the other House to reflect on the
reality associated with a segment of
America’s traditional industrial might
that the administration proposes to remove from the passing scene and become more dependent on imports and
export more dollars and more jobs offshore.
This is not unique to the oil industry.
To some extent it follows with the administration’s attitude towards domestic mining. But I will save that analysis for another day.
I am pleased the Independent Petroleum Association of America has pursued this matter. I think their President, Mr. Dennis Bode, has made a very
commendable and meaningful contribution to bring this report before us.
I hope the Energy Coalition, that is
made up of both Members of the House
and Senate, will reflect upon this report in the very near future. I know
they will.
It is interesting to look at the attitude of other nations as they observe
our increasing dependence on imports.
My many friends in Japan cannot understand. They simply say how unfortunate it is that Japan has no natural
resources and must import its entire
resources, whether energy or mineral.
They only have the human work ethic
and the efficiencies associated with
Japanese industry that have been perfected over an extended period of time,
since the Second World War. We helped
them basically during the reconstruction period. They simply cannot understand our mentality and lack of our
commitment to use our resources wisely, for the benefit of our people and our
economy.
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In summary, Madam President, I am
disappointed. It is ironic that we
should be confronted on the same day
with a bill to close the most promising
area in North America from exploration and put it into an additional
permanent wilderness—and I might
add, Madam President, we have 56 million acres of wilderness in our State.
There are some who would like to put
the whole State in a wilderness. There
are others who would like to buy the
State back from the United States and
go it alone. But that is probably another story, for another day as well. To
suggest this is the time to put it in wilderness when we get a report that says
our national security interest is at
stake is, indeed, ironic.
I know Senator STEVENS will be joining me in commenting on the significance of this report and the lack of responsible—and I stress responsible—
analysis of the alternatives that we
have available to us, alternatives that
are practical, and certainly in the national security interest.
I think that is enough for tonight,
Madam President. I wish you a good
holiday and I yield the floor.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DOLE. Madam President, I ask
unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. DOLE. Madam President, in a
move that defies principle and logic,
the Clinton administration has proposed lifting the sanctions on Serbia
and Montenegro, while it maintains an
illegal and unjust arms embargo on
Bosnia and Herzegovina. As the Washington Post editorial page put it today,
‘‘the United States and its partners in
dealing with the old Yugoslavia have
got it upside down.’’
For 7 months, the Bosnian Serbs have
said ‘‘no’’ to the contact group peace
plan. Despite their promises last summer of tough measures, the contact
group countries have pursued a concessions only approach. And so, instead of
putting on more pressure on Serbia and
its allies in Bosnia and Croatia, the
contact group is now ready to offer an
enormous concession to Serbia by
agreeing to remove the only real leverage we still have, that is, sanctions.
Sanctions provide leverage not only on
the situation in Bosnia, and in Croatia,
but in Kosova—where Albanians are
the latest victims of ethnic cleansing.
Sure, the administration says that
Serbian President Milosevic will have
to make promises in return. We have
seen what his promises are worth. Last
August Milosevic promised to cut off
the Bosnian Serbs, but what really
happened is that support was reduced,
not ended. Yes, the administration has
managed to see that conditions are attached to this lifting of sanctions, noting that the Europeans and Russians
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would make such a deal even sweeter
for Milosevic. But the bottom line is
that this is an ill-conceived policy and
any tinkering by the administration on
the margins does not change that fact.
The message this action sends is that
the contact group countries are incapable of pressuring anyone but the victims of this brutal aggression. That
message is a green light to the Bosnian
Serbs and to the Krajina Serbs. There
are warnings of a wider war, but now
we see how the contact group hopes to
avoid such a scenario, namely by withholding the Bosnians’ right to self-defense. Anyone outside the contact
group can see clearly that this is a formula for wider war, not a formula for
preventing wider war. As the Washington Post concluded, ‘‘seeking a
phony peace, the United States and its
partners may be stoking a greater
war.’’
Madam President, this is a policy of
desperation. This is a policy that highlights the lack of American leadership.
This is a policy that puts the United
States on the side of rewarding aggression and against the forces of freedom
and democracy.
Madam President, I ask unanimous
consent that the text of the Washington Post editorial be printed in the
RECORD.
There being no objection, the editorial was ordered to be printed in the
RECORD, as follows:
[From the Washington Post, Feb. 16, 1995]
PHONY PEACE
The United States and its partners in dealing with the old Yugoslavia have got it upside down. What they should be doing is putting more pressure on Serbia and the Serb
rebels it supports in Bosnia and Croatia.
What they actually are doing is putting on
less pressure by prematurely opening up the
possibility of ending the already partly suspended, porous sanctions on Serbia that are
in place.
This new sweetener concocted by the fivenation Contact Group takes as its stated
purpose to draw the Serbian regime of
Slobodan Milosevic into formal acceptance
of international peace plans for Bosnia and
Croatia. But it was always implicit anyway
that if Mr. Milosevic decided to rein in his
wild ambitions for a Greater Serbia, the
sanctions on him would fade away. Now to
make it explicit—while he still cheats on his
pledges, before he has shown a commitment
to restraint—is to invite him to bargain the
Contact Group down; to extract a large concession for a minimal policy change.
It is easy enough to grasp why the Contact
Group finds itself in the weird position of
proposing to suspend not the military embargo on the chief victim, Bosnia, but the
economic sanctions on the chief offender,
Serbia. It’s because none of the group’s five
members (United States, Russia, France,
Britain, Germany) has a taste for employing
the force it would take to stiffen their lowest-common-denominator collective diplomacy. To prevent their diplomacy from becoming altogether laughable, they should at
the least be stiffening it with tougher sanctions on Serbia. But this they decline to do.
A tragic irony is building. The danger now
perceived by the Contact Group is that the
war will spread. But the burden of constraining it is being put largely on the Muslims and, to a lesser extent, the Croats. They
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February 16, 1995
can fairly wonder whether they are not being
asked to swallow huge Serb incursions on
their territory, viability and sovereignty for
the geopolitical convenience of states far
from the battlefield and substantially unaffected by its flows. Feeling abandoned even
as their fundamental interests are threatened, Muslims and Croats may yet be confirmed in a judgment that they can satisfy
their legitimate political goals only by military means. Seeking a phony peace, the
United States and its partners may be stoking a greater war.
(Mr. DEWINE assumed the chair.)
f
ORDER OF PROCEDURE
Mr. DOLE. Mr. President, it is my
hope that we will be able to complete
our business in the next few minutes.
We are trying to reach some agreement.
Mr. President, I suggest the absence
of a quorum.
The PRESIDING OFFICER. The
clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. DOLE. Mr. President, I ask unanimous consent that the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without
objection, it is so ordered.
f
50TH ANNIVERSARY ASSAULT ON
RIVA RIDGE
Mr. DOLE. Mr. President, 50 years
ago tomorrow, the legendary 10th
Mountain Division successfully assaulted Riva Ridge in northern Italy’s
Appennine Mountains. Tomorrow, 12 of
my World War II comrades from the
10th Mountain Division will stage a
50th anniversary climb of Riva Ridge
to reenact the division’s historic capture of this heavily fortified German
stronghold.
Using ropes, pitons, and other mountaineering equipment to scale the
cliffs, and wearing replicas of our
World War II white camouflage suits,
this team of ski troop veterans will follow the same route used by 10th Mountain Division units in seizing the strategic 4,500-foot peak a half century earlier.
This assault group of World War II
combat veterans—all of whom are now
in their early seventies—will be joined
in the commemorative operation by
mountain soldier veterans of the German gebirgstruppe and the Italian
Alpini. This peaceful ascent of Riva
Ridge reflects the founding purposes of
the International Federation of Mountain Soldiers, an eight-nation organization which represents more than 500,000
mountain soldier veterans, many of
whom fought on opposing sides during
World War II. Tomorrow’s climb is actually a coming together of wartime
foes on a rugged mountain summit in
Italy.
In addition, these climbers will be
joined by today’s soldiers. During recent years, we veterans of the wartime
10th Mountain Division have established close bonds of friendship with
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February 16, 1995
our young counterparts of today’s 10th
Mountain Division —light. Following
their recent return from Haiti, 10
young soldiers of the 10th Mountain—
light—from Fort Drum, NY, will be
participating
in
the
reenactment
climb. Joining these active duty soldiers will be two climbing experts from
the 172d Mountain Battalion, Vermont
National Guard.
The reenactment teams are headquartered in the small mountain village of Lizzano, which was the scene of
intense fighting during my division’s
breakthrough from the Apennines
northward into the Po River Valley
and the Dolomite Mountains. During
the 10th Mountain Division’s decisive
combat operations in northern Italy,
nearly 1,000 of my fellow soldiers lost
their lives to enemy action, another
4,000 were wounded.
As our Nation observes the 50th anniversary of the end of World War II during 1995, I am tremendously proud to
know that a handful of my fellow 10th
Mountain Division veterans have undertaken such a meaningful way of
commemorating one of their victories
in the final months of the war. I salute
them for their endeavor, and I am sure
that all other Members of the Congress
will do the same.
Mr. PRESSLER addressed the Chair.
The PRESIDING OFFICER. The Senator from South Dakota.
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f
TRIBUTE TO DONALD ‘‘COOTIE’’
MASTERS
Mr. PRESSLER. Mr. President, I rise
to pay tribute to Donald ‘‘Cootie’’ Masters, the newspaper publisher in my
hometown, who recently passed away.
D.J. Masters was not only a publisher
of a weekly newspaper, he was also a
State legislator. He was a fine man,
and an inspiration to me.
I think that the role of the weekly
editor in America has been overlooked.
The importance of the women and men
who run our smalltown newspapers is
seldom recognized.
Our weekly newspapers have almost
been forgotten in this telecommunications age, when we have satellite TV,
when we have all the various modern
technologies. But our weekly newspapers are still there at the heart of
their communities.
I received the Humboldt Journal even
when I was in the Army in Vietnam.
My mother bought me a subscription
and sent it. I received the Humboldt
Journal when I was away at the University of South Dakota and later
when I was a student at Oxford University in England, and then at Harvard
Law School. I still get the Humboldt
Journal at home.
You cannot get the weekly hometown paper out of the boy, I suppose
you could say.
D.J. Masters was a true South Dakotan. He took great pride in his work,
his family, his community, and his
faith. He was an example and inspiration to many.
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I do not know if many people really
understand the positive impact on the
lives of South Dakotans that the editors of our weekly papers have.
As the editor of my hometown newspaper, the Humboldt Journal, Cootie
Masters was part of the lives of thousands of South Dakotans.
Born on July 7, 1906, Cootie began his
rich and fulfilling life in the town of
Humboldt, SD. This small town upbringing and his strong family ties instilled in him a deep respect for traditional values. He graduated from Humboldt High School in 1924 and went on
to attend the University of South Dakota. I would like to note that in 1924
it was quite an accomplishment for a
young student from a small town to attend college. This was only the beginning of Cootie’s many achievements.
In addition to his studies at USD,
Cootie participated in basketball and
was a fraternity brother in Delta Tau
Delta. He demonstrated at a young age
the importance in life of social involvement and balance between intellectual
and physical pursuits.
After Cootie graduated from college,
he became involved in his family business. His father owned and operated
the Humboldt Journal and passed on
his business knowledge to Cootie. Cootie’s father died suddenly in 1936, leaving Cootie as the sole owner and editor
of the Journal. Anyone you may know
in a family business will tell you that
successfully passing on a family business to the next generation is much
more difficult than most people realize.
Cootie not only succeeded in taking
over the Journal in 1936, but also was
successful in operating it until well
after his official retirement. That is no
small feat.
Cootie’s life involved much more
than his newspaper work. He contributed to the whole State of South Dakota by serving in the State house as a
representative from Minnehaha County
from 1936 to 1941.
Cootie balanced his successful business and political careers with devotion to his family and friends. On June
12, 1933, he began his family by
marrying Mildred Newton. Cootie and
Mildred had three sons: Neal, Tom, and
Bob. Today, the Masters family includes 7 grandchildren and 11 greatgrandchildren. I know that Cootie considered his family to be the most precious blessing in his life.
Aside from his children, grandchildren and great-grandchildren, what
may have kept Cootie young for so
long was his robust enjoyment of life.
After college, he continued to participate in baseball and basketball. He also
loved the outdoors. An avid sportsman,
Cootie enjoyed fishing and hunting. He
certainly picked the right State for enjoying the great outdoors.
What is most impressive about Cootie is that with all of his public activities, he is still described as a man with
not one enemy.
Cootie was a true friend to me, to our
community, and to our State. I will always remember him fondly.
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I extend my deepest sympathies to
the Masters family on the loss of their
beloved Cootie.
Mr. President, I pay tribute not only
to him but to the weekly newspapers of
South Dakota and to the South Dakota
State House of Representatives from
which he served during his career.
f
BALANCED BUDGET AMENDMENT
TO THE CONSTITUTION
The Senate continued with the consideration of the joint resolution.
UNANIMOUS-CONSENT AGREEMENT
Mr. DOLE. Mr. President, I ask unanimous consent that the following be
the only amendments or motions in
order to House Joint Resolution 1 and
that all amendments or motions be
subject to relevant first and second degree amendments and all first-degree
amendments or motions on the list
must be filed at the desk with the bill
clerk by 12 noon Wednesday with the
exception of first-degree amendments
to motions. I will submit the list. I will
not read the list. I think both the distinguished Democrat leader and I have
the same list. I will submit that list.
I further ask that no further amendments be in order to the joint resolution after 3 p.m. on Friday February 24,
and that any amendments, motions, or
motions pending at that time be disposed of without debate in a stacked
sequence beginning at 2:15 p.m. on
Tuesday, February 28.
I further ask that the time on Monday, February 27 and on Tuesday, February 28, prior to 12:30 p.m. be equally
divided between the two leaders or
their designees, and a vote on final disposition of House Joint Resolution 1
occur following the stacked votes beginning at 2:15 on February 28, 1995.
I further ask that no votes occur during the session of the Senate on Friday, February 24, and on Monday, February 27, 1995.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. DOLE. Mr. President, I send the
list to the desk, and also ask that it be
printed in the RECORD.
There being no objection, the list was
ordered to be printed in the RECORD, as
follows:
Bumpers:
1. Motion to commit to budget to amend
the Budget Act.
Johnston:
1. Impoundment.
Leahy:
1. GAO study.
Feingold:
1. Budgetary surplus; 2. Budgetary surplus;
3. T.V.A.; 4. T.V.A. like agencies.
Wellstone:
1. Children; 2. Education; 3. Veterans; 4.
Relevant; 5. Relevant; 6. Relevant; 7. Motion
to refer to Budget Committee.
Rockefeller:
1. Veterans (do today).
Graham:
1. Regarding debt; 2. Regarding debt; 3. Effective date.
Kennedy:
1. Impoundment.
Levin:
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1. Implementing language; 2. Relevant; 3.
Relevant; 4. Relevant.
Conrad:
1. Exemption for recessionary periods.
Kerry:
1. Motion to commit Budget Committee; 2.
Exemption for economic recession.
Hollings:
1. Relevant.
Dashle:
1. Relevant; 2. Relevant.
Feinstein:
1. Substitute amendment.
Byrd:
1. Increase taxes by majority vote; 2. Increase debt by majority vote; 3. President to
submit an alternative budget; 4. Waiver for
war by majority vote; 5. Effective date of
2000; 6. Strike reliance on estimates; 7. Increase revenues by 3/5’s vote of both houses;
8. Increase tax revenues by 3/5’s vote of both
houses; 9. Relevant.
Nunn:
1. National economic emergencies; 2. Judicial powers.
Dorgan:
1. Motion to refer regarding C.B.O. appointment.
Pryor:
1. Relevant.
Dole:
1. Five motions.
Daschle:
1. Three motions.
f
CLOTURE MOTION VOTES
VITIATED
Mr. DOLE. Mr. President, I ask that
the two cloture votes scheduled for
Wednesday, February 22, be vitiated.
The PRESIDING OFFICER. Without
objection, it is so ordered.
f
MORNING BUSINESS
INDIAN EDUCATION
Mr. DOLE. Mr. President, I ask unanimous consent that the Indian Affairs
Committee be discharged from consideration of S. 377, a bill relating to Indian education and that the Senate
proceed to its immediate consideration.
The PRESIDING OFFICER. Without
objection, it is so ordered. The clerk
will report.
The legislative clerk read as follows:
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A bill (S. 377) to amend a provision of part
A of title IX of the Elementary and Secondary Education Act of 1965, relating to Indian education, to provide a technical
amendment, and for other purposes.
Mr. DOLE. Mr. President, I ask unanimous consent that the bill be deemed
read a third time, passed and the motion to reconsider be laid upon the
table.
The PRESIDING OFFICER. Without
objection, it is so ordered.
So the bill (S. 377) was deemed read
the third time and passed, as follows:
S. 377
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
SECTION 1. TECHNICAL AMENDMENT.
Section 9112(a)(1)(A) of the Elementary and
Secondary Education Act of 1965 (as added by
section 101 of the Improving America’s
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Schools Act of 1994 (Public Law 103–382)) is
amended by striking ‘‘and’’ and inserting
‘‘or’’.
f
S. 377
Mr. MCCAIN. Mr. President, S. 377 is
a technical corrections bill in its truest
form. S. 377 would amend section
9112(a)(1)(A) of the Elementary and
Secondary Education Act of 1965. S. 377
would amend section 9112(a)(1)(A), otherwise referred to as the Indian Education Act, by striking the word ‘‘and’’
and inserting the word ‘‘or.’’ This technical change would correct an oversight that occurred during the conference of the bill.
Last Congress, the Committee on Indian Affairs received testimony from
both Indian educators and tribal organizations on proposals for the reauthorization of the Indian Education
Act. These proposals were integrated
into the Improving America’s School
Act of 1994. Among these proposals was
a program providing formula grants to
schools enrolling Indian children.
During the House and Senate conference regarding this particular section of the act, discussions ensued on
whether a minimum of 10 or 20 Indian
children would be required in order to
be eligible for these programs. The
House bill would have required that a
school have at least 20 Indian children
or that the Indian children make up at
least 25 percent of the student body of
the school. The Senate bill would have
required that a school have a minimum
of 10 Indian children or that Indian
children make up 25 percent of the student body of the school. The House and
Senate Conferees agreed upon the Senate version which required a minimum
of 10 Indian students or that Indian
students make up 25 percent of the
school’s enrollment.
The congressional intent behind section 9112 clearly supports the enactment of this technical amendment. The
House and Senate debate on this section only contemplated the number of
Indian children that would be required
for funding pursuant to this section.
The conferees did not debate over the
conjunction ‘‘or.’’ The side-by-side
analysis used by both the Senate and
House conferees supports this point.
However, an apparent error occurred in
the redrafting process of the conference
approved bill. The drafters inadvertently substituted the word ‘‘and’’ for
‘‘or.’’ As a result, the law currently
states that ‘‘in order for a school to be
eligible for an Indian Education Act
formula grant, it must have 10 eligible
students and have 25 percent of its student population eligible for the program.’’ among these proposals.
This minor oversight will have major
ramifications in the education of
American Indian and Alaska Native
children. The current language unnecessarily restricts a schools eligibility
for grant funding by requiring schools
to meet both criteria. Consequently,
the existing language will result in the
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February 16, 1995
disqualification of many schools that
serve American Indian and Alaska Native children. The Department of Education is in the process of promulgating regulations which do not accurately reflect the true intent of the
Congress. Therefore, it is imperative
that this amendment be promptly enacted to clarify and fulfill the true intent of the act, to improve schools for
all Americans, including Indians and
Alaska Natives.
f
MESSAGES FROM THE PRESIDENT
Messages from the President of the
United States were communicated to
the Senate by Mr. Thomas, one of his
secretaries.
f
EXECUTIVE MESSAGES REFERRED
As in executive session the PRESIDING OFFICER laid before the Senate messages from the President of the
United States submitting sundry nominations which were referred to the appropriate committees.
(The nominations received today are
printed at the end of the Senate proceedings.)
f
REPORT RELATIVE TO CHEMICAL
AND
BIOLOGICAL
WEAPONS—
MESSAGE
FROM
THE
PRESIDENT—PM 19
The PRESIDING OFFICER laid before the Senate the following message
from the President of the United
States, together with an accompanying
report; which was referred to the Committee on Banking, Housing, and
Urban Affairs.
To the Congress of the United States:
On November 16, 1990, in light of the
dangers of the proliferation of chemical and biological weapons, President
Bush issued Executive Order No. 12735,
and declared a national emergency
under the International Emergency
Economic Powers Act (50 U.S.C. 1701 et
seq.). Under section 202(d) of the National Emergencies Act (50 U.S.C.
1622(d)), the national emergency terminates on the anniversary date of its
declaration unless the President publishes in the Federal Register and transmits to the Congress a notice of its
continuation.
On November 14, 1994, I issued Executive Order No. 12938, which revoked and
superseded Executive Order No. 12735.
As I described in the report transmitting Executive Order No. 12938, the new
Executive order consolidates the functions of Executive Order No. 12735,
which declared a national emergency
with respect to the proliferation of
chemical and biological weapons, and
Executive Order No. 12930, which declared a national emergency with respect to nuclear, biological, and chemical weapons, and their means of delivery. The new Executive order continued in effect any rules, regulations, orders, licenses, or other forms of administrative action taken under the authority of Executive Order No. 12735.
J:\ODA15\1995_F~1\S16FE5.REC
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mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
February 16, 1995
This is the final report with respect to
Executive Order No. 12735.
This report is made pursuant to section 204 of the International Emergency Economic Powers Act and section 401(c) of the National Emergencies
Act regarding activities taken and
money spent pursuant to the emergency declaration. Additional information on chemical and biological weapons proliferation is contained in the
annual report to the Congress provided
pursuant to the Chemical and Biological Weapons Control and Warfare
Elimination Act of 1991.
The three export control regulations
issued under the Enhanced Proliferation Control Initiative are fully in
force and continue to be used to control the export of items with potential
use in chemical or biological weapons
(CBW) or unmanned delivery systems
for weapons of mass destruction.
During the final 6 months of Executive Order No. 12735, the United States
continued to address actively in its
international diplomatic efforts the
problem of the proliferation and use of
CBW.
At the termination of Executive
Order No. 12735, 158 nations had signed
the Chemical Weapons Convention
(CWC) and 16 had ratified it. On November 23, 1993, I submitted the CWC to
the Senate for its advice and consent
to ratification. The United States continues to press for prompt ratification
of the Convention to enable its entry
into force as soon as possible. We also
continue to urge those countries that
have not signed the Convention to do
so. The United States has remained actively engaged in the work of the CWC
Preparatory
Commission
headquartered in The Hague, to elaborate the technical and administrative
procedures for implementing the Convention.
The United States was an active participant in the Special Conference of
States Parties, held September 19–30,
1994, to review the consensus final report of the Ad Hoc Group of experts
mandated by the Third Biological
Weapons Convention (BWC) Review
conference. The Special Conference
produced a mandate to establish an Ad
Hoc Group whose objective is to develop a legally binding instrument to
strengthen the effectiveness and improve the implementation of the BWC.
The United States strongly supports
the development of a legally binding
protocol to strengthen the Convention.
The United States maintained its active participation in the Australia
Group (AG), which welcomed the Czech
Republic, Poland, and Slovakia as the
26th, 27th, and 28th AG members, respectively. The Group reaffirmed members’ collective belief that full adherence to the CWC and the BWC provides
the only means to achieve a permanent
global ban on CBW, and that all states
adhering to these conventions have an
obligation to ensure that their national activities support these goals.
The AG also reiterated its conviction
that harmonized AG export licensing
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measures are consistent with and indeed actively support, the requirement
under Article I of the CWC that States
Parties never assist, in any way, the
manufacture of chemical weapons.
These measures also are consistent
with the undertaking in Article XI of
the CWC to facilitate the fullest possible exchange of chemical materials
and related information for purposes
not prohibited by the Convention, as
they focus solely on preventing assistance to activities banned under the
CWC. Similarly, such efforts also support existing nonproliferation obligations under the BWC.
The United States Government determined that one foreign individual and
two foreign commercial entities—respectively, Nahum Manbar, and Mana
International Investments and Europol
Holding Ltd.—had engaged in chemical
weapons proliferation activities that
required the imposition of trade sanctions against them, effective on July
16, 1994. A separate determination was
made and sanctions imposed against
Alberto di Salle, an Italian national,
effective on August 19, 1994. Additional
information on these determinations
will be contained in a classified report
to the Congress, provided pursuant to
the Chemical and Biological Weapons
Control and Warfare Elimination Act
of 1991.
Pursuant to section 401(c) of the National Emergencies Act, I report that
there were no expenses directly attributable to the exercise of authorities
conferred by the declaration of the national emergency in Executive Order
No. 12735 during the period from November 16, 1990, through November 14,
1994.
WILLIAM J. CLINTON.
THE WHITE HOUSE, February 16, 1995.
f
REPORT RELATIVE TO NUCLEAR,
CHEMICAL
AND
BIOLOGICAL
WEAPONS—MESSAGE FROM THE
PRESIDENT—PM 20
The PRESIDING OFFICER laid before the Senate the following message
from the President of the United
States, together with an accompanying
report; which was referred to the Committee on Banking, Housing, and
Urban Affairs.
To the Congress of the United States:
On September 29, 1994, in Executive
Order No. 12930, I declared a national
emergency under the International
Emergency Economic Powers Act
(IEEPA) (50 U.S.C. 1701 et seq.) to deal
with the threat to the national security, foreign policy, and economy of
the United States posed by the continued proliferation of nuclear, biological,
and chemical weapons, and their means
of delivery. Specifically, this order provided necessary authority under the
Enhanced Proliferation Control Initiative (EPCI), as provided in the Export
Administration Regulations, set forth
in Title 15, Chapter VII, Subchapter C,
of the Code of Federal Regulations,
PO 00000
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Parts 768 to 799 inclusive, to continue
to regulate the activities of United
States persons in order to prevent their
participation in activities that could
contribute to the proliferation of weapons of mass destruction and their delivery means.
I issued Executive Order No. 12930
pursuant to the authority vested in me
as President by the Constitution and
laws of the United States of America,
including the IEEPA, the National
Emergencies Act (NEA) (50 U.S.C. 1601
et seq.), and section 301 of title 3 of the
United States Code. At that time, I
also submitted a report to the Congress
pursuant to section 204(b) of the IEEPA
(50 U.S.C. 1703(b)).
Executive Order No. 12930 was revoked by Executive Order No. 12938 of
November 14, 1994. Executive Order No.
12938 consolidates a number of authorities and eliminated certain redundant
authorities. All authorities contained
in Executive Order No. 12930 were
transferred to Executive Order No.
12938.
Section 204 of the IEEPA requires follow-up reports, with respect to actions
or changes, to be submitted every 6
months. Additionally, section 401(c) of
the NEA requires that the President:
(1) within 90 days the end of each 6month period following a declaration
of a national emergency, report to the
Congress on the total expenditures directly attributable to that declaration;
or (2) within 90 days after the termination of an emergency, transmit a
final report to the Congress on all expenditures. This report, covering the
period from September 29, 1994, to November 14, 1994, is submitted in compliance with these requirements.
Since the issuance of Executive Order
No. 12930, the Department of Commerce
has continued to administer and enforce the provisions contained in the
Export Administration Regulations
concerning activities by United States
persons that may contribute to the
proliferation of weapons of mass destruction and missiles. In addition, the
Department of Commerce has conducted ongoing outreach to educate
concerned
communities
regarding
these restrictions. Regulated activities
may include financing, servicing, contracting, or other facilitation of missile or weapons projects, and need not
be linked to exports or reexports of
U.S.-origin items. No applications for
licenses to engage in such activities
were received during the period covered by this report.
No expenses directly attributable to
the exercise of powers or authorities
conferred by the declaration of a national emergency in Executive Order
No. 12930 were incurred by the Federal
Government in the period from September 29, 1994, to November 14, 1994.
WILLIAM J. CLINTON.
THE WHITE HOUSE, February 16, 1995.
f
MESSAGES FROM THE HOUSE
At 3:49, p.m., a message from the
House of Representatives, delivered by
J:\ODA15\1995_F~1\S16FE5.REC
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CONGRESSIONAL RECORD — SENATE
Ms. Goetz, one of its reading clerks, announced that the House has passed the
following concurrent resolution, in
which it requests the concurrence of
the Senate:
H. Con. Res. 30. Concurrent resolution providing for the adjournment of the two
Houses.
f
EXECUTIVE REPORTS OF
COMMITTEES
The following executive reports of
committees were submitted:
By Mr. THURMOND, from the Committee
on Armed Services.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
Mr. THURMOND. Mr. President,
from the Committee on Armed Services, I report favorably the attached
listing of nominations.
Those identified with a single asterisk (*) are to be placed on the Executive Calendar. Those identified with a
double asterisk (**) are to lie on the
Secretary’s desk for the information of
any Senator since these names have already appeared in the RECORDS of January 6 and 23, 1995 and to save the expense of printing again.
The PRESIDING OFFICER. Without
objection, it is so ordered.
(The nominations ordered to lie on
the Secretary’s desk were printed in
the RECORDS of January 6 and 23, 1995
at the end of the Senate proceedings.)
(*) Lt. Gen. Dale W. Thompson, Jr., U.S.
Air Force to be placed on the retired list in
the grade of lieutenant general (reference
No. 160).
(*) Lt. Gen. Jerry R. Rutherford, U.S.
Army to be placed on the retired list in the
grade of lieutenant general (reference No.
161).
(*) Rear Adm. John A. Lockard, U.S. Navy
to be vice admiral (reference No. 162).
(**) In the Air Force there are 5 promotions to the grade of colonel and below
(list begins with Alan L. Christensen) (reference No. 166).
(**) In the Army Reserve there are 29 promotions to the grade of colonel and below
(list begins with Rodger T. Hosig) (reference
No. 167).
(**) In the Army Reserve there is 1 appointment to the grade of lieutenant colonel
(Frederick B. Brown) (reference No. 168).
(**) In the Navy there are 3 appointments
to the grade of ensign (lists begins with the
James P. Screen III) (reference No. 169).
(**) In the Air Force there are 662 promotions to the grade of colonel and below
(list begins with Barrett W. Bader) (reference
No. 170).
(**) In the Air Force Reserve there are 60
promotions to the grade of colonel (list begins with Jonathan E. Adams) (reference No.
171).
(**) In the Air Force Reserve there are 202
promotions to the grade of colonel (list begins with Timothy L. Anderson) (reference
No. 172).
(**) In the Army Reserve there are 1,371
promotions to the grade of lieutenant colonel (list begins with Ronnie Abner) (reference No. 173).
Total: 2,336.
INTRODUCTION OF BILLS AND
JOINT RESOLUTIONS
The following bills and joint resolutions were introduced, read the first
and second time by unanimous consent, and referred as indicated:
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By Ms. SNOWE:
S. 427. A bill to amend various Acts to establish offices of women’s health within certain agencies, and for other purposes; to the
Committee on Labor and Human Resources.
By Mr. ROTH (for himself, Mr. BAUCUS,
Mr. BIDEN, Mrs. BOXER, Mr. FEINGOLD, Mr. DODD, Mr. HARKIN, Mr.
JEFFORDS, Mr. KERRY, Mr. LAUTENBERG, Mr. LEAHY, Mr. LIEBERMAN,
Mrs. MURRAY, Mr. PELL, and Mr.
WELLSTONE):
S. 428. A bill to improve the management
of land and water for fish and wildlife purposes, and for other purposes; to the Committee on Environment and Public Works.
By Mr. BRYAN (for himself and Mr.
REID):
S. 429. A bill to amend the Nuclear Waste
Policy Act of 1982 to allow commercial nuclear utilities that have contracts with the
Secretary of Energy under section 302 of that
Act to receive credits to offset the cost of
storing spent fuel that the Secretary is unable to accept for storage on and after January 31, 1998; to the Committee on Energy and
Natural Resources.
By Ms. SNOWE:
S. 430. A bill to amend XIX of the Social
Security Act to require States to adopt and
enforce certain guardianship laws providing
protection and rights to wards and individuals subject to guardianship proceedings as a
condition of eligibility for receiving funds
under the medicaid program, and for other
purposes; to the Committee on Finance.
S. 431. A bill to amend the Magnuson Fishery Conservation and Management Act to
authorize the Secretary of Commerce to prepare fishery management plans and amendments to fishery management plans under
negotiated rulemaking procedures, and for
other purposes; to the Committee on Commerce, Science, and Transportation.
S. 432. A bill to amend the Magnuson Fishery Conservation and Management Act to require the Secretary of Commerce to prepare
conservation and management measures for
the northeast multispecies (groundfish) fishery under negotiated rulemaking procedures,
and for other purposes; to the Committee on
Commerce, Science, and Transportation.
By Mr. KERRY:
S. 433. A bill to regulate handgun ammunition, and for other purposes; to the Committee on the Judiciary.
By Mr. KOHL:
S. 434. A bill to amend the Internal Revenue Code of 1986 to increase the deductibility of business meal expenses for individuals who are subject to Federal limitations
on hours of service; to the Committee on Finance.
By Mr. FAIRCLOTH:
S. 435. A bill to provide for the elimination
of the Department of Housing and Urban Development, and for other purposes; to the
Committee on Banking, Housing, and Urban
Affairs.
By Mr. CAMPBELL (for himself, Mr.
Mr.
MCCAIN,
and
Mr.
INOUYE,
DASCHLE):
S. 436. A bill to improve the economic conditions and supply of housing in Native
American communities by creating the Native American Financial Services Organization, and for other purposes; to the Committee on Indian Affairs.
By Ms. SNOWE:
S. 437. A bill to establish a Northern Border States-Canada Trade Council, and for
other purposes; to the Committee on Finance.
S. 438. A bill to reform criminal laws, and
for other purposes; to the Committee on the
Judiciary.
By Mr. THOMAS (for himself, Mr.
LOTT, Mr. SIMPSON, Mr. INHOFE, Mr.
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February 16, 1995
COATS, Mr. MURKOWSKI, and Mr.
COCHRAN):
S. 439. A bill to direct the Director of the
Office of Management and Budget to establish commissions to review regulations
issued by certain Federal departments and
agencies, and for other purposes; to the Committee on Governmental Affairs.
By Mr. WARNER (for himself, Mr.
CHAFEE, Mr. BAUCUS, Mr. MOYNIHAN,
Mr. BOND, Mr. FAIRCLOTH, Mr. KEMPTHORNE,
Mr.
LAUTENBERG,
Mr.
LIEBERMAN, Mr. INHOFE, Mr. REID,
Mr. SMITH, Mr. LUGAR, Mrs. BOXER,
Mr. GRAHAM, and Mr. PELL):
S. 440. A bill to amend title 23, United
States Code, to provide for the designation of
the National Highway System, and for other
purposes; to the Committee on Environment
and Public Works.
By Mr. MCCAIN:
S. 441. A bill to reauthorize appropriations
for certain programs under the Indian Child
Protection and Family Violence Prevention
Act, and for other purposes; to the Committee on Indian Affairs.
By Ms. SNOWE (for herself and Mr.
DOLE):
S. 442. A bill to improve and strengthen the
child support collection system, and for
other purposes; to the Committee on Finance.
By Mr. GRAMS:
S. 443. A bill to reaffirm the Federal Government’s commitment to electric consumers and environmental protection by reaffirming the requirement of the Nuclear
Waste Policy Act of 1982 that the Secretary
of Energy provide for the safe disposal of
spent nuclear fuel beginning not later than
January 31, 1998, and for other purposes; to
the Committee on Energy and Natural Resources.
By Mr. MURKOWSKI (for himself and
Mr. STEVENS):
S. 444. A bill to amend the Alaska Native
Claims Settlement Act to provide for the
purchase of common stock of Cook Inlet Region, and for other purposes; to the Committee on Energy and Natural Resources.
By Mr. D’AMATO (for himself, Mr.
MACK, Mr. BENNETT, Mr. FAIRCLOTH,
and Mr. BRYAN):
S. 445. A bill to expand credit availability
by lifting the growth cap on limited service
financial institutions, and for other purposes; to the Committee on Banking, Housing, and Urban Affairs.
By Mr. INOUYE (for himself, Mr. HATFIELD, Mr. LEVIN, Mr. D’AMATO, Mr.
AKAKA, Mr. COCHRAN, Mr. DODD, Mr.
GRASSLEY, Mr. HATCH, Mr. HEFLIN,
Mr. HOLLINGS, Mr. KENNEDY, Ms. MIKULSKI, Mr. MOYNIHAN, Mr. ROBB, and
Mr. SIMON):
S. 446. A bill to require the Secretary of
the Treasury to mint coins in commemoration of the public opening of the Franklin
Delano Roosevelt Memorial in Washington,
D.C; to the Committee on Banking, Housing,
and Urban Affairs.
By Mr. INHOFE (for himself and Mr.
NICKLES):
S. 447. A bill to provide tax incentives to
encourage production of oil and gas within
the United States, and for other purposes; to
the Committee on Finance.
By Mr. GRASSLEY (for himself, Mr.
PRYOR, and Mr. REID):
S. 448. A bill to amend section 118 of the Internal Revenue Code of 1986 to provide for
certain exceptions from rules for determining contributions in aid of construction,
and for other purposes; to the Committee on
Finance.
By Mr. SIMON (for himself and Ms.
MOSELEY-BRAUN):
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February 16, 1995
S. 449. A bill to establish the Midewin National Tallgrass Prairie in the State of Illinois, and for other purposes; to the Committee on Armed Services.
By Mr. GRASSLEY:
S. 450. A bill for the relief of Foad MiahiNeysi and his wife, Haiedeh Miahi-Neysi; to
the Committee on the Judiciary.
By Mr. NICKLES (for himself, Mr.
INHOFE, and Mr. DOLE):
S. 451. A bill to encourage production of oil
and gas within the United States by providing tax incentives and easing regulatory
burdens, and for other purposes; to the Committee on Finance.
By Mr. MOYNIHAN (for himself and
Mr. DASCHLE) (by request):
S. 452. A bill to amend the Internal Revenue Code of 1986 to provide tax relief for the
middle class; to the Committee on Finance.
By Mr. MOYNIHAN (for himself and
Mr. DASCHLE) (by request):
S. 453. A bill to amend the Internal Revenue Code of 1986 to modify the eligibility
criteria for the earned income tax credit, to
improve tax compliance by United States
persons establishing or benefiting from foreign trusts, and for other purposes; to the
Committee on Finance.
By Mr. MCCONNELL (for himself, Mr.
LIEBERMAN, and Mrs. KASSEBAUM):
S. 454. A bill to reform the health care liability system and improve health care quality through the establishment of quality assurance programs, and for other purposes; to
the Committee on Labor and Human Resources.
By Mr. KEMPTHORNE (for himself and
Mr. CRAIG):
S. 455. A bill to clarify the procedures for
consultation under the Endangered Species
Act on management plans for, and specific
activities on, federal lands, and for other
purposes; to the Committee on Environment
and Public Works.
By Mr. BRADLEY (for himself, Mr.
DODD, Mr. ROCKEFELLER, Mr. CHAFEE,
Mrs. FEINSTEIN, Ms. SNOWE, Mr.
LIEBERMAN, and Mr. DORGAN):
S. 456. A bill to improve and strengthen the
child support collection system, and for
other purposes; to the Committee on Finance.
f
SUBMISSION OF CONCURRENT AND
SENATE RESOLUTIONS
The following concurrent resolutions
and Senate resolutions were read, and
referred (or acted upon), as indicated:
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
By Ms. SNOWE:
S. Con. Res. 8. A concurrent resolution expressing the sense of the Congress on the
need for accurate guidelines for breast cancer screening for women ages 40–49, and for
other purposes; to the Committee on Labor
and Human Resources.
f
STATEMENTS ON INTRODUCED
BILLS AND JOINT RESOLUTIONS
By Ms. SNOWE:
S. 427. A bill to amend various acts to
establish offices of women’s health
within certain agencies, and for other
purposes; to the Committee on Labor
and Human Resources.
THE WOMEN’S HEALTH OFFICES ACT OF 1995
∑ Ms. SNOWE. Mr. President, today I
am introducing legislation to focus attention on the special health needs of
women by establishing offices of Women’s Health within the Office of the Assistant Secretary for Health, the Cen-
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ters for Disease Control, the Agency
for Health Care Policy and Research,
the Health Resources and Services Administration, and the Food and Drug
Administration.
The directors of these offices of women’s health will assess the current level
of activity regarding women’s health
within their respective agencies, established short-range and long-range goals
and objectives for women’s health,
identify projects in women’s health
that should be conducted or supported,
consult with health professionals, nongovernmental organizations, consumer
organizations, and other appropriate
groups on their agency’s women’s
health policies, and coordinate agency
activities on women’s health.
Congress has already taken a first
step in recognizing that women’s
unique health needs should be addressed separately. In the 103d Congress, the 1993 NIH revitalization bill
established an Office of Woman’s
Health within the National Institutes
of Health. We must build upon that
progress in the 104th Congress.
For too long, women have been systematically excluded from medical research studies, received less aggressive
treatment for heart disease and other
serious ailments, and lacked access to
important preventive services. By
statutorily establishing offices of
Women’s Health in Federal agencies
which research and disseminate information about health, we ensure that
women’s needs and concerns will be
given the consideration they deserve.∑
By Mr. ROTH (for himself, Mr.
BAUCUS, Mr. BIDEN, Mrs. BOXER,
Mr. FEINGOLD, Mr. DODD, Mr.
HARKIN, Mr. JEFFORDS, Mr.
KERRY, Mr. LAUTENBERG, Mr.
LEAHY, Mr. LIEBERMAN, Mrs.
MURRAY, Mr. PELL, and Mr.
WELLSTONE):
S. 428. A bill to improve the management of land and water for fish and
wildlife purposes, and for other purposes; to the Committee on Environment and Public Works.
THE FISH AND WILDLIFE MANAGEMENT ACT OF
1995
∑ Mr. ROTH. Mr. President, I read recently that ‘‘the best thing we have
learned from nearly 500 years of contact with the American wilderness is
restraint,’’ the need to stay our hand
and preserve our precious environment
and future resources rather than destroy them for momentary gain.
With this in mind, I offer legislation
today that designates the coastal plain
of Alaska as wilderness area. At the
moment this area is a national wildlife
refuge, one of our beautiful and last
frontiers. By changing its designation,
Mr. President, we can protect it forever.
And I can’t stress how important this
is.
The Alaskan wilderness area is not
only a critical part of our earth’s ecosystem—the last remaining region
where the complete spectrum of arctic
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and subarctic ecosystems comes together—but it is a vital part of our national consciousness. It is a place we
can cherish and visit for our soul’s
good. It offers us a sense of well-being
and promises that not all dreams have
been dreamt.
The Alaskan wilderness is a place of
outstanding wildlife, wilderness and
recreation, a land dotted by beautiful
forests, dramatic peaks and glaciers,
gentle foothills, and undulating tundra. It is untamed—rich with caribou,
polar bear, grizzly, wolves, musk oxen,
Dall sheep, moose, and hundreds of
thousands of birds—snow geese, tundra
swans, black brant, and more. In all,
about 165 species use the coastal plain.
It is an area of intense wildlife activity. Animals give birth, nurse and feed
their young, and set about the critical
business of fueling up for winters of unspeakable severity.
The fact is, Mr. President, there are
parts of this Earth where it is good
that man can come only as a visitor.
These are the pristine lands that belong to all of us. And perhaps most importantly, these are the lands that belong to our future.
Considering the many reasons why
this bill is so important, I came across
the words of the great western writer,
Wallace Stegner. Referring to the land
we are trying to protect with this legislation, he wrote that it is ‘‘the most
splendid part of the American habitat;
it is also the most fragile.’’ And we
cannot enter ‘‘it carrying habits that
[are] inappropriate and expectations
that [are] surely excessive.’’
The expectations for oil exploration
in this pristine region are excessive.
There is only a one-in-five chance of
finding any economically recoverable
oil in the refuge. And if oil is found,
the daily production of 400,000 barrels
per day is less than .7 percent of world
production—far too small to meet
American’s energy needs for more than
a few months.
In other words, Mr. President, there
is much more to lose than might ever
be gained by tearing this frontier
apart. Already, some 90 percent of
Alaska’s entire North Slope is open to
oil and gas leasing and development.
Let’s keep this area as the jewel amid
the stones.
What this bill offers—and what we
need—is
a
brand
of
pragmatic
environmentalism, an environmental
stewardship that protects our important wilderness areas and precious resources, while carefully and judiciously
weighing the short-term desires or our
country against its long-term needs.
together, we need to embrace environmental policies that are workable
and pragmatic, policies based on the
desire to make the world a better place
for us and for future generations. I believe a strong economy, liberty, and
progress are possible only when we
have a healthy planet—only when resources are managed through wise
stewardship—only when an environmental ethic thrives among nations
J:\ODA15\1995_F~1\S16FE5.REC
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CONGRESSIONAL RECORD — SENATE
and only when people have frontiers
that are untrammeled and able to host
their fondest dreams.∑
By Mr. BRYAN (for himself and
Mr. REID):
S. 429. A bill to amend the Nuclear
Waste Policy Act of 1982 to allow commercial nuclear utilities that have contracts with the Secretary of Energy
under section 302 of that act to receive
credits to offset the cost of storing
spent fuel that the Secretary is unable
to accept for storage on and after January 31, 1998; to the Committee on Energy and Natural Resources.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
THE INDEPENDENT SPENT NUCLEAR FUEL
STORAGE ACT OF 1995
Mr. BRYAN. Mr. President, I rise
today to introduce again legislation I
have introduced in each of the past two
Congresses, the Independent Spent Nuclear Fuel Storage Act.
As many of my colleagues are aware,
since 1987, contrary to Nevada State
law, and against the wishes of the vast
majority of Nevadans, Nevada has been
the sole site considered for the ultimate disposal of the United States’
high-level nuclear waste.
Today, in spite of the expenditure of
billions of dollars, the Yucca Mountain
site is no closer to accepting waste
from our Nation’s nuclear reactors
than it was 13 years ago, when the Nuclear Waste Policy Act of 1982 was enacted.
I strongly oppose the purely political
decision made by Congress in 1987 to
identify Yucca Mountain as the sole
site to be characterized for a permanent repository. Now that the permanent repository program is an obvious
failure, with the Department of Energy
saying there is no hope of opening any
type of storage facility before 2010, the
nuclear power industry and its allies
have conceived a new strategy.
Contrary to all objective scientific
judgment, and general common sense,
the nuclear industry’s new effort is to
instruct the DOE to build an interim
storage facility at the Yucca Mountain
site. As offensive as the 1987 act, commonly referred to in Nevada as the
‘‘screw Nevada bill,’’ was, the new effort of the nuclear power industry is
even more of an outrage to Nevadans.
The nuclear power industry’s newest
proposal is nothing less than a direct
assault on the health and safety of Nevadans. Frustrated by its inability to
overcome the insurmountable safety
concerns raised in relation to a permanent repository, the industry is now
seeking to circumvent the objections
of credible, objective scientists to a
permanent repository at Yucca Mountain.
I am convinced, like many others,
that any centralized interim storage
facility will become the de facto permanent repository.
Funding for an interim storage program will necessarily come at the expense of the permanent repository program. The expression ‘‘out of sight, out
of mind’’ could not be truer. Once the
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waste is removed from the reactor
sites, the nuclear industry’s commitment to finding a permanent solution
to the waste problem will vanish. And
since it is the nuclear power industry’s
obsession with moving this waste off
the reactor sites that drives the Federal Civilian Nuclear Waste Program,
the Federal commitment to permanent
storage will vanish as well.
The nuclear power industry as much
as concedes this—every version of their
interim storage legislation I am aware
of provides for licensing the interim
site for 100 years, subject to renewal.
The permanent repository program is
a failure. The nuclear power industry
and its advocates, including the Department of Energy, have created a
program which was bound to fail. Careless science, poor management, unreasonable deadlines and timetables, and
the ill-fated decision to pursue only
one site for characterization, thus leaving the program with no options or alternatives, have all contributed to the
failure of the program.
The industry’s suggestion to build an
interim storage facility in Nevada is
simply one more in a long series of irresponsible and ill-founded proposals
by the nuclear power industry to solve
their high level waste problem at the
expense of the health and safety of all
Nevadans.
I will concede that the nuclear power
industry has a waste problem. I strongly object, however, to the industry’s
solution, which is simply to send their
problem, their waste to Nevada.
The question arises, do we need a
centralized interim storage site? If we
are truly talking about interim storage, the answer is obviously no.
A few nuclear utilities, looking at
the future uncertainty of the Federal
nuclear waste program, have done the
responsible thing and built interim dry
cask storage at the reactor site. In dry
cask storage, spent fuel assemblies are
removed from the reactor pools and
stored in various systems of canisters,
casks, and concrete shells.
I recently visited one of these dry
cask storage facilities, at Calvert Cliffs
in Maryland, and, I must say, I was impressed by the simplicity and efficiency of the spent fuel management
operation. It is a responsible action
taken by the industry, and I commend
their example to others. The Calvert
Cliffs dry cask storage program provides a reasonable solution to the interim storage problem, the spent fuel is
stored on site, where security and safety precautions already exist, until a
safe plan for the long-term disposition
of the waste can be finalized.
A centralized interim storage facility
is simply not needed, or desirable. The
original Nuclear Waste Policy Act recognized this fact, and placed restrictions on the DOE’s authority to accept
responsibility for interim storage. The
nuclear power industry, faced with the
reality of the failure to build a permanent repository at Yucca Mountain, is
now engaged in yet another exercise of
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February 16, 1995
political muscle with one purpose: to
make Nevada the final destination for
their toxic and highly dangerous waste.
Even if we concede, which we do not,
that there is a need for a centralized
interim storage facility, there is no defensible reason to site the facility in
Nevada. A simple look at a map easily
shows that Nevada is one of the least
central sites to store nuclear waste.
The great majority of the reactor sites
producing high-level waste are east of
the Mississippi—93 reactors out of the
U.S. total of 118.
Shipping thousands of tons of high
level waste to Nevada will create dramatic threats to the safety of communities throughout the United States.
An analysis of one proposal supported
by the nuclear power industry reveals
that interim storage in Nevada will require 15,000 shipments by rail and
truck through 43 States to begin as
early as 1998 and continue for 30 years.
Interim storage in Nevada is not the
answer to the nuclear power industry’s
waste problem. The responsible answer
to the waste problem, if the nuclear
utilities choose to continue to run
their reactors, is on-site, dry cask storage.
Unfortunately, most nuclear utilities
appear to be unwilling to develop dry
cask storage facilities for a variety of
reasons, both political and financial.
There is not much we can do about
the local political opposition faced by
utilities. The utilities, and communities, that benefited from the operation of the powerplant should bear responsibility for their own waste. Highlevel waste storage is not popular, and
there are political costs to the utilities
for living up to their responsibilities.
Asking Nevada to solve the political
problems in the communities they
serve places the nuclear utilities on
completely indefensible ground. The
outright hypocrisy of the nuclear
power industry’s advocates, and their
shameless attempts to exert political
influence to solve complex scientific
and environmental problems, has created an atmosphere of complete distrust and antagonism for the industry
in Nevada.
There are also financial barriers to
on-site, dry cask storage. Ratepayers
have been making contributions to the
nuclear waste trust fund with the exception that the Federal Government
will dispose of their nuclear waste. I
am somewhat sympathetic to the ratepayers’ concerns. The Federal disposal
program is a failure.
The civilian nuclear waste program
has been so poorly managed, and so
misguided, that Congress has had good
reason not to release the full balance of
the trust fund to the program. The
ratepayers deserve some financial relief while the Federal Government attempts to meet its obligations, and
while the utilities invest the needed
capital to store their own waste.
The legislation I am introducing
today recognizes the nuclear power industry’s need for interim storage, as
J:\ODA15\1995_F~1\S16FE5.REC
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February 16, 1995
well as the financial impact on ratepayers caused by delays in the repository program. The legislation provides
credits against utilities’ payments to
the nuclear waste trust fund for costs
incurred for on-site, dry cask storage.
The legislation provides an equitable
solution to a difficult problem. It recognizes the financial contributions of
the utilities’ ratepayers to the trust
fund, and recognizes the reality that a
permanent repository will not be available to meet the needs of the nuclear
power industry.
Mr. President, together with their
advocates in Congress and the Department of Energy, the nuclear power industry has spared no expense or effort
in moving its waste to Nevada. I have
attempted to fight the industry at
every turn.
I hope that Congress will not take
the failure of the permanent repository
program as a signal to bow to the nuclear power industry once again, and
accelerate plans to store nuclear waste
in Nevada, but instead to take this opportunity to find an equitable solution
to a difficult problem which does not
threaten the health and safety of future generations of Nevadans.
I urge my colleagues to support the
legislation I am introducing today.
By Ms. SNOWE:
S. 430. A bill to amend title XIX of
the Social Security Act to require
States to adopt and enforce certain
guardianship laws providing protection
and rights to wards and individuals
subject to guardianship proceedings as
a condition of eligibility for receiving
funds under the Medicaid Program, and
for other purposes; to the Committee
on Finance.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
THE GUARDIANSHIP RIGHTS AND
RESPONSIBILITIES ACT
∑ Ms. SNOWE. Mr. President, today I
am introducing the Guardianship
Rights and Responsibilities Act of 1995,
which establishes a bill of rights for
adults who, because of physical or mental incapacity, become wards of the
courts.
Wards are individuals whose legal
rights, decisionmaking authority and
possessions have been transferred to
the control of a guardian or conservator based on a judgment that the
person is no longer capable of handling
these affairs. This legal system severely limits an individual’s personal
autonomy and has considered problems
and widespread abuses. Horror stories
abound about guardians who force unnecessary nursing home care, embezzle
assets, or otherwise abuse their wards.
The Guardianship Rights and Responsibilities Act of 1995 would require
States to adopt and enforce laws to
provide basic protection and rights to
wards as a condition of receiving Federal Medicaid funds. It would assure
due process protections such as counsel, the right to be present at their proceedings and to appeal decisions. Also
required would be: clear and convincing
evidence to determine the need for a
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guardianship; adequate court monitoring; and standards, training and
oversight for guardians.
This legislation will help to protect
the most vulnerable elderly and disabled from exploitation, and will help
to assure them the highest possible autonomy. I hope my colleagues will join
me in supporting this bill.∑
By Ms. SNOWE:
S. 431. A bill to amend the Magnuson
Fishery Conservation and Management
Act to authorize the Secretary of Commerce to prepare fishery management
plans and amendments to fishery management plans under negotiated rulemaking procedures, and for other purposes; to the Committee on Commerce,
Science, and Transportation.
S. 432. A bill to amend the Magnuson
Fishery Conservation and Management
Act to require the Secretary of Commerce to prepare conservation and
management measures for the northeast multispecies—groundfish—fishery
under negotiated rulemaking procedures, and for other purposes; to the
Committee on Commerce, Science, and
Transportation.
NEGOTIATED RULEMAKING FOR FISHERIES
LEGISLATION
∑ Ms. SNOWE. Mr. President, as many
stories in the national media have reported, the New England groundfish industry is now facing the most difficult
challenges in its long history. Scientists report that once plentiful
stocks of cod, haddock, flounder, and
other fish species have reached historic
lows. In response to these stock assessments, the New England Fishery Management Council has approved severe
restrictions on fishing that will probably force many fishermen out of business. These restrictions include a 5year program to cut fishing efforts in
half, mandatory use of large-mesh nets,
a moratorium on new entrants into the
fishery, and the emergency closure of
large areas on the George’s Bank fishing grounds off Massachusetts.
Most fishermen in Maine recognize
that the groundfish stocks are low and
that effective conservation measures
are needed to help rebuild the fishery.
But too many fishermen also believe
that the specific program approved by
the council will not succeed at restoring groundfish populations, and will
place unnecessary economic burdens on
working fishermen. In their view, the
council, despite public hearings, dismissed too many of their recommendations despite the fact that they and
others before them have been fishing
the waters off New England for three
centuries. In short, they have no support for or confidence in the councildeveloped management program under
which they must operate.
The success of any regulatory program depends in large part on the confidence of the regulated community
that the action takes their views into
account, will achieve its ends, and is
sensible and necessary. I am introducing legislation today that aims to
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restore the confidence of New England
fishermen in the credibility of the Federal fisheries management process by
giving them and other citizens with an
interest in fisheries the ability to participate directly in that process.
My bills bring the concept of negotiated rulemaking or regulatory negotiation to fisheries management. The
concept was established in Federal law
by the negotiated Rulemaking Act of
1990. Under negotiated rulemaking,
representatives of all stakeholder
groups involved in a dispute negotiate
directly on the regulatory solution
with the aid of a professional
facilitator. It provides a collaborative,
consensus-based dispute resolution tool
that agencies can use to develop potentially controversial regulations. If the
negotiating group can reach consensus,
then the agency can propose the agreement as a new regulation or rule. Negotiated rulemaking has been used—
sometimes successfully, sometimes unsuccessful—by other Federal agencies,
and it is time that this tool be made
available in the fisheries management
process.
The first bill that I have introduced
today gives the Secretary of Commerce
explicit authority to use negotiated
rulemaking to develop fishery management plans or plan amendments. Under
the Magnuson Act, the Secretary can
only submit management plans or plan
amendments
under
limited
circumstances which preclude his flexibility in using this important tool effectively. Also, negotiated rulemaking
is specifically used to develop rules,
but fishery management plans are not
technically rules. My bill removes
these potential obstacles and clears the
way for the Secretary to use this dispute resolution tool on controversial
issues.
The second bill directs the Secretary
to use negotiated rulemaking in the
specific case of the New England
groundfish fishery. Alternative dispute
resolution is used more and more commonly in lieu of the traditional adversarial regulatory process, and I believe
that it should be tried in the case of
the New England groundfish issue.
These bills do not directly affect any
existing fisheries management programs, or impose new management
measures. They only offer an alternative route for devising plans that
will restore fish stocks off the coast of
New England and other parts of the
country. They could lead to new management measures that not only do a
better job of rebuilding fish stocks, but
do so in a manner that minimizes the
economic impact on fishermen and
coastal communities, and in a manner
that gains the confidence and support
of most fishermen. Surely, given the
extremely high stakes in an area like
New England these days, we must explore every opportunity, every possibility, for achieving such critically important results.∑
By Mr. KERRY:
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CONGRESSIONAL RECORD — SENATE
S. 433. A bill to regulate handgun ammunition, and for other purposes; to
the Committee on the Judiciary.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
THE AMMUNITION SAFETY ACT OF 1995
∑ Mr. KERRY. Mr. President, no gun
works without a bullet. Yet for no good
reason, Congress in the early 1980’s repealed laws that regulate ammunition.
And while a background check is required to stop felons from purchasing
guns, no such background check is required to stop them from buying ammunition for the guns they may already have.
In the meantime, bullets are getting
meaner and more deadly. Law enforcement officers know all too well of the
danger they face each and every time a
gun is pointed at them.
Advances in technology only promise
to make matters worse. When a large
percentage of gun-related deaths involve handguns, and a large percentage
of gun related deaths is accidental, it is
insane for the public to fear the creation of new, more destructive bullets.
The fact is 157 police officers and
State troopers were killed in this country last year. Five lost their lives in
my home State of Massachusetts.
And more than 200 people die from
the accidental use of handguns every
year. In 1992 alone, 233 accidental
deaths occurred because of handguns.
This included 6 babies, 36 kids under
the age of 14, and 8 senior citizens, 2 of
whom were over the age of 80.
In light of these sad and disturbing
facts, there is no good reason to have
ever more dangerous bullets on the
market. And there is every good reason
to keep off our streets and out of our
homes bullets that supply handguns
with the destructive power of assault
weapons.
That is why the Ammunition Safety
Act of 1995 does two things: it reestablishes reasonable regulations for the
sale of handgun ammunition, and it
outlaws all exceedingly destructive
handgun ammunition—whether or not
such ammo has been invented yet—by
expanding and updating the ban on
armor-piercing handgun ammunition.
This bill would provide a weapon for
law enforcement to crack down on
crime and would make ordinary people
safer from handgun violence and accidental shootings. The bill accomplishes
these goals in three steps.
First,
the
bill
reinstates
and
strengthens ammunition control language that Congress repealed during
the Reagan era. It would require dealers of handgun ammunition to be licensed by the Federal Government. It
would restrict interstate sale and
transportation of handgun ammunition
to licensed dealers. And it would double the maximum penalties for sale to
and for possession of handgun ammunition by felons and persons under age 21.
Second, the bill would apply Brady
bill provisions to handgun ammunition. To prevent the sale of handgun
ammunition to felons, once the nationwide, instantaneous background check
the Brady bill created is in place, every
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purchaser of ammunition will have to
pass a background check before ammunition could be sold to him or her.
These regulations would be a vital tool
to law enforcement in investigating
crime, and would provide equity to a
system that currently monitors and restricts the flow of guns, but—
inexplicably—not of ammunition.
Third, the bill expands the definition
of illegal armor-piercing handgun ammunition to include any new conceivable kind of armor-piercing bullet. The
bill establishes a new method to accomplish this goal.
To date, no law has been able to effectively ban all armor-piercing bullets. You can’t ban what you can’t define because vague laws are constitutionally void—and definitions to date
have failed to cover all armor-piercing
bullets. All that existing law does is
ban bullets based on the materials of
which they are made—consequently,
bullets made of hard metals are illegal—in the hope that this definition
will blanket most armor-piercing bullets. But the existing compositionbased definition fails to prevent the
sale of certain bullets that pierce
armor—like large lead bullets that
aren’t intended for handguns but can
be used in them—or the invention of
new armor-piercing bullets—for example, a plastic bullet hard enough to
pierce armor.
This bill calls on the Treasury Department to define armor-piercing bullets not by what they are but by what
they are not. Fulfilling this new responsibility would entail four steps.
First, within 1 year, the Treasury Department is charged with determining
a standard test to ascertain the destructive capacity of any and all bullets. This will probably result in something along the lines of a rating system
equal to the width times the depth of
the hole a projectile bores in a block of
gelatin when it is shot with no extra
powder from a standard Colt .45 at a
distance of 10 feet.
Second, utilizing this destructive rating test, the Treasury Department
would then determine a rating threshold which would be the rating of the
least destructive bullet to pierce today’s standard body armor.
Third, all manufacturers of bullets
for sale in the United States would be
required to cover the costs incurred by
the Treasury Department in testing
and determining the destructive rating
of every existing bullet available on
the market.
Fourth, this bill would make it illegal to manufacture, sell, import, use,
or possess any bullet—existing or
newly invented—that has a destructive
rating equal to or higher than the
armor-piercing threshold. This would
be in addition to the existing composition-based definition.
This bill contains reasonable exemptions. Those bullets exclusively manufactured for law enforcement would be
exempt; so would be those bullets designed for sporting purposes that Con-
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February 16, 1995
gress specifically exempts by law; and
those bullets that are proven by their
manufacturer at its expense to have a
destructive rating below the armorpiercing threshold.
By setting the legal standard at the
armor-piercing threshold, all armorpiercing bullets would be illegal. And
there is an additional advantage to setting a legal threshold in this fashion:
The threshold would ban more than
armor-piercing bullets. It would ban
any new, sick, perverse bullet that has
yet to be invented that explodes on impact, that turns to shrapnel, that does
things today’s technology cannot yet
fathom, or that by any other means is
exceptionally destructive.
Setting a legal standard this way
draws a hard and fast line between
those bullets currently on the market
and future bullets that do more damage than we can imagine today. This
bills says that America is satisfied that
the bullets of today are dangerous
enough, and America will tolerate no
greater likelihood of accidental death
as a result of new bullets.
This bill recognizes the fact that regulating only weapons is naive. Among
other reasons, guns last centuries, but
ammunition has a shelf-life of not
much more than 20 years. Felons who
want to kill will always be able to find
guns, but have to come out of the
woodwork to purchase ammunition.
When they do, this bill will be there to
stop them.
Of course, felons can make bullets at
home, but it isn’t easy, it isn’t cheap,
and it isn’t safe. Mr. President, I recognize that there is a limit to what the
Government can do to stop gun violence and accidental death. But today,
the Government is shirking its responsibility. This bill is a vital first step toward ensuring that the Government
does what is necessary to save lives.
