[Congressional Record Volume 140, Number 128 (Wednesday, September 14, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 14, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                DOD AUTHORIZATION BILL FISCAL YEAR 1995

  Mr. LAUTENBERG. Mr. President, the Senate recently approved the 
conference agreement on the DOD authorization bill for fiscal year 
1995. I am pleased the conference agreement includes a burden-sharing 
provision I offered during State debate on the bill.
  The burden-sharing provision I supported as part of this bill could 
save the American taxpayers between $1 and $2.7 billion in the upcoming 
years. The provision relates to an aspect of burden sharing that sounds 
technical, but is very tangible. It's called residual value payments. 
That isn't a household word, but it will save U.S. households money. 
Because these residual-value payments should result in the American 
people getting the cash that our allies--mostly the German Government--
owe us.
  Residual-value payments refer to the money the United States is 
supposed to get from the German Government and other European Allies in 
exchange for the infrastructure we leave behind in Europe as we 
withdraw our troops and turn our bases over to their governments. It 
refers to the billions of dollars they owe the American taxpayers in 
return for the capital we invested in military bases in Europe.
  Throughout the cold war, we stationed \1/2\ million American troops 
in Europe. In order to make sure that their military and human 
requirements were met, we spent billions of dollars on physical 
necessities: sewers, roads, housing, school buildings, and so no.
  It was a necessary investment, one that the American people supported 
and paid for. But now, as we withdraw our troops, we are leaving those 
facilities behind. The sewers and roads and houses we built for 
American troops will be there for German or French or Spanish or 
British citizens to use.
  We are not talking about nickles and dimes here, Mr. President. The 
United States invested $6.5 billion on infrastructure in NATO 
countries. But as tensions ease, our deployment has been reduced. We 
plan to cut U.S. troop strength in Europe from 323,432 in 1987 to 
100,000 by the end of 1996. As a consequence, we plan to close or 
reduce our presence at 867 military sites overseas. Most of those sites 
are in Europe, where America has already closed 434 military sites.
  Ever since this drawdown started, we have been trying to get our 
allies to pay for the physical structures we are leaving behind.
  We have not been very successful in that effort.
  Despite an investment of $6.5 billion, we have recouped only $33.3 
million in cash, and most of that was recovered in 1989.
  Although we have already turned over 60 percent of the military sites 
scheduled for closure in Germany to that Government, and although the 
value of those sites is estimated to be approximately $2.7 billion, the 
German Government has only budgeted $25 million this year to compensate 
the United States for its investment.

  Equally distressing is the fact that there has been a tendency for 
our allies to try to discharge their debt by offering us in-kind 
contributions rather than cash. In this context, an in-kind 
contribution means that our allies build something--at their expense--
that otherwise the Pentagon would have built--at our expense--as part 
of our overall security planning. In-kind contributions, while 
appreciated, do not meet our needs as well as cash. We can use cash 
payments to cut defense spending, reduce the deficit, or to lower 
taxes.
  It's a little more complicated to do that with in-kind contributions.
  What we need to do is turn these in-kind contributions into cash. I'm 
confident we can do that if we ensure they will be used, instead of tax 
dollars, for projects the Department of Defense has identified through 
the budget process as priorities.
  In-kind contributions will help reduce the deficit if they result in 
reductions in the defense budget. They will help reduce the budget if 
we can get the allies to build a project for free that we would 
otherwise ask the taxpayers to build.
  But under the current system, we don't know if the projects we accept 
through in-kind contributions are our highest budget priorities. We 
don't know that they are being used to offset costs that the taxpayers 
would otherwise be asked to incur by the Pentagon. They may benefit the 
host nation as much or more than they benefit us. Rather than being 
used to reduce the amount of money the U.S. Government needs to spend, 
in-kind projects are built in addition to those the American people 
have been asked to fund through the budget process.
  That, Mr. President, is the problem. The amendment I offered during 
Senate debate and which has been included in the conference agreement 
would help turn these in-kind contributions into tangible savings.
  Mr. President, the new law has three goals. First, it emphasizes that 
the United States is interested in a more significant cash contribution 
from the allies. In other words, we want them to pay what they owe the 
American taxpayer and to do it in cash.
  Second, if part of the burden-sharing responsibility is to be met by 
in-kind contributions, it would require that these offers of assistance 
be used in relation to projects specifically identified as priorities 
in the defense budget. This would relieve pressure on the Pentagon 
budget and the American taxpayer.
  Third, it would guard against potential wasteful spending by 
requiring that only projects approved by Congress can receive in-kind 
contributions.
  Let's look at the first goal: getting more cash.
  Mr. President, I am aware that residual-value negotiations are 
difficult. But I also believe the Department of Defense has been too 
willing to abandon negotiations for cash in favor of in-kind 
contributions. I am particularly concerned that the administration will 
too easily accept in-kind contributions from Germany, where the DOD now 
says our investment on facilities to be turned over is $2.7 billion.
  Germany clearly prefers in-kind contributions. Why wouldn't they? In-
kind contributions create a public works program in Germany, creating 
jobs for their citizens.
  The United States, though, should prefer cash payments. It is 
important to get our deficit down and provide relief to the Nation's 
taxpayers. Cash payments would help bring spending down, reduce the 
deficit, strengthen the economy, and help create jobs at home.
  It is important to keep the Western Alliance strong and in tact, but 
our allies must assume more of the burden for the collective defense. 
While our economy has lagged, and unemployment claims have taken their 
toll on the American people, our allies have been given a free ride by 
our negotiators at the expense of the American people. While we 
continue to pour money into the defense of their nations, they pour 
money into their economies. We need to invest our resources here at 
home as our allies have been doing in past years.
  Our negotiators need to change that. Unfortunately, U.S. negotiators 
have not been tough enough. They tell us that German economic problems 
and political considerations require them to settle for in-kind 
contributions. But that doesn't help us reduce spending.
  It also is not consistent with American interests or existing 
American policy. The Pentagon and our negotiators need to be tougher. 
The provision states that, as a matter of policy, the administration 
should enter negotiations with each host nation with a presumption that 
residual-value payments will be made in cash and deposited into the 
Department of Defense Overseas Military Facility Investment Recovery 
Account. It also makes it clear that the administration should only 
enter into negotiations for in-kind payments as a last resort and only 
after negotiations for cash payments have failed.
  The second goal of the provision is to reduce American spending by 
applying in-kind contributions toward our stated budget requirements. 
If we have to accept in-kind payments, then I want to make sure that, 
rather than meeting the desires of the host nation, they are used to 
pay for projects our military has identified as our own priorities 
through the budget process. That way, we cut spending and the deficit.
  Here is the point. Our allies have already agreed to pay--in-kind--
for the cost of nearly 200 million dollars' worth of projects overseas. 
In my view, that means the American taxpayer should spend $200 million 
less as a result. But I don't think they are. Instead, they're being 
asked to spend exactly what would have been proposed had the 
administration not negotiated with the allies in the first place. There 
are no savings. That should change.

