[Congressional Record Volume 140, Number 43 (Tuesday, April 19, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 19, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. CHAFEE:
  S. 2025. A bill to authorize a certificate of documentation for the 
vessel Intrepid; to the Committee on Commerce, Science, and 
Transportation.


          certificate of documentation for the vessel intrepid

 Mr. CHAFEE. Mr. President, I am introducing a bill today to 
direct that the vessel Intrepid, official number 508185, be accorded 
coastwise trading privileges and be issued a coastwise endorsement 
under title 46, United States Code, section 12106.
  The Intrepid was constructed at the Minneford Boat Yard in City 
Island, NY in 1967 as a recreational vessel. It is a 12-meter yacht 
that is 65 feet in length.
  After being built in the United States and having a long history of 
U.S. ownership, including representing the United States in America's 
Cup and winning that competition for the United States in 1967 and 
1971, the vessel was purchased by French, and later Canadian owners.
  The Intrepid is again under U.S. ownership and is currently the 
Flagship of the America' Cup Hall of Fame.
  Although the vessel was built in the United States and has a long and 
prestigious American history, the owners of the Intrepid are seeking a 
waiver of the existing law because the Intrepid was sold to non-U.S. 
owners and therefore became ineligible to participate in the U.S. 
coastwise trade. The owners plan to use the vessel for the purpose of 
engaging in limited commercial use. Their desired intentions for the 
vessel's use will not adversely affect the coastwise trade in U.S. 
waters. If granted this waiver, it is their intention to comply fully 
with U.S. documentation and safety requirements.
  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. 2025

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled, That 
     notwithstanding sections 12106, 12107, and 12108 of title 46, 
     United States Code, and section 27 of the Merchant Marine 
     Act, 1920 (46 App. U.S.C. 883), as applicable on the date of 
     enactment of this Act, the Secretary of Transportation may 
     issue a certificate of documentation for the vessel INTREPID, 
     United States official number 508185.
                                 ______

      By Mr. AKAKA (for himself and Mr. Inouye):
  S. 2026. A bill to amend the Panama Canal Act of 1979 to require the 
payment of interest on certain damages awarded by the Panama Canal 
Commission; to the Committee on Armed Services.


                panama canal commission fair claims act

 Mr. AKAKA. Mr. President, today I am introducing the Panama 
Canal Commission Fair Claims Act. This legislation would direct the 
Commission to pay interest on valid damage claims from the date the 
claim is filed until the date the claim is paid. The bill will prevent 
the abuse suffered by one Hawaii shipping company after its ship ran 
aground while under the control of a Panama Canal Commission pilot.
  The background on this incident is as follows: On April 21, 1988, the 
Hawaiian Sugar Transportation Co.'s [HSTC] ship, the Moku Pahu, ran 
aground while transiting the Panama Canal under the command of a Panama 
Canal Commission pilot. The official investigatory body of the 
Commission concluded that the grounding was entirely the fault of the 
Canal Commission pilot, and that the Moku Pahu and its crew were 
blameless.
  Damages totaled $7.5 million, and, on December 27, 1989, HSTC filed a 
detailed claim with the Commission to recover its losses. Despite 
repeated requests by HSTC, the Commission declined to meet with company 
representatives until April 1991, and finally made its first settlement 
offer 3 months later, for just $2.8 million. When the Commission was 
unwilling to significantly increase its offer, HSTC filed suit in 
October 1991. HSTC and the Commission ultimately reached agreement in 
July 1992, more than 4 years after the accident, and the claim was 
settled for $6.5 million.
  The Panama Canal Act of 1979 com- pels the Panama Canal Commission to 
``promptly adjust and pay dam- ages * * * caused by (its) fault.'' 
Despite that mandate, the Commission refused to fairly compensate HSTC 
for the damages it suffered as a result of the accident. These included 
actual damages, loss of interest, additional borrowing costs, higher 
insurance premiums, legal fees, and other costs stemming from the 
accident.
  The fact that the Commission raised its offer from $2.8 million to 
$6.5 million, the amount ultimately agreed upon, suggests that the 
initial offer was an attempt by the Federal Government to low-ball the 
company. This put HSTC in an untenable position. The company's losses 
continued to mount with each passing day but it couldn't go to court 
before exhausting administrative remedies. Lending credence to the low-
ball theory is a statement the Secretary of the Commission made to 
company representatives about the Commission's determination to ``pay 
as little as possible.''
  The amendment I have proposed would simply require the payment of 
interest, from the date the claim is filed to the date of payment, on 
damages awarded by the Panama Canal Commission in cases where the 
Commission is at fault. Even if the Panama Canal Commission acted in 
accordance with the act's mandate that it ``promptly adjust and pay 
damages,'' which it clearly has not, the payment of interest on awards 
is necessary if the injured parties are to be made whole for their 
losses. Given the Commission's egregious conduct, amending the law to 
provide for the payment of interest on damage claims will serve a dual 
purpose: to make injured parties whole and to create an incentive for 
the Commission to promptly and fairly adjust claims.

  When the Panama Canal Commission pilot ran the Moku Pahu aground, 
causing millions of dollars worth of damage, the shipowner probably 
thought that things couldn't get any worse. But that was before the 
company tried to obtain reimbursement for its losses and ran aground a 
second time while navigating its claim for damages through the Panama 
Canal Commission. While the damage to the company's ship appears to 
have been an accident, the aftermath was a crime.
  After numerous attempts to obtain compensation from the Panama Canal 
Commission for the damage caused by the Commission's pilot, officials 
at the Hawaii Sugar Transportation Co. reached an inescapable 
conclusion: the bureaucrats at the Commission were simply stalling. The 
Commission had no incentive to reach a settlement, and every reason to 
invoke delay.
  Because of inadequacies in current law, the longer the Commission 
stalled, the less it would pay in real terms and the more likely the 
owners of the damaged ship would accept a partial recovery for their 
losses. Since the Commission does not pay interest on claims, the 
amount that is eventually recovered by injured parties will be 
considerably discounted by the time a claim is finally paid. In the 
case of the Moku Paku, the Hawaii Sugar Transportation Co. settled for 
$1 million less than its actual damages, and suffered an additional 
loss of $1,742,110 in interest. This situation is grossly unfair to 
those who were victims of negligence by Commission employees.
  My amendment would require the Panama Canal Commission to pay 
interest on damage awards, beginning on the date that a valid claim is 
filed. It will create a financial incentive for the Commission to 
resolve claims promptly. No longer will the Panama Canal Commission be 
able to employ stall tactics to thwart legitimate claims.
  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. 2026

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled, That (a) 
     section 1411 of the Panama Canal Act of 1979 (22 U.S.C. 3771) 
     is amended--
       (1) in subsection (a), by inserting ``, including interest 
     under subsection (c),'' after ``damages''; and
       (2) by adding at the end the following new subsection:
       ``(c) Damages which are adjusted and payable under 
     subsection (a) shall include interest calculated from the 
     date of filing of the claim to the date of payment. Such 
     interest shall be computed at the rate the Secretary of the 
     Treasury establishes for interest payments under section 12 
     of the Contract Disputes Act of 1978 (41 U.S.C. 611).''.
       (b) The amendment made by subsection (a) shall be deemed to 
     have become effective as of April 1, 1988.
                                 ______

      By Mr. DODD (for himself, Mr. Harkin, Ms. Moseley-Braun, Mr. 
        Feingold, Mr. Wellstone, and Mr. Kerry):
  S. 2027. A bill to provide for the reinstatement of democracy in 
Haiti, the restoration to office of the duly elected President of 
Haiti, Jean-Bertrand Aristide, the end of human rights abuses against 
the Haitian people, support for the implementation of the Governors 
Island Agreement, and for other purposes; to the Committee on Foreign 
Relations.


