[Congressional Record Volume 141, Number 55 (Friday, March 24, 1995)]
[Senate]
[Pages S4532-S4544]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               SELF-EMPLOYED HEALTH INSURANCE DEDUCTIONS

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
proceed to the consideration of H.R. 831, which the clerk will report.
  The legislative clerk read as follows:

       A bill (H.R. 831) to amend the Internal Revenue Code of 
     1986 to permanently extend the deduction for the health 
     insurance costs of self-employed individuals, to repeal the 
     provision permitting nonrecognition of gain on sales and 
     exchanges effectuating policies of the Federal Communications 
     Commission, and for other purposes.

  The Senate proceeded to consider the bill, which had been reported 
from the Committee on Finance, with an amendment to strike all after 
the enacting clause and insert in lieu thereof the following:
     SECTION 1. PERMANENT EXTENSION AND INCREASE OF DEDUCTION FOR 
                   HEALTH INSURANCE COSTS OF SELF-EMPLOYED 
                   INDIVIDUALS.

       (a) Permanent Extension.--Subsection (l) of section 162 of 
     the Internal Revenue Code of 1986 (relating to special rules 
     for health insurance costs of self-employed individuals) is 
     amended by striking paragraph (6).
       (b) Increase in Deduction.--Paragraph (1) of section 162(l) 
     of the Internal Revenue Code of 1986 is amended by striking 
     ``25 percent'' and inserting ``30 percent''.
       (c) Effective Dates.--
       (1) Extension.--The amendment made by subsection (a) shall 
     apply to taxable years beginning after December 31, 1993.
       (2) Increase.--The amendment made by subsection (b) shall 
     apply to taxable years beginning after December 31, 1994.

     SEC. 2. REPEAL OF NONRECOGNITION ON FCC CERTIFIED SALES AND 
                   EXCHANGES.

       (a) In General.--Subchapter O of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by striking part V (relating 
     to changes to effectuate FCC policy).
       (b) Conforming Amendments.--Sections 1245(b)(5) and 
     1250(d)(5) of the Internal Revenue Code of 1986 are each 
     amended--
       (1) by striking ``section 1071 (relating to gain from sale 
     or exchange to effectuate polices of FCC) or'', and
       (2) by striking ``1071 and'' in the heading thereof.
       (c) Clerical Amendment.--The table of parts for such 
     subchapter O is amended by striking the item relating to part 
     V.
       (d) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to--
       (A) sales and exchanges on or after January 17, 1995, and
       (B) sales and exchanges before such date if the FCC tax 
     certificate with respect to such sale or exchange is issued 
     on or after such date.
       (2) Binding contracts.--
       (A) In general.--The amendments made by this section shall 
     not apply to any sale or exchange pursuant to a written 
     contract which 
     [[Page S4533]] was binding on January 16, 1995, and at all 
     times thereafter before the sale or exchange, if the FCC tax 
     certificate with respect to such sale or exchange was applied 
     for, or issued, on or before such date.
       (B) Sales contingent on issuance of certificate.--A 
     contract shall be treated as not binding for purposes of 
     subparagraph (A) if the sale or exchange pursuant to such 
     contract, or the material terms of such contract, were 
     contingent, at any time on January 16, 1995, on the issuance 
     of an FCC tax certificate. The preceding sentence shall not 
     apply if the FCC tax certificate for such sale or exchange is 
     issued on or before January 16, 1995.
       (3) FCC tax certificate.--For purposes of this subsection, 
     the term ``FCC tax certificate'' means any certificate of the 
     Federal Communications Commission for the effectuation of 
     section 1071 of the Internal Revenue Code of 1986 (as in 
     effect on the day before the date of the enactment of this 
     Act).

     SEC. 3. SPECIAL RULES RELATING TO INVOLUNTARY CONVERSIONS.

