[Congressional Record Volume 141, Number 40 (Friday, March 3, 1995)]
[Senate]
[Pages S3466-S3476]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. KYL (for himself, Mr. Grams, Mr. Abraham, and Mr. Craig):
  S. 494. A bill to balance the Federal budget by fiscal year 2002 
through the establishment of Federal spending limits; to the Committee 
on the Budget and the Committee on Governmental Affairs, jointly, 
pursuant to the order of August 4, 1977, with instructions that if one 
Committee reports, the other Committee have thirty days to report or be 
discharged.


          the balanced budget/spending limitation act of 1995

  Mr. KYL. Mr. President, I rise today with my colleagues, Rod Grams, 
Spencer Abraham, and Larry Craig to introduce the Balanced Budget/
Spending Limitation Act of 1995, a bill designed to balance the budget 
by fiscal year 2002, through the establishment of Federal spending 
limits and sequestration. An identical bill is being introduced in the 
House of Representatives by Representatives Jim McCrery and Mel 
Hancock.
  The Balanced Budget/Spending Limitation Act establishes a mechanism 
to limit spending and enforce limits. It establishes a Federal spending 
limit as 21.5 percent of the gross domestic product in fiscal year 
1996, declining one-half percent of GDP per year to 19 percent in 
fiscal year 2001.
  In subsequent years, Federal spending would have to balance with 
revenue but could not exceed 19 percent of the gross domestic product. 
Any excess of spending over receipts or the Federal spending limits 
would be eliminated by sequesters, including a new fiscal year start 
sequester designed to hold a fiscal year's spending accountable for any 
actual deficit in the prior year.
  The Federal spending limits in the Balanced Budget/Spending Limit Act 
are established in recognition of the fact, as the Senator from Idaho 
said a moment ago, that revenues have fluctuated only within the narrow 
bands of 18 to 20 percent of the gross domestic product for the last 40 
years, despite tax increases, tax cuts, economic contractions, and 
expansions and fiscal policies pursued by Presidents of both parties.
  In effect, the economy has already imposed an effective limit on how 
much revenue the Federal Government can raise--19 percent of the gross 
domestic product, exactly the level of today. While tax rate increases 
and tax cuts may produce temporary surges and declines in revenue, 
revenues always adjust at about 19 percent of GDP, and that is because 
changes in the Tax Code affect people's behavior. Higher taxes 
discourage work, production, savings, and investment, slowing economic 
growth. And with less economic activity to tax, of course, revenues to 
the Treasury are never as great as the tax writers expect.
  On the other hand, lower tax rates stimulate work, production, 
savings, and investment so revenues to the Treasury increase even at 
lower tax rates.
  With that in mind, the only way that Congress really can ever balance 
the budget is to ratchet spending as a share of GDP down to the level 
of revenues the economy has historically been willing to bear--19 
percent of GDP.
  Limit spending, and there is no need for Congress to consider tax 
rate increases. It would not be allowed to spend any additional revenue 
that it raised. Besides, as reflected in historical trends, tax rate 
increases are more likely to slow economic growth than produce 
additional revenue relative to the gross domestic product.
  Link spending to economic growth, as measured in terms of GDP, and a 
positive incentive is created for Congress to support pro-growth 
economic policies. The more the economy grows, the more Congress is 
allowed to spend, although always proportionate to the size of the 
Nation's economy. In other words, 19 percent of a larger GDP represents 
more revenue to the Treasury and, thus, more than Congress is allowed 
to spend, than 19 percent of a smaller GDP.
  The advantages of the Federal spending limits are thus threefold.
  First, it will get us to a balanced budget by limiting spending, not 
increasing tax rates; second, it will shrink Government relative to the 
size of the economy; and third, it gives Congress a strong incentive to 
support policies that will keep the economy healthy and strong, 
policies of less taxation, less regulation and less spending that the 
American people are demanding anyway.
  For those Members of the Senate who voted against the balanced budget 
amendment saying Congress could do the job if it only had the courage 
and the will, well, here is your chance. For those who express concern 
about Social 
[[Page S3467]] Security, this bill provides for protection of the trust 
funds that we promised during the debate on the balanced budget 
amendment. The balanced budget amendment will never be a threat to 
Social Security.
  Mr. President, with or without a balanced budget amendment, deficit 
spending must stop. We know that. The economic security of the Nation 
is at stake. The future of our children and our grandchildren is at 
stake as a result of the mountain of debt Congress is leaving behind.
  This bill we are introducing today defines the glidepath and includes 
the enforcement mechanism to get the budget to balance, and I am going 
to urge its prompt consideration by this body so that we can 
immediately demonstrate to the State legislatures, to the people of 
this country and, frankly, to many of our colleagues who did not 
support the balanced budget amendment yesterday that we mean business, 
that we mean to balance this budget by the year 2002 and that we are 
prepared to begin the steps to achieve that goal. One of the first 
steps should be the adoption of legislation such as this to establish 
the framework for achieving our goal.
                                 ______

      By Mrs. KASSEBAUM:
  S. 495. A bill to amend the Higher Education Act of 1965 to stabilize 
the student loan programs, improve congressional oversight, and for 
other purposes; to the Committee on Labor and Human Resources.


           the student loan evaluation and stabilization act

 Mrs. KASSEBAUM. Mr. President, I introduce the Student Loan 
Evaluation and Stabilization Act. Similar legislation has been 
introduced in the House by Congressman Goodling and others.
  The provisions of this bill are designed to accomplish four main 
goals:
  First, to cap the direct loan program at 40 percent of student loan 
volume;
  Second, to correct problems in the budget scoring process which 
result in an inaccurate accounting of the full costs of the direct loan 
program;
  Third, to clarify congressional intent on a number of provisions of 
the legislation which established the direct loan program; and
  Fourth, to level the playing field with respect to direct loans and 
guaranteed loans so that they can be evaluated based on real 
differences in the administration, efficiency, and effectiveness 
between the two programs.
  It is no secret that I have serious reservations and concerns about 
the direct loan program enacted into law last Congress in the Omnibus 
Budget Reconciliation Act, otherwise known as OBRA 1993.
  I am troubled that the President is proposing a further expansion of 
this program in his fiscal year 1996 budget request. This proposal, 
which would institute 100 percent direct lending by academic year 1997-
98, amounts to a total Federal takeover of a successful public/private 
sector partnership--the Student Loan Program. This approach stands in 
stark contrast to the ``reinventing'' Government message promoted by 
Vice President Gore, where the focus is on privatizing more Federal 
functions and reducing the size of the Federal Government.
  I can support a demonstration of a direct loan program, but I believe 
that the small 5-percent demonstration included in the Higher Education 
Act Amendments of 1992 was adequate. I believe that OBRA 1993 went far 
beyond a demonstration in allowing for the eventual replacement of 60 
percent of the Federal guaranteed student loan program with a direct 
loan program.
  Thus, my legislation would cap the direct lending program at the 
level specified in current law for the second year of the program--
permitting up to 40 percent of the total student loan volume to be made 
through direct Government loans. All schools which signed participation 
agreements with the Department of Education in 1994 to enter the 
program in July of this year will be able to enter the program, but the 
program will not expand beyond this level until Congress authorizes 
such an expansion.
  Restoring the direct loan program to a more appropriate demonstration 
level will allow for a more thoughtful evaluation and comparison of the 
guaranteed Federal Family Education Loan [FFEL] Program and the Federal 
Direct Student Loan [FDSL] Programs. It will allow both programs to 
operate with continued stability until Congress has enough information 
to determine which program is more effective and cost-efficient for 
students, institutions of higher education, and taxpayers.
  Through the reconciliation process, the 103d Congress made a 
substantial change in the student loan program without the benefit of 
comprehensive hearings or debate or of any evaluation results of the 
direct loan demonstration included in the 1992 higher education 
amendments.
  This change was made in order to take advantage of the current budget 
treatment of direct loans--which produces an inaccurate picture of its 
true budgetary consequences because certain direct loan costs are 
excluded in the scoring. These distortions have been well-documented by 
the Congressional Budget Office. It is unfortunate that serious policy 
decisions were driven by a budget process which hid the true costs of 
this program.
  As evidence of this shell game, the Department of Education has 
criticized the companion bill introduced by Representative Goodling 
stating that it would increase costs or budget outlays by $4.9 billion 
because the bill would change the budget scoring process. The 
Department's analysis notes that this change in the scoring process 
``does not change the long-term cost of the Direct Loan program, it 
only changes when those costs are scored for budgetary purposes.''
  This analysis illustrates the frustrating situation we face in 
getting a handle on the real costs of direct lending. What the 
materials developed by the Department say, in effect, is that current 
scoring practices undercount $4.9 billion in costs for the current 
direct loan program! Moving to 100 percent direct lending to claim more 
savings, as proposed by the President, will only compound the problem. 
We cannot and should not continue to operate in this type of budgetary 
Fantasyland.
  The Department's criticism is also disingenuous because a change in 
scoring would not increase costs or force the Congress to pay for the 
scoring change. It would simply allow the direct and guaranteed student 
loan programs to be scored in the same manner so we can truly compare 
the costs of the two programs.
  Therefore, I have included in this legislation an amendment to the 
Congressional Budget Act that would provide a more accurate comparison 
of direct and guaranteed student loans.
  The bill also clarifies congressional intent with respect to several 
provisions of the direct loan authorization legislation. Specifically:
  First, my legislation specifies that direct consolidation loans are 
intended to be offered only to students with guaranteed loans who 
cannot obtain consolidation loans or income-contingent repayment from 
participating guaranteed loan lenders. This clarification is important, 
as the administration is in the process of developing a plan that could 
result in transferring millions of dollars worth of guaranteed loans 
into the direct loan program through the direct consolidation loan 
program. The magnitude of this program, as well as the circumstances 
under which the administration envisions it would apply, goes far 
beyond congressional intent in providing authority for consolidation 
loans.
  Second, the bill makes clear that Department officials must calculate 
default rates for direct lending schools just as they do for guaranteed 
loan schools. To date, Department officials have not indicated how they 
will calculate default rates for direct loan schools or for students 
that select income-contingent loan repayment. Many schools with high or 
rising default rates entered the direct loan program because they saw 
this as a way to escape penalties for high default rates or to reduce 
their default rates.
  Third, in order to determine the effect of income-contingent 
repayment on institutional cohort default rates, the bill also requires 
the Department to report various data on loans being repaid through 
such repayment.
  Finally, the bill clarifies certain provisions of the law which the 
Department has interpreted and implemented in a way that gives direct 
lending an edge over the guaranteed loan program. True comparisons 
between the two programs are not possible with such differences. Thus, 
my bill levels 
[[Page S3468]] the playing field between the two programs.
  Having described what my bill does, I would also like to clarify what 
the bill does not do.
  First, the changes that I am proposing will have no effect on student 
access to Federal loans, on the costs of those loans to students, or on 
the amount that students may borrow. There is a widespread 
misconception that the direct loan program offers lower fees and 
interest rates than those available to guaranteed loan borrowers. This 
is simply not the case.
  The issue in this debate is who should be making the loans and 
providing the capital--the Federal Government or the private sector. 
The issue is not the availability or cost of loans to students.
  Second, my legislation will not reduce the number of repayment 
options available to students. The repayment options available to 
students in the guaranteed loan program are virtually identical to 
those in the direct loan program. Students have multiple repayment 
options available to them in both programs--including options to repay 
over longer periods of time or to make smaller initial payments which 
gradually increase over time as earnings increase.
  In fact, my bill will increase the number of repayment options 
available by permitting students in the guaranteed loan program to 
repay their loans based on their incomes--an option now available only 
to students participating in the direct loan program. I would hope that 
students would exercise caution in selecting this option, given that it 
could greatly increase the amount they end up repaying. However, I feel 
the option should be made available to both guaranteed and direct loan 
student borrowers--many of whom may otherwise default on their loans.
  As the legislative process continues, I will be keeping an open mind 
to other program changes designed to maximize the benefits of private 
sector participation in the Federal student lending program while 
holding down the costs to taxpayers. These changes could include steps 
such as increased risk-sharing by lenders and guaranty agencies--
coupled with relief from burdensome and unnecessary regulations.
  It is my hope that Congress can act promptly to correct the problems 
I have identified, so that decisions regarding Federal student loans 
can be made on the basis of sound policy rather than on flawed budget 
scoring procedures.
  Mr. President, I ask unanimous consent that the text of the bill and 
additional material be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 S. 495