The law enforcement community and
the public will never again have to
react to advertisements like the one
for the infamous Rhino bullet. This add
states:
The Rhino inflicts a wound of 8 inches in
diameter. Each of these fragments becomes
lethal shrapnel and is hurled into vital organs, lungs, circulatory system components,
the heart and other tissues. The wound channel is catastrophic. * * * Death is nearly instantaneous.
If this bill is enacted, opportunistic
manufacturers like the man who created the Rhino will have nothing to
gain from advertising the dramatic innovations of their bullets. If an advertisement claims that a new bullet is
unusually destructive, the public will
know that the advertisement is either
an outright lie or that the product is
illegal. Either way, the public will
know in advance that no such bullet
will ever hit the street, and the public
will have no cause for hysteria.
When this bill becomes law, no new
bullets that are more dangerous than
those of today will make it to market.
When this bill becomes law, those bullets that are on the market won’t end
up in the wrong hands.
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February 16, 1995
This bill is a solid step toward returning sanity and safety to our Nation’s streets and household. The Government has no greater responsibility
than to work toward this goal.
I welcome the support of colleagues
who share my concerns, as many do. I
urge them to join me in sponsoring this
legislation.
Mr. President, I ask unanimous consent that the full text of the legislation
appear in the RECORD.
There being no objection, the bill was
ordered to be printed in the RECORD, as
follows:
S. 433
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 ‘‘Ammunition
Safety Act of 1995’’.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
SEC. 2. DEALERS OF AMMUNITION.
(a) DEFINITION.—Section 921(a)(11)(A)
of
title 18, United States Code, is amended by
inserting ‘‘or ammunition’’ after ‘‘firearms’’.
(b) LICENSING.—Section 923(a) of title 18,
United States Code, is amended—
(1) in the matter preceding paragraph (1)
by striking ‘‘or importing or manufacturing
ammunition’’ and inserting ‘‘or importing,
manufacturing, or dealing in ammunition’’;
and
(2) in paragraph (3)—
(A) in subparagraph (A), by striking ‘‘or’’
the last place it appears;
(B) in subparagraph (B), by striking the period at the end and inserting ‘‘; or’’; and
(C) by inserting the following new subparagraph:
‘‘(C) in ammunition other than ammunition for destructive devices, $10 per year.’’.
(c) UNLAWFUL ACTS.—Section 922(a)(1)(A) of
title 18, United States Code, is amended—
(1) in paragraph (1)—
(A) in subparagraph (A)—
(i) by inserting ‘‘or ammunition’’ after
‘‘firearms’’; and
(ii) by inserting ‘‘or ammunition’’ after
‘‘firearm’’; and
(B) in subparagraph (B), by striking ‘‘or licensed manufacturer’’ and inserting ‘‘licensed manufacturer, or licensed dealer’’;
(2) in paragraph (2), in the matter preceding subparagraph (A), by inserting ‘‘or
ammunition’’ after ‘‘firearm’’;
(3) in paragraph (3), by inserting ‘‘or ammunition’’ after ‘‘firearm’’ the first place it
appears;
(4) in paragraph (5), by inserting ‘‘or ammunition’’ after ‘‘firearm’’ the first place it
appears; and
(5) in paragraph (9), by inserting ‘‘or ammunition’’ after ‘‘firearms’’.
(d) PENALTIES.—Section 924 of title 18,
United States Code, is amended—
(1) in paragraph (5)—
(A) in subparagraph (A)(i), by striking ‘‘1
year’’ and inserting ‘‘2 years’’; and
(B) in subparagraph (B)—
(i) in clause (i), by striking ‘‘1 year’’ and
inserting ‘‘2 years’’; and
(ii) in clause (ii), by striking ‘‘10 years’’
and inserting ‘‘20 years’’; and
(2) by adding at the end the following new
subsection:
‘‘(o) Except to the extent a greater minimum sentence is otherwise provided, any
person at least 18 years of age who violates
section 922(g) shall be subject to—
‘‘(1) twice the maximum punishment authorized by this subsection; and
‘‘(2) at least twice any term of supervised
release.’’.
(e) APPLICATION OF BRADY HANDGUN VIOLENCE PREVENTION ACT TO TRANSFER OF AM-
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MUNITION.—Section 922(t) of title 18, United
States Code, is amended by inserting ‘‘or ammunition’’ after ‘‘firearm’’ each place it appears.
SEC. 3. REGULATION OF ARMOR PIERCING AND
NEW TYPES OF DESTRUCTIVE AMMUNITION.
(a) TESTING OF AMMUNITION.—Section
921(a)(17) of title 18, United States Code, is
amended—
(1) by redesignating subparagraph (D), as
added by section 2(e)(2), as subparagraph (E);
and
(2) by inserting after subparagraph (C) the
following new subparagraph:
‘‘(D)(i) Notwithstanding subchapter II of
chapter 5 of title 5, United States Code, not
later than 1 year after the date of enactment
of this subparagraph, the Secretary shall—
‘‘(I) establish uniform standards for testing
and rating the destructive capacity of projectiles capable of being used in handguns;
‘‘(II) utilizing the standards established
pursuant to subclause (I), establish performance-based standards to define the rating of
‘armor piercing ammunition’ based on the
rating at which the projectiles pierce armor;
and
‘‘(III) at the expense of the ammunition
manufacturer seeking to sell a particular
type of ammunition, test and rate the destructive capacity of the ammunition utilizing the testing, rating, and performancebased standards established under subclauses
(I) and (II).
‘‘(ii) The term ‘armor piercing ammunition’ shall include any projectile determined
to have a destructive capacity rating higher
than the rating threshold established under
subclause (II), in addition to the composition-based determination of subparagraph
(B).
‘‘(iii) The Congress may exempt specific
ammunition designed for sporting purposes
from the definition of ‘armor piercing ammunition’.’’.
(b) PROHIBITION.—Section 922(a) of title 18,
United States Code, is amended—
(1) in paragraph (7)—
(A) by striking ‘‘or import’’ and inserting
‘‘, import, possess, or use’’;
(B) in subparagraph (B), by striking ‘‘and’’;
(C) in subparagraph (C), by striking the period at the end and inserting ‘‘; and’’; and
(D) by adding at the end the following new
subparagraph:
‘‘(D) the manufacture, importation, or use
of any projectile that has been proven, by
testing performed at the expense of the manufacturer of the projectile, to have a lower
rating threshold than armor piercing ammunition.’’; and
(2) in paragraph (8)—
(A) in subparagraph (B), by striking ‘‘and’’;
(B) in subparagraph (C), by striking the period at the end and inserting ‘‘; and’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(D) the manufacture, importation, or use
of any projectile that has been proven, by
testing performed at the expense of the manufacturer of the projectile, to have a lower
rating threshold than armor piercing ammunition.’’.∑
By Mr. KOHL:
S. 434. A bill to amend the Internal
Revenue Code of 1986 to increase the
deductibility of business meal expenses
for individuals who are subject to Federal limitation on hours of service; to
the Committee on Finance.
THE BUSINESS MEAL DEDUCTION FAIRNESS ACT
OF 1995
∑ Mr. KOHL. Mr. President, in 1993, the
103d Congress took a crucial and dif-
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ficult stand on the deficit. In August of
that year we passed the omnibus budget reconciliation bill. I am proud to
stand here today and say that that legislation has helped to produce falling
deficits
and
sustained
economic
growth.
As my colleagues know, I am one of
this body’s strongest advocates for deficit reduction. I attribute much of my
deep commitment to this goal to my
days in business. As a businessman, I
learned that you must balance your
books and live within your means. I
also learned that you must treat people
fairly, and admit when you make a
mistake. I have come to the floor today
to once again acknowledge that a mistake was made in the 1993 reconciliation bill; a mistake which must be
corrected.
During consideration of the reconciliation bill, I opposed tax increases on
working middle- and lower-income
Americans. However, in fighting to
eliminate increases in broad taxes on
middle- and lower-income Americans,
Congress overlooked a provision which
places a hidden tax on those hardworking Americans who work in the
transportation sector. It is for this reason that I rise today to reintroduce the
business meal deduction fairness bill.
Included in the 1993 reconciliation
bill was a provision which lowered the
deductible portion of business meals
and entertainment expenses from 80 to
50 percent. On the surface, this seems
only a tax on those rich enough to
spend their lunchtimes in luxury restaurants and their nighttimes on luxury yachts. But contrary to popular belief, the business meal deduction is not
only used by lobbyists and fat cats for
three-martini lunches. Due to regulations limiting travel hours, many
transportation workers must eat out.
That means the reduced business meal
deduction is a tax on workers who have
no control over the length of their
trips, the amount of time they must
rest during a delivery, or, in many
cases, the places they can stop to eat.
Let me provide you with a brief example to illustrate my point. The average truck driver earns approximately
$30,000 a year. The reduced deduction
will cost that driver between $750 and
$1,000 per year. This is just one of many
examples I could give to demonstrate
the burden this change has placed on
hard-working, middle-income Americans. The legislation I am introducing
today, will lift this burden and restore
some common sense to the tax code.
Mr. President, the business meal deduction fairness bill repeals the hidden
tax created last year by restoring the
business meal deduction to 80 percent
for those individuals covered by the
Department of Transportation hoursof-service limit. This legislation is simple, straightforward, and most importantly, fair.
Mr. President, I would like to remind
my colleagues of a similar bill we
worked on to correct another mistake
which hurt tens of thousands of hard-
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working, middle-income Americans. As
my colleagues remember, the 1990 deficit reduction bill imposed a surtax on
specific luxury items. At the time, it
was argued that the surtax would only
affect the wealthiest segment of society. However, after it went into effect,
it became clear that, instead of paying
the tax, the wealthy decided not to buy
the new boat or the diamond ring. As a
result, the middle- and lower-income
Americans producing and selling those
luxury items ended up bearing the burden of the tax through lost wages and
jobs.
Once it was apparent that the luxury
tax was not achieving its intended
goal, I began working with a number of
my colleagues to repeal it. Fortunately, we were successful in getting a
repeal in the 1993 reconciliation bill.
Unfortunately, far too many people
were hurt by this mistake because we
did not correct it quickly enough. We
cannot let that happen again. Therefore I am requesting the support and
assistance of my colleagues to ensure
that the business meal deduction fairness bill becomes law. Mr. President, I
ask unanimous consent that a copy of
my legislation be printed in the
RECORD.
There being no objection, the bill was
ordered to be printed in the RECORD, as
follows:
S. 434
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
SECTION 1. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF SERVICE.
(a) IN GENERAL.—Section 274(n) of the In-
ternal Revenue Code of 1986 (relating to only
50 percent of meal and entertainment expenses allowed as deduction) is amended by
adding at the end the following new paragraph:
‘‘(3) SPECIAL RULE FOR INDIVIDUALS SUBJECT
TO FEDERAL LIMITATIONS ON HOURS OF SERVICE.—In the case of any expenses for food or
beverages consumed by an individual during,
or incident to, any period of duty which is
subject to the hours of service limitations of
the Department of Transportation, paragraph (1) shall be applied by substituting ‘80
percent’ for ‘50 percent’.’’
(b) EFFECTIVE DATE.—The amendment
made by subsection (a) shall apply to taxable
years beginning after December 31, 1994.∑
By Mr. FAIRCLOTH:
S. 435. A bill to provide for the elimination of the Department of Housing
and Urban Development, and for other
purposes; to the Committee on Banking, Housing, and Urban Affairs.
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LEGISLATION TO ABOLISH HUD
Mr. FAIRCLOTH. Mr. President,
today I am pleased to introduce legislation that will abolish the Department of Housing and Urban Development.
Mr. President, HUD was created in
1965. When it was created, the purpose
of this Department was to revitalize
our urban areas and provide more housing for America.
Mr. President, in short, HUD has
been a collosal failure. Since 1965, HUD
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has spent hundreds of billions of dollars—that adjusted to inflation—probably exceeds a trillion dollars. Yet
today, despite this massive spending,
our Nation’s urban areas are more decayed and more dangerous today than
ever. Homelessness, hardly a problem
30 years ago, is now a major concern.
Public housing has been a disaster
and home ownership is down.
Solving these problems was supposed
to be HUD’s mission. In each, it has
failed miserably.
Imagine if we applied a performance
standard like this to other Federal
agencies. Suppose that when we created NASA with the purpose of putting
a man on the Moon, that 30 years later,
they still had not done it. We might
consider abolishing them. That is exactly what we should do with HUD because they failed to accomplish their
mission.
Suppose that instead of creating
HUD, we had given a trillion dollars to
an entrepreneur like Bill Gates. Do you
think our inner cities would be any
worse off, or do you think that they
would be more livable places today? I
think the answer is clear.
Take Fannie Mae for example.
Fannie Mae plans to spend $1 trillion
on affordable housing before the end of
the decade. The plan will finance
homes for 10 million people. This would
provide a home to one in three renters
in America. This plan, however, unlike
HUD, won’t cost American taxpayers
one cent, and yet it will provide homes
for millions of Americans.
Mr. President, I have no faith that
HUD can be reinvented. Thirty years of
failure is too much. Since the November 8 election, HUD Secretary Henry
Cisneros has put on a masterful public
relations plan to save his Department.
I for one am not fooled. If he really believed in what he was doing, he would
have done it 2 years ago.
Most importantly, what are the savings from the Cisneros plan? There are
none. The only clearly identified savings will amount to one-half of 1 percent over 5 years. Mr. President, let me
repeat that, the total savings in the
Cisneros plan amount to only one-half
of 1 percent over 5 years.
Of course, there are promises of more
savings, but they are just that—promises.
Actually, if you look at the projected
outlays by HUD in the fiscal year 1996
budget for the years 1995–99, spending
is $3 billion more than was projected in
last year’s budget. Yes, that’s right,
spending will actually increase despite
the reorganization.
Furthermore, my favorite line from
the President’s budget is on page 190. It
is a chart about HUD’s program consolidation. It says:
‘‘Net impact, HUD consolidations’’—
spending of $29.4 billion in 1995 to $30.3
billion in 1996.
Yes, that’s right. Spending will actually go up by $1 billion because of
HUD’s consolidations—not down.
The Wall Street Journal reported on
February 15, 1995, that HUD’s projected
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savings may have been oversold, and
that down at HUD they knew this before they submitted their plan to Congress.
For these reasons, I am introducing a
bill to abolish HUD. The bill will abolish HUD, effective January 1, 1998. The
bill will direct the Secretary to make
one housing block grant available to
States and localities; transform all
rental assistance into vouchers; and
make FHA a Government-controlled
corporation with income targeting and
risk sharing.
By Mr. CAMPBELL (for himself,
Mr. INOUYE, Mr. MCCAIN, and
Mr. DASCHLE):
S. 436. A bill to improve the economic
conditions and supply of housing in native American communities by creating the Native American Financial
Services Organization, and for other
purposes; to the Committee on Indian
Affairs.
NATIVE AMERICAN FINANCIAL SERVICES
ORGANIZATION ACT
Mr. CAMPBELL. Mr. President,
today I am introducing legislation entitled the Native American Financial
Services Organization Act. I am
pleased to add my distinguished colleagues, the chairman and vice-chairman of the Indian Affairs Committee,
Senators MCCAIN and INOUYE, and Senator DASCHLE, as cosponsors of this important legislation.
Mr. President, there is a continued
need for assistance to improve the
housing conditions that exist in many
Indian reservation communities, Alaska Native villages, and native Hawaiian communities. Statistics from the
Bureau of Indian Affairs estimated in
1993 that as many as 90,000 native
American families were in need of improved housing and nearly 50,000 families need new homes.
Further, a study completed by the
Commission on American Indian, Alaska Native, and Native Hawaiian Housing, found that housing shortages and
deplorable living conditions are at crisis proportions in many native American communities. In its study the
commission documented several obstacles that stand between Indian people
and affordable, adequate, and available
housing.
The Commission found there is currently little, if any, conventional lending available to native people seeking
to purchase a home.
In addition, many Indian housing authorities lack the expertise to manage,
coordinate, and maintain viable programs.
And importantly, tribal governments
have had to rely primarily on Federal
Government grant and loan programs
to finance housing and economic development projects.
As a result of the study, the Commission recommended the creation of an
entity that could serve as an intermediary financing institution with the
authority to package mortgage loans,
provide technical assistance, and serve
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February 16, 1995
as a clearinghouse of information for
alternative financing programs.
Mr. President, the Native American
Financial Services Organization Act is
the culmination of extensive deliberations between officials from the Department of Housing and Urban Development, the Department of Treasury,
the USDA, members of my staff, and
staff of the Senate Committee on Indian Affairs. The purpose of this legislation is to create a financial infrastructure for commercial financing opportunities by and for Indian people.
The primary mechanism that will
bridge Indian tribes with the commercial lending markets will be the creation of a Native American Financial
Services Organization.
The Native American Financial Services Organization would establish a
limited Government-chartered corporation. A Federal grant would capitalize
the federally chartered organization,
which would cease to exist upon a designated date. At that point the charter
would become a private corporation.
More specifically, the legislation is
designed to:
First, establish and organize native
American community lending institutions, that will be called Native American Financial Institutions. These
lending institutions could be any type
of financial institution, including community banks, credit unions and saving
banks, that together, could provide a
wide range of financial services;
Second, develop and provide financial
expertise and technical assistance to
the Native American Financial Institutions, including methods of underwriting, securing, and selling mortgage
and small commercial and consumer
loans; and
Third, develop and provide specialized technical assistance on how to
overcome barriers to primary mortgage
lending on native American lands, including issues related to trust lands,
discrimination, and inapplicability of
standard underwriting criteria.
Importantly, this legislation will
work in conjunction with the Community Development Financial Institutions [CDFI] fund established in the
Reigle Community Development Banking and Regulatory Improvement Act,
signed into law by the President last
year. Under a cooperative agreement
with the CDFI fund, this legislation
will provide technical assistance and
other services to Native American Financial Institutions.
This week, Secretary Cisneros testified before the Committee on Indian
Affairs. In his remarks, he stated that
this legislation will ‘‘neither conflict
nor duplicate the functions of CDFI or
any other Government-sponsored enterprise, but is intended to supplement
the efforts of existing organizations.’’
In short, the Native American Financial Services Organization would help
provide financial independence to the
native American community and would
begin to address the housing deficiencies by working to attract private
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capital into the Indian housing market.
Mr. President, I would like to conclude my remarks by making reference
to a letter I recently received from the
chairperson of the Ute Mountain Ute
Tribe, that I believe illustrates the
great necessity for this legislation. The
letter states that the shortage of housing in the community is so severe that
among the approximately 1,500 tribal
members, 400 are without a permanent
home and that a waiting list for new
housing approaches 300 people.
It is for this reason, that I believe
the Native American Financial Services Organization is much needed. Statistics such as this merit the need for
an innovative financing mechanism the
Native American Financial Services
Organization can provide.
Mr. President, in closing, I ask unanimous consent that the bill be printed
in the RECORD immediately following
the full text of my statement and that
the statements of Senators MCCAIN and
INOUYE, who are both original cosponsors, appear in the RECORD immediately following the bill.
I also ask unanimous consent to include letters from the Ute Mountain
Ute Tribe, the Native American Indian
Housing Council, and HUD’s Secretary
Henry Cisneros to be printed in the
RECORD.
There being no objection, the material was ordered to be printed in the
RECORD, as follows:
S. 436
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
SECTION 1. SHORT TITLE.
(a) SHORT TITLE.—This Act may be cited as
the ‘‘Native American Financial Services Organization Act of 1995’’.
(b) TABLE OF CONTENTS.—The table of contents for this Act is as follows:
Sec. 1. Short title.
TITLE I—STATEMENT OF POLICY;
DEFINITIONS
Sec. 101. Policy.
Sec. 102. Statement of purposes.
Sec. 103. Definitions.
TITLE II—NATIVE AMERICAN FINANCIAL
SERVICES ORGANIZATION
Sec. 201. Establishment of the organization.
Sec. 202. Authorized assistance and service
functions.
Sec. 203. Native American lending services
grant.
Sec. 204. Audits.
Sec. 205. Annual housing and economic development reports.
Sec. 206. Advisory Council.
TITLE III—CAPITALIZATION OF
ORGANIZATION
Sec. 301. Capitalization of the organization.
Sec. 302. Obligations and securities of the
organization.
Sec. 303. Limit on total assets and liabilities.
TITLE IV—REGULATION, EXAMINATION,
AND REPORTS
Sec. 401. Regulation, examination, and reports.
Sec. 402. Authority of the Secretary of Housing and Urban Development.
TITLE V—FORMATION OF NEW
CORPORATION
Sec. 501. Formation of new corporation.
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Sec. 502. Adoption and approval of merger
plan.
Sec. 503. Consummation of merger.
Sec. 504. Transition.
Sec. 505. Effect of merger.
TITLE VI—AUTHORIZATIONS OF
APPROPRIATIONS
Sec. 601. Authorization of appropriations for
Native American Financial Institutions.
Sec. 602. Authorization of appropriations for
organization.
TITLE I—STATEMENT OF POLICY;
DEFINITIONS
SEC. 101. POLICY.
(a) IN GENERAL.—Based upon the findings
and recommendations of the Commission on
American Indian, Alaska Native and Native
Hawaiian Housing established by the Department of Housing and Urban Development Reform Act of 1989, the Congress has determined that—
(1) housing shortages and deplorable living
conditions are at crisis proportions in Native
American communities throughout the
United States; and
(2) the lack of private capital to finance
housing and economic development for Native Americans and Native American communities seriously exacerbates these housing
shortages and poor living conditions.
(b) POLICY OF THE UNITED STATES TO ADDRESS NATIVE AMERICAN HOUSING SHORTAGE.—It is the policy of the United States to
improve the economic conditions and supply
of housing in Native American communities
throughout the United States by creating
the Native American Financial Services Organization to address the housing shortages
and poor living conditions described in subsection (a).
SEC. 102. STATEMENT OF PURPOSES.
The purposes of this Act are—
(1) to help serve the mortgage and other
lending needs of Native Americans by assisting in the establishment and organization of
Native American Financial Institutions, developing and providing financial expertise
and technical assistance to Native American
Financial Institutions, including assistance
concerning overcoming—
(A) barriers to lending with respect to Native American lands; and
(B) the past and present impact of discrimination;
(2) to promote access to mortgage credit in
Native American communities in the United
States by increasing the liquidity of financing for housing and improving the distribution of investment capital available for such
financing, primarily through Native American Financial Institutions;
(3) to promote the infusion of public capital into Native American communities
throughout the United States and to direct
sources of public and private capital into
housing and economic development for Native American individuals and families, primarily through Native American Financial
Institutions; and
(4) to provide ongoing assistance to the
secondary market for residential mortgages
and economic development loans for Native
American individuals and families, Native
American Financial Institutions, and other
borrowers by increasing the liquidity of such
investments and improving the distribution
of investment capital available for such financing.
SEC. 103. DEFINITIONS.
For purposes of this Act, the following
definitions shall apply:
(1) ALASKA NATIVE.—The term ‘‘Alaska Native’’ has the meaning given the term ‘‘Native’’ by section 3(b) of the Alaska Native
Claims Settlement Act.
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CONGRESSIONAL RECORD — SENATE
(2) BOARD.—The term ‘‘Board’’ means the
Board of Directors of the Organization established under section 201(a)(2).
(3) CHAIRPERSON.—The term ‘‘Chairperson’’
means the chairperson of the Board.
(4) COUNCIL.—The term ‘‘Council’’ means
the Advisory Council established under section 206.
(5) DESIGNATED MERGER DATE.—The term
‘‘designated merger date’’ means the specific
calendar date and time of day designated by
the Board under section 502(b).
(6) DIRECTOR.—The term ‘‘Director’’ means
the Director of the Office of Federal Housing
Enterprise Oversight of the Department of
Housing and Urban Development.
(7) FUND.—The term ‘‘Fund’’ means the
Community Development Financial Institutions Fund established under section 104 of
the Riegle Community Development and
Regulatory Improvement Act of 1994.
(8) INDIAN TRIBE.—The term ‘‘Indian tribe’’
means any Indian tribe, band, nation, or
other organized group or community, including any Alaska Native village or regional or
village corporation as defined in or established pursuant to the Alaska Native Claims
Settlement Act that is recognized as eligible
for the special programs and services provided by the Federal Government to Indians
because of their status as Indians.
(9) MERGER PLAN.—The term ‘‘merger
plan’’ means the plan of merger adopted by
the Board under section 502(a).
(10) NATIVE AMERICAN.—The term ‘‘Native
American’’ means any member of an Indian
tribe.
(11) NATIVE AMERICAN FINANCIAL INSTITUTION.—The term ‘‘Native American Financial
Institution’’ means a person (other than an
individual) that—
(A) qualifies as a community development
financial institution under section 103 of the
Riegle Community Development and Regulatory Improvement Act of 1994;
(B) satisfies the requirements established
by the Riegle Community Development and
Regulatory Improvement Act of 1994 and the
Fund for applicants for assistance from the
Fund;
(C) demonstrates a special interest and expertise in serving the primary economic development and mortgage lending needs of the
Native American community; and
(D) demonstrates that the person has the
endorsement of the Native American community that the person intends to serve.
(12) NATIVE AMERICAN LENDER.—The term
‘‘Native American lender’’ means a Native
American governing body, Native American
housing authority, or other Native American
Financial Institution that acts as a primary
mortgage or economic development lender in
a Native American community.
(13) NEW CORPORATION.—The term ‘‘new
corporation’’ means the corporation formed
in accordance with title V.
(14) NONQUALIFYING MORTGAGE LOAN.—The
term ‘‘nonqualifying mortgage loan’’ means
a mortgage loan that is determined by the
Organization, on the basis of the quality,
type, class, or principal amount of the loan,
to fail to meet the purchase standards of the
Federal National Mortgage Association or
the Federal Home Loan Mortgage Corporation in effect on September 30, 1994.
(15) ORGANIZATION.—The term ‘‘Organization’’ means the Native American Financial
Services Organization established under section 201.
(16) QUALIFYING MORTGAGE LOAN.—The
term ‘‘qualifying mortgage loan’’ means a
mortgage loan that is determined by the Organization, on the basis of the quality, type,
class or principal amount of the loan, to
meet the purchase standards of the Federal
National Mortgage Association or the Fed-
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eral Home Loan Mortgage Corporation in effect on September 30, 1994.
(17) TRANSITION PERIOD.—The term ‘‘transition period’’ means the period beginning on
the date on which the merger plan is approved by both the Secretary of Housing and
Urban Development and the Secretary of the
Treasury and ending on the designated merger date.
TITLE II—NATIVE AMERICAN FINANCIAL
SERVICES ORGANIZATION
SEC. 201. ESTABLISHMENT OF THE ORGANIZATION.
(a) CREATION; BOARD OF DIRECTORS; POLICIES; PRINCIPAL OFFICE; MEMBERSHIP; VACANCIES.—
(1) CREATION.—
(A) IN GENERAL.—There is established and
chartered a corporation to be known as the
Native American Financial Services Organization.
(B) PERIOD OF TIME.—The Organization
shall be a congressionally chartered body
corporate until the earlier of—
(i) the designated merger date; or
(ii) the date on which the charter is surrendered by the Organization.
(C) CHANGES TO CHARTER.—The right to revise, amend, or modify the Organization
charter is specifically and exclusively reserved to the Congress.
(2) BOARD OF DIRECTORS; PRINCIPAL OFFICE.—
(A) BOARD.—The powers of the Organization shall be vested in a Board of Directors.
The Board shall determine the policies that
govern the operations and management of
the Organization.
(B) PRINCIPAL OFFICE; RESIDENCY.—The
principal office of the Organization shall be
in the District of Columbia. For purposes of
venue, the Organization shall be considered
to be a resident of the District of Columbia.
(3) MEMBERSHIP.—
(A) IN GENERAL.—
(i) NINE MEMBERS.—Except as provided in
clause (ii), the Board shall consist of 9 members, 3 of whom shall be appointed by the
President and 6 of whom shall be elected by
the class A stockholders, in accordance with
the bylaws of the Organization.
(ii) THIRTEEN MEMBERS.—If class B stock is
issued under section 301(b), the Board shall
consist of 13 members, 9 of whom shall be appointed and elected in accordance with
clause (i) and 4 of whom shall be elected by
the class B stockholders, in accordance with
the bylaws of the Organization.
(B) TERMS.—Each member of the Board
shall be elected or appointed for a 4-year
term, except that the members of the initial
Board shall be elected or appointed for the
following terms:
(i) Of the 3 members appointed by the
President—
(I) 1 member shall be appointed for a 2-year
term;
(II) 1 member shall be appointed for a 3year term; and
(III) 1 member shall be appointed for a 4year term;
as designated by the President at the time of
the appointments.
(ii) Of the 6 members elected by the class
A stockholders—
(I) 2 members shall each be elected for a 2year term;
(II) 2 members shall each be elected for a 3year term; and
(III) 2 members shall each be elected for a
4-year term.
(iii) If class B stock is issued and 4 additional members are elected by the class B
stockholders—
(I) 1 member shall be elected for a 2-year
term;
(II) 1 member shall be elected for a 3-year
term; and
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February 16, 1995
(III) 2 members shall each be elected for a
4-year term.
(C) QUALIFICATIONS.—Each member appointed by the President shall have expertise
in 1 or more of the following areas:
(i) Native American housing and economic
development programs.
(ii) Financing in Native American communities.
(iii) Native American governing bodies and
court systems.
(iv) Restricted and trust land issues, economic development, and small consumer
loans.
(D) CHAIRPERSON.—The Board shall select a
Chairperson from among its members, except
that the initial Chairperson shall be selected
from among the members of the initial
Board who have been appointed or elected to
serve for a 4-year term.
(E) VACANCIES.—
(i) APPOINTED MEMBERS.—Any vacancy in
the appointed membership of the Board shall
be filled by appointment by the President,
but only for the unexpired portion of the
term.
(ii) ELECTED MEMBERS.—Any vacancy in
the elected membership of the Board shall be
filled by appointment by the Board, but only
for the unexpired portion of the term.
(F) TRANSITIONS.—Any member of the
Board may continue to serve after the expiration of the term for which the member was
appointed or elected until a qualified successor has been appointed or elected.
(b) POWERS OF THE ORGANIZATION.—The Organization may—
(1) adopt, alter, and use a corporate seal;
(2) adopt bylaws, consistent with this Act,
regulating, among other things, the manner
in which—
(A) the business of the Organization shall
be conducted;
(B) the elected members of the Board shall
be elected;
(C) the stock of the Organization shall be
issued, held, and disposed of;
(D) the property of the Organization shall
be disposed of; and
(E) the powers and privileges granted to
the Organization by this Act and other law
shall be exercised;
(3) make and perform contracts, agreements, and commitments, including entering
into a cooperative agreement with the Fund;
(4) prescribe and impose fees and charges
for services provided by the Organization;
(5)(A) settle, adjust, and compromise; and
(B) with or without consideration or benefit to the Organization, release or waive in
whole or in part, in advance or otherwise,
any claim, demand, or right of, by, or
against the Organization;
if such settlement, adjustment, compromise,
release, or waiver is not adverse to the interests of the United States;
(6) sue and be sued, complain and defend, in
any tribal, Federal, State, or other court;
(7) acquire, take, hold, and own, and to
deal with and dispose of any property;
(8) determine the necessary expenditures of
the Organization and the manner in which
such expenditures shall be incurred, allowed,
and paid, and appoint, employ, and fix and
provide for the compensation and benefits of
officers, employees, attorneys, and agents as
the Board determines reasonable and not inconsistent with this section;
(9) incorporate a new corporation under
State, District of Columbia, or tribal law, as
provided in section 501;
(10) adopt a plan of merger, as provided in
section 502;
(11) consummate the merger of the Organization into the new corporation, as provided
in section 503; and
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(12) have succession until the designated
merger date or any earlier date on which the
Organization surrenders its Federal charter.
(c) INVESTMENT OF FUNDS; DESIGNATION AS
DEPOSITARY, CUSTODIAN, OR AGENT.—
(1) INVESTMENT OF FUNDS.—Funds of the
Organization that are not required to meet
current operating expenses shall be invested
in obligations of, or obligations guaranteed
by, the United States or any agency thereof,
or in obligations, participations, or other instruments that are lawful investments for fiduciary, trust, or public funds.
(2) DESIGNATION AS DEPOSITARY, CUSTODIAN,
OR AGENT.—Any Federal Reserve bank or
Federal home loan bank, or any bank as to
which at the time of its designation by the
Organization there is outstanding a designation by the Secretary of the Treasury as a
general or other depositary of public money,
may—
(A) be designated by the Organization as a
depositary or custodian or as a fiscal or
other agent of the Organization; and
(B) act as such depositary, custodian, or
agent.
(d) ACTIONS BY AND AGAINST THE ORGANIZATION.—Notwithstanding section 1349 of title
28, United States Code, or any other provision of law—
(1) the Organization shall be deemed to be
an agency covered under sections 1345 and
1442 of title 28, United States Code;
(2) any civil action to which the Organization is a party shall be deemed to arise under
the laws of the United States, and the appropriate district court of the United States
shall have original jurisdiction over any
such action, without regard to amount or
value; and
(3) any civil or other action, case, or controversy in a tribal court, court of a State,
or in any court other than a district court of
the United States, to which the Organization
is a party, may at any time before the commencement of the trial be removed by the
Organization, without the giving of any bond
or security and by following any procedure
for removal of causes in effect at the time of
the removal—
(A) to the district court of the United
States for the district and division in which
the action is pending;
(B) or, if there is no such district court, to
the district court of the United States for
the District of Columbia.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
SEC. 202. AUTHORIZED ASSISTANCE AND SERVICE FUNCTIONS.
(a) TECHNICAL ASSISTANCE AND SERVICES.—
The Organization may—
(1) assist the Fund in the establishment
and organization of Native American Financial Institutions;
(2) assist the Fund in developing and providing financial expertise and technical assistance to Native American Financial Institutions, including methods of underwriting,
securing, servicing, packaging, and selling
mortgage and small commercial and consumer loans;
(3) develop and provide specialized technical assistance on overcoming barriers to
primary mortgage lending on Native American lands, including issues related to trust
lands, discrimination, high operating costs,
and inapplicability of standard underwriting
criteria;
(4) assist the Fund in providing mortgage
underwriting assistance (but not in originating loans) under contract to Native
American Financial Institutions;
(5) work with the Federal National Mortgage Association, the Federal Home Loan
Mortgage Corporation, and other participants in the secondary market for home
mortgage instruments in identifying and
eliminating barriers to the purchase of Native American mortgage loans originated by
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Native American Financial Institutions and
other lenders in Native American communities;
(6) obtain capital investments in the Organization from Indian tribes, Native American
organizations, and other entities;
(7) assist the Fund in the operation of the
Organization as an information clearinghouse by providing information on financial
practices to Native American Financial Institutions; and
(8) assist the Fund in monitoring and reporting to the Congress on the performance
of Native American Financial Institutions in
meeting the economic development and
housing credit needs of Native Americans.
(b) PURCHASES AND SALES OF MORTGAGES
AND MORTGAGE-BACKED SECURITIES.—
(1) IN GENERAL.—
(A) AUTHORIZATION.—If a determination is
made in accordance with subparagraph (B),
the Organization may, upon receipt of a
written authorization from the Secretary of
Housing and Urban Development under this
paragraph, carry out any activity described
in paragraph (3).
(B) DETERMINATION.—For purposes of subparagraph (A), a determination made under
this section is a determination by the Secretary of Housing and Urban Development
that the combined purchases by the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation of
residential Native American nonqualifying
mortgage loans originated by Native American Financial Institutions and other lenders
on housing consisting of between 1 and 4
dwelling units—
(i) in the second year following the establishment of the Organization, total less than
$20,000,000 (unless the Organization can demonstrate to the Secretary of Housing and
Urban Development that such purchase goal
could not be met); or
(ii) in any succeeding year, total less than
that amount that the Secretary of Housing
and Urban Development has determined and
published as a reasonable Native American
mortgage purchase goal (in accordance with
paragraph (2)) for such combined purchases
by the Federal National Mortgage Association and the Federal Home Loan Mortgage
Corporation in such year.
(2) FACTORS CONSIDERED.—In determining
the purchase goal described in paragraph
(1)(B)(ii), the Secretary shall take into account the study by the Fund of Native American lending and investment conducted pursuant to section 117(c) of the Riegle Community Development and Regulatory Improvement Act of 1994.
(3) POWERS OF THE ORGANIZATION.—Upon receiving a written authorization from the
Secretary of Housing and Urban Development under paragraph (1), the Organization
may, at any time—
(A) with respect to residential mortgage
loans originated by Native American Financial Institutions that are qualifying mortgage loans—
(i) purchase such qualifying mortgage
loans;
(ii) hold such qualifying mortgage loans for
a period of not to exceed 12 months; and
(iii) resell such qualifying mortgage loans
to the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or other secondary market participants, as provided in section 303(b);
(B) with respect to residential mortgage
loans originated by the Native American Financial Institutions that are nonqualifying
mortgage loans—
(i) purchase such nonqualifying mortgage
loans from the Native American Financial
Institutions for such terms as the Organization determines to be appropriate, including
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the life of the mortgage loan, if, with respect
to any such loan—
(I) the Organization has reasonable assurance that the loan will be repaid within the
time agreed;
(II) the Native American Financial Institution selling the loan retains a participation
of not less than 10 percent in the mortgage;
(III) the Native American Financial Institution selling the loan agrees for such period
of time and under such circumstances as the
Organization may require, to repurchase or
replace the mortgage upon demand of the Organization in the event that the loan is in
default; or
(IV) that portion of the outstanding principal balance of the loan which exceeds 80
percent of the value of the property securing
such loan is guaranteed or insured by a
qualified insurer, as determined by the Organization; and
(ii) issue mortgage-backed securities or
other forms of participations based on pools
of such nonqualifying mortgage loans, as
provided in section 303(c); and
(C) purchase, service, sell, lend on the security of, and otherwise deal in—
(i) residential mortgages that are secured
by a subordinate lien against a property consisting of 1 to 4 dwelling units that is the
principal residence of the mortgagor; and
(ii) residential mortgages that are secured
by a subordinate lien against a property consisting of five or more dwelling units.
(4) RIGHTS AND REMEDIES.—
(A) IN GENERAL.—The rights and remedies
of the Organization, including any rights and
remedies of the Organization on, under, or
with respect to any mortgage or any obligation secured thereby, shall be immune from
impairment, limitation, or restriction by or
under any State, District of Columbia, or
tribal—
(i) law that becomes effective after the acquisition by the Organization of the subject
or property on, under, or with respect to
which such right or remedy arises or exists
or would so arise or exist in the absence of
such law; or
(ii) administrative or other action that becomes effective after such acquisition.
(B) QUALIFICATION.—The Organization may
conduct its business without regard to any
qualification or similar requirement in the
District of Columbia, or any State or tribal
jurisdiction.
SEC. 203. NATIVE AMERICAN LENDING SERVICES
GRANT.
(a) INITIAL GRANT PAYMENT.—If the Fund
and the Organization enter into a cooperative agreement for the Organization to provide technical assistance and other services
to Native American Financial Institutions,
such agreement shall, to the extent that
funds are available as provided in section 602,
provide that the initial grant payment, anticipated to be $5,000,000, shall be made when
all members of the initial Board have been
appointed under section 201.
(b) PAYMENT OF GRANT BALANCE.—The payment of the grant balance of $5,000,000 shall
be made to the Organization not later than 1
year after the date on which the initial grant
payment is made under subsection (a).
SEC. 204. AUDITS.
(a) INDEPENDENT AUDITS.—
(1) IN GENERAL.—The Organization shall
have an annual independent audit made of
its financial statements by an independent
public accountant in accordance with generally accepted auditing standards.
(2) DETERMINATIONS.—In conducting an
audit under this subsection, the independent
public accountant shall determine and report
on whether the financial statements of the
Organization—
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(A) are presented fairly in accordance with
generally accepted accounting principles;
and
(B) to the extent determined necessary by
the Director, comply with any disclosure requirements imposed under section 401.
(b) GAO AUDITS.—
(1) IN GENERAL.—Beginning after the first 2
years of the operation of the Organization,
unless an earlier date is required by any
other statute, grant, or agreement, the programs, activities, receipts, expenditures, and
financial transactions of the Organization
shall be subject to audit by the Comptroller
General of the United States under such
rules and regulations as may be prescribed
by the Comptroller General.
(2) ACCESS.—To carry out this subsection,
the representatives of the General Accounting Office shall—
(A) have access to all books, accounts, financial records, reports, files, and all other
papers, things, or property belonging to or in
use by the Organization and necessary to facilitate the audit;
(B) be afforded full facilities for verifying
transactions with the balances or securities
held by depositaries, fiscal agents, and
custodians; and
(C) have access, upon request to the Organization or any auditor for an audit of the
Organization under subsection (a), to any
books, accounts, financial records, reports,
files, or other papers, or property belonging
to or in use by the Organization and used in
any such audit and to any papers, records,
files, and reports of the auditor used in such
an audit.
(3) REPORTS.—The Comptroller General of
the United States shall submit to the Congress a report on each audit conducted under
this subsection.
(4) REIMBURSEMENT.—The Organization
shall reimburse the General Accounting Office for the full cost of any audit conducted
under this subsection.
SEC. 205. ANNUAL HOUSING AND ECONOMIC DEVELOPMENT REPORTS.
Not later than 1 year after the date of enactment of this Act, and annually thereafter,
the Organization shall collect, maintain, and
provide to the Secretary of Housing and
Urban Development, in a form determined by
the Secretary, such data as the Secretary determines to be appropriate with respect to
the Organization’s—
(1) mortgages on properties consisting of
between 1 and 4 dwelling units;
(2) mortgages on properties consisting of
five or more dwelling units; and
(3) activities relating to economic development.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
SEC. 206. ADVISORY COUNCIL.
(a) ESTABLISHMENT.—The Board shall es-
tablish an Advisory Council in accordance
with this section.
(b) MEMBERSHIP.—
(1) IN GENERAL.—The Council shall consist
of 13 members, who shall be appointed by the
Board, including 1 representative from each
of the 12 districts established by the Bureau
of Indian Affairs and 1 representative from
the State of Hawaii.
(2) QUALIFICATIONS.—Not less than 6 of the
members of the Council shall have financial
expertise, and not less than 9 members of the
Council shall be Native Americans.
(3) TERMS.—Each member of the Council
shall be appointed for a 4-year term, except
that the initial Council shall be appointed,
as designated by the Board at the time of appointment, as follows:
(A) Four members shall each be appointed
for a 2-year term.
(B) Four members shall each be appointed
for a 3-year term.
(C) Five members shall each be appointed
for a 4-year term.
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(c) DUTIES.—The Council shall advise the
Board on all policy matters of the Organization. Through the regional representation of
its members, the Council shall provide information to the Board from all sectors of the
Native American community.
TITLE III—CAPITALIZATION OF
ORGANIZATION
SEC. 301. CAPITALIZATION OF THE ORGANIZATION.
(a) CLASS A STOCK.—The class A stock of
the Organization shall—
(1) be issued only to Indian tribes;
(2) be allocated on the basis of Indian tribe
population, as determined by the Secretary
of Housing and Urban Development in consultation with the Secretary of the Interior;
(3) have such par value and other characteristics as the Organization shall provide;
(4) be vested with voting rights, each share
being entitled to 1 vote;
(5) be nontransferable; and
(6) be surrendered to the Organization if
the holder ceases to be recognized as an Indian tribe under this Act.
(b) CLASS B STOCK.—
(1) IN GENERAL.—The Organization may
issue class B stock evidencing capital contributions in the manner and amount, and
subject to any limitations on concentration
of ownership, as may be established by the
Organization.
(2) CHARACTERISTICS.—Any class B stock
issued under paragraph (1) shall—
(A) be available for purchase by investors;
(B) be entitled to such dividends as may be
declared by the Board in accordance with
subsection (c);
(C) have such par value and other characteristics as the Organization shall provide;
(D) be vested with voting rights, each
share being entitled to 1 vote; and
(E) be transferable only on the books of the
Organization.
(c) CHARGES AND FEES; EARNINGS.—
(1) CHARGES AND FEES.—The Organization
may impose charges or fees, which may be
regarded as elements of pricing, with the objectives that—
(A) all costs and expenses of the operations
of the Organization should be within the income of the Organization derived from such
operations; and
(B) such operations would be fully self-supporting.
(2) EARNINGS.—All earnings from the operations of the Organization shall be annually
transferred to the general surplus account of
the Organization. At any time, funds in the
general surplus account may, in the discretion of the Board, be transferred to the reserves of the Organization.
(d) CAPITAL DISTRIBUTIONS.—
(1) IN GENERAL.—Except as provided in
paragraph (2), the Organization may make
such capital distributions (as such term is
defined in section 1303 of the Federal Housing Financial Safety and Soundness Act of
1992) as may be declared by the Board. All
capital distributions shall be charged against
the general surplus account of the Organization.
(2) RESTRICTION.—The Organization may
not make any capital distribution that
would decrease the total capital (as such
term is defined in section 1303 of the Federal
Housing Financial Safety and Soundness Act
of 1992) of the Organization to an amount
less than the capital level for the Organization established under section 401, without
prior written approval of the distribution by
the Director.
SEC. 302. OBLIGATIONS AND SECURITIES OF THE
ORGANIZATION.
(a) IN GENERAL.—
Organization
(1)
AUTHORIZATION.—The
may—
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February 16, 1995
(A) borrow funds to give security or pay interest or other return; and
(B) issue upon the approval of the Secretary of the Treasury, notes, debentures,
bonds, or other obligations having maturities and bearing such rate or rates of interest as may be determined by the Organization with the approval of the Secretary of
the Treasury;
if such borrowing and issuing of obligations
qualifies as a transaction by an issuer not involving any public offering under section 4(2)
of the Securities Act of 1933.
(2) RESTRICTIONS.—
(A) IN GENERAL.—Obligations issued by the
Organization under this section shall not be
obligations of the United States or any agency of the United States.
(B) NO GUARANTEES.—Payment of the principal of or interest on such obligations shall
not be guaranteed by the United States or
any agency of the United States. The obligations issued by the Organization under this
section shall so plainly state.
(b) RESALES OF QUALIFYING MORTGAGE
LOANS.—The sale or other disposition by the
Organization of qualifying mortgage loans
under section 202(b) shall be on such terms
and conditions relating to resale, repurchase,
substitution, replacement or otherwise as
the Organization may prescribe, except that
the Organization may not guarantee or insure the payment of any mortgage loan sold
under section 202(b).
(c) SECURITIES BACKED BY NONQUALIFYING
MORTGAGE LOANS.—Securities in the form of
debt obligations or trust certificates of beneficial interest, or both, and based upon nonqualifying mortgage loans held and set aside
by the Organization under section 202(b)—
(1) may be issued upon the approval of the
Secretary of the Treasury; and
(2) shall have such maturities, and shall
bear such rate or rates of interest, as may be
determined by the Organization with the approval of the Secretary of the Treasury;
if such issuance qualifies as a transaction by
an issuer not involving any public offering
under section 4(2) of the Securities Act of
1933.
(d) PROHIBITIONS AND RESTRICTIONS; CREATION OF LIENS AND CHARGES.—
(1) IN GENERAL.—The Organization may, by
regulation or by writing executed by the Organization—
(A) establish prohibitions or restrictions
on the creation of indebtedness or obligations of the Organization or of liens or
charges upon property of the Organization,
including after-acquired property; and
(B) create liens and charges, which may be
floating liens or charges, upon all or any
part or parts of the property of the Organization, including after-acquired property.
(2) EFFECT.—Any prohibition, restriction,
lien, or charge established under paragraph
(2) shall—
(A) have such effect, including such rank
and priority, as may be provided by regulations of the Organization or by any writing
executed by the Organization; and
(B) create a cause of action which may be
enforced by action in the United States district court for the District of Columbia or in
the United States district court for any judicial district in which any of the property affected is located.
(3) JURISDICTION; SERVICE OF PROCESS.—
Process in any action described in paragraph
(2) may run to or be served in any judicial
district or in any place subject to the jurisdiction of the United States.
(e) VALIDITY OF PROVISIONS; VALIDITY OF
PROHIBITIONS,
LIENS,
OR
RESTRICTIONS,
CHARGES.—This section and any restriction,
prohibition, lien, or charge referred to in
subsection (b) shall be fully effective notwithstanding any other law, including any
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law of or relating to sovereign immunity or
priority.
SEC. 303. LIMIT ON TOTAL ASSETS AND LIABILITIES.
The aggregate of—
(1) the total equity of the Organization, including all capital from any issuance of class
B stock; and
(2) the total liabilities of the Organization,
including all obligations issued or incurred
by the Organization;
shall not at any time exceed $20,000,000.
TITLE IV—REGULATION, EXAMINATION,
AND REPORTS
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
SEC. 401. REGULATION, EXAMINATION, AND REPORTS.
(a) EFFECTIVE DATE OF SECTION.—This sec-
tion shall take effect on the date on which
the Secretary of Housing and Urban Development makes a determination in accordance
with section 202(b) that the Organization
may purchase and sell mortgages and mortgage-backed securities.
(b) IN GENERAL.—The Organization shall be
subject to the regulatory authority of the
Office of Federal Housing Enterprise Oversight of the Department of Housing and
Urban Development with respect to all matters relating to the financial safety and
soundness of the Organization.
(c) DUTY OF DIRECTOR.—The Director shall
ensure that the Organization is adequately
capitalized and operating safely as a congressionally chartered body corporate.
(d) POWERS OF DIRECTOR.—The Director
shall have all of the exclusive powers granted the Director under subsections (b), (d),
and (e) of section 1313 of the Housing and
Community Development Act of 1992, as determined by the Director to be necessary or
appropriate to regulate the operation of the
Organization.
(e) REPORTS TO DIRECTOR.—
(1) ANNUAL REPORT.—Not later than 1 year
after the date of enactment of this Act, and
annually thereafter, the Organization shall
submit to the Director a report describing
the financial condition and operations of the
Organization. The report shall be in such
form, contain such information, and be submitted on such date as the Director shall require.
(2) OTHER REPORTS.—In addition to the reports submitted under paragraph (1), the Organization shall submit to the Director any
report required by the Director pursuant to
section 1314 of the Housing and Community
Development Act of 1992.
(3) CONTENTS OF REPORT.—Each report submitted under this subsection shall contain a
declaration by the president, vice president,
treasurer, or any other officer of the Organization designated by the Board to make such
declaration, that the report is true and correct to the best of such officer’s knowledge
and belief.
(f) FUNDING OFHEO OVERSIGHT.—
(1) ASSESSMENT AND COLLECTION.—The Director shall assess and collect from the Organization such amounts as are necessary to
reimburse the Office of Federal Housing Enterprise Oversight for the reasonable costs
and expenses of the activities undertaken by
the Office of Federal Housing Enterprise
Oversight to carry out the duties of the Director under paragraph (2), including the
costs of examinations and overhead expenses.
(2) REQUIREMENTS.—Annual assessments
imposed by the Director shall be—
(A) imposed prior to October 1 of each
year;
(B) collected at such time or times during
each assessment year as determined necessary or appropriate by the Director;
(C) deposited into the Federal Housing Enterprises Oversight Fund established by sec-
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tion 1316(f) of the Housing and Community
Development Act of 1992; and
(D) available, to the extent provided in appropriations Acts, for carrying out the responsibilities of the Director under this section.
SEC. 402. AUTHORITY OF THE SECRETARY OF
HOUSING AND URBAN DEVELOPMENT.
Except for the authority of the Director
under in section 401, the Secretary of Housing and Urban Development shall—
(1) have general regulatory power over the
Organization; and
(2) issue such rules and regulations applicable to the Organization as determined necessary or appropriate by the Secretary to ensure that the purposes specified in section
102 are accomplished.
TITLE V—FORMATION OF NEW
CORPORATION
SEC. 501. FORMATION OF NEW CORPORATION.
(a) IN GENERAL.—In order to continue the
accomplishment of the purposes specified in
section 102 beyond the terms of the charter
of the Organization, the Board shall, not
later than 10 years after the date of enactment of this Act, cause the formation of a
new corporation under the laws of any tribe,
any State, or the District of Columbia.
(b) POWERS OF NEW CORPORATION NOT PRESCRIBED.—Except as provided in this section,
the new corporation may have any corporate
powers and attributes permitted under the
laws of the jurisdiction of its incorporation
which the Board shall determine, in its business judgment, to be appropriate.
(c) USE OF NAFSO NAME PROHIBITED.—The
new corporation may not use in any manner
the name ‘‘Native American Financial Services Organization’’ or ‘‘NAFSO’’ or any variation of thereof.
SEC. 502. ADOPTION AND APPROVAL OF MERGER
PLAN.
(a) IN GENERAL.—Not later than 10 years
after the date of enactment of this Act, the
Board shall prepare, adopt, and submit to
the Secretary of Housing and Urban Development and the Secretary of the Treasury for
approval, a plan for merging the Organization into the new corporation.
(b) DESIGNATED MERGER DATE.—
(1) IN GENERAL.—The Board shall establish
the designated merger date in the merger
plan as a specific calendar date on which and
time of day at which the merger of the Organization into the new corporation shall take
effect.
(2) CHANGES.—The Board may change the
designated merger date in the merger plan
by adopting an amended plan of merger.
(3) RESTRICTION.—Except as provided in
paragraph (4), the designated merger date in
the merger plan or any amended merger plan
shall not be later than 11 years after the date
of enactment of this Act.
(4) EXCEPTION.—Subject to the restriction
contained in paragraph (5), the Board may
adopt an amended plan of merger that designates a date later than 11 years after the
date of enactment of this Act if the Board
submits to both the Secretary of Housing
and Urban Development and the Secretary of
the Treasury a report—
(A) stating that an orderly merger of the
Organization into the new corporation is not
feasible before the latest date designated by
the Board;
(B) explaining why an orderly merger of
the Organization into the new corporation is
not feasible before the latest date designated
by the Board;
(C) describing the steps that have been
taken to consummate an orderly merger of
the Organization into the new corporation
not later than 11 years after the date of enactment of this Act; and
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(D) describing the steps that will be taken
to consummate an orderly and timely merger of the Organization into the new corporation.
(5) LIMITATION.—The date designated by
the Board in an amended merger plan shall
not be later than 12 years after the date of
enactment of this Act.
(6) CONSUMMATION OF MERGER.—The consummation of an orderly and timely merger
of the Organization into the new corporation
shall not occur later than 13 years after the
date of enactment of this Act.
(c) GOVERNMENTAL APPROVALS OF MERGER
PLAN REQUIRED.—The merger plan or any
amended merger plan shall take effect on the
date on which the plan is approved by both
the Secretary of Housing and Urban Development and the Secretary of the Treasury.
(d) REVISION OF DISAPPROVED MERGER PLAN
REQUIRED.—If either the Secretary of Housing and Urban Development or the Secretary
of the Treasury, or both, disapprove the
merger plan or any amended merger plan—
(1) each Secretary that disapproves the
plan shall notify the Organization of such
disapproval and indicate the reasons for the
disapproval; and
(2) not later than 30 days after the date of
notification of disapproval under paragraph
(1), the Organization shall submit to both
the Secretary of Housing and Urban Development and the Secretary of the Treasury for
approval an amended merger plan responsive
to the reasons for the disapproval indicated
in such notification.
(e) NO STOCKHOLDER APPROVAL OF MERGER
PLAN REQUIRED.—The approval or consent of
the stockholders of the Organization shall
not be required to accomplish the merger of
the Organization into the new corporation.
SEC. 503. CONSUMMATION OF MERGER.
The Board shall ensure that the merger of
the Organization into the new corporation is
accomplished in accordance with—
(1) the merger plan approved by the Secretary of Housing and Urban Development
and the Secretary of the Treasury; and
(2) all applicable laws of the jurisdiction in
which the new corporation is incorporated.
SEC. 504. TRANSITION.
(a) CONTINUATION OF RIGHTS, DUTIES, AND
RESTRICTIONS.—Except as provided in this
section, the Organization shall, during the
transition period, continue to have all of the
rights, privileges, duties, and obligations,
and shall be subject to all of the limitations
and restrictions, set forth in this Act.
(b) COLLATERALIZATION OF OUTSTANDING
OBLIGATIONS.—
(1) IN GENERAL.—The Organization shall
provide for all debt obligations of the Organization that are outstanding on the date before the designated merger date to be secured as to principal and interest by obligations of the United States held in trust for
the holders of such obligations.
(2) REQUIREMENTS, TERMS, AND CONDITIONS.—The collateralization and the trust
referred to in the preceding sentence shall be
subject to such requirements, terms, and
conditions as the Secretary of the Treasury
determines to be necessary or appropriate.
(c) ISSUANCE OF NEW OBLIGATIONS DURING
TRANSITION PERIOD.—As needed to carry out
the purposes for which it was formed, the Organization may, during the transition period, continue to issue obligations under section 303. Any new obligation issued during
the transition period shall mature before the
designated merger date.
SEC. 505. EFFECT OF MERGER.
(a) TRANSFER OF ASSETS AND LIABILITIES.—
(1) TRANSFER OF ASSETS.—On the des-
ignated merger date, all property, real, personal, and mixed, all debts due on any account, and any other interest of or belonging
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to or due to the Organization shall be transferred to and vested in the new corporation
without further act or deed, and title to any
property, whether real, personal, or mixed,
shall not in any way be impaired by reason
of the merger.
(2) TRANSFER OF LIABILITIES.—On the designated merger date, the new corporation
shall be responsible and liable for all obligations and liabilities of the Organization and
neither the rights of creditors nor any liens
upon the property of the Organization shall
be impaired by the merger.
(b) TERMINATION OF THE ORGANIZATION AND
ITS FEDERAL CHARTER.—On the designated
merger date—
(1) the surviving corporation of the merger
shall be the new corporation;
(2) the Federal charter of the Organization
shall terminate; and
(3) the separate existence of the Organization shall terminate.
(c) REFERENCES TO THE ORGANIZATION IN
LAW.—After the designated merger date, any
reference to the Organization in any law or
regulation shall be deemed to refer to the
new corporation.
(d) SAVINGS CLAUSE.—
(1) PROCEEDINGS.—The merger of the Organization into the new corporation shall not
abate any proceeding commenced by or
against the Organization before the designated merger date, except that the new
corporation shall be substituted for the Organization as a party to any such proceeding
as of the designated merger date.
(2) CONTRACTS AND AGREEMENTS.—All contracts and agreements to which the Organization is a party and which are in effect on
the day before the designated merger date
shall continue in effect according to their
terms, except that the new corporation shall
be substituted for the Organization as a
party to those contracts and agreements as
of the designated merger date.
TITLE VI—AUTHORIZATIONS OF
APPROPRIATIONS
SEC. 601. AUTHORIZATION OF APPROPRIATIONS
FOR NATIVE AMERICAN FINANCIAL
INSTITUTIONS.
(a) IN GENERAL.—There are authorized to
be appropriated to the Fund, without fiscal
year limitation, $20,000,000 to provide financial assistance to Native American Financial
Institutions.
(b) NOT MATCHING FUNDS.—To the extent
that a Native American Financial Institution receives a portion of an appropriation
made under subsection (a), such funds shall
not be considered to be matching funds required of the Native American Financial Institution under section 108(e) of the Riegle
Community Development and Regulatory
Improvement Act of 1994.
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SEC. 602. AUTHORIZATION OF APPROPRIATIONS
FOR ORGANIZATION.
The Secretary of Housing and Urban Development may, to the extent provided in advance in an appropriations Act, provide not
more than $10,000,000 to the Fund for the
funding of a cooperative agreement to be entered into by the Fund and the Organization
for technical assistance and other services to
be provided by the Organization to Native
American Financial Institutions.
UTE MOUNTAIN UTE TRIBE
TOWAOC, COLORADO,
January 26, 1995.
Senator BEN NIGHTHORSE CAMPBELL,
Russell Office Building, Washington, DC.
DEAR SENATOR CAMPBELL: Thank you for
your letter of January 25, 1995 requesting my
comments on the draft Native American Financial Services Organization Act (NAFSO)
attached thereto. Based on this Tribe’s experience and on the House Committee on Bank-
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ing, Finance and Urban Affairs report referenced in the draft, this type of assistance
to Tribes is desperately needed. Your efforts
to remedy the current housing situation for
Native Americans is greatly appreciated.
After a brief review of the draft NAFSO, I
have some initial observations. First, with
respect to governance of NAFSO, it will be
important to ensure that financial services
experts are either on the Board of Directors
or in a position to directly advise them. The
issue here is that such experts will be required for a successful NAFSO and to assist
in the establishment of NAFIs. Experts are
necessary for the fiscal management of
NAFSO itself.
Second, along these same lines, there probably should be some federal oversight, but
not necessarily regulatory control, consistent with the United States’s trust responsibility, to make sure NAFSO and
NAFIs are properly established and operated.
This oversight would be in addition to that
required by the draft if NAFSO is authorized
to purchase and sell Native American mortgages. Please advise if NAFIs would be subject to banking and lending laws as other
such institutions are. Third, a more detailed
explanation of what the ‘‘tribal contribution’’ will amount to in NAFSO’s future
would be beneficial. Many tribes with limited financial resources will have concerns
about this facet of the legislation and some
indication of what such contributions will
entail may help to alleviate apprehension
about them. Nevertheless, some tribes may
oppose any tribal contributions at all. One
would hope that the NAFSO could operate on
its own resources if it is indeed successful.
To sum up, my primary concern involves
ensuring that NAFSO will be successful, particularly considering it will be up to the
Tribes in large part to do so. Some expert or
federal representation on the Board of Directors would be helpful in this regard.
Coupled with this consideration is the importance of oversight for operations of
NAFIs. This seems appropriate since the
draft implies these institutions will be very
similar to banks, institutions which are already highly regulated.
As you may be aware, the Department of
Veteran’s Affairs entered into a Cooperative
Agreement with the Tribe on November 15,
1993 to assist us in obtaining home loans for
veteran tribal members. To date, no loans
have been processed under this Cooperative
Agreement. At the same time, I have some
concern about HUD’s involvement in this
program based on their inability to resolve
this problem on its own. Nevertheless, surely
HUD has learned much from its mistakes
and should add to the process. Whether that
agency should be a majority voice in the decision-making or policy formulating process
is something that should be examined.
The shortage of suitable housing on this
Reservation is severe. We currently have
close to 400 individuals without a permanent
home and near 300 which have placed themselves on the waiting list for housing. Out of
the 1500 or so tribal members which reside
here, this means over 25% of our people are
without a permanent home. We also have information which indicates that upwards of
200 families are forced to share their homes
with other families to provide the most basic
of human needs, shelter. As you can understand, this desperate situation seriously affects tribal member’s sense of self-worth and
self-esteem.
Although this Tribe operates a Casino as
well as other successful enterprises, we must
utilize those funds for operation of the Tribal budget and economic development to keep
our people working and reduce unemployment. It is for this reason that your draft
NAFSO/NAFI legislation is urgently needed.
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February 16, 1995
Again, I cannot stress enough how much
your efforts in this regard are appreciated.
The Tribe acknowledges this efforts and will
endeavor to help where we can.
Thank you very much for the opportunity
to comment. Please contact my office if you
require anything further.
Sincerely,
JUDY KNIGHT FRANK,
Chairperson.
NATIONAL AMERICAN INDIAN
HOUSING COUNCIL,
Washington, DC, January 24, 1995.
Hon. BEN NIGHTHORSE CAMPBELL,
U.S. Senate, Washington, DC.
DEAR SENATOR: On behalf of the NAIHC’s
Board of Directors and membership, I am
writing to thank you for supporting legislation that is very important to the Native
American community. In particular, your
support for the Native American Financial
Services Organization (NAFSO) is greatly
appreciated as NAIHC believes this legislation will bring much needed relief to solving
the housing problems for Native Americans.
The housing needs in Indian Country remain acute and we recognize that we must
move beyond housing assistance from the
federal government. NAFSO will help us do
so. We believe that allowing the creation of
Native American Financial Institutions
(NAFIs) will also stimulate local economies
and encourage privately financed housing.
Your recognization that NAFSO will have
a positive affect on Indian Country is appreciated and valued. Please feel free to contact
me if I can be of further support regarding
this legislation.
Sincerely,
RUTH A. JAURE,
Executive Director.
U.S. DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT,
Washington, DC, September 22, 1994.
Hon. ALBERT GORE, JR.,
President of the U.S. Senate,
Washington, DC.