                  haitian restoration of democracy act

  Mr. DODD. Mr. President, today I am introducing a bill that is 
designed to strengthen our efforts to restore the democratically 
elected leadership of Haiti. This legislation would close a number of 
loopholes in the present United States sanctions against Haiti and 
would call on the Clinton administration to negotiate the extension of 
these sanctions throughout the rest of the international community.
  This bill is being introduced on behalf of myself, Senator Harkin, 
Senator Moseley-Braun, Senator Feingold, Senator Wellstone, and Senator 
John Kerry.
  The purpose of this legislation is simple and very straightforward: 
to encourage the military regime in Haiti to fulfill its obligations 
under the 1993 agreement known as the governers island accord. But in 
truth, Mr. President, this legislation also has a more important 
purpose, and that is to uphold the promise of democracy that has eluded 
the people of Haiti for far too long.
  Mr. President, as we consider the recent events that have taken place 
in Haiti, we would do well to remind ourselves of the historical 
context in which they occur.
  First of all, I should tell you of my own history involving the 
island of Hispaniola. I served for almost 3 years as a Peace Corps 
volunteer in the Dominican Republic very close to the border of Haiti. 
I know both countries and that island very, very well. There are very 
few communities within Haiti that I have not visited. I have very, very 
many personal friends in Haiti that go back almost 30 years. I have a 
great affection for the country of Haiti and for its people. They are a 
noble and proud people, and they deserve far better than they have been 
getting.
  Mr. President, ever since Haiti gained its independence in 1804, the 
citizens of that tiny Caribbean nation have suffered under an endless 
cycle of poverty, despair, and misrule.
  It is a nation that remains one of the poorest, if not the poorest, 
in the hemisphere, and one of the poorest anywhere in the world, with 
consistently high levels of illiteracy, malnutrition, and infant 
mortality. It is also a land where the free expression of the popular 
will has been repeatedly and brutally thwarted by those who hold the 
reins of power.
  The present events in Haiti trace their roots back to the era of 
Francois Duvalier, the notorious dictator who ruled Haiti with an iron 
hand after assuming power in a fixed election in 1957. The Duvalier 
regime had close ties with the military and security forces and it kept 
the population in fear with the help of a secret branch of the police, 
the dreaded so-called Tontons Macoutes.
  Duvalier's legacy of repression and state-sponsored brutality was 
passed on to his son, Jean-Claude, who faithfully continued the work of 
his father until being overthrow in 1986.
  Despite the hopes of the world community, the overthrow of the so-
called Baby Doc did not bring an end to the violence and repression in 
Haiti. Instead, it brought only more false hopes, a cycle of military 
regimes, and a heap of broken promises, to put it mildly.
  The world soon became familiar with names like Henri Namphy, Prosper 
Avril, Leslie Manigat, Herard Abraham--all of whom, in their time, 
promised that they would work to restore democracy and respect human 
rights. But unfortunately, not one of these leaders was able to live up 
to his word, and the cycle of military rule went on.
  In fact, we were told in this country in every single example I just 
cited that if we would only give General Namphy a chance that democracy 
would be restored. We were told the same with Prosper Avril, and we 
were told the same with Herard Abraham, and yet in every single case 
democracy was not restored, and the situation unfortunately seemed to 
get worse.
  Finally, and unbelievably, on December 16, 1990, Haitians went to the 
polls and chose as their president a Roman Catholic priest by the name 
of Jean-Bertrand Aristide. The election of President Aristide, in the 
most free and fair elections in that nation's history, gave hope to a 
watching world that Haiti had finally overcome a bitter legacy of 
repression and military rule. President Aristide took office on a 
platform of social justice for the poor, and immediately set out to 
dismantle the old repressive structures of the Duvalier era.
  Sadly, for all the hope that was ushered in with the election of 
President Aristide, Haiti's encounter with democracy would come to an 
end almost as soon as it began.
  In September 1991, only a few short months after President Aristide 
had been elected, military and security forces overthrew the Aristide 
government and resumed their iron grip on the people of Haiti. Today, 
repression in Haiti has a new set of names and faces, people like Gen. 
Raoul Cedras, the leader of the Armed Forces, and Col. Michel Francois, 
the chief of security. But although the names in Haiti may have 
changed, unfortunately and regrettably, the policies and the practices 
remain very much the same.
  In response to the events of September 1991, the Bush administration 
lent its vocal support to the restoration of democracy in Haiti and to 
the return of President Aristide. Much to the credit of the Bush 
administration, the administration moved quickly to end all 
nonhumanitarian aid programs in Haiti and to comply with a trade 
embargo on Haiti that was imposed by the Organization of American 
States.
  These efforts were continued by the new administration of President 
Clinton, who came into office with a strong personal commitment to the 
restoration of democratic rule in Haiti, a commitment I happen to be 
believe is still very strong in the mind of the President. In June of 
1993 the administration imposed additional sanctions on the coup 
plotters in Haiti, freezing their United States assets and prohibiting 
their travel into the United States.
  The United States then made use of its leadership at the United 
Nations to bring a worldwide fuel and arms embargo into effect on June 
23. These sanctions took a heavy economic toll on the business elite in 
Haiti and brought a quick response from the leaders of the coup. It was 
having an immediate and significant effect.
  On July 3d, only a few days after the imposition of the embargo and 
with the active involvement of the Clinton administration and in 
particular U.N. negotiator Dante Caputo, President Aristide and General 
Cedras reached agreement on an arrangement to restore democratic rule 
to Haiti. This agreement was called the Governors Island accord, so 
named for the New York island where it was signed.
  The accord, which was hailed throughout the international community, 
promised a just and honorable end for all parties involved. It set out 
a 10-step process toward reducing the role of the military in Haiti's 
daily affairs, concluding with the retirement of General Cedras and the 
restoration of President Aristide by no later than October 30.
  In return, Aristide as to name a new prime minister and to issue an 
amnesty for all the political crimes carried out in connection with the 
coup.
  Imagine: Amnesty for all those people who had been responsible for 
the overthrow of President Aristide.
  It is important to note--and I emphasize that last point--that the 
Governors Island accord represented a compromise for both parties. The 
military, for its part, agreed to cede the power that it had won 
through the force of arms and to submit to civilian control. President 
Aristide, for this part, agreed to accept a document that did not 
require the resignation from the military of anyone other than General 
Cedras, requiring only that all others associated with the coup accept 
their retirement or reassignment to posts out of the country.
  In addition, the plan called for sanctions on Haiti to be suspended 
as soon as a new Prime Minister had been approved by the legislature, 
well in advance of President Aristide's return on October 19.
  Despite these and others shortcomings in the Governors Island Accord, 
President Aristide signed the document, I might point out under heavy 
pressure from U.S. and U.N. negotiators. Not only did he agree to abide 
by the terms of the accord, Mr. President, but he kept faith with the 
promises that he had made.
  President Aristide wasted no time in naming a new Prime Minister, 
Robert Malval, and issuing the required political amnesty as called for 
in the accord.
  Regrettably, the Haitian military leaders did not respond in kind. In 
fact, no sooner was the ink dry on the accord, and no sooner had 
sanctions on Haiti been lifted, than the military signaled its disdain 
for the agreement and the commitments it had made.
  Most notably, the military prevented the arrival of U.N.-sanctioned 
military personnel and engaged in a number of serious human rights 
abuses, including the high-profile murders of several of President 
Aristide's close associates.
  I might point out that those murders were most brutal. They were done 
in view of the international community. One individual was literally 
dragged from a church service and executed outside of the church in 
front of the international TV crews. And the other, of course, was the 
Minister of Justice, who was executed a block away again in broad 
daylight in view of a large community that watched the assassination 
take place. That was done to send a message that the agreement, the 
Governors Island Accord, may be lived up to by President Aristide but 
the military, their financial backers, and the thugs they support were 
totally to abrogate that agreement. That is what happened on the 
streets.
  By the time the appointed date of October 30 had arrived, it was 
clear that the deal was off and President Aristide would not be allowed 
to come back to his own country where he had been so overwhelmingly 
elected.
  In the time since the collapse of the Governors Island Accord, the 
human rights situation in Haiti has grown perilously worse, 
deteriorating to a point that many believe, and I believe, surpasses 
even the height of the Duvalier era. A report that was released several 
days ago by Human Rights/Watch Americas and the National Coalition for 
Haitian Refugees illustrates the case quite clearly.
  The report notes that political killings and suspicious murders in 
Haiti rose from a reported 9 last May and 5 last June to a total of 34 
in July, 33 in August, more than 60 in September, and more than 80 in 
October. The number of killings has remained at or near the rate to the 
present day. In fact, Mr. President, some estimate that between 3,000 
and 4,000 people have lost their lives in Haiti since the overthrow of 
President Aristide for the simple crime of supporting the return of 
President Aristide to their country.
  What is particularly disturbing, in addition, is the emergence of a 
new organization known as the Front for the Advancement and Progress of 
Haiti, or FRAPH as it is called. This organization, a loose arrangement 
of Duvalier supporters with close ties to the present military 
establishment, has carried out with impunity the barbaric killings of 
anyone suspected to be a supporter of President Aristide.
  In perhaps the single most notorious incident of violence, FRAPH 
supporters were responsible for starting a fire in the shantytown of 
Cite Soleil, a poor barrio community in Haiti, on December 27, leaving 
dozens of people dead and hundreds of families homeless.
  Let me add here, in talking about some of these human rights 
violations, there is a new level of atrocities occurring in Haiti. I 
mentioned earlier that 25 years ago I served as a Peace Corps volunteer 
on the Haitian border. Even under the worst days of Papa Doc, the 
government did not engage in the systematic kidnapping of children, the 
rape of women, and the mutilation of corpses. Those violations never 
occurred in Haiti before. This is a systematic attempt to intimidate 
the supporters of democracy in that country, and it is a new level of 
violence that that Nation has never seen even in its worst days.
  In response to these and other transgressions on the part of the 
Haitian military, the administration has moved quickly, I point out, to 
reimpose sanctions and to condemn the violations of the Governors 
Islands Accord. Mr. President, while I commend the administration for 
doing so, I think it is fair to say there are a number of serious 
questions that have arisen in regard to the present direction of U.S. 
policy toward Haiti.
  Mr. President, last month I had the opportunity to explore some of 
these questions, including the human rights issues, at a hearing that I 
chaired in the Foreign Relations Committee with administration 
witnesses and outside experts. In addition, I spend several days in 
Haiti, only a couple weeks ago, and the Dominican Republic on a trip to 
the region, at which time I got a firsthand look at the serious 
conditions that prevail today in Haiti.

  The most serious of these questions, in my view, surround the 
willingness of the administration to push for tougher measures against 
the present leadership in Haiti. On December 21 of last year the 
nations known collectively as the Four Friends of Haiti--the United 
States, Canada, France, and Venezuela--announced that they would call 
for additional sanctions if no progress had been made by January 15 on 
negotiations to restore President Aristide to office.
  It is now April 19. That was January 15. That deadline has now come 
and gone, and no additional sanctions have been imposed.
  Instead, it appears that the administration has chosen to focus its 
efforts on developing new political arrangements for the restoration of 
power in Haiti. Working with parliamentarians and other political 
leaders in Haiti, the administration has helped to develop several 
proposals that call on President Aristide to make even more concessions 
in order to entice the military high command to step aside.
  While I am convinced that our negotiators in the State Department and 
other administration agencies are acting with the best of intentions, 
it is my view that these efforts ignore some very important realities.
  The first, Mr. President, is that President Aristide has already made 
significant major concessions, and to ask him to make even further 
concessions is to run the risk of putting pressure on the wrong side. 
Let us not forget that it was President Aristide who won nearly 70 
percent of the vote in Haiti, a popular mandate that would be the envy 
of any politician in any nation, including our own.
  Let us not forget that it was the military, and not President 
Aristide, that backed out of the Governors Island Accord. Let us not 
forget that it is the military, and not President Aristide, that stands 
accused of murdering thousands of innocent civilians in their homes, in 
their churches, and in their streets.
  The second reality, Mr. President, that appears to be overlooked in 
the present course of diplomatic negotiations is that the military 
regime in Haiti has shown absolutely no interest whatsoever in any new 
diplomatic solution. I have met personally with General Cedras and his 
high command in recent weeks, and I am prepared to assure my colleagues 
that this is the case.
  The truth of the matter is that the military leaders in Haiti have 
already called our bluff. They believe that they can simply wait us 
out, just as they have done time and time again in the past.