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

     SECTION 1. SHORT TITLE; REFERENCES.

       (a) Short Title.--This Act may be cited as the ``Student 
     Loan Evaluation and Stabilization Act of 1995''.
       (b) References.--References in this Act to ``the Act'' are 
     references to the Higher Education Act of 1965 (20 U.S.C. 
     1001 et seq.).

     SEC. 2. FINDINGS.

       The Congress finds that:
       (1) The current public/private student loan partnership is 
     fulfilling the mission set for it by Congress, delivering 
     loans to students reliably and in a timely fashion, and 
     should be preserved.
       (2) The Administration's dismantling of the Federal Family 
     Education Loan (FFEL) Program which has begun in order to 
     replace it with an unproven direct Government lending 
     program, which increases the Federal debt, further enlarges 
     the Federal bureaucracy, adds major new financial oversight 
     activities to the already overburdened Department of 
     Education, and forces Congress to depend on estimated budget 
     savings which may prove illusory, needs to be stopped so that 
     a true and valid comparison of the student loan programs can 
     occur.
       (3) The Federal Direct Student Loan (FDSL) Program pilot is 
     only now getting started and has proceeded fairly smoothly 
     when dealing with 5 percent of new loan volume. This slow and 
     cautious approach should be continued as the volume increases 
     to 40 percent. This pilot program should continue to proceed 
     slowly and cautiously and demonstrate successful results 
     before expanding it to additional loan volume.
       (4) While the FDSL Program pilot continues its test phase, 
     reform of the FFEL Program which will benefit students and 
     institutions of higher education, should be a continuing 
     priority for the Department of Education.

     SEC. 3. PARTICIPATION OF INSTITUTIONS AND ADMINISTRATION OF 
                   DIRECT LOAN PROGRAMS.

       (a) Limitation on Proportion of Loans Made Under the Direct 
     Loan Program.--Section 453(a) of the Act (20 U.S.C. 1087c(a)) 
     is amended--
       (1) by amending paragraph (2) to read as follows:
       ``(2) Determination of Number of Agreements.--In the 
     exercise of the Secretary's discretion, the Secretary shall 
     enter into agreements under subsections (a) and (b) of 
     section 454 with institutions for participation in the 
     programs under this part, subject to the following:
       ``(A) for academic year 1994-1995, loans made under this 
     part shall represent 5 percent of new student loan volume for 
     such year; and
       ``(B) for academic year 1995-1996 and for any succeeding 
     fiscal year, loans made under this part shall represent 40 
     percent of new student loan volume for such year, except that 
     the Secretary may not enter into agreements under subsections 
     (a) and (b) of section 454 with any additional eligible 
     institutions that have not applied and been accepted for 
     participation in the program under this part on or before 
     December 31, 1994.''.
       (2) by striking paragraph (3); and
       (3) by redesignating paragraph (4) as paragraph (3).
       (b) Elimination of Conscription.--Section 453(b)(2) of the 
     Act is amended--
       (1) by striking subparagraph (B);
       (2) by redesignating subparagraphs (A)(i) and (A)(ii) as 
     subparagraphs (A) and (B) respectively; and
       (3) in such subparagraph (B) (as so redesignated) by 
     striking ``clause (i); and'' and inserting ``subparagraph 
     (A).''.
       (c) Control of Administrative Expenses.--
       (1) Administrative Expenses.--Section 458(a) of the Act is 
     amended to read as follows:
       ``(a) In General.--For each fiscal year, there shall be 
     available to the Secretary from funds not otherwise 
     appropriated, funds for all direct and indirect expenses 
     associated with the Direct Student Loan program under this 
     part.''
       (2) Improved congressional oversight of administration.--
     (A) Section 458(b) of the Act is amended to read as follows:
       ``(b) Funding Triggers.--For each fiscal year, funds 
     available under this section may be obligated only in such 
     amounts and according to such schedule as specified in the 
     appropriations Act for the Department of Education of a 
     detailed proposal of expenditures under this section.''.
       (B) Section 458(d) of the Act is amended to read as 
     follows:
       ``(d) Quarterly Report.--The Secretary shall provide a 
     detailed quarterly report of all monies expended under this 
     section to the Chairman of the Committee on Labor and Human 
     Resources of the Senate and the Chairman of the Committee on 
     Economic and Educational Opportunities of the House of 
     Representatives. Such report shall specifically identify all 
     contracts entered into by the Department for services 
     supporting the loan programs under parts B and D of this 
     title and the current and projected costs of such 
     contracts.''
       (3) Administrative cost allowance.--Section 428(f) of the 
     Act is amended--
       (A) in subsection (A) by striking out ``For a fiscal year 
     prior to fiscal year 1994, the'' and inserting in lieu 
     thereof ``The''; and
       (B) by inserting after the first sentence of subsection (B) 
     the following new sentence:
       ``For fiscal year 1996 and each succeeding fiscal year, 
     each guaranty agency shall elect to receive an administrative 
     cost allowance, payable quarterly, for such fiscal year 
     calculated on the basis of either of the following:
       ``(i) 0.85 percent of the total principal amount of the 
     loans upon which insurance was issued under part B during 
     such fiscal year by such guaranty agency; or
       ``(ii) 0.08 percent of the original principal amount of 
     loans guaranteed by the guaranty agency that was outstanding 
     at the end of the previous fiscal year.''
       (d) Elimination of Transition to Direct Loans.--The Act is 
     further amended--
       (1) in section 422(c)(7)--
       (A) by striking ``during the transition'' and all that 
     follows through ``part D of this title'' in subparagraph (A); 
     and
       (B) by striking ``section 428(c)(10)(F)(v)'' in 
     subparagraph (B) and inserting ``section 428(c)(9)(F)(v)'';
       (2) in section 428(c)(8)--
       (A) by striking ``(A)'' after the paragraph designation; 
     and
       (B) by striking subparagraph (B);
       (3) in section 428(c)(9)(E)--
       (A) by inserting ``or'' after the semicolon at the end of 
     clause (iv);
       (B) by striking``; or'' at the end of clause (v) and 
     inserting a period; and
       (C) by striking clause (vi);
       (4) in clause (vii) of section 428(c)(9)(F)--
       (A) by inserting ``and'' before ``to avoid disruption''; 
     and
       (B) by striking ``, and to ensure an orderly transition'' 
     and all that follows through the end of such clause and 
     inserting a period;
       (5) in section 428(c)(9)(K), by striking ``the progress of 
     the transition from the loan programs under this part to'' 
     and inserting ``the integrity and administration of'';
       (6) in section 428(e)(1)(B)(ii), by inserting ``during the 
     transition'' and all that follows through ``part D of this 
     title'';
       [[Page S3469]] (7) in section 428(e)(3), by striking ``of 
     transition'';
       (8) in section 428(j)(3)--
       (A) by striking ``during transition to direct lending'' in 
     the heading of paragraph (3); and
       (B) by striking ``during the transition'' and all that 
     follows through ``part D of this title,'' and inserting a 
     comma;
       (9) in section 453(c)(2), by striking ``transition'' and 
     inserting ``institutional'' in the heading of paragraph (2);
       (10) in section 453(c)(3), by striking ``after transition'' 
     in the heading of paragraph (3); and
       (11) in section 456(b)--
       (A) by inserting ``and'' after the semicolon at the end of 
     paragraph (3);
       (B) by striking paragraph (4);
       (C) by redesignating paragraph (5) as paragraph (4); and
       (D) in such paragraph (4) (as redesignated), by striking 
     ``successful operation'' and inserting ``integrity and 
     efficiency.''
     SEC. 4 DIRECT LOANS HAVE THE SAME TERMS AND CONDITIONS AS 
                   FEDERAL FAMILY EDUCATION LOANS.

       (a) In General.--Section 455(a)(1) of the Act (20 U.S.C. 
     1087e(a)(1)) is amended to read as follows:
       ``(1) Parallel Terms, Conditions, Benefits and Amounts.--
     Unless otherwise specified in this part, loans made to 
     borrowers under this part shall have the same terms, 
     conditions, eligibility requirements and benefits, and be 
     available in the same amounts, as the corresponding types of 
     loans made to borrowers under section 428, 428B, 428C and 
     428H of this title.''.
       (b) Direct Consolidation Loans.--Section 455(a)(2) of the 
     Act is amended--
       (1) by striking ``and'' at the end of subparagraph (B);
       (2) by redesignating subparagraph (C) as subparagraph (D); 
     and
       (3) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) section 428C shall be known as `Federal Direct 
     Consolidation Loans'; and''.

     SEC. 5. ABILITY OF BORROWERS TO CONSOLIDATE UNDER DIRECT AND 
                   GUARANTEED LOANS PROGRAMS.