DEAR MR. PRESIDENT: I am pleased to
transmit to you the ‘‘Native American Financial Services Organization Act of 1994.’’
For the past several months, the Department
of Housing and Urban Development has been
working with the Departments of the Treasury, the Interior, Agriculture and Veterans’
Affairs, in consultation with the Native
American Community to develop this bill.
Based upon the findings and recommendations of the Commission on American Indian,
Alaska Native and Native Hawaiian Housing,
established by Public Law 101–235, HUD believes that housing shortages and deplorable
living conditions have reached crisis proportions in Native American communities
throughout the United States.
Historically, financing for most Native
American housing and economic development has been provided through government
programs. These federal programs, however,
do not fully meet the needs of Native American communities. Furthermore, there are
few financial institutions that provide financial services to these communities.
To begin to address this crisis, the Department is proposing this legislation to improve
the conditions and supply of housing in Native American communities by creating the
Native American Financial Services Organization. This legislation would establish a
limited government-chartered corporation to
be known as the Native American Financial
Services Organization (NAFSO). A Federal
grant would capitalize the federally-chartered, for-profit NAFSO through a cooperative agreement. Under the agreement,
NAFSO could assist Native Americans in
creating local financial institutions to address their capital needs. The Federal
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NAFSO charter would cease to exist upon a
designated date, by which time it would be
merged into a private corporation. The legislation also provides for an ‘‘asset cap’’ that
is designed to limit the size of the NAFSO to
$20 million. It is anticipated that the NAFSO
will be privatized in order to grow beyond
this limit. It also is anticipated that tribal
contributions would assist the NAFSO in becoming self-sufficient over time.
The governance of the NAFSO would be
vested in a Board of Directors that would be
representative of the Native American community. Shares would be equitably distributed among federally-recognized tribes; the
Board could elect to distribute additional
shares on an investment basis.
It is the purpose of this Act—
(1) to help serve the mortgage, economic
development, and other lending needs of Native Americans by assisting in the establishment and organization of Native American
community lending institutions that would
be called Native American Financial Institutions (NAFIs); NAFIs would be any type of
financial institution, including community
banks, credit unions and savings banks, and
therefore could provide a wide range of financial services;
(2) to develop and provide financial expertise and technical assistance to NAFIs, including assistance on how to overcome barriers to lending on Native American lands,
and the past and present impact of discrimination;
(3) to promote access to mortgage and economic development credit throughout Native
American communities by increasing the liquidity of financing for housing and improving the distribution of investment capital
available for such financing, primarily
through NAFIs;
(4) to direct sources of public and private
capital into housing and economic development for Native American individuals and
families, primarily through NAFIs; and,
(5) to provide ongoing assistance to the
secondary market for residential mortgages
and economic development loans for Native
American individuals and families, NAFIs,
and other borrowers by increasing the liquidity of such mortgage investments and improving the distribution of investment capital available for such residential mortgage
financing.
At the outset, it is contemplated that the
NAFSO itself will not purchase and sell Native American mortgages originated by the
NAFIs, but rather will work with the existing secondary market for residential mortgages to increase the liquidity for such investment. However, if it is later determined
that the secondary market is not meeting
reasonable mortgage purchase goals established by this department, the NAFSO will
be authorized to purchase and sell such
mortgages.
The Secretary of Housing and Urban Development would be authorized to provide up to
$10 million, subject to appropriations, for the
funding of a cooperative agreement for technical assistance and other services to be provided by the NAFSO to NAFIs. In addition,
there would be authorized, without fiscal
year limitation, $20 million to provide financial assistance through the NAFSO to
NAFIs. Funding would be made available
from the Community Development Financial
Institution (CDFI) fund. NAFIs are not eligible for additional funding under the CDFI
fund if the NAFI elects to receive funding
under this Act.
This legislation further provides that the
Office of Federal Housing Enterprise Oversight would regulate matters pertaining to
the financial safety and soundness of the
NAFSO in the event that the NAFSO is authorized to purchase and sell Native Amer-
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ican mortgages and the Department of Housing and Urban Development would have general regulatory authority.
The ‘‘Native American Financial Services
Act of 1994’’ would provide financial independence to the Native American community that has never been enjoyed before. It
provides the structure to marry private financial resources with Federal and tribal resources in a way that benefits all parties.
The creation of the NAFSO would have the
ripple effect of opening avenues to economic
development and housing that have not been
available heretofore.
The Office of Management and Budget has
advised that it has no objection to the transmittal of this legislation to Congress.
I request that the bill be referred to the appropriate committee and urge its early consideration. I am sending a similar letter to
the Speaker of the House of Representatives,
Thomas S. Foley.
Sincerely,
HENRY G. CISNEROS,
Secretary.
Mr. INOUYE, Mr. President, I rise
today to express my support for a
measure being introduced by my esteemed colleague from Colorado, Senator BEN NIGHTHORSE CAMPBELL. This
measure, the Native American Financial Services Organization Act of 1995,
is being introduced at the request of
the administration. It is the end-product of a multiagency Federal working
group whose goal was to craft a legislative proposal which would encourage,
promote, and foster the delivery of
housing and economic development financing to native American families
and communities.
Mr. President, it is difficult for many
of us here to comprehend the sheer
magnitude of the housing needs of this
Nation’s native communities. In 1993,
the Bureau of Indian Affairs of the U.S.
Department of Interior estimated that
88,689 native American families were in
need of housing assistance. But anyone
familiar with Indian country would
agree that these figures reflect a gross
underestimation. I am pleased to note
that in the next few months, the Department of Housing and Urban Development will be releasing the results of
an assessment of Indian housing needs
and programs. This survey is one of the
most ambitious and comprehensive
ever undertaken, and it is my hope
that we in the Congress will finally be
provided with a more accurate picture
of the housing needs and conditions of
native American families.
The Native American Financial Services Organization Act has its genesis in
the finding and recommendations of
the National Commission on American
Indian, Alaska Native, and Native Hawaiian housing. The Commission, established pursuant to Public Law 101–
235, documented that native American
Families and communities were overwhelmingly and consistently access to
conventional financing mechanisms,
often due to the unique legal status of
Indian trust lands. The Commission
recommended the creation of a Native
American Finance Authority to direct
sources of capital to native Americans,
native American families, and other eligible mortgagors in order that they
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might meet their housing and related
infrastructure needs.
Mr. President, this administration
heeded the Commission’s call for action. The Department of Housing and
Urban Development spearheaded a
multi-departmental effort, which included representatives for the Department of the Treasury, the Bureau of Indian Affairs, and the Office of Management and Budget. The working group
began with the Commission’s legislative proposal, and ended with the measure which I am honored to be co-sponsoring today. This administration deserves to be commended for recognizing the distressed housing conditions under which many of our native
American families live and for taking
deliberate and meaningful steps to
change
and
improve
these
circumstances.
In many, many respects, the measure
being introduced today addresses the
concerns of the National Commission
on American Indian, Alaska Native,
and Native Hawaiian Housing and embodies the spirit of the Commission’s
recommendations. But Mr. President, I
wish to point out one very fundamental
difference between this measure, and
the Commission’s legislative proposal.
The omission—one which I have just
cause to be concerned about—is a glaring one, for while the original proposal
included native Hawaiians, the bill before us today does not.
Mr. President, the Commission’s
final report documented that native
Hawaiians are among the neediest in
the State of Hawaii—they have the
worst housing conditions and the highest percentage of homelessness, representing over 30 percent of the State’s
homeless population. Under any circumstances, the figures would be deplorable, but the truth is that this situation can only worsen. I surely do not
need to point out that Hawaii is one of
the most expensive States in which to
build, rent, or purchase a home, and
that, according to a recent survey conducted by the National Association of
Home Builders, Honolulu ranked 179th
out of 185 places in home affordability.
Mr. President, I stand here, not only
as a co-sponsor, in support of this
measure, but as the senior Senator
from the State of Hawaii and one who
has long sought to address the housing
needs of the native Hawaiian people. I
must express for the record my disappointment that this bill departs from
the recommendation of the very Commission which was the genesis for the
concept of a financial service organization—namely that native Hawaiians
should be included in this measure. I
assure you that I will seek to honor the
Commission’s recommendations.
Mr. MCCAIN. Mr. President, today I
am pleased to join as an original cosponsor of a bill to establish a Native
American Financial Services Organization [NAFSO] that will provide financial incentives to increase homeownership opportunities in Indian and Alaska Native communities.
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Indian
housing
problems
have
reached crisis proportions with seriously deteriorating conditions and severe overcrowding. The latest U.S. Census report indicates that 18 percent of
Indian reservation homes are overcrowded, while the comparable data for
the Nation as a whole is 2. The shortage of housing is made even more acute
by the deplorable condition of existing
housing in native American communities. Many Indian homes lack running water, indoor bathrooms, sufficient heat, or weatherization.
To date, most of the housing construction done on reservations has
been financed directly by the U.S. Government. But Indian housing needs
have far out-stripped the capacity of
Federal housing construction efforts.
Everyone who has looked at the problem agrees that one main reason for
the Indian housing disaster is an absence of private capital participation
in financing housing in Indian and
Alaska Native communities.
The bill I am cosponsoring today
would begin to change the Federal role
in Indian housing in ways that
strengthen and empower local tribal
governments in their efforts to increase housing opportunities in their
communities. The bill would do this by
federally chartering a limited, for-profit corporation to be known as the Native American Financial Services Organization [NAFSO]. NAFSO would assist
Indians and Alaska Natives to create
local financial institutions that will
attract capital investment in housing
in Indian communities. It would also
work within the existing secondary
market to increase the liquidity of
mortgages placed on housing located
on land held in trust for Indians by the
United States. If sufficient levels of
private lending are not achieved, at a
later date NAFSO could enter the secondary market itself to purchase and
sell portages.
I am particularly pleased that the
bill contains a sunset-type provision
under which the Federal charter would
cease and NAFSO would be merged into
a private corporation to permit further
growth and attract private contributions, including those of tribes with
funds to invest in Indian and native
American housing.
I look forward to a hearing on this
bill because it will provide an opportunity for the Committee on Indian Affairs to evaluate this proposal to ensure that it is properly designed to accomplish its goals. While a commission
on Indian and native American housing
recommended the concepts underlying
this bill, and while many tribal governments already are on record in support
of the bill as introduced, I will ask
tribes and tribal organizations to scrutinize the bill and provide the committee with recommendations to improve it and sharpen its focus on the
serious problems plaguing Indian housing.
I commend HUD Secretary Cisneros
for his increased support for Indian
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housing efforts, one of which is reflected in the Department’s development of this NAFSO proposal, and I
look forward to working with the administration to enact this important
legislation.
By Ms. SNOWE:
S. 437. A bill to establish a Northern
Border States-Canada Trade Council,
and for other purposes; to the Committee on Finance.
ESTABLISHMENT
OF
A
NORTHERN
BORDER
STATES COUNCIL ON UNITED STATES AND CANADIAN TRADE
∑ Ms. SNOWE. Mr. President, today I
am introducing legislation that would
establish the Northern Border States
Council on United States-Canada
Trade. The purpose of this Council is to
oversee cross-border trade with our Nation’s largest trading partner—an action that I believe is long overdue. The
Council will serve as an early warning
system to alert State and Federal
trade officials to problems in cross-border traffic and trade. And the Council
will help the United States more efficiently manage the administration of
its trade policy with Canada by applying the wealth of insight, knowledge
and expertise that resides in our northern border States on this critical policy issue.
Yes, we already have the Department
of Commerce and a U.S. Trade Representative. But the fact is that these
both are federal entities, responsible
for our larger, national U.S. trade interest. Too often, they do not look
after the interests of the 12 Northern
States that share a border with Canada. The Northern Border States Council will provide State trade officials a
mechanism to share information about
cross-border traffic and trade. The
Council will then advise the Congress,
the President, the United States Trade
Representative, the Secretary of Commerce, and other Federal and State
trade officials on United States-Canada
trade policies, practices, and relations.
Canada is America’s largest trading
partner. Trade with Canada accounts
for approximately one-fifth of total
United States exports and Canada is
the top purchaser of U.S. exports. Canada is also the largest supplier of
United States imports. Canada needs to
maintain close trade ties with the
United States to assure its survival.
The Canadian economy is heavily oriented on exports, and most—roughly 75
percent—of that trade is directly with
the United States.
Over the last decade, Canada and the
United States have signed two major
trade agreements—the United StatesCanada Free-Trade Agreement in 1989,
and the North American Free-Trade
Agreement in 1993. Notwithstanding
these trade accords, numerous disagreements have caused trade negotiators to shuttle back and forth between Washington and Ottawa. Most of
the more well-known trade disputes
with Canada have dealt with agricultural commodities such as durum
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February 16, 1995
wheat, peanut butter, dairy products,
and poultry products, and these disputes have impacted more than just
the 12 northern border States.
But each and every day an enormous
quantity of trade and traffic crosses
the United States-Canada border.
There are literally thousands of businesses, large and small, that rely on
this cross-border traffic and trade for
their livelihood. Any disruption in that
flow of traffic and trade, whether intentional or not, would have traumatic
economic consequences on hundreds of
thousands, if not millions, of people in
the 12 northern border States.
The people best qualified to monitor
that cross-border traffic and trade live
in the States along our northern border—States that share that border with
Canada. This is why it is important
that the members of this Council be
from those States.
My own State of Maine has had a
long-running dispute with Canada over
that Nation’s unfair policies in support
of its potato industry. Specifically,
Canada protects its domestic potato
growers from United States competition through a system of nontariff
trade barriers, such as setting container size limitations and a prohibition on bulk imports from the United
States. This bulk import prohibition
effectively blocks United States potato
imports into Canada. At the same
time, Canada artificially enhances the
competitiveness of its product through
domestic subsidies for potato growers.
Another trade dispute with Canada,
specifically with the province of New
Brunswick, served as the inspiration
for this legislation. In July 1993, Canadian Federal Customs Officials began
stopping Canadians returning from
Maine and collecting from them the 11percent New Brunswick provincial
sales tax [PST] on goods purchased in
Maine. Canadian Customs Officers had
already been collecting the Canadian
Federal sales tax all across the United
States-Canada border. The collection
of the New Brunswick PST was specifically targeted against goods purchased
in Maine—not on goods purchased in
any of the other provinces bordering
New Brunswick. The premier of New
Brunswick even admitted that his
province had no intention of trying to
collect the PST along any of its provincial borders. Only along the border
with Maine.
After months of imploring the United
States Trade Representative to do
something about the imposition of the
unfair tax, Ambassador Kantor agreed
that the New Brunswick PST was a
violation of NAFTA, and that the
United States would include the PST
in the NAFTA dispute settlement process. It has languished in that process
for almost a year because Canada and
Mexico have been stubbornly refusing
to finalize the details of the NAFTA
dispute resolution process.
Throughout the early months of the
PST dispute, we in the State of Maine
had enormous difficulty convincing our
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Federal trade officials that the PST
was in fact an international trade dispute that warranted their attention action. We had no way of knowing if the
PST was a national problem, or a localized one. If a body like the Northern
State Trade Council had been in existence when the collection of the PST
began, if would have immediately
started investigating the issue to determine its causes and make recommendations on how to deal with it.
In short, the Northern Border States
Council will serve as the eyes and ears
for our States that share a border with
Canada, and are vulnerable to fluctuations in cross-border trade and traffic.
The Council will be a tool for Federal
and State officials to use in monitoring
their cross-border trade. It will help
ensure that national trade policy regarding America’s largest trading partner will be developed and implemented
with an eye toward the unique burdens
and opportunities present to the northern border States.
The Northern Border States Council
will be an advisory body, not a regulatory one. Its fundamental purpose
will be to determine the nature and
course of cross-border trade issues or
disputes, and to recommend how to resolve them.
The duties and responsibilities of the
Council will include, but are not limited to, providing advice and policy
recommendations on such matters as
taxation and the regulation of crossborder wholesale and retail trade in
goods and services; taxation, regulation and subsidization of food, agricultural, energy, and forest-products commodities; and the potential for Federal,
State, and Canadian provincial laws
and regulations—including customs
and immigrations regulations—to act
as nontariff barriers to trade.
As an advisory body, the Council will
review and comment on all Federal
and/or State reports, studies, and practices concerning United States-Canada
trade, with particular emphasis on all
reports from the dispute settlement
panel established under the North
American Free Trade Agreement.
These Council reviews will be conducted upon the request of the U.S
Trade Representative, the Secretary of
Commerce, any Member of Congress
from a Council State, and the Governor
of a Council State.
If the Council determines that the origin of a cross-border trade dispute resides with Canada, the Council must
determine, to the best of its ability, if
the source of the dispute is the Canadian Federal Government or a Canadian provincial government.
My goal is not to create another Federal trade bureaucracy. The Council
will be made up of individuals nominated by the Governors and approved
by the Secretary of Commerce. Each
Northern border State will have two
members on the Council. The Council
members will be unpaid, and serve a 2year term.
The Northern Border States Council
on United States-Canada Trade will
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not solve all of our trade problems with
Canada. But it will ensure that the
voices and views of our northern border
States are heard in Washington by our
Federal trade officials. For too long
their voices were ignored, and the
northern border States have had to suffer severe economic consequences at
times because of it. This legislation
will restore our northern border States
to their rightful position as full partners in administering and managing
corss-border trade and traffic with
America’s largest trading partner.
I urge my colleagues to join me in
supporting this important legislation.∑
By Ms. SNOWE:
S. 438. A bill to reform criminal laws,
and for other purposes; to the Committee on the Judiciary.
LEGISLATION TO STRENGTHEN AMERICA’S ANTICRIME LAWS
∑ Ms. SNOWE. Mr. President, today I
am introducing legislation to address
the serious problem of crime in America, while offering stronger protection
to the victims of crime. My legislation
will propose mandatory minimum sentences for criminals who use a firearm
while committing violent State crimes;
require truth-in-sentencing provisions
so that criminals complete at least 85
percent of their sentences; eliminate
prison luxuries that coddle prisoners,
and require courts to order restitution
for the victims of crimes.
Many of these proposals—which are
designed to strengthen the crime package passed by Congress last year—are
not new. Some have already won passage in the Senate as part of the Senate-passed crime bill. But they are important proposals—and it is important
for our citizens and especially for our
children—that we include these plans
to get tough on crime.
When 23 million households will suffer from crimes this year, it is no wonder that crime is the number one concern of most Americans, whether in a
relatively safe State like Maine, or
here in the District of Columbia. As
Americans scan the front page of the
newspapers every morning, word of
crimes right in our own neighborhoods
catches our eye, puts us on guard—and
keeps the American people on edge. We
have been raised in a humane and advanced nation—and our citizens place a
premium on safety, security. For too
many Americans, the home is no
longer a castle. Too many Americans
must lock up their homes like a fortress, and walk through our streets
with fear because of the scourge of violent crime.
Indeed, Americans no longer feel safe
in their own neighborhoods. In the 35
years since 1960, the population of the
United States has increased by 44 percent. Over that same time, violent
crime in America has increased by
more than 500 percent. Our Nation has
lost its edge in law enforcement and in
humane social efforts that meet the
root causes of crime. Indeed, according
to a recent study published in Business
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Week, crime bears an enormous cost:
The total direct and indirect cost of
crime in America is a staggering $425
billion.
Sadly, crime does not discriminate
across regional or social boundaries.
Crime reaches to us all—and exacts a
devastating personal toll on its victims
and their families and loved ones. Few
among us have escaped the devastating
impact of crime. Every day, 14 Americans are murdered, 48 are raped, and
578 are robbed. In our lifetimes, onethird of all Americans will be robbed.
Three-fourths will be assaulted.
In the course of the average day in
America, there is a murder every 21
minutes. Rape is committed once every
5 minutes. Robberies occur every 46
seconds. Burglaries occur every 10 seconds. Imagine: A boy born in 1978
stands a greater chance of being murdered in the United States than one of
our brave soldiers in World War II
stood of dying in combat.
Last year, Congress passed the President’s crime bill—a package that took
steps to punish violent criminals and
keep them off the streets, and to address the root problems of crime. Unfortunately, however, the President’s
bill stopped short of proposals that I
believe
will
give
our
Nation’s
anticrime laws teeth.
My legislation includes tough provisions to provide mandatory minimum
sentences for violent State crimes, or
State drug trafficking crimes involving
the use or possession of a firearm.
Clearly, we must crack down on the
violent offenders who have been proven
responsible for the vast majority of
crimes.
Studies by the criminologist Marvin
Wolfgang show that just 7 percent of
each age group was responsible for twothirds of all violent crime, including
three-fourths of all rapes and robberies—and virtually every murder. According to Mr. Wolfgang’s study—conducted in Philadelphia over a 13-year
period—this 7 percent of the population
had five or more arrests by the age of
18. For every arrest, each individual
had gotten away with another dozen
crimes.
Indeed, it is estimated that last year,
more than 1,100 convicted murderers
did not go to prison; more than 6,900
convicted rapists did not go to prison;
more than 37,000 individuals convicted
of aggravated assault did not go to
prison.
My proposal will impose tough mandatory minimum sentences on violent
criminals. For first-time offenders, we
will direct the courts to impose sentences of 10 years for those who possess
a firearm; 20 years if they discharge
that firearm with the intent to harm
another person; and 30 years for possession of a machine gun or other weapon
equipped with a firearm silencer or
muffler.
Too often, however, even a tough
first sentence is not enough to stop the
endless cycle of crime. More than 40
percent of murderers released from
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State prisons are re-arrested for a felony or serious misdemeanor within 3
years—more than 20 percent for another violent crime. Of the 50,000 violent criminals who are put on probation this year, more than 9,000 will not
learn their lesson. They will be re-arrested in the same State within 3 years
for another violent crime. An astonishing 10 percent of America’s jail population—39,000 people in 1989—committed their current crime while out
on parole.
So for second-time offenders, we will
make our mandatory minimum sentences tougher; 20 years for possession
of a firearm, 30 years for discharge of a
firearm with the intent to injure another person, and life in prison for possession of a machine gun.
And for a third offense? Three strikes
and they’re out—for life imprisonment
for any violent offender.
My provisions for mandatory minimum sentences will prohibit States
from offering probation or suspended
sentences, and we will direct the courts
that sentences cannot run concurrently. This legislation also provides
for Good Samaritans or for citizens
who act in self-defense: the provision
will not apply to those acting in defense of person or property during the
course of a crime committed by another person.
Criminals have also learned, over
times, that the odds in sentencing are
in their favor. For every 100 violent
crimes reported, only 4 criminals go to
prison. The risk of punishment for a serious criminal offense has declined by
two-thirds since 1950, while the annual
number of serious crimes is seven
times greater than it was then. This
fact is not lost on criminals, who know
that if they scoff at the criminal justice system—and hire a good lawyer—
they can go free in little, if any time.
Even when criminals are convicted and
sent to prison after appeals, they know
that the average violent offender—who
in 1990 received a sentence of 7.8
years—will serve just over 3 years in
jail.
To make sure that convicted criminals serve their time, my legislation
will enact truth-in-sentencing provisions. In order to be eligible for prison
funding under the 1994 crime bill, this
legislation will require that States
change their laws to require violent offenders to serve a minimum of 85 percent of their required sentence.
Prison is not meant to be a pleasant
experience: it is meant, instead, to
serve as both a deterrent to crime and
to rehabilitate criminals so that they
can again become productive members
of society. Too often, however, our
criminal justice system has coddled
prisoners with luxury items that even
hard-working Americans can not afford. Indeed, our Federal prison system
has earned the nickname ‘‘Club Fed’’
because of its luxury. I believe our Federal prison system must instead address the root causes of crime as it rehabilitates prisoners. We should elimi-
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nate the luxuries in our prisons from
expansive weight lifting equipment to
X-rated movies, cable television, computer, even miniature golf.
Instead, we should require every
able-bodied prisoner to work, and begin
to return to society part of what the
prisoner has taken. My legislation will
give the Attorney General 120 days to
implement and enforce regulations
mandating prison work for able-bodied
inmates in Federal penal and correctional institutions.
In addition to these provisions that
get tough on criminals and make our
tough sentences stick, my legislation
includes provisions to require increased
fairness—and awareness—of the victims of crimes. For the 5 million people
each year who are victims of violent
crimes—such as rape, murder, robbery
or assault—these provisions will provide increased security and peace of
mind. While criminals can pursue one
legal remedy after another, victims of
crimes quickly exhaust their options
and are frequently forced to quietly
bear the brunt of the crime, alone, and
without restitution.
Victim restitution presently can be
ordered by courts, at the discretion of
the court. My legislation will require
courts to order restitution, and extends
to the victims of crimes the same sort
of safeguards that we extended to
women in the Violence Against Women
Act, which I cosponsored in the House.
This legislation will state that victims should be reimbursed for all necessary expenses related to the investigation and prosecution of crime,
whether child care, transportation or
other expenses. No longer will the economic cost of prosecution serve as a deterrent that could keep victims from
vigorously pursuing justice.
This legislation also will require reimbursement to the victim for medical
services resulting from physical, psychiatric or psychological care, physical
and occupational therapy costs due to
rehabilitation, and all other losses suffered by the victim because of the
crime. I believe that these provisions
provide basic fairness for the victims of
crime, and begin to balance our criminal justice system again by keeping in
mind the needs of crime victims.
Mr. President, the people of Maine
and America have a right to be personally secure, free from the fear of violent crime. My legislation combines
positive steps that punish criminals
and keep them off the streets, and to
meet the often-overlooked needs of the
victims of crime. This is legislation
that is overdue, and will improve our
nation’s crime-fighting efforts.
I urge my colleagues to join me in
supporting this legislation.∑
By Mr. THOMAS (for himself, Mr.
LOTT, Mr. SIMPSON, Mr. INHOFE,
Mr. COATS, Mr. MURKOWSKI, and
Mr. COCHRAN):
S. 439. A bill to direct the Director of
the Office of Management and Budget
to establish commissions to review reg-
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ulations issued by certain Federal departments and agencies, and for other
purposes; to the Committee on Governmental Affairs.
REGULATORY REFORM COMMISSION ACT
∑ Mr. THOMAS. Mr. President, it is
well known that Federal regulations
stifle economic growth. The cost of
complying with Federal regulations
alone is estimated to be between $300
and $500 billion per year—$4,000 to
$6,000 for every working man and
woman in America. The private sector
spends 6.6 billion hours year complying
with Federal paperwork requirements.
The number of pages in the Federal
Register last year was 45 percent higher than the number in 1986—without
the Clinton health care bill going anywhere.
These excessive and misguided mandates impose enormous economic costs
that limit economic growth and job
creation. Small and medium-sized businesses—which are the businesses in my
State of Wyoming—are disproportionately hurt by overregulation because
they have fewer resources to allocate
for compliance.
Mr. President, the 1994 elections were
about change. The American people
want less government in their lives.
They don’t want OSHA inspectors
breathing down their necks, they don’t
want to pay for unnecessary EPA mandated facilities and they don’t want
Washington bureaucrats telling them
how to live their lives.
That is why I am introducing the
Regulatory Reform Commissions Act.
This measure is designed to look back,
review, and reduce existing regulations. My legislation would establish
three bipartisan Regulatory Review
Commissions, one for each selected
Federal department or agency. Initially, I have selected the Departments
of Interior, Labor, and the Environmental Protection Agency [EPA]. Over
a 2-year period, the commissions will
examine all regulations within the selected Federal department or agency
and determine if the regulations are
justified and report all appropriate
changes to Congress, the department,
and the Director of the Office of Management and Budget [OMB]. The commissions will examine the department’s or agency’s rules based on the
following criteria: Whether the regulations are within the scope of authority
of the statutes under which the regulations were issued; whether the regulations are consistent with the original
intent of Congress; whether the regulations are based on cost/benefit analysis; and whether the regulations are
subject to judicial review.
There have been several different
proposals, which I support, to prevent
new onerous regulations. This legislation is a perfect fit with those efforts,
because it reviews the rules already on
the books.
I urge my colleagues to join me in
the effort against overregulation.∑
By Mr. WARNER (for himself,
Mr. CHAFEE, Mr. BAUCUS, Mr.
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MOYNIHAN, Mr. BOND, Mr. FAIRCLOTH, Mr. KEMPTHORNE, Mr.
LAUTENBERG, Mr. LIEBERMAN,
Mr. INHOFE, Mr. REID, Mr.
SMITH, Mr. LUGAR, Mrs. BOXER,
Mr. GRAHAM, and Mr. PELL):
S. 440. A bill to amend title 23,
United States Code, to provide for the
designation of the National Highway
System, and for other purposes; to the
Committee on Environment and Public
Works.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
THE NATIONAL HIGHWAY SYSTEM DESIGNATION
ACT OF 1995
∑ Mr. WARNER. Mr. President, I am
pleased to be joined today by Chairman
CHAFEE, Senator BAUCUS, Senator LAUTENBERG, Senator BOND, and others.
We are here today to provide assurances to the States, to commercial activities dependent on a viable transportation system, and to the motoring
public that the Congress will enact the
National Highway System legislation
this year.
The legislation I am introducing to
designate the National Highway System is sponsored by 14 of my colleagues.
The National Highway System is the
cornerstone of the 1991 ISTEA statute
which preserves a Federal role in a core
surface transportation network.
As we come to the completion of the
Eisenhower Interstate System, the
NHS is the next generation of Federal
focus to meet transportation challenges into the 21st century.
This system of 159,000 miles—although only a small fraction of highways in this country—consists of the
44,000-mile Interstate System and other
primary routes.
Today, we affirm that Federal responsibility by ensuring a consistency
of road engineering and safety among
the States to provide for the free flow
of commerce and to efficiently move
people.
Ideally, Congress has only to approve
the map which is the product of a joint
effort between the Department of
Transportation and our States. But,
pragmatically, we all know that this
legislation will be the 18-wheeler that
will carry other issues.
We must not, however, be detoured
from our mission.
Without passage of this bill, we know
that our States will be crippled by the
sanction of a loss of $6 billion until
Congress does its job.
The NHS also will allow States to
benefit from the flexibility and intermodalism which is the hallmark of
ISTEA.
For the first time, States will focus
their investments on connecting our
rail, air, commercial water ports, and
highways so that performance of the
entire system can be maximized.
The NHS also provides an opportunity for States to target their future
investments on these routes which
carry high volumes of commuter traffic and commercial truck traffic.
Improving the safety of the motoring
public must remain a Federal priority.
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Routes on the NHS must be among
the first to benefit from the application of new and emerging technologies
to improve safety and reduce congestion.
In Virginia, the twin problems of
congestion and safety in major urban/
suburban areas have been the focus of
our transportation policies for some
time.
We only need to look at Sunday’s
Washington Post to remind us of the
dangers of driving on the Capital Beltway.
Again this morning, our commuters
and
commerce
suffered
extensive
delays on the Capital Beltway when a
tractor-trailer accident at the Cabin
John Bridge closed a large segment of
the beltway for hours.
As a result of this gridlock, commuters cannot get to work and interstate commerce is delayed. That translates into reduced productivity and
wasted resources for all Americans.
The legislation we are introducing
today also includes modest provisions
to provide uniformity and flexibility to
States as they continue to implement
ISTEA.
As States enter the fourth year of
ISTEA and we have sufficient information and experience to support these
modifications.
As we move this legislation forward,
my focus will be to reduce mandates on
our States, without jeopardizing the
safety of the traveling public, and to
increase flexibility for States to allocate funds to meet their own needs.
Mr. President, I ask unanimous consent that additional material be printed in the RECORD.
There being no objection, the material was ordered to be printed in the
RECORD, as follows:
NATIONAL HIGHWAY SYSTEM DESIGNATION ACT
OF 1995—SECTION BY SECTION ANALYSIS
Sec. 1: Short Title.
Sec. 2:
Section 2 approves the most recent National Highway System submitted to Congress by the Secretary of Transportation.
The section also specifies the procedure for
future changes and modifications to the NHS
after Congress has adopted the initial system. At the request of a State, the Secretary
may add a new route segment to the NHS or
delete an existing route segment and any
connection to the route segment, as long as
the segment or connection is within the jurisdiction of the requesting State and the
total mileage of the NHS (including any
route segment or connection proposed to be
added) does not exceed 165,000 miles.
If a State requests a modification to the
NHS as adopted by Congress, the State must
establish that each change in a route segment or connection has been identified by
the State in cooperation with local officials.
This cooperative process between the State
and local officials will be carried out under
the existing transportation planning activities for metropolitan areas and the statewide
planning processes established under ISTEA.
Congress will not approve or disapprove
any subsequent modifications made to the
NHS. The cooperative planning process between State and local officials, along with
the approval of the Secretary, is the appropriate forum for considering modifications
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to the NHS following enactment of this legislation.
Sec. 3:
Section 3 amends section 103(i) of title 23
to permit States to use National Highway
System and Congestion Mitigation and Air
Quality funds for operational expenses of Intelligent Vehicle Highways System (IVHS)
projects for an unlimited period of time
rather than the two years currently stipulated.
Sec. 4:
Section 4 amends section 104 of title 23 to
permit a State to transfer 60 percent of its
bridge apportionments to its National Highway System or Surface Transportation Program categories.
Sec. 5:
Section 5 amends section 129(a)(5) of title
23 to provide that the Federal share for participation in toll highways, bridges, and tunnels shall be a percentage as determined by
the State but not to exceed 80 percent. Depending on the facility, the federal share
currently ranges from 50 to 80 percent.
Sec. 6:
Section 6 amends 217(f) of title 23 to permit
states to apply the federal lands sliding scale
match to bicycle and pedestrian projects.
Sec. 7:
Section 7 amends section 323 of title 23 to
allow private funds, materials and services
to be donated to an activity eligible under
title 23 and permits a state to apply 100 percent of such donated funds, materials or
services to the State’s matching share under
title 23.
Sec. 8:
Section 8 states that notwithstanding any
requirements of the Metric Conversion Act
of 1975, no state is required to erect signs
which establish speed limits, distance or
other measurements using the metric system. If a state chooses to use its federal-aid
highway funds for such a purpose, it may do
so.
Sec. 9:
Section 9 requires states to receive U.S.
Department of Transportation approval for
Intelligent Vehicle Highway System (IVHS)
projects within two years of receiving funds
for this purpose. If after two years the Secretary has not approved a plan, the DOT may
redirect unobligated funds to another IVHS
project. Prior to such redirection, the Secretary shall notify the intended recipient
that they are in danger of losing their
funds.∑
∑ Mr. CHAFEE. Mr. President, I am
pleased to join Senator WARNER in introducing legislation today that will
approve the designation of the National Highway System.
As my colleagues will remember, the
Environment and Public Works Committee fashioned what I believe is a
landmark surface transportation bill
now known as the Intermodal Surface
Transportation Efficiency Act of 1991
or ISTEA. The purpose of this surface
transportation law is to provide mobility for all our citizens, to enable our
country to be competitive internationally, to promote economic development, and to provide transportation facilities that are sensitive to the environment and the communities they
pass through.
The National Highway System, established by the surface transportation
law, is an important part of our country’s National Transportation System.
The National Highway System,
which includes the Interstate System
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represents 4 percent of the highway
system but carries 40 percent of the
Nation’s highway travel. Even more
importantly, it connects intermodal
and strategic facilities including our
ports, airports, train stations, and
military bases.
The U.S. Department of Transportation worked with the States and
local governments to develop the National Highway System. In December
of 1993 the Department transmitted the
proposed System to Congress. Congress
must approve the National Highway
System by September 30 of this year,
or States will not receive over $6 billion in highway funds.
The NHS legislation we are introducing today maintains the important
principles that ISTEA established for
the National Highway System.
First, it maintains the flexibility of
the NHS so that the System can
change as our transportation needs
change. The legislation enables States,
in consultation with local officials, and
the Secretary of Transportation to add
to and delete routes from the System.
Second, the amount of funding a
State receives for the NHS program is
not tied to the number of miles it has
on the NHS System. There is no incentive to pad the System with a lot of
miles in hopes of receiving more of the
Federal money.
And third, the NHS funds retain their
flexibility. States continue to have the
ability to transfer NHS funds to other
categories to target their highest priority needs.
In addition to the approval of the National Highway System, the legislation
we are introducing today includes several other provisions that are in keeping with the principles of ISTEA to
provide flexibility wherever possible.
Stability is very important in the
Federal-aid highway program. States
need the assurance of long-term funding to efficiently manage their transportation programs. As the NHS legislation makes its way through Congress
this year, there may be a temptation
to reopen the surface transportation
law and debate items that are controversial. To disrupt this program and
make significant changes in midstream
will damage the transportation program. If we are to meet the September
30 deadline for approval of the National
Highway System, contentious issues
must be postponed until ISTEA is reauthorized in 1997.
I am pleased to join my colleagues in
introducing the National Highway System bill and will work with them for
its early approval.∑
By Mr. MCCAIN:
S. 441. A bill to reauthorize appropriations for certain programs under
the Indian Child Protection and Family Violence Prevention Act, and for
other purposes; to the Committee on
Indian Affairs.
THE INDIAN CHILD PROTECTION AND FAMILY
VIOLENCE PROTECTION ACT
∑ Mr. MCCAIN. Mr. President, today I
am introducing a bill to reauthorize
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Public Law 101–630, the Indian Child
Protection and Family Violence Prevention Act. This bill will provide a 2year reauthorization of appropriations
pursuant to sections 409, 410, and 411 of
the act. These sections are critical to
Indian tribal governments in preventing and treating incidents of child
abuse and family violence at the local
level. Specifically, section 409 requires
the Indian Health Service [IHS] and
the Bureau of Indian Affairs [BIA] to
cooperatively establish an Indian Child
Abuse Treatment Grant Program, section 410 requires the BIA to establish
Indian child resource and family services centers to provide technical assistance, training, and to develop policies
and procedures on child abuse for Indian tribes, and section 411 requires the
BIA to establish an Indian Child Protection and Family Violence Prevention Program.
Mr. President, the Indian Child Protection and Family Violence Prevention Act was enacted into law on November 28, 1990 to address concerns
raised by the findings of the Senate Select Committee on Indian Affairs and
the Special Committee on Investigations. What these committees found
through public hearings was that Indian country was literally a safe haven
for child abuse perpetrators to prey
upon Indian children. I’m sure that
many of my colleagues in the Congress
will recall the notorious cases of multiple child sexual abuse that rose within the Hopi, Navajo, and Cherokee Indian reservations. These crimes were
perpetrated over the course of many
years, and in some cases, the crimes
were perpetrated upon generations of
families. The Federal investigation and
prosecution of these crimes provided
insight into the purposeful plan of the
perpetrators in committing their
crimes in Indian communities. Child
abuse perpetrators were aware that the
conditions of detecting, reporting, investigating, and preventing crimes
upon children were in such a sorry
state that there crimes would rarely be
detected. As a result, hundreds of Indian children, their families, and communities needlessly suffered.
Both the Special Committee on Investigations and the Committee on Indian Affairs held numerous hours of
testimony in which both tribal and
Federal witnesses testified about the
serious deficiencies in the Federal Governments efforts to assist tribal governments in preventing and treating
child abuse and family violence. The
hearings disclosed that the BIA’s failure to implement effective background
checks on potential employees having
contact with children resulted in negligent hiring practices, and child abuse
reporting procedures deterred employees from reporting suspected child
abuse. Tribal witnesses testified that
law enforcement and social services
lacked coordinated approaches to address child victimization. As a result,
victims were often further traumatized
by repeated interviews by physicians,
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February 16, 1995
social workers, investigators, and prosecutors. The hearings also revealed
that due to scare resources, tribal social workers and mental health professional experienced case loads exceeding
national standards. It also became very
clear that both the IHS and the BIA
lacked the professional experience necessary to treat incidents of child sexual
abuse.
The Indian Child Protection and
Family Violence Prevention Act was
intended to give the Federal Government an opportunity to meet it’s responsibility to Indian children and
families by establishing policies and
programs which would prevent the
tragedies of child abuse and family violence. To accomplish the goals of the
act, appropriations were authorized per
fiscal year from 1990 through 1995 to establish prevention and treatment programs within the BIA and IHS. The act
also authorize the BIA and IHS to assist tribes in establishing on-reservation child abuse prevention and treatment programs. The act also created
mandatory Federal child abuse reporting and prescribed a process by which
child abuse allegations would be handled to prevent further trauma to a
victim.
Mr. President, the implementation of
this act has had positive results in Indian country. Indian tribal governments have initiated local public education programs on the prevention and
detection of child abuse and domestic
violence. However, these local efforts
have been so successful that reports of
child abuse and domestic violence incidents have increased substantially.
Therefore, the need for funding for
treatment of these victims has also
substantially increased. Last Congress,
the Committee on Indian Affairs received testimony from tribal governments which documented these needs,
and which called for more vigorous implementation of the act by the Federal
agencies.
Finally, I believe that the possible
benefits of the act have not been fully
realized. Neither the BIA nor the IHS
have successfully requested or received
appropriations to fully implement the
programs that are so critical to the
protection of vulnerable Indian children and families. As a result, Indian
tribal governments that are in desperate need of these services have had
to rely on special appropriations and
congressional earmarks to fund their
efforts. Those tribes that are unable to
obtain earmarks must struggle to provide child abuse and family violence
prevention and treatment services
using existing resources and piecemeal
grants.
Mr. President, I strongly believe that
extending the authorization of appropriations for the Indian Child Protection and Family Violence prevention
act will enable the Federal agencies
and Indian tribal governments the opportunity to continue and enhance the
work that has begun on behalf of Indian children and families.
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February 16, 1995
Mr. President, I ask unanimous consent that the full text of the bill be
printed in the RECORD.
There being no objection, the bill was
ordered to be printed in the RECORD, as
follows:
S. 441
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
SECTION 1. REAUTHORIZATION OF PROGRAMS.
Sections 409(e), 410(h), and 411(i) of the Indian Child Protection and Family Violence
prevention Act (25 U.S.C. 3208(e), 3209(h), and
3210(i), respectively) are each amended by
striking ‘‘and 1995’’ and inserting ‘‘1995, 1996,
and 1997’’.∑
By Ms. SNOWE (for herself and
Mr. DOLE):
S. 442. A bill to improve and
strengthen the child support collection
system, and for other purposes; to the
Committee on Finance.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
THE CHILD SUPPORT RESPONSIBILITY ACT OF 1995
∑ Ms. SNOWE. Mr. President, I am
pleased to introduce, on behalf of myself and Senator DOLE, the Child Support Responsibility Act of 1995.
This bill improves upon existing
child support enforcement mechanisms
and establishes new enforcement systems where none currently are in
place. Furthermore, it recognizes that
the issue of child support enforcement
goes far beyond parochial interests or
state lines, that as a national problem
for our children and their families,
child support enforcement merits a national solution.
When two people, whether married or
not, have a baby, they incur an obligation to provide for and care for their
child. When parents live apart, the parent not living with, and providing dayto-day care for, the parent is expected
to provide financial assistance for the
child.
Consider the facts: millions of American single parents and children continue to suffer from the consequences
of a parent who financially and emotionally abandons them. For mothers
who have obtained a child support
order—and more than 40 percent have
not—only half of those actually receive
what is owed—the other half receives
partial payments or nothing. Nevermarried single parents have a particularly difficult time obtaining child support—1990 census data indicates that of
all never-married custodial mothers, 75
percent did not have child support orders and more than 50 percent had
household incomes below the poverty
line. These statistics add up to significant economic and emotional burdens
for single parents and their dependent
children.
The Child Support Enforcement Program was first created in 1975 and significantly modified in 1984 and 1988.
The program’s purpose is to strengthen
existing State and local efforts to locate noncustodial parents, to establish
paternity for them, to obtain child support orders and collect child support
payments. My proposed legislation, a
companion to the House bill introduced
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by Congresswomen JOHNSON and ROUwould assist the Child Support
Enforcement Program with each of
these goals.
To strengthen efforts to locate parents, it expands the Federal parent locator system and provides for State-toState access of the network. To increase paternity establishment, the
bill simplifies paternity procedures, facilitates voluntary acknowledgment,
and encourages outreach. To facilitate
the setting of effective child support
orders, it calls for the establishment of
a National Child Support Guidelines
Commission to develop a national child
support guideline for consideration by
Congress, and provides for a simplified
process for review and adjustment of
child support orders. And to facilitate
child support enforcement and collection, the bill expands the penalties for
child support delinquency to include
the denial of professional, recreational,
and driver’s license to deadbeat parents, the imposition of liens on real
property, and the automatic reporting
of delinquency to credit unions. It also
grants families who are owed child support the right of first access to an IRS
refund credited to a deadbeat dad and
permits the denial of a passport for individuals who are more than $5,000 or 24
months in arrears.
Other provisions include developing a
national registry of child support orders, developing centralized State registries, and requiring States to adopt
the Uniform Interstate Family Support
Act, as approved by the National Conference of Commissioners on Uniform
State Laws in August 1992.
Through the enactment of this child
support legislation I would like to
begin to ease, and eventually lift, the
economic
and
emotional
burdens
caused by delinquent child support
payments. Noncustodial parents must
begin to accept and bear responsibility
for their children, who will reap the
support they so justly deserve and desperately need.∑
KEMA,
By Mr. MURKOWSKI (for himself
and Mr. STEVENS):
S. 444. A bill to amend the Alaska
Native Claims Settlement Act to provide for the purchase of common stock
of Cook Inlet region, and for other purposes; to the Committee on Energy and
Natural Resources.
THE ALASKA NATIVE CLAIMS ACT AMENDMENT
ACT OF 1995
∑ Mr. MURKOWSKI. Mr. President, I
am pleased to introduce a bill to
amend the Alaska Native Claims Act of
1971 at the request of Cook Inlet Region, Inc. [CIRI] to allow CIRI to purchase stock from their shareholders
and retire the stock.
Congress enacted the Alaska Native
Claims Settlement Act [ANCSA] in 1971
to address claims to lands in Alaska by
the Eskimo, Indian, and Aleut Native
people. Lands and other benefits transferred to Alaska Natives under the act
were conveyed to corporations formed
under this act. CIRI is one of the cor-
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porations formed under ANCSA and
has approximately 6,262 Alaska Natives
enrolled, each of whom were issued 100
shares of stock in CIRI, as required
under ANCSA.
ANCSA stock, unlike most corporate
stock, cannot be sold, transferred, or
pledged by the owners of the shares.
Rather, transfers can only happen
through inheritance, or in limited case,
by court decree.
To date, no Native corporation has
sought to lift the restriction. For the
most part, this is because Native shareholders continue to value Native ownership of the corporations and Native
control of the lands and other assets
held by them. These shareholders,
whose numbers consistently register at
the 70- 80-percent level, see economic
benefits in the continuation of Native
ownership, and also value the important cultural goals, values, and activities of their ANCSA corporation. However, a minority of shareholders favor
assessing some or all of the value of
their CIRI stock through the sale of
that stock. These shareholders include,
but are not limited to, elderly shareholders who have real current need yet
doubt that sale of stock will be available to them in their lifetime; holder of
small,
fractional
shares
received
through one or more cycles of inheritance; non-Natives who have acquired
stock through inheritance but without
attendant voting privileges; and shareholders who have few ties to the corporation or to Alaska, 25 percent of
CIRI shareholders live outside of Alaska.
Under current law, these two legitimate but conflicting concerns cannot
be addressed, because lifting restrictions on the sale of stock in an all or
nothing proposition. In order to allow
the minority of shareholders to exercise their desire to sell some or all of
their stock, the majority of shareholders would have to sacrifice their
important desire to maintain Native
control and ownership of CIRI.
CIRI believes this conflict will eventually leave the interests of the majority of its shareholders vulnerable to political instability. In addition, CIRI
recognizes that responding to the desire of those shareholders who wish to
sell CIRI stock is a legitimate corporate responsibility. CIRI believes
there is a way to address the needs and
desires of both groups of shareholders,
those who wish to sell stock and those
who desire to maintain their Native
ownership. The method embodied in
this legislation is one that other companies routinely use, buying back of its
own stock. The acquired stock would
then be retired.
Mr. President, I have discussed this
bill at length with CIRI and I am convinced this is the best solution. This
bill is identical to one that passed the
House, and was approved by the Senate
Energy Committee last session, and I
look forward to its passage.∑
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CONGRESSIONAL RECORD — SENATE
By Mr. D’AMATO (for himself,
Mr. MACK, Mr. BENNETT, Mr.
FAIRCLOTH, and Mr. BRYAN):
S. 445. A bill to expand credit availability by lifting the growth cap on
limited service financial institutions,
and for other purposes; to the Committee on Banking, Housing, and
Urban Affairs.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
THE LIMITED-PURPOSE BANK GROWTH CAP
RELIEF ACT
∑ Mr. D’AMATO. Mr. President, I am
today introducing the Limited-Purpose
Bank Growth Cap Relief Act with Senators MACK, BENNETT, FAIRCLOTH, and
BRYAN as cosponsors.
Mr. President, this bill would lift the
7-percent cap on the annual asset
growth of limited-purpose banks. This
growth cap, which was imposed temporary under the 1987 Competitive
Equality Banking Act [CEBA], imposes
an arbitrary and unnecessary regulatory burden. The removal of this cap
would enhance the ability of limitedpurpose banks to serve their customers, increase the availability of
credit, and allow such banks to maintain assets on their balance sheets.
By way of background, the ownership
of limited-purpose banks by certain
non-banking holding companies was
protected by a grandfather provision in
CEBA. A grandfathered non-bank holding company was permitted to maintain its ownership of limited-purpose
bank if the bank, first, did not both accept demand deposits and engage in
commercial lending; second, limited its
cross-marketing of financial services
with affiliates; third, did not participate in activities in which the bank did
not already engage prior to the passage
of CEBA; fourth, did not provide daylight overdrafts to affiliates; and fifth,
limited its annual asset growth to 7
percent. Except for these restrictions,
limited-purpose banks were subjected
to the same capital requirements, regulatory supervision, community reinvestment obligations, consumer protection laws and banking laws as fullservice banks.
Mr. President, Congress intended
these CEBA restrictions on limitedpurpose banks to be only a temporary
measure coexistent with the moratorium on the ability of the bank regulators to permit banks to engage in additional securities, insurance and real
estate activities. The legislative history is clear that these restrictions
would be reconsidered as part of comprehensive banking legislation. The
overall purpose of CEBA was merely to
preserve the opportunity for Congress—not the regulators or the
courts—to define more precisely regulatory supervision over financial service institutions and competition among
financial service providers.
Mr. President, Congress has not enacted comprehensive banking legislation, although I am hopeful this important national policy objective can be
accomplished in this Congress with the
enactment of S. 337, the Depository Institution Affiliation Act of 1995, which
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I introduced on February 2. Despite the
significant changes in the laws and regulation governing the financial services industry over the past 8 years that
have enhanced the diversification opportunities of banks, securities firms,
insurance companies and other financial providers, the temporary and arbitrary restrictions CEBA imposed on
limited purpose banks remain in place.
The number of limited-purpose banks
has sharply dropped from nearly 160 to
only 23. And the remaining institutions
are forced to labor under severe restrictions that cannot be justified from a
regulatory, public policy, or competitive standpoint.
Mr. President, limited service banks
have been frozen in time. Congress has
enacted numerous laws to render fullservice banks more competitive, efficient and financially strong. The
growth cap is no longer necessary from
a regulatory perspective. In 1989 and
1991, Congress enacted legislation to increase the ability of regulators to ensure that all banks are run in a safe
and sound manner, including the authority to freeze bank asset growth if
capital levels decline significantly.
And the restriction is not necessary
from a competitive standpoint. The
103d Congress enacted interstate banking legislation. Finally, bank regulators and the courts continue to approve a growing list of securities, insurance, and other financial services
activities for banks.
Mr. President, only a small category
of specialized and limited purpose
banks remain subject to onerous limitations on their growth, activities,
products, and customer relationships.
This situation is both unfair and unnecessary.
Mr. President, the Limited-Purpose
Bank Growth Cap Relief Act would lift
the 7-percent asset growth cap for
limited-purpose banks. It would not remove any of the other CEBA restrictions and it would not allow the chartering of additional limited-purpose
banks from a statutory requirements
that has outlived its usefulness.
Mr. President, the repeal of the
growth cap is entirely consistent with
the objectives of the Depository Institutions Affiliation Act, which I introduced several weeks ago. Both bills
seek to enhance the global competitiveness of the U.S. financial services
industry and to ready the regulation of
that industry for the next century.∑
∑ Mr. BRYAN. Mr. President, today I
am introducing legislation which repeals a restriction on the ability of
limited-purpose banks to increase their
assets by more than 7 percent per year.
I believe that a removal of this restriction will promote increased credit
availability, and will enhance the safety and soundness of the 22 institutions
that are subject to the growth limitation.
This asset growth limitation was
adopted in 1987, in legislation which
stated that the restriction was being
imposed temporarily. It remains in
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February 16, 1995
place nearly 8 years later, although the
objectives it was intended to accomplish have been achieved by subsequent
legislation, regulatory act on and judicial decisions. For example, supporters
of this limitation said that it would
help offset full-service banks’ inability
to establish interstate branches, an
issue that has now been addressed.
Today, the growth restriction is not
needed to protect the banks, their customers, or competitors. To the contrary, the growth cap harms these
banks, by imposing enormous and unnecessary compliance costs and by
forcing them to dispose of assets despite adverse marketplace conditions
and negative safety and soundness implications. It hurts their depositors and
borrowers—and other consumers—by
reducing limited-purpose banks’ ability
to offer competitive banking services.
And it provides no legitimate benefit
to full service banks, whose ability to
compete will not be impaired if a small
number of limited-purpose banks are
permitted to grow assets on their balance sheets rather than outside of the
banks.
The legislation I am introducing addresses only one of the restrictions on
limited-purpose banks: The 7-percent
asset growth cap. These banks will continue to be subject to the same requirements as other banks, including the
provision enacted in 1991 requiring the
asset growth of any undercapitalized
institution to be curtailed. And they
will remain subject to additional restrictions unique to limited-purpose institutions, such as a limitation on engaging in new banking activities, and a
restrictions on cross marketing with
affiliates. The need to retain these restrictions is an issue that should be addressed in the near future, as we consider broader legislation addressing
bank ownership, affiliations and permissible powers. But the asset growth
restriction is a regulatory burden unrelated to these issues, and needs to be
addressed now.
In the last Congress, a number of my
colleagues on both sides of the aisle
supported the removal of the 7-percent
growth cap. I am especially pleased
that the distinguished chairman of the
Committee on Banking, Housing, and
Urban Affairs and others are joining
me today as original cosponsors of
their bill. I look forward to prompt action on this legislation.∑
By Mr. INOUYE (for himself, Mr.
HATFIELD,
Mr.
LEVIN,
Mr.
D’AMATO, Mr. AKAKA, Mr. COCHRAN, Mr. DODD, Mr. GRASSLEY,
Mr. HATCH, Mr. HEFLIN, Mr.
HOLLINGS, Mr. KENNEDY, Ms.
MIKULSKI, Mr. MOYNIHAN, Mr.
ROBB, and Mr. SIMON):
S. 446. A bill to require the Secretary
of the Treasury to mint coins in commemoration of the public opening of
the Franklin Delano Roosevelt Memorial in Washington, DC; to the Committee on Banking, Housing, and
Urban Affairs.
J:\ODA15\1995_F~1\S16FE5.REC
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February 16, 1995
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
THE FRANKLIN DELANO ROOSEVELT
COMMEMORATIVE COIN ACT
∑ Mr. INOUYE. Mr. President, today, I
introduce the Franklin Delano Roosevelt Commemorative Coin Act. I am
joined by Senator HATFIELD, Cochair of
the FDR Memorial Commission, Senators LEVIN and D’AMATO, FDR Memorial Commissioners, and Senators
AKAKA, COCHRAN, DODD, GRASSLEY,
HATCH, HEFLIN, HOLLINGS, KENNEDY,
MIKULSKI, MOYNIHAN, ROBB, and SIMON.
The Franklin Delano Roosevelt Commemorative Coin Act authorizes the
Secretary of the Treasury to mint
500,000 half dollar silver coins bearing
the likeness of our great leader, President Franklin Delano Roosevelt, in the
year 1997, to celebrate the public opening of the Franklin Delano Roosevelt
Memorial in Washington, DC.
A surcharge of $3 will be applied to
each coin. Proceeds from the sale of
the coin will be used to finance the
construction of the memorial. In 1992,
the Congress mandated the FDR Memorial Commission to raise $10 million
in private funds to supplement the Federal appropriations for the memorial.
The American people are deeply indebted to Franklin Delano Roosevelt
for his leadership in America’s struggle
for peace, well-being, and the assurance
of human dignity. Personally, I will
never forget the pride I felt in looking
to President Roosevelt as my Commander in Chief as he led us in the
worldwide struggle for freedom during
World War II.
All Americans enjoy more secure
lives and a higher standard of living because of this great President. The Civilian Conservation Corps helped restore America’s forests and land; the
National Rural Electric Cooperative
gave farmers a decent life; the Federal
Highway Program developed a national
system upon which the automobile and
the trucking industries depend; the
Works Progress Administration built
schools and hospitals throughout the
country and every American who receives Social Security owes a debt of
gratitude to President Roosevelt.
The commemorative coin will do
more than honor one of our greatest
Americans; it will also help ensure that
an extraordinary era of our Nation’s
history will live on as a legacy for future generations. I want to assure my
colleagues that this bill will not place
any burden on the American taxpayer.
The profits generated by the sale of
this coin will cover all costs incurred
by the Department of the Treasury.
I urge my colleagues to support this
important legislation which will honor
one of America’s greatest Presidents
by establishing a magnificent and historic national memorial in our Nation’s Capital.
Mr. President, I ask unanimous consent that the text of the bill be printed
in the RECORD.
There being no objection, the bill was
ordered to be printed in the RECORD, as
follows:
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CONGRESSIONAL RECORD — SENATE
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S. 446
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 ‘‘1997 Franklin Delano Roosevelt Commemorative Coin
Act’’.
SEC. 2. FINDINGS.
The Congress finds that—
(1) the people of the United States feel a
deep debt of gratitude to Franklin Delano
Roosevelt for his leadership in America’s
struggle for peace, well-being, and human
dignity;
(2) Franklin Delano Roosevelt served his
country as the thirty-second President from
1932 until his death in 1945, and is the only
United States President elected to 4 terms in
office;
(3) Franklin Delano Roosevelt served the
State of New York as Governor from 1928
through 1932;
(4) Franklin Delano Roosevelt served his
country as the United States Assistant Secretary of the Navy from 1913 through 1920;
(5) Franklin Delano Roosevelt piloted the
American people through the economic
chaos of the Great Depression;
(6) Franklin Delano Roosevelt, as our commander in chief, led the American people
through the turmoil of World War II;
(7) Franklin Delano Roosevelt established
Social Security, thus providing all Americans with a more abundant and secure life;
(8) Franklin Delano Roosevelt was the author of ‘‘The Four Freedoms: Freedom of
Speech, Freedom of Worship, Freedom from
Want, and Freedom from Fear’’;
(9) Franklin Delano Roosevelt was the
founder of the National Foundation for Infantile Paralysis, parent organization of the
March of Dimes;
(10) Franklin Delano Roosevelt was the
chief architect of the United Nations;
(11) after many years of planning, the
Franklin Delano Roosevelt Memorial will
soon join the memorials of Washington, Jefferson, and Lincoln as a tribute to another
great American leader;
(12) the Franklin Delano Roosevelt Memorial will be a series of 4 large outdoor rooms
encompassing over 7 acres, and will be situated between the Lincoln and Jefferson memorials in Washington, D.C.; and
(13) in 1997, the Nation will celebrate the
public opening of this magnificent memorial,
honoring one of our greatest Presidents.
SEC. 3. COIN SPECIFICATIONS.
(a) HALF DOLLAR SILVER COINS.—The Sec-
retary of the Treasury (hereafter in this Act
referred to as the ‘‘Secretary’’) shall mint
and issue not more than 500,000 half dollar
coins, each of which shall—
(1) weigh 12.50 grams;
(2) have a diameter of 30.61 millimeters;
and
(3) contain 90 percent silver and 10 percent
copper.
(b) LEGAL TENDER.—The coins minted
under this Act shall be legal tender, as provided in section 5103 of title 31, United States
Code.
(c) NUMISMATIC ITEMS.—For purposes of
section 5134 of title 31, United States Code,
all coins minted under this Act shall be considered to be numismatic items.
SEC. 4. SOURCES OF BULLION.
The Secretary shall obtain silver for minting coins under this Act only from stockpiles
established under the Strategic and Critical
Materials Stock Piling Act.
SEC. 5. DESIGN OF COINS.
(a) DESIGN REQUIREMENTS.—
(1) IN GENERAL.—The obverse side of each
coin minted under this Act shall bear a like-
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ness of Franklin Delano Roosevelt, the thirty-second President of the United States.
The reverse side of each coin shall be emblematic of the Franklin Delano Roosevelt
Memorial in Washington, D.C.
(2) DESIGNATION AND INSCRIPTIONS.—On
each coin minted under this Act there shall
be—
(A) a designation of the value of the coin;
(B) an inscription of the year ‘‘1997’’; and
(C) inscriptions of the words ‘‘Liberty’’,
‘‘In God We Trust’’, ‘‘United States of America’’, and ‘‘E Pluribus Unum’’.
(b) SELECTION.—The design for the coins
minted under this Act shall be—
(1) selected by the Secretary after consultation with the Franklin Delano Roosevelt Memorial Commission and the Commission of Fine Arts; and
(2) reviewed by the Citizens Commemorative Coin Advisory Committee.
(c) ADDITIONS AND ALTERATIONS.—No addition or alteration to the design selected in
accordance with subsection (b) shall be made
without the approval of the Franklin Delano
Roosevelt Memorial Commission.
SEC. 6. ISSUANCE OF COINS.
(a) QUALITY AND MINT FACILITY.—The coins
authorized under this Act may be issued in
uncirculated and proof qualities and shall be
struck at the United States Bullion Depository at West Point.
(b) PERIOD FOR ISSUANCE.—The Secretary
may issue coins minted under this Act only
during the period beginning on January 1,
1997, and ending on December 31, 1997.
SEC. 7. SALE OF COINS.
(a) SALE PRICE.—The coins issued under
this Act shall be sold by the Secretary at a
price equal to the sum of—
(1) the face value of the coins;
(2) the surcharge provided in subsection (d)
with respect to such coins; and
(3) the cost of designing and issuing the
coins (including labor, materials, dies, use of
machinery, overhead expenses, marketing,
and shipping).
(b) BULK SALES.—The Secretary shall
make bulk sales of the coins issued under
this Act at a reasonable discount.
(c) PREPAID ORDERS.—
(1) IN GENERAL.—The Secretary shall accept prepaid orders for the coins minted
under this Act before the issuance of such
coins.
(2) DISCOUNT.—Sale prices with respect to
prepaid orders under paragraph (1) shall be
at a reasonable discount.
(d) SURCHARGES.—All sales shall include a
surcharge of $3 per coin.
SEC. 8. GENERAL WAIVER OF PROCUREMENT
REGULATIONS.
(a) IN GENERAL.—Except as provided in
subsection (b), no provision of law governing
procurement or public contracts shall be applicable to the procurement of goods and
services necessary for carrying out the provisions of this Act.
(b) EQUAL EMPLOYMENT OPPORTUNITY.—
Subsection (a) shall not relieve any person
entering into a contract under the authority
of this Act from complying with any law relating to equal employment opportunity.
SEC. 9. DISTRIBUTION OF SURCHARGES.
(a) IN GENERAL.—All surcharges received
by the Secretary from the sale of coins
issued under this Act shall be promptly paid
by the Secretary as follows:
(1) An amount equal to 50 percent of the
total surcharges shall be paid to the National Park Foundation Restricted Account
for the Franklin Delano Roosevelt Memorial.
(2) An amount equal to 50 percent of the
total surcharges shall be paid to the National Park Service Restricted Construction
Account for the Franklin Delano Roosevelt
Memorial.
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CONGRESSIONAL RECORD — SENATE
(b) AUDITS.—The Comptroller General of
the United States shall have the right to examine such books, records, documents, and
other data of the accounts referred to in subsection (a) as may be related to the expenditures of amounts paid under such subsection.
SEC. 10. FINANCIAL ASSURANCES.