       (a) Replacement Property Acquired by Corporations From 
     Related Persons.--
       (1) In general.--Section 1033 of the Internal Revenue Code 
     of 1986 (relating to involuntary conversions) is amended by 
     redesignating subsection (i) as subsection (j) and by 
     inserting after subsection (h) the following new subsection:
       ``(i) Nonrecognition Not To Apply if Corporation Acquires 
     Replacement Property From Related Person.--
       ``(1) In general.--In the case of a C corporation, 
     subsection (a) shall not apply if the replacement property or 
     stock is acquired from a related person. The preceding 
     sentence shall not apply to the extent that the related 
     person acquired the replacement property or stock from an 
     unrelated person during the period described in subsection 
     (a)(2)(B).
       ``(2) Related person.--For purposes of this subsection, a 
     person is related to another person if the person bears a 
     relationship to the other person described in section 267(b) 
     or 707(b)(1).''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to involuntary conversions occurring on or after 
     February 6, 1995.
       (b) Application of Section 1033 to Certain Sales Required 
     for Microwave Relocation.--
       (1) In general.--Section 1033 of the Internal Revenue Code 
     of 1986 (relating to involuntary conversions), as amended by 
     subsection (a), is amended by redesignating subsection (j) as 
     subsection (k) and by inserting after subsection (i) the 
     following new subsection:
       ``(j) Sales or Exchanges To Implement Microwave Relocation 
     Policy.--
       ``(1) In general.--For purposes of this subtitle, if a 
     taxpayer elects the application of this subsection to a 
     qualified sale or exchange, such sale or exchange shall be 
     treated as an involuntary conversion to which this section 
     applies.
       ``(2) Qualified sale or exchange.--For purposes of 
     paragraph (1), the term `qualified sale or exchange' means a 
     sale or exchange before January 1, 2000, which is certified 
     by the Federal Communications Commission as having been made 
     by a taxpayer in connection with the relocation of the 
     taxpayer from the 1850-1990MHz spectrum by reason of the 
     Federal Communications Commission's reallocation of that 
     spectrum for use for personal communications services. The 
     Commission shall transmit copies of certifications under this 
     paragraph to the Secretary.''
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to sales or exchanges after March 14, 1995.
     SEC. 4. DENIAL OF EARNED INCOME CREDIT FOR INDIVIDUALS HAVING 
                   MORE THAN $2,450 OF INVESTMENT INCOME.

       (a) In General.--Section 32 of the Internal Revenue Code of 
     1986 is amended by redesignating subsections (i) and (j) as 
     subsections (j) and (k), respectively, and by inserting after 
     subsection (h) the following new subsection:
       ``(i) Denial of Credit for Individuals Having More Than 
     $2,450 of Investment Income.--
       ``(1) In general.--No credit shall be allowed under 
     subsection (a) for the taxable year if the aggregate amount 
     of disqualified income of the taxpayer for the taxable year 
     exceeds $2,450.
       ``(2) Disqualified income.--For purposes of paragraph (1), 
     the term `disqualified income' means--
       ``(A) interest which is received or accrued during the 
     taxable year (whether or not exempt from tax),
       ``(B) dividends to the extent includible in gross income 
     for the taxable year, and
       ``(C) the excess (if any) of--
       ``(i) gross income from rents or royalties not derived in 
     the ordinary course of a trade or business, over
       ``(ii) the sum of--

       ``(I) expenses (other than interest) which are clearly and 
     directly allocable to such gross income, plus
       ``(II) interest expenses properly allocable to such gross 
     income.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1995.

     SEC. 5. REVISION OF TAX RULES ON EXPATRIATION.

       (a) In General.--Subpart A of part II of subchapter N of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     inserting after section 877 the following new section:

     ``SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

       ``(a) General Rule.--For purposes of this subtitle, if any 
     United States citizen relinquishes his citizenship during a 
     taxable year--
       ``(1) except as provided in subsection (f)(2), all property 
     held by such citizen at the time immediately before such 
     relinquishment shall be treated as sold at such time for its 
     fair market value, and
       ``(2) notwithstanding any other provision of this title, 
     any gain or loss shall be taken into account for such taxable 
     year.