       (a) Ability of Part D Borrowers to Obtain Federal Stafford 
     Consolidation Loans.--Section 428C(a)(4) of the Act (20 
     U.S.C. 1078-3(a)(4)) is amended--
       (1) by striking ``or'' at the end of subparagraph (B);
       (2) by redesignating subparagraphs (C) and (D) as 
     subparagraphs (D) and (E); and
       (3) by inserting after subparagraph (B) the following new 
     subparagraph:
       ``(C) made under part D of this title;''.
       (b) Ability of Part B Borrowers to Obtain Federal Direct 
     Consolidation Loans.--Section 428C(b)(5) of the Act is 
     amended to read as follows:
       ``(5) Direct Consolidation Loans for Borrowers in Specified 
     Circumstances.--(A) The Secretary may offer a borrower a 
     direct consolidation loan if a borrower otherwise eligible 
     for a consolidation loan pursuant to this section is--
       ``(i) unable to obtain a consolidation loan from a lender 
     with an agreement under subsection (a)(1); or
       ``(ii) unable to obtain a consolidation loan with an income 
     contingent repayment schedule from a lender with an agreement 
     under subsection (a)(1).
       ``(B) The Secretary shall establish appropriate 
     certification procedures to verify the eligibility of 
     borrowers for loans pursuant to this paragraph.
       ``(C) The Secretary shall not offer such consolidation 
     loans if, in the Secretary's judgment, the Department of 
     Education does not have the necessary origination and 
     servicing arrangement in place for such loans, or the 
     projected volume in the program would be destabilizing to the 
     availability of loans otherwise available under this part.''.

     SEC. 6. INCOME CONTINGENT REPAYMENT IN THE FEDERAL FAMILY 
                   EDUCATION LOAN PROGRAM.

       (a) Insurance Program Agreement.--Section 428(B)(1)(E)(i) 
     of the Act (20 U.S.C. 1078(b)(1)(E)(i)) is amended by 
     striking ``or income-sensitive repayment schedule'' and 
     inserting in lieu thereof ``repayment schedule or either an 
     income-sensitive or income contingent repayment schedule''.
       (b) Repayment Schedules.--Section 428(c)(A) of the Act is 
     amended by striking ``or income-sensitive repayment 
     schedules'' and inserting in lieu thereof ``repayment 
     schedules or either income sensitive or income contingent 
     repayment schedules''.
       (c) Definitions.--Section 435 of the Act is amended by 
     adding a new subsection (n):
       ``(n) Income Contingent Repayment Schedules.--For the 
     purpose of this part, income contingent repayment schedules 
     established pursuant to section 428(b)(1)(E)(i) and 
     428(c)(2)(A) may have terms and conditions comparable to 
     terms and conditions established by the Secretary pursuant to 
     section 45(e)(4).''.

     SEC. 7. RESERVE FUND REFORMS.

       (a) Guaranty Agency Reserve Levels.--Section 428(c)(9) of 
     such Act (20 U.S.C. 1078(c)(9)) is amended--
       (1) in subparagraph (E)--
       (A) by striking ``The Secretary'' and inserting ``After 
     notice and opportunity for hearing on the record, the 
     Secretary''; and (2) in subparagraph (F)--
       (A) by inserting ``dedicated to the functions of the agency 
     under the loan insurance program under this part'' after 
     ``assets of the guaranty agency'' in clause (vi); and
       (B) in clause (vi), by inserting before ``; or'' the phrase 
     '', except that the Secretary may not take any action to 
     require the guaranty agency to provide to the Secretary the 
     unencumbered non-Federal portion of a reserve fund (as 
     defined in section 422(a)(2))''.
       (b) Additional Amendments.--Section 422 of the Act is 
     further amended--
       (1) in the last sentence of subsection (a)(2), by striking 
     ``Except as provided in section 428(c)(10) (E) or (F), such'' 
     and inserting ``Such'';
       (2) in subsection (g), by striking paragraph (4) and 
     inserting the following:
       ``(4) Disposition of funds returned to or recovered by the 
     secretary.--Any funds that are returned to or otherwise 
     recovered by the Secretary pursuant to this subsection shall 
     be retuned to the Treasury of the United States for purposes 
     of reducing the Federal debt and shall be deposited into the 
     special account under section 3113(d) of title 31, United 
     States Code.''.

     SEC. 8. DEFAULT RATE LIMITATIONS ON DIRECT LENDING.

       (a) Ineligibility Based on Default Rates.--Section 
     435(a)(2) of the Act (20 U.S.C. 1085(a)(2)) is amended by 
     inserting ``or part D'' after ``under this part''.
       (b) Cohort Default Rate.--Section 435(m)(1) of the Act is 
     amended by:
       (1) striking ``428, 428A, or 428H'' in paragraph (A) and 
     inserting ``428, 428A, 428H, or part D of the Act (except for 
     Federal Direct PLUS Loans)'';
       (2) striking ``428C'' in paragraph (A) and inserting ``428C 
     or 455(g)'';
       (3) striking ``428C'' in paragraph (C) and inserting ``428C 
     or 455(g)''; and
       (4)(A) in paragraph (B), by striking ``only''; and
       (B) in paragraph (B) by inserting ``and loans made under 
     part D determined to be in default,'' after ``for 
     instance.''.
       (c) Income Contingent Repayment.--Section 435(m) of the Act 
     is amended by adding at the end thereof the following new 
     paragraph:
       ``(5)(A) The Secretary shall produce an annual report on 
     loans subject to repayment schedules under sections 
     428(b)(1)(E)(i), 428C(c)(2)(A), and 455(e)(4) at the end of 
     each fiscal year detailing, by institution and for the title 
     IV, part B and D programs separately and together--
       ``(i) the number and amount of loans scheduled for payments 
     that did not equal the interest accruing on the loan,
       ``(ii) the number and amount of loans where no payment was 
     scheduled to be received from the borrower due to their low-
     income status,
       ``(iii) the number and amount of loans where a scheduled 
     payment was more than 90 days delinquent, and
       ``(iv) the projected amount of interest and principal to be 
     forgiven at the end of the 25 year repayment period, based on 
     the projected payment schedule for the borrower over that 
     period.
       ``(B) Such report shall be made available at the same time 
     as the reports required under section 435(m)(4) of this 
     Act.''.
       (d) Termination of Institutional Participation.--Section 
     455 of the Act is amended by adding at the end the following 
     new subsection:
       ``(k) Termination of Institutions for High Default Rates.--
       ``(l) Methodology and criteria.--After consultation with 
     institutions of higher education and other members of the 
     higher education community, the Secretary shall develop--
       ``(A) a methodology for the calculation of institutional 
     default rates under the loan programs operated pursuant to 
     this part;
       ``(B) criteria for the initiation of termination 
     proceedings on the basis of such default rates; and
       ``(C) procedures for the conduct of such termination 
     proceedings.
       ``(2) Comparability to part b.--In developing the 
     methodology, criteria, and procedures required by paragraph 
     (1), the Secretary shall, to the maximum extent possible, 
     establish standards for the termination of institutions from 
     participation in loan programs under this part that are 
     comparable to the standards established for the termination 
     of institutions from participation in the loan programs under 
     part B. Such procedures shall also include provisions for the 
     appeal of default rate calculations based on deficiencies in 
     the servicing of loans under this part that are comparable to 
     the provisions for such appeals based on deficiencies in the 
     servicing of loans under part B.''.
       ``(3) Limitation on authorization to issue new loans under 
     this part.--Such standards and procedures required by 
     paragraphs (1) and (2) shall be promulgated in final form no 
     later than 120 days after date of enactment of this 
     paragraph. Notwithstanding any other provision of this part, 
     no new loan under this part shall be issued after 120 days 
     after the date of enactment of this paragraph if the 
     standards and procedures required under this section have not 
     been promulgated prior to that date. The authority to issue 
     new loans under this part shall resume upon the Secretary's 
     issuance of such standards and procedures.''
     SEC. 9. USE OF ELECTRONIC FORMS.

       Section 484(a) of the Act (20 U.S.C. 1091b(a)) is amended 
     by adding the following new paragraph after paragraph (a)(4):
       ``(5) Electronic Forms.--(A) Nothing in this Act shall 
     preclude the development, production, distribution or use of 
     the form described in subsection (a)(1) in an electronic 
     [[Page S3470]] format through software produced or 
     distributed by guaranty agencies or eligible lenders, or 
     consortia thereof. Such electronic form need not require the 
     signature of the applicant to be collected at the time the 
     form is submitted, if the applicant certifies the output of 
     the application in a subsequent document. No fee may be 
     charged in connection with use of the electronic form 
     described in subsection (a)(1).
       ``(B) The Secretary shall approve the use of an electronic 
     form submitted for approval that is not inconsistent with the 
     provisions of this part or part B within 30 days of such 
     submission. In the case of any electronic form not approved, 
     the Secretary shall specifically identify the changes to the 
     form necessary to secure approval.''.

     SEC. 10. APPLICATION FOR PART B LOANS USING FREE FEDERAL 
                   APPLICATION.

       Secton 483(a) of the Act (20 U.S.C. 1090(a)) is amended--
       (1) in paragraph (1)--
       (A) by inserting ``B,'' after ``assistance under parts 
     A,'';
       (B) by striking ``part A) and to determine the need of a 
     student for the purpose of part B of this title'' and 
     inserting ``part A).''; and
       (C) by striking the last sentence and inserting the 
     following: ``Such form may be in an electronic or any other 
     format (subject to section 485B) in order to facilitate use 
     by borrowers and institutions.''; and
       (2) in paragraph (3), by striking ``and States shall 
     receive,'' and inserting'', any guaranty agency authorized by 
     any such institution, and States shall receive, at their 
     request and''.

     SEC. 11. CREDIT REFORM.