(a) NO NET COST TO THE GOVERNMENT.—The
Secretary shall take such actions as may be
necessary to ensure that minting and issuing
coins under this Act will not result in any
net cost to the United States Government.
(b) PAYMENT FOR COINS.—A coin shall not
be issued under this Act unless the Secretary
has received—
(1) full payment for the coin;
(2) security satisfactory to the Secretary
to indemnify the United States for full payment; or
(3) a guarantee of full payment satisfactory to the Secretary from a depository institution whose deposits are insured by the
Federal Deposit Insurance Corporation or
the National Credit Union Administration
Board.∑
By Mr. INHOFE (for himself and
Mr. NICKLES):
S. 447. A bill to provide tax incentives to encourage production of oil
and gas within the United States, and
for other purposes; to the Committee
on Finance.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
THE DOMESTIC OIL AND GAS PRODUCTION TAX
INCENTIVES ACT
∑ Mr. INHOFE. Mr. President, I introduce legislation that is designed to
help the domestic oil and gas industry
not only in my own State of Oklahoma,
but also the multitude of energy producing States throughout the United
States. We are all very much aware
that a healthy and competitive oil and
gas industry is critically important to
the U.S. economy. The petroleum industry alone is burdened with the highest tax rates in corporate America.
Changes fostered by this bill only level
the playing field with businesses
throughout the United States that are
trying to attract capital.
Through tax incentives for new and
existing marginal wells, small producers in Oklahoma, as well as
throughout the United States, will be
the primary benefactors of my legislation. Independents find more than half
of all new oil and natural gas reserves,
and they drill almost 85 percent of all
domestic wells—both exploratory and
development—onshore and offshore.
The U.S. oil and gas industry is one
of the Nation’s major economic assets
and has long been recognized as a world
leader in size, scope, and technology.
As such a vital national industry, we
cannot afford to continue down the
road we have become accustomed to for
so long. We need to focus our energies
inward and try to help the industry restimulate its growth. As a nation we
must face up to the threat posed by
mounting U.S. dependency on foreign
energy imports from such regions as
the Middle East.∑
By Mr. GRASSLEY (for himself,
Mr. PRYOR and Mr. REID):
S. 448. A bill to amend sections 118 of
the Internal Revenue Code of 1986 to
provide for certain exceptions from
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rules for determining contributions in
aid of construction, and for other purposes, to the Committee on Finance.
THE CONTRIBUTIONS ON AID OF CONSTRUCTION
LEGISLATION
∑ Mr. GRASSLEY. Mr. President,
today I am here to reintroduce revenue
neutral legislation to reinstate the exclusion from gross income of contributions in aid of construction—known as
CIAC—to a water or wastewater utility. Joining me as cosponsors are Senators PRYOR and REID. Senator REID
has taken the lead on this issue for a
number of years.
This legislation has passed as an
amendment in the Senate on two occasions. It is my hope that this year we
will finally be successful in passing
this legislation and having the President sign it into law.
Utilities are capital-incentive industries. Historically, they have received
the capital for the construction of a
utility extension directly from new
customers, either through the developer or small municipality. The customer contributes this property, or a
cash equivalent, to the utility. In this
manner, existing customers will not
face rate increases every time the utility gains new customers.
Prior to enactment of the Tax Reform Act of 1986, CIAC were not included in the gross income of an investor-owned utility and therefore were
not subject to Federal income tax. In
addition, utilities could not take tax
depreciation or investment tax credits
on CIAC. The 1986 act repealed section
118(b) of the Internal Revenue Code and
thus subjected CIAC to tax as gross income. As we all remember, the 1986 act
had two basic premises as its core. One,
the tax base would be broadened and
rates would be lowered. Two, cuts in
individual rates would be offset by increases in the corporate tax burden.
Clearly the authors of the 1986 act intended to ensure that the burden of
corporate taxes was spread to all industries including utilities.
The removal of the exclusion from
gross income of CIAC was intended as a
tax on utilities. In practice, the CIAC
tax is not a tax on utilities, but a tax
on utility customers, primarily on developers and home buyers. State utility regulatory bodies, referred to as
PUC’s, generally require utilities to
pass tax costs onto their customers.
This is done in one of two ways. The
most common approach is to require
the new customer to pay the cost of
the tax. But this is not a simple dollarfor-dollar charge. In order for utility to
be made whole, it must pay on the
CIAC, plus a tax on the tax. The phenomenon is known as gross-up. Depending on the State, a gross-up can add as
much as 70 percent to the customer’s
cost of the contributions. In other
words, a contribution of water mains
valued at $100,000 would cost a customer $170,000.
Alternatively, the PUC’s may allow
the utility to recover the tax cost from
existing customers or over a period of
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February 16, 1995
time from the new ratepayers. Not
only does this defeat the purpose of a
contribution, it also means a rate increase. And with many water utilities
seeking rate increases of as much as 25
percent in order to pay for Safe Drinking Water Act requirements, additional
rate increases can lead to calls for condemnation.
Whichever method is chosen, utilities
do not pay the tax, they pass it on.
Passing the tax on has detrimental effects, not only on the utility’s ability
to bring in new business, but on the environment, and most significantly, on
the price of new housing.
Any developer faced with a large
gross-up will have to evaluate its effect
on the bottom line. Depending on conditions in the local housing market, a
developer will ultimately pass the cost
of the CIAC and the gross-up on to the
new home buyer. The National Association of Home Builders has estimated
that the CIAC tax can increase the cost
of new housing by as much as $2,000 a
unit. This additional cost is enough to
end the dream of home ownership for a
young couple.
The CIAC tax also has some important environmental effects. New customers can avoid paying the CIAC tax
by building their own independent
water systems. This leads to a proliferation of systems that may not
have the financial, technical, or managerial ability to comply with the rigorous requirements of the Safe Drinking Water Act. Such systems are referred to as nonviable. According to
the EPA, in fiscal year 1990, more than
90 percent of the violations of the Safe
Drinking Water Act were made by systems serving less than 3,300 individuals. By encouraging the proliferation
of nonviable systems, the CIAC tax
frustrates the environmental policy
goal of consolidating these systems
into already existing, professionally
managed systems.
Mr. President, section 118(b) of the
Internal Revenue Code, exempting
CIAC from the gross income, should be
restored. It is a tax on capital, not income. It is not a tax on utilities, it is
a tax on their customers. The CIAC tax
increases the price of new homes, leads
to the development of environmentally
unsound water and sewage facilities,
and reduces the tax base for all levels
of government.
Most important in my opinion, elimination of the CIAC tax will help home
buyers, not by fueling real estate speculation, but by removing another barrier to the purchase of a new home.
Anyone who has bought a house recently knows you don’t just pay the
price of the house. You pay closing
costs, title costs, title insurance fees,
attorney’s fees, and points. And when
you buy a house hooked up to privately
owned utilities, you also pay the CIAC
tax—as much as $2,000 per unit.
This legislation was most recently
estimated to cost $106 million over 5
years. I have included a revenue offset
in the bill as introduced that raises
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February 16, 1995
$140 million over the same period, thus
netting $34 million for the Federal Government. The offset extends depreciation on new water utility plant from 20
to 25 years and switches from 150 percent declining balance to straight-line
depreciation. This offset was suggested
by the investor-owned water industry
and is indivisible from the substance of
the legislation which is the restoration
of the exclusion of CIAC from gross income. The industry suggested it only
for the purpose of repealing the CIAC
tax, and that is its only intended use.
Mr. President, repeal of the tax on
CIAC for water and wastewater utilities will have a noticeable effect on
both housing prices and environmental
policy. It is supported by the National
Association of Water Companies, the
National Association of Regulatory
Utility Commissioners, and the National Association of Home Builders. I
urge my colleagues to cosponsor this
important legislation.
Mr. President, I ask unanimous consent that the text of the bill be printed
in the RECORD.
There being no objection, the bill was
ordered to be printed in the RECORD, as
follows:
S. 448
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
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SECTION 1. TREATMENT OF CONTRIBUTIONS IN
AID OF CONSTRUCTION.
(a) TREATMENT OF CONTRIBUTIONS IN AID OF
CONSTRUCTION.—
(1) IN GENERAL.—Section 118 of the Internal
Revenue Code of 1986 (relating to contributions to the capital of a corporation) is
amended—
(A) by redesignating subsection (c) as subsection (e), and
(B) by inserting after subsection (b) the
following new subsections:
‘‘(c) SPECIAL RULES FOR WATER AND SEWAGE DISPOSAL UTILITIES.—
‘‘(1) GENERAL RULE.—For purposes of this
section, the term ‘contribution to the capital
of the taxpayer’ includes any amount of
money or other property received from any
person (whether or not a shareholder) by a
regulated public utility which provides water
or sewerage disposal service if—
‘‘(A) such amount is a contribution in aid
of construction,
‘‘(B) in the case of contribution of property
other than water or sewerage disposal facilities, such amount meets the requirements of
the expenditure rule of paragraph (2), and
‘‘(C) such amount (or any property acquired or constructed with such amount) is
not included in the taxpayer’s rate base for
ratemaking purposes.
‘‘(2) EXPENDITURE RULE.—An amount meets
the requirements of this paragraph if—
‘‘(A) an amount equal to such amount is
expended for the acquisition or construction
of tangible property described in section
1231(b)—
‘‘(i) which is the property for which the
contribution was made or is of the same type
as such property, and
‘‘(ii) which is used predominantly in the
trade or business of furnishing water or sewerage disposal services,
‘‘(B) the expenditure referred to in subparagraph (A) occurs before the end of the
second taxable year after the year in which
such amount was received, and
‘‘(C) accurate records are kept of the
amounts contributed and expenditures made,
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the expenditures to which contributions are
allocated, and the year in which the contributions and expenditures are received and
made.
‘‘(3) DEFINITIONS.—For purpose of this subsection—
‘‘(A) CONTRIBUTION IN AID OF CONSTRUCTION.—The term ‘contribution in aid of construction’ shall be defined by regulations
prescribed by the Secretary, except that
such term shall not include amounts paid as
service charges for starting or stopping services.
‘‘(B) PREDOMINANTLY.—The term ‘predominantly’ means 80 percent or more.
‘‘(C) REGULATED PUBLIC UTILITY.—The term
‘regulated public utility’ has the meaning
given such term by section 7701(a)(33), except
that such term shall not include any utility
which is not required to provide water or
sewerage disposal services to members of the
general public in its service area.
‘‘(4) DISALLOWANCE OF DEDUCTIONS AND INVESTMENT CREDIT; ADJUSTED BASIS.—Notwithstanding any other provision of this subtitle,
no deduction or credit shall be allowed for,
or by reason of, any expenditure which constitutes a contribution in aid of construction
to which this subsection applies. The adjusted basis of any property acquired with
contributions in aid of construction to which
this subsection applies shall be zero.
‘‘(d) STATUTE OF LIMITATIONS.—If the taxpayer for any taxable year treats an amount
as a contribution to the capital of the taxpayer described in subsection (c), then—
‘‘(1) the statutory period for the assessment of any deficiency attributable to any
part of such amount shall not expire before
the expiration of 3 years from the date the
Secretary is notified by the taxpayer (in
such manner as the Secretary may prescribe)
of—
‘‘(A) the amount of the expenditure referred to in subparagraph (A) of subsection
(c)(2),
‘‘(B) the taxpayer’s intention not to make
the expenditures referred to in such subparagraph, or
‘‘(C) a failure to make such expenditure
within the period described in subparagraph
(B) of subsection (c)(2); and
‘‘(2) such deficiency may be assessed before
the expiration of such 3-year period notwithstanding the provisions of any other law or
rule of law which would otherwise prevent
such assessment.’’
AMENDMENT.—Section
(2)
CONFORMING
118(b) of such Code is amended by inserting
‘‘except as provided in subsection (c),’’ before
‘‘the term’’.
(3) EFFECTIVE DATE.—The amendments
made by this subsection shall apply to
amounts received after the date of the enactment of this Act.
(b) RECOVERY METHOD AND PERIOD FOR
WATER UTILITY PROPERTY.—
(1) REQUIREMENT TO USE STRAIGHT LINE
METHOD.—Section 168(b)(3) of the Internal
Revenue Code of 1986 is amended by adding
at the end the following new subparagraph:
‘‘(F) Water utility property described in
subsection (e)(5).’’
(2) 25-YEAR RECOVERY PERIOD.—The table
contained in section 168(c)(1) of such Code is
amended by inserting the following item
after the item relating to 20-year property:
‘‘Water utility property ....
25 years’’.
(3) WATER UTILITY PROPERTY.—
(A) IN GENERAL.—Section 168(e) of such
Code is amended by adding at the end the
following new paragraph:
‘‘(5) WATER UTILITY PROPERTY.—The term
‘water utility property’ means property—
‘‘(A) which is an integral part of the gathering, treatment, or commercial distribution
of water, and
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‘‘(B) which, without regard to this paragraph, would be 20-year property.’’
(B) CONFORMING AMENDMENT.—Subparagraph (F) of section 168(e)(3) of such Code is
amended by adding at the end the following
new sentence: ‘‘Such term does not include
water utility property.’’
(4) ALTERNATIVE SYSTEM.—Clause (iv) of
section 168(g)(2)(C) of such Code is amended
by inserting ‘‘, water utility property,’’ and
‘‘grading’’.
(5) EFFECTIVE DATE.—The amendments
made by this subsection shall apply to property placed in service after the date of the
enactment of this Act, other than property
placed in service pursuant to a binding contract in effect on such date and at all times
thereafter before the property is placed in
service.∑
By Mr. SIMON (for himself and
Ms. MOSELEY-BRAUN):
S. 449. A bill to establish the Midewin
National Tallgrass Prairie in the State
of Illinois, and for other purposes; to
the Committee on Armed Services.
ILLINOIS LAND CONSERVATION ACT
∑ Mr. SIMON. Mr. President, I rise
today to introduce a most unique piece
of legislation—the Illinois Land Conservation Act. This bill is the result of
a broad-based, bipartisan consensus involving Federal, State, county and municipal concerns. It is a model for the
land reuse challenges faced by so many
communities throughout the country
who are impacted by military base closures. I believe this to be one of the
most significant conservation and economic development efforts ever attempted.
The closing of the Joliet Army Ammunition Plant in northeastern Illinois
has provided a once-in-a-lifetime opportunity to recapture and preserve
the tallgrass prairie that once covered
most of the Prairie State.
The Illinois Land Conservation Act
will create the Midewin National
Tallgrass Prairie. The term ‘‘Midewin’’
commemorates the grant medicine society of the Potawatoni Indian Tribe—
the original inhabitants of this area of
Illinois. This prairie will comprise
19,000 acres of land, which is home to 16
State endangered and threatened species, all within an easy drive of metropolitan Chicago.
A 910-acre tract adjacent to the
Midewin Prairie will become our county’s largest national veterans’ cemetery. Under the auspices of the Department of Veterans Affairs, this longawaited site will provide a dignified
place of rest for the many veterans in
this region who sacrificed so much for
our country.
The remaining acreage will be developed as an industrial park and a county landfill by the local communities.
Mr. President, the impact of the Joliet Arsenal closing has been profound
on the entire region—particularly the
small communities. The municipalities
surrounding the arsenal have sustained
the military presence here for the last
50 years, with several generations of
families involve in the important work
of defending our freedom. The Illinois
Land Conservation Act is our opportunity to provide a true peace dividend
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to those who have supported this vital
facility over the years.
I hope all my colleagues will support
this innovative effort that recaptures
an important part of our past, and addresses our needs for the future.∑
∑ Ms. MOSELEY-BRAUN. Mr. President, I am pleased to join the distinguished senior Senator from Illinois,
Senator SIMON, in introducing the Illinois Land Conservation Act of 1995.
This bill transfers land from the
former Joliet Army Ammunition Plant
to the Forest Service in order to establish a national grasslands. This bill
also turns over land to the Veterans
Administration for a new national veterans cemetery, and converts a number
of former munitions production areas
at the arsenal to local purposes.
Illinois is known as the Prairie
State. This name commemorates a
younger Illinois, a region of rolling
prairies, seas of butterflies, grazing
wildlife, and pioneers seeking out new
lands to settle. At one time, more than
43,000 square miles of prairie existed in
Illinois.
Over the course of 175 years, however,
development has crept over these open
lands. Farms, highways, and cities
have been built to such an extent that
today, only .01 percent of original prairie is left. Little evidence remains of,
in the words of Charles Chamberlain,
the author of the Illinois State song,
this ‘‘wilderness of prairies.’’
That is one reason why the bill we
are introducing today is important,
Mr. President—so important that it
has attracted support from a broad, bipartisan array of Illinois groups, from
industrialists to environmentalists,
and from researchers to hunters.
The Illinois Land Conservation Act is
more than just a bill to create a national veterans cemetery, although it
will address critical needs long awaited
by Chicago veterans. It is more than
just a bill to create a conservation
area, although it will establish the
largest in northern Illinois.
The Illinois Land Conservation Act,
once enacted, gives Illinois a rare opportunity to preserve one of the last
remaining areas of natural prairie. It’s
a once-in-a-lifetime chance to set aside
such a large, undeveloped tract of property for environmental and recreational purposes. In a sense, this bill
helps to protect a slice of ecological
history, and in doing so, creates a legacy for future generations of Illinoisans to study and enjoy.
In April 1993, the U.S. Army, after
announcing its intentions to close the
Joliet Arsenal, approached former Illinois Congressman George Sangmeister
to develop a concept plan for reutilization of the property. Congressman
Sangmeister formed a commission of 24
local and Federal representatives, who,
after several years of detailed planning, countless meetings, and extensive
negotiations, carefully formulated and
unanimously adopted a land reuse plan.
The Illinois Land Conservation Act is
the culmination of the commission’s
work.
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At the heart of this bill is the creation of a 19,000-acre national grasslands, to be known as the Midewin National Tallgrass Prairie.
Located approximately 60 miles
southwest of the Chicago metropolitan
area, the grasslands will be a recreational treasure for city residents,
accessible to millions for outdoor activities such as camping, horseback
riding, hunting, hiking, and environmental education.
The grasslands designation also will
help to protect and improve upon what
already is considered an ecological
wonderland. Hundreds of types of
plants and animals are found here, including plants indigenous to the area
for more than 10,000 years, and many
threatened and endangered species.
Many future projects are under consideration for the grasslands, such as the
restoration of wetlands and the reintroduction of bison.
Another cornerstone of this bill is
the establishment of a 1,000-acre national veterans cemetery. Identified as
the leading location by the Veterans
Administration, this cemetery, proposed for the center of the arsenal
property, will be a landscape rich in
streams, marshes, and hardwood forests—a magnificent and tranquil setting for veterans. When complete, the
cemetery will honor over 92,000 Chicago
veterans through the year 2030.
Mr. President, the Illinois Land Conservation Act is based upon a plan that
has been carefully crafted by key representatives of the local community
who have worked closely with Federal
agencies and the State of Illinois. It deserves to move forward quickly.
This bill is an excellent opportunity
to establish a monument to the fertile
soils which cultivated the agricultural
and commercial prosperity Illinois enjoys today.
It’s an excellent opportunity to create the first and the largest tallgrass
prairie ecosystem east of the Mississippi River.
And, most importantly, this bill is
the last opportunity of our lifetimes to
preserve a largely untouched, expansive tract of ecologically unique land
in the State of Illinois. In the words of
the Chicago Tribune, this is our chance
to ‘‘save Joliet Arsenal land for the
ages.’’ I agree, and urge the quick approval of this bill.∑
By Mr. NICKLES (for himself,
Mr. INHOFE, and Mr. DOLE):
S. 451. A bill to encourage production
of oil and gas within the United States
by providing tax incentives and easing
regulatory burdens, and for other purposes; to the Committee on Finance.
THE DOMESTIC OIL AND GAS PRODUCTION AND
PRESERVATION ACT
∑ Mr. NICKLES. Mr. President, today I
am introducing The Domestic Oil and
Gas Production and Preservation Act
along with Senators INHOFE and DOLE.
A companion bill is also being introduced in the House by Congressman
LUCAS and the rest of the Oklahoma
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February 16, 1995
delegation. We are introducing this bill
today in an effort to help revive our domestic oil and gas industry which plays
such a vital role in our national security. If our domestic industry is to survive domestically, then Congress needs
to act now to provide incentives and
regulatory reforms to encourage production in America.
Since the early 1980’s oil and gas extraction employment has been cut in
half. Employment in the oil and gas industry has declined by 500,000 since
1984. Imports of crude oil products have
increased by 200,000 barrels a day over
the last year and the import dependency ratio now exceeds 50 percent. In
December 1994, crude oil production
dropped to 5 million barrels per day in
the lower 48 States which is the lowest
level since 1946. We must take action
now to save domestic production not
only for the sake of the oil and gas industry but for the sake of the national
security of this Nation.
I understand that today the administration released an investigative report
conducted under section 232 of the
Trade Expansion Act of 1962 on the
threat to national security from the
rising tide of oil imports. I have not
yet seen this report but previous Commerce Department reports have found
that oil imports threaten the national
security and they were conducted when
our foreign oil dependence was much
lower. The question now is not whether
oil imports threaten national security;
everyone agrees that is the case. The
question now is what are we going to
do about it.
To date, the Clinton administration
has done nothing to encourage domestic production. In fact, in 1993, crude
oil reserves continued to decline by 788
million barrels. Natural gas reserves
fell by 2,600 Bcf to 162,415 Bcf. I have
been asking the Secretary of Energy
for 3 years now, what she intends to do
to help preserve the domestic oil and
gas industry. In the President’s 1996
budget there is nothing to aid this industry. That is why I am introducing
this bill today.
The Domestic Oil and Gas Production
and Preservation Act is intended to do
just what its name implies—encourage
oil and gas production and preserve and
revitalize the domestic oil and gas industry. This bill would accomplish
these goals in several ways. In title 1,
we provide for tax incentives. One of
the cornerstone pieces of this legislation is a tax credit to preserve marginal production and to encourage new
drilling. This provision would make it
more economical to keep a marginal
well producing during times of low
prices and would provide incentives to
producers not to shut in their marginal
wells due to economics resulting in a
permanent loss of the remaining
unproduced reserves.
This legislation also includes a tax
credit for production from new wells
that have been drilled after June 1,
1995. This provision is meant to encourage domestic exploration which has
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February 16, 1995
fallen dramatically in recent years.
During the early 1980’s the average rig
count was around 2,929. In 1994 the rig
count averaged 775. This is less than
one-third the average during the boom
years of the 1980’s. If domestic production does not increase, our reliance on
imported oil will only continue to
grow.
In addition to the tax credit, this bill
provides for several depletion reforms.
There are provisions to repeal the net
income limitation for computing percentage depletion, exclude marginal
production from the current 1,000 barrels per day limitation, repeal the
property allocation rule for computing
depletion, and freeze the percentage depletion rate at current marginal levels.
Until 1976, percentage depletion was
designed to operate as risk-weighted
depreciation for mineral properties.
Since then, the multiple limitations on
the availability of percentage depletion
as an effective capital cost recovery
provision has diminished our proven reserves. The time has come to revise
U.S. energy depletion policy. The circumstances that prevail in today’s
crude oil market are precisely the opposite of those that led to change to
the depletion deduction in 1976. The
world crude oil market is now glutted
with overproduction from Kuwait and
unsold Iraqi supplies are threatening
another oil market crash. When prices
decline, many wells are lost forever
and many other wells cannot be drilled.
Percentage depletion should be reformed so that more U.S. production
qualifies. Ensuring an adequate depletion allowance can reverse the falling
U.S. energy resource base. These reforms will encourage new technology
investments, provide economic stimulus to a major U.S. industry and create new, high-quality jobs.
In addition to the tax credit and the
percentage depletion reforms, this legislation provides that geological and
geophysical expenditures shall be
treated as deductible expenses, it expands the existing enhanced oil recovery tax credit and makes it AMT creditable, it provides an election for optional 5-year write-off of intangible
drilling costs, and it increases the
amount of intangible drilling costs
that can be expended without being
treated as a preference item for AMT
purposes. All these provisions will help
encourage continued production from
marginal wells, thus saving a valuable
national resource from being lost.
Title II of this legislation calls for
several regulatory reforms. It has provisions that address the enormous and
unnecessary financial responsibility
provisions of the Oil Pollution Act of
1990 [OPA ’90]. This bill clarifies that
the definition of ‘‘navigable waters’’
under OPA ’90 only applies to true ‘‘offshore facilities,’’ not facilities onshore.
It also changes the amount of financial
responsibility required under OPA ’90
from $150 to $35 million with discretion
given to the Secretary to establish a
higher amount (but not higher than
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$150 million) taking into account factors relevant to risks posed by a facility.
This legislation also addresses two
oil and gas royalty issues. First, it establishes a 6-year statute of limitations on actions commenced by the
United States for recovery of royalties
due under an oil and gas lease on Federal lands unless a lessee has made a
false or fraudulent statement with the
intent to evade the payment of royalties due. This provision is intended to
give some finality to the royalty collection process and require the government to be prompt and timely in their
pursuit of any underpayment of royalties. Second, it provides the Secretary
discretion to lower royalties on oil and
gas leases on Federal lands. This is intended to be used to help marginal
wells, when prices are low, from being
shut in as uneconomical.
In addition to the aforementioned
regulatory reforms, this bill addresses
two critical areas of reform, private
property rights and risk assessment.
Private property rights are protected
by the fifth amendment to the U.S.
Constitution. Unfortunately, the Federal bureaucracy has increasingly used
environmental laws to trample on
these rights. Two of the worst offenders are the Endangered Species Act and
the wetlands permitting program established by section 404 of the Clean
Water Act. This legislation incorporates the provisions of a separate bill
that I have introduced for the last 3
years entitled the Property Owners Bill
of Rights. The provisions of this bill require a landowner’s written consent before Federal agents could enter private
property, guarantee a landowner’s access to information gathered about
their property, guarantee a landowner’s right to dispute that information’s accuracy, guarantee a landowner’s right to appeal decisions made
under endangered species or wetlands
law, and guarantee that a landowner be
compensated if federal actions under
the Endangered Species Act or wetlands permitting program devalue their
property by 33 percent or more.
The risk assessment provisions of
this bill requires Federal agencies to
use sound scientific data when risk criteria and benefits are determined. It
also requires the agencies to make public the scientific basis for each risk criteria and full disclosure of all assumptions and uncertainties. It also provides for a petition process to require
an agency to review an existing regulation to ensure that benefits exceed the
costs.
Finally, title III of this bill abolishes
the existing prohibitions against the
export of domestic crude oil production. This provision would also help encourage production in the lower 48
States.
Together, the provisions of this bill
provide much needed incentives and
regulatory relief to an industry that is
vital to our national security. The
sooner the administration and Con-
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gress acknowledge the critical importance of the domestic oil and gas industry and stop burdening this industry
with high taxes and regulatory obstacles, the sooner we can take the necessary actions to preserve and revitalize this important sector of our
economy.∑
By Mr. MOYNIHAN (for himself
and Mr. DASCHLE) (by request):
S. 452. A bill to amend the Internal
Revenue Code of 1986 to provide tax relief for the middle class; to the Committee on Finance.
THE MIDDLE-CLASS BILL OF RIGHTS TAX RELIEF
ACT OF 1995
Mr. MOYNIHAN. Mr. President, as
ranking member of the Committee on
Finance, I am today joining with the
Democratic leader in introducing a
bill, at the request of the administration, containing the statutory provisions that implement the middle-income tax cuts contained in the President’s fiscal year 1996 budget submission. Secretary Rubin appeared before
the Finance Committee last week to
testify concerning these proposals.
By making statutory language available early in the legislative process,
the administration has aided the process of Senate consideration of these
provisions. This legislation also will
serve to answer many of the questions
that the public may have with respect
to the President’s tax proposals.
I want to thank the administration
for providing this level of detail in so
timely a fashion, and I look forward to
working with them on these proposals
in the coming months.
Mr. President, I ask unanimous consent that the text of the bill and additional material be printed in the
RECORD.
There being no objection, the material was ordered to be printed in the
RECORD, as follows:
S. 452
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986
CODE.
(a) SHORT TITLE.—This Act may be cited as
the ‘‘Middle-Class Bill of Rights Tax Relief
Act of 1995’’.
(b) AMENDMENT OF 1986 CODE.—Except as
otherwise expressly provided, whenever in
this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a
section or other provision of the Internal
Revenue Code of 1986.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; amendment of 1986 Code.
TITLE I—MIDDLE CLASS TAX RELIEF
Sec. 101. Credit for families with young children.
Sec. 102. Deduction for higher education expenses.
TITLE II—PROVISIONS RELATING TO
INDIVIDUAL RETIREMENT PLANS
Subtitle A—Retirement Savings Incentives
PART I—IRA DEDUCTION
Sec. 201. Increase in income limitations.
Sec. 202. Inflation adjustment for deductible
amount and income limitations.
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Sec. 203. Coordination of IRA deduction
limit with elective deferral
limit.
PART II—NONDEDUCTIBLE TAX-FREE IRA’S
Sec. 211. Establishment of nondeductible
tax-free individual retirement
accounts.
Subtitle B—Penalty-Free Distributions
Sec. 221. Distributions from certain plans
may be used without penalty to
purchase first homes, to pay
higher education or financially
devastating medical expenses,
or by the unemployed.
Sec. 222. Contributions must be held at least
5 years in certain cases.
TITLE I—MIDDLE CLASS TAX RELIEF
SEC. 101. CREDIT FOR FAMILIES WITH YOUNG
CHILDREN.
(a) IN GENERAL.—Subpart A of part IV of
subchapter A of chapter 1 (relating to nonrefundable personal credits) is amended by
inserting after section 22 the following new
section:
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‘‘SEC. 23. FAMILIES WITH YOUNG CHILDREN.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—In the case of an indi-
vidual, there shall be allowed as a credit
against the tax imposed by this chapter for
the taxable year an amount equal to $300
multiplied by the number of eligible children
of the taxpayer for the taxable year.
‘‘(2) INCREASE IN CREDIT.—In the case of
taxable years beginning after December 31,
1998, paragraph (1) shall be applied by substituting ‘$500’ for ‘$300’.
‘‘(b) LIMITATIONS.—
‘‘(1) PHASE-OUT OF CREDIT.—
‘‘(A) IN GENERAL.—The amount of the credit allowed under subsection (a) shall be reduced (but not below zero) by the amount determined under subparagraph (B).
‘‘(B) AMOUNT OF REDUCTION.—The amount
determined under this subparagraph equals
the amount which bears the same ratio to
the credit (determined without regard to this
subsection) as—
‘‘(i) the excess of—
‘‘(I) the taxpayer’s adjusted gross income
for such taxable year, over
‘‘(II) $60,000, bears to
‘‘(ii) $15,000.
Any amount determined under this subparagraph which is not a multiple of $10 shall be
rounded to the next lowest $10.
‘‘(C) ADJUSTED GROSS INCOME.—For purposes of this paragraph, adjusted gross income of any taxpayer shall be increased by
any amount excluded from gross income
under section 911, 931, or 933.
‘‘(2) LIMITATION BASED ON AMOUNT OF TAX.—
The credit allowed by subsection (a) for the
taxable year (after the application of paragraph (1)) shall not exceed the excess (if any)
of—
‘‘(A) the taxpayer’s regular tax liability for
the taxable year reduced by the credits allowable against such tax under this subpart
(other than this section) determined without
regard to section 26, over
‘‘(B) the sum of—
‘‘(i) the taxpayer’s tentative minimum tax
for such taxable year, plus
‘‘(ii) the credit allowed for the taxable year
under section 32.
‘‘(c) ELIGIBLE CHILD.—For purposes of this
section, the term ‘eligible child’ means any
child (as defined in section 151(c)(3)) of the
taxpayer—
‘‘(1) who has not attained age 13 as of the
close of the calendar year in which the taxable year of the taxpayer begins,
‘‘(2) who is a dependent of the taxpayer
with respect to whom the taxpayer is allowed a deduction under section 151 for such
taxable year, and
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‘‘(3) whose TIN is included on the taxpayer’s return for such taxable year.
‘‘(d) INFLATION ADJUSTMENTS.—In the case
of a taxable year beginning in a calendar
year after 1999—
‘‘(1) IN GENERAL.—The $500 and $60,000
amounts contained in subsections (a)(2) and
(b)(2) shall each be increased by an amount
equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar
year in which the taxable year begins, determined by substituting ‘calendar year 1998’
for ‘calendar year 1992’ in subparagraph (B)
thereof.
‘‘(2) INCREASE IN PHASEOUT RANGE.—If the
amount applicable under subsection (a) for
any taxable year exceeds $500, subsection
(b)(2)(B) shall be applied by substituting an
amount equal to 30 times such applicable
amount for ‘$15,000’.
‘‘(3) ROUNDING.—If any amount as adjusted
under paragraph (1) is not a multiple of $100,
such amount shall be rounded to the next
lowest multiple of $100.
‘‘(e) SPECIAL RULES.—
‘‘(1) AMOUNT OF CREDIT MAY BE DETERMINED
UNDER TABLES.—The amount of the credit allowed by this section may be determined
under tables prescribed by the Secretary.
‘‘(2) CERTAIN OTHER RULES APPLY.—Rules
similar to the rules of subsections (c)(1)(E)
and (F), (d), and (e) of section 32 shall apply
for purposes of this section.’’
(b) CLERICAL AMENDMENT.—The table of
sections for subpart A of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 22 the
following new item:
‘‘Sec. 23. Families with young children.’’
(c) EFFECTIVE DATE.—The amendments
made by this section shall apply to taxable
years beginning after December 31, 1995.
SEC. 102. DEDUCTION FOR HIGHER EDUCATION
EXPENSES.
(a) DEDUCTION ALLOWED.— Part VII of sub-
chapter B of chapter 1 (relating to additional
itemized deductions for individuals) is
amended by redesignating section 220 as section 221 and by inserting after section 219 the
following new section:
‘‘SEC. 220. HIGHER EDUCATION TUITION AND
FEES.
‘‘(a) ALLOWANCE OF DEDUCTION.—In the
case of an individual, there shall be allowed
as a deduction the amount of qualified higher education expenses paid by the taxpayer
during the taxable year.
‘‘(b) LIMITATIONS.—
‘‘(1) DOLLAR LIMITATION.—
‘‘(A) IN GENERAL.—The amount allowed as
a deduction under subparagraph (a) for any
taxable year shall not exceed $10,000.
‘‘(B) PHASE-IN.—In the case of taxable
years beginning in 1996, 1997, or 1998, ‘$5,000’
shall be substituted for ‘$10,000’ in subparagraph (A).
‘‘(2) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME.—
‘‘(A) IN GENERAL.—The amount which
would (but for this paragraph) be taken into
account under paragraph (1) shall be reduced
(but not below zero) by the amount determined under subparagraph (B).
‘‘(B) AMOUNT OF REDUCTION.—The amount
determined under this subparagraph equals
the amount which bears the same ratio to
the amount which would be so taken into account as—
‘‘(i) the excess of—
‘‘(I) the taxpayer’s modified adjusted gross
income for such taxable year, over
‘‘(II) $70,000 ($100,000 in the case of a joint
return), bears to
‘‘(ii) $20,000.
‘‘(C) MODIFIED ADJUSTED GROSS INCOME.—
The term ‘modified adjusted gross income’
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means the adjusted gross income of the taxpayer for the taxable year determined—
‘‘(i) without regard to this section and sections 911, 931, and 933, and
‘‘(ii) after the application of sections 86,
135, 219 and 469.
For purposes of sections 86, 135, 219, and 469,
adjusted gross income shall be determined
without regard to the deduction allowed
under this section.
‘‘(D) INFLATION ADJUSTMENTS.—
‘‘(i) IN GENERAL.—In the case of a taxable
year beginning after 1999, the $70,000 and
$100,000 amounts described in subparagraph
(B) shall each be increased by an amount
equal to—
‘‘(I) such dollar amounts, multiplied by
‘‘(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar
year in which the taxable year begins, determined by substituting ‘calendar year 1998’
for ‘calendar year 1992’ in subparagraph (B)
thereof.
‘‘(ii) ROUNDING.—If any amount as adjusted
under clause (i) is not a multiple of $5,000,
such amount shall be rounded to the next
lowest multiple of $5,000.
‘‘(c) QUALIFIED HIGHER EDUCATION EXPENSES.—For purposes of this section—
‘‘(1) QUALIFIED HIGHER EDUCATION EXPENSES.—
‘‘(A) IN GENERAL.—The term ‘qualified
higher education expenses’ means tuition
and fees charged by an educational institution and required for the enrollment or attendance of—
‘‘(i) the taxpayer,
‘‘(ii) the taxpayer’s spouse, or
‘‘(iii) any dependent of the taxpayer with
respect to whom the taxpayer is allowed a
deduction under section 151,
as an eligible student at an institution of
higher education.
‘‘(B) EXCEPTION FOR EDUCATION INVOLVING
SPORTS, ETC.—Such term does not include expenses with respect to any course or other
education involving sports, games, or hobbies, unless such expenses—
‘‘(i) are part of a degree program, or
‘‘(ii) are deductible under this chapter
without regard to this section.
‘‘(C) EXCEPTION FOR NONACADEMIC FEES.—
Such term does not include any student activity fees, athletic fees, insurance expenses,
or other expenses unrelated to a student’s
academic course of instruction.
‘‘(D) ELIGIBLE STUDENT.—For purposes of
subparagraph (A), the term ‘eligible student’
means a student who—
‘‘(i) meets the requirements of section
484(a)(1) of the Higher Education Act of 1965
(20 U.S.C. 1091(a)(1)), as in effect on the date
of the enactment of this section, and
‘‘(ii)(I) is carrying at least one-half the
normal full-time work load for the course of
study the student is pursuing, as determined
by the institution of higher education, or
‘‘(II) is enrolled in a course which enables
the student to improve the student’s job
skills or to acquire new job skills.
‘‘(E) IDENTIFICATION REQUIREMENT.—No deduction shall be allowed under subsection (a)
to a taxpayer with respect to an eligible student unless the taxpayer includes the name,
age, and taxpayer identification number of
such eligible student on the return of tax for
the taxable year.
‘‘(2) INSTITUTION OF HIGHER EDUCATION.—
The term ‘institution of higher education’
means an institution which—
‘‘(A) is described in section 481 of the Higher Education Act of 1965 (20 U.S.C. 1088), as in
effect on the date of the enactment of this
section, and
‘‘(B) is eligible to participate in programs
under title IV of such Act.
‘‘(d) SPECIAL RULES.—
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‘‘(1) NO DOUBLE BENEFIT.—
‘‘(A) IN GENERAL.—No deduction shall be
allowed under subsection (a) for qualified
higher education expenses with respect to
which a deduction is allowable to the taxpayer under any other provision of this chapter unless the taxpayer irrevocably waives
his right to the deduction of such expenses
under such other provision.
‘‘(B) DEPENDENTS.—No deduction shall be
allowed under subsection (a) to any individual with respect to whom a deduction
under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable
year begins.
‘‘(C) SAVINGS BOND EXCLUSION.—A deduction shall be allowed under subsection (a) for
qualified higher education expenses only to
the extent the amount of such expenses exceeds the amount excludable under section
135 for the taxable year.
‘‘(2) LIMITATION ON TAXABLE YEAR OF DEDUCTION.—
‘‘(A) IN GENERAL.—A deduction shall be allowed under subsection (a) for any taxable
year only to the extent the qualified higher
education expenses are in connection with
enrollment at an institution of higher education during the taxable year.
‘‘(B) CERTAIN PREPAYMENTS ALLOWED.—
Subparagraph (A) shall not apply to qualified
higher education expenses paid during a taxable year if such expenses are in connection
with an academic term beginning during
such taxable year or during the 1st 3 months
of the next taxable year.
‘‘(3) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS AND VETERANS BENEFITS.—The amount
of qualified higher education expenses otherwise taken into account under subsection (a)
with respect to the education of an individual shall be reduced (before the application of subsection (b)) by the sum of the
amounts received with respect to such individual for the taxable year as—
‘‘(A) a qualified scholarship which under
section 117 is not includable in gross income,
‘‘(B) an educational assistance allowance
under chapter 30, 31, 32, 34, or 35 of title 38,
United States Code, or
‘‘(C) a payment (other than a gift, bequest,
devise, or inheritance within the meaning of
section 102(a)) for educational expenses, or
attributable to enrollment at an eligible
educational institution, which is exempt
from income taxation by any law of the
United States.
‘‘(4) NO DEDUCTION FOR MARRIED INDIVIDUALS FILING SEPARATE RETURNS.—If the taxpayer is a married individual (within the
meaning of section 7703), this section shall
apply only if the taxpayer and the taxpayer’s
spouse file a joint return for the taxable
year.
‘‘(5) NONRESIDENT ALIENS.—If the taxpayer
is a nonresident alien individual for any portion of the taxable year, this section shall
apply only if such individual is treated as a
resident alien of the United States for purposes of this chapter by reason of an election
under subsection (g) or (h) of section 6013.
‘‘(6) REGULATIONS.—The Secretary may
prescribe such regulations as may be necessary or appropriate to carry out this section, including regulations requiring recordkeeping and information reporting.’’
(b) DEDUCTION ALLOWED IN COMPUTING ADJUSTED GROSS INCOME.—Section 62(a) is
amended by inserting after paragraph (15)
the following new paragraph:
‘‘(16) HIGHER EDUCATION TUITION AND
FEES.—The deduction allowed by section
220.’’
(c) CONFORMING AMENDMENT.—The table of
sections for part VII of subchapter B of chapter 1 is amended by striking the item relating to section 220 and inserting:
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‘‘Sec. 220. Higher education tuition and fees.
‘‘Sec. 221. Cross reference.’’
(d) EFFECTIVE DATE.—The amendments
made by this section shall apply to payments
made after December 31, 1995.
TITLE II—PROVISIONS RELATING TO
INDIVIDUAL RETIREMENT PLANS
Subtitle A—Retirement Savings Incentives
PART I—IRA DEDUCTION
SEC. 201. INCREASE IN INCOME LIMITATIONS.
(a) IN GENERAL.—Subparagraph (B) of section 219(g)(3) is amended—
(1) by striking ‘‘$40,000’’ in clause (i) and
inserting ‘‘$80,000’’, and
(2) by striking ‘‘$25,000’’ in clause (ii) and
inserting ‘‘$50,000’’.
(b) PHASE-OUT OF LIMITATIONS.—Clause (ii)
of section 219(g)(2)(A) is amended by striking
‘‘$10,000’’ and inserting ‘‘an amount equal to
10 times the dollar amount applicable for the
taxable year under subsection (b)(1)(A)’’.
(c) EFFECTIVE DATE.—The amendments
made by this section shall apply to taxable
years beginning after December 31, 1995.
SEC. 202. INFLATION ADJUSTMENT FOR DEDUCTIBLE AMOUNT AND INCOME LIMITATIONS.
(a) IN GENERAL.—Section 219 is amended by
redesignating subsection (h) as subsection (i)
and by inserting after subsection (g) the following new subsection:
‘‘(h) COST-OF-LIVING ADJUSTMENTS.—
‘‘(1) IN GENERAL.—In the case of any taxable year beginning in a calendar year after
1996, each dollar amount to which this subsection applies shall be increased by an
amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar
year in which the taxable year begins, determined by substituting ‘calendar year 1995’
for ‘calendar year 1992’ in subparagraph (B)
thereof.
‘‘(2) DOLLAR AMOUNTS TO WHICH SUBSECTION
APPLIES.—This subsection shall apply to—
‘‘(A) the $2,000 amounts under subsection
(b)(1)(A) and (c), and
‘‘(B) the applicable dollar amounts under
subsection (g)(3)(B).
‘‘(3) ROUNDING RULES.—
‘‘(A) DEDUCTION AMOUNTS.—If any amount
referred to in paragraph (2)(A) as adjusted
under paragraph (1) is not a multiple of $500,
such amount shall be rounded to the next
lowest multiple of $500.
‘‘(B) APPLICABLE DOLLAR AMOUNTS.—If any
amount referred to in paragraph (2)(B) as adjusted under paragraph (1) is not a multiple
of $5,000, such amount shall be rounded to
the next lowest multiple of $5,000.’’
(b) CONFORMING AMENDMENTS.—
(1) Clause (i) of section 219(c)(2)(A) is
amended to read as follows:
‘‘(i) the sum of $250 and the dollar amount
in effect for the taxable year under subsection (b)(1)(A), or’’.
(2) Section 408(a)(1) is amended by striking
‘‘in excess of $2,000 on behalf of any individual’’ and inserting ‘‘on behalf of any individual in excess of the amount in effect for
such taxable year under section 219(b)(1)(A)’’.
(3) Section 408(b)(2)(B) is amended by striking ‘‘$2,000’’ and inserting ‘‘the dollar
amount in effect under section 219(b)(1)(A)’’.
(4) Subparagraph (A) of section 408(d)(5) is
amended by striking ‘‘$2,250’’ and inserting
‘‘the dollar amount in effect for the taxable
year under section 219(c)(2)(A)(i)’’.
(5) Section 408(j) is amended by striking
‘‘$2,000’’.
(c) EFFECTIVE DATE.—The amendments
made by this section shall apply to taxable
years beginning after December 31, 1995.
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SEC. 203. COORDINATION OF IRA DEDUCTION
LIMIT WITH ELECTIVE DEFERRAL
LIMIT.
(a) IN GENERAL.—Section 219(b) (relating to
maximum amount of deduction) is amended
by adding at the end the following new paragraph:
‘‘(4) COORDINATION WITH ELECTIVE DEFERRAL
LIMIT.—The amount determined under paragraph (1) or subsection (c)(2) with respect to
any individual for any taxable year shall not
exceed the excess (if any) of—
‘‘(A) the limitation applicable for the taxable year under section 402(g)(1), over
‘‘(B) the elective deferrals (as defined in
section 402(g)(3)) of such individual for such
taxable year.’’
AMENDMENT.—Section
(b)
CONFORMING
219(c) is amended by adding at the end the
following new paragraph:
‘‘(3) CROSS REFERENCE.—
‘‘For reduction in paragraph (2) amount,
see subsection (b)(4).’’
(c) EFFECTIVE DATE.—The amendments
made by this section shall apply to taxable
years beginning after December 31, 1995.
PART II—NONDEDUCTIBLE TAX-FREE
IRA’S
SEC. 211. ESTABLISHMENT OF NONDEDUCTIBLE
TAX-FREE INDIVIDUAL RETIREMENT
ACCOUNTS.
(a) IN GENERAL.—Subpart A of part I of
subchapter D of chapter 1 (relating to pension, profit-sharing, stock bonus plans, etc.)
is amended by inserting after section 408 the
following new section:
‘‘SEC. 408A. SPECIAL INDIVIDUAL RETIREMENT
ACCOUNTS.
‘‘(a) GENERAL RULE.—Except as provided in
this chapter, a special individual retirement
account shall be treated for purposes of this
title in the same manner as an individual retirement plan.
‘‘(b) SPECIAL INDIVIDUAL RETIREMENT ACCOUNT.—For purposes of this title, the term
‘special individual retirement account’
means an individual retirement plan which
is designated at the time of establishment of
the plan as a special individual retirement
account.
‘‘(c) TREATMENT OF CONTRIBUTIONS.—
‘‘(1) NO DEDUCTION ALLOWED.—No deduction
shall be allowed under section 219 for a contribution to a special individual retirement
account.
‘‘(2) CONTRIBUTION LIMIT.—The aggregate
amount of contributions for any taxable year
to all special individual retirement accounts
maintained for the benefit of an individual
shall not exceed the excess (if any) of—
‘‘(A) the maximum amount allowable as a
deduction under section 219 with respect to
such individual for such taxable year, over
‘‘(B) the amount so allowed.
‘‘(3) SPECIAL RULES FOR QUALIFIED TRANSFERS.—
‘‘(A) IN GENERAL.—No rollover contribution
may be made to a special individual retirement account unless it is a qualified transfer.
‘‘(B) LIMIT NOT TO APPLY.—The limitation
under paragraph (2) shall not apply to a
qualified transfer to a special individual retirement account.
‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—
‘‘(1) IN GENERAL.—Except as provided in
this subsection, any amount paid or distributed out of a special individual retirement
account shall not be included in the gross income of the distributee.
‘‘(2) EXCEPTION FOR EARNINGS ON CONTRIBUTIONS HELD LESS THAN 5 YEARS.—
‘‘(A) IN GENERAL.—Any amount distributed
out of a special individual retirement account which consists of earnings allocable to
contributions made to the account during
the 5-year period ending on the day before
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such distribution shall be included in the
gross income of the distributee for the taxable year in which the distribution occurs.
‘‘(B) ORDERING RULE.—
‘‘(i) FIRST-IN, FIRST-OUT RULE.—Distributions from a special individual retirement
account shall be treated as having been
made—
‘‘(I) first from the earliest contribution
(and earnings allocable thereto) remaining
in the account at the time of the distribution, and
‘‘(II) then from other contributions (and
earnings allocable thereto) in the order in
which made.
‘‘(ii) ALLOCATIONS BETWEEN CONTRIBUTIONS
AND EARNINGS.—Any portion of a distribution
allocated to a contribution (and earnings allocable thereto) shall be treated as allocated
first to the earnings and then to the contribution.
‘‘(iii) ALLOCATION OF EARNINGS.—Earnings
shall be allocated to a contribution in such
manner as the Secretary may by regulations
prescribe.
‘‘(iv) CONTRIBUTIONS IN SAME YEAR.—Except
as provided in regulations, all contributions
made during the same taxable year may be
treated as 1 contribution for purposes of this
subparagraph.
‘‘(C) CROSS REFERENCE.—
‘‘For additional tax for early withdrawal,
see section 72(t).
‘‘(3) QUALIFIED TRANSFER.—
‘‘(A) IN GENERAL.—Paragraph (2) shall not
apply to any distribution which is transferred in a qualified transfer to another special individual retirement account.
‘‘(B) CONTRIBUTION PERIOD.—For purposes
of paragraph (2), the special individual retirement account to which any contributions
are transferred shall be treated as having
held such contributions during any period
such contributions were held (or are treated
as held under this subparagraph) by the special individual retirement account from
which transferred.
‘‘(4) SPECIAL RULES RELATING TO CERTAIN
TRANSFERS.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of law, in the case of a qualified transfer to a special individual retirement account from an individual retirement
plan which is not a special individual retirement account—
‘‘(i) there shall be included in gross income
any amount which, but for the qualified
transfer, would be includible in gross income, but
‘‘(ii) section 72(t) shall not apply to such
amount.
‘‘(B) TIME FOR INCLUSION.—In the case of
any qualified transfer which occurs before
January 1, 1997, any amount includible in
gross income under subparagraph (A) with
respect to such contribution shall be includible ratably over the 4-taxable year period
beginning in the taxable year in which the
amount was paid or distributed out of the individual retirement plan.
‘‘(e) QUALIFIED TRANSFER.—For purposes of
this section
‘‘(1) IN GENERAL.—The term ‘qualified
transfer’ means a transfer to a special individual retirement account from another such
account or from an individual retirement
plan but only if such transfer meets the requirements of section 408(d)(3).
‘‘(2) LIMITATION.—A transfer otherwise described in paragraph (1) shall not be treated
as a qualified transfer if the taxpayer’s adjusted gross income for the taxable year of
the transfer exceeds the sum of—
‘‘(A) the applicable dollar amount, plus
‘‘(B) the dollar amount applicable for the
taxable year under section 219(g)(2)(A)(ii).
This paragraph shall not apply to a transfer
from a special individual retirement account
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to another special individual retirement account.
‘‘(3) DEFINITIONS.—For purposes of this subsection, the terms ‘adjusted gross income’
and ‘applicable dollar amount’ have the
meanings given such terms by section
219(g)(3), except subparagraph (A)(ii) thereof
shall be applied without regard to the phrase
‘or the deduction allowable under this section’.’’
(b) EARLY WITHDRAWAL PENALTY.—Section
72(t) is amended by adding at the end the following new paragraph:
‘‘(6) RULES RELATING TO SPECIAL INDIVIDUAL
RETIREMENT ACCOUNTS.—In the case of a special individual retirement account under section 408A—
‘‘(A) this subsection shall only apply to
distributions out of such account which consist of earnings allocable to contributions
made to the account during the 5-year period
ending on the day before such distribution,
and
‘‘(B) paragraph (2)(A)(i) shall not apply to
any distribution described in subparagraph
(A).’’
(c) EXCESS CONTRIBUTIONS.—Section 4973(b)
is amended by adding at the end the following new sentence: ‘‘For purposes of paragraphs (1)(B) and (2)(C), the amount allowable as a deduction under section 219 shall be
computed without regard to section 408A.’’
(d) CONFORMING AMENDMENT.—The table of
sections for subpart A of part I of subchapter
D of chapter 1 is amended by inserting after
the item relating to section 408 the following
new item:
‘‘Sec. 408A. Special individual retirement accounts.’’
(e) EFFECTIVE DATE.—The amendments
made by this section shall apply to taxable
years beginning after December 31, 1995.
Subtitle B—Penalty-Free Distributions
SEC. 221. DISTRIBUTIONS FROM CERTAIN PLANS
MAY BE USED WITHOUT PENALTY TO
PURCHASE FIRST HOMES, TO PAY
HIGHER EDUCATION OR FINANCIALLY DEVASTATING MEDICAL EXPENSES, OR BY THE UNEMPLOYED.
(a) IN GENERAL.—Paragraph (2) of section
72(t) (relating to exceptions to 10-percent additional tax on early distributions from
qualified retirement plans) is amended by
adding at the end the following new subparagraph:
‘‘(D) DISTRIBUTIONS FROM CERTAIN PLANS
FOR FIRST HOME PURCHASES OR EDUCATIONAL
EXPENSES.—Distributions to an individual
from an individual retirement plan—
‘‘(i) which are qualified first-time homebuyer distributions (as defined in paragraph
(7)); or
‘‘(ii) to the extent such distributions do
not exceed the qualified higher education expenses (as defined in paragraph (8)) of the
taxpayer for the taxable year.’’
(b) FINANCIALLY DEVASTATING MEDICAL EXPENSES.—
(1) IN GENERAL.—Section 72(t)(3)(A) is
amended by striking ‘‘(B),’’.
(2) CERTAIN LINEAL DESCENDANTS AND ANCESTORS TREATED AS DEPENDENTS AND LONGTERM CARE SERVICES TREATED AS MEDICAL
CARE.—Subparagraph (B) of section 72(t)(2) is
amended by striking ‘‘medical care’’ and all
that follows and inserting ‘‘medical care determined—
‘‘(i) without regard to whether the employee itemizes deductions for such taxable
year, and
‘‘(ii) in the case of an individual retirement plan—
‘‘(I) by treating such employee’s dependents as including all children, grandchildren
and ancestors of the employee or such employee’s spouse and
‘‘(II) by treating qualified long-term care
services (as defined in paragraph (9)) as med-
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February 16, 1995
ical care for purposes of this subparagraph
(B).’’
AMENDMENT.—Subpara(3)
CONFORMING
graph (B) of section 72(t)(2) is amended by
striking ‘‘or (C)’’ and inserting ‘‘, (C) or (D)’’.
(c) DEFINITIONS.—Section 72(t), as amended
by this Act, is amended by adding at the end
the following new paragraphs:
‘‘(7) QUALIFIED FIRST-TIME HOMEBUYER DISTRIBUTIONS.—For
purposes of paragraph
(2)(D)(i)—
‘‘(A) IN GENERAL.—The term ‘qualified
first-time homebuyer distribution’ means
any payment or distribution received by an
individual to the extent such payment or distribution is used by the individual before the
close of the 60th day after the day on which
such payment or distribution is received to
pay qualified acquisition costs with respect
to a principal residence of a first-time homebuyer who is such individual or the spouse,
child (as defined in section 151(c)(3)), or
grandchild of such individual.
‘‘(B) QUALIFIED ACQUISITION COSTS.—For
purposes of this paragraph, the term ‘qualified acquisition costs’ means the costs of acquiring, constructing, or reconstructing a
residence. Such term includes any usual or
reasonable settlement, financing, or other
closing costs.
‘‘(C) FIRST-TIME HOMEBUYER; OTHER DEFINITIONS.—For purposes of this paragraph—
‘‘(i) FIRST-TIME HOMEBUYER.—The term
‘first-time homebuyer’ means any individual
if—
‘‘(I) such individual (and if married, such
individual’s spouse) had no present ownership interest in a principal residence during
the 3-year period ending on the date of acquisition of the principal residence to which
this paragraph applies, and
‘‘(II) subsection (h) or (k) of section 1034
did not suspend the running of any period of
time specified in section 1034 with respect to
such individual on the day before the date
the distribution is applied pursuant to subparagraph (A).
In the case of an individual described in section 143(i)(1)(C) for any year, an ownership
interest shall not include any interest under
a contract of deed described in such section.
An individual who loses an ownership interest in a principal residence incident to a divorce or legal separation is deemed for purposes of this subparagraph to have had no
ownership interest in such principal residence within the period referred to in subparagraph (A)(II).
‘‘(ii) PRINCIPAL RESIDENCE.—The term
‘principal residence’ has the same meaning
as when used in section 1034.
‘‘(iii) DATE OF ACQUISITION.—The term ‘date
of acquisition’ means the date—
‘‘(I) on which a binding contract to acquire
the principal residence to which subparagraph (A) applies is entered into, or
‘‘(II) on which construction or reconstruction of such a principal residence is commenced.
‘‘(D) SPECIAL RULE WHERE DELAY IN ACQUISITION.—If any distribution from any individual retirement plan fails to meet the requirements of subparagraph (A) solely by
reason of a delay or cancellation of the purchase or construction of the residence, the
amount of the distribution may be contributed to an individual retirement plan as provided in section 408(d)(3)(A)(i) (determined by
substituting ‘120 days’ for ‘60 days’ in such
section), except that—
‘‘(i) section 408(d)(3)(B) shall not be applied
to such contribution, and
‘‘(ii) such amount shall not be taken into
account in determining whether section
408(d)(3)(A)(i) applies to any other amount.
‘‘(8) QUALIFIED HIGHER EDUCATION EXPENSES.—For
purposes
of
paragraph
(2)(D)(ii)—
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‘‘(A) IN GENERAL.—The term ‘qualified
higher education expenses’ means tuition
and fees required for the enrollment or attendance of—
‘‘(i) the taxpayer,
‘‘(ii) the taxpayer’s spouse,
‘‘(iii) a dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151, or
‘‘(iv) the taxpayer’s child (as defined in
section 151(c)(3)) or grandchild,
as an eligible student at an institution of
higher education (as defined in paragraphs
(1)(D) and (2) of section 220(c)).
‘‘(B) EXCEPTIONS.—The term ‘qualified
higher education expenses’ does not include
expenses described in subparagraphs (B) and
(C) of section 220(c)(1).
‘‘(C) COORDINATION WITH SAVINGS BOND PROVISIONS.—The amount of qualified higher
education expenses for any taxable year
shall be reduced by any amount excludable
from gross income under section 135.
‘‘(9) QUALIFIED LONG-TERM CARE SERVICES.—
For purposes of paragraph (2)(B)—
‘‘(A) IN GENERAL.—The term ‘qualified
long-term care services’ means necessary diagnostic, curing, mitigating, treating, preventive, therapeutic, and rehabilitative services, and maintenance and personal care
services (whether performed in a residential
or nonresidential setting) which—
‘‘(i) are required by an individual during
any period the individual is an incapacitated
individual (as defined in subparagraph (B)),
‘‘(ii) have as their primary purpose—
‘‘(I) the provision of needed assistance with
1 or more activities of daily living (as defined in subparagraph (C)), or
‘‘(II) protection from threats to health and
safety due to severe cognitive impairment,
and
‘‘(iii) are provided pursuant to a continuing plan of care prescribed by a licensed
professional (as defined in subparagraph (D)).
‘‘(B) INCAPACITATED INDIVIDUAL.—The term
‘incapacitated individual’ means any individual who—
‘‘(i) is unable to perform, without substantial assistance from another individual (including assistance involving cueing or substantial supervision), at least 2 activities of
daily living as defined in subparagraph (C),
or
‘‘(ii) has severe cognitive impairment as
defined by the Secretary in consultation
with the Secretary of Health and Human
Services.
Such term shall not include any individual
otherwise meeting the requirements of the
preceding sentence unless a licensed professional within the preceding 12-month period
has certified that such individual meets such
requirements.
‘‘(C) ACTIVITIES OF DAILY LIVING.—Each of
the following is an activity of daily living:
‘‘(i) Eating.
‘‘(ii) Toileting.
‘‘(iii) Transferring.
‘‘(iv) Bathing.
‘‘(v) Dressing.
‘‘(D) LICENSED PROFESSIONAL.—The term
‘licensed professional’ means—
‘‘(i) a physician or registered professional
nurse, or
‘‘(ii) any other individual who meets such
requirements as may be prescribed by the
Secretary after consultation with the Secretary of Health and Human Services.
‘‘(E) CERTAIN SERVICES NOT INCLUDED.—The
term ‘qualified long-term care services’ shall
not include any services provided to an individual—
‘‘(i) by a relative (directly or through a
partnership, corporation, or other entity)
unless the relative is a licensed professional
with respect to such services, or
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‘‘(ii) by a corporation or partnership which
is related (within the meaning of section
267(b) or 707(b)) to the individual.
For purposes of this subparagraph, the term
‘relative’ means an individual bearing a relationship to the individual which is described
in paragraphs (1) through (8) of section
152(a).’’
(d) PENALTY-FREE DISTRIBUTIONS FOR CERTAIN UNEMPLOYED INDIVIDUALS.—Paragraph
(2) of section 72(t) is amended by adding at
the end the following new subparagraph:
‘‘(E) DISTRIBUTIONS TO UNEMPLOYED INDIVIDUALS.—A distribution from an individual
retirement plan to an individual after separation from employment, if—
‘‘(i) such individual has received unemployment compensation for 12 consecutive
weeks under any Federal or State unemployment compensation law by reason of such
separation, and
‘‘(ii) such distributions are made during
any taxable year during which such unemployment compensation is paid or the succeeding taxable year.’’
(e) EFFECTIVE DATE.—The amendments
made by this section shall apply to payments
and distributions after December 31, 1995.
SEC. 222. CONTRIBUTIONS MUST BE HELD AT
LEAST 5 YEARS IN CERTAIN CASES.
(a) IN GENERAL.—Section 72(t), as amended
by this Act, is amended by adding at the end
the following new paragraph:
‘‘(10) CERTAIN CONTRIBUTIONS MUST BE HELD
5 YEARS.—
‘‘(A) IN GENERAL.—Paragraph (2)(A)(i) shall
not apply to any amount distributed out of
an individual retirement plan (other than a
special individual retirement account) which
is allocable to contributions made to the
plan during the 5-year period ending on the
date of such distribution (and earnings on
such contributions).
‘‘(B) ORDERING RULE.—For purposes of this
paragraph, distributions shall be treated as
having been made—
‘‘(i) first from the earliest contribution
(and earnings allocable thereto) remaining
in the account at the time of the distribution, and
‘‘(ii) then from other contributions (and
earnings allocable thereto) in the order in
which made.
Earnings shall be allocated to contributions
in such manner as the Secretary may prescribe.
‘‘(C) SPECIAL RULE FOR ROLLOVERS.—
‘‘(i) PENSION PLANS.—Subparagraph (A)
shall not apply to distributions out of an individual retirement plan which are allocable
to rollover contributions to which section
402(c), 403(a)(4), or 403(b)(8) applied.
‘‘(ii) CONTRIBUTION PERIOD.—For purposes
of subparagraph (A), amounts shall be treated as having been held by a plan during any
period such contributions were held (or are
treated as held under this clause) by any individual retirement plan from which transferred.
‘‘(D) SPECIAL ACCOUNTS.—For rules applicable to special individual retirement accounts
under section 408A, see paragraph (8).’’
(b) EFFECTIVE DATE.—The amendment
made by this section shall apply to contributions (and earnings allocable thereto) which
are made after December 31, 1995.
PRESIDENTIAL MESSAGE REGARDING THE
MIDDLE-CLASS BILL OF RIGHTS
To the Congress of the United States:
I am pleased to transmit today for
your immediate consideration and enactment the ‘‘Middle-Class Bill of
Rights Tax Relief Act of 1995.’’ I am
also sending you an explanation of the
revenue proposals of this legislation.
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This bill is the next step in my Administration’s continuing effort to
raise living standards for working families and help restore the American
Dream for all our people.