     Paragraph (2) shall not apply to amounts excluded from gross 
     income under part III of subchapter B.
       ``(b) Exclusion for Certain Gain.--The amount which would 
     (but for this subsection) be includible in the gross income 
     of any individual by reason of subsection (a) shall be 
     reduced (but not below zero) by $600,000.
       ``(c) Property Treated as Held.--For purposes of this 
     section, except as otherwise provided by the Secretary, an 
     individual shall be treated as holding--
       ``(1) all property which would be includible in his gross 
     estate under chapter 11 were such individual to die at the 
     time the property is treated as sold,
       ``(2) any other interest in a trust which the individual is 
     treated as holding under the rules of subsection (f)(1), and
       ``(3) any other interest in property specified by the 
     Secretary as necessary or appropriate to carry out the 
     purposes of this section.
       ``(d) Exceptions.--The following property shall not be 
     treated as sold for purposes of this section:
       ``(1) United states real property interests.--Any United 
     States real property interest (as defined in section 
     897(c)(1)), other than stock of a United States real property 
     holding corporation which does not, on the date the 
     individual relinquishes his citizenship, meet the 
     requirements of section 897(c)(2).
       ``(2) Interest in certain retirement plans.--
       ``(A) In general.--Any interest in a qualified retirement 
     plan (as defined in section 4974(c)), other than any interest 
     attributable to contributions which are in excess of any 
     limitation or which violate any condition for taxfavored 
     treatment.
       ``(B) Foreign pension plans.--
       ``(i) In general.--Under regulations prescribed by the 
     Secretary, interests in foreign pension plans or similar 
     retirement arrangements or programs.
       ``(ii) Limitation.--The value of property which is treated 
     as not sold by reason of this subparagraph shall not exceed 
     $500,000.
       ``(e) Relinquishment of Citizenship.--For purposes of this 
     section, a citizen shall be treated as relinquishing his 
     United States citizenship on the earliest of--
       ``(1) the date the individual renounces his United States 
     nationality before a diplomatic or consular officer of the 
     United States pursuant to paragraph (5) of section 349(a) of 
     the Immigration and Nationality Act (8 U.S.C. 1481(a)(5)),
       ``(2) the date the individual furnishes to the United 
     States Department of State a signed statement of voluntary 
     relinquishment of United States nationality confirming the 
     performance of an act of expatriation specified in paragraph 
     (1), (2), (3), or (4) of section 349(a) of the Immigration 
     and Nationality Act (8 U.S.C. 1481(a)(1)-(4)),
       ``(3) the date the United States Department of State issues 
     to the individual a certificate of loss of nationality, or
       ``(4) the date a court of the United States cancels a 
     naturalized citizen's certificate of naturalization.