       (a) Amendment.--Section 502(5)(B) of the Congressional 
     Budget Act (31 U.S.C. 661a(5)(B)) is amended to read as 
     follows:
       ``(B) The cost of a direct loan shall be the net present 
     value, at the time when the direct loan is disbursed, of the 
     following cash flows for the estimated life of the loan:
       ``(i) Loan disbursements.
       ``(ii) Repayments of principal.
       ``(iii) Payments of interest and other payments by or to 
     the Government over the life of the loan after adjusting for 
     estimated defaults, prepayments, fees, penalties, and other 
     recoveries.
       ``(iv) In the case of a direct student loan made pursuant 
     to the program authorized under part D of title IV of the 
     Higher Education Act of 1965, direct and indirect expenses, 
     including but not limited to the following: expenses arising 
     from credit policy and oversight, activities related to 
     credit extension, loan origination, loan servicing, training, 
     program promotion and payments to contractors, other 
     Government entities, and program participants, collection of 
     delinquent loans, and write-off and close-out of loans.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     of this section shall apply to all fiscal years beginning on 
     or after October 1, 1995, and to statutory changes made on or 
     after the date of enactment of this Act.
                                                                    ____

                           Summary of S. 495

       The bill will do four basic things:
       (1) Cap the direct loan program at 40 percent of student 
     loan volume.
       (a) This allow for the continued implementation of the 
     Federal Direct Student Loan Program (FDSL) at the loan volume 
     currently authorized for the second year of the program 
     (beginning July 1995).
       (b) It provides for the continued stability of the Federal 
     Family Education Loan Program (FFELP--previously known as the 
     Guaranteed Student Loan or the Stafford and PLUS loan 
     programs).
       (c) It improves congressional oversight of administrative 
     expenditures.
       (2) Improve the accuracy of the budget scoring process.
       The bill revises the Congressional Budget Act so that 
     budget scoring will be fair and accurate when determining and 
     comparing costs associated with the FFELP loan program and 
     the direct lending program.
       (3) Clarify congressional intent with respect to provisions 
     of the law establishing the direct loan program.
       (a) Clarifies that direct consolidation loans are intended 
     to be offered only to those students who cannot obtain 
     consolidation loans or income-contingent repayment from 
     participating lenders.
       (b) Clarifies that default rates should be calculated for 
     direct lending schools as they are for FFELP loan schools.
       (c) Also requires the reporting of data on direct loans 
     being repaid through income-contingent repayment in order to 
     determine the effect of such repayment on cohort default 
     rates.
       (4) Make the FDSL and FFELP programs more comparable so 
     that they can be evaluated based on ``real'' differences 
     between the administration, efficiency, and effectiveness of 
     the two programs.
       (a) Clarify that the guaranteed loan program and the direct 
     loan program have essentially the same terms and conditions 
     for loans and their repayment.
       (b) Allow income-contingent repayment for FFELP borrowers.
       (c) Make the application processes similar for FFELP and 
     direct loan students.
                                                                    ____


                      Section-by-Section Analysis

       Section 1. Short Title. The bill is to be cited as the 
     ``Student Loan Evaluation and Stabilization Act of 1995.''
       Section 2. Findings. The bill makes four findings upon 
     which the legislation is based. The findings highlight the 
     fact that the Federal Direct Student Loan Program (direct 
     loan program) is in its pilot phase and that a slow and 
     cautious approach toward implementing the program should be 
     continued. The findings further emphasize that the federal 
     debt, further enlarges the federal bureaucracy, adds major 
     new financial oversight activities to the Department of 
     Education, and forces Congress to depend on an estimated 
     budget savings that may prove illusory. In addition, the 
     findings note that reform of the Federal Family Education 
     Loan Program (guaranteed loan program) should be a continuing 
     priority of the Department of Education.
       Section 3. Participation of Institutions and Administration 
     of Direct Loan Programs.
       Subsection (a). Participation in direct loans is limited as 
     follows:
       (1) five percent of new student loan volume for academic 
     year 1994-1995;
       (2) for academic year 1995-1996 loans to those students and 
     parents of students attending institutions who have applied 
     and been accepted for participation in the direct loan 
     program on or before December 31, 1994.
       Subsection (b). The authority of the Secretary to force 
     schools into the direct loan program is eliminated.
       Subsection (c). Section 458 of the HEA is amended so that 
     administrative expenses for the direct loan program under are 
     made available on an entitlement basis to cover the full 
     administrative costs of direct loans made under Part D. These 
     costs are recognized on a net present value basis under the 
     Credit Reform Act amendment in section 11 of this 
     legislation.
       This section also establishes ``funding triggers'' for the 
     release of funds under section 458. Funds may be obligated 
     only in such amounts and according to the schedules specified 
     under the Appropriations Act for the Department of Education 
     after submission of a detailed proposal for expenditures 
     under this section.
       In addition, this section also directs the Secretary to 
     produce a detailed quarterly report of the expenditures of 
     monies under section 458.
       Finally, this section mandates payment of an administrative 
     cost allowance to guaranty agencies based on the following 
     formula: .85 percent of the total principal amount of the 
     loans for which insurance was issued during the fiscal year, 
     or .08 percent of the original principal amount of the loans 
     guaranteed by the program that are outstanding at the end of 
     the previous fiscal year. Agencies elect which formula under 
     which to receive payment.
       Subsection (d). References to the transition to the direct 
     loan program are eliminated from the HEA.
       Section 4. Direct Loans Have the Same Terms and Conditions 
     as Federal Family Education Loans. The legislation clarifies 
     and strengthens Congressional intent that direct and 
     guaranteed loans have essentially the same terms, conditions, 
     eligibility requirements, and loan limits.
       Section 5. Ability of Borrowers to Consolidate Under Direct 
     and Guaranteed Loan Programs.
       Subsection (a). Borrowers of direct loans under Part D are 
     made eligible to consolidate such loans into a Federal 
     Stafford Consolidation Loan.
       Subsection (b). The HEA is clarified to reflect 
     Congressional intent that a guaranteed loan borrower is only 
     eligible to obtain a direct consolidation loan when they are 
     unable to obtain a consolidation loan from a lender. The law 
     is also modified to limit eligibility of a guaranteed loan 
     borrower to those students who are unable to obtain a 
     consolidation loan with an income-contingent loan repayment 
     schedule from a lender.
       This section also requires the Secretary to establish 
     appropriate certification procedures to verify eligibility of 
     borrowers and it prohibits the Secretary from offering 
     consolidation loans if the Department lacks the capacity or 
     if the projected loan volume would destabilize the 
     availability of guaranteed loans.
       Section 6. Income Contingent Repayment in the Federal 
     Family Education Loan Program. The legislation authorizes 
     guaranteed student loan borrowers to repay their loans 
     through income-contingent repayment to lenders like in the 
     direct loan program.
       Section 7. Reserve Fund Reforms. The legislation requires 
     due process procedures, including a hearing on the record, 
     for the return of guaranty agencies reserve funds. The 
     legislation further restricts the expenditure of such funds, 
     and those funds otherwise recovered by the Secretary, by 
     requiring the funds to be returned to the U.S. Treasury.
       Section 8. Default Rate Limitations on Direct Lending. This 
     section clarifies the HEA to reflect Congressional intent 
     that the Secretary is required to calculate default rates for 
     direct lending schools and to terminate such schools if they 
     exceed the default rates established in the law as is done 
     currently for the guaranteed loan schools.
       This section also requires the reporting of data on direct 
     loans being repaid through income-contingent repayment in 
     order to determine the effect of such repayment on cohort 
     default rates.
       In addition, section 455 of the HEA is modified by 
     directing the Secretary to develop criteria for the 
     calculation of default rates for institutions participating 
     in the direct loan program. The methodology, criteria, and 
     procedures to be used in determining 
     [[Page S3471]] such default rates must be comparable to those 
     applied to schools participating in the guaranteed loan 
     program under Part B of the HEA. Such standards must be 
     promulgated no later than 120 days after the date of 
     enactment of this legislation or the Secretary may no longer 
     make any new direct loans.
       Section 9. Use of Electronic Forms. This section permits 
     the development, production, distribution and use of an 
     electronic version of the common application form by guaranty 
     agencies, lenders, and consortium thereof to expedite the 
     processing of student loans. Requires that the Secretary 
     approve the form to ensure it is consistent with the 
     requirements of the HEA. Allows the applicant to certify that 
     the output of the application is accurate in a subsequent 
     document. The legislation prohibits a fee from being charged 
     to students in connection with the use of this form.
       Section 10. Application for Part B Loans Using the Free 
     Federal Application. Section 483(A) of the HEA is amended to 
     clarify that the application may be the Free Application for 
     Federal Student Assistance (FAFSA). The legislation also 
     clarifies that the application may be in an electronic or 
     other format in order to facilitate use by borrowers and 
     institutions. Finally, this section clarifies that data shall 
     be available to any guaranty agency authorized by an 
     institution.
       Section 11. Credit Reform. The bill modifies section 
     502(5)(B) of the Congressional Budget Act to require 
     consideration of direct and indirect expenses associated with 
     Federal Direct Student Loans, including, but not limited to, 
     expenses arising from credit policy and oversight, credit 
     extension, loan origination, loan servicing, training, 
     program promotion, and payments to contractors. The amendment 
     would apply to all fiscal years beginning on or after October 
     1, 1995, and to statutory changes made on or after the date 
     of enactment of this bill.
                                 ______

      By Mr. WARNER (for himself and Mr. Robb):
  S. 496. A bill to abolish the Board of Review of the Metropolitan 
Washington Airports Authority, and for other purposes; to the Committee 
on Commerce, Science, and Transportation.


 the board of review of the metropolitan washington airports authority 
                         abolition act of 1995

  Mr. WARNER. Mr. President, on January 26, 1995, I joined with my 
colleagues Senators McCain and Robb in introducing legislation in the 
Senate to abolish the Board of Review of the Metropolitan Washington 
Airports Authority.
  Mr. President, I have been involved for many years in seeking to 
devise a legislative solution to the constitutional issues that exist 
due to the decisions of the Congressional Board of Review.
  Unfortunately, Mr. President, I have learned that the legislation 
which my colleagues and I introduced does include a provision which I 
do not support. The provision is contained in section 3 of the 
legislation which is the elimination of the perimeter rule with respect 
to certain nonstop flights.
  After further review and analysis of this provision, and after 
consultation with the Governor of Virginia and the Metropolitan 
Washington Airports Authority, I have learned that adoption of such a 
provision would be detrimental to the current and projected operations 
of Washington National Airport and Washington Dulles International 
Airport. Eliminating the perimeter rule could in the short term disrupt 
existing air service patterns, with nonstop flights to cities within 
the perimeter being canceled as flights are added to more distant and 
economically beneficial destinations. In the longer term, both the 
airlines and the cities that could suffer a loss in nonstop service to 
National could call for increases in the number of flights allowed at 
National.
  Mr. President, today I am introducing legislation along with my 
colleague Senator Robb, which will seek to abolish the Board of Review 
of the Metropolitan Washington Airports Authority.
  Mr. President, our legislation would: First, remove the 
unconstitutional sections of the Metropolitan Washington Airports Act; 
second, provide a savings clause to protect all actions of the 
Authority taken under the old legislation; and third direct the 
Secretary of Transportation to amend the Authority's 50-year lease.
  This legislation provides a necessary cure to a constitutional 
deficiency as defined by the Federal courts, in the structure of the 
Airports Authority, which is operating and improving the two airports 
that serve the Nation's Capital and the Washington region, Washington 
National and Washington Dulles International.
  In April 1994, the Court of Appeals for the District of Columbia 
Circuit found that the Board of Review, made up of current and former 
Senators and Members of Congress, violated constitutional separation of 
powers principles. This was the second time the courts have struck down 
the Board of Review,
 which was designed to represent users of the airports and to preserve 
some Federal control over them.