For 2 years, we have worked hard to
strengthen our economy. We worked
with the last Congress to enact legislation that will reduce the annual deficits of 1994–98 by more than $600 billion; we created nearly 6 million new
jobs; we cut taxes for 15 million low-income families and gave tax relief to
small businesses; we opened export
markets through global and regional
trade agreements; we invested in
human and physical capital to increase
productivity; and we reduced the Federal Government by more than 100,000
positions.
With that strong foundation in place,
I am now proposing a Middle Class Bill
of Rights. Despite our progress, too
many Americans are still working
harder for less. The Middle Class Bill of
Rights will enable working Americans
to raise their families and get the education and training they need to meet
the demands of a new global economy.
It will let middle-income families share
in our economic prosperity today and
help them build our economic prosperity tomorrow.
The ‘‘Middle-Class Bill of Rights Tax
Relief Act of 1995’’ includes three of the
four elements of my Middle Class Bill
of Rights. First, it offers middle-income families a $500 tax credit for each
child under 13. Second, it includes a tax
deduction of up to $10,000 a year to help
middle-income Americans pay for postsecondary education expenses and
training expenses. Third, it lets more
middle-income Americans make taxdeductible contributions to Individual
Retirement Accounts and withdraw
from them, penalty-free, for the costs
of education and training, health care,
first-time home-buying, long periods of
unemployment, or the care of an ill
parent.
The fourth element of my Middle
Class Bill of Rights—not included in
this legislation—is the GI Bill for
America’s Workers, which consolidates
70 Federal training programs and creates a more effective system for learning new skills and finding better jobs
for adults and youth. Legislation for
this proposal is being developed in cooperation with the Congress.
If enacted, the Middle Class Bill of
Rights will help keep the American
Dream alive for everyone willing to
take responsibility for themselves,
their families, and their futures. And it
will not burden our children with more
debt. In my fiscal 1996 budget, we have
found enough savings not only to pay
for this tax bill, but also to provide another $81 billion in deficit reduction between 1996 and 2000.
This legislation will restore fairness
to our tax system, let middle-income
families in our economic prosperity,
encourage Americans to prepare for the
future, and help ensure that the United
States moves into the 21st Century
J:\ODA15\1995_F~1\S16FE5.REC
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CONGRESSIONAL RECORD — SENATE
still the strongest nation in the world.
I urge the Congress to take prompt and
favorable action on this legislation.
WILLIAM J. CLINTON.
THE WHITE HOUSE, February 13, 1995.
below, would apply for purposes of the dependent child credit.
REVENUE ESTIMATE
[In billions of dollars]
Fiscal years—
Total
GENERAL EXPLANATION OF THE MIDDLE-CLASS
BILL OF RIGHTS TAX RELIEF ACT OF 1995
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
TAX CREDIT FOR DEPENDENT CHILDREN
Current law
A tax exemption, in the form of a deduction, is allowed for each taxpayer and for
each dependent of a taxpayer. A dependent
includes a child of the taxpayer who is supported by the taxpayer and is under age 19 at
the close of the calendar year or is a student
under age 24. The deduction amount is $2,500
for tax year 1995. This amount is indexed annually for inflation.
In addition to an exemption for each child,
three other tax benefits may accrue to taxpayers with dependent or otherwise qualifying children: the credit for child and dependent care expenses, the exclusion for employer-provided child and dependent care
benefits, and the earned income tax credit
(EITC).
The EITC is a refundable tax credit based
on the earnings of the taxpayer. The EITC is
restricted to lower-income taxpayers and is
phased out when earnings exceed specified
levels. Although the EITC is available for
taxpayers without dependents or otherwise
qualifying children, the credit rate and income range of the credit are far greater when
the taxpayer has one or more qualifying children. In addition, the rate and income range
are higher for taxpayers with two or more
qualifying children than for taxpayers with
only one qualifying child.
Reasons for change
Tax relief for middle-class families has
been and continues to be an important goal
of this Administration. In 1993, the Administration faced a projection of ever-increasing
deficits. Bringing the deficit under control
and providing tax relief for the working poor
through an expansion of the EITC were the
first priorities. Having achieved more favorable than projected results from the deficit
reduction program introduced in 1993, the
Administration can now turn to providing
tax relief to middle-income families.
Tax relief to taxpayers with children is
needed to adjust the relative tax burdens of
smaller and larger families to reflect more
accurately their relative abilities to pay
taxes. Available resources should be targeted
to those in greatest need and at greatest
risk.
Proposal
A nonrefundable tax credit, which would be
applied after the EITC, would be allowed for
each dependent child under age 13. It would
be phased in, at $300 per child for tax years
1996, 1997, and 1998, and $500 per child for 1999
and thereafter. The credit would not reduce
any alternative minimum tax liability. The
credit would be phased out for taxpayers
with adjusted gross income between $60,000
and $75,000. Beginning in the year 2000, both
the amount of the credit and the phase-out
range would be indexed for the effects of inflation.
Taxpayers claiming the dependent child
credit would be required to provide valid social security numbers for themselves, their
spouses, and their children who qualify for
the credit. The procedures that would apply
for determining the validity of social security numbers under the EITC, discussed
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Tax credit
for dependent
children
1995
1996
1997
1998
1999
2000
0
¥3.5
¥6.8
¥6.6
¥8.3
¥10.1
¥35.4
EDUCATION AND JOB TRAINING TAX DEDUCTION
Current law
Taxpayers generally may not deduct the
expenses of higher education and training.
There are, however, special circumstances in
which deductions for educational expenses
are allowed, or in which the payment of educational expenses by others is excluded from
income.
Educational expenses may be deductible,
but only if the taxpayer itemizes, and only
to the extent that the expenses, along with
other miscellaneous itemized deductions, exceed two percent of adjusted gross income
(AGI). A deduction for educational purposes
is allowed only if the education maintains or
improves a skill required in the individual’s
employment or other trade or business, or is
required by the individual’s employer, or by
law or regulation for the individual to retain
his or her current job.
The interest from qualified U.S. savings
bonds is excluded from a taxpayer’s gross income to the extent the interest is used to
pay qualified educational expenses. To be
qualified, the savings bonds must be purchased after December 31, 1989, by a person
who has attained the age of 25. Qualified educational expenses consist of tuition and fees
for enrollment of the taxpayer, the taxpayer’s spouse, or the taxpayer’s dependent
at a public or non-profit institution of higher
education, including two-year colleges and
vocational schools.
Reasons for change
Deductions for educational expenses combine needed tax relief with preparation for
new economic imperatives. The expenses of
higher education place a significant burden
on many middle-class families. Grants and
subsidized loans are available to students
from low- and moderate-income families;
high-income families can afford the costs of
higher education.
Well-educated workers are essential to an
economy experiencing technological change
and facing global competition. The Administration believes that reducing the after-tax
cost of education for individuals and families
encourages investment in education and
training while lowering tax burdens for middle-income taxpayers.
Proposal
A taxpayer would be allowed to deduct
qualified educational expenses paid during
the taxable year for the education or training of the taxpayer, the taxpayer’s spouse, or
the taxpayer’s dependent. The deduction
would be allowed in determining AGI. Therefore, taxpayers could claim the deduction
even if they do not itemize and even if they
do not meet the two-percent AGI floor on
itemized deductions.
Qualified educational expenses would be
defined as tuition and fees charged by educational institutions that are directly related to an eligible student’s course of study
(e.g., registration fees, laboratory fees, and
extra charges for particular courses).
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February 16, 1995
Charges and expenses associated with meals,
lodging, student activities, athletics, health
care, transportation, books and similar personal, living or family expenses would not be
included. The expenses of education involving sports, games, or hobbies would not be
qualified educational expenses unless the
education is required as part of a degree program or related to the student’s current profession.
Qualified educational expenses would be
deductible in the year the expenses are paid,
subject to the requirement that the education commences or continues during that
year or during the first three months of the
next year. Qualified educational expenses
paid with the proceeds of a loan generally
will be deductible (rather than repayment of
the loan itself). Normal tax benefit rules
would apply to refunds (and reimbursements
through insurance) of previously deducted
tuition and fees.
In 1996, 1997, and 1998, the maximum deduction would be $5,000. In 1999 and thereafter,
this maximum would increase to $10,000. The
deduction would be phased out ratably for
taxpayers with modified AGI between $70,000
and $90,000 ($100,000 and $120,000 for joint returns). Modified AGI would include taxable
Social Security benefits and amounts otherwise excluded with respect to income earned
abroad (or income from Puerto Rico or U.S.
possessions). Beginning in 2000, the income
phase-out range would be indexed for inflation.
Any amount taken into account as a qualified educational expense would be reduced by
educational assistance that is not required
to be included in the gross income of either
the student or the taxpayer claiming the deduction. Thus, qualified educational expenses would be reduced by scholarship or
fellowship grants excludable from gross income under section 117 of the Internal Revenue Code (even if the grants are used to pay
expenses other than qualified educational expenses) and any educational assistance received as veterans’ benefits. However, no reduction would be required for a gift, bequest,
devise or inheritance within the meaning of
section 102(a).
An eligible student would be one who is enrolled or accepted for enrollment in a degree,
certificate, or other program (including a
program of study abroad approved for credit
by the institution at which such student is
enrolled) leading to a recognized educational
credential at an eligible institution. The student must pursue a course of study on at
least a half-time basis (or be taking a course
to improve or acquire job skills), cannot be
enrolled in an elementary or secondary
school, and cannot be a nonresident alien.
Educational institutions would determine
what constitutes a half-time basis for individual programs.
‘‘Eligible institution’’ is defined by reference to section 481 of the Higher Education
Act. Such institutions must have entered
into an agreement with the Department of
Education to participate in the student loan
program. This definition includes certain
proprietary institutions.
This proposal would not affect deductions
claimed under any other section of the Code,
except that any amount deducted under another section of the Code could not also be
deducted under this provision. An eligible
student would not be eligible to claim a deduction under this provision if that student
could be claimed as a dependent of another
taxpayer.
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S2853
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REVENUE ESTIMATE
[In billions of dollars]
Fiscal years—
Education and job training tax deduction .........................................................................................................................................................................................................................
EXPANDED INDIVIDUAL RETIREMENT ACCOUNTS
Current law
Under current law, an individual may
make deductible contributions to an individual retirement account or individual retirement annuity (IRA) up to the lesser of
$2,000 or compensation (wages and self-employment income). If the individual (or the
individual’s spouse) is an active participant
in an employer-sponsored retirement plan,
the $2,000 limit on deductible contributions
is phased out for couples filing a joint return
with adjusted gross income (AGI) between
$40,000 and $50,000, and for single taxpayers
with AGI between $25,000 and $35,000. To the
extent that an individual is not eligible for
deductible IRA contributions, he or she may
make nondeductible IRA contributions (up
to the contributions limit).
The earnings on IRA account balances are
not included in income until they are withdrawn. Withdrawals from an IRA (other than
withdrawals of nondeductible contributions)
are includable in income, and must begin by
age 701⁄2. Amounts withdrawn before age 591⁄2
are generally subject to an additional 10 percent penalty tax. The penalty tax does not
apply to distributions upon the death or disability of the taxpayer or withdrawals in the
form of substantially equal periodic payments over the life (or life expectancy) of the
IRA owner or over the joint lives (or life
expectancies) of the IRA owner and his or
her beneficiary.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
Reasons for change
The Nation’s savings rate has declined dramatically since the 1970’s. The Administration believes that increasing the savings rate
is essential if the United States is to sustain
a sufficient level of private investment into
the next century. Without adequate investment, the continued healthy growth of the
economy is at risk. The Administration is
also concerned that many households are not
saving enough to provide for long-term needs
such as retirement and education.
The Administration believes that individuals should be encouraged to save, and that
tax policies can provide a significant incentive. Under current law, however, savings incentives in the form of deductible IRAs are
not available to all middle-income taxpayers. Furthermore, the present-law income
thresholds for deductible IRAs and the maximum contribution amount are not indexed
for inflation, so that fewer Americans are eligible to make a deductible IRA contribution
each year, and the amount of the maximum
contribution is declining in real terms over
time. The Administration also believes that
providing taxpayers with the option of making IRA contributions that are nondeductible but can be withdrawn tax free will provide an alternative savings vehicle that
some middle-income taxpayers may find
more suitable for their savings needs.
Individuals save for many purposes besides
retirement. Broadening the tax incentives
for non-retirement saving can be an important element in any proposal to increase the
Nation’s savings rate. Expanding the flexibility of IRAs to meet a wider variety of savings needs, such as first-time home purchases, higher education expenditures, unemployment and catastrophic medical and
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nursing home expenses, should prove to be
more attractive to many taxpayers than accounts limited to retirement savings.
Proposal
Expand Deductible IRAs: Under the proposal the income thresholds and phase-out
ranges for deductible IRAs would be doubled;
therefore, eligibility would be phased out for
couples filing joint returns with AGI between $80,000 and $100,000 and for single individuals with AGI between $50,000 and $70,000.
The income thresholds and the present-law
annual contribution limit of $2,000 would be
indexed for inflation. As under current law,
any individual who is not an active participant in an employer-sponsored plan and
whose spouse is also not an active participant would be eligible for deductible IRAs
regardless of income.
Under the proposal, the IRA contribution
limit would be coordinated with the current
law limits on elective deferrals under qualified cash or deferred arrangements (sec.
401(k) plans), tax-sheltered annuities (sec.
403(b) annuities), and similar plans. The proposal also would provide that the presentlaw rule permitting penalty-free IRA withdrawals after an individual reaches age 591⁄2
does not apply in the case of amounts attributable to contributions made during the previous five years. This provision does not
apply to amounts rolled over from tax-qualified plans or tax-sheltered annuities.
These provisions would be effective January 1, 1996.
Special IRAs: Each individual eligible for a
traditional deductible IRA would have the
option of contributing an amount up to the
contribution limit to either a deductible IRA
or to a new ‘‘Special IRA.’’ Contributions to
a Special IRA would not be deductible, but if
the contributions remained in the account
for at least five years, distributions of the
contributions and earnings thereon would be
tax-free. Withdrawals of earnings from Special IRAs during the five-year period after
contribution would be subject to ordinary income tax. In addition, such withdrawals
would be subject to the 10-percent penalty
tax on early withdrawals unless used for one
of the four purposes described below.
The proposal would permit individuals
whose AGI for a taxable year did not exceed
the upper end of the new income eligibility
limits to convert balances in deductible
IRAs into Special IRAs without being subject to the 10-percent tax on early withdrawals. The amount transferred from the
deductible IRA to the Special IRA generally
would be includable in the individual’s income in the year of the transfer. However, if
a transfer was made before January 1, 1997,
the transferred amount included in the individual’s income would be spread evenly over
four taxable years.
The Special IRA provisions would be effective January 1, 1996.
Penalty-Free Distributions. Amounts could
be withdrawn penalty-free from deductible
IRAs and Special IRAs within the five-year
period after contribution, if the taxpayer
used the amounts to pay post-secondary education costs, to buy or build a first home, to
cover living costs if unemployed, or to pay
catastrophic medical expenses (including
certain nursing home costs).
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1995
1996
1997
1998
1999
2000
Total
0
¥0.7
¥4.7
¥5.0
¥5.8
¥7.6
¥23.7
a. Education expenses:
Penalty-free withdrawals would be allowed
to the extent the amount withdrawn is used
to pay qualified higher education expenses of
the taxpayer, the taxpayer’s spouse, the taxpayer’s dependent, or the taxpayer’s child or
grandchild (even if not a dependent). In general, a withdrawal for qualified higher education expenses would be subject to the same
requirements as the deduction for qualified
educational expenses (e.g., the expenses are
tuition and fees that are charged by educational institutions and are directly related
to an eligible student’s course of study).
b. First-time home purchasers:
Penalty-free withdrawals would be allowed
to the extent the amount withdrawn is used
to pay qualified acquisition, construction, or
reconstruction costs with respect to a principal residence of a first-time home buyer
who is the taxpayer, the taxpayer’s spouse,
or the taxpayer’s child or grandchild. A firsttime home buyer would be any individual
(and if married, the individual’s spouse) who
(1) did not own an interest in a principal residence during the three years prior to the
purchase of a home and (2) was not in an extended period for rolling over gain from the
sale of a principal residence.
c. Unemployment:
Penalty-free withdrawals could be made by
an individual after the individual is separated from employment if (1) the individual
has received unemployment compensation
for 12 consecutive weeks and (2) the withdrawal is made in the taxable year in which
the unemployment compensation is received
for the succeeding taxable year.
d. Medical care expenses and nursing home
costs:
The proposal would extend to IRAs the
present-law exception to the early withdrawal tax for distributions from tax-qualified plans and tax-sheltered annuities for
certain medical care expenses (deductible
medical expenses that are subject to a floor
of 7.5 percent of AGI) and expand the exception for IRAs to allow withdrawal for medical care expenses of the taxpayer’s child,
grandchild, parent or grandparent, whether
or not such person otherwise qualifies as the
taxpayer’s dependent.
In addition, for purposes of the exemption
from the 10 percent tax on early withdrawals
for distributions from IRAs, the definition of
medical care would include expenses for
qualified long-term care services for incapacitated individuals. Qualified long-term
care services generally would be services
that are required by an incapacitated individual, where the primary purpose of the
services is to provide needed assistance with
any activity of daily living or protection
from threats to health and safety due to severe cognitive impairment. An incapacitated
individual generally would be a person who
is certified by a licensed professional within
the preceding 12-month period as being unable to perform without substantial assistance at least two activities of daily living, or
as having severe cognitive impairment.
These provisions would be effective January 1, 1996.
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CONGRESSIONAL RECORD — SENATE
REVENUE ESTIMATE
[In billions of dollars]
Fiscal years—
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
Expanded individual retirement accounts ...........................................................................................................................................................................................................................
Mr. DASCHLE. Mr. President, I am
pleased to join my distinguished colleague from New York, the ranking
member of the Finance Committee, in
introducing the President’s MiddleClass Bill of Rights, a modest package
of measures that will make it easier for
middle-income Americans to raise
their children, educate themselves and/
or their children, and save for retirement.
These proposals are in stark contrast
to the tax cut proposals advanced by
Republicans. The tax cuts in the Republican Contract With America would
cost four times as much as the President’s tax cuts over the next 10 years,
with the overwhelming majority of the
benefit going to those making more
than $100,000.
According to a recent report prepared
by the Joint Committee on Taxation,
while the Republican tax cuts would
cost $200 billion over the first 5 years,
that cost would balloon to $704 billion
over 10 years. The President’s MiddleClass Bill of Rights would cost less
than a quarter of that amount—$171
billion—over a 10-year period.
In other words, Republicans are proposing tax cuts that will benefit the
middle class, while at the same time
asking those same middle-income
Americans to pay for tax cuts for highincome taxpayers that are three times
as large. That doesn’t sound like a fair
deal to me.
While there are some similarities between the President’s tax cuts and
those contained in the Contract With
America, the principal difference is
that the contract includes tax cuts for
high-income people and large corporations. And, as far as their impact on
the budget and middle-income taxpayers is concerned, it is an exceedingly large difference.
Another way the President’s tax cuts
can be distinguished from Republican
proposals is that the President would
provide middle-income tax relief specifically for higher education and job
training. Education and job training
expenses are among the largest costs
faced by middle-income families. Yet,
education and job training are critical
tools needed by middle-class Americans to build more quality of life for
themselves and their children.
Mr. President, I understand that the
Finance Committee already has held
hearings on the President’s proposal,
and I look forward to reviewing the
committee’s report on the testimony
presented at those hearings.
By Mr. MOYNIHAN (for himself
and Mr. DASCHLE) (by request):
S. 453. A bill to amend the Internal
Revenue Code of 1986 to modify the eli-
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gibility criteria for the earned income
tax credit, to improve tax compliance
by U.S. persons establishing or benefiting from foreign trusts, and for other
purposes; to the Committee on Finance.
THE TAX COMPLIANCE ACT OF 1995
Mr. MOYNIHAN. Mr. President, as
ranking member of the Committee on
Finance, I am today joining with the
Democratic leader in introducing a
bill, at the request of the administration, containing the statutory provisions that implement the tax compliance proposals in the President’s fiscal
year 1996 budget submission.
By making statutory language available early in the legislative process,
the administration has aided the process of Senate consideration of these
provisions. This legislation also will
serve to answer many of the questions
that the public may have with respect
to the President’s tax proposals.
I want to thank the administration
for providing this level of detail in so
timely a fashion, and I look forward to
working with them on these proposals
in the coming months.
Mr. President, I ask unanimous consent that the text of the bill and additional material be printed in the
RECORD.
There being no objection, the material was ordered to be printed in the
RECORD, as follows:
S. 453
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986
CODE.
(a) SHORT TITLE.—This Act may be cited as
the ‘‘Tax Compliance Act of 1995’’.
(b) AMENDMENT OF 1986 CODE.—Except as
otherwise expressly provided, whenever in
this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a
section or other provision of the Internal
Revenue Code of 1986.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; amendment of 1986 Code.
TITLE I—PROVISIONS RELATING TO THE
EARNED INCOME CREDIT
Sec. 101. Earned income tax credit denied to
individuals not authorized to be
employed in the United States.
Sec. 102. Earned income tax credit denied to
individuals with substantial unearned income.
TITLE II—PROVISIONS RELATING TO
INTERNATIONAL TAXATION
Sec. 201. Revision of tax rules on expatriation.
Sec. 202. Improved information reporting on
foreign trusts.
Sec. 203. Modification of rules relating to
foreign trusts having one or
more
United
States
beneficiaries.
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Sec. 204. Foreign persons not to be treated
as owners under grantor trust
rules.
Sec. 205. Gratuitous transfers by partnerships and foreign corporations.
Sec. 206. Information reporting regarding
large foreign gifts.
Sec. 207. Modification of rules relating to
foreign trusts which are not
grantor trusts.
Sec. 208. Residence of estates and trusts.
TITLE III—ADDITIONAL EMPOWERMENT
ZONES
Sec. 301. Additional empowerment zones.
TITLE I—PROVISIONS RELATING TO THE
EARNED INCOME CREDIT
SEC. 101. EARNED INCOME TAX CREDIT DENIED
TO INDIVIDUALS NOT AUTHORIZED
TO BE EMPLOYED IN THE UNITED
STATES.
(a) IN GENERAL.—Section 32(c)(1) (relating
to individuals eligible to claim the earned
income tax credit) is amended by adding at
the end the following new subparagraph:
‘‘(F) IDENTIFICATION NUMBER REQUIREMENT.—The term ‘eligible individual’ does
not include any individual who does not include on the return of tax for the taxable
year—
‘‘(i) such individual’s taxpayer identification number, and
‘‘(ii) if the individual is married (within
the meaning of section 7703), the taxpayer
identification number of such individual’s
spouse.’’
(b) SPECIAL IDENTIFICATION NUMBER.—Section 32 is amended by adding at the end the
following new subsection:
‘‘(k) IDENTIFICATION NUMBERS.—Solely for
purposes
of
subsections
(c)(1)(F)
and
(c)(3)(D), a taxpayer identification number
means a social security number issued to an
individual by the Social Security Administration (other than a social security number
issued pursuant to clause (II) (or that portion of clause (III) that relates to clause (II))
of section 205(c)(2)(B)(i) of the Social Security Act).’’
(c) EXTENSION OF PROCEDURES APPLICABLE
TO MATHEMATICAL OR CLERICAL ERRORS.—
Section 6213(g)(2) (relating to the definition
of mathematical or clerical errors) is amended by striking ‘‘and’ at the end of subparagraph (D), by striking the period at the end
of subparagraph (E) and inserting ‘‘, and’’,
and by inserting after subparagraph (E) the
following new subparagraph:
‘‘(F) an omission of a correct taxpayer
identification number required under section
23 (relating to credit for families with younger children) or section 32 (relating to the
earned income tax credit) to be included on
a return.’’
(d) EFFECTIVE DATE.—The amendments
made by this section shall apply to taxable
years beginning after December 31, 1995.
SEC. 102. EARNED INCOME TAX CREDIT DENIED
TO INDIVIDUALS WITH SUBSTANTIAL UNEARNED INCOME.
(a) IN GENERAL.—Paragraph (1) of section
32(c) (relating to individuals eligible to claim
the earned income tax credit) is amended by
adding at the end the following new subparagraph:
‘‘(G) EXCEPTION FOR INDIVIDUAL WITH SUBSTANTIAL INTEREST AND DIVIDEND INCOME.—
The term ‘eligible individual’ shall not include any individual if the aggregate amount
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of interest and dividends includible in the
gross income of the taxpayer for the taxable
year exceeds $2,500.’’
(b) CONFORMING AMENDMENT.—
(1) Paragraph (2) of section 32(i) (relating
to inflation adjustments) is amended to read
as follows:
‘‘(2) UNEARNED INCOME LIMITATION.—In the
case of a taxable year beginning in a calendar year after 1996, the dollar amount contained in subsection (c)(1)(G) shall be increased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar
year in which the taxable year begins, determined by substituting ‘calendar year 1995’
for ‘calendar year 1992’ in subparagraph (B)
thereof.
If any amount as adjusted under the preceding sentence is not a multiple of $50, such
dollar amount shall be rounded to the nearest multiple of $50.’’
(2) Paragraph (1) of section 32(i) is amended
by adding at the end the following new flush
sentence:
‘‘If any amount as adjusted under the preceding sentence is not a multiple of $10, such
dollar amount shall be rounded to the nearest multiple of $10.’’
(c) EFFECTIVE DATE.—The amendments
made by this section shall apply to taxable
years beginning after December 31, 1995.
TITLE II—PROVISIONS RELATING TO
INTERNATIONAL TAXATION
SEC. 201. REVISION OF TAX RULES ON EXPATRIATION.
(a) IN GENERAL.—Subpart A of part II of
subchapter N of chapter 1 is amended by inserting after section 877 the following new
section:
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‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
‘‘(a) GENERAL RULES.—For purposes of this
subtitle—
‘‘(1) CITIZENS.—If any United States citizen
relinquishes his citizenship during a taxable
year, all property held by such citizen at the
time immediately before such relinquishment shall be treated as sold at such time
for its fair market value and any gain or loss
shall be taken into account for such taxable
year.
‘‘(2) CERTAIN RESIDENTS.—If any long-term
resident of the United States ceases to be
subject to tax as a resident of the United
States for any portion of any taxable year,
all property held by such resident at the
time of such cessation shall be treated as
sold at such time for its fair market value
and any gain or loss shall be taken into account for the taxable year which includes
the date of such cessation.
‘‘(b) EXCLUSION FOR CERTAIN GAIN.—The
amount which would (but for this subsection) be includible in the gross income of
any taxpayer by reason of subsection (a)
shall be reduced (but not below zero) by
$600,000.
‘‘(c) PROPERTY TREATED AS HELD.—For purposes of this section, except as otherwise
provided by the Secretary, an individual
shall be treated as holding—
‘‘(1) all property which would be includible
in his gross estate under chapter 11 were
such individual to die at the time the property is treated as sold,
‘‘(2) any other interest in a trust which the
individual is treated as holding under the
rules of section 679(e) (determined by treating such section as applying to foreign and
domestic trusts), and
‘‘(3) any other interest in property specified by the Secretary as necessary or appropriate to carry out the purposes of this section.
‘‘(d) EXCEPTIONS.—The following property
shall not be treated as sold for purposes of
this section:
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‘‘(1) UNITED STATES REAL PROPERTY INTERESTS.—Any United States real property interest (as defined in section 897(c)(1)), other
than stock of a United States real property
holding corporation which does not, on the
date the individual relinquishes his citizenship or ceases to be subject to tax as a resident, meet the requirements of section
897(c)(2).
‘‘(2) INTEREST IN CERTAIN RETIREMENT
PLANS.—
‘‘(A) IN GENERAL.—Any interest in a qualified retirement plan (as defined in section
4974(d)), other than any interest attributable
to contributions which are in excess of any
limitation or which violate any condition for
tax-favored treatment.
‘‘(B) FOREIGN PENSION PLANS.—
‘‘(i) IN GENERAL.—Under regulations prescribed by the Secretary, interests in foreign
pension plans or similar retirement arrangements or programs.
‘‘(ii) LIMITATION.—The value of property
which is treated as not sold by reason of this
subparagraph shall not exceed $500,000.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) RELINQUISHMENT OF CITIZENSHIP.—A
citizen shall be treated as relinquishing his
United States citizenship on the date the
United States Department of State issues to
the individual a certificate of loss of nationality or on the date a court of the United
States cancels a naturalized citizen’s certificate of naturalization.
‘‘(2) LONG-TERM RESIDENT.—
‘‘(A) IN GENERAL.—The term ‘long-term
resident’ means any individual (other than a
citizen of the United States) who is a lawful
permanent resident of the United States and,
as a result of such status, has been subject to
tax as a resident in at least 10 taxable years
during the period of 15 taxable years ending
with the taxable year during which the sale
under subsection (a) is treated as occurring.
‘‘(B) SPECIAL RULE.—For purposes of subparagraph (A), there shall not be taken into
account—
‘‘(i) any taxable year during which any
prior sale is treated under subsection (a) as
occurring, or
‘‘(ii) any taxable year prior to the taxable
year referred to in clause (i).
‘‘(f) TERMINATION OF DEFERRALS, ETC.—On
the date any property held by an individual
is treated as sold under subsection (a)—
‘‘(1) any period deferring recognition of income or gain shall terminate, and
‘‘(2) any extension of time for payment of
tax shall cease to apply and the unpaid portion of such tax shall be due and payable.
‘‘(g) ELECTION BY EXPATRIATING RESIDENTS.—Solely for purposes of determining
gain under subsection (a)—
‘‘(1) IN GENERAL.—At the election of a resident not a citizen of the United States, property—
‘‘(A) which was held by such resident on
the date the individual first became a resident of the United States during the period
of long-term residency to which the treatment under subsection (a) relates, and
‘‘(B) which is treated as sold under subsection (a),
shall be treated as having a basis on such
date of not less than the fair market value of
such property on such date.
‘‘(2) ELECTION.—Such an election shall
apply to all property described in paragraph
(1), and, once made, shall be irrevocable.
‘‘(h) DEFERRAL OF TAX ON CLOSELY HELD
BUSINESS INTERESTS.—The District Director
may enter into an agreement with any individual which permits such individual to
defer payment for not more than 5 years of
any tax imposed by subsection (a) by reason
of holding any interest in a closely held business (as defined in section 6166(b)) other than
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a United States real property interest described in subsection (d)(1).
‘‘(i) REGULATIONS.—The Secretary shall
prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.
‘‘(j) CROSS REFERENCE.—
‘‘For termination of United States citizenship
for
tax
purposes,
see
section
7701(a)(47).’’
(b) DEFINITION OF TERMINATION OF UNITED
STATES CITIZENSHIP.—Section 7701(a) is
amended by adding at the end the following
new paragraph:
‘‘(47) TERMINATION OF UNITED STATES CITIZENSHIP.—An individual shall not cease to be
treated as a United States citizen before the
date on which the individual’s citizenship is
treated as relinquished under section
877A(e)(1).’’
(c) CONFORMING AMENDMENTS.—
(1) Section 877 is amended by adding at the
end the following new subsection:
‘‘(f) TERMINATION.—This section shall not
apply to any individual who is subject to the
provisions of section 877A.’’
(2) Paragraph (10) of section 7701(b) is
amended by adding at the end the following
new sentence: ‘‘This paragraph shall not
apply to any individual who is subject to the
provisions of section 877A.’’
(d) CLERICAL AMENDMENT.—The table of
sections for subpart A of part II of subchapter N of chapter 1 is amended by inserting after the item relating to section 877 the
following new item:
‘‘Sec. 877A. Tax responsibilities of expatriation.’’
(e) EFFECTIVE DATE.—The amendments
made by this section shall apply to—
(1) United States citizens who relinquish
(within the meaning of section 877A(e)(1) of
the Internal Revenue Code of 1986, as added
by this section) United States citizenship on
or after February 6, 1995, and
(2) long-term residents (as defined in such
section) who cease to be subject to tax as
residents of the United States on or after
such date.
SEC. 202. IMPROVED INFORMATION REPORTING
ON FOREIGN TRUSTS.
(a) IN GENERAL.—Section 6048 (relating to
returns as to certain foreign trusts) is
amended to read as follows:
‘‘SEC. 6048. INFORMATION WITH RESPECT TO
CERTAIN FOREIGN TRUSTS.
‘‘(a) NOTICE OF CERTAIN EVENTS.—
‘‘(1) GENERAL RULE.—On or before the 90th
day (or such later day as the Secretary may
prescribe) after any reportable event, the responsible party shall—
‘‘(A) notify each trustee of the trust of the
requirements of subsection (b), and
‘‘(B) provide written notice of such event
to the Secretary in accordance with paragraph (2).
‘‘(2) CONTENTS OF NOTICE.—The notice required by paragraph (1)(B) shall contain such
information as the Secretary may prescribe,
including—
‘‘(A) the amount of money or other property (if any) transferred to the trust in connection with the reportable event,
‘‘(B) the identity of the trust and of each
trustee and beneficiary (or class of beneficiaries) of the trust, and
‘‘(C) a statement that each trustee of the
trust has been informed of the requirements
of subsection (b).
‘‘(3) REPORTABLE EVENT.—For purposes of
this subsection, the term ‘reportable event’
means—
‘‘(A) the creation of any foreign trust by a
United States person,
‘‘(B) the transfer of any money or property
to a foreign trust by a United States person,
including a transfer by reason of death,
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‘‘(C) a domestic trust becoming a foreign
trust,
‘‘(D) the death of a citizen or resident of
the United States who is a grantor of a foreign trust, and
‘‘(E) the residency starting date (within
the meaning of section 7701(b)(2)(A)) of a
grantor of a foreign trust subject to tax
under section 679(a)(3).
Subparagraphs (A) and (B) shall not apply
with respect to a trust described in section
404(a)(4) or 404A.
‘‘(4) RESPONSIBLE PARTY.—For purposes of
this subsection, the term ‘responsible party’
means—
‘‘(A) the grantor in the case of a reportable
event described in subparagraph (A) or (E) of
paragraph (3),
‘‘(B) the transferor in the case of a reportable event described in paragraph (3)(B)
other than a transfer by reason of death,
‘‘(C) the trustee of the domestic trust in
the case of a reportable event described in
paragraph (3)(C), and
‘‘(D) the executor of the decedent’s estate
in the case of a transfer by reason of death.
‘‘(b) TRUST REPORTING REQUIREMENTS.—If a
foreign trust, at any time during a taxable
year of such trust—
‘‘(1) has a grantor who is a United States
person and—
‘‘(A) such grantor is treated as the owner
of any portion of such trust under the rules
of subpart E of part I of subchapter J of
chapter 1, or
‘‘(B) any portion of such trust would be included in the gross estate of such grantor if
the grantor were to die at such time, or
‘‘(2) directly or indirectly distributes, credits, or allocates money or property to any
United States person (whether or not the
trust has a grantor described in paragraph
(1)),
then such trust shall meet the requirements
of subsection (c) (relating to trust information and agent) and subsection (d) (relating
to annual return).
‘‘(c) CONTENTS OF SECTION 6048 STATEMENT.—
‘‘(1) IN GENERAL.—The requirements of this
subsection are met if the trust files with the
Secretary a statement which contains such
information as the Secretary may prescribe
and which—
‘‘(A) identifies a United States person who
is the trust’s limited agent to provide the
Secretary with such information that reasonably should be available to the trust for
purposes of applying sections 7602, 7603, and
7604 with respect to any request by the Secretary to examine trust records or produce
testimony related to any transaction by the
trust or with respect to any summons by the
Secretary for such records or testimony, and
‘‘(B) contains an agreement to comply with
the requirements of subsection (d).
‘‘(2) SPECIAL RULE.—A foreign trust which
appoints an agent described in paragraph
(1)(A) shall not be considered to have an office or a permanent establishment in the
United States solely because of the activities
of such agent pursuant to this section. For
purposes of this section, the appearance of
persons or production of records by reason of
the creation of the agency shall not subject
such persons or records to legal process for
any purpose other than determining the correct treatment under this title of the activities and operations of the trust.
‘‘(d) ANNUAL RETURNS AND STATEMENTS.—
The requirements of this subsection are met
if—
‘‘(1) the trust makes a return for the taxable year which sets forth a full and complete accounting of all trust activities and
operations for the taxable year, and contains
such other information as the Secretary may
prescribe; and
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‘‘(2) the trust furnishes such information
as the Secretary may prescribe to each
United States person—
‘‘(A) who is treated as the owner of any
portion of such trust under the rules of subpart E of part I of subchapter J of chapter 1,
‘‘(B) to whom any item with respect to the
taxable year is credited or allocated, or
‘‘(C) who receives a distribution from such
trust with respect to the taxable year.
‘‘(e) TIME AND MANNER OF FILING INFORMATION.—Any notice, statement, or return required under this section shall be made at
such time and in such manner as the Secretary shall prescribe.
‘‘(f) MODIFICATION OF RETURN REQUIREMENTS.—The Secretary is authorized to suspend or modify any requirement of this section if the Secretary determines that the
United States has no significant tax interest
in obtaining the required information.’’
(b) PENALTIES.—Section 6677 (relating to
failure to file information returns with respect to certain foreign trusts) is amended to
read as follows:
‘‘SEC. 6677. FAILURE TO FILE INFORMATION
WITH RESPECT TO CERTAIN FOREIGN TRUSTS.
‘‘(a)
FAILURE
TO
REPORT
CERTAIN
EVENTS.—
‘‘(1) IN GENERAL.—In the case of a report-
able event described in any subparagraph of
section 6048(a)(3) for which a responsible
party does not file a written notice meeting
the requirements of section 6048(a)(2) within
the time specified in section 6048(a)(1), the
responsible party shall pay a penalty of
$10,000. If any failure described in the preceding sentence continues for more than 90
days after the day on which the Secretary
mails notice of such failure to the responsible party, such party shall pay a penalty
(in addition to the $10,000 amount) of $10,000
for each 30-day period (or fraction thereof)
during which such failure continues after the
expiration of such 90-day period.
‘‘(2) 35-PERCENT PENALTY.—In the case of a
reportable event described in subparagraph
(A), (B), or (C) of section 6048(a)(3) (other
than a transfer by reason of death), the aggregate amount of the penalties under paragraph (1) shall not be less than an amount
equal to 35 percent of the gross value of the
property involved in such event (determined
as of the date of the event).
‘‘(3) RESPONSIBLE PARTY.—For purposes of
this subsection, the term ‘responsible party’
has the meaning given to such term by section 6048(a)(4).
‘‘(b) FAILURE TO MAKE CERTAIN STATEMENTS AND RETURNS.—
‘‘(1) IN GENERAL.—In the case of any failure
to meet the requirements of section 6048(b),
the appropriate tax treatment of any trust
transactions or operations shall be determined by the Secretary in the Secretary’s
sole discretion from the Secretary’s own
knowledge or from such information as the
Secretary may obtain through testimony or
otherwise.
‘‘(2) MONETARY PENALTY.—In the case of
any failure to meet the requirements of section 6048(b) with respect to a trust described
in such section by reason of paragraph (1)
thereof, the grantor described in such paragraph (1) shall pay a penalty of $10,000 for
each taxable year with respect to which the
foreign trust fails to meet such requirements. If any failure described in the preceding sentence continues for more than 90
days after the day on which the Secretary
mails notice of such failure to such grantor,
such grantor shall pay a penalty (in addition
to any other penalty) of $10,000 for each 30day period (or fraction thereof) during which
such failure continues after the expiration of
such 90-day period.
‘‘(c) REASONABLE CAUSE EXCEPTION.—No
penalty shall be imposed by this section on
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February 16, 1995
any failure which is shown to be due to reasonable cause and not due to willful neglect.
The fact that a foreign jurisdiction would
impose a civil or criminal penalty on the
taxpayer (or any other person) for disclosing
the requested documentation is not reasonable cause.
‘‘(d) DEFICIENCY PROCEDURES NOT TO
APPLY.—Subchapter B of chapter 63 (relating
to deficiency procedures for income, estate,
gift, and certain excise taxes) shall not apply
in respect of the assessment or collection of
any penalty imposed by this section.’’
(c) CLERICAL AMENDMENTS.—
(1) The table of sections for subpart B of
part III of subchapter A of chapter 61 is
amended by striking the item relating to
section 6048 and inserting the following new
item:
‘‘Sec. 6048. Information with respect to certain foreign trusts.’’
(2) The table of sections for part I of subchapter B of chapter 68 is amended by striking the item relating to section 6677 and inserting the following new item:
‘‘Sec. 6677. Failure to file information with
respect
to
certain
foreign
trusts.’’
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section shall apply—
(A) to reportable events occurring on or
after February 6, 1995, and
(B) to the extent such amendments require
reporting for any taxable year under section
6048(b) of the Internal Revenue Code of 1986
(as added by this section), to taxable years
beginning after the date of the enactment of
this Act.
(2) NOTICES.—For purposes of section
6048(a) of such Code, the 90th day referred to
therein shall in no event be treated as being
earlier than the 90th day after the date of
the enactment of this Act.
SEC. 203. MODIFICATION OF RULES RELATING TO
FOREIGN TRUSTS HAVING ONE OR
MORE
UNITED
STATES
BENEFICIARIES.
(a) IN GENERAL.—Section 679 (relating to
foreign trusts having one or more United
States beneficiaries) is amended to read as
follows:
‘‘SEC. 679. FOREIGN TRUSTS HAVING ONE OR
MORE
UNITED
STATES
BENEFICIARIES.
‘‘(a) TRANSFEROR TREATED AS OWNER.—
‘‘(1) IN GENERAL.—A United States person
who directly or indirectly transfers property
to a foreign trust (other than a trust described in section 404(a)(4) or section 404A)
shall be treated as the owner for his taxable
year of the portion of such trust attributable
to such property if for such year there is a
United States beneficiary of such trust.
‘‘(2) EXCEPTION.—
‘‘(A) IN GENERAL.—Paragraph (1) shall not
apply to any sale or exchange of property to
a trust if—
‘‘(i) the trust pays fair market value for
such property, and
‘‘(ii) all of the gain to the transferor is recognized at the time of transfer.
‘‘(B) CERTAIN OBLIGATIONS NOT TAKEN INTO
ACCOUNT.—For purposes of subparagraph (A),
in determining whether the transferor received fair market value, there shall not be
taken into account—
‘‘(i) any obligation of—
‘‘(I) the trust,
‘‘(II) any grantor or beneficiary of the
trust, or
‘‘(III) any person who is related (within the
meaning of section 643(i)(3)) to any grantor
or beneficiary of the trust, and
‘‘(ii) except as provided in regulations, any
obligation which is guaranteed by a person
described in clause (i).
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‘‘(C) TREATMENT OF DEEMED SALE ELECTION
UNDER SECTION 1057.—For purposes of subparagraph (A), a transfer with respect to which
an election under section 1057 is made shall
not be treated as a sale or exchange.
‘‘(3) SPECIAL RULES APPLICABLE TO FOREIGN
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GRANTOR WHO LATER BECOMES
STATES PERSON.—A nonresident
A
UNITED
alien individual who becomes a United States resident
within 5 years after directly or indirectly
transferring property to a foreign trust shall
be treated for purposes of this section and
section 6048 as having transferred such property, and any undistributed income (including all realized and unrealized gains) attributable thereto, to the foreign trust immediately after becoming a United States resident. For this purpose, a nonresident alien
shall be treated as becoming a resident of
the United States on the residency starting
date (within the meaning of section
7701(b)(2)(A)).
‘‘(b) BENEFICIARIES TREATED AS TRANSFERORS IN CERTAIN CASES.—For purposes of
this section and section 6048, if—
‘‘(1) a citizen or resident of the United
States who is treated as the owner of any
portion of a trust under subsection (a) dies,
‘‘(2) property is transferred to a foreign
trust by reason of the death of a citizen or
resident of the United States, or
‘‘(3) a domestic trust to which any United
States person made a transfer becomes a foreign trust,
then, except as otherwise provided in regulations, the trust beneficiaries shall be treated
as having transferred to such trust (as of the
date of the applicable event under paragraph
(1), (2), or (3)) their respective interests (as
determined under subsection (e)) in the property involved.
‘‘(c) TRUSTS ACQUIRING UNITED STATES
BENEFICIARIES.—If—
‘‘(1) subsection (a) applies to a trust for the
transferor’s taxable year, and
‘‘(2) subsection (a) would have applied to
the trust for the transferor’s immediately
preceding taxable year but for the fact that
for such preceding taxable year there was no
United States beneficiary for any portion of
the trust,
then, for purposes of this subtitle, the transferor shall be treated as having received as
an accumulation distribution taxable under
subpart D an amount equal to the undistributed net income (as determined under section 665(a) as of the close of such immediately preceding taxable year) attributable
to the portion of the trust referred to in subsection (a).
‘‘(d) TRUSTS TREATED AS HAVING A UNITED
STATES BENEFICIARY.—
‘‘(1) IN GENERAL.—For purposes of this section, a trust shall be treated as having a
United States beneficiary for the taxable
year unless—
‘‘(A) under the terms of the trust, no part
of the income or corpus of the trust may be
paid or accumulated during the taxable year
to or for the benefit of a United States person, and
‘‘(B) if the trust were terminated at any
time during the taxable year, no part of the
income or corpus of such trust could be paid
to or for the benefit of a United States person.
To the extent provided by the Secretary, for
purposes of this subsection, the term ‘United
States person’ includes any person who was a
United States person at any time during the
existence of the trust.
‘‘(2) ATTRIBUTION OF OWNERSHIP.—For purposes of paragraph (1), an amount shall be
treated as paid or accumulated to or for the
benefit of a United States person if such
amount is paid to or accumulated for a foreign corporation, foreign partnership, or foreign trust or estate, and—
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‘‘(A) in the case of a foreign corporation,
more than 50 percent of the total combined
voting power of all classes of stock of such
corporation entitled to vote is owned (within
the meaning of section 958(a)) or is considered to be owned (within the meaning of section 958(b)) by United States shareholders (as
defined in section 951(b)),
‘‘(B) in the case of a foreign partnership, a
United States person is a partner of such
partnership, or
‘‘(C) in the case of a foreign trust or estate,
such trust or estate has a United States beneficiary (within the meaning of paragraph
(1)).
‘‘(e) DETERMINATION OF BENEFICIARIES’ INTERESTS IN TRUST.—
‘‘(1) GENERAL RULE.—For purposes of this
section, a beneficiary’s interest in a foreign
trust shall be based upon all relevant facts
and circumstances, including the terms of
the trust instrument and any letter of wishes
or similar document, historical patterns of
trust distributions, and the existence of and
functions performed by a trust protector or
any similar advisor.
‘‘(2) SPECIAL RULE.—In the case of beneficiaries whose interests in a trust cannot be
determined under paragraph (1)—
‘‘(A) the beneficiary having the closest degree of kinship to the grantor shall be treated as holding the remaining interests in the
trust not determined under paragraph (1) to
be held by any other beneficiary, and
‘‘(B) if 2 or more beneficiaries have the
same degree of kinship to the grantor, such
remaining interests shall be treated as held
equally by such beneficiaries.
‘‘(3) CONSTRUCTIVE OWNERSHIP.—If a beneficiary of a foreign trust is a corporation,
partnership, trust, or estate, the shareholders, partners, or beneficiaries shall be
deemed to be the trust beneficiaries for purposes of this section.
‘‘(4) TAXPAYER RETURN POSITION.—A taxpayer shall clearly indicate on its income
tax return—
‘‘(A) the methodology used to determine
that taxpayer’s trust interest under this section, and
‘‘(B) if the taxpayer knows (or has reason
to know) that any other beneficiary of such
trust is using a different methodology to determine such beneficiary’s trust interest
under this section.
‘‘(f) REGULATIONS.—The Secretary shall
prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.’’
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments
made by this section shall apply to taxable
years ending on or after February 6, 1995.
(2) SECTION 679(a).—Paragraphs (2) and (3) of
section 679(a) of the Internal Revenue Code
of 1986 (as added by this section) shall apply
to—
(A) any trust created on or after February
6, 1995, and
(B) the portion of any trust created before
such date which is attributable to actual
transfers of property to the trust on or after
such date.
(3) SECTION 679(b).—
(A) IN GENERAL.—Paragraphs (1) and (2) of
section 679(b) of such Code (as so added) shall
apply to—
(i) any trust created on or after the date of
the enactment of this Act, and
(ii) the portion of any trust created before
such date which is attributable to actual
transfers of property to the trust on or after
such date.
(B) SECTION 679(b)(3).—Section 679(b)(3) of
such Code (as so added) shall take effect on
February 6, 1995, without regard to when the
property was transferred to the trust.
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SEC. 204. FOREIGN PERSONS NOT TO BE TREATED AS OWNERS UNDER GRANTOR
TRUST RULES.
(a) IN GENERAL.—So much of section 672(f)
(relating to special rule where grantor is foreign person) as precedes paragraph (2) is
amended to read as follows:
‘‘(f) SUBPART NOT TO RESULT IN FOREIGN
OWNERSHIP.—
‘‘(1) IN GENERAL.—Notwithstanding any
other provision of this subpart, this subpart
shall apply only to the extent such application results in an amount being included (directly or through 1 or more entities) in the
gross income of a citizen or resident of the
United States or a domestic corporation. The
preceding sentence shall not apply to any
portion of an investment trust if such trust
is treated as a trust for purposes of this title
and the grantor of such portion is the sole
beneficiary of such portion.’’
(b) CREDIT FOR CERTAIN TAXES.—Paragraph
(2) of section 665(d) is amended by adding at
the end the following new sentence: ‘‘Under
rules or regulations prescribed by the Secretary, in the case of any foreign trust of
which the settlor or another person would be
treated as owner of any portion of the trust
under subpart E but for section 672(f), the
term ‘taxes imposed on the trust’ includes
the allocable amount of any income, war
profits, and excess profits taxes imposed by
any foreign country or possession of the
United States on the settlor or such other
person in respect of trust income.’’
(c) DISTRIBUTIONS BY CERTAIN FOREIGN
TRUSTS THROUGH NOMINEES.—
(1) Section 643 is amended by adding at the
end the following new subsection:
‘‘(h) DISTRIBUTIONS BY CERTAIN FOREIGN
TRUSTS THROUGH NOMINEES.—For purposes of
this part, any amount paid to a United
States person which is derived directly or indirectly from a foreign trust of which the
payor is not the grantor shall be deemed in
the year of payment to have been directly
paid by the foreign trust to such United
States person.’’
(2) Section 665 is amended by striking subsection (c).
(d) EFFECTIVE DATE.—The amendments
made by this section shall take effect on the
date of the enactment of this Act.
(e) TRANSITIONAL RULE.—If—
(1) by reason of the amendments made by
this section, any person other than a United
States person ceases to be treated as the
owner of a portion of a domestic trust, and
(2) before January 1, 1996, such trust becomes a foreign trust, or the assets of such
trust are transferred to a foreign trust,
no tax shall be imposed by section 1491 of the
Internal Revenue Code of 1986 by reason of
such trust becoming a foreign trust or the
assets of such trust being transferred to a
foreign trust.
SEC. 205. GRATUITOUS TRANSFERS BY PARTNERSHIPS AND FOREIGN CORPORATIONS.
(a) IN GENERAL.—Subchapter C of chapter
80 (relating to provisions affecting more than
one subtitle) is amended by adding at the
end the following new section:
‘‘SEC. 7874. PURPORTED GIFTS BY PARTNERSHIPS AND FOREIGN CORPORATIONS.
‘‘(a) IN GENERAL.—Any property (including
money) that is purportedly a direct or indirect gift by a partnership or a foreign corporation to a person who is not a partner of
the partnership or a shareholder of the corporation, respectively, may be recharacterized by the Secretary to prevent the
avoidance of tax. The Secretary may not recharacterize gifts made for bona fide business or charitable purposes.
‘‘(b) STATEMENTS ON RECIPIENT’S RETURN.—
A taxpayer who receives a purported gift
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subject to subsection (a) shall attach a statement to his income tax return for the year of
receipt that identifies the property received
and describes fully the circumstances surrounding the purported gift.
‘‘(c) EXEMPTION.—Subsection (a) shall not
apply to purported gifts received by any person during any taxable year if the amount
thereof is less than $2,500.
‘‘(d) REGULATIONS.—The Secretary may
prescribe such rules as may be necessary or
appropriate to carry out the purposes of this
section.’’
(b) CLERICAL AMENDMENT.—The table of
sections for such subchapter C is amended by
adding at the end the following new item:
‘‘Sec. 7874. Purported gifts by partnerships
and foreign corporations.’’
(c) EFFECTIVE DATE.—The amendments
made by this section shall apply to amounts
received after the date of the enactment of
this Act.
SEC. 206. INFORMATION REPORTING REGARDING
LARGE FOREIGN GIFTS.
(a) IN GENERAL.—Subpart A of part III of
subchapter A of chapter 61 is amended by inserting after section 6039E the following new
section:
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‘‘SEC. 6039F. NOTICE OF LARGE GIFTS RECEIVED
FROM FOREIGN PERSONS.
‘‘(a) IN GENERAL.—If the value of the aggre-
gate foreign gifts received by a United States
person (other than an organization described
in section 501(c) and exempt from tax under
section 501(a)) during any taxable year exceeds $100,000, such United States person
shall furnish (at such time and in such manner as the Secretary shall prescribe) such information as the Secretary may prescribe regarding each foreign gift received during
such year.
‘‘(b) FOREIGN GIFT.—For purposes of this
section, the term ‘foreign gift’ means any
amount received from a person other than a
United States person which the recipient
treats as a gift or bequest. Such term shall
not include any qualified transfer (within
the meaning of section 2503(e)(2)).
‘‘(c) PENALTY FOR FAILURE TO FILE INFORMATION.—
‘‘(1) IN GENERAL.—If a United States person
fails to furnish the information required by
subsection (a) with respect to any foreign
gift within the time prescribed therefor (including extensions)—
‘‘(A) the tax consequences of the receipt of
such gift shall be determined by the Secretary in the Secretary’s sole discretion
from the Secretary’s own knowledge or from
such information as the Secretary may obtain through testimony or otherwise, and
‘‘(B) such United States person shall pay
(upon notice and demand by the Secretary
and in the same manner as tax) an amount
equal to 5 percent of the amount of such foreign gift for each month for which the failure continues (not to exceed 25 percent of
such amount in the aggregate).
‘‘(2) REASONABLE CAUSE EXCEPTION.— Paragraph (1) shall not apply to any failure to report a foreign gift if the United States person shows that the failure is due to reasonable cause and not due to willful neglect.
‘‘(d) REGULATIONS.—The Secretary shall
prescribe such regulations as may be necessary to carry out the purposes of this section.’’.
(b) CLERICAL AMENDMENT.—The table of
sections for such subpart is amended by inserting after the item relating to section
6039E the following new item:
‘‘Sec. 6039F. Notice of large gifts received
from foreign persons.’’
(c) EFFECTIVE DATE.—The amendments
made by this section shall apply to amounts
received after the date of the enactment of
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this Act in taxable years ending after such
date.
SEC. 207. MODIFICATION OF RULES RELATING TO
FOREIGN TRUSTS WHICH ARE NOT
GRANTOR TRUSTS.
(a) MODIFICATION OF INTEREST CHARGE ON
DISTRIBUTIONS.—Subsection
ACCUMULATION
(a) of section 668 (relating to interest charge
on accumulation distributions from foreign
trusts) is amended to read as follows:
‘‘(a) GENERAL RULE.—For purposes of the
tax determined under section 667(a)—
‘‘(1) SUM OF INTEREST CHARGES FOR EACH
THROWBACK YEAR.—The interest charge (determined under paragraph (2)) with respect
to any distribution is the sum of the interest
charges for each of the throwback years to
which such distribution is allocated under
section 666(a).
‘‘(2) INTEREST CHARGE FOR YEAR.—Except as
provided in paragraph (6), the interest charge
for any throwback year on such year’s allocable share of the partial tax computed
under section 667(b) with respect to any distribution shall be determined for the period—
‘‘(A) beginning on the due date for the
throwback year, and
‘‘(B) ending on the due date for the taxable
year of the distribution,
by using the rates and method applicable
under section 6621 for underpayments of tax
for such period. For purposes of the preceding sentence, the term ‘due date’ means
the date prescribed by law (determined without regard to extensions) for filing the return of the tax imposed by this chapter for
the taxable year.
‘‘(3) ALLOCABLE PARTIAL TAX.—For purposes of paragraph (2), a throwback year’s allocable share of the partial tax is an amount
equal to such partial tax multiplied by the
fraction—
‘‘(A) the numerator of which is the amount
deemed by section 666(a) to be distributed on
the last day of such throwback year, and
‘‘(B) the denominator of which is the accumulation distribution taken into account
under section 666(a).
‘‘(4) THROWBACK YEAR.—For purposes of
this subsection, the term ‘throwback year’
means any taxable year to which a distribution is allocated under section 666(a).
‘‘(5) PERIODS OF NONRESIDENCE.—The period
under paragraph (2) shall not include any
portion thereof during which the beneficiary
was not a citizen or resident of the United
States.
‘‘(6) THROWBACK YEARS BEFORE 1996.—In the
case of any throwback year beginning before
1996—
‘‘(A) interest for the portion of the period
described in paragraph (2) which occurs before the first taxable year beginning after
1995 shall be determined by using an interest
rate of 6 percent and no compounding, and
‘‘(B) interest for the remaining portion of
such period shall be determined as if the partial tax computed under section 667(b) for
the throwback year were increased (as of the
beginning of such first taxable year) by the
amount of the interest determined under
subparagraph (A).’’
(b) RULE WHEN INFORMATION NOT AVAILABLE.—Subsection (d) of section 666 is
amended by adding at the end the following:
‘‘In the case of a distribution from a foreign
trust to which section 6048(b) applies, adequate records shall not be considered to be
available for purposes of the preceding sentence unless such trust meets the requirements referred to in such section. If a taxpayer is not able to demonstrate when a
trust was created, the Secretary may use
any reasonable approximation based on
available evidence.’’
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February 16, 1995
(c) ABUSIVE TRANSACTIONS.—Section 643(a)
is amended by inserting after paragraph (6)
the following new paragraph:
‘‘(7) ABUSIVE TRANSACTIONS.—The Secretary shall prescribe such regulations as
may be necessary or appropriate to carry out
the purposes of this part, including regulations to prevent avoidance of such purposes.’’
(d) TREATMENT OF USE OF TRUST PROPERTY.—Section 643 (relating to definitions
applicable to subparts A, B, C, and D) is
amended by adding at the end the following
new subsection:
‘‘(i) USE OF FOREIGN TRUST PROPERTY.—
‘‘(1) GENERAL RULE.—For purposes of subparts B, C, and D, if, during a taxable year of
a foreign trust a trust participant of such
trust directly or indirectly uses any of the
trust’s property, the use value for such taxable year shall be treated as an amount paid
to such participant (other than from income
for the taxable year) within the meaning of
sections 661(a)(2) and section 662(a)(2).
‘‘(2) EXEMPTION.—Paragraph (1) shall not
apply to any trust participant as to whom
the aggregate use value during the taxable
year does not exceed $2,500.
‘‘(3) DEFINITIONS AND SPECIAL RULES.—For
purposes of this subsection—
‘‘(A) USE VALUE.—Except as provided in
subparagraph (B), the term ‘use value’ means
the fair market value of the use of property
reduced by any amount paid for such use by
the trust participant or by any person who is
related to such participant.
‘‘(B) SPECIAL RULE FOR CASH AND CASH
EQUIVALENT.—A direct or indirect loan of
cash, or cash equivalent, by a foreign trust
shall be treated as a use of trust property by
the borrower and the full amount of the loan
principal shall be the use value.
‘‘(C) USE BY RELATED PARTY.—
‘‘(i) Use by a person who is related to a
trust participant shall be treated as use by
the participant.
‘‘(ii) If property is used by any person who
is a related person with respect to more than
one trust participant, then the property
shall be treated as used by the trust participant most closely related, by blood or otherwise, to such person.
‘‘(D) PROPERTY INCLUDES CASH AND CASH
EQUIVALENTS.—The term ‘property’ includes
cash and cash equivalents.
‘‘(E) TRUST PARTICIPANT.—The term ‘trust
participant’ means each grantor and beneficiary of the trust.
‘‘(F) RELATED PERSON.—A person is related
to a trust participant if the relationship between such persons would result in a disallowance of losses under section 267(b) or
707(b). In applying section 267 for purposes of
the preceding sentence—
‘‘(i) section 267(e) shall be applied as if such
person or the trust participant were a passthru entity,
‘‘(ii) section 267(b) shall be applied by substituting ‘at least 10 percent’ for ‘more than
50 percent’ each place it appears, and
‘‘(iii) in determining the family of an individual under section 267(c)(4), such section
shall be treated as including the spouse (and
former spouse) of such individual and of each
other person who is treated under such section as being a member of the family of such
individual or spouse.
‘‘(G) SUBSEQUENT TRANSACTIONS REGARDING
LOAN PRINCIPAL.—If any loan described in
subparagraph (B) is taken into account
under paragraph (1), any subsequent transaction between the trust and the original
borrower regarding the principal of the loan
(by way of complete or partial repayment,
satisfaction, cancellation, discharge, or otherwise) shall be disregarded for purposes of
this title.’’
(e) EFFECTIVE DATES.—
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CONGRESSIONAL RECORD — SENATE
(1) IN GENERAL.—Except as provided in
paragraph (2), the amendments made by this
section shall apply to taxable years beginning after the date of the enactment of this
Act.
(2) INTEREST CHARGE.—The amendment
made by subsection (a) shall apply to interest for throwback years beginning before, on,
or after the date of the enactment of this
Act.
SEC. 208. RESIDENCE OF ESTATES AND TRUSTS.
(a) TREATMENT AS UNITED STATES PER(30) of section 7701(a) is
amended by striking subparagraph (D) and
by inserting after subparagraph (C) the following:
‘‘(D) any estate or trust if—
‘‘(i) a court within the United States is
able to exercise primary supervision over the
administration of the estate or trust, and
‘‘(ii) in the case of a trust, one or more
United States fiduciaries have the authority
to control all substantial decisions of the
trust.’’
SON.—Paragraph
(b) CONFORMING AMENDMENT.—Paragraph
(31) of section 7701(a) is amended to read as
follows:
‘‘(31) FOREIGN ESTATE OR TRUST.—The term
‘foreign estate’ or ‘foreign trust’ means any
estate or trust other than an estate or trust
described in section 7701(a)(30)(D).’’
(c) EFFECTIVE DATE.—The amendments
made by this section shall apply—
(1) to taxable years beginning after December 31, 1996, and
(2) at the election of the trustee of a trust,
to taxable years beginning after the date of
the enactment of this Act and on or before
December 31, 1996.
DEPARTMENT OF THE TREASURY,
Washington, DC, February 15, 1995.
Hon. DANIEL PATRICK MOYNIHAN,
Ranking Democratic Member, Committee on Finance, U.S. Senate, Washington, DC.
DEAR SENATOR MOYNIHAN: I am pleased to
transmit the enclosed Tax Compliance Act of
1995 for your immediate consideration. The
provisions contained in this bill, which were
described in the budget submitted by the
President to Congress February 6, 1995, include a number of compliance and related
measures. Several proposals are aimed at
curbing offshore tax abuses. One proposal
would close a tax loophole that allows
wealthy Americans to renounce their citizenship and avoid paying tax on appreciated
assets. Another would tighten tax rules governing foreign trusts set up by U.S. taxpayers and foreigners. In addition, the
earned income tax credit would be denied to
undocumented workers and individuals
whose interest and dividend income exceeds
$2,500. Finally, the bill would authorize the
designation of two additional urban empowerment zones.
An identical bill has been sent to Representative Gibbons of the House Ways and
Means Committee, Senate Democratic Leader Daschle, and House Democratic Leader
Gephardt. I urge Congress to give the attached bill prompt and favorable consideration.
The Office of Management and Budget advises that there is no objection to the presentation of this proposal to the Congress,
and that its enactment would be in accord
with the program of the President.
Sincerely,
ROBERT E. RUBIN,
Secretary of the Treasury.
GENERAL EXPLANATION OF THE TAX
COMPLIANCE ACT OF 1995
Such an election, once made, shall be irrevocable.