  Under the current system, the Pentagon is not required to return 
directly to the U.S. taxpayers what it gets from other countries. It is 
not required to use the allies' in-kind contributions to bring 
requested spending levels down and reduce the deficit. The net result 
is more spending overall and less control of spending by the Congress. 
What the allies agree to build in Europe through in-kind contributions 
ought to be a substitute for other expenditures the Pentagon will make.
  Mr. President, let me illustrate the problem. Look at overseas 
military construction spending. The administration submitted a budget 
which asks the Congress to authorize and appropriate approximately $22 
million for military construction projects in Germany for next year. 
Although residual value negotiations should generate hundreds of 
millions of dollars' worth of in-kind contributions, the Pentagon is 
not asking the Germans to build the projects already identified as 
important through the budget process. If it did, the Pentagon could 
save the taxpayers $22 million.
  It's the same thing with the NATO infrastructure budget request. The 
Pentagon asked the American taxpayers to spend almost $230 million in 
NATO countries next year. At the same time, it is seeking hundreds of 
millions of dollars' worth of in-kind contributions from the allies for 
the debt they owe the American people. Why not let the allies pay for 
the NATO infrastructure projects rather than the American people. Let's 
let the allies pick up the tab, and give the American taxpayer a break.
  Mr. President, this issue and amendment go beyond the budget for 
fiscal year 1995. The administration notified the Congress that it will 
seek $200 million from Germany for each of 5 years for residual-value 
payments. That's $1 billion. If the administration identifies 1 billion 
dollars' worth of projects already included in its future year budget 
plans, and asks the Germans to pay for those projects--as the provision 
included in the conference agreement would require--we could save the 
American taxpayer $1 billion. That's $1 billion that could be applied 
toward deficit reduction.
  Again, the point is that our allies are apparently not being asked to 
offset hundreds of millions of dollars' worth of requirements the 
administration has asked the Congress to fund in Europe or has 
identified through the budget process. Instead, the allies are being 
asked to pay for construction projects the Pentagon says it needs, but 
have never been identified as priorities in the budget. By requiring 
the Pentagon to ask the allies to cover the cost of projects that have 
been identified in the budget, we could save hundreds of millions of 
dollars--billions down the road.
  The provision included in the conference agreement would correct this 
problem by requiring that in-kind contributions be used to offset costs 
that would otherwise be incurred by the Department of Defense and the 
American taxpayer.
  Under current law, the Pentagon is required to submit ``a written 
notice to the congressional defense committees containing a 
justification for entering into negotiations for payments-in-kind with 
the host country * * *'' before it seeks in-kind contributions. The new 
law would require the Pentagon, at the time it submits this 
justification, to let us know how the budget will be adjusted to 
reflect costs that may no longer be incurred by the United States as a 
result of the residual value payment-in-kind being sought from the 
allies.
  Thirty days before the Pentagon enters into an agreement with a host 
country to accept a burden-sharing contribution in-kind, the provision 
would require the Pentagon to notify the Congress and to certify that 
tax dollars will no longer be necessary as a result of the allies 
burden-sharing in-kind contribution.
  The third goal is to protect against wasteful spending by requiring 
congressional approval of these burden-sharing contributions made in-
kind.
  Mr. President, the Congress is required to approve military 
construction projects by law. It is not the role of the German 
Government or any foreign government to set our budget priorities. If 
residual-value payments were secured in cash from the allies, the 
Congress would authorize and appropriate those funds. We could help 
bring defense spending down and reduce the deficit by applying those 
dollars to projects included in the administration's budget request. 
The Congress should play the same role in approving military 
construction projects secured as in-kind contributions.
  There has been abuse in the system even with congressional oversight. 
Without congressional oversight and with billions of dollars' worth of 
in-kind projects at stake, we do more than invite waste, fraud, and 
abuse--we virtually require it.
  Look at what happened at the Ramstein Air Base in Germany in the late 
1980's. In 1989 the Department of Defense Office of the Inspector 
General found that the Ramstein Air Base had inappropriately used 
taxpayer money at officers clubs to buy a $6,800 snooker table, to buy 
party equipment--like cocktail, champagne, and wine glasses--and to 
upgrade the officers club.
  I'd like to keep Ramstein Air Base a unique example. I fear it will 
be all too common unless we get control over the use of the purposes 
for which in-kind contributions can be used.
  I am not suggesting that we shouldn't give our military the kind of 
facilities they deserve. That isn't the point. The point is simply that 
even with oversight, fraud can happen. Wasteful spending can slip 
through the cracks. The system can be abused. Imagine what could happen 
with little or no congressional oversight.
  Under the new law, the Congress will have a greater oversight and 
approval role. Currently, we have none. Thirty days before the Pentagon 
accepts a burden-sharing payment through an in-kind contribution, it 
must submit it to the Congress for review. Based on a letter from the 
Comptroller I previously submitted for the record, I expect the 
mandated notification to be submitted in a manner consistent with 
current notification reprogramming procedures.