  And that brings us back, Mr. President, to the Governors Island 
Accord. It is a fact that under the Governors Island Accord both 
President Aristide and the military made certain profound commitments 
to bring about the restoration of democratic rule in Haiti.
  President Aristide, I would emphasize, has fulfilled his part of that 
bargain. Now it is time for the military leaders and their supporters 
to fulfill their side of the deal, and for the United States and the 
international community to put the needed pressure on them to do so.
  That is the purpose, Mr. President, of the legislation that I am 
submitting today.
  This legislation would put the clamp on the Haitian military regime 
by banning virtually all private and commercial transactions between 
the United States and Haiti. In particular, this legislation would 
prohibit entirely the following activities:
  All trade between the United States and Haiti, with the only 
exemptions being made for humanitarian articles such as food and 
medicine and for news publications and broadcasts;
  The purchase by any United States person of any goods for export from 
Haiti to any other Nation;
  The performance by any United States person of any contract in 
support of an industrial or commercial or governmental project in 
Haiti;
  The grant or extension of credits or loans by any United States 
person to anyone affiliated with the Haitian military regime;
  Any transaction by a United States person relating to air 
transportation to and from Haiti; and
  The operation in the United States of any Haitian registered 
aircraft.
  In addition, Mr. President, this legislation also contains a 
provision requiring the President to cut off all United States 
assistance to any country that has not imposed equivalent sanctions 
against Haiti. This is an important provision that I believe will help 
to assure that the sanctions enacted under this measure will be 
respected and adopted by the rest of the international community.
  Finally, Mr. President, this legislation contains a provision that is 
intended to reverse the administration's policy in regard to the issue 
of Haitian refugees.
  Under the present policy, begun in the previous administration, 
refugees who are intercepted by the Coast Guard are returned to Haiti 
to be screened for asylum. Unfortunately, this policy has made it very 
easy for the Haitian military to single out and identify those who are 
opposed to the present regime.
  In fact, Mr. President, human rights groups have reported an 
increasing number of incidents of returning refugees being arrested, 
harassed and, in some cases, even murdered.
  Accordingly, the legislation that we are introducing this afternoon 
would prevent the expenditure of United States funds for the return of 
any refugee who has not been properly screened on his or her claim for 
asylum.
  Let me add here as an aside, Mr. President, that I visited the 
immigration offices in Haiti. I have nothing but the highest regard and 
respect for the conditions under which our immigration personnel are 
working. They are doing an incredibly fine job of trying to manage this 
situation. Despite their good efforts, however, I think it is expecting 
too much to assume that people who are caught on the high seas and 
brought back to their own country for processing can avoid the 
detection of the military in that nation as to who are the ones trying 
to seek political asylum.
  But I want to emphasize that I was deeply, deeply impressed and moved 
by the quality and demeanor of the people working for the U.S. 
Immigration Service in Port-au-Prince.
  In addition, Mr. President, the legislation would designate temporary 
protective status for any Haitian not affiliated with the coup, in 
accordance with the Immigration and Nationality Act, for as long as the 
military remains in power in Haiti.
  I would point out that this is basically the policy we follow with 
Cuban refugees who come from virtually the same neighborhood. Any time 
we find these people on boats trying to flee Cuba, we do not fly them 
back to Havana to find out whether or not they can then get out again. 
We allow them to come to our shores.
  What we are suggesting here today is that we are dealing with a 
Government in Cuba that is repressive, that violates human rights. The 
same exists in Haiti. You cannot have a dual standard. If it is good 
enough to allow people on boats trying to flee the country of the 
Government of Cuba, then it ought to be the same when it applies to 
those trying to leave the thugs and the repressive policies that exist 
in Haiti today. You cannot have one policy for one group of refugees in 
the Caribbean and a different one for another set.
  Let me point out here, Mr. President, there is a great concern and a 
legitimate concern about how many refugees and immigrants this country 
can continue to accept, given the pressures that exist domestically in 
our own Nation with unemployment and the hard times many Americans are 
feeling. I will tell you that if we do not put the screws to this 
Government down there as quickly and as strongly as we can, we are 
going to have a flood of refugees trying to leave that nation.
  And who could blame them? Which one of us would continue to reside in 
a country where our families and children face kidnaping, our wives and 
sisters and mothers are raped by the military and their thug 
supporters, or people are killed and their bodies are mutilated? Any 
decent person would try to protect their family and to escape that kind 
of situation.

  So unless there is a change in Haiti and we get some decency back in 
that nation, I think you are going to see an absolutely incredible 
invasion, if you will, of people pouring out of that nation.
  So while there are problems posed by any sanctions bill, to merely 
allow the situation to continue as it is, I think, only invites an 
explosion of the numbers that will be arriving at our shores seeking 
asylum.
  At the same time, Mr. President, I want to emphasize that the best 
solution to the refugee crisis, as I have said--and ultimately the only 
solution--is a political solution in Haiti that is responsive to the 
Haitian people. That is what President Aristide represents and that, in 
my view, is why it is so important that he be returned as the rightful, 
freely elected leader of his nation.
  And that, in the end, Mr. President, is what this legislation is all 
about.
  Mr. President, in every corner of the world, from the former Soviet 
Union to China to the emerging democracies of Latin America, the United 
States is making an effort to promote respect for democracy and the 
rule of law. What we are trying to promote, above all else, is the 
concept that if you abide by certain principles, if you play by the 
rules, your cause and the cause of the people you represent will always 
be advanced.
  Today, that principle is under direct challenge in Haiti. The people 
of Haiti have played by the rules. They went to the polls. They stood 
hours, I might point out, in the boiling sun to vote for their choice 
to lead their nation. They voted for a president, they supported that 
president as he made a deal with the military, and they supported that 
president as he abided by the terms of that deal.
  Now those very same people are being told that they have not done 
enough, that they have to make further concessions, that those who 
broke their faith with the international community will not be punished 
for their misdeeds. This is wrong, Mr. President, and it does no honor 
to the very principles of democracy that this administration and that 
this Congress have committed themselves to promoting.
  Mr. President, today in Haiti democracy is under siege, an elected 
leader is in exile, and a population lives in dreaded fear. Haitians 
need the help of the international community and they need the 
leadership of the United States.
  President Aristide has done his part, Mr. President. He has played by 
the rules. I think it is only fair now to ask the military and those 
who support them in Haiti to do the same.

  Mr. President, I would stand here today and tell you that with this 
sanctions bill I am introducing, along with my colleagues, there will 
be those who will say, ``Well, that is just a handful of Senators 
offering a bill.'' Let me send a message here today to those who think 
otherwise. We intend to stick with this issue. It may take a month, it 
may take 6 months, it may take 6 years, but, Mr. President, we will not 
cease in our determination to try to achieve a restoration of democracy 
in Haiti. It is important that the people of Haiti understand that, 
but, most importantly, that the military leaders and those who support 
them understand it.
  This is serious. We take it seriously. And we will not retreat until 
the people of Haiti have democracy restored.
  Mr. President, I urge the adoption of this legislation and I send the 
bill to the desk and ask for its appropriate referral.
  The PRESIDING OFFICER. The bill will be referred to the appropriate 
committee.
  The Senator yields the floor.
  Ms. MOSELEY-BRAUN. Mr. President, I would like to associate myself 
with the remarks of the Senator from Connecticut with regard to the 
Haitian Restoration of Democracy Act of 1994. I am proud to be a 
cosponsor for that legislation, along with Senators Harkin, Feingold, 
and Wellstone.
  We are introducing this legislation, Mr. President, to make the 
strongest possible statement in support of the restoration of democracy 
to Haiti, and the return of its elected President, Jean Bertrand 
Aristide.
  Mr. President, United States policy toward Haiti is not working. In 
fact, I think it is appropriate to say that it has been an abject 
failure. Repression in Haiti continues to escalate and human rights 
violations are worse today than at any time since the overthrow of 
President Aristide in September 1991. There are reports from the United 
Nations/Organization of American States Mission of the systematic use 
of rape to terrorize the population. Along with rapes, we have seen 
human rights violations consisting of murders, intimidation, and 
threats. The situation there is totally out of control. This 
legislation proposes a series of concrete steps for the United States 
and the international community to follow in order to reverse the 
situation. We must redirect our policy to restore democracy, decency, 
and hope in Haiti.
  The economic sanctions imposed by the United Nations in 1993 were 
highly effective in isolating the Haitian military and bringing them to 
the negotiating table. The Haitian military signed the Governors Island 
Accord in July 1993 because of the deleterious effect of these 
sanctions. Sanctions were lifted at the end of August 1993, as part of 
the accord. In light of the fact that the military has failed to live 
up to its part of the agreement to that accord, it is certainly time to 
reimpose sanctions and that is part of what this legislation would do.
  This legislation would prohibit all trade between Haiti and the 
United States except humanitarian assistance. It would prohibit 
Americans from purchasing any goods originating in Haiti through a 
third country. All loans and credits by any American to the unelected 
military leaders would be forbidden, and no contract between any 
American and industrial, commercial or Government entity would be 
permitted. We also urge President Clinton to take measures that employ 
a multinational border patrol between the Dominican Republic and Haiti, 
to halt the continuing smuggling of goods over land.

  In brief, this legislation says we should not have trade with those 
who would so blatantly violate the terms of their own agreement, the 
Governors Island agreement, those who would so blatantly flout human 
rights with regard to the rest of the world, who would so egregiously 
violate every principle of decency, of democracy, that we believe, as 
Americans, we have to stand for not only here in the United States but 
in other parts of the world.
  This legislation also physically isolates the Haitian military. Air 
transport between the United States and Haiti would be terminated and 
members of the Haitian military, including anyone who provides 
financial or military support for the military coup, would also be 
ineligible to receive a visa to enter the United States. This bill also 
freezes all assets of Members of the Haitian military in the United 
States.
  I point out that is important because, as things stand, the current 
situation in Haiti is such that those who participated in the coup, 
those who support this military dictatorship, those part of the 
repression we see there, are able because of their financial means to 
travel freely from Haiti to other parts of the world, particularly the 
United States, and indeed have done so.
  The specter of wealthy Haitians coming to the United States to shop 
while poor Haitians are starving and dying in the streets of that 
country is a specter I think, as Americans, we are automatically, 
revolted by and must seek to end.
  But the United States cannot act alone. The isolation of Haiti's 
military regime must be an international effort. This legislation 
instructs our President to direct Ambassador Albright to assume a 
leadership role within the United Nations Security Council to ensure 
the international community imposes the same comprehensive sanctions as 
are suggested in this bill. If another country is not cooperating with 
these efforts, the legislation ensures the United States will cut off 
all assistance including credits, loans, and grants to that country.
  In addition to sanctions, our country, the United States, must take 
measures to alleviate the escalating human rights abuses in Haiti. We 
support the return of a full contingent of human rights observers under 
the auspices of the United Nations, or the Organization of American 
States. By their very presence these observers play, and will play, a 
vital role in protecting Haitian people from abuse because they will be 
the eyes and the ears of the international community.
  This legislation will also reverse the current United States policy 
of returning Haitian migrants to that country without properly 
ascertaining their refugee status under internationally recognized 
standards and guidelines. The policy we are presently following is 
inhumane, it is morally wrong, and it violates the values that 
Americans hold dear.
  We have not seen recently the specter of the boatloads of people 
being turned back, but the notion that people fleeing repression, 
trying to seek out democracy; the notion that refugees from a 
repressive, oppressive, military dictatorship such as we have in Haiti 
would be turned back on the open seas--in many instances to die there--
is one that I and other Members who are supporting this legislation are 
not prepared to support by our silence. This legislation says the 
current policy of return, repatriating Haitian refugees, Haitian 
migrants, is wrong. We have to go forward and apply to them the same 
standards that are applied to immigrants and migrants from other parts 
of the world who are fleeing repression and human rights abuses.