  The court of appeals stayed its decision until the Supreme Court had 
time to consider the issue. The Supreme Court decided not to hear the 
case in January, and the stay expires March 31, 1995.
  Therefore, I repeat, all Congress is required to do to keep the 
airports in operation is to pass this legislation. Such continued 
uninterrupted operations are essential to the travel requirements of 
Members of Congress and their staffs.
  If the Congress does not amend the Metropolitan Washington Airports 
Act by that date, the Airports Authority Board of Directors will lose 
all its power to take basic, critical actions, including the ability to 
award contracts, issue more bonds, amend its regulations, change its 
master plans, or adopt an annual budget.
  This shutdown could not come at a worse time. The Airports Authority 
is in the middle of a $2 billion construction program between two 
airports.
  In 1986, the Congress transferred the airports to an interstate 
agency created by the District of Columbia and the Commonwealth of 
Virginia. We did this because we recognized that an independent state-
level authority could do what the Federal Government apparently could 
not--issue revenue bonds and undertake the major construction that was 
so long overdue at both airports.
  The Airports Authority has done a credible job carrying out 
congressional intent. It has sold over $1.3 billion in tax-exempt 
bonds, and has multimillion dollar projects underway to double the size 
of the Dulles terminal and replace many of the National Airport 
facilities with a modern new terminal building.
  As of today, the Authority has already completed $331 million in 
construction projects, and has an additional $416 million under 
construction. The steel superstructure at National is visible to all; 
just this week, construction crews topped off the new 220-foot high air 
traffic control tower there.
  Thus, we cannot afford to interrupt this construction progress by 
Congress not acting by March 31, 1995. The Congress must pass this 
legislation now.
  Mr. President, recently the House Transportation subcommittee on 
Aviation adopted H.R. 1036, the Metropolitan Washington Airports 
Amendments Act of 1995. This legislation contains provisions which we 
cannot support at this time.
  Specifically, the legislation imposes a reauthorization provision in 
which the Congress would reauthorize the Airports Authority every 2 
years. Also, the statutory freeze on the 37 slots under the high 
density rule would be repealed. This would mean that the Federal 
Aviation Administration would be able to increase slots through a 
rulemaking process.
  Mr. President, all the Congress must consider now--before March 31--
legislation to abolish the Congressional Board of Review. Any further 
delays will result in slowing the schedule and increasing the costs of 
the major construction projects at both airports.
                                 ______

      By Mr. HELMS (for himself and Mr. Faircloth):
  S. 497. A bill to amend title 28, United States Code, to provide for 
the protection of civil liberties, and for other purposes; to the 
Committee on Governmental Affairs.


                act to end unfair preferential treatment

  Mr. HELMS. Mr. President, momentarily I am going to send a bill to 
the desk for introduction but I want to make a few remarks before I do 
that.
  First of all, this bill will simply get us started along a road that 
the Senate ought to have taken a long time ago. Senator Dole may have a 
similar bill, in which case I will gladly serve as a cosponsor of his 
bill, and I feel sure that he will want to be a cosponsor of mine. 
There may be others. But somebody has to start the ball rolling and 
that is what I am doing here at about 18 minutes until 3 p.m. on 
Friday.
  [[Page S3472]] Mr. President, unless I am badly mistaken, when the 
bill I shall offer today hits the hopper there is likely to be the 
usual outburst of usual phony demagoguery among our liberal brethren in 
the political arena and in the news media. It always happens when a 
proposal is made to do away with any Federal program that was 
established in the first place to attract votes for liberal candidates 
and liberal issues.
  The liberal brethren can begin their holier than thou lamentations, 
because here comes the bill that proposes to eliminate so-called 
affirmative action programs that have done more harm than good in terms 
of race relations, which have been exceedingly costly to the American 
taxpayers, and worst of all, have been so burdensome for people trying 
to operate small businesses or, in fact, businesses of any size.
  This legislation, which I shall send to the desk presently, is almost 
identical to the California Civil Rights Initiative which proposes to 
erase several decades of State-sponsored preferential programs in 
California based on race, color, gender, or ethnic background. If you 
want to call it the Helms bill that is fine, but I want to call it, 
``An Act to End Unfair Federal Preferential Treatment.'' And I hope 
that hereinafter it will be known as that.
  This bill's principal difference with the California legislation is 
that I am proposing to eliminate the same kinds of discriminatory, 
expensive, and counterproductive programs on the Federal level as 
California is attempting on the State level.
  As I said at the outset, Mr. President, we are likely to hear and see 
the customary antics by the liberal news media who always start tossing 
epithets around any time efforts are proposed to put an end to Federal 
programs that do not work and that have done more harm than good--in 
this case, the heavy-handed effort of Government to force so-called 
affirmative action down the throats of the American people of all 
races.
  But I say, here and now, that this legislation--indeed this issue--is 
not about race--although an intellectually dishonest liberal media may 
try to portray it as such. It is about fairness. It is about putting an 
end to reverse discrimination at the hands of ruthless bureaucrats.
  Reasonable men and women may disagree about the wisdom of the 
Government's having gotten into the business of racial and other 
quotas, and affirmative action in the first place. But, now is not the 
time to revisit that argument, or to attempt to unscramble that egg. 
And that is not what this legislation is all about.
  Rather, Mr. President, this legislation is based on questions being 
raised by a vast percentage of the American people. For example:
  First, with a Federal debt of $4.8 trillion, can Congress justify 
forcing the American taxpayers to continue paying for programs that are 
today no longer needed?
  Second, should Congress--which so recklessly ran up this $4.8 
trillion debt--now act to do away with the social engineering 
foolishness that is so harming the country?
  Third, after 30 years of federally funded affirmative action 
programs, it is now time to say enough is enough.
  Fourth, should America return to the fundamental principles laid out 
prayerfully, and with specificity, by our Founding Fathers?
  Is not the answer ``yes'' to each of these questions?
  Of course it is.
  You see, Mr. President, the American dream has been within the reach 
of citizens of all races, religions, and ethnic backgrounds because our 
Nation has adhered for so many years to the principles of free 
enterprise, self reliance, personal responsibility, and, of course, the 
concept that every citizen should be free to pursue his or her personal 
dream--based not on birthright, but rather on hard work, initiative, 
talent, and character.
  The now-entrenched, but nonetheless discriminatory system of 
affirmative action preferences established by Congress, the courts, and 
virtually every Federal agency flies in the face of the merit-based 
society that the Founding Fathers envision, which is why my 
legislation, aimed at removing these preferences, is called the ``Act 
to End Unfair Federal Preferential Treatment.''
  Mr. President, I am convinced this legislation reflects the thoughts 
of countless citizens across America of every color and creed who 
struggle each day to make the American dream become a reality--to own 
their own homes, raise their families, and provide educations for their 
children. But the all-powerful Federal Government somehow manages to 
get in the way at nearly every turn. This is the thing that we must put 
an end to.
  Those familiar with the debate surrounding affirmative action and 
quota programs likely have heard of the California Civil Rights 
Initiative, which residents of that State will vote upon as early as 
next March. For those unfamiliar with this initiative, it reads:

       Neither the State of California nor any of its political 
     subdivisions or agents shall use race, sex, color, ethnicity 
     or national origin as a criterion for either discriminating 
     against, or granting preferential treatment to, any 
     individual or group in the operation of the State's system of 
     public employment, public education or public contracting.

  As I stated previously, the Act To End Unfair Federal Preferential 
Treatment--which I will shortly send to the desk--differs in that it 
puts an end to taxpayer funding of such programs on the Federal level.
  Mr. President, polls show that 73 percent of Californians support 
this initiative to roll back racial and other quotas and preferences. 
But California is not alone in this sentiment. According to a recent 
Wall Street Journal/NBC News survey, 2 out of every 3 Americans--
including half of those who voted for President Clinton--oppose so-
called affirmative action.
  This demonstrates, I believe, that the American people are once again 
far ahead of their leaders in Washington. Americans recognize that such 
programs are divisive, discriminatory, and in fact, harm the very 
citizens they claim they want to help. In short, these programs pervert 
the concept of equality. As Senator Malcolm Wallop, the great statesman 
from Wyoming, put it, ``Any government that is not strictly blind in 
matters of race is quite simply un-American.''
  Mr. President, we simply cannot afford to continue to pour money into 
ineffective and ultimately destructive affirmative action programs when 
the total Federal debt, as of March 1, stood at exactly 
$4,848,389,403,816.26. That is $18,404.57 for every man, woman, and 
child in America.
  Of course, those who pay taxes--because so many do not--will pay even 
far more than that in the theoretical sense of how much it will cost to 
pay off the debt.
 We must stop wasting the taxpayers' money on programs that 
demonstrably cannot and will not work.

  If the California initiative passes, one legislative analysis 
predicts that high schools and community colleges would save $120 
million a year in administrative costs. Universities would save another 
$50 million a year. Think of the savings we could realize if Federal 
programs are terminated nationwide. It boggles the mind.
  Let me offer a few examples of Government-sponsored affirmative 
action programs that are so counterproductive and divisive they make me 
wonder how much more of this we can swallow. These few programs are 
only the tip of the iceberg.
  First, the State Department has been instructed that certain new 
positions must be filled with women and minorities rather than white 
workers. The administration complained when a State Department list of 
candidates for ambassadorial posts did not contain enough minorities 
and women. The White House returned the list to Secretary Christopher.
  Second, the Federal Communications Commission has for years 
implemented a program where women and minorities are given special tax 
breaks and special incentives to enable them to acquire mass media 
facilities, such as radio and television stations.
  The most well-known example is the special tax break that Viacom, the 
world's second largest entertainment conglomerate, is trying to use. 
Under current FCC law, Viacom can defer $1.1 to $1.6 billion in taxes 
on the sale of its cable operations simply by selling them to an 
African-American buyer. And this buyer just happens to be the same man 
who conceived the minority tax-break program while working on FCC 
issues in the Carter White House. 
[[Page S3473]] This minority buyer now plans to invest $1 million of 
his own money in the acquisition. I ask you, Mr. President, is this 
someone in need of a Federal preference? I say no way, Jose.
  Third, the Forest Service has a firefighter program where certain 
positions can be filled only with women or minorities. And a North 
Carolina constituent and Forest Service employee recently sent me 
articles regarding an internal Forest Service document that actually 
states, ``Only unqualified applicants will be considered.'' This policy 
was supposed to be a set-aside for women. So much for qualifications 
being important.
  Fourth, and what about the Defense Department's special hiring 
directive that said, ``special permission will be required for 
promotion of all white men without disabilities.''
  Mr. President, I have it on good authority that there are more than 
160 such preference programs in place today in the Federal bureaucracy. 
That is what this bill is aimed at. And who pays for them? That is 
right. The American taxpayers pay for them.
  Citizens visiting my office frequently note on my office wall a 
picture of a man who was a friend of all of us who served with him, 
Hubert Humphrey of Minnesota. Hubert was the author of the original 
Civil Rights Act of 1964. True enough, Senator Humphrey and I disagreed 
on just about every policy issue but we disagreed agreeably. We were 
friends, nevertheless. And I respected him for having the courage of 
his convictions, wrong as I thought those convictions were sometimes. 
He stated many times to me that my feeling about him was mutual, and I 
appreciated that.
  In any event, Hubert Humphrey was exactly right when he stated during 
a debate in this room over the Civil Rights Act of 1964:

       * * * if there is any language [in the Civil Rights Act of 
     1964] which provides that any employer will have to hire on 
     the basis of percentages or quotas related to color, race, 
     religion or national origin, I will start eating the pages 
     one after another because it is not there.