     Paragraph (1) or (2) shall not apply to any individual unless 
     the renunciation or voluntary relinquishment is subsequently 
     approved by the issuance to the individual of a certificate 
     of loss of nationality by the United States Department of 
     State.
       ``(f) Special Rules Applicable to Beneficiaries' Interests 
     in Trust.--
       ``(1) Determination of beneficiaries' interest in trust.--
     For purposes of this section--
       ``(A) General rule.--A beneficiary's interest in a trust 
     shall be based upon all relevant facts and circumstances, 
     including the terms of the trust instrument and any letter of 
     wishes or similar document, historical patterns of trust 
     distributions, and the existence of and functions performed 
     by a trust protector or any similar advisor.
       ``(B) Special rule.--In the case of beneficiaries whose 
     interests in a trust cannot be determined under subparagraph 
     (A)--
       ``(i) the beneficiary having the closest degree of kinship 
     to the grantor shall be treated as holding the remaining 
     interests in the trust not determined under subparagraph (A) 
     to be held by any other beneficiary, and
       ``(ii) if 2 or more beneficiaries have the same degree of 
     kinship to the grantor, such remaining interests shall be 
     treated as held equally by such beneficiaries.
       ``(C) Constructive ownership.--If a beneficiary of a trust 
     is a corporation, partnership, trust, or estate, the 
     shareholders, partners, or beneficiaries shall be deemed to 
     be the trust beneficiaries for purposes of this section.
       ``(D) Taxpayer return position.--A taxpayer shall clearly 
     indicate on its income tax return--
       ``(i) the methodology used to determine that taxpayer's 
     trust interest under this section, and
       ``(ii) if the taxpayer knows (or has reason to know) that 
     any other beneficiary of such trust is using a different 
     methodology to determine such beneficiary's trust interest 
     under this section.
       ``(2) Deemed sale in case of trust interest.--If an 
     individual who relinquishes his citizenship during the 
     taxable year is treated under paragraph (1) as holding an 
     interest in a trust for purposes of this section--
       ``(A) the individual shall not be treated as having sold 
     such interest,
       ``(B) such interest shall be treated as a separate share in 
     the trust, and
     [[Page S4534]]   ``(C)(i) such separate share shall be 
     treated as a separate trust consisting of the assets 
     allocable to such share,
       ``(ii) the separate trust shall be treated as having sold 
     its assets immediately before the relinquishment for their 
     fair market value and as having distributed all of its assets 
     to the individual as of such time, and
       ``(iii) the individual shall be treated as having 
     recontributed the assets to the separate trust.
     Subsection (a)(2) shall apply to any income, gain, or loss of 
     the individual arising from a distribution described in 
     subparagraph (B)(ii).
       ``(g) Termination of Deferrals, Etc.--On the date any 
     property held by an individual is treated as sold under 
     subsection (a), notwithstanding any other provision of this 
     title--
       ``(1) any period during which recognition of income or gain 
     is deferred shall terminate, and
       ``(2) any extension of time for payment of tax shall cease 
     to apply and the unpaid portion of such tax shall be due and 
     payable at the time and in the manner prescribed by the 
     Secretary.
       ``(h) Rules Relating to Payment of Tax.--
       ``(1) Imposition of tentative tax.--
       ``(A) In general.--If an individual is required to include 
     any amount in gross income under subsection (a) for any 
     taxable year, there is hereby imposed, immediately before the 
     individual relinquishes United States citizenship, a tax in 
     an amount equal to the amount of tax which would be imposed 
     if the taxable year were a short taxable year ending on the 
     date of such relinquishment.
       ``(B) Due date.--The due date for any tax imposed by 
     subparagraph (A) shall be the 90th day after the date the 
     individual relinquishes United States citizenship.
       ``(C) Treatment of tax.--Any tax paid under subparagraph 
     (A) shall be treated as a payment of the tax imposed by this 
     chapter for the taxable year to which subsection (a) applies.
       ``(2) Deferral of tax.--The provisions of section 6161 
     shall apply to the portion of any tax attributable to amounts 
     included in gross income under subsection (a) in the same 
     manner as if such portion were a tax imposed by chapter 11.
       ``(i) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary or appropriate to carry out 
     the purposes of this section, including regulations providing 
     appropriate adjustments to basis to reflect gain recognized 
     by reason of subsection (a) and the exclusion provided by 
     subsection (b).
       ``(j) Cross Reference.--

  ``For termination of United States citizenship for tax purposes, see 
section 7701(a)(47).''

       (b) Definition of Termination of United States 
     Citizenship.--Section 7701(a) of the Internal Revenue Code of 
     1986 is amended by adding at the end the following new 
     paragraph:
       ``(47) Termination of united states citizenship.--An 
     individual shall not cease to be treated as a United States 
     citizen before the date on which the individual's citizenship 
     is treated as relinquished under section 877A(e).''
       (c) Conforming Amendment.--Section 877 of the Internal 
     Revenue Code of 1986 is amended by adding at the end the 
     following new subsection:
       ``(f) Application.--This section shall not apply to any 
     individual who relinquishes (within the meaning of section 
     877A(e)) United States citizenship on and after February 6, 
     1995.''
       (d) Clerical Amendment.--The table of sections for subpart 
     A of part II of subchapter N of chapter 1 of the Internal 
     Revenue Code of 1986 is amended by inserting after the item 
     relating to section 877 the following new item:

``Sec. 877A. Tax responsibilities of expatriation.''

       (e) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to United States citizens who relinquish (within the 
     meaning of section 877A(e) of the Internal Revenue Code of 
     1986, as added by this section) United States citizenship on 
     or after February 6, 1995.
       (2) Due date for tentative tax.--The due date under section 
     877A(h)(1)(B) of such Code shall in no event occur before the 
     90th day after the date of the enactment of this Act.