  Finally, this legislation would grant temporary protected status for 
Haitian immigrants already in the United States until democracy is 
restored to Haiti. Temporary protected status was written into the 1990 
Immigration and Naturalization Act to provide temporary designation for 
migrants who need short-term relief in the United States due to war or 
upheaval in their home country. TPS allows the United States Government 
to react to the type of political upheaval that is currently affecting 
Haiti and its people. We should use this tool to allow Haitians to 
remain in the United States until it is safe for them to return to 
their own country.
  I believe these actions are appropriate and necessary and, taken 
together, will work to achieve an end to military rule and a 
restoration of democracy.
  Mr. President, I am therefore proud to join my colleagues in 
introducing this legislation to redirect United States policy toward 
Haiti. Our foreign policy has to have some meaning to it in order for 
it to work over the short or the long term. Protection of human rights, 
particularly in this hemisphere, it seems to me, should be at the top 
of the list of the motivations of our foreign policy. To single out 
Haiti by our inaction, by a set of standards or set of approaches that 
flies in the face of the standards we have articulated for the rest of 
the world, seems to me not only to help undermine the situation there 
but also undermines the moral authority of our foreign policy. It 
undermines our capacity to intervene and to be an effective voice for 
democracy and for human rights in the rest of the world.
  I strongly suggest that the current nonpolicy--and I call a nonpolicy 
the course that our administration has unfortunately followed with 
regard to Haiti--must end. This legislation hopes to put us on the 
right track to make certain our foreign policy in this regard comports 
with our values, comports with our stated policy, and that we are 
consistent in fighting and rebuffing human rights abuses, dictatorship, 
repression, and murder as it has been employed by the military 
dictatorship in Haiti.
  We hope these efforts will bring about a return of democracy to Haiti 
and the restoration of the democratically elected President there, who 
was elected by a 2-to-1 margin, President Aristide.
  Mr. FEINGOLD. Mr. President, I rise as an original cosponsor of the 
bill introduced by the Senator from Connecticut. [Mr. Dodd]. This bill, 
the Haitian Restoration of Democracy Act of 1994, clearly states policy 
toward Haiti as supporting the restoration of democracy in Haiti and 
the return to office of Jean Bertrand Aristide, the duly elected 
President of Haiti. To implement that, this bill mandates tough 
sanctions against the Haitian military regime, and outlines a fair and 
humane policy on Haitian refugees seeking protection in the United 
States I congratulate Senators Dodd and Harkin for their leadership on 
this pressing issue.
  The disaster in Haiti demands our attention. Human rights abuses have 
reached crisis proportions. The military, which seized power illegally 
from the democratically-elected President, has instituted a reign of 
terror. Observer missions report that there have been more than 345 
political murders since September 1993. Since the military took over, 
thousands of Haitians have disappeared, and been beaten, tortured, 
raped, and arrested. Human Rights Watch reports that bands of armed 
civilians have kidnapped, tortured, and murdered Aristide supporters, 
and the military regime has restricted basic freedoms by outlawing 
public support for Aristide and intimidating the press. The UN/OAS 
Civilian Mission revealed last week that rape is used by paramilitary 
forces to terrorize women. Every attempt at reconciliation has been 
flagrantly violated by the generals.
  Unfortunately, to date, United States policy toward Haiti has failed. 
In fact, the most observant characterization I have hear was from Dr. 
Harold Koh, a professor of international law at Yale University, who 
recently testified before the Senate Subcommittee on Western Hemisphere 
and Peace Corps Affairs that ``watching the U.S. Government's Haitian 
policy unfold over the last 2 years has been like watching a slow-
motion train wreck. * * *'' He is not alone in his assessment of U.S. 
policy. In fact, I find myself wondering what exactly is our policy 
toward Haiti.
  Last month, the Senator from Connecticut, Senator Dodd, chaired the 
hearing at which Dr. Koh made his analogy. In his opening remarks, 
Senator Dodd said, ``it is fair to say that a number of questions have 
been raised in recent months about the present direction of 
administration policy.'' I, too, feel that some questions need to be 
addressed, especially concerning the dilemma of the Haitian refugees, 
the feasibility of the sanctions currently in place against the Haitian 
Government, the role of the Central Intelligence Agency in trying to 
discredit President Aristide, and, most puzzling, the apparent 
willingness on the part of the administration to bargain with the 
Haitian military. This bill makes great strikes in addressing these 
issues.
  There are several interests at stake here for United States First, 
Haiti is in our backyard and, furthermore, is the poorest country in 
our hemisphere. Second, the United States pushed the Haitians to 
institute democracy, and thus, we have a responsibility to continue to 
support its transition--particularly when just 9 months after 
Aristide's inauguration, he was overthrown in a violent military coup. 
Third, the refugee flow created by the instability and oppression in 
Haiti lands on our shores: Given our involvement in the democratic 
movement there and our national ethic of protecting those fleeing 
persecution, we have an interest in supporting a Haiti in which its 
citizens can live freely and without the danger of persecution. 
Finally, as Senator Harkin testified at the recent hearings, we should 
care about Haiti because ``if we cannot support duly elected democratic 
governments of a nation just 800 miles from our shores, what kind of 
message will that send to other potential coup leaders considering the 
overthrow of other democratically-elected governments?'' This is a 
question that deserves our serious consideration.
  I fully support a policy which includes President Aristide as the 
central part of the solution--after all, he was elected in democratic 
elections with over 67 percent of his country's vote, a solid, 
resounding block of support. We are not promoting democracy if we 
ignore democratically elected leaders. We want Haiti to become a 
democratic nation. And though it took the first steps, we find 
ourselves contemplating negotiating with a military regime which seized 
power, rather than trying to force the thugs out. This is not support 
for democracy--it is appeasement, and it should be reversed. This bill 
will reinforce our support of President Aristide and the cause of 
democracy in Haiti.
  President Aristide's 6-year term will expire in 1996. Under the 
Haitian Constitution, he cannot run for reelection. The military is 
hoping they can stonewall Aristide until his term has run out. It is 
incumbent upon supporters of democracy to show them that they cannot. 
In the Governors' Island Accord of July 1993, President Aristide made 
numerous concessions for the cause of democracy in his country which I 
believe were far more generous than necessary, such as granting the 
coup leaders amnesty upon his return and acquiescing in the lifting of 
sanctions against Haiti before his return. He also appointed a Prime 
Minister. However, the military forced out his Prime Minister, 
continues to assassinate his supporters, and has not held up any of its 
parts of the accord. We must do nothing less than force the military to 
live up to its part of the bargain.
  Sadly, the military regime that is currently in power is not the only 
vicious, anti-democratic group the Haitians are forced to live with. 
The extremist right-wing paramilitary organization known as FRAPH 
(Haitian Front for Advancement and Progress) is also making its 
presence known through myriad illegal arrests, acts of torture and 
intimidation and murders of those who support democracy in general and 
Aristide in particular.
  The group, which was founded in October 1993 to oppose Aristide's 
return under the Governor's Island Accord, is composed of former 
members of the police force and their supporters. Its members are 
reportedly loyal to Michel Francois, the current police chief. In most 
places, FRAPH works in concert with the military to impose terror on 
the Haitian people. Many members have official-looking ID cards which 
are signed by military officers.
  FRAPH's agenda has four main points: First, they are committed to 
preventing Aristide's return to Haiti; second, they wish to eradicate 
completely democracy in the country; third, they wish to consolidate as 
an organization; fourth--and perhaps most worrisome to the 
international community--they wish to create an air of legitimacy that 
will allow them to legally assume power within the framework of the 
constitution, most likely through the 1996 elections.
  The State Department seems to feel that FRAPH is not a threat. Its 
existence was not even mentioned in the State Department's annual 
Country Reports on Human Rights Practices for 1993. According to United 
States Special Advisor on Haiti Lawrence Pezzullo, FRAPH is merely ``an 
invention of desperate people'' which is ``probably associated with 
death squads'' and which will eventually cease to be an issue. The 
administration seems more interested in worrying about the future than 
concentrating on the tragic present. The fact is that FRAPH is a 
powerful force in Haiti and they do not plan to go away--they plan to 
run the country.
  Another regret I have about United States policy, Mr. President, is 
the administration's initial backing of the so-called parliamentarian 
plan for Haiti, which I understand we are only partially retreating 
from now. Much of this plan is similar to the original United States-
supported plan on Governors Island--with one glaring inconsistency: It 
does not provide a date certain for President Aristide's return to 
Haiti. Instead, it provides a means for the military to share power 
with a democratic President and to obtain complete amnesty for all 
crimes committed since the coup. It addition, this plan calls for 
Aristide to name again a Prime Minister--something he has already done 
once at great peril. It calls for the sanctions to be lifted and the 
resignation of General Cedras. Once the sanctions have been lifted, 
however, Cedras will have no incentive to resign and leave Haiti--as we 
saw with the initial attempt to implement the Governors Island Accord.

  Another disturbing difference between the current plan and the 
Governors Island Accord is that the Parliamentarian's plan allows 
Francois--the same man who has led the reign of terror on the Haitian 
civilians--to remain in Haiti and retain a position within the same 
police department he is currently running--albeit at a lower level. By 
allowing Francois to stay, the plan almost certainly ensures that the 
military thugs and organizations like FRAPH will remain a political 
force and will not just go away as Mr. Pezzullo seems to think. Thus, 
this plan would keep Aristide's government under the thumb of the 
military and allow extremist groups such as FRAPH to continue their 
assault on the Haitian people. This is hardly a democracy worth U.S. 
support.
  Aristide has flatly rejected the Parliamentarian's plan and is still 
determined to make the provisions of Governors Island work. One of the 
most meaningful provisions of the bill introduced today is that it will 
bring U.S. policy in line with Aristide's position, and conform it to 
the democratic values and commitment to human rights we champion. It 
will show President Aristide that we, too, are committed to making 
Governors Island work. The text of the bill is crystal clear on that 
point: ``No officer or employee of the United States shall attempt, 
directly or indirectly, to amend, reinterpret, or to amend, re-
interpret, or nullify the Governors Island Agreement.'' Governors 
Island must be the framework from which we operate to return democracy 
to Haiti. Any diversion from its text must come from President Aristide 
or his advisors.
  I had hopes that after a year of the Organization of American States 
and the United Nations dealing seriously with the military takeover in 
Haiti that there would have been progress. Unfortunately, there has 
been little, if any. Various sanctions have been in place on and off 
since the coup, but they have been implemented with little resolve, and 
as a result, there are enough holes that the very targets of these 
sanctions have the resources to circumvent them. Consequently, the 
sanctions are hurting the very ones we purport to want to help: The 
Haitian people.
  The current sanctions, which were levied in October 1993, include an 
oil and arms embargo as well as a freeze on the visas and assets of 
military officers and their supporters. To date, the military has been 
able to get around these sanctions due to a porous border with the 
Dominican Republic and assistance from other sources who stand to 
profit by violating the embargoes. Sanctions levied against the 
military regime must be universal and constant and cannot be lifted 
until President Aristide has returned to Haiti--not a day or months 
before. Otherwise, the military will continue to evade the measures 
designed to force them out of power, and the people will continue to 
suffer.