  Well, the distinguished majority leader, Mr. Dole, recently remarked,

       Now we all have indigestion from living in an America where 
     the government too often says that the most important thing 
     about you is the color of your skin or the country of your 
     forefathers * * * that's wrong, and we should fix it.

  I agree with Senator Dole. Bob Dole was on target, and hopefully the 
legislation that I am introducing today will serve as a first step 
toward fixing this problem.
  As I said at the outset, I anticipate that Senator Dole may offer 
legislation on this subject. I hope others will too so that we can all 
think together and act together on a problem that should not be allowed 
further to beset the greatest country on Earth.
  But, Mr. President, back to Hubert Humphrey. Hubert Humphrey hated 
the idea of quotas and preferential treatment based on race. He knew 
instinctively that such programs, if instituted, would turn America 
inside out--which is exactly what has occurred: there is much evidence 
that so-called affirmative action programs have exacerbated racial 
problems--not healed them. Former Secretary of Education William 
Bennett put it this way.

       Affirmative Action has not brought us what we want--a 
     colorblind society. It has brought us an extremely color-
     conscious society. In our universities we have separate 
     dorms, separate social centers. What's next--water fountains? 
     That's not good, and everybody knows it.

  George Weigel of the Ethics and Public Policy Center had this 
observation regarding how divided a country America has become:

       People have not grasped the extent to which the notion of 
     governmentally appointed preference groups is pernicious to 
     American democracy * * * They have not grasped what it means 
     to balkanize the United States. My guess is that there will 
     be a tremendous revolt against this.

  Paul Sniderman of Stanford University and Thomas Piazza of the 
University of California recently completed a book, ``The Scar of 
Race.'' These authors demonstrate that whites are more likely to view 
African-Americans in a negative light if they are first asked questions 
about affirmative action. Here's what Sniderman and Piazza found:

       A number of whites dislike the idea of affirmative action 
     so much and perceive it to be so unfair that they have come 
     to dislike blacks as a consequence.

  Parenthetically, Mr. President, that is an awful state of affairs, 
but I believe it to be true. It should not be true, but it is. The 
authors continued:

       Hence the special irony of the contemporary politics of 
     race. In the very effort to make things better, we have made 
     some things worse.

  Sharon Brooks Hodge, an African-American writer and broadcaster, 
perhaps summed it up best when she observed:

       * * * white skepticism leads to African-American 
     defensiveness * * * Combined, they make toxic race relations 
     in the workplace.

  And, as is the case with so many forays into social engineering by 
the Federal Government, affirmative action and quota programs, have, at 
the end of the day, harmed the very people their proponents designed 
them to assist. Peter Schrag of the San Diego Union-Tribune hit the 
nail on the head when he asked:

       To what extent will the real achievements of minorities be 
     diminished by the suspicion that they got some sort of break?

  Although Federal agencies designed affirmative action programs to 
benefit victims of discrimination at the lowest rungs of the economic 
ladder, today they benefit chiefly educated, middle-class minorities. 
As Linda Chavez, the Hispanic leader and President of the Center for 
Equal Opportunity and former staff director of the U.S. Commission on 
Civil Rights under President Reagan, observed today's government 
affirmative action programs benefit those who can make it on their own.
  Mr. President, after 30 years of affirmative action, America now 
finds itself a more racially ethnically divided society than ever 
before. The cohesiveness which once brought all of us together as 
Americans first is slipping away.
  After 30 years, it is obvious that this social experiment called 
affirmative action has outlived its usefulness. It is time for the 
Federal Government to scrap these programs, and restore the principles 
upon which our country was built--personal responsibility, self-
reliance, and hard work.
  Mr. President, that formula for achievement was the answer 200 years 
ago and it is still the same today. And I might add, it is the only 
road to reaching the American dream for all our citizens, whether they 
be black, white, Hispanic or Asian, men or women. The Act To End Unfair 
Federal Preferential Treatment is the first step toward this dream.
  Mr. President, I ask unanimous consent that the following items be 
printed in the Record at the conclusion of my remarks following the 
text of the bill, an August 21, 1994, article by Peter Schrag of the 
San Diego Union Tribune; a February 15, 1995, article by Linda Chavez 
in USA Today; and a February 13, 1995, article by Steven Roberts in 
U.S. News & World Report.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                 S. 497

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Act to End Unfair 
     Preferential Treatment''.

     SEC. 2. PUBLIC EMPLOYMENT, PUBLIC CONTRACTING, AND FEDERAL 
                   BENEFITS.

       Part VI of title 28, United States Code, is amended by 
     inserting after chapter 176 the following new chapter:

                     ``CHAPTER 177--CIVIL LIBERTIES

     ``Sec. 3601. Public employment, public contracting, and 
       Federal benefits

       ``Notwithstanding title VII of the Civil Rights Act of 1964 
     (42 U.S.C. 2000e et seq.), title IX of the Education 
     Amendments of 1972 (20 U.S.C. 1681 et seq.), section 15 of 
     the Small Business Act (15 U.S.C. 644), or any other 
     provision of law, no agent or agency of the Federal 
     Government may use race, color, gender, ethnicity, or 
     national origin--
       ``(1) as a criterion for either discriminating against, or 
     granting preferential treatment to, any individual or group; 
     or
       ``(2) in a manner that has the effect of requiring that 
     employment positions be allocated among individuals or 
     groups;

     with respect to providing public employment, conducting 
     public contracting, or providing a Federal benefit for 
     education or other activities.
     [[Page S3474]] ``Sec. 3602. Necessary classifications based 
       on gender

       ``Nothing in this chapter shall be interpreted as 
     prohibiting classifications based on gender that are 
     reasonably necessary to the normal provision of public 
     employment, conduct of public contracting, or provision of a 
     Federal benefit.

     ``Sec. 3603. Court order or consent decree

       ``Nothing in this chapter shall be interpreted as--
       ``(1) affecting any court order or consent decree that is 
     in effect as of the date of enactment of this chapter; or
       ``(2) forbidding a court to order appropriate relief to 
     redress past discrimination.

     ``Sec. 3604. Definitions.

       ``As used in this chapter:
       ``(1) The term `agent' means an officer or employee of the 
     Federal Government.
       ``(2) The term `Federal benefit' means--
       ``(A) funds made available through a Federal contract; or
       ``(B) cash or in-kind assistance in the form of a payment, 
     grant, loan, or loan guarantee, provided through any program 
     administered or funded by the Federal Government.''.
                                                                    ____

 Minorities Can't Measure Up? That's What Affirmative Action Policies 
        Imply, Though You Won't Hear Its Liberal Backers Say So

                           (By Linda Chavez)
       Bethesda, MD.--For years I've suspected that many liberals 
     favor affirmative action because they believe blacks and 
     Hispanics can't measure up to the same standards as whites, 
     but it's been difficult to get any of them to say so 
     publicly.
       Now Rutgers University President Francis L. Lawrence, a 
     staunch proponent of affirmative action throughout his 
     career, has let the cat out of the bag.
       In comments to a faculty group discussing the school's 
     admission criteria, Lawrence referred to blacks as a 
     ``disadvantaged population that doesn't have the genetic, 
     hereditary background'' to score equally with whites on the 
     Scholastic Aptitude Test.
       Lawrence has since apologized for his comments--which he 
     now says he doesn't actually believe--and students have led 
     angry protests demanding his resignation.
       But the fact is that affirmative-action programs at 
     universities around the country operate as if Lawrence were 
     right.
       They routinely apply lower admission standards to black and 
     Hispanic applicants, all the while pretending that such 
     double standards won't reinforce negative stereotypes and 
     stigmatize students admitted under them.
       The University of California at Berkeley, for example, 
     admits black and Hispanic students with test scores and 
     grade-point averages significantly below those it requires of 
     both white and Asian students.
       Berkeley is one of the few universities that has made 
     available such information, even on a limited basis.
       In 1989, Berkeley turned away approximately 2,800 white 
     students with perfect 4.0 GPAs--straight As. But half of the 
     minority students it admitted that year had below a 3.53 GPA.
       And contrary to the assumptions of many affirmative-action 
     supporters, students admitted on the basis of lower test 
     scores and grades aren't necessarily economically 
     disadvantaged graduates of poor inner-city schools.
       At Berkeley, for example, the Hispanic student admitted 
     through the affirmative action program comes from a middle-
     class family, and many if not most attended integrated 
     schools, often in the suburbs.
       In fact, 17% of Hispanic entering freshmen admitted to 
     Berkeley in 1989 came from families that earned more than
      $75,000 a year, as did 14% of black students.
       Statistics like these make it increasingly difficult for 
     advocates to argue that affirmative action is intended to 
     benefit disadvantage minorities.
       One Mexican-American student told researchers studying the 
     Berkeley program she was ``unaware of the things that have 
     been going on with our people, all the injustice we've 
     suffered, how the world really is. I thought racism didn't 
     exist, and here, you know, it just comes to light.''
       No doubt she was referring to the political indoctrination 
     many minority students receive in such programs so they'll 
     know how ``oppressed'' they really are, despite attending one 
     of the world's elite institutions of higher learning.
       But the comments that racism at Berkeley ``just comes to 
     light'' might just as well apply to the university's own 
     admission standards, which clearly do treat applicants 
     differently according to their race.
       Affirmative action advocates can't have it both ways. A 
     system that depends on holding minorities to different--and 
     lower--standards than whites invites prejudice and bolsters 
     bigotry.
       But it also sends a clear message to the intended 
     beneficiaries that those who claim to want to help minorities 
     don't really believe blacks and Hispanics can ever measure up 
     to whites.
       Most supporters of affirmative action no doubt would be 
     horrified that anyone might interpret their intentions so 
     malignly. But their actions speak as loudly as words.