TITLE III—ADDITIONAL EMPOWERMENT
ZONES
SEC. 301. ADDITIONAL EMPOWERMENT ZONES.
(a) IN GENERAL.—Paragraph (2) of section
1391(b) (relating to designations of empowerment zones and enterprise communities) is
amended—
(1) by striking ‘‘9’’ and inserting ‘‘11’’,
(2) by striking ‘‘6’’ and inserting ‘‘8’’, and
(3) by striking ‘‘750,000’’ and inserting
‘‘1,000,000’’.
(b) EFFECTIVE DATE.—The amendment
made by this section shall take effect on the
date of the enactment of this Act.
EARNED INCOME TAX CREDIT COMPLIANCE
PROPOSALS
Current law
to be eligible for the Earned Income Tax
Credit (EITC), a taxpayer must reside in the
United States for over six months. Nonresident aliens are not entitled to the EITC
beginning in 1995. Other non-U.S. citizens are
eligible for the EITC if, among other things,
they meet a six-month residency requirement and do not file an income tax return as
a non-resident alien.
To claim the higher EITC amounts available to taxpayers with qualifying children,
those taxpayers are required to provide taxpayer identification numbers (TINs) for each
qualifying child. Unless otherwise proscribed
by regulation, social security numbers serve
as TINs. Some taxpayers are unable to obtain social security numbers. Under section
205(c) of the Social Security Act, social security numbers are generally issued only to individuals who are citizens or who are authorized to work in the U.S. Undocumented
workers may not be able to obtain social security numbers.
The IRS must follow deficiency procedures
when
investigating
questionable
EITC
claims. First, contact letters are sent to the
taxpayer. If the necessary information is not
provided by the taxpayer, a statutory notice
of deficiency is sent by certified mail, notifying the taxpayer that the adjustment will
be assessed unless the taxpayer files a petition in Tax Court within 90 days. If a petition is not filed within that time and there
is no other response to the statutory notice,
the assessment is made and the EITC is denied.
Reasons for change
The Administration believes that the EITC
should not be available to individuals who
are not authorized to work in the United
States. During the past year, the Administration and Congress have taken steps to improve the administration of the EITC. Further steps are desirable to ensure that only
the intended beneficiaries receive the EITC.
Proposal
Only individuals who are authorized to
work in the United States would be eligible
for the EITC. Taxpayers claiming the EITC
would be required to provide a valid social
security number for themselves, their
spouses, and qualifying children. Social security numbers would have to be valid for employment purposes in the United States.
Thus, eligible individuals would include U.S.
citizens and lawful permanent residents.
Taxpayers residing in the United States illegally would not be eligible for the credit.
In addition, the IRS would be authorized to
use the math-error procedures, which are
simpler than deficiency procedures, to resolve questions about the validity of a social
security number. Under this approach, the
failure to provide a correct social security
number would be treated as a math error.
Taxpayers would have 60 days in which they
could either provide a correct social security
number or request that the IRS follow the
current-law deficiency procedures. If a taxpayer failed to respond within this period, he
or she would be required to refile with correct social security numbers in order to obtain the EITC.
These provisions would be effective for tax
years beginning after December 31, 1995.
REVENUE ESTIMATE
[In billions of dollars] 1
Fiscal year—
1995
EITC compliance proposals ......................................................................................................................................................................................................................
1 Includes
0
1997
0
1998
0.4
0.5
1999
0.5
2000
0.5
Total
1.9
reduction in outlays.
INTEREST AND DIVIDEND TEST FOR EARNED
INCOME TAX CREDIT
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1996
Current law
To be eligible to receive the Earned Income Tax Credit (EITC), an individual must
have earned income. To target the EITC to
low-income workers, the amount of the credit to which a taxpayer is entitled decreases
when the taxpayer’s earned income (or, if
greater, adjusted gross income (AGI)) exceeds certain thresholds. The earned income
and AGI thresholds are indexed for inflation
and are also adjusted to take into account
qualifying children. In 1995, a taxpayer with
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two or more qualifying children will not be
eligible for the EITC if his or her income exceeds $26,673. The income cut-offs decline to
$24,396 for a taxpayer with one qualifying
child and $9,230 for a taxpayer with no qualifying children.
and must rely on earnings to meet their dayto-day living expenses, but taxpayers with
high levels of interest and dividend income
can draw upon the resources that produce
this income to meet family needs.
Reason for change
Proposal
Under current law a taxpayer may have
relatively low earned income, and therefore
may be eligible for the EITC, even though he
or she has significant interest and dividend
income. The EITC should be targeted to families with the greatest need. Most EITC recipients do not have significant resources
Beginning in 1996, a taxpayer would not be
entitled to the EITC if his or her aggregate
interest and dividend income during a taxable year exceeds $2,500. This threshold
would be indexed for inflation thereafter.
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CONGRESSIONAL RECORD — SENATE
REVENUE ESTIMATE
[In billions of dollars] 1
Fiscal year—
1995
Interest and dividend test for earned income tax credit ........................................................................................................................................................................
1996
0
1997
*
1998
0.3
1999
0.3
2000
0.4
Total
0.4
1.4
1 Includes
reduction in outlays.
* Revenue gain of less than $50 million.
TAX RESPONSIBILITIES OF AMERICANS WHO
RENOUNCE CITIZENSHIP
Current law
Under current law, worldwide gains realized by U.S. citizens and resident aliens are
subject to U.S. tax. Existing rules recognize
that the United States has a tax interest in
preventing tax avoidance through renunciation of citizenship. These rules continue to
tax former U.S. citizens on U.S. source income for ten years following renunciation of
citizenship if one of the principal purposes of
the renunciation was to avoid U.S. income
tax. A similar rule applies to aliens who
cease to be residents.
Reasons for change
Wealthy U.S. citizens and long-term residents sometimes abandon their U.S. citizenship or status as residents. Existing rules to
prevent tax avoidance through expatriation
have proven largely ineffective because departing taxpayers have found ways to restructure their activities to avoid those
rules, and compliance with the rules is difficult to monitor. Consequently, existing
measures need to be enhanced to ensure that
gains generally accruing during the time a
taxpayer was a citizen or long-term permanent resident will be subject to U.S. tax at
the time the taxpayer abandons citizenship
or residency.
Proposal
Existing rules would be expanded to provide that if a U.S. person expatriates on or
after February 6, 1995, the person would be
treated as having sold his or her assets at
fair market value immediately prior to expatriation and gain or loss from such sale
would be recognized and would be subject to
U.S. income tax. A U.S. citizen would be considered to expatriate if the citizens renounces or abandons U.S. citizenship. A resident alien individual would be taxed under
this proposal if the alien has been subject to
U.S. tax as a lawful permanent resident of
the United States in at least ten of the prior
fifteen taxable years and then ceases to be
subject to U.S. tax as a resident.
For this purpose, a taxpayer would be
treated as owning those assets that would be
included in the taxpayer’s gross estate (determined as if the taxpayer’s estate had been
created on the date of expatriation) as well
as, in certain cases, the taxpayer’s interest
in assets held in certain trusts (defined
below in Section II of the foreign trust discussion). Exceptions to the tax on expatriation would be made for most U.S. real prop-
erty interests (because they remain subject
to U.S. taxing jurisdiction) and interests in
qualified retirement plans. An expatriating
individual also would be entitled to exclude
$600,000 of gain as determined under the proposal.
The IRS may allow a taxpayer to defer
payment of the tax on expatriation with respect to interests in closely-held businesses.
In those cases, the taxpayer would be required to provide collateral satisfactory to
the IRS. Payment of tax could not be deferred for more than five years, and an interest charge would be imposed on the deferred
tax.
Solely for purposes of determining gain or
loss subject to the tax on expatriation, a
resident alien individual would be permitted
to elect to determine basis using the fair
market value (instead of historical cost) of
assets owned on the date when U.S. residence
first began. If made, this election would
apply to all of a taxpayer’s property.
This proposal would replace existing income tax rules with respect to expatriations
on or after February 6, 1995. Existing rules
that apply to taxes other than income taxes
would continue to apply.
REVENUE ESTIMATE
[In billions of dollars]
Fiscal year—
Tax responsibilities of Americans who renounce citizenship ..............................................................................................................................................................................................
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REVISE TAXATION OF INCOME FROM FOREIGN
TRUSTS
U.S. tax rules applicable to foreign trusts
have not been revised for nearly two decades.
New rules are needed to accommodate
changes in the use and incidence of foreign
trusts and to limit the avoidance and evasion of U.S. taxes. The Administration proposals would reform the taxation of foreign
trusts in five respects.
I. Information reporting and foreign trusts
Current law
Under current law, most foreign trusts established by U.S. persons are grantor trusts,
the income of which is taxed to the grantor.
U.S. persons who create or transfer property
to foreign trusts are required to report
transactions with the foreign trust to the
IRS.
Reasons for change
The existing information reporting statute
predates the significant expansion of the foreign grantor trust rules in 1976. In general,
penalties for noncompliance with reporting
requirements are minimal. U.S. grantors of
foreign trusts often do not report the income
earned by foreign trusts and often do not
comply with required information reporting.
These foreign trusts are frequently established in tax haven jurisdictions with stringent secrecy rules. Consequently, the IRS’s
attempts to verify income earned by foreign
trusts are often unsuccessful. Existing penalties have not proven adequate to encourage
some U.S. taxpayers to comply with existing
rules.
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Proposal
Notice of Transfer: Section 6048 would require U.S. persons transferring property to
foreign trusts to notify the IRS. This notice
would identify the trustee of the foreign
trust, indicate the property transferred to
the trust, and identify the trust beneficiaries.
If a transferor did not file the required notice, a penalty would be imposed equal to 35
percent of the gross value of the property
transferred, valued as of the date of transfer.
This penalty would not be less than $10,000,
and could be further increased for continuing
noncompliance.
Trustee Statements: Section 6048 would require trustees of any foreign trust with a
U.S. grantor or a U.S. beneficiary to file two
types of statements: a ‘‘Section 6048 Statement’’ and an annual information return. In
the Section 6048 Statement, the trustee
would be required to:
(1) appoint a U.S. agent (whether or not a
trustee) who has the ability to provide any
information that reasonably should be available to the trust in response to requests by
the IRS; and
(2) agree to file an annual information return for the foreign trust.
The annual information return would be required to include a full accounting of trust
activities, including separate schedules (K–
1s) for income attributable to U.S. grantors
or U.S. beneficiaries, as appropriate. The foreign trust would not be considered to have
an office or permanent establishment in the
United States merely because of the section
6048 activities of its U.S. agent.
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1995
1996
1997
1998
1999
2000
Total
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0.2
0.3
0.4
0.5
0.7
2.2
There would be two consequences if the
trustee of the foreign trust did not file a Section 6048 Statement or the required annual
information return. First, the U.S. settlor of
a foreign trust would be subject to a $10,000
penalty for each failure to file a Section 6048
Statement or annual information return.
This penalty would be increased for continuing noncompliance. Second, the IRS
would be authorized to determine, in its discretion, the tax consequences of any trust
transactions or operations to a U.S. grantor
or U.S. beneficiary. Thus, for example, the
IRS could impose a gift tax on property
transferred to the foreign trust. In appropriate circumstances, the IRS could also impute taxable income to the U.S. settlor based
on the value of assets transferred to or held
in the foreign trust. A distribution to a U.S.
beneficiary could be deemed to come from
income accumulated in the year the trust
was organized (or an alien beneficiary’s first
year of U.S. residence, if later). Although the
trustee would have an incentive to file the
trustee statements to avoid adverse U.S. tax
consequences to U.S. grantors and U.S. beneficiaries, there would be no penalties directly imposed on a trustee for the failure to
file those statements.
The Secretary would be authorized to
waive any information reporting requirements when there was no significant U.S. tax
interest in obtaining the information. Penalties would not be imposed if the taxpayer
acted with reasonable cause and not willful
neglect.
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These proposals generally would be effective for trust taxable years beginning after
the date of enactment.
II. Outbound foreign grantor trusts
Current law
Under section 679, a foreign trust established by a U.S. person for the benefit of U.S.
persons generally is a ‘‘grantor trust’’, and
the grantor is treated as owner of property
transferred to the trust. There are, however,
some transfers that are not covered by this
general rule. First, transfers by reason of
death are not subject to section 679. Second,
sales of property to a foreign trust at fair
market value are not subject to section 679.
Third, if a foreign person transfers property
to a foreign trust for the benefit of a U.S.
person and then becomes a resident of the
United States, section 679 does not apply to
the transfer. Finally, current rules do not
clearly address the tax consequences for a
domestic trust that becomes a foreign trust.
Reasons for change
Tax planning to avoid or defer recognition
of income from foreign trusts often utilizes
the exceptions to section 679. For example, a
foreign trust may be established by will upon
the death of a U.S. person for the benefit of
U.S. persons. Because the trust is not a
grantor trust, the income of the trust is not
subject to U.S. tax until distributed to a U.S.
person, even though the trust was created by
a U.S. person for the benefit of a U.S. person.
U.S. persons also sometimes attempt to
avoid section 679 by selling property to a foreign trust in exchange for a note from the
trust. Often, the U.S. transferor does not intend to collect on the note. In such a case,
the purported seller of the assets should be
treated as owning the assets transferred to
the trust. (If there is no bona fide debt, these
transactions are subject to challenge under
current law, because the exchange would not
be at fair market value.)
Prior to becoming residents of the United
States, foreign persons often put their assets
into irrevocable trusts in tax haven jurisdictions for the benefit of U.S. persons. As a result, the trust income escapes U.S. tax until
distribution.
Further, as tax haven jurisdictions enact
legislation to enable U.S. trusts to move to
those jurisdictions, trust migrations are becoming more common. Taxpayers should not
be able to achieve tax results through migration of a domestic trust that they could not
achieve directly by creating a foreign trust.
Finally, the inadequacy of the existing attribution rules as they apply to discretionary beneficiaries encourages taxpayers
to avoid the appropriate tax consequences of
their transactions by disguising true economic ownership of assets through the use of
foreign discretionary trusts.
Proposal
The
Administration
proposes
several
changes to section 679, described below.
Transfers at Death: Property transferred
to a foreign trust at the death of a trust
grantor (including property in a foreign
grantor trust at the grantor’s death) would
be treated as having been transferred to the
trust by the beneficiaries in accordance with
their respective interests in the trust (described below) in a transaction in which no
gain or loss would be recognized. U.S. beneficiaries therefore would become grantors for
purposes of section 679. These proposals
would be effective for assets transferred to
foreign trusts after the date of enactment.
Sales to Foreign Trusts: The sale of property to a foreign trust by a U.S. person
would be considered a transfer to a grantor
trust under section 679 unless the trust pays
the grantor full fair market value for the
property without regard to any debt obliga-
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Jkt 041999
tion received by the transferor issued by the
trust, the grantor, a beneficiary, or a person
related to the grantor or beneficiary or guaranteed by any such person. Exceptions would
be provided for legitimate commercial transactions, such as credit extended by unrelated
persons. A transferor would not be treated as
receiving fair market value for property
transferred in a deemed sale (pursuant to an
election under section 1057 or otherwise).
These proposals would be effective for assets
transferred to foreign trusts on or after February 6, 1995.
Pre-immigration Trusts: If a foreign person transfers property to a foreign trust and
becomes a U.S. person within five years of
the transfer, the trust would be considered a
grantor trust under section 679 with respect
to such transferred assets if the trust has
U.S. beneficiaries after the grantor becomes
a U.S. person. This proposal would be effective for assets transferred to foreign trusts
on or after February 6, 1995.
Outbound Trust Migrations: For purposes
of section 679, if a domestic trust becomes a
foreign trust, the trust assets would be
deemed to have been transferred to the trust
by the beneficiaries in accordance with their
respective interests in the trust (defined
below) in a transaction in which no gain or
loss is recognized. Thus, any U.S. beneficiaries would be considered to be grantors
of their respective interests in the foreign
trust for purposes of section 679. However, if
the IRS determines that the domestic trust
was established pursuant to a plan to retransfer assets to a foreign trust, the IRS
would be permitted to treat the U.S. settlor
of the domestic trust as grantor of the foreign trust for purposes of section 679. The
proposal would be effective for assets transferred to foreign trusts on or after February
6, 1995.
Determination of Respective Interests: For
purposes of presenting abusive transactions
designed to avoid section 679 and the tax on
expatriation, a beneficiary’s respective interest in a trust would be based on all relevant facts and circumstances, including the
terms of the trust instrument. Other relevant factors may include letters of wishes
or similar documents, patterns of historical
trust distributions, and the existence of and
functions performed by a trust protector or
any similar advisor. If the respective interests of beneficiaries in a discretionary trust
cannot otherwise be determined, those beneficiaries with the closest degree of family affiliation to the settlor could be presumed to
have equal proportionate interests in the
trust.
The proposed would apply the attribution
rules of discretionary beneficiaries only to
the abusive situations under section 679 described above and to the tax on expatriation
of U.S. citizens and residents, but would not
directly apply the attribution rules for other
purposes (e.g., to determine if a discretionary beneficiary is a U.S. shareholder of a
controlled foreign corporation that is owned
by the trust). The determination of respective interests for purposes of the tax on expatriation by U.S. citizens and residents
would be effective for expatriations occurring on or after February 6, 1995.
III. Inbound foreign grantor trusts
Current law
The United States disregards certain
‘‘grantor’’ trusts for income tax purposes.
This treatment is designed to prevent abuses
arising from attempts to shift income to
beneficiaries who are likely to be paying
taxes at lower rates than the grantor of the
trust. Consequently, under existing antiabuse rules, the grantor of such a trust is
taxed as if he owned the trust assets directly. Trusts generally are considered
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grantor trusts if (1 the grantor has a reversionary interest in trust income or corpus,
(2) the grantor or a nonadverse party holds
certain powers over the beneficial enjoyment
of trust income or corpus, (3) certain administrative powers are exercisable for the
grantor’s benefit (e.g., the grantor can reacquire trust assets by substituting assets of
equivalent value), (4) the grantor or a nonadverse party has the power to revest trust
assets in the grantor, or (5) trust income
may be paid or accumulated for the benefit
of the grantor or the grantor’s spouse in the
discretion of the grantor or a nonadverse
party. A person other than the grantor is
treated as owning trust assets if that person
has the power to withdraw trust income or
corpus.
The IRS has issued a revenue ruling in
which a foreign person funded a foreign
grantor trust for U.S. beneficiaries. The ruling holds that since the foreign person is
treated as the owner of the grantor trust, a
U.S. beneficiary is not taxable on trust distributions.
Reasons for change
Existing law inappropriately permits foreign taxpayers to affirmatively use the domestic anti-abuse rules concerning grantor
trusts. Although current law treats a foreign
grantor as the owner of the trust assets, the
foreign grantor generally is not subject to
U.S. tax on income of the trust. These rules
therefore permit U.S. beneficiaries, who
enjoy the benefits of residing in the United
States, to avoid U.S. tax on trust income.
U.S. beneficiaries should be appropriately
taxed in the United States.
Proposal
Under the proposal, a person would be
treated as owning trust assets under the
grantor trust rules only if that person is a
U.S. citizen, U.S. resident, or domestic corporation. The IRS may prescribe rules for
applying the grantor trust rules to settlors
that are partnerships, trusts, and estates to
the extent that the beneficial interests in
such entities are owned by U.S. citizens, U.S.
residents, or domestic corporations. A U.S.
person receiving distributions of trust income as result of this provision would be allowed to claim a foreign tax credit for foreign taxes paid on trust income by the trust
or the foreign grantor.
Several related provisions are proposed to
enforce these rules. First, enhanced authority would be granted to the IRS to prevent
the use of nominees to evade these rules. For
this purpose, a bona fide settlor of a trust
with power to withdraw income or corpus
from the trust would normally not be considered a nominee. Second, new rules would
harmonize the treatment of purported gifts
by corporations and partnerships with the
new foreign grantor trust rules. Third, U.S.
persons would be required to report the receipt of what they claim to be large gifts
from foreign persons in order to allow the
IRS to verify that such purported gifts are
not, in fact, disguised income to the U.S. recipients.
If a trust that is a grantor trust under current law becomes a nongrantor trust pursuant to this rule, the trust would be treated
as if it were resettled on the date the trust
becomes a nongrantor trust. Neither the
grantor nor the trust would recognize gain or
loss. If a resettled domestic trust that has a
foreign grantor became a foreign trust before
December 31, 1995, the section 1491 excise tax
on outbound transfers of assets would not be
applied to the transfer by the domestic trust
to the new foreign trust. Otherwise, this proposal would be effective on the date of enactment of this provision. These rules would not
apply to normal security arrangements involving a trustee (including the use of indenture trustees and similar arrangements).
J:\ODA15\1995_F~1\S16FE5.REC
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CONGRESSIONAL RECORD — SENATE
IV. Foreign nongrantor trusts
Current law
Accumulation distributions: U.S. beneficiaries of foreign trusts are subject to a
nondeductible interest charge on distributions of accumulated income earned by the
trust in earlier taxable years. The charge is
based on the length of time the tax was deferred by deferring distributions of accumulated income. Under existing law, the interest charge is equal to six percent simple interest per year multiplied by the tax imposed on the distribution. If adequate
records are not available to determine the
portion of a distribution that is accumulated
income, the distribution is deemed to be an
accumulation distribution from the year the
trust was organized.
Constructive Distributions: The tax consequences of the use of trust assets by beneficiaries is ambiguous under current law.
Taxpayers may assert that a beneficiary’s
use of assets owned by a trust does not constitute a distribution to the beneficiary.
Reasons for change
Accumulation distributions: Interest paid
by U.S. beneficiaries of foreign trusts should
reflect market rates of interest.
Constructive distributions: If a corporation
makes corporate assets available for a shareholder’s personal use (e.g., a corporate apartment made available rent-free to a shareholder), the fair market value of the use of
that property is treated as a constructive
distribution. Further, if a controlled foreign
corporation makes a loan to a U.S. person,
the loan is treated as a deemed distribution
by the foreign corporation to its U.S. shareholders. The use of foreign trust assets by
trust beneficiaries should give rise to tax
consequences that are similar to those associated with the use of corporate shareholders.
Proposal
Accumulation distributions: For periods of
accumulation after December 31, 1995, the
rate of interest charged on accumulation distributions would correspond to the interest
rate taxpayers pay on underpayment of tax.
If a trust does not provide information required under section 6048, the distribution
would be deemed to be from income accumulated in the year the trust was organized (or
an alien beneficiary’s first year of U.S. residence, if later). If a taxpayer is not able to
demonstrate when the trust was created, the
IRS may use any approximation based on
available evidence.
Taxpayers have used a variety of methods
(e.g., tiered trusts, divisions of trusts, mergers of trusts, and similar transactions with
corporations) to convert a distribution of ac-
cumulated income into a distribution of current income or corpus. The proposal would
authorize the IRS to recharacterize such
transactions, effective for transactions or arrangements entered into after the date of enactment. Transactions that may be entered
into to avoid the interest charge on accumulation distributions (e.g., excessive ‘‘compensation’’ paid to trust beneficiaries who
are directors of corporations owned by the
foreign trust) may be subject to recharacterization.
The proposal also clarifies existing law by
providing that if an alien beneficiary of a
foreign trust becomes a U.S. resident and
thereafter receives an accumulation distribution, no interest would be charged for
periods of accumulation that predate U.S.
residency.
Constructive distributions: If a beneficiary
uses assets of a foreign trust, the value of
that use would be a constructive distribution
to the beneficiary. Thus, if a foreign trust
made a residence available for use by a beneficiary (or a related person), the difference
between the fair rental value of the residence
and any rent actually paid would be treated
as a constructive distribution to that beneficiary. If a foreign trust purported to loan
cash (or cash equivalents) to a U.S. beneficiary, the loan would be treated as a constructive distribution by the foreign trust to
the U.S. beneficiary. These provisions would
not apply if constructive distributions did
not exceed $2,500 during a taxable year. The
provisions would be effective for taxable
years of a trust that begin after the date of
enactment.
V. Residence of trusts
Current law
Under current law, a ‘‘foreign estate or
trust’’ is an estate or trust the ‘‘income of
which, from sources without the United
States which is not effectively connected
with the conduct of a trade or business within the United States, is not includable in
gross income under subtitle A’’ of the Internal Revenue Code. This definition does not
provide criteria for determining when an estate or trust is foreign.
Court cases and rulings indicate that the
residence of an estate or trust depends on
various factors, such as the location of the
assets, the country under whose laws the estate or trust is created, the residence of the
fiduciary, the nationality of the decedent or
settlor, the nationality of the beneficiaries,
and the location of the administration of the
trust or estate. See e.g., B.W. Jones Trust v.
Comm’r, 46 B.T.A. 531 (1942), aff’d, 132 F.2d 914
(4th Cir. 1943).
Reasons for change
Present rules provide insufficient guidance
for determining the residence of estates and
trusts. Because the tax treatment of an estate, trust, settlor, or beneficiary may depend on whether the estate or trust is foreign or domestic, it is important to have an
objective definition of the residence of an estate or trust. Reducing the number of factors
used in determining the residence of estates
or trusts for tax purposes would increase the
flexibility of settlors and trust administrators to decide where to locate and in what
assets to invest. For example, if the location
of the administration of the trust were no
longer a relevant criterion, settlors of foreign trusts would be able to choose whether
to administer the trusts in the United States
or abroad based on non-tax considerations.
Proposal
An estate or trust would be considered a
domestic estate or trust if two factors were
present: (1) a court within the United States
is able to exercise primary supervision over
the administration of the estate or trust;
and (2) a U.S. fiduciary (alone or in concert
with other U.S. fiduciaries) has the authority to control all major decisions of the estate or trust. A foreign estate or trust would
be any estate or trust that is not domestic.
The first factor would be fulfilled only if a
U.S. court had authority over the entire estate or trust, and not if it merely had jurisdiction over certain assets or a particular
beneficiary. Normally, the first factor would
be satisfied if the trust instrument is governed by the laws of a U.S. state. One way to
satisfy this factor is to register the estate or
trust in a state pursuant to a state law
which is substantially similar to Article VII
of the Uniform Probate Code as published by
the American Law Institute. The second factor would normally be satisfied if a majority
of the fiduciaries are U.S. persons and a foreign fiduciary (including a ‘‘protector’’ or
similar trust advisor) may not veto important decisions of the U.S. fiduciaries. In applying this factor, the IRS would allow an
estate or trust a reasonable period of time to
adjust for inadvertent changes in fiduciaries
(e.g., a U.S. trustee dies or abruptly resigns
where a trust has two U.S. fiduciaries and
one foreign fiduciary).
The new rules defining domestic estates
and trusts would be effective for taxable
years of an estate or trust that begin after
December 31, 1996. The delayed effective date
is intended to allow estates and trusts a period of time to modify their governing instruments or to change fiduciaries. Moreover, taxpayers would be allowed to elect to
apply these rules to taxable years of an estate or trust beginning after the date of enactment.
REVENUE ESTIMATE
[In billions of dollars]
Fiscal year—
1995
Revise taxation of income from foreign trusts (sections I–V) ................................................................................................................................................................
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
INCREASE IN NUMBER OF EMPOWERMENT ZONES
Current law
The Omnibus Budget Reconciliation Act of
1993 (OBRA ’93) authorized a federal demonstration project in which nine empowerment zones and 95 enterprise communities
would be designated in a competitive application process. Of the nine empowerment
zones, six were to be located in urban areas
and three were to be located in rural areas.
State and local governments jointly nominated distressed areas and proposed strategic
plans to stimulate economic and social revitalization. By the June 30, 1994 application
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deadline, over 500 communities had submitted applications.
On December 21, 1994, the Secretaries of
the Department of Housing and Urban Development and the Department of Agriculture
designated the empowerment zones and enterprise communities authorized by Congress
in OBRA ’93.
Among other benefits, businesses located
in empowerment zones are eligible for three
federal tax incentives: an employment and
training credit; an additional $20,000 per year
of section 179 expensing; and a new category
of tax-exempt private activity bonds. Busi-
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0.1
1996
0.3
1997
0.5
1998
0.5
1999
0.5
2000
0.6
Total
2.4
nesses located in enterprise communities are
eligible for the new category of tax-exempt
bonds. OBRA ’93 also provided that federal
grants would be made to designated areas.
Reasons for change
Because of the vast number of distressed
urban areas and the need to revitalize these
areas, the Administration believes that the
number of authorized empowerment zones
should be expanded, subject to budgetary
constraints. Extending the tax incentives to
economically distressed areas will help stimulate revitalization of these areas.
J:\ODA15\1995_F~1\S16FE5.REC
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S2863
CONGRESSIONAL RECORD — SENATE
Proposal
The proposal would authorize the designation of two additional urban empowerment
zones and would be effective on the date of
enactment. No additional federal grants
would be authorized. The sole effect of the
proposal would be to extend the empowerment zone tax incentives to two additional
areas.
REVENUE ESTIMATE
[In billions of dollars]
Fiscal Year—
Increase in number of empowernment zones ......................................................................................................................................................................................................................
By Mr. MCCONNELL (for himself,
Mr.
LIEBERMAN,
and
Mrs.
KASSEBAUM):
S. 454. A bill to reform the health
care liability system and improve
health care quality through the establishment of quality assurance programs, and for other purposes; to the
Committee on Labor and Human Resources.
mmaher on MIKETEMP with SOCIAL SECURITY NUMBERS
THE HEALTH CARE LIABILITY REFORM AND
QUALITY ASSURANCE ACT OF 1995
∑ Mr. MCCONNELL. Mr. President, I
am pleased to introduce the Health
Care Liability Reform and Quality Assurance Act of 1995. Last year, Congress spent many days and weeks considering a dramatic overhaul of the finest health care system in the world.
But the vast majority of Americans
concluded we didn’t need to reinvent
our medical system. So, Congress, with
good reason, laid aside health care and
vowed to come back this year and
make
some
needed
incremental
changes to the health care system.
Health care liability is one issue on
which there was bipartisan consensus
about the need to make some significant change. This bill which I am introducing today with the co-sponsorship and assistance of Senators
LIEBERMAN and KASSEBAUM represents
this bipartisan effort.
The purpose of our bill is to promote
patient safety, compensate those who
suffer injuries fully and fairly, without
enriching lawyers and bureaucrats,
make health care more accessible, gain
some cost containment in health care,
strengthen the doctor-patient relationship and encourage medical innovation. Our present system, unfortunately, does none of the above.
First of all, patients don’t get compensated. The Rand Corp. has reported
that only 43 cents of every dollar spent
in the liability system goes to the injured party. That means lawyers, experts, and court fees eat up 57 percent
of all dollars spent in the liability system.
Second, the prohibitive cost of liability insurance means some doctors
won’t provide care to those in our society who need it most. Half a million
rural women can’t get an obstetrician
to deliver their babies. Because of high
malpractice premiums, African-American doctors are avoiding the practice
of medicine in high-risk areas—generally urban areas, making it more difficult for minority communities to get
necessary care.
Third, companies that invent new
products are discouraged under the
current system from putting them on
VerDate Aug 31 2005
03:57 May 28, 2008
Jkt 041999
the market. Medical device manufacturers are finding it more difficult to
get raw materials to produce life saving devices because of the risk of lawsuits.
Fourth, doctors are less likely to explore risky treatment because of the
proliferation of lawsuits. A doctor has
a better than 1 in 3 chance of being
sued during his practice years. And the
likelihood of suit has nothing to do
with whether the doctor was negligent.
GAO reports that almost 60 percent of
all suits are dismissed without a verdict or even a settlement.
So, something is very wrong with our
liability system and our bill will help
solve the problem. It contains many of
the provisions that were considered, on
a bipartisan basis, in the Finance Committee last year, during the health
care debate. I have included a summary
of the bill’s provisions and I ask that
the full text of the bill be printed in
the RECORD.
Mr. President, I am hopeful that
health care liability will get full consideration and action in this Congress.
There will be at least two opportunities—when we consider some targeted
health care reform and when we consider legal reform. It is very important
that we tackle this issue and I look forward to prompt action.
Mr. President, I ask unanimous consent that the text of the bill and additional material be printed in the
RECORD.
There being no objection, the bill was
ordered to be printed in the RECORD, as
follows:
S. 454
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as
the ‘‘Health Care Liability Reform and Quality Assurance Act of 1995’’.
(b) TABLE OF CONTENTS.—The table of contents is as follows:
Sec. 1. Short title; table of contents.
TITLE I—HEALTH CARE LIABILITY
REFORM
Subtitle A—Liability Reform
Sec. 101. Findings and purpose.
Sec. 102. Definitions.
Sec. 103. Applicability.
Sec. 104. Statute of limitations.
Sec. 105. Reform of punitive damages.
Sec. 106. Periodic payments.
Sec. 107. Scope of liability.
Sec. 108. Mandatory offsets for damages paid
by a collateral source.
Sec. 109. Treatment of attorneys’ fees and
other costs.
Sec. 110. Obstetric cases.
Sec. 111. State-based alternative dispute resolution mechanisms.
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1996
1997
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1999
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Sec. 112. Requirement
of
certificate
of
merit.
Subtitle B—Biomaterials Access Assurance
Sec. 121. Short title.
Sec. 122. Findings.
Sec. 123. Definitions.
Sec. 124. General
requirements;
applicability; preemption.
Sec. 125. Liability of biomaterials suppliers.
Sec. 126. Procedures for dismissal of civil actions against biomaterials suppliers.
Subtitle C—Applicability
Sec. 131. Applicability.
TITLE II—PROTECTION OF THE HEALTH
AND SAFETY OF PATIENTS
Sec. 201. Health care quality assurance program.
Sec. 202. Risk management programs.
Sec. 203. National practitioner data bank.
TITLE III—SEVERABILITY
Sec. 301. Severability.
TITLE I—HEALTH CARE LIABILITY
REFORM
Subtitle A—Liability Reform
SEC. 101. FINDINGS AND PURPOSE.
(a) FINDINGS.—Congress finds
the following:
(1) EFFECT ON HEALTH CARE ACCESS AND
COSTS.—That the civil justice system of the
United States is a costly and inefficient
mechanism for resolving claims of health
care liability and compensating injured patients and that the problems associated with
the current system are having an adverse
impact on the availability of, and access to,
health care services and the cost of health
care in this country.
(2) EFFECT ON INTERSTATE COMMERCE.—
That the health care and insurance industries are industries affecting interstate commerce and the health care liability litigation
systems existing throughout the United
States affect interstate commerce by contributing to the high cost of health care and
premiums for health care liability insurance
purchased by participants in the health care
system.
(3) EFFECT ON FEDERAL SPENDING.—That
the health care liability litigation systems
existing throughout the United States have
a significant effect on the amount, distribution, and use of Federal funds because of—
(A) the large number of individuals who receive health care benefits under programs
operated or financed by the Federal Government;
(B) the large number of individuals who
benefit because of the exclusion from Federal taxes of the amounts spent to provide
them with health insurance benefits; and
(C) the large number of health care providers who provide items or services for
which the Federal Government makes payments.
(b) PURPOSE.—It is the purpose of this Act
to implement reasonable, comprehensive,
and effective health care liability reform
that is designed to—
(1) ensure that individuals with meritorious health care injury claims receive fair
and adequate compensation, including reasonable non-economic damages;
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(2) improve the availability of health care
service in cases in which health care liability actions have been shown to be a factor in
the decreased availability of services; and
(3) improve the fairness and cost-effectiveness of our current health care liability system to resolve disputes over, and provide
compensation for, health care liability by reducing uncertainty and unpredictability in
the amount of compensation provided to injured individuals.
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SEC. 102. DEFINITIONS.
As used in this subtitle:
term
‘‘claimant’’
(1)
CLAIMANT.—The
means any person who commences a health
care liability action, and any person on
whose behalf such an action is commenced,
including the decedent in the case of an action brought through or on behalf of an estate.
(2) CLEAR AND CONVINCING EVIDENCE.—The
term ‘‘clear and convincing evidence’’ is that
measure or degree of proof that will produce
in the mind of the trier of fact a firm belief
or conviction as to the truth of the allegations sought to be established, except that
such measure or degree of proof is more than
that required under preponderance of the
evidence, but less than that required for
proof beyond a reasonable doubt.
(3) HEALTH CARE LIABILITY ACTION.—The
term ‘‘health care liability action’’ means a
civil action in a State or Federal court—
(A) against a health care provider, health
care professional, or other defendant joined
in the action (regardless of the theory of liability on which the action is based) in
which the claimant alleges injury related to
the provision of, or the failure to provide,
health care services; or
(B) against a health care payor, a health
maintenance organization, insurance company, or any other individual, organization,
or entity that provides payment for health
care benefits in which the claimant alleges
that injury was caused by the payment for,
or the failure to make payment for, health
care benefits, except to the extent such actions are subject to the Employee Retirement Income Security Act of 1974.
(4) HEALTH CARE PROFESSIONAL.—The term
‘‘health care professional’’ means any individual who provides health care services in a
State and who is required by Federal or
State laws or regulations to be licensed, registered or certified to provide such services
or who is certified to provide health care
services pursuant to a program of education,
training and examination by an accredited
institution, professional board, or professional organization.
(5) HEALTH CARE PROVIDER.—The term
‘‘health care provider’’ means any organization or institution that is engaged in the delivery of health care items or services in a
State and that is required by Federal or
State laws or regulations to be licensed, registered or certified to engage in the delivery
of such items or services.
(6) HEALTH CARE SERVICES.—The term
‘‘health care services’’ means any services
provided by a health care professional or
health care provider, or any individual working under the supervision of a health care
professional, that relate to the diagnosis,
prevention, or treatment of any disease or
impairment, or the assessment of the health
of human beings.
(7) INJURY.—The term ‘‘injury’’ means any
illness, disease, or other harm that is the
subject of a health care liability action.
(8) NONECONOMIC LOSSES.—The term ‘‘noneconomic losses’’ means losses for physical
and emotional pain, suffering, inconvenience, physical impairment, mental anguish,
disfigurement, loss of enjoyment of life, loss
of consortium, and other nonpecuniary
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losses incurred by an individual with respect
to which a health care liability action is
brought.
(9) PUNITIVE DAMAGES.—The term ‘‘punitive damages’’ means damages awarded, for
the purpose of punishment or deterrence, and
not for compensatory purposes, against a
health care provider, health care organization, or other defendant in a health care liability action. Punitive damages are neither
economic nor noneconomic damages.
(10) SECRETARY.—The term ‘‘Secretary’’
means the Secretary of Health and Human
Services.
SEC. 103. APPLICABILITY.
(a) IN GENERAL.—Except as provided in
subsection (c), this subtitle shall apply with
respect to any health care liability action
brought in any Federal or State court, except that this section shall not apply to an
action for damages arising from a vaccinerelated injury or death to the extent that
title XXI of the Public Health Service Act
applies to the action.
(b) PREEMPTION.—The provisions of this
subtitle shall preempt any State law to the
extent such law is inconsistent with the limitations contained in such provisions. The
provisions of this subtitle shall not preempt
any State law that—
(1) provides for defenses in addition to
those contained in this subtitle, places
greater limitations on the amount of attorneys’ fees that can be collected, or otherwise
imposes greater restrictions on non-economic or punitive damages than those provided in this subtitle;
(2) permits State officials to commence
health care liability actions as a representative of an individual; or
(3) permits provider-based dispute resolution.
(c) EFFECT ON SOVEREIGN IMMUNITY AND
CHOICE OF LAW OR VENUE.—Nothing in this
subtitle shall be construed to—
(1) waive or affect any defense of sovereign
immunity asserted by any State under any
provision of law;
(2) waive or affect any defense of sovereign
immunity asserted by the United States;
(3) affect the applicability of any provision
of the Foreign Sovereign Immunities Act of
1976;
(4) preempt State choice-of-law rules with
respect to actions brought by a foreign nation or a citizen of a foreign nation; or
(5) affect the right of any court to transfer
venue or to apply the law of a foreign nation
or to dismiss an action of a foreign nation or
of a citizen of a foreign nation on the ground
of inconvenient forum.
(d) FEDERAL COURT JURISDICTION NOT ESTABLISHED ON FEDERAL QUESTION GROUNDS.—
Nothing in this subtitle shall be construed to
establish any jurisdiction in the district
courts of the United States over health care
liability actions on the basis of sections 1331
or 1337 of title 28, United States Code.
SEC. 104. STATUTE OF LIMITATIONS.
A health care liability action that is subject to this Act may not be initiated unless
a complaint with respect to such action is
filed within the 2-year period beginning on
the date on which the claimant discovered
or, in the exercise of reasonable care, should
have discovered the harm and its cause, except that such an action relating to a claimant under legal disability may be filed within 2 years after the date on which the disability ceases. If the commencement of a
health care liability action is stayed or enjoined, the running of the statute of limitations under this section shall be suspended
for the period of the stay or injunction.
SEC. 105. REFORM OF PUNITIVE DAMAGES.
(a) LIMITATION.—With respect to a health
care liability action, an award for punitive
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damages may only be made, if otherwise permitted by applicable law, if it is proven by
clear and convincing evidence that the defendant—
(1) intended to injure the claimant for a
reason unrelated to the provision of health
care services;
(2) understood the claimant was substantially certain to suffer unnecessary injury,
and in providing or failing to provide health
care services, the defendant deliberately
failed to avoid such injury; or
(3) acted with a conscious disregard of a
substantial and unjustifiable risk of unnecessary injury which the defendant failed to
avoid in a manner which constitutes a gross
deviation from the normal standard of conduct in such circumstances.
(b) PUNITIVE DAMAGES NOT PERMITTED.—
Notwithstanding the provisions of subsection
(a), punitive damages may not be awarded
against a defendant with respect to any
health care liability action if no judgment
for compensatory damages, including nominal damages (under $500), is rendered against
the defendant.
(c) REQUIREMENTS FOR PLEADING OF PUNITIVE DAMAGES.—
(1) IN GENERAL.—No demand for punitive
damages shall be included in a health care liability action as initially filed.
(2) AMENDED PLEADING.—A court may allow
a claimant to file an amended complaint or
pleading for punitive damages in a health
care liability action if—
(A) the claimant submits a motion to
amend the complaint or pleading within the
earlier of—
(i) 2 years after the complaint or initial
pleading is filed, or
(ii) 9 months before the date the matter is
first set for trial; and
(B) after a finding by a court upon review
of supporting and opposing affidavits or after
a hearing, that after weighing the evidence
the claimant has established by a substantial probability that the claimant will prevail on the claim for punitive damages.
(d) SEPARATE PROCEEDING.—
(1) IN GENERAL.—At the request of any defendant in a health care liability action, the
trier of fact shall consider in a separate proceeding—
(A) whether punitive damages are to be
awarded and the amount of such award, or
(B) the amount of punitive damages following a determination of punitive liability.
(2) ONLY RELEVANT EVIDENCE ADMISSIBLE.—
If a defendant requests a separate proceeding
under paragraph (1), evidence relevant only
to the claim of punitive damages in a health
care liability action, as determined by applicable State law, shall be inadmissible in any
proceeding to determine whether compensatory damages are to be awarded.
(e) DETERMINING AMOUNT OF PUNITIVE DAMAGES.—In determining the amount of punitive damages in a health care liability action, the trier of fact shall consider only the
following:
(1) The severity of the harm caused by the
conduct of the defendant.
(2) The duration of the conduct or any concealment of it by the defendant.
(3) The profitability of the conduct of the
defendant.
(4) The number of products sold or medical
procedures rendered for compensation, as the
case may be, by the defendant of the kind
causing the harm complained of by the
claimant.
(5) Awards of punitive or exemplary damages to persons similarly situated to the
claimant, when offered by the defendant.
(6) Prospective awards of compensatory
damages to persons similarly situated to the
claimant.
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(7) Any criminal penalties imposed on the
defendant as a result of the conduct complained of by the claimant, when offered by
the defendant.
(8) The amount of any civil fines assessed
against the defendant as a result of the conduct complained of by the claimant, when offered by the defendant.
(f) LIMITATION AMOUNT.—The amount of
damages that may be awarded as punitive
damages in any health care liability action
shall not exceed 3 times the amount awarded
to the claimant for the economic injury on
which such claim is based, or $250,000, whichever is greater. This subsection shall be applied by the court and shall not be disclosed
to the jury.
(g) RESTRICTIONS PERMITTED.—Nothing in
this section shall be construed to imply a
right to seek punitive damages where none
exists under Federal or State law.
SEC. 106. PERIODIC PAYMENTS.
With respect to a health care liability action, no person may be required to pay more
than $100,000 for future damages in a single
payment of a damages award, but a person
shall be permitted to make such payments of
the award on a periodic basis. The periods for
such payments shall be determined by the
adjudicating body, based upon projections of
future losses and shall be reduced to present
value. The adjudicating body may waive the
requirements of this section if such body determines that such a waiver is in the interests of justice.
SEC. 107. SCOPE OF LIABILITY.
(a) IN GENERAL.—With respect to punitive
and noneconomic damages, the liability of
each defendant in a health care liability action shall be several only and may not be
joint. Such a defendant shall be liable only
for the amount of punitive or noneconomic
damages allocated to the defendant in direct
proportion to such defendant’s percentage of
fault or responsibility for the injury suffered
by the claimant.
(b) DETERMINATION OF PERCENTAGE OF LIABILITY.—The trier of fact in a health care liability action shall determine the extent of
each defendant’s fault or responsibility for
injury suffered by the claimant, and shall assign a percentage of responsibility for such
injury to each such defendant.
(c) PROHIBITION ON VICARIOUS LIABILITY.—A
defendant in a health care liability action
may not be held vicariously liable for the direct actions or omissions of other individuals.
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SEC. 108. MANDATORY OFFSETS FOR DAMAGES
PAID BY A COLLATERAL SOURCE.
(a) IN GENERAL.—With respect to a health
care liability action, the total amount of
damages received by an individual under
such action shall be reduced, in accordance
with subsection (b), by any other payment
that has been, or will be, made to an individual to compensate such individual for the
injury that was the subject of such action.
(b) AMOUNT OF REDUCTION.—The amount by
which an award of damages to an individual
for an injury shall be reduced under subsection (a) shall be—
(1) the total amount of any payments
(other than such award) that have been made
or that will be made to such individual to
pay costs of or compensate such individual
for the injury that was the subject of the action; minus
(2) the amount paid by such individual (or
by the spouse, parent, or legal guardian of
such individual) to secure the payments described in paragraph (1).
(c) PRETRIAL DETERMINATION OF AMOUNTS
FROM COLLATERAL SERVICES.—The reductions
requires under subsection (b)(2) shall be determined by the court in a pretrial proceeding. At such proceeding—
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(1) no evidence shall be admitted as to the
amount of any charge, payments, or damage
for which a claimant—
(A) has received payment from a collateral
source or the obligation for which has been
assured by a third party; or
(B) is, or with reasonable certainty, will be
eligible to receive payment from a collateral
source of the obligation which will, with reasonable certainty be assumed by a third
party; and
(2) the jury, if any, shall be advised that—
(A) except for damages as to which the
court permits the introduction of evidence,
the claimant’s medical expenses and lost income have been or will be paid by a collateral source or third party; and
(B) the claimant shall receive no award for
any damages that have been or will be paid
by a collateral source or third party.
SEC. 109. TREATMENT OF ATTORNEYS’ FEES AND
OTHER COSTS.
(a) LIMITATION ON AMOUNT OF CONTINGENCY
FEES.—
(1) IN GENERAL.—An attorney who rep-
resents, on a contingency fee basis, a claimant in a health care liability action may not
charge, demand, receive, or collect for services rendered in connection with such action
in excess of the following amount recovered
by judgment or settlement under such action:
(A) 331⁄3 percent of the first $150,000 (or portion thereof) recovered, based on after-tax
recovery, plus
(B) 25 percent of any amount in excess of
$150,000 recovered, based on after-tax recovery.
(2) CALCULATION OF PERIODIC PAYMENTS.—In
the event that a judgment or settlement includes periodic or future payments of damages, the amount recovered for purposes of
computing the limitation on the contingency
fee under paragraph (1) shall be based on the
cost of the annuity or trust established to
make the payments. In any case in which an
annuity or trust is not established to make
such payments, such amount shall be based
on the present value of the payments.
(b) CONTINGENCY FEE DEFINED.—As used in
this section, the term ‘‘contingency fee’’
means any fee for professional legal services
which is, in whole or in part, contingent
upon the recovery of any amount of damages, whether through judgment or settlement.
SEC. 110. OBSTETRIC CASES.
With respect to a health care liability action relating to services provided during
labor or the delivery of a baby, if the health
care professional against whom the action is
brought did not previously treat the pregnant woman for the pregnancy, the trier of
fact may not find that the defendant committed malpractice and may not assess damages against the health care professional unless the malpractice is proven by clear and
convincing evidence.
SEC. 111. STATE-BASED ALTERNATIVE DISPUTE
RESOLUTION MECHANISMS.
(a) APPLICATION TO HEALTH CARE LIABILITY
CLAIMS UNDER HEALTH PLANS.—Prior to or
immediately following the commencement of
any health care liability action, the parties
shall participate in the alternative dispute
resolution system administered by the State
under subsection (b). Such participation
shall be in lieu of any other provision of Federal or State law applicable to the parties
prior to the commencement of the health
care liability action.
(b) ADOPTION OF MECHANISM BY STATE.—
Each State shall—
(1) maintain or adopt at least one of the alternative dispute resolution methods satisfying the requirements specified under subsection (c) and (d) for the resolution of
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health care liability claims arising from the
provision of (or failure to provide) health
care services to individuals enrolled in a
health plans; and
(2) clearly disclose to enrollees in health
plans (and potential enrollees) the availability and procedures for consumer grievances, including a description of the alternative dispute resolution method or methods
adopted under this subsection.
(c) SPECIFICATION OF PERMISSIBLE ALTERNATIVE DISPUTE RESOLUTION METHODS.—
(1) IN GENERAL.—The Attorney General, in
consultation with the Secretary and the Administrative Conference of the United
States, shall, by regulation, develop alternative dispute resolution methods for the
use by States in resolving health care liability claims under subsection (a). Such methods shall include at least the following:
(A) ARBITRATION.—The use of arbitration, a
nonjury adversarial dispute resolution process which may, subject to subsection (d), result in a final decision as to facts, law, liability or damages. The parties may elect binding arbitration.
(B) MEDIATION.—The use of mediation, a
settlement process coordinated by a neutral
third party without the ultimate rendering
of a formal opinion as to factual or legal
findings.
(C) EARLY NEUTRAL EVALUATION.—The use
of early neutral evaluation, in which the parties make a presentation to a neutral attorney or other neutral evaluator for an assessment of the merits, to encourage settlement.
If the parties do not settle as a result of assessment and proceed to trial, the neutral
evaluator’s opinion shall be kept confidential.
(D) EARLY OFFER AND RECOVERY MECHANISM.—
(i) IN GENERAL.—The use of early offer and
recovery mechanisms under which a health
care provider, health care organization, or
any other alleged responsible defendant may
offer to compensate a claimant for his or her
reasonable economic damages, including future economic damages, less amounts available from collateral sources.
(ii) BINDING ARBITRATION.—If, after an offer
is made under clause (i), the claimant alleges
that payment of economic damages under
the offer has not been reasonably made, or
the participants in the offer dispute their
relative contributions to the payments to be
made to the claimant, such disputes shall be
resolved through binding arbitration in accordance with applicable rules and procedures established by the State involved.
(2) STANDARDS FOR ESTABLISHING METHODS.—In developing alternative dispute resolution methods under paragraph (1), the Attorney General shall assure that the methods promote the resolution of health care liability claims in a manner that—
(A) is affordable for the parties involved;
(B) provides for timely resolution of
claims;
(C) provides for the consistent and fair resolution of claims; and
(D) provides for reasonably convenient access to dispute resolution for individuals enrolled in plans.
(3) WAIVER AUTHORITY.—Upon application
of a State, the Attorney General, in consultation with the Secretary, may grant the
State the authority to fulfill the requirement of subsection (b) by adopting a mechanism other than a mechanism established by
the Attorney General pursuant to this subsection, except that such mechanism must
meet the standards set forth in paragraph
(2).
(d) FURTHER REDRESS.—Except with respect to the claimant-requested binding arbitration method set forth in subsection
(c)(1)(A), a claimant who is dissatisfied with
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the determination reached as a result of an
alternative dispute resolution method applied under this section may, after the final
resolution of the claimant’s claim under the
method, initiate or resume a cause of action
to seek damages or other redress with respect to the claim to the extent otherwise
permitted under State law. State law shall
govern the admissibility of results of any alternative dispute resolution procedure and
all statements, offers, and other communications made during such procedures, at any
subsequent trial. An individual who indicates or resumes a health care liability action shall only prevail if such individual
proves each element of the action beyond a
reasonable doubt, including proving that the
defendant was grossly negligent or intentionally caused injury.
SEC. 112. REQUIREMENT OF CERTIFICATE OF
MERIT.
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(a) REQUIRING
PLAINT.—Except as
SUBMISSION WITH COMprovided in subsection (b)
and subject to the penalties of subsection (d),
no health care liability action may be
brought by any individual unless, at the
time the individual commences such action,
the individual or the individual’s attorney
submits an affidavit declaring that—
(1) the individual (or the individual’s attorney) has consulted and reviewed the facts of
the claim with a qualified specialist (as defined in subsection (c));
(2) the individual or the individual’s attorney has obtained a written report by a qualified specialist that clearly identifies the individual and that includes the specialist’s determination that, based upon a review of the
available medical record and other relevant
material, a reasonable medical interpretation of the facts supports a finding that the
claim against the defendant is meritorious
and based on good cause; and
(3) on the basis of the qualified specialist’s
review and consultation, the individual, and
if represented, the individual’s attorney,
have concluded that the claim is meritorious
and based on good cause.
(b) EXTENSION IN CERTAIN INSTANCES.—
(1) IN GENERAL.—Subject to paragraph (2),
subsection (a) shall not apply with respect to
an individual who brings a health care liability action without submitting an affidavit
described in such subsection if—
(A) despite good faith efforts, the individual is unable to obtain the written report
before the expiration of the applicable statute of limitations;
(B) despite good faith efforts, at the time
the individual commences the action, the individual has been unable to obtain medical
records or other information necessary, pursuant to any applicable law, to prepare the
written report requested; or
(C) the court of competent jurisdiction determines that the affidavit requirement
shall be extended upon a showing of good
cause.
(2) DEADLINE FOR SUBMISSION WHERE EXTENSION APPLIES.—In the case of an individual
who brings an action to which paragraph (1)
applies, the action shall be dismissed unless
the individual submits the affidavit described in subsection (a) not later than—
(A) in the case of an action to which subparagraph (A) of paragraph (1) applies, 90
days after commencing the action; or
(B) in the case of an action to which subparagraph (B) of paragraph (1) applies, 90
days after obtaining the information described in such subparagraph or when good
cause for an extension no longer exists.
(c) QUALIFIED SPECIALIST DEFINED.—
(1) IN GENERAL.—As used in subsection (a),
the term ‘‘qualified specialist’’ means, with
respect to a health care liability action, a
health care professional who has expertise in
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the same or substantially similar area of
practice to that involved in the action.
(2) EVIDENCE OF EXPERTISE.—For purposes
of paragraph (1), evidence of required expertise may include evidence that the individual—
(A) practices (or has practiced) or teaches
(or has taught) in the same or substantially
similar area of health care or medicine to
that involved in the action; or
(B) is otherwise qualified by experience or
demonstrated competence in the relevant
practice area.
(d) SANCTIONS FOR SUBMITTING FALSE AFFIDAVIT.—Upon the motion of any party or on
its own initiative, the court in a health care
liability action may impose a sanction on a
party, the party’s attorney, or both, for—
(1) any knowingly false statement made in
an affidavit described in subsection (a);
(2) making any false representations in
order to obtain a qualified specialist’s report; or
(3) failing to have the qualified specialist’s
written report in his or her custody and control;
and may require that the sanctioned party
reimburse the other party to the action for
costs and reasonable attorney’s fees.
Subtitle B—Biomaterials Access Assurance
SEC. 121. SHORT TITLE.
This subtitle may be cited as the ‘‘Biomaterials Access Assurance Act of 1995’’.
SEC. 122. FINDINGS.
Congress finds that—
(1) each year millions of citizens of the
United States depend on the availability of
lifesaving or life-enhancing medical devices,
many of which are permanently implantable
within the human body;
(2) a continued supply of raw materials and
component parts is necessary for the invention, development, improvement, and maintenance of the supply of the devices;
(3) most of the medical devices are made
with raw materials and component parts
that—
(A) are not designed or manufactured specifically for use in medical devices; and
(B) come in contact with internal human
tissue;
(4) the raw materials and component parts
also are used in a variety of nonmedical
products;
(5) because small quantities of the raw materials and component parts are used for
medical devices, sales of raw materials and
component parts for medical devices constitute an extremely small portion of the
overall market for the raw materials and
medical devices;
(6) under the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.), manufacturers of medical devices are required to demonstrate that the medical devices are safe
and effective, including demonstrating that
the products are properly designed and have
adequate warnings or instructions;
(7) notwithstanding the fact that raw materials and component parts suppliers do not
design, produce, or test a final medical device, the suppliers have been the subject of
actions alleging inadequate—
(A) design and testing of medical devices
manufactured with materials or parts supplied by the suppliers; or
(B) warnings related to the use of such
medical devices;
(8) even though suppliers of raw materials
and component parts have very rarely been
held liable in such actions, such suppliers
have ceased supplying certain raw materials
and component parts for use in medical devices because the costs associated with litigation in order to ensure a favorable judgment for the suppliers far exceeds the total
potential sales revenues from sales by such
suppliers to the medical device industry;
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(9) unless alternate sources of supply can
be found, the unavailability of raw materials
and component parts for medical devices will
lead to unavailability of lifesaving and lifeenhancing medical devices;
(10) because other suppliers of the raw materials and component parts in foreign nations are refusing to sell raw materials or
component parts for use in manufacturing
certain medical devices in the United States,
the prospects for development of new sources
of supply for the full range of threatened raw
materials and component parts for medical
devices are remote;
(11) it is unlikely that the small market
for such raw materials and component parts
in the United States could support the large
investment needed to develop new suppliers
of such raw materials and component parts;
(12) attempts to develop such new suppliers
would raise the cost of medical devices;
(13) courts that have considered the duties
of the suppliers of the raw materials and
component parts have generally found that
the suppliers do not have a duty—
(A) to evaluate the safety and efficacy of
the use of a raw material or component part
in a medical device; and
(B) to warn consumers concerning the safety and effectiveness of a medical device;
(14) attempts to impose the duties referred
to in subparagraphs (A) and (B) of paragraph
(13) on suppliers of the raw materials and
component parts would cause more harm
than good by driving the suppliers to cease
supplying manufacturers of medical devices;
and
(15) in order to safeguard the availability
of a wide variety of lifesaving and life-enhancing medical devices, immediate action
is needed—
(A) to clarify the permissible bases of liability for suppliers of raw materials and
component parts for medical devices; and
(B) to provide expeditious procedures to
dispose of unwarranted suits against the suppliers in such manner as to minimize litigation costs.
SEC. 123. DEFINITIONS.
As used in this subtitle:
(1) BIOMATERIALS SUPPLIER.—
(A) IN GENERAL.—The term ‘‘biomaterials
supplier’’ means an entity that directly or
indirectly supplies a component part or raw
material for use in the manufacture of an
implant.
(B) PERSONS INCLUDED.—Such term includes any person who—
(i) has submitted master files to the Secretary for purposes of premarket approval of
a medical device; or
(ii) licenses a biomaterials supplier to
produce component parts or raw materials.
(2) CLAIMANT.—
(A) IN GENERAL.—The term ‘‘claimant’’
means any person who brings a civil action,
or on whose behalf a civil action is brought,
arising from harm allegedly caused directly
or indirectly by an implant, including a person other than the individual into whose
body, or in contact with whose blood or tissue, the implant is placed, who claims to
have suffered harm as a result of the implant.
(B) ACTION BROUGHT ON BEHALF OF AN ESTATE.—With respect to an action brought on
behalf or through the estate of an individual
into whose body, or in contact with whose
blood or tissue the implant is placed, such
term includes the decedent that is the subject of the action.
(C) ACTION BROUGHT ON BEHALF OF A
MINOR.—With respect to an action brought
on behalf or through a minor, such term includes the parent or guardian of the minor.
(D) EXCLUSIONS.—Such term does not include—
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(i) a provider of professional services, in
any case in which—
(I) the sale or use of an implant is incidental to the transaction; and
(II) the essence of the transaction is the
furnishing of judgment, skill, or services; or
(ii) a manufacturer, seller, or biomaterials
supplier.
(3) COMPONENT PART.—
(A) IN GENERAL.—The term ‘‘component
part’’ means a manufactured piece of an implant.
(B) CERTAIN COMPONENTS.—Such term includes a manufactured piece of an implant
that—
(i) has significant nonimplant applications;
and
(ii) alone, has no implant value or purpose,
but when combined with other component
parts and materials, constitutes an implant.
(4) HARM.—
(A) IN GENERAL.—The term ‘‘harm’’
means—
(i) any injury to or damage suffered by an
individual;
(ii) any illness, disease, or death of that individual resulting from that injury or damage; and
(iii) any loss to that individual or any
other individual resulting from that injury
or damage.
(B) EXCLUSION.—The term does not include
any commercial loss or loss of or damage to
an implant.
(5) IMPLANT.—The term ‘‘implant’’ means—
(A) a medical device that is intended by
the manufacturer of the device—
(i) to be placed into a surgically or naturally formed or existing cavity of the body
for a period of at least 30 days; or
(ii) to remain in contact with bodily fluids
or internal human tissue through a surgically produced opening for a period of less
than 30 days; and
(B) suture materials used in implant procedures.
(6) MANUFACTURER.—The term ‘‘manufacturer’’ means any person who, with respect
to an implant—
(A) is engaged in the manufacture, preparation, propagation, compounding, or processing (as defined in section 510(a)(1) of the
Federal Food, Drug, and Cosmetic Act (21
U.S.C. 360(a)(1)) of the implant; and
(B) is required—
(i) to register with the Secretary pursuant
to section 510 of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360) and the regulations issued under such section; and
(ii) to include the implant on a list of devices filed with the Secretary pursuant to
section 510(j) of such Act (21 U.S.C. 360(j))
and the regulations issued under such section.
(7) MEDICAL DEVICE.—The term ‘‘medical
device’’ means a device, as defined in section
201(h) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)).
(8) QUALIFIED SPECIALIST.—With respect to
an action, the term ‘‘qualified specialist’’
means a person who is qualified by knowledge, skill, experience, training, or education in the specialty area that is the subject of the action.
(9) RAW MATERIAL.—The term ‘‘raw material’’ means a substance or product that—
(A) has a generic use; and
(B) may be used in an application other
than an implant.
(10) SECRETARY.—The term ‘‘Secretary’’
means the Secretary of Health and Human
Services.
(11) SELLER.—
(A) IN GENERAL.—The term ‘‘seller’’ means
a person who, in the course of a business conducted for that purpose, sells, distributes,
leases, packages, labels, or otherwise places
an implant in the stream of commerce.
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(B) EXCLUSIONS.—The term does not include—
(i) a seller or lessor of real property;
(ii) a provider of professional services, in
any case in which the sale or use of an implant is incidental to the transaction and the
essence of the transaction is the furnishing
of judgment, skill, or services; or
(iii) any person who acts in only a financial capacity with respect to the sale of an
implant.
SEC. 124. GENERAL REQUIREMENTS; APPLICABILITY; PREEMPTION.
(a) GENERAL REQUIREMENTS.—
(1) IN GENERAL.—In any civil action cov-
ered by this subtitle, a biomaterials supplier
may raise any defense set forth in section
125.
any
(2)
PROCEDURES.—Notwithstanding
other provision of law, the Federal or State
court in which a civil action covered by this
subtitle is pending shall, in connection with
a motion for dismissal or judgment based on
a defense described in paragraph (1), use the
procedures set forth in section 126.
(b) APPLICABILITY.—
(1) IN GENERAL.—Except as provided in
paragraph (2), notwithstanding any other
provision of law, this subtitle applies to any
civil action brought by a claimant, whether
in a Federal or State court, against a manufacturer, seller, or biomaterials supplier, on
the basis of any legal theory, for harm allegedly caused by an implant.