  Given this system, we will have at least 30 days to scrutinize the 
project and have the opportunity to disapprove if we do not believe it 
is meritorious or in the national interest.
  Mr. President, we have carried the burden of defending Europe for 
generations. We have created a safe environment that has allowed 
European economies to flourish. Maybe there is no way to get our allies 
to pay as much as they should. But, Mr. President, we must do better.
  We must ensure that burdensharing inkind payments reduce the Federal 
deficit. We must ensure that burden-sharing inkind payments benefit the 
United States, because our allies sure do benefit. Instead of paying us 
for what they are getting, they are in essence paying themselves: They 
are putting their people to work, they are improving structures they 
may ultimately inherit. They are making the decisions, and we are still 
footing the bill.
  Mr. President, the provision included in this conference agreement 
has been endorsed by the Citizens Against Government Waste. I ask that 
a copy of a letter from this organization be inserted in the Record at 
the conclusion of my remarks.
  (See exhibit 1.)
  Mr. LAUTENBERG. The provision reiterates U.S. burdensharing policies 
which look to our allies to pay their fair share for their defense. 
That fair share amounts to billions. It requires that our Government 
use contributions by the allies to reduce the deficit and bring our 
spending down. And, it puts on record against potential wasteful 
spending of billions owed to the American people. I am pleased it has 
been included in the final version of this legislation.

                               Exhibit 1

                                              Council for Citizens


                                     Against Government Waste,

                                    Washington, DC, July 29, 1994.
     Hon. Frank Lautenberg,
     Hon. Larry Pressler,
     U.S. Senate,
     Washington, DC.
       Dear Senators Lautenberg and Pressler: On behalf of the 
     Council for Citizens Against Government Waste (CCAGW), we 
     support the burden sharing amendment you successfully offered 
     to the Department of Defense Authorization bill, H.R. 4301. 
     We urge the conferees to keep this fiscally responsible 
     amendment in the bill.
       We share a common goal. The Cold War is over and it is time 
     to focus like a laser beam on a new national security risk--
     America's $4.6 trillion debt. CCAGW has been battling this 
     enemy for nearly ten years, and time is running out if our 
     nation is going to continue to prosper as it has in this 
     century. The only way America can continue to provide for the 
     common defense is to pass legislation that addresses our 
     nation's fiscal concerns.
       Your amendment has teeth. According to the Congressional 
     Budget Office, during the next decade, your burden sharing 
     amendment could save between $1 and $2.7 billion for the 
     taxpayers. It would ensure that the allies--mostly the German 
     government--pay the American taxpayer for bearing the brunt 
     of the defense burden for the last 50 years. In addition, the 
     Lautenberg-Pressler amendment is ``fiscally correct'' by 
     requiring burden sharing payments to relieve pressure on the 
     deficit. It also provides congressional oversight to guard 
     against wasteful spending.
       CCAGW supports this burden sharing amendment and urges the 
     House of Representatives to support it as well.
           Sincerely,
     Tom Schatz.

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