  The PRESIDING OFFICER. There are 5 hours of debate, equally divided.
  The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I do believe the distinguished chairman 
of the committee wishes to speak first.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. PACKWOOD. I thank the Chair.
  Mr. President, ``Amici attenti.'' These are the opening words in the 
play ``Fiorello'' when Fiorello LaGuardia is first campaigning for 
Congress in 1916. The set--and I saw it first in New York--is a 
wonderful set. As he is campaigning, to give the sense of ethnic 
campaigning, he has a little box and they put it on the left of the 
stage. He stands up, and as he is speaking to Italian immigrants, he 
says, ``Amici attenti, Trieste must be free as we must be free.''
  Trieste was then a port disputed between what is now Italy and what 
we used to call Yugoslavia. It was then part of the Austro-Hungarian 
Empire.
  Italy, of course, was allied on our side during World War I, and the 
Austro-Hungarian Empire was against us. And one of the big issues in 
American politics where there was ethnic campaigning--people of Italian 
ancestry--was the issue of Trieste.
  Many of us today would understand it in a different venue--Cyprus, 
those of Greek and Turkish ancestry; Jerusalem, those of Jewish and 
Moslem faith. The issues may change, but not the methods.
  It was interesting to watch ``Fiorello'' in New York because at the 
end of his little pitch to those of Italian ancestry, the box is simply 
moved to the other side of the stage, and he stands up and he is 
speaking to those of Jewish background in Yiddish, with whatever may 
have been at the time in 1916 appropriate for an appeal to that group.
  As I went to law school at New York University, that was all I 
needed, or anybody familiar with New York needed, to give the 
impression of ethnic campaigning.
  I saw the play produced at an Oregon high school some years later, 
and it was interesting the way the scene was done. They did the ``amici 
attenti,'' moved the box on the other side, and spoke in Yiddish. Then 
they moved it back, and there is the same type of interlude in Swedish. 
They moved it back again on the other side, and it was in Scottish.
  Afterward, I talked to the high school producer and asked him did he 
know he had added this. He said, yes, he had seen ``Fiorello.''
  I asked, ``Why did you add it?''
  He said, ``Because the students here are familiar with the Johnsons 
and the Eriksons and the MacGivers, but not the Giadellis, Bergers, or 
Cohens. And so, for this audience to give the impression of what ethnic 
campaigning was like, it had to be put in a form understandable to that 
audience.
  I thought to myself, we are all products of our environment and where 
we grew up. And we may see things in a different light and often at a 
different time.
  You may remember the difficulty that Ed Muskie had in 1972 when he 
used, or was alleged to have used, the word ``Canuck,'' a term of 
derogation, a term not to be used, and it hurt him in the campaign.
  Yet, you can go back not more than 60, 70 years to the musical 
``Naughty Marietta'' and the captain, Captain Dick. Captain Dick's 
infantry was almost a free-booter in terms of this little private army, 
and in the Victor Herbert musical, ``Naughty Marietta,'' you recall the 
lines:

     Tramp, tramp, tramp now clear the roadway.
     Room, room, room the world is free.
     We are Planters and Canucks.
     Virginians and Kaintucks.
     Captain Dick's own infantry.