  Some controversy has arisen about what the nature of these new, 
tougher sanctions should be. Aristide is in favor of squeezing the 
military out of power via the harshest sanctions possible. That is, 
tightening the sanctions and making them truly effective. These 
sanctions must be enforced and must work quickly or, as Ms. Holly 
Burkhalter of Human Rights Watch points out, the people of Haiti may be 
subject to conditions which are in violation of the Geneva Convention 
on torture.
  The bill introduced today, Mr. President, prescribes tough and 
thorough sanctions against the unselected, military rulers of Haiti. 
The bill calls for a full commercial trade embargo, including the 
suspension of all United States licenses in Haiti. Of course, 
humanitarian aid is exempt from this sanction. The bill also restricts 
United States air travel to and from Haiti, which is intended to 
isolate the military leaders--and their spouses--who take these 
flights. The bill also requires the levying of sanctions by the United 
States, against any country which does not comply with the embargo 
against Haiti. The threat of these additional sanctions can be used to 
strengthen the blockade around Haiti. Further, this bill calls for a 
worldwide freeze on the visas and assets of the military officers and 
their supporters. This practice has been in place in the United States 
since October 1993, but in order to be truly effective, it must have 
worldwide support. Otherwise, this military and its supporters will 
continue to travel freely and obtain goods from those countries which 
choose to violate the sanction agreement.
  This bill summons United States leadership at the United Nations to 
institute multinational, U.N.-mandated sanctions against Haiti to 
ensure that pressure on the military rulers comes from the 
international community as a whole, not just from the United States. 
These embargoes must be strictly enforced via aerial, naval, and border 
blockades in order to be effective. If these steps are followed, the 
sanctions would begin to be felt by the military instead of just the 
civilian population. The purpose of these measures is to increase the 
pressure on the military; this will happen if they are enforced and if 
there is international cooperation. The United States cannot do it 
alone.
  In addition to the implementation of sanctions, this bill urges the 
President to take whatever steps necessary to support the admission of 
United Nations and/or Organization of American States human rights 
observers to Haiti. This bill calls upon the President to support an 
effective multinational border patrol to monitor the border between 
Haiti and the Dominican Republic to ensure that there are no leaks 
across the border. The purpose of these measures--and what the crux of 
United States policy should be--is to isolate and pressure the ruthless 
military regime in Haiti, and pave the way for the return of Haiti's 
elected President.

  This bill also reaffirms the United States commitment to support 
multilateral socioeconomic and peacekeeping assistance to Haiti upon 
President Aristide's return.
  Finally, one of most disturbing aspects of this crisis relates to the 
Haitian refugees. When I came to the Senate and was appointed to its 
Foreign Relations Committee 1 year ago, one of the first issues which 
confronted me was the admission of Haitian refugees into the United 
States. I agreed with President Clinton's campaign promise to show a 
more humanitarian and supportive attitude, and to assist those who were 
fleeing ``a well-founded fear of persecution'' in a repressive regime. 
Now, 1 year later, this humane policy has evaporated. Thousands of 
Haitians still sail to our shores in the hope of escaping the 
oppressive government of their homeland only to be picked up by the 
United States military, at sea, and returned to Haiti and General 
Cedras. We say we want Haiti to be democratic, yet we--the country that 
is supposed to be the shining example of democracy--send them back to a 
military regime that tortures, starves, rapes, and even murders its own 
people.
  This practice also demonstrates a glaring inconsistency in the 
refugee policy of the United States. The blanket rejection of Haitian 
refugees into this country smacks of racism, as the Congressional Black 
Caucus recently charged. Others, such as Russians and Cubans, are 
welcomed into this country with open arms while the Haitians are sent 
home.
  Boats carrying hundreds of Haitian refugees are interdicted at sea by 
the United States Coast Guard before they ever reach United States 
waters and are sent back home without so much as an informal hearing to 
determine if they qualify for refugee status--that is, ``fleeing a 
well-founded fear of persecution.'' According to one Defense Department 
official who spoke at the recent hearings, the Coast Guard 
``interdicted 16 Haitian vessels with 853 migrants during fiscal year 
1994. During the month of February, a total of 345 immigrants were 
interdicted.'' This example illustrates what Dr. Koh referred to as 
America's don't ask policy regarding Haitian immigrants--they are 
turned away before we even ask them why they have come.
  This bill will put an end to this outrageous practice. First of all, 
this bill will bring the United States in compliance with international 
law, and direct authorities to assess each refugee's situation 
individually to determine whether or not they qualify for asylum. At 
the same time, the bill requires the United States to refuse refugee 
status to any Haitian serving in or receiving support from the military 
or to anyone who has violated United Nations resolutions.
  Instead of the current deplorable practice of automatic repatriation, 
Senator Dodd's bill requires that Haitian refugees be granted temporary 
protected status by the United States Government. In the past, we have 
extended this status to refugees from countries such as Kuwait, 
Somalia, El Salvador, and Bosnia. This would allow these people a safe 
haven until democracy is restored in their country. They would be in 
our protection until President Aristide has been successfully returned 
to office and the military leaders have been removed.

  Representative Carrie Meek has introduced a bill with similar 
provisions, the Haitian Refugee Fairness Act in the House, which 
currently has 65 cosponsors. According to Representative Meek, this 
bill will ``bring the treatment of Haitian refugees by the United 
States Government into conformity with international law and make the 
treatment that Haitian refugees receive from the United States 
Government consistent with the treatment given to refugees from other 
nations.''
  Both these bills propose what is fair and what should have been done 
from the beginning. By sending Haitian refugees back to the oppressive 
government from which they are fleeing without first determining if 
there is significant risk to them in their own country is in violation 
of international law. We must act to correct this policy before we send 
thousands more Haitians back to perilous lives under tyrannical rule.
  Another procedure that must be reformed is the current in-country 
processing that is used when Haitians want to leave their country. The 
Haitians must apply for asylum in the United States while they are 
still in Haiti and wait in Haiti to find out if their application has 
been approved. This process strips applicants of any protection, and 
intimidates them from supplying any kind of information to support 
their claim to asylum. Human Rights Watch has documented numerous 
instances of persecution in Haiti against those applying for asylum. 
Instead of helping refugees to flee their country, in-country 
processing exposes them to further abuse from the Haitian military.
  During the 9 months President Aristide was in office, there was 
hardly a trickle of refugees leaving Haiti. Since the coup, there has 
been a flood. The United States is now seen as subscribing to a double 
standard--we don't want the Haitians to live under the oppressive 
military regime of Cedras and Francois, but we won't help them to 
escape it, either. This is wrong. Until President Aristide can be 
returned to power, we must find a better solution to help his people. 
We must not let the Haitians' support of and desire for democracy wane 
while we cater to the demands of the likes of General Cedras and Michel 
Francois.
  In my estimation, the United States has been negotiating with the 
wrong side. We should be pressuring the military to accept President 
Aristide's terms and not the other way around. The time to act is now. 
Too many lives have been lost in the name of democracy in Haiti. We 
must not let them die in vain and we must not let democracy itself 
become the final casualty.
                                 ______

      By Mr. HATFIELD (for himself and Mr. Harkin):
  S. 2028. A bill to amend the Internal Revenue Code of 1986 to improve 
revenue collection and to provide that a taxpayer conscientiously 
opposed to participation in war may elect to have such taxpayer's 
income, estate, or gift tax payments spent for nonmilitary purposes to 
create the U.S. Peace Tax Fund to receive such tax payments, and for 
other purposes; to the Committee on Finance.


                        u.s. peace tax fund act

 Mr. HATFIELD. Mr. President, every year in April, Members of 
Congress received letters from constituents who write to explain why 
they have not paid their taxes in full. These letters from sincere 
conscientious objectors share with us their moral or religious 
opposition to payment of taxes to the military. These people write 
Congress because they want to stop violating their consciences. They 
want Congress to enact the U.S. Peace Tax Fund.
  I am introducing this legislation once again because I believe it is 
important. Our Nation has embraced the concept of conscientious 
objection for those who are called to serve in the Armed Forces. Yet 
Congress fails to provide relief to those Americans who cannot violate 
their consciences by paying military taxes. If we give the right of a 
person to withhold their body from military services, why is this 
principle not extend to those who seek to withhold their money?
  Just a few days ago I read a news story about a woman in Denver, CO, 
who had her car seized, was forced to sell her house, and lost half her 
paycheck to the IRS, all because she is a conscientious objector who 
had refused to pay a portion of her taxes. When interviewed by the 
media, the woman called for enactment of this bill. Clearly, she wants 
to obey the law. She wants to pay her taxes in full.
  By passing the Peace Tax Fund Act, we will not only end the hardship 
imposed upon qualified conscientious objectors, we will achieve this 
without any significant loss of revenue, according to the Joint 
Committee on Taxation. And as the ranking member of the Appropriations 
Committee, I would like to point out that the Peace Tax Fund Act does 
not improperly alter our congressional funding authority. The bill 
stipulates that a portion of the participants tax funds will be 
deposited into the Peace Tax Fund and then disbursed to four Federal 
programs: Head Start, WIC, the U.S. Institute of Peace, and the Peace 
Corps. The bill will not reduce the amount of funding for military 
activities.
  I urge my colleagues to join us in addressing this glaring inequity 
by cosponsoring the U.S. Peace Tax Fund Act.
                                 ______

      By Mr. BREAUX (for himself, Mr. Chafee, and Mr. Johnston):
  S. 2029. A bill to amend the Internal Revenue Code of 1986 to allow 
the taxable sale or use, without penalty, of dyed diesel fuel with 
respect to recreational boaters; to the Committee on Finance.


 correcting the implementation of the recreational boat diesel fuel tax

 Mr. BREAUX. Mr. President, I rise today to introduce 
legislation to clarify the implementation of a law that we adopted last 
year. One of the provisions included the 1993 Budget Reconciliation Act 
removed the exemption from payment of the diesel fuel tax that 
recreational boaters previously had.
  At the same time, the 1993 Budget Act modified the collection point 
for all of the fuel taxes and imposed fuel dying requirements. The 
combination of these two changes have made the implementation of the 
fuel tax a disaster creating a situation where many recreational 
boaters cannot find any fuel to pay tax on.
  Under the 1993 changes, fuel that is subject to taxation is clear and 
fuel that is exempt from taxation is dyed. The problem for boaters 
arises because most marinas have only one fuel tank, however, they 
provide fuel to both commercial boats and recreational boats. 
Commercial boat fuel is exempt from any tax and therefore commercial 
boat operators seek to purchase dyed fuel. Recreational boat fuel is 
taxable and recreational boaters want to purchase clear fuel. For those 
marina operators with only one fuel tank, they must decide if they will 
offer clear, taxable fuel for the recreational boaters or offer dyed 
tax exempt fuel for the commercial boaters. Most marina operators in my 
State of Louisiana, find that their primary customer base is commercial 
boaters and they are choosing to sell the dyed fuels. Thus, 
recreational boaters have no place to purchase the clear fuel.
  Mr. President, this is a clear case of unintended consequences. The 
boaters want to pay the tax they simply cannot find the place to buy 
the fuel and pay the tax. My bill is very simple. It modifies the 
collection process for diesel boating fuel. Very simply, it allows 
marina operators to purchase dyed, exempt fuel and then collect the tax 
directly from recreational boaters and remit the tax to the Government 
directly.
  Mr. President, I believe that this is a very simple solution to this 
very difficult problem. I urge the Senate act on this important issue 
as soon as possible.
                                 ______