(2) EXCLUSION.—A civil action brought by a
purchaser of a medical device for use in providing professional services against a manufacturer, seller, or biomaterials supplier for
loss or damage to an implant or for commercial loss to the purchaser—
(A) shall not be considered an action that
is subject to this subtitle; and
(B) shall be governed by applicable commercial or contract law.
(c) SCOPE OF PREEMPTION.—
(1) IN GENERAL.—This subtitle supersedes
any State law regarding recovery for harm
caused by an implant and any rule of procedure applicable to a civil action to recover
damages for such harm only to the extent
that this subtitle establishes a rule of law
applicable to the recovery of such damages.
(2) APPLICABILITY OF OTHER LAWS.—Any
issue that arises under this subtitle and that
is not governed by a rule of law applicable to
the recovery of damages described in paragraph (1) shall be governed by applicable
Federal or State law.
(d) STATUTORY CONSTRUCTION.—Nothing in
this subtitle may be construed—
(1) to affect any defense available to a defendant under any other provisions of Federal or State law in an action alleging harm
caused by an implant; or
(2) to create a cause of action or Federal
court jurisdiction pursuant to section 1331 or
1337 of title 28, United States Code, that otherwise would not exist under applicable Federal or State law.
SEC. 125. LIABILITY OF BIOMATERIALS SUPPLIERS.
(a) IN GENERAL.—
(1) EXCLUSION FROM LIABILITY.—Except as
provided in paragraph (2), a biomaterials
supplier shall not be liable for harm to a
claimant caused by an implant.
(2) LIABILITY.—A biomaterials supplier
that—
(A) is a manufacturer may be liable for
harm to a claimant described in subsection
(b);
(B) is a seller may be liable for harm to a
claimant described in subsection (c); and
(C) furnishes raw materials or component
parts that fail to meet applicable contractual requirements or specifications may be
liable for a harm to a claimant described in
subsection (d).
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(b) LIABILITY AS MANUFACTURER.—
(1) IN GENERAL.—A biomaterials supplier
may, to the extent required and permitted
by any other applicable law, be liable for
harm to a claimant caused by an implant if
the biomaterials supplier is the manufacturer of the implant.
(2) GROUNDS FOR LIABILITY.—The biomaterials supplier may be considered the manufacturer of the implant that allegedly caused
harm to a claimant only if the biomaterials
supplier—
(A)(i) has registered with the Secretary
pursuant to section 510 of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 360) and
the regulations issued under such section;
and
(ii) included the implant on a list of devices filed with the Secretary pursuant to
section 510(j) of such Act (21 U.S.C. 360(j))
and the regulations issued under such section; or
(B) is the subject of a declaration issued by
the Secretary pursuant to paragraph (3) that
states that the supplier, with respect to the
implant that allegedly caused harm to the
claimant, was required to—
(i) register with the Secretary under section 510 of such Act (21 U.S.C. 360), and the
regulations issued under such section, but
failed to do so; or
(ii) include the implant on a list of devices
filed with the Secretary pursuant to section
510(j) of such Act (21 U.S.C. 360(j)) and the
regulations issued under such section, but
failed to do so.
(3) ADMINISTRATIVE PROCEDURES.—
(A) IN GENERAL.—The Secretary may issue
a declaration described in paragraph (2)(B)
on the motion of the Secretary or on petition by any person, after providing—
(i) notice to the affected persons; and
(ii) an opportunity for an informal hearing.
(B) DOCKETING AND FINAL DECISION.—Immediately upon receipt of a petition filed pursuant to this paragraph, the Secretary shall
docket the petition. Not later than 180 days
after the petition is filed, the Secretary shall
issue a final decision on the petition.
(C) APPLICABILITY OF STATUTE OF LIMITATIONS.—Any applicable statute of limitations
shall toll during the period during which a
claimant has filed a petition with the Secretary under this paragraph.
(c) LIABILITY AS SELLER.—A biomaterials
supplier may, to the extent required and permitted by any other applicable law, be liable
as a seller for harm to a claimant caused by
an implant if the biomaterials supplier—
(1) held title to the implant that allegedly
caused harm to the claimant as a result of
purchasing the implant after—
(A) the manufacture of the implant; and
(B) the entrance of the implant in the
stream of commerce; and
(2) subsequently resold the implant.
(d) LIABILITY FOR VIOLATING CONTRACTUAL
REQUIREMENTS OR SPECIFICATIONS.—A biomaterials supplier may, to the extent required and permitted by any other applicable
law, be liable for harm to a claimant caused
by an implant, if the claimant in an action
shows, by a preponderance of the evidence,
that—
(1) the raw materials or component parts
delivered by the biomaterials supplier either—
(A) did not constitute the product described in the contract between the biomaterials supplier and the person who contracted
for delivery of the product; or
(B) failed to meet any specifications that
were—
(i) provided to the biomaterials supplier
and not expressly repudiated by the biomaterials supplier prior to acceptance of delivery
of the raw materials or component parts;
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(ii)(I) published by the biomaterials supplier;
(II) provided to the manufacturer by the
biomaterials supplier; or
(III) contained in a master file that was
submitted by the biomaterials supplier to
the Secretary and that is currently maintained by the biomaterials supplier for purposes of premarket approval of medical devices; or
(iii)(I) included in the submissions for purposes of premarket approval or review by the
Secretary under section 510, 513, 515, or 520 of
the Federal Food, Drug, and Cosmetic Act
(21 U.S.C. 360, 360c, 360e, or 360j); and
(II) have received clearance from the Secretary,
if such specifications were provided by the
manufacturer to the biomaterials supplier
and were not expressly repudiated by the
biomaterials supplier prior to the acceptance
by the manufacturer of delivery of the raw
materials or component parts; and
(2) such conduct was an actual and proximate cause of the harm to the claimant.
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SEC. 126. PROCEDURES FOR DISMISSAL OF CIVIL
ACTIONS AGAINST BIOMATERIALS
SUPPLIERS.
(a) MOTION TO DISMISS.—In any action that
is subject to this subtitle, a biomaterials
supplier who is a defendant in such action
may, at any time during which a motion to
dismiss may be filed under an applicable law,
move to dismiss the action on the grounds
that—
(1) the defendant is a biomaterials supplier; and
(2)(A) the defendant should not, for the
purposes of—
(i) section 125(b), be considered to be a
manufacturer of the implant that is subject
to such section; or
(ii) section 125(c), be considered to be a
seller of the implant that allegedly caused
harm to the claimant; or
(B)(i) the claimant has failed to establish,
pursuant to section 125(d), that the supplier
furnished raw materials or component parts
in violation of contractual requirements or
specifications; or
(ii) the claimant has failed to comply with
the procedural requirements of subsection
(b).
(b) PROCEDURAL REQUIREMENTS.—
(1) IN GENERAL.—The procedural requirements described in paragraphs (2) and (3)
shall apply to any action by a claimant
against a biomaterials supplier that is subject to this subtitle.
(2) MANUFACTURER OF IMPLANT SHALL BE
NAMED A PARTY.—The claimant shall be required to name the manufacturer of the implant as a party to the action, unless—
(A) the manufacturer is subject to service
of process solely in a jurisdiction in which
the biomaterials supplier is not domiciled or
subject to a service of process; or
(B) an action against the manufacturer is
barred by applicable law.
(3) AFFIDAVIT.—At the time the claimant
brings an action against a biomaterials supplier the claimant shall be required to submit an affidavit that—
(A) declares that the claimant has consulted and reviewed the facts of the action
with a qualified specialist, whose qualifications the claimant shall disclose;
(B) includes a written determination by a
qualified specialist that the raw materials or
component parts actually used in the manufacture of the implant of the claimant were
raw materials or component parts described
in section 125(d)(1), together with a statement of the basis for such a determination;
(C) includes a written determination by a
qualified specialist that, after a review of
the medical record and other relevant material, the raw material or component part
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supplied by the biomaterials supplier and actually used in the manufacture of the implant was a cause of the harm alleged by
claimant, together with a statement of the
basis for the determination; and
(D) states that, on the basis of review and
consultation of the qualified specialist, the
claimant (or the attorney of the claimant)
has concluded that there is a reasonable and
meritorious cause for the filing of the action
against the biomaterials supplier.
(c) PROCEEDING ON MOTION TO DISMISS.—
The following rules shall apply to any proceeding on a motion to dismiss filed under
this section:
(1) AFFIDAVITS RELATING TO LISTING AND
DECLARATIONS.—
(A) IN GENERAL.—The defendant in the action may submit an affidavit demonstrating
that defendant has not included the implant
on a list, if any, filed with the Secretary pursuant to section 510(j) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 360(j)).
(B) RESPONSE TO MOTION TO DISMISS.—In response to the motion to dismiss, the claimant may submit an affidavit demonstrating
that—
(i) the Secretary has, with respect to the
defendant and the implant that allegedly
caused harm to the claimant, issued a declaration pursuant to section 125(b)(2)(B); or
(ii) the defendant who filed the motion to
dismiss is a seller of the implant who is liable under section 125(c).
(2) EFFECT OF MOTION TO DISMISS ON DISCOVERY.—
(A) IN GENERAL.—If a defendant files a motion to dismiss under paragraph (1) or (3) of
subsection (a), no discovery shall be permitted in connection to the action that is
the subject of the motion, other than discovery necessary to determine a motion to
dismiss for lack of jurisdiction, until such
time as the court rules on the motion to dismiss in accordance with the affidavits submitted by the parties in accordance with this
section.
(B) DISCOVERY.—If a defendant files a motion to dismiss under subsection (a)(2) on the
grounds that the biomaterials supplier did
not furnish raw materials or component
parts in violation of contractual requirements or specifications, the court may permit discovery, as ordered by the court. The
discovery conducted pursuant to this subparagraph shall be limited to issues that are
directly relevant to—
(i) the pending motion to dismiss; or
(ii) the jurisdiction of the court.
(3) AFFIDAVITS RELATING STATUS OF DEFENDANT.—
(A) IN GENERAL.—Except as provided in
clauses (i) and (ii) of subparagraph (B), the
court shall consider a defendant to be a biomaterials supplier who is not subject to an
action for harm to a claimant caused by an
implant, other than an action relating to liability for a violation of contractual requirements or specifications described in subsection (d).
(B) RESPONSES TO MOTION TO DISMISS.—The
court shall grant a motion to dismiss any action that asserts liability of the defendant
under subsection (b) or (c) of section 125 on
the grounds that the defendant is not a manufacturer subject to such subsection 125(b) or
seller subject to subsection 125(c), unless the
claimant submits a valid affidavit that demonstrates that—
(i) with respect to a motion to dismiss contending the defendant is not a manufacturer,
the defendant meets the applicable requirements for liability as a manufacturer under
section 125(b); or
(ii) with respect to a motion to dismiss
contending that the defendant is not a seller,
the defendant meets the applicable require-
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February 16, 1995
ments for liability as a seller under section
125(c).
(4) BASIS OF RULING ON MOTION TO DISMISS.—
(A) IN GENERAL.—The court shall rule on a
motion to dismiss filed under subsection (a)
solely on the basis of the pleadings of the
parties made pursuant to this section and
any affidavits submitted by the parties pursuant to this section.
(B) MOTION FOR SUMMARY JUDGMENT.—Notwithstanding any other provision of law, if
the court determines that the pleadings and
affidavits made by parties pursuant to this
section raise genuine issues as concerning
material facts with respect to a motion concerning contractual requirements and specifications, the court may deem the motion to
dismiss to be a motion for summary judgment made pursuant to subsection (d).
(d) SUMMARY JUDGMENT.—
(1) IN GENERAL.—
(A) BASIS FOR ENTRY OF JUDGMENT.—A biomaterials supplier shall be entitled to entry
of judgment without trial if the court finds
there is no genuine issue as concerning any
material fact for each applicable element set
forth in paragraphs (1) and (2) of section
125(d).
(B) ISSUES OF MATERIAL FACT.—With respect to a finding made under subparagraph
(A), the court shall consider a genuine issue
of material fact to exist only if the evidence
submitted by claimant would be sufficient to
allow a reasonable jury to reach a verdict for
the claimant if the jury found the evidence
to be credible.
(2) DISCOVERY MADE PRIOR TO A RULING ON A
MOTION FOR SUMMARY JUDGMENT.—If, under
applicable rules, the court permits discovery
prior to a ruling on a motion for summary
judgment made pursuant to this subsection,
such discovery shall be limited solely to establishing whether a genuine issue of material fact exists.
(3) DISCOVERY WITH RESPECT TO A BIOMATERIALS SUPPLIER.—A biomaterials supplier
shall be subject to discovery in connection
with a motion seeking dismissal or summary
judgment on the basis of the inapplicability
of section 125(d) or the failure to establish
the applicable elements of section 125(d)
solely to the extent permitted by the applicable Federal or State rules for discovery
against nonparties.
(e) STAY PENDING PETITION FOR DECLARATION.—If a claimant has filed a petition for a
declaration pursuant to section 125(b) with
respect to a defendant, and the Secretary has
not issued a final decision on the petition,
the court shall stay all proceedings with respect to that defendant until such time as
the Secretary has issued a final decision on
the petition.
(f) MANUFACTURER CONDUCT OF PROCEEDING.—The manufacturer of an implant
that is the subject of an action covered
under this subtitle shall be permitted to file
and conduct a proceeding on any motion for
summary judgment or dismissal filed by a
biomaterials supplier who is a defendant
under this section if the manufacturer and
any other defendant in such action enter
into a valid and applicable contractual
agreement under which the manufacturer
agrees to bear the cost of such proceeding or
to conduct such proceeding.
(g) ATTORNEY FEES.—The court shall require the claimant to compensate the biomaterials supplier (or a manufacturer appearing in lieu of a supplier pursuant to subsection (f)) for attorney fees and costs, if—
(1) the claimant named or joined the biomaterials supplier; and
(2) the court found the claim against the
biomaterials supplier to be without merit
and frivolous.
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Subtitle C—Applicability
SEC. 131. APPLICABILITY.
This title shall apply to all civil actions
covered under this title that are commenced
on or after the date of enactment of this Act,
including any such action with respect to
which the harm asserted in the action or the
conduct that caused the harm occurred before the date of enactment of this Act.
TITLE II—PROTECTION OF THE HEALTH
AND SAFETY OF PATIENTS
SEC. 201. HEALTH CARE QUALITY ASSURANCE
PROGRAM.
(a) FUND.—Each State shall establish a
health care quality assurance program, to be
approved by the Secretary, and a fund consisting of such amounts as are transferred to
the fund under subsection (b).
(b) TRANSFER OF AMOUNTS.—Each State
shall require that 50 percent of all awards of
punitive damages resulting from all health
care liability actions in that State be transferred to the fund established under subsection (a) in the State.
(c) OBLIGATIONS FROM FUND.—The chief executive officer of a State shall obligate such
sums as are available in the fund established
in that State under subsection (a) to—
(1) license and certify health care professionals in the State;
(2) implement health care quality assurance programs; and
(3) carry out programs to reduce malpractice-related costs for health care providers volunteering to provide health care
services in medically underserved areas.
SEC. 202. RISK MANAGEMENT PROGRAMS.
(a) REQUIREMENTS FOR PROVIDERS.—Each
State shall require each health care professional and health care provider providing
services in the State to participate in a risk
management program to prevent and provide
early warning of practices which may result
in injuries to patients or which otherwise
may endanger patient safety.
(b) REQUIREMENTS FOR INSURERS.—Each
State shall require each entity which provides health care professional or provider liability insurance to health care professionals
and health care providers in the State to—
(1) establish risk management programs
based on data available to such entity or
sanction programs of risk management for
health care professionals and health care
providers provided by other entities; and
(2) require each such professional or provider, as a condition of maintaining insurance, to participate in one program described in paragraph (1) at least once in each
3-year period.
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SEC. 203. NATIONAL PRACTITIONER DATA BANK.
Section 427 of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11137) is
amended—
(1) by redesignating subsections (b)
through (d) as subsections (c) through (e), respectively;
(2) by inserting after subsection (a), the
following new subsection:
‘‘(b) DISCLOSURE OF INFORMATION.—The
Secretary shall promulgate regulations providing for the disclosure of information reported to the Secretary under sections 422
and 423, upon request, to any individual.’’;
and
(3) in subsection (c) (as so redesignated)—
(A) in the first sentence of paragraph (1),
by striking ‘‘under this part’’ and inserting
‘‘under section 421’’; and
(B) in paragraph (3), by striking ‘‘subsection (a)’’ and inserting ‘‘subsections (a)
and (b)’’.
TITLE III—SEVERABILITY
SEC. 301. SEVERABILITY.
If any provision of this Act, an amendment
made by this Act, or the application of such
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provision or amendment to any person or
circumstance is held to be unconstitutional,
the remainder of this Act, the amendments
made by this Act, and the application of the
provisions of such to any person or circumstance shall not be affected thereby.
SUMMARY OF MCCONNELL-LIEBERMAN-KASSEBAUM HEALTH CARE LIABILITY REFORM AND
QUALITY ASSURANCE ACT OF 1995
TITLE I—LIABILITY REFORM
Subtitle A—Health Care Liability Reform
1. Scope:
a. Applies to any action, filed in federal or
state court, against a health care provider,
professional, payor, hmo, insurance company
or any other defendant (except vaccine-related injuries);
b. Preempts state law to the extent it is inconsistent with the provisions herein; no
preemption for state laws which:
(1) provide additional defenses;
(2) greater limitations on attorneys’ fees;
(3) greater restrictions on punitive or noneconomic damages;
(4) permit state officials to institute action;
(5) permit provider-based dispute resolution.
c. Does not create federal jurisdiction for
health care liability actions.
2. Uniform Statute of Limitations:
Two years from the date injury discovered
or should have been discovered, except that
any person under a legal disability may file
within two years after the disability ceases.
3. Limit on Punitive Damages:
a. Awarded if proved by clear and convincing evidence defendant:
(1) intended to injure;
(2) understood claimant was substantially
certain to suffer unnecessary injury and deliberately failed to avoid injury; or
(3) acted with conscious disregard of substantial and unjustifiable risk which defendant failed to avoid in a way which constitutes a gross deviation from the normal
standard of conduct.
b. No punitive damages where compensatory damages of less than $500 are awarded.
c. Punitive damages may not be pleaded in
original complaint. A complaint may be
amended within, the earlier of, 2 years of
original complaint or 9 months before the
case is set for trial, and after court finds substantial probability that claimant will prevail on the claim for punitive damages.
d. At the defendant’s request, punitive
damages must be considered in a separate
proceeding and, if so requested, no evidence
relevant to the claim for punitive damages
may be admitted in the proceedings for compensatory damages.
e. In determining the amount, court must
consider only:
(1) severity of harm;
(2) duration of defendant’s conduct and any
concealment;
(3) profitability of defendant’s conduct;
(4) number of products sold/procedures rendered which caused similar harm;
(5) similar awards of punitive damages in
similar circumstances;
(6) prospective awards of compensatory
damages to similarly situated persons;
(7) criminal penalties imposed on defendant;
(8) civil fines imposed.
f. No award may exceed the greater of 3
times the amount of economic damages or
$250,000.
4. Periodic Payment of Damages:
No more than $100,000 may be required to
be paid in one single payment. The court will
determine the schedule for payments, based
on projection of future losses and reduced to
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present value. This requirement may be
waived, in the interests of justice.
5. Several, not Joint, Liability:
Defendant liable only for the amount of
non-economic and punitive damages allocated to defendant’s direct proportion of
fault or responsibility. The trier of fact determines percentage of responsibility of each
defendant. No vicarious liability for direct
acts or omissions.
6. Collateral Source:
Total damages must be reduced by payments from other sources made, or to be
made, to compensate individual for injury
that is the subject of the health care liability action. The offset is reduced by any
amount paid by the injured party (or family
member) to secure the payment. The reductions must be determined by the judge in a
pretrial proceeding.
7. Attorneys’ Fees:
Limits attorney contingent fees to 331⁄3%
of the first $150,000 and 25% of any amount in
excess of $150,000.
8. Obstetric Cases:
No malpractice award against a health
care professional relating to delivery of a
baby, if the health care professional did not
previously treat the woman during the pregnancy, unless malpractice proved by clear
and convincing evidence.
9. State Based Alternative Dispute Resolution:
a. Prior to the filing, or immediately following the filing of the action, the parties
must participate in a state administered alternative dispute resolution system.
b. The Attorney General will develop adr
methods for use by the states, including arbitration, mediation, early neutral evaluation, early offer and recovery. The parties
may elect binding arbitration.
c. Adr must promote resolution of health
care liability claims in an affordable, timely,
fair and convenient manner. States may be
granted waivers if they have programs that
meet these standards.
d. Any party dissatisfied (except where
binding arbitration selected) may continue
the action in court and may prevail only if
each element of the case is proved beyond a
reasonable doubt, including that the defendant was grossly negligent or intentionally
caused injury. State law governs the admission of adr proceedings.
10. Certificate of Merit:
Requires that, prior to bringing a lawsuit,
an individual (or his or her attorney) to submit an affidavit declaring that the individual reviewed the facts with a qualified
specialist and that the specialist has concluded the claim is meritorious. A qualified
specialist means a health care professional
with expertise (the specialist practices or
teaches or has experience or demonstrated
competence) in the same or substantially
similar area of practice as that involved in
the case. A court may impose sanctions for
the submission of a false affidavit.
Subtitle B—Biomaterial Access Assurance
1. Summary:
The Biomaterial Access Assurance Act
would allow suppliers of the raw material
(biomaterial) used to make medical implants, to obtain dismissal, without extensive discovery or other legal costs, in certain
tort suits in which plaintiffs allege harm
from a finished medical implant.
The Act would not affect the ability of
plaintiffs to sue manufacturers or sellers of
medical implants. It would allow raw materials suppliers, however, to be dismissed
from lawsuits if the generic raw material
used in the medical device met contract
specifications, and if the biomaterial supplier cannot be classified as either a manufacturer or seller of the medical implant.
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2. Scope:
a. Establishes that any biomaterial supplier may seek its dismissal from a civil action within the parameters of the Subtitle.
b. Applies to any civil action brought by a
claimant in Federal or State court against a
manufacturer, seller, or biomaterial supplier, on the basis of any legal theory, for
harm allegedly caused by an implant.
c. Preempts State law to the extent the
bill establishes a rule of law.
3. Grounds for Dismissal:
a. Requires dismissal of a biomaterial supplier unless the claimant establishes that
the supplier:
(1) was itself the manufacturer of the implant;
(2) was itself the seller of the implant; or
(3) furnished raw materials that failed to
met applicable contractual requirements or
specifications.
b. A supplier may be deemed to be a manufacturer only if the supplier registered as
such with the FDA pursuant to medical device requirements or if the HHS Secretary
issues a declaration that the supplier should
have registered as such. Establishes a procedure for the Secretary to issue such a declaration.
c. A supplier may be deemed to be a seller
if the supplier itself resold the implant after
it had been manufactured and had entered
the stream of commerce.
d. With respect to contractual requirements, a supplier may be liable for harm
only if the claimant shows that the biomaterial were not the actual product for which
the parties contracted or the biomaterial
failed to meet certain specifications and that
failure was the cause of the injury. The relevant specifications are those:
(1) provided to the supplier by the manufacturer,
(2) provided by the manufacturer (either
published, given to the manufacturer, or included in an FDA master file), or
(3) included in manufacturer submissions
that had received clearance from the FDA.
4. Procedures for Dismissal:
a. A supplier named as a defendant or
joined as a co-defendant may file a motion to
dismiss based on the defenses set forth
above.
b. A plaintiff must sue a manufacturer directly whenever jurisdiction over the manufacturer is available. A plaintiff must submit
an expert’s affidavit certifying that the biomaterial were actually used and were the
cause of the alleged harm and that the case
has merit.
c. Specific rules are established for the
handling of a motion to dismiss, including
discovery limitations, summary judgment
procedures, and staying the proceedings.
d. The manufacturer, not the supplier, may
conduct the proceeding on the motion if an
appropriate
contractual
indemnification
agreement exists. The possibility of frivolous
claims against a supplier is reduced by permitting the court to require the plaintiff to
pay attorney fees if the plaintiff succeeds in
making the supplier a defendant, but ultimately is found to have a meritless claim.
5. Effective Date: The bill will apply to
civil actions commenced on or after the date
of enactment.
TITLE II—PROTECTION OF PATIENT HEALTH AND
SAFETY
1. Quality Assurance:
Requires each state to establish a health
care quality assurance program and fund, approved by the Secretary of HHS. Allocates
50% of all punitive damage awards to be
transferred to the fund for the purpose of licensing and certifying health care professionals, implementing programs, including
programs to reduce malpractice costs for
volunteers serving underserved areas.
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2. Risk Management Programs:
Professionals and providers must participate in risk management program to prevent
and provide early warning of practices which
may result in injuries. Insurers must establish risk management programs and require
participation, once every 3 years, as a condition of maintaining insurance.
3. National Practitioner Data Bank:
Requires that information on the discipline of health care practitioners, including suspension or revocation of licenses or
hospital privileges, be accessible to the public.∑
∑ Mr. LIEBERMAN. Mr. President, I
am pleased to join Senators MCCONNELL and KASSEBAUM today in introducing the Liability Reform and Quality Assurance Act of 1995. I thank Senator MCCONNELL for his leadership on
the bill.
Mr. President, our present system for
compensating patients who have been
injured by medical malpractice is ineffective, inefficient, and in many respects, unfair. The system promotes
the overuse of medical tests and procedures, and diverts too much money
away from victims. The Rand Corp. has
estimated that injured patients receive
only 43 percent of spending on medical
malpractice and medical product litigation. And victims often receive their
awards after many years of delay.
Our medical malpractice system is a
stealth contributor to the high cost of
health care. The American Medical Association reports that in the 1980’s liability insurance premiums grew faster
that other physician practice expenses.
The cost of liability insurance has been
estimated at $9 billion in 1992.
So called defensive medicine costs
are an even greater concern. The Office
of Technology Assessment has found
that as many as 8 percent of diagnostic
procedures are ordered primarily because of doctors’ concerns about liability. These defensive practices present a
hidden but significant burden on our
health care system. The health care
consulting firm, Lewin-VHI, has estimated that physician and hospital
charges for defensive medicine were as
high as $25 billion in 1991.
Taxpayers and health care consumers
bear the financial burden of these excessive costs. Liability insurance and
defensive medicine premiums drive up
the cost of Medicare and Medicaid and
of private health care premiums. Further, in some specialties, such as obstetrics, where malpractice premiums
have skyrocketed, malpractice liability may be reducing access to quality
health care. The American College of
Obstetricians and Gynecologists report
of that malpractice costs for ob/gyns
increased 350 percent between 1982 and
1988, and that by 1988, 41 percent of
those ob/gyns surveyed indicated that
they had made changes in their practice patterns, such as ceasing to serve
high-risk patients, because of malpractice concerns.
The bill we’re introducing today will
begin to address these inefficiencies
and perverse effects of our malpractice
system by directing a greater portion
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of malpractice awards to victims, by
discouraging frivolous law suits, and
by enhancing quality assurance programs. Key provisions of this malpractice reform bill include:
Establishing a uniform statute of
limitations, 2 years from the date the
injury was discovered.
Allowing periodic payments for
awards greater than $100,000.
Applying several, not joint and several liability for noneconomic and punitive damages.
Limiting attorneys’ contingency fees
to 331⁄3 of the $150,000 of an award and 25
percent of any amount above $150,000.
Establishing a clear and convincing
evidence standard for doctors delivering a baby who had not previously
treated the pregnant women.
Requiring States to establish mandatory alternative dispute resolution.
Strengthening the standard for
awarding punitive damages and establish State health care quality assurance programs funded with 50 percent
of punitive damage awards.
Requiring providers and insurers to
participate in risk management programs every 3 years to better detect
and prevent practices which may result
in patient injury.
Increasing consumer access to the
National Practitioner Data Bank
which contains information on disciplinary actions against health care providers.
The bill also incorporates legislation
I introduced earlier this year with Senator MCCONNELL and others, S. 303, the
Biomaterials Access Assurance Act of
1995. That bill seeks to ensure that raw
materials continue to be available for
use in life-saving medical devices. It allows suppliers of raw materials or biomaterials used to make medical implants to obtain dismissal, with minimal legal costs, from certain tort suits
in which plaintiffs allege harm from a
finished medical product containing
the biomaterial.
Many of the reform ideas in the legislation we are introducing today were
proposed or cosponsored by Democrats
and Republicans in the last Congress as
part of comprehensive health care reform bills. A number of these ideas
were embraced last year by a group of
us participating in the bipartisan Senate mainstream coalition. But we had
little chance to debate these issues in
the last Congress. I am optimistic that
we will have the opportunity in this
Congress to pass a bipartisan medical
malpractice reform bill. I encourage
my colleagues to consider this legislation and join Senator MCCONNELL, Senator KASSEBAUM, and me as we seek to
improve our medical malpractice system.∑
By Mr. KEMPTHORNE (for himself and Mr. CRAIG):
S. 455. A bill entitled the ‘‘Consultation Clarification Act’’; to the Committee on Environment and Public
Works.
CONSULTATION CLARIFICATION ACT
Mr. KEMPTHORNE. Mr. President,
today I am introducing a bill to amend
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the Endangered Species Act. I am introducing a bill critical to the people
of this country who are held hostage by
the inappropriate implementation of a
provision of the Endangered Species
Act.
One abuse in particular has caused
me to rise today with an urgent need
to make a clarification to the Endangered Species Act.
Late last month a Federal judge
issued an injunction to protect an endangered strain of salmon. This action
resulted in the shutting down of all
mining, logging, and grazing in six
Idaho National Forests. It didn’t cover
just the activities that would affect the
salmon, it included all activities on
lands that represent 30 percent of the
land in the State of Idaho. And worse,
it adversely affected people lives and
jobs in half of the States.
Mr. President, this is the area of the
State of Idaho where people’s jobs are
needlessly at risk because of the vagaries of the courts and Federal agencies.
The court imposed a 5-day injunction
on all activities on the national forests
covering 30 percent of the area of the
State of Idaho and jeopardizing the
jobs of nearly 5,000 workers, workers on
projects that have been in continuous
operation that the Forest Service has
determined will not jeopardize the endangered salmon runs. And adding uncertainty to another 5,000 workers
whose jobs are influenced by the
project work.
Mr. President, 2,500 people rallied in
Challis, ID, January 21 to let their
Government know that they are frustrated that no one is considering their
plight. They are facing loss of jobs, not
having money for food and clothing,
and the uncertainties of having to
move from their homes. I got a letter
from Russell Ebberts who is an eighth
grader in Challis, ID. He’s facing having to move if his Dad looses his job.
And Danny Fisher and Karena Turpin
were planing on getting married in
June. Their wedding and future plans
have been shattered. And as long as
there is a threat of a recurrence of that
injunctions, they must continue to be
worried.
The current injunction, when it was
in effect, affected mainly mining operations, but future injunctions, when
they come will affect grazing, timber
harvest including salvage, and other
activities. We have estimated that if
the injunction is put in place again in
March, it will cost $65,000 per day in
the loss of folks’ wages across Idaho.
That is intolerable.
The insanity of this injunction was
that many of the projects that would
be shut down had already been the subject of consultation under the Endangered Species Act and had been determined to not harm the salmon.
Let me repeat that important point,
Mr. President. These are projects that
had already been the subject of consultation, and had been found to have
no effect on the salmon. Nonetheless,
just because these projects were con-
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tained within a national forest management plan, and the plan had not yet
been consulted upon for the salmon,
the projects were subject to immediate
cessation.
Why, you ask, had the plan not been
made subject to consultation? That is
the irony of this judge’s order. The
plans in the six national forests had
been consulted upon, in addition to the
projects within the plans. The problem
was that the salmon was listed under
the Endangered Species Act after the
forest plans had been consulted upon.
Well, Mr. President, the injunction
was temporarily lifted, until March 15.
Hopefully this will be enough time for
the National Marine Fisheries Service
to complete consultation on the forest
plans. But, if anything goes wrong, the
injunction may be imposed again. As
the year progresses, more and more
people’s jobs will be at risk. These uncertainties in folks’ lives are not necessary.
The legislation my colleague from
Idaho and I are sponsoring does only
one thing, it clarifies that it has never
been the intent of Congress to give the
regulatory agencies two opportunities
to consult on the same project. It was
never the intent to cause a project that
has already been approved under the
Endangered Species Act to come to a
halt while the plan of which it is a part
goes through a second review.
Since the enactment of the Endangered Species Act, Congress has enacted laws requiring agencies to do
broad plans for their activities. These
agencies are required by Federal law to
have different levels of planning—a
broad scale long term plan and then
site specific plans.
Court decisions like this one have
begun to force an interpretation that
there must be consultation on both levels of planning and that both these
plans and the resulting projects may be
held up if the consultation on both has
not been completed.
This is double jeopardy. We cannot
afford to allow our Federal Government to waste taxpayers dollars in essentially looking at the same project
twice. We can no longer throw out
years of planning and community involvement on these plans every time a
new species is listed. The laws and regulations for both the Forest Service
and the BLM allow for these kinds of
updates—they are called amendments
and require the kinds of public involvement that put people back into the
management of their public lands.
Mr. President, it is time that Congress is clear about what we intended
for the consultation process. My bill
amends section 7 of the Endangered
Species Act to clarify that when a consultation has been completed on a
project, the project does not need to
stop while consultation is done on the
overriding plan.
This is a necessary clarification of
the intent of Congress on this issue. Its
intent is to avoid unnecessary multiple
consultations on a project. We envision
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that it will help with existing situations in Oregon, Idaho, New Mexico,
and California and it will prevent many
other States from getting in the same
situation that we are currently facing
in Idaho.
Mr. President, I want to make it
clear that we are not intending to reform the Endangered Species Act with
this bill. That reform effort is one that
I feel needs careful consideration, constructive debate, and substantive suggestions over the months ahead. We are
planning hearings on this broader reform bill and are looking to submit a
comprehensive reauthorization bill in
the fall.
Mr. President, my bill will fix a
small, but critical part of the frustrations caused by liberal interpretations
of the Endangered Species Act. And, it
will head off potential catastrophes in
the short run that will bog down the
kind of innovative discussions that are
needed to bring forth the best possible
bill reauthorizing the Endangered Species Act, to benefit the species truly at
risk and to help, not hinder the American people.
By Mr. BRADLEY (for himself,
Mr. DODD, Mr. ROCKEFELLER,
Mr. CHAFEE, Mrs. FEINSTEIN,
Ms. SNOWE, Mr. LIEBERMAN, Mr.
DORGAN, and Mr. KENNEDY):
S. 456. A bill to improve and
strengthen the child support collection
system, and for other purposes; to the
Committee on Finance.
THE INTERSTATE CHILD SUPPORT
RESPONSIBILITY ACT
∑ Mr. BRADLEY. Mr. President, the
crucible of American society is the
family. Today the family faces stresses
and injuries that we have never seen
before in this country. Almost every
child is affected by these pressures: the
40 percent of children who go home to
an empty house every afternoon because both parents work as well as the
27 percent of children who live with
only one parent. Our efforts as a nation
must address these stresses by seeking
to recouple sexual behavior and childbearing with family responsibility.
That responsibility involves giving
time, love, care, and attention, but it
also includes food, clothing, and medical care. We should send a clear message, above all to young men: If you father a child, whether or not you are
married to the mother of that child, be
prepared to set aside one-sixth or more
of your earnings every year for 18 years
to help that child grow up healthy,
educated, and responsible.
That’s the principle of child support.
Today, Mr. President, I rise to introduce a bill that will reinforce that
principle by repairing all the holes in
the tattered, State-based system of
child support enforcement. That system has not worked well. It left $5.1
billion in court-ordered child support
uncollected last year. It succeeds in establishing paternity for less than 40
percent of out-of-wedlock births. Still,
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the complex Federal-State system succeeds in collecting $3.98 for every dollar spent on enforcement. We face a
choice. We can throw out the State
system and replace it with a Federal
bureaucracy, which might be more
cumbersome but would be as hard to
run away from as the IRS. Or, we can
try to repair the State system, help
States work together better, require
some uniformity, and help the States
by creating national databases of child
support orders and new hires. That is
the path that I and a number of my
colleagues of both parties have chosen
in developing the bill we introduce
today.
About 17.6 million children live with
just one parent. There are almost 10
million women who are raising children on their own. Almost one-third of
them live below the poverty level. Less
than 60 percent have child support orders. Only half of those who have child
support orders receive the full amount
due.
Mothers who do not receive child
support do all they can to remain off of
welfare. By definition, almost every
family receiving Aid to Families with
Dependent Children should be receiving
child support, except in cases where
one parent is deceased or in the small
number of two-parent families participating in the AFDC–UP program. When
we talk about welfare, we have to recognize that for every woman who is
raising children, receiving welfare and
not working, there is a father who is
not raising the children and who may
or may not be working. Either way, he
is exploiting welfare as much or more
than the mother who is receiving welfare. Tougher child support enforcement has resulted in collections for
873,000 families on welfare in 1993, and
much of that money went back to the
taxpayers to make up for welfare payments already made.
If this Congress undertakes a serious
effort at welfare reform, child support
enforcement along the lines we propose
today must be a part of it. I am very
pleased that my colleagues in the
House of Representatives, especially
Congresswomen MARGE ROUKEMA and
NANCY JOHNSON, were able to persuade
the leadership of the Ways and Means
Committee to expand the Contract
With America’s welfare reform bill to
include comprehensive child support
reform. But as I said last year, if welfare reform continues to be delayed by
controversy, we must not allow child
support to be delayed along with it.
There is consensus on child support,
and there are also three times as many
mothers due child support who are not
eligible for welfare as are. They should
not have to wait until we fix the welfare system before they receive the
support due them.
The link to welfare makes child support a valid concern of the Federal
Government, but it is also a Federal
concern because one-third of all child
support cases are interstate cases,
which means that the parents live in
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different States. These cases are the
most difficult to resolve. By moving
from State to State and changing jobs,
parents can systematically avoid paying child support, or even being located
so that their wages can be withheld, for
about a year at a time. These deliberate evasions occur against a backdrop of inconsistent State laws, inadequate staff and computer resources,
and a continually growing caseload due
to the tremendous rise in out-of-wedlock births.
Expanded paternity establishment is
key to improving interstate child support enforcement. Every year more
than 1 million children are born to unmarried women, about one-fourth of all
births that year. About 57 percent of
black children, 23 percent of Hispanic
children, and 17 percent of white children born in 1990 were born to unwed
mothers. In 1990, 68 percent of all
births to women between the ages of 15
to 19 were out of wedlock.
Out-of-wedlock births need not automatically consign a mother and children to poverty. They can be handled
like a divorce; support can be ordered
and enforced. But in about one-quarter
of the cases, the State cannot even get
started, because they cannot obtain
any information about the father.
Many of the paternity establishment
provisions of my earlier bill were
passed in the 1993 budget package,
which required States to establish hospital-based paternity establishment
programs. These programs are now up
and running, and are demonstrating a
significant increase in the number of
child support cases in which the father
can be identified, so that support can
be ordered and the other enforcement
mechanisms can kick in. About 85 percent of fathers are in touch with the
child and mother at, or soon after, the
birth. Many fathers visit their children
in the hospital or birthing center. Programs that target these fathers and
provide opportunities for them to acknowledge paternity can do a lot to cut
down on the number of children for
whom paternity has not been established.
For the situations where the father
was not targeted at the hospital, this
bill contains provisions which would
make it easier for paternity to be established by courts or administrative
agencies. It makes it less difficult to
locate out-of-State fathers by expanding the locate information and services
available to custodial parents and child
support professionals. It mandates
changes in evidence standards which
remove many of the obstacles that now
exist to paternity establishment across
State lines. It provides State child support agencies for the first time with a
Federal incentive to work on establishing paternity, not just collecting
child support that has already been ordered.
Even when parentage is established,
custodial parents always seem to be
one step behind noncustodial parents.
If a noncustodial parent gets a job in
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February 16, 1995
another State, child support officials
do not usually learn about the job
change until the next quarter in which
the employer has to report payroll information. By the time child support
officials in the custodial parent’s State
learn the information, the noncustodial parent has often moved to another
job. A year can pass. This scenario is
played out over and over in interstate
cases.
This bill requires information on
every new hire to be filed in a national
database, which States can regularly
search for the names or Social Security
numbers of parents who owe support to
children in their States.
To eliminate the problems associated
with establishing a support order
across State lines, my bill requires the
States to expand their long-arm statutes to reach more out-of-State noncustodial parents. It requires States to
recognize and enforce child support orders from other States, and it also requires all States to adopt the Uniform
Interstate Family Support Act, adopted by the National Conference of Commissioners on Uniform State Laws,
verbatim so that inconsistencies between the States in case processing and
enforcement can be eliminated.
Even where a support order has been
established, custodial parents still
have problems collecting money, especially in interstate cases. In response,
this bill requires the States to take
tougher measures against parents who
do not pay their child support. It requires them to pass laws making it
possible for delinquent parents to lose
their professional and occupational licenses, hitting them in a sense at their
livelihood. It requires the States to
hold off issuing driver’s licenses to delinquent parents. It calls for the expanded use of credit reporting—it is interesting that a noncustodial parent
can be delinquent on a car loan and
that fact can be reported on a credit report, but the fact that he or she is delinquent on child support might not be
reported. In addition, this bill requires
the
States
to
intercept
lottery
winnings, money judgments, and other
income of noncustodial parents who
owe child support. This bill also requires the States to make it easier to
freeze the bank accounts of delinquent
parents, and requires the States to
make it a State crime to willfully fail
to pay child support.
Finally, this bill responds to staffing
the training issues which have plagued
child support professionals for decades.
In a GAO report I and the other congressional members of the commission
requested, it was reported that the average caseload per child support case
worker is 1,000 cases. Can you imagine,
Mr. President, 1,000 cases? This bill requires the Department of Health and
Human Services to conduct staffing
studies in every State and report such
findings to this body and the States. It
also requires the Office of Child Support Enforcement to make training assistance available to State child support agencies.
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February 16, 1995
Mr. President, this bill represents a
consensus, an overdue consensus, about
the kinds of repairs that are needed in
the child support system. It began with
the recommendations of the U.S. Commission on Interstate Child Support
Enforcement, of which I was a member.
I put those recommendations forward
as legislation in 1992, as did my colleagues on the commission, Representatives MARGE ROUKEMA and BARBARA
KENNELLY. Last year, the administration took those central recommendations and added some detail about the
national databases of child support orders and new hires. Late last year and
early this year, the House Caucus on
Women’s Issues took up the subject,
and earlier this month introduced a
bill modeled on the administration’s
and my earlier bill. The bill we introduce today is intended to be the Senate
companion to H.R. 785, the Johnson bill
in the House, with only minor differences.
I ask unanimous consent that the
text of the bill and a summary be inserted in the RECORD.
There being no objection, the material was ordered to be printed in the
RECORD, as follows:
S. 456
Be it enacted by the Senate and House of Representatives of the United States of America in
Congress assembled,
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SECTION 1. SHORT TITLE; REFERENCE; TABLE OF
CONTENTS.
(a) SHORT TITLE.—This Act may be cited as
the ‘‘Interstate Child Support Responsibility
Act of 1995’’.
(b) REFERENCE TO SOCIAL SECURITY ACT.—
Except as otherwise specifically provided,
wherever in this Act an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that
section or other provision of the Social Security Act.
(c) TABLE OF CONTENTS.—The table of contents of this Act is as follows:
Sec. 1. Short title; reference; table of contents.
TITLE I—IMPROVEMENTS TO THE CHILD
SUPPORT COLLECTION SYSTEM
Subtitle A—Eligibility and Other Matters
Concerning Title IV–D Program Clients
Sec. 101. State obligation to provide paternity establishment and child
support enforcement services.
Sec. 102. Distribution of payments.
Sec. 103. Rights to notification and hearings.
Sec. 104. Privacy safeguards.
Subtitle B—Program Administration and
Funding
Sec. 111. Federal matching payments.
Sec. 112. Performance-based incentives and
penalties.
Sec. 113. Federal and State reviews and audits.
Sec. 114. Required reporting procedures.
Sec. 115. Automated data processing requirements.
Sec. 116. Director of CSE program; staffing
study.
Sec. 117. Funding for secretarial assistance
to State programs.
Sec. 118. Data collection and reports by the
Secretary.
Subtitle C—Locate and Case Tracking
Sec. 121. Central State and case registry.
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Sec. 122. Centralized collection and disbursement of support payments.
Sec. 123. Amendments concerning income
withholding.
Sec. 124. Locator information from interstate networks.
Sec. 125. Expanded Federal parent locator
service.
Sec. 126. Use of social security numbers.
Subtitle D—Streamlining and Uniformity of
Procedures
Sec. 131. Adoption of uniform State laws.
Sec. 132. Improvements to full faith and
credit for child support orders.
Sec. 133. State laws providing expedited procedures.
Subtitle E—Paternity Establishment
Sec. 141. State laws concerning paternity establishment.
Sec. 142. Outreach for voluntary paternity
establishment.
Subtitle F—Establishment and Modification
of Support Orders
Sec. 151. National Child Support Guidelines
Commission.
Sec. 152. Simplified process for review and
adjustment of child support orders.
Subtitle G—Enforcement of Support Orders
Sec. 161. Federal income tax refund offset.
Sec. 162. Internal Revenue Service collection of arrearages.
Sec. 163. Authority to collect support from
Federal employees.
Sec. 164. Enforcement of child support obligations of members of the
Armed Forces.
Sec. 165. Motor vehicle liens.
Sec. 166. Voiding of fraudulent transfers.
Sec. 167. State law authorizing suspension of
licenses.
Sec. 168. Reporting arrearages to credit bureaus.
Sec. 169. Extended statute of limitation for
collection of arrearages.
Sec. 170. Charges for arrearages.
Sec. 171. Denial of passports for nonpayment
of child support.
Sec. 172. International child support enforcement.
Subtitle H—Medical Support
Sec. 181. Technical correction to ERISA definition of medical child support
order.
Subtitle I—Access and Visitation Programs
Sec. 191. Grants to States for access and visitation programs.
TITLE II—EFFECT OF ENACTMENT
Sec. 201. Effective dates.
Sec. 202. Severability.
TITLE I—IMPROVEMENTS TO THE CHILD
SUPPORT COLLECTION SYSTEM
Subtitle A—Eligibility and Other Matters
Concerning Title IV–D Program Clients
SEC. 101. STATE OBLIGATION TO PROVIDE PATERNITY
ESTABLISHMENT
AND
CHILD
SUPPORT
ENFORCEMENT
SERVICES.
(a) STATE LAW REQUIREMENTS.—Section
466(a) (42 U.S.C. 666(a)) is amended by adding
at the end the following new paragraph:
‘‘(12) Procedures under which—
‘‘(A) every child support order established
or modified in the State on or after October
1, 1998, is recorded in the central case registry established in accordance with section
454A(e); and
‘‘(B) child support payments are collected
through the centralized collections unit established in accordance with section 454B—
‘‘(i) on and after October 1, 1998, under each
order subject to wage withholding under section 466(b); and
‘‘(ii) on and after October 1, 1999, under
each other order required to be recorded in
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such central case registry under this paragraph or section 454A(e), if requested by either party subject to such order.’’.
(b) STATE PLAN REQUIREMENTS.—Section
454 (42 U.S.C. 654) is amended—
(1) by striking paragraph (4) and inserting
the following new paragraph:
‘‘(4) provide that such State will undertake—
‘‘(A) to provide appropriate services under
this part to—
‘‘(i) each child with respect to whom an assignment is effective under section 402(a)(26),
471(a)(17), or 1912 (except in cases in which
the State agency determines, in accordance
with paragraph (25), that it is against the
best interests of the child to do so); and
‘‘(ii) each child not described in clause (i)—
‘‘(I) with respect to whom an individual applies for such services; or
‘‘(II) on and after October 1, 1998, with respect to whom a support order is recorded in
the central State case registry established
under section 454A, if application is made for
services under this part.’’;
(2) in paragraph (6)—
(A) by striking ‘‘(6) provide that’’ and all
that follows through subparagraph (A) and
inserting the following:
‘‘(6) provide that—
‘‘(A) services under the State plan shall be
made available to nonresidents on the same
terms as to residents;’’;
(B) in subparagraph (B)—
(i) by inserting ‘‘on individuals not receiving assistance under part A’’ after ‘‘such
services shall be imposed’’; and
(ii) by inserting ‘‘but no fees or costs shall
be imposed on any absent or custodial parent
or other individual for inclusion in the central State registry maintained pursuant to
section 454A(e)’’;
(C) in each of subparagraphs (B), (C), (D),
and (E), by indenting such subparagraph and
aligning its left margin with the left margin
of subparagraph (A); and
(D) in each of subparagraphs (B), (C), and
(D), by striking the final comma and inserting a semicolon.
(c) CONFORMING AMENDMENTS.—
(1) PATERNITY ESTABLISHMENT PERCENTAGE.—Section
452(g)(2)(A)
(42
U.S.C.
652(g)(2)(A)) is amended by striking ‘‘454(6)’’
each place it appears and inserting
‘‘454(4)(A)(ii)’’.
(2) STATE PLAN.—Section 454(23) (42 U.S.C.
654(23)) is amended, effective October 1, 1998,
by striking ‘‘information as to any application fees for such services and’’.
(3) PROCEDURES TO IMPROVE ENFORCEMENT.—Section
466(a)(3)(B)
(42
U.S.C.
666(a)(3)(B)) is amended by striking ‘‘in the
case of overdue support which a State has
agreed to collect under section 454(6)’’ and
inserting ‘‘in any other case’’.
(4) DEFINITION OF OVERDUE SUPPORT.—Section 466(e) (42 U.S.C. 666(e)) is amended by
striking ‘‘or (6)’’.
SEC. 102. DISTRIBUTION OF PAYMENTS.
(a) DISTRIBUTIONS THROUGH STATE CHILD
SUPPORT ENFORCEMENT AGENCY TO FORMER
ASSISTANCE RECIPIENTS.—Section 454(5) (42
U.S.C. 654(5)) is amended—
(1) in subparagraph (A)—
(A) by inserting ‘‘except as otherwise specifically provided in section 464 or 466(a)(3),’’
after ‘‘is effective,’’; and
(B) by striking ‘‘except that’’ and all that
follows through the semicolon; and
(2) in subparagraph (B), by striking ‘‘, except’’ and all that follows through ‘‘medical
assistance’’.
(b) DISTRIBUTION TO A FAMILY CURRENTLY
RECEIVING AFDC.—Section 457 (42 U.S.C. 657)
is amended—
(1) by striking subsection (a) and redesignating subsection (b) as subsection (a);
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(2) in subsection (a), as redesignated—
(A) in the matter preceding paragraph (2),
to read as follows:
‘‘(a) IN THE CASE OF A FAMILY RECEIVING
AFDC.—Amounts collected under this part
during any month as support of a child who
is receiving assistance under part A (or a
parent or caretaker relative of such a child)
shall (except in the case of a State exercising
the option under subsection (b)) be distributed as follows:
‘‘(1) an amount equal to the amount that
will be disregarded pursuant to section
402(a)(8)(A)(vi) shall be taken from each of—
‘‘(A) the amounts received in a month
which represent payments for that month;
and
‘‘(B) the amounts received in a month
which represent payments for a prior month
which were made by the absent parent in
that prior month;
and shall be paid to the family without affecting its eligibility for assistance or decreasing any amount otherwise payable as
assistance to such family during such
month;’’;
(B) in paragraph (4), by striking ‘‘or (B)’’
and all that follows through the period and
inserting ‘‘; then (B) from any remainder,
amounts equal to arrearages of such support
obligations assigned, pursuant to part A, to
any other State or States shall be paid to
such other State or States and used to pay
any such arrearages (with appropriate reimbursement of the Federal Government to the
extent of its participation in the financing);
and then (C) any remainder shall be paid to
the family.’’.
(3) by inserting after subsection (a), as redesignated, the following new subsection:
‘‘(b) ALTERNATIVE DISTRIBUTION IN CASE OF
FAMILY RECEIVING AFDC.—In the case of a
State electing the option under this subsection, amounts collected as described in
subsection (a) shall be distributed as follows:
‘‘(1) an amount equal to the amount that
will be disregarded pursuant to section
402(a)(8)(A)(vi) shall be taken from each of—
‘‘(A) the amounts received in a month
which represent payments for that month;
and
‘‘(B) the amounts received in a month
which represent payments for a prior month
which were made by the absent parent in
that prior month;
and shall be paid to the family without affecting its eligibility for assistance or decreasing any amount otherwise payable as
assistance to such family during such
month;
‘‘(2) second, from any remainder, amounts
equal to the balance of support owed for the
current month shall be paid to the family;
‘‘(3) third, from any remainder, amounts
equal to arrearages of such support obligations assigned, pursuant to part A, to the
State making the collection shall be retained and used by such State to pay any
such arrearages (with appropriate reimbursement of the Federal Government to the extent of its participation in the financing);
‘‘(4) fourth, from any remainder, amounts
equal to arrearages of such support obligations assigned, pursuant to part A, to any
other State or States shall be paid to such
other State or States and used to pay any
such arrearages (with appropriate reimbursement of the Federal Government to the extent of its participation in the financing);
and
‘‘(5) fifth, any remainder shall be paid to
the family.’’.
(c) DISTRIBUTION TO A FAMILY NOT RECEIVING AFDC.—
(1) IN GENERAL.—Section 457(c) (42 U.S.C.
657(c)) is amended to read as follows:
‘‘(c) DISTRIBUTIONS IN CASE OF FAMILY NOT
RECEIVING AFDC.—Amounts collected by a
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State agency under this part during any
month as support of a child who is not receiving assistance under part A (or of a parent or caretaker relative of such a child)
shall (subject to the remaining provisions of
this section) be distributed as follows:
‘‘(1) first, amounts equal to the total of
such support owed for such month shall be
paid to the family;
‘‘(2) second, from any remainder, amounts
equal to arrearages of such support obligations for months during which such child did
not receive assistance under part A shall be
paid to the family;
‘‘(3) third, from any remainder, amounts
equal to arrearages of such support obligations assigned to the State making the collection pursuant to part A shall be retained
and used by such State to pay any such arrearages (with appropriate reimbursement of
the Federal Government to the extent of its
participation in the financing); and
‘‘(4) fourth, from any remainder, amounts
equal to arrearages of such support obligations assigned to any other State pursuant
to part A shall be paid to such other State or
States, and used to pay such arrearages, in
the order in which such arrearages accrued
(with appropriate reimbursement of the Federal Government to the extent of its participation in the financing).’’.
(2) EFFECTIVE DATE.—The amendment
made by paragraph (1) shall become effective
on October 1, 1999.
(d) DISTRIBUTION TO A CHILD RECEIVING ASSISTANCE UNDER TITLE IV–E.—Section 457(d)
(42 U.S.C. 657(d)) is amended, in the matter
preceding paragraph (1), by striking ‘‘Notwithstanding the preceding provisions of this
section, amounts’’ and inserting the following:
‘‘(d) DISTRIBUTIONS IN CASE OF A CHILD RECEIVING ASSISTANCE UNDER TITLE IV–E.—
Amounts’’.
(e) REGULATIONS.—The Secretary of Health
and Human Services shall promulgate regulations—
(1) under part D of title IV of the Social
Security Act, establishing a uniform nationwide standard for allocation of child support
collections from an obligor owing support to
more than 1 family; and
(2) under part A of such title, establishing
standards applicable to States electing the
alternative formula under section 457(b) of
such Act for distribution of collections on
behalf of families receiving Aid to Families
with Dependent Children, designed to minimize irregular monthly payments to such
families.
(f) CLERICAL AMENDMENTS.—Section 454 (42
U.S.C. 654) is amended—
(1) in paragraph (11)—
(A) by striking ‘‘(11)’’ and inserting
‘‘(11)(A)’’; and
(B) by inserting after the semicolon ‘‘and’’;
and
(2) by redesignating paragraph (12) as subparagraph (B) of paragraph (11).
(g) MANDATORY CHILD SUPPORT PASSTHROUGH.—
(1) IN GENERAL.—Section 402(a)(8)(A)(vi) (42
U.S.C. 602(a)(8)(A)(vi)) is amended—
(A) by striking ‘‘$50’’ each place it appears
and inserting ‘‘$50, or, if greater, $50 adjusted
by the CPI (as prescribed in section 406(i));’’;
and
(B) by striking the semicolon at the end
and inserting ‘‘or, in lieu of each dollar
amount specified in this clause, such greater
amount as the State may choose (and provide for in its State plan);’’.
(2) CPI ADJUSTMENT.—Section 406 (42 U.S.C.
606) is amended by adding at the end the following new subsection:
‘‘(i) For purposes of this part, an amount is
‘adjusted by the CPI’ for any month in a calendar year by multiplying the amount involved by the ratio of—
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February 16, 1995
‘‘(1) the Consumer Price Index (as prepared
by the Department of Labor) for the third
quarter of the preceding calendar year, to
‘‘(2) such Consumer Price Index for the
third quarter of calendar year 1996,
and rounding the product, if not a multiple
of $10, to the nearer multiple of $10.’’.
SEC. 103. RIGHTS TO NOTIFICATION AND HEARINGS.
(a) IN GENERAL.—Section 454 (42 U.S.C. 654),
as amended by section 102(f), is amended by
inserting after paragraph (11) the following
new paragraph:
‘‘(12) establish procedures to provide that—
‘‘(A) individuals who are applying for or receiving services under this part, or are parties to cases in which services are being provided under this part—
‘‘(i) receive notice of all proceedings in
which support obligations might be established or modified; and
‘‘(ii) receive a copy of any order establishing or modifying a child support obligation, or (in the case of a petition for modification) a notice of determination that
there should be no change in the amount of
the child support award, within 14 days after
issuance of such order or determination;
‘‘(B) individuals applying for or receiving
services under this part have access to a fair
hearing or other formal complaint procedure
that meets standards established by the Secretary and ensures prompt consideration and
resolution of complaints (but the resort to
such procedure shall not stay the enforcement of any support order); and
‘‘(C) the State may not provide to any noncustodial parent of a child representation relating to the establishment or modification
of an order for the payment of child support
with respect to that child, unless the State
makes provision for such representation outside the State agency;’’.
(b) EFFECTIVE DATE.—The amendment
made by subsection (a) shall become effective on October 1, 1997.
SEC. 104. PRIVACY SAFEGUARDS.
(a) STATE PLAN REQUIREMENT.—Section 454
(42 U.S.C. 454) is amended—
(1) by striking ‘‘and’’ at the end of paragraph (23);
(2) by striking the period at the end of
paragraph (24) and inserting ‘‘; and’’; and
(3) by adding after paragraph (24) the following:
‘‘(25) provide that the State will have in effect safeguards applicable to all sensitive
and confidential information handled by the
State agency designed to protect the privacy
rights of the parties, including—
‘‘(A) safeguards against unauthorized use
or disclosure of information relating to proceedings or actions to establish paternity, or
to establish or enforce support;
‘‘(B) prohibitions on the release of information on the whereabouts of 1 party to another party against whom a protective order
with respect to the former party has been entered; and
‘‘(C) prohibitions on the release of information on the whereabouts of 1 party to another party if the State has reason to believe
that the release of the information may result in physical or emotional harm to the
former party.’’.
(b) EFFECTIVE DATE.—The amendment
made by subsection (a) shall become effective on October 1, 1997.
Subtitle B—Program Administration and
Funding
SEC. 111. FEDERAL MATCHING PAYMENTS.
(a) INCREASED BASE MATCHING RATE.—Sec-
tion 455(a)(2) (42 U.S.C. 655(a)(2)) is amended
to read as follows:
‘‘(2) The applicable percent for a quarter
for purposes of paragraph (1)(A) is—
‘‘(A) for fiscal year 1997, 69 percent,
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‘‘(B) for fiscal year 1998, 72 percent, and
‘‘(C) for fiscal year 1999 and succeeding fiscal years, 75 percent.’’.
(b) MAINTENANCE OF EFFORT.—Section 455
(42 U.S.C. 655) is amended—
(1) in subsection (a)(1), in the matter preceding subparagraph (A), by striking ‘‘From’’
and inserting ‘‘Subject to subsection (c),
from’’; and
(2) by inserting after subsection (b) the following new subsection:
‘‘(c) Notwithstanding the provisions of subsection (a), total expenditures for the State
program under this part for fiscal year 1997
and each succeeding fiscal year (excluding 1time capital expenditures for automation),
reduced by the percentage specified for such
fiscal year under subsection (a)(2) shall not
be less than such total expenditures for fiscal year 1996, reduced by 66 percent.’’.
PERFORMANCE-BASED INCENTIVES
AND PENALTIES.
(a) INCENTIVE ADJUSTMENTS TO FEDERAL
MATCHING RATE.—Section 458 (42 U.S.C. 658)
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SEC.
112.
is amended to read as follows:
‘‘INCENTIVE ADJUSTMENTS TO MATCHING RATE
‘‘SEC. 458. (a) INCENTIVE ADJUSTMENT.—
‘‘(1) IN GENERAL.—In order to encourage
and reward State child support enforcement
programs which perform in an effective manner, the Federal matching rate for payments
to a State under section 455(a)(1)(A), for each
fiscal year beginning on or after October 1,
1998, shall be increased by a factor reflecting
the sum of the applicable incentive adjustments (if any) determined in accordance
with regulations under this section with respect to Statewide paternity establishment
and to overall performance in child support
enforcement.
‘‘(2) STANDARDS.—
‘‘(A) IN GENERAL.—The Secretary shall
specify in regulations—
‘‘(i) the levels of accomplishment, and
rates of improvement as alternatives to such
levels, which States must attain to qualify
for incentive adjustments under this section;
and
‘‘(ii) the amounts of incentive adjustment
that shall be awarded to States achieving
specified accomplishment or improvement
levels, which amounts shall be graduated,
ranging up to—
‘‘(I) 5 percentage points, in connection
with Statewide paternity establishment; and
‘‘(II) 10 percentage points, in connection
with overall performance in child support
enforcement.
‘‘(B) LIMITATION.—In setting performance
standards pursuant to subparagraph (A)(i)
and adjustment amounts pursuant to subparagraph (A)(ii), the Secretary shall ensure
that the aggregate number of percentage
point increases as incentive adjustments to
all States do not exceed such aggregate increases as assumed by the Secretary in estimates of the cost of this section as of June
1995, unless the aggregate performance of all
States exceeds the projected aggregate performance of all States in such cost estimates.
‘‘(3) DETERMINATION OF INCENTIVE ADJUSTMENT.—The Secretary shall determine the
amount (if any) of incentive adjustment due
each State on the basis of the data submitted by the State pursuant to section
454(15)(B) concerning the levels of accomplishment (and rates of improvement) with
respect to performance indicators specified
by the Secretary pursuant to this section.
‘‘(4) FISCAL YEAR SUBJECT TO INCENTIVE ADJUSTMENT.—The total percentage point increase determined pursuant to this section
with respect to a State program in a fiscal
year shall apply as an adjustment to the applicable percent under section 455(a)(2) for
payments to such State for the succeeding
fiscal year.
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‘‘(5) RECYCLING OF INCENTIVE ADJUSTState shall expend in the State
program under this part all funds paid to the
State by the Federal Government as a result
of an incentive adjustment under this section.
‘‘(b) MEANING OF TERMS.—
‘‘(1) STATEWIDE PATERNITY ESTABLISHMENT
PERCENTAGE.—
‘‘(A) IN GENERAL.—For purposes of this section, the term ‘Statewide paternity establishment percentage’ means, with respect to
a fiscal year, the ratio (expressed as a percentage) of—
‘‘(i) the total number of out-of-wedlock
children in the State under 1 year of age for
whom paternity is established or acknowledged during the fiscal year, to
‘‘(ii) the total number of children requiring
paternity establishment born in the State
during such fiscal year.
MEASUREMENT.—The
‘‘(B)
ALTERNATIVE
Secretary shall develop an alternate method
of measurement for the Statewide paternity
establishment percentage for any State that
does not record the out-of-wedlock status of
children on birth certificates.
‘‘(2) The term ‘overall performance in child
support enforcement’ means a measure or
measures of the effectiveness of the State
agency in a fiscal year which takes into account factors including—
‘‘(A) the percentage of cases requiring a
child support order in which such an order
was established;
‘‘(B) the percentage of cases in which child
support is being paid;
‘‘(C) the ratio of child support collected to
child support due; and
‘‘(D) the cost-effectiveness of the State
program, as determined in accordance with
standards established by the Secretary in
regulations.’’.