  There it was used as a term of geography, perhaps, but really used as 
a term for rural Americans. It does not matter if we are Canucks of 
French Canadian background or planters or Kaintucks. The times had 
changed and times do change.
  I remember well January or February 1942. My father was a lobbyist 
for the principal Oregon business group, now called Associated Oregon 
Industries, and then called Columbia Empire Industries. He used to go 
to the legislature. He was a house counsel for them, not outside. He 
attempted to explain to me in 1942 an incident that I could not grasp 
at the time.
  I grew up practically every day after school at the neighborhood 
YMCA--swimming, tumbling, basketball--and it was, indeed, a 
neighborhood youth center, and we had a number of boys, members of 
Japanese ancestry. One day they disappeared. Gone.
  My father attempted to explain the relocation. He attempted to 
explain these were American citizens--he was also a member of the 
American Civil Liberties Union, even though he was a business 
lobbyist--and the unfairness in what he thought was clearly an 
unconstitutional act, and surely the Supreme Court would strike it 
down.
  I remember him calling to my attention that we were not going to 
imprison any Americans whose names were Shultz or Heindrich of German 
ancestry, even though at the time German submarines were sinking ships 
5 and 10 miles off our coast.
  It was a difference in the way we looked at ethnic backgrounds.
  Mr. MOYNIHAN. Or Giadelli.
  Mr. PACKWOOD. Exactly. We did not imprison any Giadellis or any 
DeAngelos; only those of Japanese ancestry. So as we look at things, 
our whole growing up and our whole background influence us.
  [[Page S4535]] I noticed the glass ceiling report the other day on 
women and employment. I can understand the report. It is hard for me to 
grasp, in terms of my own employment practices. The women in my office 
are my chief of staff, my press secretary, my legislative director, my 
staff director, and chief counsel on the Finance Committee. All of the 
principal positions of leadership in my offices are held by women. All 
of my campaigns have been managed by women for the last four campaigns.
  On average, although we did this study 8 or 9 months ago, women made, 
on average, $10,000 more a year than men in the office. I once had a 
man--I do not know if he was facetious or not--who talked to me about 
affirmative action and the feeling that somehow men were not treated 
quite as equally.
  In my office, if I had to have a quota system, I would have to fire 
two or three women and probably lower the salaries of many others in 
order to reach some kind of equality.
  So, again, we are all products of our background. We all see things 
as we saw them when we grew up, and often people who grow up in a 
different era, or are treated differently, come at things in a 
different way.
  I think rather than being harsh with each other and judgmental, we 
are often better to be kind.
  One of the nicest eulogies I think I ever read was by Winston 
Churchill when Neville Chamberlain died. He died in about 1942. 
Chamberlain had been the Prime Minister of Great Britain. He had been 
really the head of the pacifists and had negotiated with Hitler for 
peace for our time. He had been proven utterly wrong, and had to resign 
almost in disgrace at the start of the war.
  Churchill, all during the thirties and during the ascendancy of 
Neville Chamberlain, said, ``Watch out for that man. This Hitler is 
evil. We are going to go to war. The pacifists are wrong. We should be 
arming, not disarming.'' Everything Chamberlain did, Churchill 
disagreed with, and Churchill was right.
  Churchill's wonderful eulogy is as follows:

       At the lychgate, we may all pass our own conduct and our 
     own judgments under a searching review. It is not given to 
     human beings happily for them for otherwise life would be 
     intolerable, to foresee or to predict to any large extent the 
     unfolding course of events. In one phase, men seem to have 
     been right, in another, they seem to have been wrong. Then 
     again, a few years later, when the prospective of time has 
     lengthened, all stands in a different setting. There is a new 
     proportion. There is another scale of values. History with 
     its flickering lamp stumbles along the trail of the past, 
     trying to reconstruct its scenes, to revive its echoes, and 
     kindle with pale gleams the passion of former days.

  He goes on for another three or four paragraphs in his book and he 
concludes that, ``We do honor to one.'' Churchill would have had every 
right if he had wanted to say this man was wrong, but he did not.
  Now, Mr. President, with that background, let me come to this bill. 
The issue of this bill, de facto, is whether or not we are going to 
fund, for those who are self-employed, enough money so that they can 
deduct 25 percent in the first year and 30 percent thereafter of the 
cost of their health insurance premiums. There is no debate about that 
subject. There is barely any debate about the funding levels. We would 
all like it to be higher, but there is no debate about what we have 
done. And in the discussion of this bill, I think relatively little 
controversy, if any, would be generated about the purpose of the bill.
  But the bill became a flash point when it passed the House and part 
of the financing--we have continued it in the Senate--was the 
elimination of what are known as minority and women certificates at the 
Federal Communications Commission, whereby certificates of preference, 
in essence, are given to sellers or others of broadcast properties if 
they will sell them to minorities or to women.
  This brings us, really, to the issue--and it is interesting that in 
the Washington Post this morning there is a long story and in USA Today 
is the longest story I have ever seen for USA Today--four pages--on the 
issue of affirmative action. I thought it ironic that on the day we 
start this debate, those stories would be in two principal newspapers. 
It is doubly ironic that we start this debate on a bill that comes from 
the Finance Committee. We have jurisdiction of many things on this 
committee, but never in my wildest imagination would I have thought the 
first debate on one of the major issues to face this country would come 
out of this committee. But so be it. Like generals, you cannot choose 
where you want to fight. You fight where you have to.
  Let me discuss what the issues involved are and what we face, because 
I think in this bill and in this issue, whether or not we want to have 
preferences is really oblique. But what will come after this may be set 
by the tenor of the debate today. Take a look at the history of civil 
rights enforcement, and it really falls into three categories: 
individual discrimination, individual remedy, and then past 
discrimination, where the remedy was a group entitlement rather than 
just an individual remedy. The last is a situation is where you have no 
discrimination shown in the past at all, but you have group 
entitlements because you want to change the ratios of employment, or 
admittance to colleges, or whatever, but no showing of past 
discrimination. Those three--the first is individual discrimination and 
individual right; the second is past discrimination and group right, 
even though everybody in the group may not have been discriminated 
against. And the last is, where there is no evidence of discrimination.
  Take the first, individual discrimination. Suzy Goldberg is Jewish, 
and Suzy wants to buy a house in a housing development. The developers 
have a covenant that they cannot sell to Jews. Suzy sues and wins and 
gets the house, and Suzy gets damages. An individual wrong and an 
individual remedy. And that was what we thought we meant, I think, by 
civil rights and civil rights enforcement, that all people were to be 
judged on their individual merits and treated individually. Then we 
moved to a second phase. I remember this era because I was here. To 
digress for a moment, it is interesting, when we were debating the 
budget the other day, I mentioned a 1972 bill in which we were voting 
whether or not to give to President Nixon the power to cut the budget 
when it exceeded $250 billion. One of the younger staff members, one of 
our permanent staff members, came up and said to me, ``Senator, that 
was very interesting, but if we had term limits, would anybody know 
about that except some historian? I thought her point was well taken, 
perhaps because I am going to go back now in history. I am not sure, if 
we had term limits, that anybody would know.
  Anyway, we went through this first phase of individual remedies for 
individual discrimination--and Hubert Humphrey's wonderful comment is 
cited over and over on the 1964 Civil Rights Act. He said:

       I will start eating the pages, one after another, if there 
     is any language which provides that an employer will have to 
     hire on the basis of percentage or quota related to color.

  He was thinking individual remedy for individual discrimination. But 
the difficulty came when you started getting into a situation where you 
had businesses that simply had a history of discrimination. Women would 
not rise above a certain position. No blacks would be hired. And you 
had this 30, 40, or 50 years of discrimination. What do you do? How 
does one individual remedy solve an almost aggregated problem?
  So the Johnson administration--and my good friend, Senator Moynihan, 
the ranking member of the Finance Committee, is well familiar with this 
era. He was in the Kennedy administration in the Department of Labor 
and certainly is familiar with everything that went on as we got to the 
Office of Federal Contract Compliance and the effort to get employers 
and those who contract with the Government to do better at hiring 
minorities and women. But the administration, I think, correctly was 
afraid to actually set quotas. They did not want to use the word 
``quotas.'' Therefore, business, on the other hand, was not quite sure 
what goal they were to hit. Ironically, it fell to a Republican 
administration to really address this--there had been a couple of court 
decisions, but the first set out a remedy that went way beyond any 
remedy to rectify discrimination to an individual person. It was 
called 
[[Page S4536]] the Philadelphia plan. Here again, when I say I have 
been here long enough to remember this, I am not sure if we had term 
limits, if anyone would know this.
  The Under Secretary of Labor was Larry Silberman. He was the author 
of the Philadelphia plan. He is now on the court of appeals. I knew him 
well. I was on the Labor and Public Welfare Committee and dealt with 
him then. More importantly, I got to know his wife, and she was my 
press secretary for several years in the 1970's. So it is a 
longstanding association. Larry Silberman, now Judge Silberman, was the 
author of the Philadelphia plan. In Philadelphia, in the building 
trades, they had a history of discrimination. Initially, we thought 
against blacks, but I recall, 20 years ago, Larry saying it was not 
against blacks, it was against anybody not related to somebody already 
in the trades. You hired your cousin or your uncle's nephew, or 
somebody like that. It was a closed show. But it was totally closed to 
blacks.
  So the administration came up with the Philadelphia plan. Larry 
Silberman, Under Secretary of Labor, now Judge Silberman on the court 
of appeals, was simply decreeing that, henceforth, the building trades 
would have to hire a certain number of minorities, and there had to be 
a timetable and a goal to be reached. And the problem was--and Larry 
Silberman said, in retrospect, and he set this forth in a wonderful 
Wall Street Journal article in 1977--he said that inevitably the goals 
and the timetables became quotas. How could you know if somebody was 
meeting the goal without counting? And the counting became quotas. And, 
finally, the employers, out of frustration and fear, started setting 
quotas. If there were 20 percent blacks in the area, you try to hire 20 
percent blacks, if you can.
  I might quote one paragraph from that Wall Street Journal article 
that Larry Silberman wrote in 1977:

       I now realize that the distinction we saw between goals and 
     timetables on the one hand, and unconstitutional quotas on 
     the other, was not valid. Our use of numerical standards in 
     pursuit of equal opportunity has led ineluctably to the very 
     quotas, guaranteeing equal results, that we initially wished 
     to avoid.