                         what others are saying

       ``We are happily at a time when a number of the 
     compensations that were earlier advanced to make up for 
     earlier discrimination are no longer needed.''--Calif. Gov. 
     Pete Wilson.
       ``If the president respects the goal of affirmative action 
     as fully as he should, he might gain political support from 
     voters who believe in pursuing an integrated society. * * * 
     But if he ignores the subject and lets critics set the terms 
     of the debate * * * he's likely to be stuck with affirmative 
     action as a thin cover for nasty, race-minded politics--the 
     Willie Horton issue of 1996. And it's likely to contribute to 
     his loss.''--Lincoln Caplan, Newsweek magazine contributing 
     editor.
       ``The people in America now are paying a price for things 
     that were done before they were born. We did discriminate. * 
     * * But should future generations have to pay for that?''--
     Senate Majority Leader Bob Dole.
       ``We know that affirmative action has created problems, 
     abuses we didn't contemplate. But if you eliminate or 
     severely curb * * * then what?''--Calif. Lt. Gov. Gray Davis.
       ``(It's) going to be hell. * * * You better make sure you 
     prepare for it.''--Franklyn Jenifer, president of the 
     University of Texas at Dallas, warning college administrators 
     of a backlash from minority students if affirmative action 
     policies are removed.
                                                                    ____

           [From the U.S. News & World Report, Feb. 13, 1995]

 Affirmative Action on the Edge--A Divisive Debate Begins Over Whether 
          Women and Minorities Still Deserve Favored Treatment

       Affirmative action is a time bomb primed to detonate in the 
     middle of the American political marketplace. Federal courts 
     are pondering cases that challenge racial preferences in 
     laying off teachers, awarding contracts and admitting 
     students. On Capitol Hill, the new Republican majority is 
     taking aim at the Clinton administration's civil rights 
     record. On the campaign trail, several Republican 
     presidential hopefuls are already running against affirmative 
     action. And in California, organizers are trying to put an 
     initiative on next year's ballot banning state-sanctioned 
     ``preferential treatment'' based on race or gender.
       This increasingly angry and divisive debate about the role 
     of race and gender in modern America could help the 
     Republicans unseat Bill Clinton in 1996 and change the way 
     many institutions allot jobs, business and benefits. A recent 
     Wall Street Journal NBC News survey found that 2 out of 3 
     Americans, including half of those who voted for President 
     Clinton in 1992, oppose affirmative action. The Los Angeles 
     Times found 73 percent of Californians back the ballot 
     initiative. ``The political implications are enormous,'' says 
     Will Marshall of the Democratic leadership Council, a 
     moderate group. ``Obviously, a lot of Republicans look at 
     affirmative action as the ultimate wedge issue.''
       The assault on affirmative action is gathering strength 
     from a slow-growth economy, stagnant middle-class incomes and 
     corporate downsizing, all of which make the question of who 
     gets hired--or fired--more volatile. Facing attacks on such a 
     broad front, women's groups, civil rights organizations and 
     other defenders of affirmative action are circling their 
     wagons. Women and minorities still need preferential 
     treatment, they argue, because discrimination still exists, 
     causing blacks and other minorities to lag far behind whites 
     in terms of economic status. ``If African-Americans are 
     taking all these jobs,'' asks Barbara Arnwine of the Lawyers 
     Committee for Civil Rights Under Law, ``why is there double-
     digit unemployment in the African-American community?'' Adds 
     Patricia Williams, a professor at Columbia Law School: 
     ``There is this misplaced sound and fury about nothing. 
     Access is still very limited, and the numbers are still very 
     low.''
       But the sound and fury are real. Affirmative action poses a 
     conflict between two cherished American principles: the 
     belief that all Americans deserve equal opportunities and the 
     idea that hard work and merit, not race or religion or gender 
     or birthright, should determine who prospers and who does 
     not. In 1965, Lyndon Johnson defended affirmative action by 
     arguing that people hobbled by generations of bias could not 
     be expected to compete equally. That made sense to most 
     Americans 30 years ago, but today many argue that the 
     government is not
      simply ensuring that the race starts fairly but trying to 
     decide who wins it.
       Moreover, many women and racial minorities are no longer 
     disadvantaged simply because of their race or gender. Indeed, 
     most of the young people applying for jobs and to colleges 
     today were not even born when legal segregation ended. ``I'll 
     be goddamned why the son of a wealthy black businessman 
     should have a slot reserved for that race when the son of a 
     white auto-assembly worker is excluded,'' says a liberal 
     Democratic lawmaker. ``That's just not right.''


                             disheartening

       The critics of affirmative action include some conservative 
     minority and women's leaders who believe it has a destructive 
     effect on their own communities. Thomas Sowell, the black 
     economist, argues that affirmative action has created a 
     process of ``mismatching,'' in which competition for talented 
     minorities is so fierce that many are pushed into colleges 
     for which they are not ready. ``You can't fool kids,'' says 
     Linda Chavez, a Hispanic activist. ``They come into a 
     university, they haven't had the preparation and it's a very 
     disheartening experience for some of them.
       [[Page S3475]] Others say affirmative action causes co-
     workers to view them with suspicion. ``White skepticism leads 
     to African-American defensiveness,'' says Sharon Brooks 
     Hodge, a black writer and broadcaster. ``Combined, they make 
     toxic race relations in the workplace.'' Glenn Loury, an 
     economics profession at Boston University, says proponents of 
     affirmative action have an inferiority complex: ``When blacks 
     say we have to have affirmative action, please don't take it 
     away from us, it's almost like saying, `You're right, we 
     can't compete on merit.' But I know that we can compete.''
       William Bennett, former education secretary and a leading 
     GOP strategist, says that ``toxic'' race relations, 
     aggravated by affirmative action, have led to a damaging form 
     of re-segregation: ``Affirmative action has not brought us 
     what we want--a colorblind society. It has brought us an 
     extremely color-conscious society. In our universities we 
     have separate dorms, separate social centers. What's next--
     water fountains? That's not good, and everybody knows it.''
       But supporters of affirmative action maintain that 
     arguments like Bennett's are unrealistic--even naive. ``We 
     tried colorblind 30 years ago, and that system is naturally 
     and artificially rigged for white males,'' says Connie Rice 
     of the
      NAACP Legal Defense and Education Fund. ``If we abandon 
     affirmative action, we return to the old-boy network.''
       Voices on both sides of the debate are starting to discuss 
     a possible compromise that would focus eligibility on class, 
     instead of on race or gender. For example, the son of a poor 
     white coal miner from West Virginia would be eligible for 
     special help, but the daughter of a black doctor from Beverly 
     Hills would not. ``Some of the conventional remedies don't 
     work as one might have hoped,'' says University of 
     Pennsylvania law professor Lani Guinier, whose ill-fated 
     nomination as Clinton's chief civil rights enforcer sparked a 
     storm of protest from conservatives. ``Perhaps there is an 
     approach that does not suggest that only people who have been 
     treated unfairly because of race or gender or ethnicity have 
     a legitimate case.''
       No one questions the sensitivity of the subject. For years, 
     the civil rights lobby, backed by Democrats in Congress, was 
     so strong that critics often felt intimidated. Even today, 
     Democrats who disagree with affirmative action are reluctant 
     to voice their doubts. ``The problem is political 
     correctness--you can't talk openly,'' says a member of 
     Congress.
       Democrats are talking privately, however, urging the White 
     House to formulate a response to the antiaffirmative-action 
     wave before it swamps the president and the party. At the 
     Justice Department, chief civil rights enforcer Duval Patrick 
     is ready: ``We have to engage; we can't sit to one side.''
       But despite the fact that the California initiative could 
     cost Clinton a must-win state in 1996, the administration 
     seems sluggish, even paralyzed. Laments a senior adviser, 
     ``We're going to wait until it's a crisis before reacting.'' 
     White House political strategists admit one reason for the 
     inaction: The issue is a sure loser.


                                referee?

       Caught between angry white males and the party's 
     traditional liberal base, White House advisers think the best 
     they can do is position the president as an arbiter between 
     two extremes. In a recent interview with U.S. News, the 
     president voiced his aim this way: ``What I hope we don't 
     have here, and what I hope they don't have in California, is 
     a vote that's structured in such a way as to be highly 
     divisive, where there have to be winners and losers and no 
     alternatives can be easily considered.'' Asked his views on 
     affirmative action, the president tried--as he often does--to 
     please both sides: ``There's no question that a lot of people 
     have been helped by it. Have others been hurt by it? What is 
     the degree of that harm? What are the alternatives? That's a 
     discussion we ought to have.''
       But a senior administration official admits that the middle 
     ground will be an uncomfortable place: ``The civil rights 
     groups are going to say we're caving in if we make any 
     compromises. And the Republicans are going to shout, 
     `Quotas.''' That same tension is already developing within 
     the White House. U.S. News has learned that Chief of Staff 
     Leon Panetta is quietly asking friends on Capitol Hill 
     whether the president should simply endorse the California 
     initiative--a position sure to trigger outrage among the 
     president's more-liberal advisers.
       Unsure how resolute the White House will be, civil rights 
     groups are looking for their own strategy to defend 
     affirmative action. One of their main jobs, they say, is to 
     debunk the ``myth'' that unqualified women and minorities are 
     being hired in large numbers. And some of the best salesmen 
     for affirmative action are big corporations that adjusted 
     long ago to the demands for a more-diverse work force, dread 
     bad publicity and fear the uncertainty change would produce. 
     James Wall, national director of human resources for Deloitte 
     & Touche LLP, a management consulting firm, says diversity is 
     good business: ``If you don't use the best of all talent, you 
     don't make money.''
       Even so, the combination of old resentments, new economic 
     hardships and shifting political winds threatens to explode. 
     ``There's a great deal of pent-up anger beneath the surface 
     of American politics that's looking for an outlet,'' says 
     conservative strategist Clint Bolick of the Institute for 
     Justice. It's the same anxiety that helped pass Proposition 
     187 in California, which sharply restricts public assistance 
     to the children of illegal immigrants, and thwarted Clinton's 
     plan to push a Mexican aid plan through Congress. ``If there 
     is a squeeze on the middle class,'' says GOP pollster Linda 
     Divall, ``people get very vociferous if they think their 
     ability to advance is being limited.''
       Some African-American leaders insist that this white-male 
     anger is being stirred up by demogogues who make blacks and 
     women into scapegoats. Says Derrick Bell, professor of law at 
     New York University: ``There is a fixation among so many in 
     this country that their anxieties will go away if we can just 
     get these black folks in their place.''
       But the anxieties are strong and are coupled with a growing 
     belief that affirmative action is another aspect of intrusive 
     and inefficient big government. ``The real back-to-basics 
     movement is not in education but in politics,'' says William 
     Bennett. ``We're rethinking basic assumptions about 
     government.''
       Accordingly, the fight over affirmative action is playing 
     out in four arenas:


                               california

       The real question is whether the civil rights initiative 
     will appear on the primary ballot in March of 1996 or on the 
     general-election ballot. If it appears in November, the 
     measure could seriously damage President Clinton's chances to 
     carry the nation's most populous state. That is precisely why 
     national Republicans are promising to raise money for the 
     effort--as long as organizers aim for November.
       The initiative is the brainchild of two academics, Tom Wood 
     and Glynn Custred, who say they were alarmed by the 
     prevalence of ``widespread reverse discrimination'' in the 
     state's college system. The initiative has already attracted 
     some unlikely support: Ward Connerly, a black member of the 
     University of California Board of Regents, said last month 
     that he favors an end to racial and gender preferences. 
     ``What we're doing is inequitable to certain people. I want 
     something in its place that is fair.'' and Hispanic columnist 
     Roger Hernandez wrote: ``I've never understood why Hispanic 
     liberals, so sensitive to slights from the racist right, 
     don't also take offense at the patronizing racists of the 
     left who say that being Hispanic makes you an idiot.''
       California Assembly Speaker Willie Brown, who is black, 
     opposes the initiatives as an attempt ``to maintain white 
     America in total control.'' But other Democrats are scurrying 
     for cover. ``The wedge potential is absolutely scary,'' says 
     Ron Wakabayashi, director of the Los Angeles County Human 
     Rights Commission. ``The confrontation of interests looks 
     like blacks and Latinos on one side and Asians and Jews on 
     the other.''


                               the courts

       The Supreme Court has generally supported race and gender 
     preferences to remedy past discrimination, but an 
     increasingly conservative bench has moved to limit the 
     doctrine. In 1989, the court struck down a program in 
     Richmond, Va., that set aside 30 percent of municipal 
     contracts for racial minorities, and that decision set off a 
     flurry of litigation. In the current term, the court already 
     has heard arguments in a key case: A white-owned construction 
     company is claiming that it failed to get a federal contract 
     in Colorado because of bonuses given to contractors that hire 
     minority firms.
       In another case making its way toward the high court, a 
     black teacher in Piscataway, N.J., was retained while an 
     equally qualified white teacher was fired, in the name of 
     diversity. The Bush administration sided with the white 
     teacher after she sued the school board. The Clinton 
     administration backs the board. Two other cases relating to 
     education are also moving forward. In one, white students at 
     the University of Maryland are challenging a scholarship 
     program reserved for minorities. In the other, the University 
     of Texas law school is being sued for an admissions policy 
     that lowers standards for blacks and Hispanics.
       While most court watchers do not expect sweeping changes in 
     current doctrine, the high court is closely divided on 
     racial-preference questions, and the deciding
      votes could be cast by Justice Sandra Day O'Connor. Legal 
     analysts cite her opinion in a 1993 case challenging 
     voting districts that were drawn to guarantee a black 
     winner: ``racial gerrymandering, even for remedial 
     purposes, may balkanize us into competing racial 
     factions.'' The court's most likely move: require programs 
     to be more narrowly tailored to remedy past 
     discrimination.


                                congress

       Republican victories last year mean that critics of 
     affirmative action now control the key committees and the 
     congressional calendar. A strategy session was held last 
     Friday at the Heritage Foundation, a conservative think tank, 
     bringing together about two dozen Hill staffers, lawyers and 
     conservative activists. Already, Rep. Charles Canady, the 
     Florida Republican who heads the key House subcommittee, has 
     written to the Justice Department requesting every document 
     relating to affirmative action cases. His goal oversight 
     hearings that try to demonstrate that the administration's 
     civil rights policies far exceed the original intent of 
     Congress.
       Conservatives are considering amendments to appropriations 
     bills that would restrict the administration's flexibility. 
     There also is talk of a measure banning racial and gender 
     [[Page S3476]] preferences altogether. Civil rights 
     proponents remain confident that Clinton would veto any 
     measure that eviscerates affirmative action and that his veto 
     would survive.


                              campaign '96

       The affirmative action issue will be test-marketed this 
     year by Buddy Roemer, a Republican candidate for governor of 
     Louisiana. But it is already intruding into the politics of 
     1996: California Gov. Pete Wilson has all but endorsed the 
     initiative and Sen. Phil Gramm of Texas, who will soon 
     announce his presidential candidacy, has taken over the 
     appropriations subcommittee that handles the Justice 
     Department. He will use it, predicts an administration 
     official, ``as a platform to rail against quotas.''
       The danger for Republicans lies in going too far in 
     attacking affirmative action and courting resentful white 
     males. If the antiaffirmative-action campaign ``turns into 
     mean-spirited racial crap, to hell with it,'' William Bennett 
     warned fellow Republicans.
       But the questions at the core of the affirmative action 
     debate remain unanswered. How much discrimination still 
     exists in America? And what remedies are still necessary to 
     aid its victims?
                                                                    ____

           [From the San Diego Union-Tribune, Aug. 21, 1994]

                  The Preferential Treatment Backlash

                           (By Peter Schrag)

       A Republican attempt to prohibit California government 
     agencies from discriminating for or against individuals on 
     the basis of race, ethnicity or gender got a three-hour 
     hearing in the Assembly Judiciary Committee this month, 
     followed by the predictable brushoff from the committee's 
     majority Democrats. ``It is one of the most dangerous pieces 
     of legislation I have witnessed in my four years here,'' said 
     Assemblywoman Barbara Lee, D-Oakland.
       We should only be so lucky.
       The California Civil Rights Initiative (CCRI), a 
     constitutional amendment that would have required a two-
     thirds vote in each house of the Legislature in order to go 
     on the ballot, had as much chance as a snowball in a furnace. 
     It was sponsored by Assemblyman Bernie Richter of Chico and 
     had some 42 legislative co-sponsors, one of whom was a 
     Democrat and one an Independent.
       It's a simply worded proposition. Its key passage says, 
     ``Neither the state * * * nor any of its political 
     subdivisions or agents shall use race, sex, color, ethnicity 
     or national origin as a criterion for either discriminating 
     against, or granting preferential treatment to, any 
     individual or group in the operation of the state's system of 
     public employment, public education or public contracting.''
       Put that proposition to the voters unadorned and you're 
     likely to get a sweep. It's as American as Abraham Lincoln 
     and Martin Luther King Jr.: Judge people as individuals on 
     what they can do, on the content of their character, not on 
     what group they belong to or the color of their skin.
       It's not the way things work, either in the universities, 
     where much of the push and inspiration for CCRI comes from, 
     or many other places in the public arena. Everywhere there 
     are preferences based at least partly on something else--in 
     hiring, in college admissions and in a thousand subtle other 
     ways.
       The reasons for some official preferences are obvious 
     enough: 1) to make up for the lingering effects of past 
     discrimination and 2) to try to get in the professions, in 
     the civil service and on the campuses people who, at the very 
     least, are not strikingly different in pigmentation from the 
     rest of the populace.
       But as the backers of the CCRI point out, the thing has 
     gone to the point where new offenses are committed in the 
     effort to remedy the old: Should there be scholarships 
     reserved for blacks or Hispanics? Should college departments 
     be offered bounties for bagging minorities in their faculty 
     recruiting? Should there be legislative requirements of 
     racial proportionality, not only in university admissions, 
     but in graduation rates?
       Should people of the right color or sex be given preference 
     in contracting with public agencies, even if it costs the 
     public more? And to what extent should success of a 
     particular ethnic group--Asians in academic achievement for 
     example--itself become a reason for race-based restrictions 
     against them?
       In some instances, these things have reached such totemic 
     proportions that just questioning them is regarded as 
     evidence of racism.
       But it's not the whole story. Even CCRI's sponsors, who now 
     hope to get the measure on the ballot by the initiative 
     route, acknowledge that there are colleges that give 
     preference in admission to children of alumni or, as at the 
     University of California, to the offspring of legislators. 
     And there are almost without doubt fire and police 
     departments, and probably other public agencies as well, 
     where it still doesn't hurt to be related to somebody, or at 
     least to know them, whatever the civil service regulations 
     say.
       More important, there are legitimate sensibilities and 
     experiences that come with certain backgrounds that may well 
     be important in the selection of police officers or in 
     enriching the composition of a campus. Where two candidates 
     are otherwise similarly qualified, what's wrong with giving 
     preference to the one whose parents are immigrants and grew 
     up in the barrio?
       CCRI's backers point out, correctly, that economic 
     disadvantage could be used more legitimately to accomplish 
     almost the same thing. But the very precision in CCRI's 
     language is likely to run colleges and other state agencies 
     afoul, on the one hand, of federal laws that encourage 
     affirmative action and, on the other, to invite still more 
     suits from disappointed applicants every time there's a 
     suggestion that race or gender might have been used, however 
     marginally, as a criterion.
       All that being said, however, CCRI nonetheless reflects a 
     set of increasingly serious problems and grievances that, as 
     the state becomes ever more diverse, will become all the more 
     vexing.
       At what point do objective criteria and real performance 
     become secondary to the politically correct imperatives of 
     diversity, as in some cases they already are, thereby making 
     it harder and harder to maintain standards of quality? To 
     what extent do preferences for marginal candidates lead to 
     frustration when its beneficiaries are overwhelmed?
       The questions run on: To what extent will the real 
     achievements of minorities be diminished by the suspicion 
     that they, too, got some kind of break? To what extent does 
     the whole process generate mutually self-validating backlash 
     that further institutionalizes race in our society? And at 
     what point, given our growing diversity, do the definitional 
     problems about who is what--definitions, ironically, that 
     squint right back to the slaveholders' racial distinctions--
     become both absurd and totally unmanageable?
       The problem may lie as much in the idea of subjecting these 
     processes to a rigid legal formula as in the formula chosen. 
     And it lies in the unchecked spread of the idea that 
     everything--college admissions, college graduation, a job--is 
     an entitlement not to be abridged without due process.
       But the complaint of the CCRI people is real enough, and it 
     has legs.
     

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