      By Mr. ROTH (for himself, Mr. Wallop, and Mr. Pressler):
  S. 2030. A bill to amend the Internal Revenue Code of 1986 to limit 
the tax rate for certain small businesses, and for other purposes; to 
the Committee on Finance.


                small business investment and growth act

  Mr. ROTH. Mr. President, I rise to introduce this legislation to save 
small businesses from the dramatic tax increase in last year's budget 
reconciliation tax bill. That tax increase could be as much as 37 
percent for these small businesses and they should be removed.
  Just this morning, the National Association of Manufacturers [NAM] 
released a survey of their small manufacturing members. That survey 
includes this question: ``As a result of the 1993 tax increase, and 
taking interest rates into account, how do you expect your investment 
and employment decisions to be affected in 1994?'' The results, 
according to the survey, show a startling difference between small 
manufacturer's that are subchapter S corporations and regular C 
corporations. Some 51.5 percent of sub S corporations said they would 
reduce investment, and 29.7 percent said they would reduce hiring new 
employees in 1994. Regular C corporations, which had a rate increase 
from 35 to 36 percent said only 21 percent would reduce investment and 
17 percent would hire fewer workers. Clearly, the small businesses that 
had the biggest tax increase are going to cut back dramatically in 
their investments.
  The NAM survey also asked what tax incentive would offer the most 
positive impact on growth and job creation. Subchapter S corporations 
agreed by over 65 percent that repealing the tax rate increase from 
1993 would do the most for them. Clearly, small businesses would invest 
and hire more if the 1993 tax rate increase were repealed.
  Indeed, American small business is the goose that lays the golden 
egg. The legislation I'm introducing today recognizes that. We have 
drafted this legislation so that this precious goose might be spared 
the debilitating and counter-productive income tax rate increases and 
the Medicare health insurance payroll tax increase from 1993. Does this 
legislation relieve small businesses from paying these higher tax rates 
under any circumstance? No. Rather, this legislation encourages small 
businesses, through tax relief, to keep their earnings in their 
business, to reinvest in new equipment and more jobs. If a small 
business does these things, then this legislation assures that they 
will not be subject to the punishing new tax rates Congress and the 
President imposed on them last year.
  There's no question about it, Mr. President, these new tax rates are 
punishing successful small businesses--businesses that mean jobs and 
growth. Under the Clinton tax bill, small businesses with earnings as 
low as $250,000 will have to pay marginal tax rates as high as 42.5 
percent. That's an increase from the 1992 rate of 31 percent, and it 
approaches the level of taxes that these businesses had to pay when 
Jimmy Carter was President--a time of great suffering and stagflation 
for this country. In fact, when the additional burden of State and 
local taxes are added to these new tax rates, these small businesses 
will have to give more than half of their profits just to pay their tax 
collectors.

  This, of course, means less money available for these businesses to 
hire more employees, less money to grow, less money to invest, less 
money to compete and provide jobs and security for American families. 
We all know that these businesses are the backbone of our country's 
economic growth. In fact, firms with fewer than 20 employees have 
created an amazing 4.1 million net new jobs from 1988 to 1990, while 
large businesses had a net loss of 500,000 jobs. Our Nation's 20 
million small businesses employ almost 56 percent of the private work 
force, contribute 44 percent of all sales, and are responsible for 47 
percent of GNP. These businesses are expected to create 75 percent of 
the 43 million jobs needed over the next 25 years. That's a tall order. 
And I'm afraid it will be an impossible order if Congress doesn't act 
responsibly and loosen the tax choke-hold it imposed last year.
  They won't succeed with that goal if their taxes remain increased by 
37 percent as they were last year, especially now that interest rates 
are higher than they've been in the last 2 years. Suddenly, for our 
small businesses, all the promises the President and his tax-hike 
proponents made last year--that increased taxes would bring down 
interest rates--are beginning to ring hollow. Now comes the pain, as 
these valiant small business men and women grapple not only with the 
President's record-setting tax increase, but with these increasing 
interest rates that have followed that tax increase.
  And when I say small business men and women, I want to emphasize 
women. Today, women own more than 30 percent of all U.S. businesses--
almost all of them small, and women will own 50 percent of the Nation's 
small businesses by the 21st century. The legislation I introduce today 
is certainly good fiscal policy for them. Likewise, it will benefit 
America's minorities--men and women whose businesses generate $60 
billion in gross receipts annually, men and women whose businesses 
provide almost a million jobs to working Americans.
  This legislation is equitable. It resolves a gaping injustice now 
created by the Clinton tax increase. On several occasions, I have come 
to this floor to explain that the Clinton taxes raise rates on small 
businesses from 31 percent to 42.5 percent if they have profits of 
$250,000 or more, but the largest corporations in the world, making 
$250 million in profits will only pay a maximum rate of 35 percent. I 
have explained how big corporations now get a lower tax rate than, say, 
a small family restaurant supporting 20 employees on the Rehobeth, DE 
boardwalk. Is this the tax equity President Clinton promised?
  You hear the President talk about the ``rich'' paying more, and 
``fairness''--but here you have small family businesses paying tax 
rates of more than 21 percent more than the biggest corporations in 
America. Thus, under current law, small family businesses, farmers, 
restaurants, manufacturers, and others pay tax rates that are 21 
percent higher rates than the largest corporations in America, 
including foreign corporations.
  Some have argued that the income tax rates of a small business should 
not be compared to the income tax rates of a corporation based on the 
fact that corporations have to pay taxes twice--once at the corporate 
level, and a second time when they pay dividends to the shareholders. 
Small businesses, by comparison, only pay one level of tax, at the 
owner's level.
  However, our legislation is designed to treat the same kind of 
retained corporate earnings of small businesses and large businesses in 
a fair manner. This is because only profits that are left in the small 
business for reinvestment qualify for the lower rate of 31 percent rate 
in our legislation. When major corporations do the same thing, they are 
taxed only once at a maximum rate of 35 percent. If small businesses do 
the very same thing, they have to pay as much as 42.5 percent or more, 
even when they want to reinvest the money back into the business--under 
the Clinton tax hike.
  Let me explain a few things about this legislation. First, in order 
for a small business' income to qualify for the reduced tax rate in our 
legislation, the income must come from the active conduct of a trade or 
business in which the taxpayer is a material participant. This means 
that the taxpayer must actually work in that business. There is no 
loophole here for investors, or those who do not spend a significant 
amount of time working in that business. This requirement means that 
the true entrepreneur will gain the benefit of this legislation, and 
not some taxpayer taking advantage of a loophole.
  Second, the small business income can not exceed the earnings from 
self-employment income. This excludes income from things like the 
renting of real estate or capital gains from the sale of business 
assets. We intend that the legislation will not benefit a business' 
profits unless the profits come from the active participation in that 
business, and not indirect profits from other sources.
  Finally, the small business income must be retained in the business 
in a qualified retained earnings account. Under this rule, if a 
business simply accumulates money and invests it then the investment 
income from that savings would not be eligible for the lower rates.
  A small business will be able to make distributions from this 
retained earnings account in order to make an investment in itself, or 
to pay its tax liability. But, if a small business makes a distribution 
to its owners, or does not spend the money in its retained earnings 
account to invest in itself, or provide jobs, then an excise tax will 
apply so that the owners are subject to the maximum tax rate. So, this 
legislation does what it is suppose to do. It requires a small business 
to accumulate its earnings and invest in itself if it wants to take 
advantage of the lower tax rates--the tax rates that before Bill 
Clinton became President were 31 percent.
  Last year, during debate on the budget and tax bill, I offered this 
legislation as an amendment and gained 56 votes in favor of it. I hope 
that those 56 Senators will join us by sponsoring it with me.
  I would ask that this statement, two summaries of the legislation, a 
table on tax rates, a letter from the National Federation of 
Independent Business, a statement by Senator Wallop, a statement by 
Senator Pressler, and a copy of the bill be included in the Record in 
full.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Small Business Investment 
     and Growth Act''.

     SEC. 2. MAXIMUM SMALL BUSINESS TAX RATE.

       (a) In General.--Section 1 of the Internal Revenue Code of 
     1986 (relating to tax imposed) is amended by adding at the 
     end the following new subsection:
       ``(i) Maximum Small Business Tax Rate.--
       ``(1) In general.--Except as provided in paragraph (4), if 
     a taxpayer has taxable small business income for any taxable 
     year to which this subsection applies, then the tax imposed 
     by this section shall not exceed the sum of--
       ``(A) a tax computed at the rates and in the same manner as 
     if this subsection had not been enacted on the greater of--
       ``(i) taxable income reduced by the amount of taxable small 
     business income, or
       ``(ii) the amount of taxable income taxed at a rate below 
     31 percent, plus
       ``(B) a tax of 31 percent of the amount of taxable income 
     in excess of the amount determined under paragraph (1).
       ``(2) Taxable small business income.--For purposes of this 
     subsection, the term `taxable small business income' means, 
     with respect to any taxable year, the least of--
       ``(A) the taxable income of the taxpayer for such year 
     attributable to the active conduct of any trade or business 
     of an eligible small business in which the taxpayer 
     materially participates (within the meaning of section 469(h) 
     (other than paragraph (4))),
       ``(B) the net earnings from self-employment (within the 
     meaning of section 1402(a), applied without dollar 
     limitation) of the taxpayer for such year attributable to the 
     active conduct of such trade or business, or
       ``(C) the taxpayer's share of additions for such taxable 
     year to the qualified retained earnings account of such trade 
     or business.