(b) ADJUSTMENT OF PAYMENTS UNDER PART
D OF TITLE IV.—Section 455(a)(2) (42 U.S.C.
655(a)(2)), as amended by section 111(a), is
amended—
(1) by striking the period at the end of subparagraph (C) and inserting a comma; and
(2) by adding after and below subparagraph
(C), flush with the left margin of the paragraph, the following:
‘‘increased by the incentive adjustment factor (if any) determined by the Secretary pursuant to section 458.’’.
(c) CONFORMING AMENDMENTS.—Section
454(22) (42 U.S.C. 654(22)) is amended—
(1) by striking ‘‘incentive payments’’ the
first place it appears and inserting ‘‘incentive adjustments’’; and
(2) by striking ‘‘any such incentive payments made to the State for such period’’
and inserting ‘‘any increases in Federal payments to the State resulting from such incentive adjustments’’.
(d) CALCULATION OF IV–D PATERNITY ESTABLISHMENT PERCENTAGE.—
PERFORMANCE.—Section
(1)
OVERALL
452(g)(1) (42 U.S.C. 652(g)(1)) is amended in
the matter preceding subparagraph (A) by inserting ‘‘its overall performance in child support enforcement is satisfactory (as defined
in section 458(b) and regulations of the Secretary), and’’ after ‘‘1994,’’.
(2) DEFINITION.—Section 452(g)(2)(A) (42
U.S.C. 652(g)(2)(A)) is amended, in the matter
preceding clause (i)—
(A) by striking ‘‘paternity establishment
percentage’’ and inserting ‘‘IV–D paternity
establishment percentage’’; and
(B) by striking ‘‘(or all States, as the case
may be)’’.
(3) MODIFICATION OF REQUIREMENTS.—Section 452(g)(3) (42 U.S.C. 652(g)(3)) is amended—
(A) by striking subparagraph (A) and redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively;
MENT.—A
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(B) in subparagraph (A), as redesignated,
by striking ‘‘the percentage of children born
out-of-wedlock in the State’’ and inserting
‘‘the percentage of children in the State who
are born out of wedlock or for whom support
has not been established’’; and
(C) in subparagraph (B), as redesignated—
(i) by inserting ‘‘and overall performance
in child support enforcement’’ after ‘‘paternity establishment percentages’’; and
(ii) by inserting ‘‘and securing support’’ before the period.
(e) REDUCTION OF PAYMENTS UNDER PART D
OF TITLE IV.—
(1) NEW REQUIREMENTS.—Section 455 (42
U.S.C. 655) is amended—
(A) by redesignating subsection (e) as subsection (f); and
(B) by inserting after subsection (d) the
following new subsection:
‘‘(e)(1) Notwithstanding any other provision of law, if the Secretary finds, with respect to a State program under this part in
a fiscal year beginning on or after October 1,
1997—
‘‘(A)(i) on the basis of data submitted by a
State pursuant to section 454(15)(B), that the
State program in such fiscal year failed to
achieve the IV–D paternity establishment
percentage (as defined in section 452(g)(2)(A))
or the appropriate level of overall performance in child support enforcement (as defined in section 458(b)(2)), or to meet other
performance measures that may be established by the Secretary, or
‘‘(ii) on the basis of an audit or audits of
such State data conducted pursuant to section 452(a)(4)(C), that the State data submitted pursuant to section 454(15)(B) is incomplete or unreliable; and
‘‘(B) that, with respect to the succeeding
fiscal year—
‘‘(i) the State failed to take sufficient corrective action to achieve the appropriate
performance levels as described in subparagraph (A)(i) of this paragraph, or
‘‘(ii) the data submitted by the State pursuant to section 454(15)(B) is incomplete or
unreliable,
the amounts otherwise payable to the State
under this part for quarters following the
end of such succeeding fiscal year, prior to
quarters following the end of the first quarter throughout which the State program is
in compliance with such performance requirement, shall be reduced by the percentage specified in paragraph (2).
‘‘(2) The reductions required under paragraph (1) shall be—
‘‘(A) not less than 3 nor more than 5 percent, or
‘‘(B) not less than 5 nor more than 7 percent, if the finding is the second consecutive
finding made pursuant to paragraph (1), or
‘‘(C) not less than 7 nor more than 10 percent, if the finding is the third or a subsequent consecutive such finding.
‘‘(3) For purposes of this subsection, section 402(a)(27), and section 452(a)(4), a State
which is determined as a result of an audit
to have submitted incomplete or unreliable
data pursuant to section 454(15)(B), shall be
determined to have submitted adequate data
if the Secretary determines that the extent
of the incompleteness or unreliability of the
data is of a technical nature which does not
adversely affect the determination of the
level of the State’s performance.’’.
(2) CONFORMING AMENDMENTS.—
(A) PAYMENTS TO STATES.—Section 403 (42
U.S.C. 603) is amended by striking subsection
(h).
(B) DUTIES OF SECRETARY.—Subsections
(d)(3)(A), (g)(1), and (g)(3)(A) of section 452 (42
U.S.C. 652) are each amended by striking
‘‘403(h)’’ and inserting ‘‘455(e)’’.
(f) EFFECTIVE DATES.—
(1) INCENTIVE ADJUSTMENTS.—
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(A) IN GENERAL.—The amendments made
by subsections (a), (b), and (c) shall become
effective on October 1, 1997, except to the extent provided in subparagraph (B).
(B) EXCEPTION.—Section 458 of the Social
Security Act, as in effect prior to the enactment of this section, shall be effective for
purposes of incentive payments to States for
fiscal years prior to fiscal year 1999.
(2) PENALTY REDUCTIONS.—
(A) IN GENERAL.—The amendments made
by subsection (d) shall become effective with
respect to calendar quarters beginning on
and after the date of the enactment of this
Act.
(B) REDUCTIONS.—The amendments made
by subsection (e) shall become effective with
respect to calendar quarters beginning on
and after the date 1 which is year after the
date of the enactment of this Act.
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SEC. 113. FEDERAL AND STATE REVIEWS AND AUDITS.
(a) STATE AGENCY ACTIVITIES.—Section 454
(42 U.S.C. 654) is amended—
(1) in paragraph (14)—
(A) by striking ‘‘(14)’’ and inserting
‘‘(14)(A)’’; and
(B) by inserting after the semicolon ‘‘and’’;
(2) by redesignating paragraph (15) as subparagraph (B) of paragraph (14); and
(3) by inserting after paragraph (14) the following new paragraph:
‘‘(15) provide for—
‘‘(A) a process for annual reviews of and reports to the Secretary on the State program
under this part—
‘‘(i) which shall include such information
as may be necessary to measure State compliance with Federal requirements for expedited procedures and timely case processing,
using such standards and procedures as are
required by the Secretary; and
‘‘(ii) under which the State agency will determine the extent to which such program is
in conformity with applicable requirements
with respect to the operation of State programs under this part (including the status
of complaints filed under the procedure required under paragraph (12)(B)); and
‘‘(B) a process of extracting from the State
automated data processing system and
transmitting to the Secretary data and calculations concerning the levels of accomplishment (and rates of improvement) with
respect to applicable performance indicators
(including IV–D paternity establishment percentages and overall performance in child
support enforcement) to the extent necessary for purposes of sections 452(g) and
458.’’.
(b) FEDERAL ACTIVITIES.—Section 452(a)(4)
(42 U.S.C. 652(a)(4)) is amended to read as follows:
‘‘(4)(A) review data and calculations transmitted by State agencies pursuant to section
454(15)(B) on State program accomplishments with respect to performance indicators for purposes of section 452(g) and 458,
and determine the amount (if any) of penalty
reductions pursuant to section 455(e) to be
applied to the State;
‘‘(B) review annual reports by State agencies pursuant to section 454(15)(A) on State
program conformity with Federal requirements; evaluate any elements of a State program in which significant deficiencies are indicated by such report on the status of complaints under the State procedure under section 454(12)(B); and, as appropriate, provide
to the State agency comments, recommendations for additional or alternative corrective
actions, and technical assistance; and
‘‘(C) conduct audits, in accordance with
the government auditing standards of the
United States Comptroller General—
‘‘(i) at least once every 3 years (or more
frequently, in the case of a State which fails
to meet requirements of this part, or of regu-
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lations implementing such requirements,
concerning performance standards and reliability of program data) to assess the completeness, reliability, and security of the
data, and the accuracy of the reporting systems, used for the calculations of performance indicators specified in subsection (g)
and section 458;
‘‘(ii) of the adequacy of financial management of the State program, including assessments of—
‘‘(I) whether Federal and other funds made
available to carry out the State program
under this part are being appropriately expended, and are properly and fully accounted
for; and
‘‘(II) whether collections and disbursements of support payments and program income are carried out correctly and are properly and fully accounted for; and
‘‘(iii) for such other purposes as the Secretary may find necessary;’’.
(c) EFFECTIVE DATE.—The amendments
made by this section shall be effective with
respect to calendar quarters beginning on or
after the date which is 1 year after the enactment of this section.
SEC. 114. REQUIRED REPORTING PROCEDURES.
(a) ESTABLISHMENT.—Section 452(a)(5) (42
U.S.C. 652(a)(5)) is amended by inserting ‘‘,
and establish procedures to be followed by
States for collecting and reporting information required to be provided under this part,
and establish uniform definitions (including
those necessary to enable the measurement
of State compliance with the requirements
of this part relating to expedited processes
and timely case processing) to be applied in
following such procedures’’ before the semicolon.
(b) STATE PLAN REQUIREMENT.—Section 454
(42 U.S.C. 654), as amended by section 104(a),
is amended—
(1) by striking ‘‘and’’ at the end of paragraph (24);
(2) by striking the period at the end of
paragraph (25) and inserting ‘‘; and’’; and
(3) by adding after paragraph (25) the following:
‘‘(26) provide that the State shall use the
definitions established under section 452(a)(5)
in collecting and reporting information as
required under this part.’’.
SEC. 115. AUTOMATED DATA PROCESSING REQUIREMENTS.
(a) REVISED REQUIREMENTS.—
(1) STATE PLAN.—Section 454(16) (42 U.S.C.
654(16)) is amended—
(A) by striking ‘‘, at the option of the
State,’’;
(B) by inserting ‘‘and operation by the
State agency’’ after ‘‘for the establishment’’;
(C) by inserting ‘‘meeting the requirements
of section 454A’’ after ‘‘information retrieval
system’’;
(D) by striking ‘‘in the State and localities
thereof, so as (A)’’ and inserting ‘‘so as’’;
(E) by striking ‘‘(i)’’; and
(F) by striking ‘‘(including, but not limited
to,’’ and all that follows and to the semicolon.
(2) AUTOMATED DATA PROCESSING.—Part D
of title IV (42 U.S.C. 651–669) is amended by
inserting after section 454 the following new
section:
‘‘AUTOMATED DATA PROCESSING
‘‘SEC. 454A. (a) IN GENERAL.—In order to
meet the requirements of this section, for
purposes of the requirement of section
454(16), a State agency shall have in operation a single statewide automated data
processing and information retrieval system
which has the capability to perform the
tasks specified in this section, and performs
such tasks with the frequency and in the
manner specified in this part or in regulations or guidelines of the Secretary.
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‘‘(b) PROGRAM MANAGEMENT.—The automated system required under this section
shall perform such functions as the Secretary may specify relating to management
of the program under this part, including—
‘‘(1) controlling and accounting for use of
Federal, State, and local funds to carry out
such program; and
‘‘(2) maintaining the data necessary to
meet Federal reporting requirements on a
timely basis.
‘‘(c) CALCULATION OF PERFORMANCE INDICATORS.—In order to enable the Secretary to
determine the incentive and penalty adjustments required by sections 452(g) and 458, the
State agency shall—
‘‘(1) use the automated system—
‘‘(A) to maintain the requisite data on
State performance with respect to paternity
establishment and child support enforcement
in the State; and
‘‘(B) to calculate the IV–D paternity establishment percentage and overall performance
in child support enforcement for the State
for each fiscal year; and
‘‘(2) have in place systems controls to ensure the completeness, and reliability of, and
ready access to, the data described in paragraph (1)(A), and the accuracy of the calculations described in paragraph (1)(B).
‘‘(d) INFORMATION INTEGRITY AND SECURITY.—The State agency shall have in effect
safeguards on the integrity, accuracy, and
completeness of, access to, and use of data in
the automated system required under this
section, which shall include the following (in
addition to such other safeguards as the Secretary specifies in regulations):
‘‘(1) POLICIES RESTRICTING ACCESS.—Written
policies concerning access to data by State
agency personnel, and sharing of data with
other persons, which—
‘‘(A) permit access to and use of data only
to the extent necessary to carry out program
responsibilities;
‘‘(B) specify the data which may be used
for particular program purposes, and the personnel permitted access to such data; and
‘‘(C) ensure that data obtained or disclosed
for a limited program purpose is not used or
redisclosed for another, impermissible purpose.
‘‘(2) SYSTEMS CONTROLS.—Systems controls
(such as passwords or blocking of fields) to
ensure strict adherence to the policies specified under paragraph (1).
‘‘(3) MONITORING OF ACCESS.—Routine monitoring of access to and use of the automated
system, through methods such as audit trails
and feedback mechanisms, to guard against
and promptly identify unauthorized access
or use.
‘‘(4) TRAINING AND INFORMATION.—The
State agency shall have in effect procedures
to ensure that all personnel (including State
and local agency staff and contractors) who
may have access to or be required to use sensitive or confidential program data are fully
informed of applicable requirements and penalties, and are adequately trained in security
procedures.
‘‘(5) PENALTIES.—The State agency shall
have in effect administrative penalties (up to
and including dismissal from employment)
for unauthorized access to, or disclosure or
use of, confidential data.’’.
(3) REGULATIONS.—Section 452 (42 U.S.C.
652) is amended by adding at the end the following new subsection:
‘‘(j) The Secretary shall prescribe final regulations for implementation of the requirements of section 454A not later than 2 years
after the date of the enactment of this subsection.’’.
(4) IMPLEMENTATION TIMETABLE.—Section
454(24) (42 U.S.C. 654(24)), as amended by sections 104(a)(2) and 114(b)(1), is amended to
read as follows:
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‘‘(24) provide that the State will have in effect an automated data processing and information retrieval system—
‘‘(A) by October 1, 1996, meeting all requirements of this part which were enacted
on or before the date of the enactment of the
Family Support Act of 1988; and
‘‘(B) by October 1, 1999, meeting all requirements of this part enacted on or before
the date of the enactment of the Interstate
Child Support Responsibility Act of 1995 (but
this provision shall not be construed to alter
earlier deadlines specified for elements of
such system), except that such deadline shall
be extended by 1 day for each day (if any) by
which the Secretary fails to meet the deadline imposed by section 452(j);’’.
(b) SPECIAL FEDERAL MATCHING RATE FOR
DEVELOPMENT COSTS OF AUTOMATED SYSTEMS.—Section 455(a) (42 U.S.C. 655(a)) is
amended—
(1) in paragraph (1)(B)—
(A) by striking ‘‘90 percent’’ and inserting
‘‘the percent specified in paragraph (3)’’;
(B) by striking ‘‘so much of’’; and
(C) by striking ‘‘which the Secretary’’ and
all that follows through ‘‘thereof’’; and
(2) by adding at the end the following new
paragraph:
‘‘(3)(A) The Secretary shall pay to each
State, for each quarter in fiscal year 1996, 90
percent of so much of State expenditures described in paragraph (1)(B) as the Secretary
finds are for a system meeting the requirements specified in section 454(16), or meeting
such requirements without regard to subparagraph (D) thereof.
‘‘(B)(i) The Secretary shall pay to each
State, for each quarter in fiscal years 1997
through 2001, the percentage specified in
clause (ii) of so much of State expenditures
described in paragraph (1)(B) as the Secretary finds are for a system meeting the requirements specified in section 454(16) and
454A, subject to clause (iii).
‘‘(ii) The percentage specified in this
clause, for purposes of clause (i), is the higher of—
‘‘(I) 80 percent, or
‘‘(II) the percentage otherwise applicable
to Federal payments to the State under subparagraph (A) (as adjusted pursuant to section 458).’’.
AMENDMENT.—Section
(c)
CONFORMING
123(c) of the Family Support Act of 1988 (102
Stat. 2352; Public Law 100–485) is repealed.
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SEC. 116. DIRECTOR OF CSE PROGRAM; STAFFING
STUDY.
(a) REPORTING TO SECRETARY.—Section
452(a) (42 U.S.C. 652(a)) is amended in the
matter preceding paragraph (1) by striking
‘‘directly’’.
(b) STAFFING STUDIES.—
(1) SCOPE.—The Secretary of Health and
Human Services (in this subsection referred
to as the ‘‘Secretary’’) shall, directly or by
contract, conduct studies of the staffing of
each State child support enforcement program under part D of title IV of the Social
Security Act. Such studies shall—
(A) include a review of the staffing needs
created by requirements for automated data
processing, maintenance of a central case
registry and centralized collections of child
support, and of changes in these needs resulting from changes in such requirements;
and
(B) examine and report on effective staffing practices used by the States and on recommended staffing procedures.
(2) FREQUENCY OF STUDIES.—The Secretary
shall complete the first staffing study required under paragraph (1) not later than October 1, 1997, and may conduct additional
studies subsequently at appropriate intervals.
(3) REPORT TO THE CONGRESS.—The Secretary shall submit a report to the Congress
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stating the findings and conclusions of each
study conducted under this subsection.
SEC. 117. FUNDING FOR SECRETARIAL ASSISTANCE TO STATE PROGRAMS.
Section 452 (42 U.S.C. 652), as amended by
section 115(a)(3), is amended by adding at the
end the following new subsection:
‘‘(k)(1) There shall be available to the Secretary, from amounts appropriated for fiscal
year 1996 and each succeeding fiscal year for
payments to States under this part, the
amount specified in paragraph (2) for the
costs to the Secretary for—
‘‘(A) information dissemination and technical assistance to States, training of State
and Federal staff, staffing studies, and related activities needed to improve programs
(including technical assistance concerning
State automated systems);
‘‘(B) research, demonstration, and special
projects of regional or national significance
relating to the operation of State programs
under this part; and
‘‘(C) operation of the Federal Parent Locator Service under section 453, to the extent
such costs are not recovered through user
fees.
‘‘(2) The amount specified in this paragraph for a fiscal year is the amount equal to
a percentage of the reduction in Federal payments to States under part A on account of
child support (including arrearages) collected in the preceding fiscal year on behalf
of children receiving aid under such part A
in such preceding fiscal year (as determined
on the basis of the most recent reliable data
available to the Secretary as of the end of
the third calendar quarter following the end
of such preceding fiscal year), equal to—
‘‘(A) 1 percent, for the activities specified
in subparagraphs (A) and (B) of paragraph
(1); and
‘‘(B) 2 percent, for the activities specified
in subparagraph (C) of paragraph (1).’’.
SEC. 118. DATA COLLECTION AND REPORTS BY
THE SECRETARY.
(a) ANNUAL REPORT TO CONGRESS.—
(1) IN GENERAL.—Section 452(a)(10)(A) (42
U.S.C. 652(a)(10)(A)) is amended—
(A) by striking ‘‘this part;’’ and inserting
‘‘this part, including—’’; and
(B) by adding at the end the following indented clauses:
‘‘(i) the total amount of child support payments collected as a result of services furnished during such fiscal year to individuals
receiving services under this part;
‘‘(ii) the cost to the States and to the Federal Government of furnishing such services
to those individuals; and
‘‘(iii) the number of cases involving families—
‘‘(I) who became ineligible for aid under
part A during a month in such fiscal year;
and
‘‘(II) with respect to whom a child support
payment was received in the same month;’’.
(2) CERTAIN DATA.—Section 452(a)(10)(C) (42
U.S.C. 652(a)(10)(C)) is amended—
(A) in the matter preceding clause (i), by
striking ‘‘with the data required under each
clause being separately stated for cases’’ and
all that follows through ‘‘part:’’ and inserting ‘‘separately stated for cases where the
child is receiving aid to families with dependent children (or foster care maintenance
payments under part E), or formerly received
such aid or payments and the State is continuing to collect support assigned to it
under section 402(a)(26), 471(a)(17), or 1912,
and all other cases under this part—’’;
(B) in each of clauses (i) and (ii), by striking ‘‘, and the total amount of such obligations’’;
(C) in clause (iii), by striking ‘‘described
in’’ and all that follows through the semicolon and inserting ‘‘in which support was
collected during the fiscal year;’’;
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(D) by striking clause (iv); and
(E) by redesignating clause (v) as clause
(vii), and inserting after clause (iii) the following new clauses:
‘‘(iv) the total amount of support collected
during such fiscal year and distributed as
current support;
‘‘(v) the total amount of support collected
during such fiscal year and distributed as arrearages;
‘‘(vi) the total amount of support due and
unpaid for all fiscal years; and’’.
(3) USE OF FEDERAL COURTS.—Section
452(a)(10)(G) (42 U.S.C. 652(a)(10)(G)) is
amended by striking ‘‘on the use of Federal
courts and’’.
(4) ADDITIONAL INFORMATION NOT NECESSARY.—Section
452(a)(10)
(42
U.S.C.
652(a)(10)) is amended by striking all that follows subparagraph (I).
(b) DATA COLLECTION AND REPORTING.—Section 469 (42 U.S.C. 669) is amended—
(1) by striking subsections (a) and (b) and
inserting the following:
‘‘(a) The Secretary shall collect and maintain, on a fiscal year basis, up-to-date statistics, by State, with respect to services to establish paternity and services to establish
child support obligations, the data specified
in subsection (b), separately stated, in the
case of each such service, with respect to—
‘‘(1) families (or dependent children) receiving aid under plans approved under part
A (or E); and
‘‘(2) families not receiving such aid.
‘‘(b) The data referred to in subsection (a)
are—
‘‘(1) the number of cases in the caseload of
the State agency administering the plan
under this part in which such service is needed; and
‘‘(2) the number of such cases in which the
service has been provided.’’; and
(2) in subsection (c), by striking ‘‘(a)(2)’’
and inserting ‘‘(b)(2)’’.
(c) EFFECTIVE DATE.—The amendments
made by this section shall be effective with
respect to fiscal year 1996 and succeeding fiscal years.
Subtitle C—Locate and Case Tracking
SEC. 121. CENTRAL STATE AND CASE REGISTRY.
Section 454A, as added by section 115(a)(2),
is amended by adding at the end the following new subsections:
‘‘(e) CENTRAL CASE REGISTRY.—
‘‘(1) IN GENERAL.—The automated system
required under this section shall perform the
functions, in accordance with the provisions
of this subsection, of a single central registry containing records with respect to each
case in which services are being provided by
the State agency (including, on and after October 1, 1998, each order specified in section
466(a)(12)), using such standardized data elements (such as names, social security numbers or other uniform identification numbers, dates of birth, and case identification
numbers), and containing such other information (such as information on case status)
as the Secretary may require.
‘‘(2) PAYMENT RECORDS.—Each case record
in the central registry shall include a record
of—
‘‘(A) the amount of monthly (or other periodic) support owed under the support order,
and other amounts due or overdue (including
arrearages, interest or late payment penalties, and fees);
‘‘(B) all child support and related amounts
collected (including such amounts as fees,
late payment penalties, and interest on arrearages);
‘‘(C) the distribution of such amounts collected; and
‘‘(D) the birth date of the child for whom
the child support order is entered.
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‘‘(3) UPDATING AND MONITORING.—The State
agency shall promptly establish and maintain, and regularly monitor, case records in
the registry required by this subsection, on
the basis of—
‘‘(A) information on administrative actions
and administrative and judicial proceedings
and orders relating to paternity and support;
‘‘(B) information obtained from matches
with Federal, State, or local data sources;
‘‘(C) information on support collections
and distributions; and
‘‘(D) any other relevant information.
‘‘(f) DATA MATCHES AND OTHER DISCLOSURES OF INFORMATION.—The automated system required under this section shall have
the capacity, and be used by the State agency, to extract data at such times, and in such
standardized format or formats, as may be
required by the Secretary, and to share and
match data with, and receive data from,
other data bases and data matching services,
in order to obtain (or provide) information
necessary to enable the State agency (or
Secretary or other State or Federal agencies) to carry out responsibilities under this
part. Data matching activities of the State
agency shall include at least the following:
‘‘(1) DATA BANK OF CHILD SUPPORT ORDERS.—Furnishing to the Data Bank of Child
Support Orders established under section
453(h) (and updating as necessary, with information, including notice of expiration of orders) minimal information specified by the
Secretary on each child support case in the
central case registry.
‘‘(2) FEDERAL PARENT LOCATOR SERVICE.—
Exchanging data with the Federal Parent
Locator Service for the purposes specified in
section 453.
‘‘(3) AFDC AND MEDICAID AGENCIES.—Exchanging data with State agencies (of the
State and of other States) administering the
programs under part A and title XIX, as necessary for the performance of State agency
responsibilities under this part and under
such programs.
AND
INTERSTATE
DATA
‘‘(4)
INTRAMATCHES.—Exchanging data with other agencies of the State, agencies of other States,
and interstate information networks, as necessary and appropriate to carry out (or assist
other States to carry out) the purposes of
this part.’’.
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SEC. 122. CENTRALIZED COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.
(a) STATE PLAN REQUIREMENT.—Section 454
(42 U.S.C. 654), as amended by sections 104(a)
and 114(b), is amended—
(1) by striking ‘‘and’’ at the end of paragraph (25);
(2) by striking the period at the end of
paragraph (26) and inserting ‘‘; and’’; and
(3) by adding after paragraph (26) the following new paragraph:
‘‘(27) provide that the State agency, on and
after October 1, 1998—
‘‘(A) will operate a centralized, automated
unit for the collection and disbursement of
child support under orders being enforced
under this part, in accordance with section
454B; and
‘‘(B) will have sufficient State staff (consisting of State employees), and, at State option, contractors reporting directly to the
State agency to monitor and enforce support
collections through such centralized unit, including carrying out the automated data
processing responsibilities specified in section 454A(g) and to impose, as appropriate in
particular cases, the administrative enforcement
remedies
specified
in
section
466(c)(1).’’.
(b) ESTABLISHMENT OF CENTRALIZED COLLECTION UNIT.—Part D of title IV (42 U.S.C.
651–669) is amended by adding after section
454A the following new section:
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‘‘CENTRALIZED COLLECTION AND DISBURSEMENT
OF SUPPORT PAYMENTS
‘‘SEC. 454B. (a) IN GENERAL.—In order to
meet the requirement of section 454(27), the
State agency must operate a single, centralized, automated unit for the collection and
disbursement of support payments, coordinated with the automated data system required under section 454A, in accordance
with the provisions of this section, which
shall be—
‘‘(1) operated directly by the State agency
(or by 2 or more State agencies under a regional cooperative agreement), or by a single
contractor responsible directly to the State
agency; and
‘‘(2) used for the collection and disbursement (including interstate collection and
disbursement) of payments under support orders in all cases being enforced by the State
pursuant to section 454(4).
‘‘(b) REQUIRED PROCEDURES.—The centralized collections unit shall use automated
procedures, electronic processes, and computer-driven technology to the maximum extent feasible, efficient, and economical, for
the collection and disbursement of support
payments, including procedures—
‘‘(1) for receipt of payments from parents,
employers, and other States, and for disbursements to custodial parents and other
obligees, the State agency, and the State
agencies of other States;
‘‘(2) for accurate identification of payments;
‘‘(3) to ensure prompt disbursement of the
custodial parent’s share of any payment; and
‘‘(4) to furnish to either parent, upon request, timely information on the current
status of support payments.’’.
(c) USE OF AUTOMATED SYSTEM.—Section
454A, as added by section 115(a)(2) and as
amended by section 121, is amended by adding at the end the following new subsection:
‘‘(g) CENTRALIZED COLLECTION AND DISTRIBUTION OF SUPPORT PAYMENTS.—The automated system required under this section
shall be used, to the maximum extent feasible, to assist and facilitate collections and
disbursement of support payments through
the centralized collections unit operated
pursuant to section 454B, through the performance of functions including at a minimum—
‘‘(1) generation of orders and notices to
employers (and other debtors) for the withholding of wages (and other income)—
‘‘(A) within 2 working days after receipt
(from the directory of New Hires established
under section 453(i) or any other source) of
notice of and the income source subject to
such withholding; and
‘‘(B) using uniform formats directed by the
Secretary;
‘‘(2) ongoing monitoring to promptly identify failures to make timely payment; and
‘‘(3) automatic use of enforcement mechanisms (including mechanisms authorized
pursuant to section 466(c)) where payments
are not timely made.’’.
(d) EFFECTIVE DATE.—The amendments
made by this section shall become effective
on October 1, 1998.
SEC. 123. AMENDMENTS CONCERNING INCOME
WITHHOLDING.
(a) MANDATORY INCOME WITHHOLDING.—
(1) FROM WAGES.—Section 466(a)(1) (42
U.S.C. 666(a)(1)) is amended to read as follows:
‘‘(1)(A) Procedures described in subsection
(b) for the withholding from income of
amounts payable as support in cases subject
to enforcement under the State plan.
‘‘(B) Procedures under which all child support orders issued (or modified) before October 1, 1996, and which are not otherwise subject to withholding under subsection (b),
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shall become subject to withholding from
wages as provided in subsection (b) if arrearages occur, without the need for a judicial or
administrative hearing.’’.
(2) REPEAL OF CERTAIN PROVISIONS CONCERNING ARREARAGES.—Section 466(a)(8) (42
U.S.C. 666(a)(8)) is repealed.
(3) PROCEDURES DESCRIBED.—Section 466(b)
(42 U.S.C. 666(b)) is amended—
(A) in the matter preceding paragraph (1),
by striking ‘‘subsection (a)(1)’’ and inserting
‘‘subsection (a)(1)(A)’’;
(B) in paragraph (5), by striking ‘‘a public
agency’’ and all that follows through the period and inserting ‘‘the State through the
centralized collections unit established pursuant to section 454B, in accordance with the
requirements of such section 454B.’’;
(C) in paragraph (6)(A)(i)—
(i) by inserting ‘‘, in accordance with timetables established by the Secretary,’’ after
‘‘must be required’’; and
(ii) by striking ‘‘to the appropriate agency’’ and all that follows through the period
and inserting ‘‘to the State centralized collections unit within 5 working days after the
date such amount would (but for this subsection) have been paid or credited to the
employee, for distribution in accordance
with this part.’’;
(D) in paragraph (6)(A)(ii), by inserting ‘‘be
in a standard format prescribed by the Secretary, and’’ after ‘‘shall’’; and
(E) in paragraph (6)(D) to read as follows:
‘‘(D) Provision must be made for the imposition of a fine against any employer who—
‘‘(i) discharges from employment, refuses
to employ, or takes disciplinary action
against any absent parent subject to wage
withholding required by this subsection because of the existence of such withholding
and the obligations or additional obligations
which it imposes upon the employer; or
‘‘(ii) fails to withhold support from wages,
or to pay such amounts to the State centralized collections unit in accordance with this
subsection.’’.
AMENDMENT.—Section
(b)
CONFORMING
466(c) (42 U.S.C. 666(c)) is repealed.
(c) DEFINITION OF TERMS.—The Secretary of
Health and Human Services shall promulgate
regulations providing definitions, for purposes of part D of title IV of the Social Security Act, for the term ‘‘income’’ and for such
other terms relating to income withholding
under section 466(b) of such Act as the Secretary may find it necessary or advisable to
define.
SEC. 124. LOCATOR INFORMATION FROM INTERSTATE NETWORKS.
Section 466(a) (42 U.S.C. 666(a)), as amended
by section 123(a)(2), is amended by inserting
after paragraph (7) the following new paragraph:
‘‘(8) Procedures ensuring that the State
will neither provide funding for, nor use for
any purpose (including any purpose unrelated to the purposes of this part), any automated interstate network or system used to
locate individuals—
‘‘(A) for purposes relating to the use of
motor vehicles; or
‘‘(B) providing information for law enforcement purposes (where child support enforcement agencies are otherwise allowed access
by State and Federal law),
unless all Federal and State agencies administering programs under this part (including
the entities established under section 453)
have access to information in such system or
network to the same extent as any other
user of such system or network.’’.
SEC. 125. EXPANDED FEDERAL PARENT LOCATOR
SERVICE.
(a) EXPANDED AUTHORITY TO LOCATE INDIVIDUALS AND ASSETS.—Section 453 (42 U.S.C.
653) is amended—
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(1) in subsection (a), by striking ‘‘information as to the whereabouts’’ and all that follows through the period and inserting ‘‘, for
the purpose of establishing parentage, establishing, setting the amount of, modifying, or
enforcing child support obligations—
‘‘(1) information on, or facilitating the discovery of, the location of any individual—
‘‘(A) who is under an obligation to pay
child support;
‘‘(B) against whom such an obligation is
sought; or
‘‘(C) to whom such an obligation is owed,
including such individual’s social security
number (or numbers), most recent residential address, and the name, address, and employer identification number of such individual’s employer; and
‘‘(2) information on the individual’s wages
(or other income) from, and benefits of, employment (including rights to or enrollment
in group health care coverage); and
‘‘(3) information on the type, status, location, and amount of any assets of, or debts
owed by or to, any such individual.’’;
(2) in subsection (b)—
(A) in the matter preceding paragraph (1),
by striking ‘‘social security’’ and all that
follows through ‘‘absent parent’’ and inserting ‘‘information specified in subsection
(a)’’; and
(B) in paragraph (2), by inserting before the
period ‘‘, or from any consumer reporting
agency (as defined in section 603(f) of the
Fair Credit Reporting Act (15 U.S.C.
1681a(f))’’; and
(3) in subsection (e)(1), by inserting before
the period ‘‘, or by consumer reporting agencies’’.
(b) REIMBURSEMENT FOR DATA FROM FEDERAL AGENCIES.—Section 453(e)(2) (42 U.S.C.
653(e)(2)) is amended in the fourth sentence
by inserting before the period ‘‘in an amount
which the Secretary determines to be reasonable payment for the data exchange
(which amount shall not include payment for
the costs of obtaining, compiling, or maintaining the data)’’.
(c) ACCESS TO CONSUMER REPORTS UNDER
FAIR CREDIT REPORTING ACT.—
(1) IN GENERAL.—Section 608 of the Fair
Credit Reporting Act (15 U.S.C. 1681f) is
amended—
(A) by striking ‘‘, limited to’’ and inserting
‘‘to a governmental agency (including the
entire consumer report, in the case of a Federal, State, or local agency administering a
program under part D of title IV of the Social Security Act, and limited to’’; and
(B) by striking ‘‘employment, to a governmental agency’’ and inserting ‘‘employment,
in the case of any other governmental agency)’’.
(2) REIMBURSEMENT FOR REPORTS BY STATE
AGENCIES AND CREDIT BUREAUS.—Section 453
(42 U.S.C. 653) is amended by adding at the
end the following new subsection:
‘‘(g) The Secretary is authorized to reimburse to State agencies and consumer credit
reporting agencies the costs incurred by such
entities in furnishing information requested
by the Secretary pursuant to this section in
an amount which the Secretary determines
to be reasonable payment for the data exchange (which amount shall not include payment for the costs of obtaining, compiling,
or maintaining the data).’’.
(d) DISCLOSURE OF TAX RETURN INFORMATION.—
(1) BY THE SECRETARY OF THE TREASURY.—
Section 6103(l)(6)(A)(ii) of the Internal Revenue Code of 1986 (relating to disclosure of
return information to Federal, State, and
local child support enforcement agencies) is
amended by striking ‘‘, but only if’’ and all
that follows to the period.
(2) BY THE SOCIAL SECURITY ADMINISTRATION.—Section 6103(l)(8) of the Internal Rev-
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enue Code of 1986 (relating to disclosure of
certain return information by Social Security Administration to State and local child
support enforcement agencies) is amended—
(A) in subparagraph (A), by striking ‘‘State
or local’’ and inserting ‘‘Federal, State, or
local’’; and
(B) in subparagraph (C), by inserting ‘‘(including any entity under contract with such
agency)’’ after ‘‘thereof’’.
(e) TECHNICAL AMENDMENTS.—
(1) Sections 452(a)(9), 453(a), 453(b), 463(a),
and 463(e) (42 U.S.C. 652(a)(9), 653(a), 653(b),
663(a), and 663(e)) are each amended by inserting ‘‘Federal’’ before ‘‘Parent’’ each
place it appears.
(2) Section 453 (42 U.S.C. 653) is amended in
the heading by inserting ‘‘FEDERAL’’ before
‘‘PARENT’’.
(f) NEW COMPONENTS.—Section 453 (42
U.S.C. 653), as amended by subsection (c)(2),
is amended by adding at the end the following new subsections:
‘‘(h) DATA BANK OF CHILD SUPPORT ORDERS.—
‘‘(1) IN GENERAL.—Not later than October 1,
1998, in order to assist States in administering their State plans under this part and
parts A, F, and G, and for the other purposes
specified in this section, the Secretary shall
establish and maintain in the Federal Parent
Locator Service an automated registry to be
known as the Data Bank of Child Support
Orders, which shall contain abstracts of
child support orders and other information
described in paragraph (2) on each case in
each State central case registry maintained
pursuant to section 454A(e), as furnished
(and regularly updated), pursuant to section
454A(f), by State agencies administering programs under this part.
‘‘(2) CASE INFORMATION.—The information
referred to in paragraph (1), as specified by
the Secretary, shall include sufficient information (including names, social security
numbers or other uniform identification
numbers, and State case identification numbers) to identify the individuals who owe or
are owed support (or with respect to or on
behalf of whom support obligations are
sought to be established), and the State or
States which have established or modified,
or are enforcing or seeking to establish, such
an order.
‘‘(i) DIRECTORY OF NEW HIRES.—
‘‘(1) IN GENERAL.—Not later than October 1,
1998, in order to assist States in administering their State plans under this part and
parts A, F, and G, and for the other purposes
specified in this section, the Secretary shall
establish and maintain in the Federal Parent
Locator Service an automated directory to
be known as the directory of New Hires, containing—
‘‘(A) information supplied by employers on
each newly hired individual, in accordance
with paragraph (2); and
‘‘(B) information supplied by State agencies administering State unemployment
compensation laws, in accordance with paragraph (3).
‘‘(2) EMPLOYER INFORMATION.—
‘‘(A) INFORMATION REQUIRED.—Subject to
subparagraph (D), each employer shall furnish to the Secretary, for inclusion in the directory under this subsection, not later than
10 days after the date (on or after October 1,
1998) on which the employer hires a new employee (as defined in subparagraph (C)), a report containing the name, date of birth, and
social security number of such employee,
and the employer identification number of
the employer.
‘‘(B) REPORTING METHOD AND FORMAT.—The
Secretary shall provide for transmission of
the reports required under subparagraph (A)
using formats and methods which minimize
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the burden on employers, which shall include—
‘‘(i) automated or electronic transmission
of such reports;
‘‘(ii) transmission by regular mail; and
‘‘(iii) transmission of a copy of the form required for purposes of compliance with section 3402 of the Internal Revenue Code of
1986.
‘‘(C) EMPLOYEE DEFINED.—For purposes of
this paragraph, the term ‘employee’ means
any individual subject to the requirement of
section 3402(f)(2) of the Internal Revenue
Code of 1986.
‘‘(D) PAPERWORK REDUCTION REQUIREMENT.—As required by the information resources management policies published by
the Director of the Office of Management
and Budget pursuant to section 3504(b)(1) of
title 44, United States Code, the Secretary,
in order to minimize the cost and reporting
burden on employers, shall not require reporting pursuant to this paragraph if an alternative reporting mechanism can be developed that either relies on existing Federal or
State reporting or enables the Secretary to
collect the needed information in a more
cost-effective and equally expeditious manner, taking into account the reporting costs
on employers.
‘‘(E) CIVIL MONEY PENALTY ON NONCOMPLYING EMPLOYERS.—
‘‘(i) IN GENERAL.—Any employer that fails
to make a timely report in accordance with
this paragraph with respect to an individual
shall be subject to a civil money penalty, for
each calendar year in which the failure occurs, of the lesser of $500 or 1 percent of the
wages or other compensation paid by such
employer to such individual during such calendar year.
‘‘(ii) APPLICATION OF SECTION 1128A.—Subject to clause (iii), the provisions of section
1128A (other than subsections (a) and (b)
thereof) shall apply to a civil money penalty
under clause (i) in the same manner as they
apply to a civil money penalty or proceeding
under section 1128A(a).
‘‘(iii) COSTS TO SECRETARY.—Any employer
with respect to whom a penalty under this
subparagraph is upheld after an administrative hearing shall be liable to pay all costs of
the Secretary with respect to such hearing.
‘‘(3) EMPLOYMENT SECURITY INFORMATION.—
‘‘(A) REPORTING REQUIREMENT.—Each State
agency administering a State unemployment
compensation law approved by the Secretary
of Labor under the Federal Unemployment
Tax Act shall furnish to the Secretary extracts of the reports to the Secretary of
Labor concerning the wages and unemployment compensation paid to individuals required under section 303(a)(6), in accordance
with subparagraph (B).
‘‘(B) MANNER OF COMPLIANCE.—The extracts
required under subparagraph (A) shall be furnished to the Secretary on a quarterly basis,
with respect to calendar quarters beginning
on and after October 1, 1996, by such dates, in
such format, and containing such information as required by that Secretary in regulations.
‘‘(j) DATA MATCHES AND OTHER DISCLOSURES.—
‘‘(1) VERIFICATION BY SOCIAL SECURITY ADMINISTRATION.—
‘‘(A) TRANSMISSION OF DATA.—The Sec-
retary shall transmit data on individuals and
employers in the registries maintained under
this section to the Social Security Administration to the extent necessary for
verification in accordance with subparagraph (B).
‘‘(B) VERIFICATION.—The Commissioner of
Social Security shall verify the accuracy of,
correct or supply to the extent necessary and
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feasible, and report to the Secretary, the following information in data supplied by the
Secretary pursuant to subparagraph (A):
‘‘(i) the name, social security number, and
birth date of each individual; and
‘‘(ii) the employer identification number of
each employer.
‘‘(2) CHILD SUPPORT LOCATOR MATCHES.—For
the purpose of locating individuals for purposes of paternity establishment and establishment and enforcement of child support,
the Secretary shall—
‘‘(A) match data in the directory of New
Hires against the child support order abstracts in the Data Bank of Child Support
Orders not less than every 2 working days;
and
‘‘(B) report information obtained from a
match established under subparagraph (A) to
concerned State agencies operating programs under this part not later than 2 working days after such match.
‘‘(3) DATA MATCHES AND DISCLOSURES OF
DATA IN ALL REGISTRIES FOR TITLE IV PROGRAM PURPOSES.—The Secretary shall—
‘‘(A) perform matches of data in each component of the Federal Parent Locator Service maintained under this section against
data in each other such component (other
than the matches required pursuant to paragraph (1)), and report information resulting
from such matches to State agencies operating programs under this part and parts A,
F, and G; and
‘‘(B) disclose data in such registries to
such State agencies,
to the extent, and with the frequency, that
the Secretary determines to be effective in
assisting such States to carry out their responsibilities under such programs.
‘‘(k) FEES.—
‘‘(1) FOR SSA VERIFICATION.—The Secretary
shall reimburse the Commissioner of Social
Security, at a rate negotiated between the
Secretary and the Commissioner, the costs
incurred by the Commissioner in performing
the verification services specified in subsection (j).
‘‘(2) FOR INFORMATION FROM SESAS.—The
Secretary shall reimburse costs incurred by
State employment security agencies in furnishing data as required by subsection (i)(3),
at rates which the Secretary determines to
be reasonable (which rates shall not include
payment for the costs of obtaining, compiling, or maintaining such data).
‘‘(3) FOR INFORMATION FURNISHED TO STATE
AND FEDERAL AGENCIES.—State and Federal
agencies receiving data or information from
the Secretary pursuant to this section shall
reimburse the costs incurred by the Secretary in furnishing such data or information, at rates which the Secretary determines to be reasonable (which rates shall include payment for the costs of obtaining,
verifying, maintaining, and matching such
data or information).
‘‘(l) RESTRICTION ON DISCLOSURE AND USE.—
Data in the Federal Parent Locator Service,
and information resulting from matches
using such data, shall not be used or disclosed except as specifically provided in this
section.
‘‘(m) RETENTION OF DATA.—Data in the
Federal Parent Locator Service, and data resulting from matches performed pursuant to
this section, shall be retained for such period
(determined by the Secretary) as appropriate
for the data uses specified in this section.
‘‘(n) INFORMATION INTEGRITY AND SECURITY.—The Secretary shall establish and implement safeguards with respect to the entities established under this section designed
to—
‘‘(1) ensure the accuracy and completeness
of information in the Federal Parent Locator
Service; and
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‘‘(2) restrict access to confidential information in the Federal Parent Locator Service to authorized persons, and restrict use of
such information to authorized purposes.
‘‘(o) LIMIT ON LIABILITY.—The Secretary
shall not be liable to either a State or an individual for inaccurate information provided
to a component of the Federal Parent Locator Service and disclosed by the Secretary in
accordance with this section.’’.
(g) CONFORMING AMENDMENTS.—
(1) TO PART D OF TITLE IV OF THE SOCIAL SECURITY ACT.—Section 454(8)(B) (42 U.S.C.
654(8)(B)) is amended to read as follows:
‘‘(B) the Federal Parent Locator Service
established under section 453;’’.
(2) TO FEDERAL UNEMPLOYMENT TAX ACT.—
Section 3304(16) of the Internal Revenue Code
of 1986 (relating to approval of State laws) is
amended—
(A) by striking ‘‘Secretary of Health, Education, and Welfare’’ each place it appears
and inserting ‘‘Secretary of Health and
Human Services’’;
(B) in subparagraph (B), by striking ‘‘such
information’’ and all that follows through
the semicolon and inserting ‘‘information
furnished under subparagraph (A) or (B) is
used only for the purposes authorized under
such subparagraph;’’;
(C) by striking ‘‘and’’ at the end of subparagraph (A);
(D) by redesignating subparagraph (B) as
subparagraph (C); and
(E) by inserting after subparagraph (A) the
following new subparagraph:
‘‘(B) wage and unemployment compensation information contained in the records of
such agency shall be furnished to the Secretary of Health and Human Services (in accordance with regulations promulgated by
such Secretary) as necessary for the purposes of the directory of New Hires established under section 453(i) of the Social Security Act, and’’.
(3) TO STATE GRANT PROGRAM UNDER TITLE
III OF THE SOCIAL SECURITY ACT.—Section
303(a) (42 U.S.C. 503(a)) is amended—
(A) by striking ‘‘and’’ at the end of paragraph (8);
(B) by striking the period at the end of
paragraph (9) and inserting ‘‘; and’’; and
(C) by adding after paragraph (9) the following new paragraph:
‘‘(10) The making of quarterly electronic
reports, at such dates, in such format, and
containing such information, as required by
the Secretary under section 453(i)(3), and
compliance with such provisions as such Secretary may find necessary to ensure the correctness and verification of such reports.’’.
SEC. 126. USE OF SOCIAL SECURITY NUMBERS.
(a) STATE LAW REQUIREMENT.—Section
466(a) (42 U.S.C. 666(a)), as amended by section 101(a), is amended by adding at the end
the following new paragraph:
‘‘(13) Procedures requiring the recording of
social security numbers—
‘‘(A) of both parties on marriage licenses
and divorce decrees;
‘‘(B) of both parents, on birth records and
child support and paternity orders; and
‘‘(C) on all applications for motor vehicle
licenses and professional licenses.’’.
(b) CLARIFICATION OF FEDERAL POLICY.—
Section
205(c)(2)(C)(ii)
(42
U.S.C.
405(c)(2)(C)(ii)) is amended by striking the
third sentence and inserting ‘‘This clause
shall not be considered to authorize disclosure of such numbers except as provided in
the preceding sentence.’’.
Subtitle D—Streamlining and Uniformity of
Procedures
SEC. 131. ADOPTION OF UNIFORM STATE LAWS.
Section 466(a) (42 U.S.C. 666(a)), as amended
by sections 101(a) and 126(a), is amended by
adding at the end the following new paragraph:
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February 16, 1995
‘‘(14)(A) Procedures under which the State
adopts in its entirety (with the modifications and additions specified in this paragraph) not later than January 1, 1997, and
uses on and after such date, the Uniform
Interstate Family Support Act, as approved
by the National Conference of Commissioners on Uniform State Laws in August
1992.
‘‘(B) The State law adopted pursuant to
subparagraph (A) shall be applied to any
case—
‘‘(i) involving an order established or modified in one State and for which a subsequent
modification is sought in another State; or
‘‘(ii) in which interstate activity is required to enforce an order.
‘‘(C) The State law adopted pursuant to
subparagraph (A) of this paragraph shall contain the following provision in lieu of section
611(a)(1) of the Uniform Interstate Family
Support Act described in such subparagraph
(A):
‘‘ ‘(1) the following requirements are met:
‘‘ ‘(i) the child, the individual obligee, and
the obligor—
‘‘ ‘(I) do not reside in the issuing State; and
‘‘ ‘(II) either reside in this State or are subject to the jurisdiction of this State pursuant to section 201; and
‘‘ ‘(ii) in any case where another State is
exercising or seeks to exercise jurisdiction
to modify the order, the conditions of section 204 are met to the same extent as required for proceedings to establish orders;
or’.
‘‘(D) The State law adopted pursuant to
subparagraph (A) shall recognize as valid, for
purposes of any proceeding subject to such
State law, service of process upon persons in
the State (and proof of such service) by any
means acceptable in another State which is
the initiating or responding State in such
proceeding.’’.
SEC. 132. IMPROVEMENTS TO FULL FAITH AND
CREDIT FOR CHILD SUPPORT ORDERS.
Section 1738B of title 28, United States
Code, is amended—
(1) in subsection (a)(2), by striking ‘‘subsection (e)’’ and inserting ‘‘subsections (e),
(f), and (i)’’;
(2) in subsection (b), by inserting after the
first undesignated paragraph the following:
‘‘ ‘child’s home State’ means the State in
which a child lived with a parent or a person
acting as parent for at least 6 consecutive
months immediately preceding the time of
filing of a petition or comparable pleading
for support and, if a child is less than 6
months old, the State in which the child
lived from birth with any of them. A period
of temporary absence of any of them is
counted as part of the 6-month period.’’;
(3) in subsection (c), by inserting ‘‘by a
court of a State’’ before ‘‘is made’’;
(4) in subsection (c)(1), by inserting ‘‘and
subsections (e), (f), and (g)’’ after ‘‘located’’;
(5) in subsection (d)—
(A) by inserting ‘‘individual’’ before ‘‘contestant’’; and
(B) by striking ‘‘subsection (e)’’ and inserting ‘‘subsections (e) and (f)’’;
(6) in subsection (e), by striking ‘‘make a
modification of a child support order with respect to a child that is made’’ and inserting
‘‘modify a child support order issued’’;
(7) in subsection (e)(1), by inserting ‘‘pursuant to subsection (i)’’ before the semicolon;
(8) in subsection (e)(2)—
(A) by inserting ‘‘individual’’ before ‘‘contestant’’ each place such term appears; and
(B) by striking ‘‘to that court’s making the
modification and assuming’’ and inserting
‘‘with the State of continuing, exclusive jurisdiction for a court of another State to
modify the order and assume’’;
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(9) by redesignating subsections (f) and (g)
as subsections (g) and (h), respectively;
(10) by inserting after subsection (e) the
following new subsection:
‘‘(f) RECOGNITION OF CHILD SUPPORT ORDERS.—If 1 or more child support orders have
been issued in this or another State with regard to an obligor and a child, a court shall
apply the following rules in determining
which order to recognize for purposes of continuing, exclusive jurisdiction and enforcement:
‘‘(1) If only 1 court has issued a child support order, the order of that court must be
recognized.
‘‘(2) If 2 or more courts have issued child
support orders for the same obligor and
child, and only 1 of the courts would have
continuing, exclusive jurisdiction under this
section, the order of that court must be recognized.
‘‘(3) If 2 or more courts have issued child
support orders for the same obligor and
child, and only 1 of the courts would have
continuing, exclusive jurisdiction under this
section, an order issued by a court in the
current home State of the child must be recognized, but if an order has not been issued
in the current home State of the child, the
order most recently issued must be recognized.
‘‘(4) If 2 or more courts have issued child
support orders for the same obligor and
child, and none of the courts would have continuing, exclusive jurisdiction under this
section, a court may issue a child support
order, which must be recognized.
‘‘(5) The court that has issued an order recognized under this subsection is the court
having continuing, exclusive jurisdiction.’’;
(11) in subsection (g) (as so redesignated)—
(A) by striking ‘‘PRIOR’’ and inserting
‘‘MODIFIED’’; and
(B) by striking ‘‘subsection (e)’’ and inserting ‘‘subsections (e) and (f)’’;
(12) in subsection (h) (as so redesignated)—
(A) in paragraph (2), by inserting ‘‘including the duration of current payments and
other obligations of support’’ before the
comma; and
(B) in paragraph (3), by inserting ‘‘arrears
under’’ after ‘‘enforce’’; and
(13) by adding at the end the following new
subsection:
‘‘(i) REGISTRATION FOR MODIFICATION.—If
there is no individual contestant or child residing in the issuing State, the party or support enforcement agency seeking to modify,
or to modify and enforce, a child support
order issued in another State shall register
that order in a State with jurisdiction over
the nonmovant for the purpose of modification.’’.
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SEC. 133. STATE LAWS PROVIDING EXPEDITED
PROCEDURES.
(a) STATE LAW REQUIREMENTS.—Section 466
(42 U.S.C. 666), as amended by section 123(b),
is amended—
(1) in subsection (a)(2), in the first sentence, to read as follows: ‘‘Expedited administrative and judicial procedures (including
the procedures specified in subsection (c)) for
establishing paternity and for establishing,
modifying, and enforcing support obligations.’’; and
(2) by adding after subsection (b) the following new subsection:
‘‘(c) The procedures specified in this subsection are the following:
‘‘(1) Procedures which give the State agency the authority (and recognize and enforce
the authority of State agencies of other
States), without the necessity of obtaining
an order from any other judicial or administrative tribunal (but subject to due process
safeguards, including (as appropriate) requirements for notice, opportunity to contest the action, and opportunity for an ap-
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peal on the record to an independent administrative or judicial tribunal), to take the
following actions relating to establishment
or enforcement of orders:
‘‘(A) To order genetic testing for the purpose of paternity establishment as provided
in section 466(a)(5).
‘‘(B) To enter a default order, upon a showing of service of process and any additional
showing required by State law—
‘‘(i) establishing paternity, in the case of
any putative father who refuses to submit to
genetic testing; and
‘‘(ii) establishing or modifying a support
obligation, in the case of a parent (or other
obligor or obligee) who fails to respond to
notice to appear at a proceeding for such
purpose.
‘‘(C) To subpoena any financial or other information needed to establish, modify, or enforce an order, and to sanction failure to respond to any such subpoena.
‘‘(D) To require all entities in the State
(including for-profit, nonprofit, and governmental employers) to provide promptly, in
response to a request by the State agency of
that or any other State administering a program under this part, information on the
employment, compensation, and benefits of
any individual employed by such entity as
an employee or contractor, and to sanction
failure to respond to any such request.
‘‘(E) To obtain access, subject to safeguards on privacy and information security,
to the following records (including automated access, in the case of records maintained in automated data bases):
‘‘(i) Records of other State and local government agencies, including—
‘‘(I) vital statistics (including records of
marriage, birth, and divorce);
‘‘(II) State and local tax and revenue
records (including information on residence
address, employer, income and assets);
‘‘(III) records concerning real and titled
personal property;
‘‘(IV) records of occupational and professional licenses, and records concerning the
ownership and control of corporations, partnerships, and other business entities;
‘‘(V) employment security records;
‘‘(VI) records of agencies administering
public assistance programs;
‘‘(VII) records of the motor vehicle department; and
‘‘(VIII) corrections records.
‘‘(ii) Certain records held by private entities, including—
‘‘(I) customer records of public utilities
and cable television companies; and
‘‘(II) information (including information
on assets and liabilities) on individuals who
owe or are owed support (or against or with
respect to whom a support obligation is
sought) held by financial institutions (subject to limitations on liability of such entities arising from affording such access).
‘‘(F) To order income withholding in accordance with subsection (a)(1) and (b) of
section 466.
‘‘(G) In cases where support is subject to an
assignment
under
section
402(a)(26),
471(a)(17), or 1912, or to a requirement to pay
through the centralized collections unit
under section 454B) upon providing notice to
obligor and obligee, to direct the obligor or
other payor to change the payee to the appropriate government entity.
‘‘(H) For the purpose of securing overdue
support—
‘‘(i) to intercept and seize any periodic or
lump-sum payment to the obligor by or
through a State or local government agency,
including—
‘‘(I) unemployment compensation, workers’ compensation, and other benefits;
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‘‘(II) judgments and settlements in cases
under the jurisdiction of the State or local
government; and
‘‘(III) lottery winnings;
‘‘(ii) to attach and seize assets of the obligor held by financial institutions;
‘‘(iii) to attach public and private retirement funds in appropriate cases, as determined by the Secretary; and
‘‘(iv) to impose liens in accordance with
paragraph (a)(4) and, in appropriate cases, to
force sale of property and distribution of proceeds.
‘‘(I) For the purpose of securing overdue
support, to increase the amount of monthly
support payments to include amounts for arrearages (subject to such conditions or restrictions as the State may provide).
‘‘(J) To suspend drivers’ licenses of individuals owing past-due support, in accordance
with subsection (a)(16).
‘‘(2) The expedited procedures required
under subsection (a)(2) shall include the following rules and authority, applicable with
respect to all proceedings to establish paternity or to establish, modify, or enforce support orders:
‘‘(A) Procedures under which—
‘‘(i) the parties to any paternity or child
support proceedings are required (subject to
privacy safeguards) to file with the tribunal
before entry of an order, and to update as appropriate, information on location and identity (including social security number, residential and mailing addresses, telephone
number, driver’s license number, and name,
address, and telephone number of employer);
and
‘‘(ii) in any subsequent child support enforcement action between the same parties,
the tribunal shall be authorized, upon sufficient showing that diligent effort has been
made to ascertain such party’s current location, to deem due process requirements for
notice and service of process to be met, with
respect to such party, by delivery to the
most recent residential or employer address
so filed pursuant to clause (i).
‘‘(B) Procedures under which—
‘‘(i) the State agency and any administrative or judicial tribunal with authority to
hear child support and paternity cases exerts
statewide jurisdiction over the parties, and
orders issued in such cases have statewide effect; and
‘‘(ii) in the case of a State in which orders
in such cases are issued by local jurisdictions, a case may be transferred between jurisdictions in the State without need for any
additional filing by the petitioner, or service
of process upon the respondent, to retain jurisdiction over the parties.’’.
(c) EXCEPTIONS FROM STATE LAW REQUIREMENTS.—Section 466(d) (42 U.S.C. 666(d)) is
amended—
(1) by striking ‘‘(d) If’’ and inserting ‘‘(d)(1)
Subject to paragraph (2), if’’; and
(2) by adding at the end the following new
paragraph:
‘‘(2) The Secretary shall not grant an exemption from the requirements of—
‘‘(A) subsection (a)(5) (concerning procedures for paternity establishment);
‘‘(B) subsection (a)(10) (concerning modification of orders);
‘‘(C) subsection (a)(12) (concerning recording of orders in the central State case registry);
‘‘(D) subsection (a)(13) (concerning recording of social security numbers);
‘‘(E) subsection (a)(14) (concerning interstate enforcement); or
‘‘(F) subsection (c) (concerning expedited
procedures), other than paragraph (1)(A)
thereof (concerning establishment or modification of support amount).’’.
(c) AUTOMATION OF STATE AGENCY FUNCTIONS.—Section 454A, as added by section
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115(a)(2) and as amended by sections 121 and
122(c), is amended by adding at the end the
following new subsection:
‘‘(h) EXPEDITED ADMINISTRATIVE PROCEDURES.—The automated system required
under this section shall be used, to the maximum extent feasible, to implement any expedited administrative procedures required
under section 466(c).’’.
Subtitle E—Paternity Establishment
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SEC. 141. STATE LAWS CONCERNING PATERNITY
ESTABLISHMENT.
(a)
STATE
LAWS
REQUIRED.—Section
466(a)(5) (42 U.S.C. 666(a)(5)) is amended—
(1) in subparagraph (B)—
(A) by striking ‘‘(B)’’ and inserting
‘‘(B)(i)’’;
(B) in clause (i), as redesignated, by inserting before the period ‘‘, where such request is
supported by a sworn statement—
‘‘(I) by such party alleging paternity setting forth facts establishing a reasonable
possibility of the requisite sexual contact of
the parties; or
‘‘(II) by such party denying paternity setting forth facts establishing a reasonable
possibility of the nonexistence of sexual contact of the parties;’’; and
(C) by inserting after clause (i) (as redesignated) the following new clause:
‘‘(ii) Procedures which require the State
agency, in any case in which such agency orders genetic testing—
‘‘(I) to pay the costs of such tests, subject
to recoupment (where the State so elects)
from the putative father if paternity is established; and
‘‘(II) to obtain additional testing in any
case where an original test result is disputed, upon request and advance payment by
the disputing party.’’;
(2) by striking subparagraphs (C), (D), (E),
and (F) and inserting the following:
‘‘(C)(i) Procedures for a simple civil process for voluntarily acknowledging paternity
under which the State must provide that, before a mother and a putative father can sign
an acknowledgment of paternity, the putative father and the mother must be given notice, orally, in writing, and in a language
that each can understand, of the alternatives
to, the legal consequences of, and the rights
(including, if 1 parent is a minor, any rights
afforded due to minority status) and responsibilities that arise from, signing the acknowledgment.
‘‘(ii) Such procedures must include a hospital-based program for the voluntary acknowledgment of paternity focusing on the
period immediately before or after the birth
of a child.
‘‘(iii) Such procedures must require the
State agency responsible for maintaining
birth records to offer voluntary paternity establishment services.
‘‘(iv) The Secretary shall prescribe regulations governing voluntary paternity establishment services offered by hospitals and
birth record agencies. The Secretary shall
prescribe regulations specifying the types of
other entities that may offer voluntary paternity establishment services, and governing the provision of such services, which
shall include a requirement that such an entity must use the same notice provisions
used by, the same materials used by, provide
the personnel providing such services with
the same training provided by, and evaluate
the provision of such services in the same
manner as, voluntary paternity establishment programs of hospitals and birth record
agencies.
‘‘(D)(i) Procedures under which a signed acknowledgment of paternity is considered a
legal finding of paternity, subject to the
right of any signatory to rescind the acknowledgment within 60 days.
VerDate Aug 31 2005
03:57 May 28, 2008
Jkt 041999
‘‘(ii)(I) Procedures under which, after the
60-day period referred to in clause (i), a
signed acknowledgment of paternity may be
challenged in court only on the basis of
fraud, duress, or material mistake of fact,
with the burden of proof upon the challenger,
and under which the legal responsibilities
(including child support obligations) of any
signatory arising from the acknowledgment
may not be suspended during the challenge,
except for good cause shown.
‘‘(II) Procedures under which, after the 60day period referred to in clause (i), a minor
who signs an acknowledgment of paternity
other than in the presence of a parent or
court-appointed guardian ad litem may rescind the acknowledgment in a judicial or
administrative proceeding, until the earlier
of—
‘‘(aa) attaining the age of majority; or
‘‘(bb) the date of the first judicial or administrative proceeding brought (after the
signing) to establish a child support obligation, visitation rights, or custody rights with
respect to the child whose paternity is the
subject of the acknowledgment, and at which
the minor is represented by a parent, guardian ad litem, or attorney.
‘‘(E) Procedures under which no judicial or
administrative proceedings are required or
permitted to ratify an unchallenged acknowledgment of paternity.
‘‘(F) Procedures requiring—
‘‘(i) that the State admit into evidence, for
purposes of establishing paternity, results of
any genetic test that is—
‘‘(I) of a type generally acknowledged, by
accreditation bodies designated by the Secretary, as reliable evidence of paternity; and
‘‘