     For purposes of determining net earnings from self-employment 
     under subparagraph (B), an S corporation shall be treated as 
     if it were a partnership.
       ``(3) Qualified retained earnings account.--For purposes of 
     this subsection--
       ``(A) In general.--The term `qualified retained earnings 
     account' means an account established by a trade or 
     business--
       ``(i) which is designated as a qualified retained earnings 
     account for purposes of this subsection,
       ``(ii) additions to which may only be made in cash,
       ``(iii) distributions from which may only consist of 
     qualified distributions, and
       ``(iv) any earnings on which are not allocated to the 
     account.
       ``(B) Qualified distributions.--For purposes of 
     subparagraph (A), distributions from a qualified retained 
     earnings account shall be treated as qualified distributions 
     if used--
       ``(i) to pay ordinary and necessary expenses paid or 
     incurred in carrying on the trade or business of the eligible 
     small business to which the account relates, or
       ``(ii) to pay the tax imposed under this subtitle on 
     amounts in the account.
       ``(4) Additional tax on nonqualified distributions.--
       ``(A) In general.--If--
       ``(i) a distribution other than a qualified distribution is 
     made from a qualified retained earnings account, and
       ``(ii) such distribution is made from additions to the 
     account for a taxable year with respect to which paragraph 
     (1) applied to the taxpayer by reason of such additions,

     then the tax imposed by this section for the taxable year of 
     the taxpayer with or within which the taxable year of the 
     eligible small business in which the distribution was made 
     ends shall be increased by the amount determined under 
     subparagraph (B).
       ``(B) Amount of additional tax.--The amount of tax 
     determined under this subparagraph is an amount equal to the 
     sum of--
       ``(i) the product of the taxpayer's pro rata share of the 
     distribution described in subparagraph (A)(i) and the number 
     of percentage points(and fractions thereof) by which the 
     highest rate of tax in effect under this section for the 
     taxpayer's taxable year exceeds 31 percent, plus
       ``(ii) the product of--

       ``(I) the amount by which the taxpayer's pro rata share of 
     such distribution, when added to the taxpayer's pro rata 
     share of previous distributions from additions to the account 
     for the same taxable year, exceeds $135,000, and
       ``(II) the rate of tax imposed by section 1401(b) for the 
     taxpayer's taxable year.

       ``(C) Order of distributions.--For purposes of this 
     paragraph, distributions shall be treated as having been made 
     from the qualified retained earnings account on a first-in, 
     first-out basis.
       ``(D) Treatment of health insurance tax.--For purposes of 
     this title, the tax described in subparagraph (B)(ii) shall 
     be treated as if it were a tax imposed by section 1401(b).
       ``(5) Eligible small business.--For purposes of this 
     subsection--
       ``(A) In general.--The term `eligible small business' 
     means, with respect to any taxable year, a sole 
     proprietorship, partnership, or S corporation which is a 
     small business concern (within the meaning of section 3(a) of 
     the Small Business Act) as of the beginning of the taxable 
     year.
       ``(B) Election to use 3 preceding years.--If the 
     determination under subparagraph (A) is made on the basis of 
     number of employees or gross receipts, the taxpayer may elect 
     to have the determination made on the basis of the average 
     number of employees or the average gross receipts of the 
     taxpayer for the 3 taxable years preceding the taxable year.
       ``(6) Years to which subsection applies.--This subsection 
     shall apply to any taxable year if the highest rate of tax 
     set forth in subsection (a), (b), (c), (d), or (e) (whichever 
     applies) for the taxable year exceeds 31 percent.
       ``(7) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section, including regulations 
     preventing the characterization of distributions for purposes 
     of compensation or personal use as qualified distributions 
     under paragraph (3)(B)(i).''
       (b) Certain Taxable Small Business Income Not Subject to HI 
     Tax.--Section 3121(a) (defining wages) is amended--
       (i) by striking ``or'' at the end of paragraph (20),
       (ii) by striking the period at the end of paragraph (21) 
     and inserting ``; or'', and
       (iii) by adding at the end the following new paragraph:
       ``(22) the portion of any taxable small business income (as 
     defined in section 1(i)) properly allocable to the calendar 
     year which is in excess of $135,000.''
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     1992.
                                  ____


     Roth-Wallop-Pressler Small Business Investment and Growth Act

       The President's tax package in 1993 forces small businesses 
     to pay tax rates at higher levels than our nation's largest 
     corporations. It discourages small businesses from investing 
     in themselves. By allowing businesses to continue paying at 
     the 1992 tax rate of 31 percent for all active trade or 
     business income retained or reinvested, this legislation will 
     help small businesses expand, modernize and create jobs.


                                purpose

       The Roth-Wallop-Pressler bill exempts active trade or 
     business income reinvested or retained in a small business or 
     family farm from the increased individual tax rates and the 
     unlimited Medicare hospital insurance (H.I.) wage tax enacted 
     in 1993. Taxing small businesses at these high rates will 
     severely reduce their ability to act as our engine of job 
     creation. Small businesses that are hiring the most new 
     employees, growing the fastest and investing more are 
     punished the most, while larger corporations making the very 
     same investments are taxed at significantly lower tax rates.


                             who qualifies

       Businesses organized as sole proprietorships, Subchapter S 
     corporations and partnerships who qualify as ``small 
     businesses'' under the Small Business Administration's 
     definition will qualify.


                     what the legislation would do

       Profits that remain in a business or farm would continue to 
     be taxed at the 1992 31 percent rate rather than the new 36 
     and 39.6 percent rates. The reinvested profits would also be 
     exempt from the 2.9 percent unlimited self employment H.I. 
     tax increase imposed in 1993.
       This legislation would not change the tax rates on wages 
     for business owners or partners. Only properly retained or 
     invested earnings of the business, invested in ordinary and 
     necessary business expenses would receive favorable tax 
     treatment.
       This legislation would require that these lower rates only 
     apply to active income. In other words, passive income or 
     portfolio income would be taxed at the new, higher rates, 
     while profits that remained in the business would be subject 
     to the 1992 lower tax rates. Interest earnings or other 
     corporate dividends, for example, would not benefit from the 
     lower tax rates.


                                example

       Assume a diary farmer has $275,000 of taxable income. If 
     the business owner takes out wages of $90,000 then those 
     wages would be taxed at the applicable tax rate, but if 
     $150,000 is spent on a new milk processing system and then 
     $35,000 is kept in a ``retained'' account for future use and 
     to pay tax liabilities then that business income would be 
     taxed at the 31 percent rate.


 reasons to support the roth-wallop-pressler small business investment 
                             and growth act

       Eight out of ten small businesses pay taxes as individuals, 
     rather than as corporations--that's 21 million small 
     businesses nationwide.
       Raising individual tax rates to ``tax the rich'' has 
     directly impacted small businesses and family farms. A new 
     survey by the National Association of Manufacturers (NAM) 
     states that more than half of the Subchapter S businesses 
     polled expect to decrease their investment as a result of the 
     1993 tax increase, while three in ten expect the new tax to 
     hold down employment. The Clinton tax plan punishes the very 
     people we need to get our economy moving.
       A great majority of the so-called ``wealthy'' under last 
     year's tax plan are small businesses--sole proprietorships, 
     Subchapter S corporations, partnerships and family farms.


                               The facts

       Individual tax rate:
       36 percent--passed as part of the Budget Act of 1993 
     (OBRA).
       31 percent--1992 rate and retained earnings rate in SBIG 
     Act of 1994.
       Additional Burdens from OBRA of 1993:
       2.9 percent--Medicare self employment H.I. tax.
       10 percent--``Millionaire'' surtax over $250,000 ``Pep'' 
     and ``Pease'' and the ``transportation tax.''
       Corporate tax rate:
       35 percent--Passed as part of OBRA of 1993 for corporations 
     making $10 million or more.
       34 percent--1992 rate and actual rate for C corps. making 
     under $10 million in taxable income.
       1. According to the U.S. Treasury Department, 67 percent of 
     the revenue paid by the top two percent of taxpayers is paid 
     by small businesses and family farms.
       2. Fifty-two percent of those making over $100,000 are 
     small businesses--and 66 percent of those making over 
     $200,000 are small businesses.
       3. Critics of this legislation will say the answer is 
     simple; get small businesses to incorporate. Incorporation is 
     neither simple nor inexpensive; it requires complex legal and 
     financial documents prepared by lawyers and accountants. 
     Additionally, there are questions about Boards of Directors, 
     annual meetings, the effects of double taxation and numerous 
     other issues.
       4. Critics will also argue that small businesses have the 
     advantage of paying only one level of tax, because there is 
     no corporate level of tax on profits. But major corporations, 
     too, only pay one level of tax on the same kind of income in 
     this legislation (i.e. reinvested profits of the business!)
       5. Between 1988 and 1990, small businesses created 4.1 
     million jobs and big business lost 500,000 jobs. But 
     regardless of this proven record, last year's budget deal 
     clearly favored large businesses as a matter of tax policy.

                 TAX RATES ON RETAINED BUSINESS PROFITS                 
                              [In percent]                              
------------------------------------------------------------------------
                                                             Roth-Wallop-
                                                Current tax    Pressler 
                                                   rate        tax rate 
------------------------------------------------------------------------
Family farm earning $150,000.................          38.9           31
Family run restaurant earning $250,000.......          42.5           31
Small manufacturer earning $300,000..........          42.5           31
Big corporations earning $250 million........          35             35
------------------------------------------------------------------------

                                  ____

                                            National Federation of


                                         Independent Business,

                                   Washington, DC, April 19, 1994.
     Hon. William V. Roth, Jr.,
     U.S. Senate,
     Washington, DC.
       Dear Senator Roth: On behalf of the over 600,000 members of 
     the National Federation of Independent Business (NFIB), I am 
     writing to support your legislation to repeal the tax rate 
     increases as they apply to small businesses, which were 
     signed into law in the 1993 Omnibus Budget Reconciliation 
     Act. As the nation's largest small business advocacy 
     organization, we supported this legislation when you, Senator 
     Wallop and Senator Pressler offered it as an amendment to the 
     1993 budget and are pleased to offer our endorsement once 
     again.
       The law, as currently written, punishes small businesses 
     and family farms organized as sole proprietorships, 
     Subchapter S corporations, and partnerships with a tax rate 
     higher than that of America's largest corporations. Most 
     small business growth is financed by profits reinvested in 
     the business.
       Your legislation will encourage America's entrepreneurs to 
     reinvest their profits into their businesses--allowing 
     businesses to expand and create more jobs. Reinvested or 
     retained business earnings will then be taxed at the 1992 
     maximum tax rate of 31 percent, provided the earnings 
     resulted from an active trade or business. Profits that do 
     not remain in the business, or are later distributed, will be 
     subject to the new higher tax rates.
       Over 84 percent of small business owners opposed the 1993 
     budget act because they thought it was damaging to business. 
     Small businesses strongly believe that the deficit will not 
     be reduced until the federal government makes tough decisions 
     on cutting spending. In their opinion, raising taxes only 
     allows the government to delay these tough decisions.
       Again, thank you for your support of small business. I look 
     forward to working with you.
           Sincerely,

                                              John Motley III,

                                                   Vice President,
                                   Federal Governmental Relations.

  Mr. WALLOP. Mr. President, on April 15, many small businesses were 
painfully reminded of the 1993 Clinton tax hike. Sole proprietors, 
partnerships, and subchapter S corporations found themselves subject to 
tax rates of 36 percent and 39.6 percent and the 2.9 percent unlimited 
self-employment health insurance tax.
  During debate on the tax bill last year, and even now, we see the 
administration trying to justify and down play the negative impact that 
these increased individual taxes will have on small business. In fact, 
on April 16, Treasury Secretary Bentsen spent time on CNN's ``Evans & 
Novak'' rejecting claims that the higher tax rates caused the recent 
losses in the bond and stock markets. He also rejected out-of-hand a 
comment by Alan Reynolds in the Wall Street Journal, April 12, 1993, 
that 2 percent of households will pay higher rates--instead of the 1.2 
percent President Clinton was so quick to tout.
  But no matter what the administration says, small business knows 
differently. Over 80 percent of businesses in America are 
unincorporated. This year alone, almost 1 million small businesses will 
be exposed to these higher rates.
  Last year during debate on the tax bill Republicans predicted that 
the increased individual tax rates would directly impact the ability of 
small business to expand and to hire new employees. We were right--
these new taxes are stifling investment and job creation. Today, the 
National Association of Manufacturers announced that more than 50 
percent of the subchapter S firms polled expected their investment to 
decline--and they directly attributed this decline to the increased tax 
rates. Three in ten firms polled expected to hold down hiring.
  Last year, Bill Clinton and the Democrats painted a rosy economic 
scenario. They promised that the largest tax increase in history would 
lead to low interest rates and greater economic growth. Instead, we now 
have high tax rates and the highest interest rates in 2 years. And 
small business will pay the price. Higher taxes, more regulations and 
health care are all combining to drain the resources of small 
businesses. The administration has continually forgotten that 
prosperous small businesses are the engines of growth in this economy 
and that the higher taxes confiscate the very investment income 
necessary to grow this economy.
  That is why I have sponsored this bill with Senators Roth and 
Pressler. Under our bill, sole proprietors, partnerships, and 
subchapter S corporations that reinvest or retain their active trade or 
business income will only be taxed at last year's rate of 31 percent 
instead of the new higher tax rates. Profits that are not retained or 
are later distributed will continue to be subject to the current tax 
rates. Only small businesses that meet the Small Business 
Administration's definition of small business will qualify for the 
reduced tax rates.
  This is a good bill. It will encourage job creation and economic 
growth by reducing--not increasing--taxes on small businesses. It will 
allow small businesses and family farms and ranches to expand, 
modernize and create jobs. Instead of placing more burdens on 
employers, this bill will lift those burdens. I urge my colleagues to 
cosponsor this legislation and keep this economy on track.
  Mr. PRESSLER. Mr. President, I rise today, both as an original 
sponsor of this bill and as the ranking member of the Small Business 
Committee, to urge adoption of this important measure. This 
legislation, the ``Small Business Investment and Growth Act,'' is 
critical to the success of small business and job creation in our 
country.
  Nearly a year ago, I joined with Senator Roth and Senator Wallop in 
sponsoring an identical piece of legislation in the form of an 
amendment to the budget resolution. Despite significant bipartisan 
support, the amendment was defeated narrowly.
  The Clinton administration claims to be a friend of small business, 
but what kind of a friend imposes a staggering tax hike on our nation's 
foremost job creator? Small businesses are suffering the effects of the 
President's 1993 Budget Reconciliation Act. Since the passage of this 
budget, some small businesses have been forced to pay taxes at a higher 
rate than America's largest corporations.
  Eighty percent of businesses in this country pay taxes as 
individuals, not corporations. They are sole proprietorships, 
Subchapter S corporations and partnerships. This means the profits from 
their businesses are taxed at the individual rather than the corporate 
rate. Thus, a great majority of the so-called wealthy targeted for 
increased taxes under the President's 1993 Budget actually were small 
business owners who do not take home all the wealth on which they are 
now paying higher taxes.
  The top income tax rate for these entrepreneurs increased from 31 
percent to an effective rate of nearly 45 percent, after adding up the 
impact of the two new brackets, an unlimited Medicare tax and the 
phasing out of various deductions. All of this comes in addition to 
asking America's entrepreneurs to pay the lion's share of the cost of 
mandated health care.
  By increasing the top effective small business tax rate, the 
President's plan punished the very people we have consistently counted 
on to keep the economy moving. As a matter of fact, 52 percent of those 
making over $100,000 are small businesses--and 66 percent of those 
making over $200,000 are small businesses.
  As a result of President Clinton's tax increases and new government 
mandates, small business optimism has weakened in this past year. 
Businesses are afraid of higher taxes and all that comes with them--
lower profits, increased government mandates and an overpowering 
regulatory environment. Mr. President, Congress is doing nothing to 
inspire confidence among America's small business women and men.
  By repealing the damaging tax hike of 1993, we would restore the 
concept of ``tax fairness'' to a system currently plagued by 
unfairness. Corporations with taxable incomes of $250 million now are 
taxed at a rate of 35 percent--up from 34 percent. At what rate is a 
small business earning $250,000 currently taxed? Almost 45 percent--up 
from 31 percent. Does this sound fair to you?
  Our bill would repeal the tax rate increases as they apply to small 
businesses, passed into law as part of the 1993 Budget Reconciliation 
Act. However, it will apply only to active trade or business income 
retained or reinvested in a small business or family farm. This bill 
will help small businesses expand, modernize and create jobs.

  Opponents of this bill will tell you the legislation will be a tax 
break for the wealthy. This is one of the oldest and most overused 
arguments in the Senate--and it simply is not true.
  Our bill was carefully crafted. Not all income is exempt. Let me 
repeat, only those profits that are reinvested or retained in the 
business or farm will be taxed at the 1992 maximum tax rate of 31 
percent, rather than the 36- and 39.6-percent rates that recently went 
into effect. Those profits also would be exempt from the 2.9 percent 
self-employment hospital insurance tax.
  This bill would not change the tax rate on wages for business owners 
or partners. In other words, profits removed from the business would be 
subject to the new tax rates. Thus, no fat cat law firm partners or 
investment bankers would get a reduced rate on the income they take 
home as some have argued.
  The President and certain Members of Congress do not seem to grasp 
the simple proposition that small businesses respond to incentives and 
disincentives. Additional taxes and more government intervention 
represent serious disincentives. Our tax code should encourage small 
businesses to start up, expand and create jobs; currently, it does just 
the opposite.
  Mr. President, this bill has nothing to do with tax breaks for the 
wealthy. It has everything to do with rewarding, not punishing, the 
small business owners who properly retain or reinvest their profits.
  Now, more than ever, small business owners need a friend--the kind of 
friend who will allow and encourage them to expand and create jobs. By 
enacting this legislation, Congress can provide entrepreneurs the kind 
of incentives they need desperately.
  I urge all of my colleagues to look beyond the rhetoric to the facts. 
If they do, they quickly will understand the benefits of the approach 
taken by this bill and support its passage.
                                 ______

      By Mr. D'AMATO (for himself, Mr. Moynihan, Mr. Inouye, Mr. 
        Cochran, and Mr. Durenberger):
  S. 2031. A bill to amend the Merchant Marine Act, 1936, to prohibit 
the imposition of additional charges or fees for attendance at the 
United States Merchant Marine Academy, and to express the sense of the 
Senate that no additional charges or fees shall be imposed for 
attendance at the United States Military Academy, the United States 
Naval Academy, the United States Air Force Academy, and the United 
States Coast Guard Academy, and for other purposes; to the Committee on 
Commerce, Science, and Transportation.


               merchant marine academy reform act of 1994

  Mr. D'AMATO. Mr. President, I rise today to offer legislation to save 
the U.S. Merchant Marine Academy, and protect the other National 
Service Academies--the U.S. Military Academy, the U.S. Naval Academy, 
the U.S. Air Force Academy, and the U.S. Coast Guard Academy.
  The legislation I am introducing would prohibit charging tuition for 
attendance at the U.S. Merchant Marine Academy at King's Point, and 
express the sense of the Senate that no additional charges or fees 
shall be imposed for attendance at the other National Service 
Academies. Charging tuition will jeopardize the Academies. When 
educational costs increase, the more affluent and not necessarily the 
most able participate in higher education programs. With respect to the 
Merchant Marine Academy, news about possibly charging tuition already 
has had a negative impact for the class entering in 1994--applications 
for admission dropped 25 percent from last year. Charging tuition would 
be devastating to the ability of the Academy to recruit top prospects. 
One of King's Point's best assets, its ethnic, racial, economic, 
geographic and gender diversity would be lost.
  The Academies educate qualified young men and women for service to 
their country. The training these men and women receive, both in the 
classroom and during their summer sea faring obligations outside of the 
classroom, prepares them to be leaders unlike any other program at any 
other institution of higher learning. Graduates are prepared to serve 
the United States in times of peace, war and national emergency.
  Mr. President, this legislation will send a clear message to the 
shipping industry of the United States that Congress stands ready to 
support this vital industry. The U.S. Merchant Marine Academy has a 
long history of providing the shipping industry with leaders to serve 
on board its vessels. If the United States is to remain a strong 
competitor in international commerce, we must support a strong merchant 
marine. The Academy at Kings Point is one of the best ways I know to 
ensure America's dominance on the high seas.
  Mr. President, I ask unanimous consent that the text of my bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2031

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TILE.

       This Act may be cited as the ``Merchant Marine Academy 
     Reform Act of 1994''.

     SEC. 2. PROHIBITION OF IMPOSITION OF ADDITIONAL CHARGES OR 
                   FEES FOR NATIONAL DEFENSE ACADEMY ATTENDANCE.

       Section 1303 of the Merchant Marine Act, 1936 (46 U.S.C. 
     App. 1295b) is amended by adding at the end the following new 
     subsection:
       ``(j) Prohibition on Fees and Charges for Attendance by 
     United States Citizens at the Merchant Marine Academy.--
       ``(1) In general.--Except as provided in paragraph (2), no 
     tuition or charge for room or board may be imposed in 
     connection with attendance at the Merchant Marine Academy by 
     an individual selected for attendance pursuant to subsection 
     (b).
       ``(2) Exception.--The prohibition specified in paragraph 
     (1) shall not apply with respect to any item or service 
     provided to midshipmen at the Merchant Marine Academy for 
     which a charge is imposed on the date of enactment of the 
     Merchant Marine Academy Reform Act of 1994.
       ``(3) Change in applicable fee.--The Secretary of 
     Transportation shall notify Congress of any change made in 
     the amount of a charge exempted by paragraph (2) from the 
     prohibition in paragraph (1).''.

     SEC. 3. SENSE OF SENATE.

       It is the sense of the Senate that no charges or fees 
     should be imposed for attendance at the United States 
     Military Academy, the United States Naval Academy, the United 
     States Air Force Academy, or the United States Coast Guard 
     Academy.

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