  So now we have gone from an individual remedy, for an individual act 
of discrimination, to a group entitlement and having to hire a certain 
percentage of minorities, even though many in the minority may have 
never suffered any individual discrimination in hiring. They never 
applied and had never been turned down. As Larry Silberman said, once 
the Philadelphia plan was adopted, we began to apply it nationwide like 
Johnny Appleseed, scattering it every place, and even starting to apply 
it where there was no evidence of discrimination. Just assuming that 
after 200 years there had been discrimination and therefore, Mr. or Ms. 
Employer, if you want to contract with the Federal Government, you 
better have so many percentages of different minorities.
  That brings us to the issue at hand. It is the issue of the Federal 
Communications Commission and the issuance of tax certificates. We are 
principally talking about sellers of broadcast properties receiving a 
tax credit when they sell to a minority. And the sellers are the ones 
that make, initially, the great profit. Here is an example: Let us say 
you bought a radio station for $1 million 10 years ago and you want to 
sell it now. It is now worth maybe $5 million.
  The FCC says if a person sells it to a minority, they need pay no 
taxes on the profits if, within 2 years, they reinvest them in a 
similar property. No capital gains, no nothing.
  So they have a $1 million station, they sell to a white person for $5 
million, they have to pay taxes on $4 million. Sell to a minority, they 
have $4 million profit, and roll it into a similar profit and they pay 
no taxes.
  What brought this issue to a head was the so-called Viacom deal, and 
this was a big deal. This was a sale of about $2.4 billion and a 
deferral of taxes, $400 to $600 million of taxes. That is what caused 
this issue to come to a head.
  Here is the problem with the FCC tax certificate program. First, 
there is no history of discrimination in the sale of broadcast 
properties. If a person wants to sell their radio station, they will 
sell it to the highest bidder. One fellow said, ``I don't care if they 
have blue skin and an eye in the center of their forehead. If they have 
the most money, they get to buy the station.''
  There is utterly no history of discrimination in the sale of 
properties. Yet the FCC wanted to ensure that minorities could get 
properties, and they had to hinge it on something, as they had no 
history of discrimination in the sale of these properties.
  So they came up with the idea of diversity broadcasting. It is not a 
new idea; it is a policy they have followed for years. But normally we 
would have thought of it as economic concentration. A person was not 
allowed to own two radio stations in the same town. They came up with a 
policy that said, ``You have to sell one.'' Involuntary conversion. You 
sold it, you got the tax certificate because the Government made you 
sell it.
  Pretty soon they said a person could not have a newspaper and 
television station in the same town, and they required the divesting of 
the involuntary diversions, and the tax certificates were used because 
they changed policy. It was almost as if they were thinking they did 
not want William Randolph Hearst to own the television station, radio 
station, and newspaper--almost an economic antitrust.
  The argument is people wanted diversity. In 1978, the FCC, Federal 
Communication Commission, started the policy of diversity; you sell to 
minorities and you want diverse voices owning television and radio so 
you could get a different kind of editorial opinion and a different 
kind of news.
  Here is where the interesting linchpin comes. It is a difference of 
opinion as to how one reads the studies. I have now read all the 
studies. I think I mistakenly had not read enough when it went through 
the Finance Committee. I thought initially that the studies proved that 
minority-owned radio stations and television stations programmed 
differently. I have now, I think, read all of the studies that were 
relied upon, and I will cite a few.
  One was done by Marilyn Fife in 1984, an associate professor at 
Michigan State University. It was a relatively modest study, of two 
local television stations in Detroit. One was owned by a minority and 
one not, and her conclusions were as follows: There was no significant 
difference between the stations as to news and coverage of 
international politics or issues. No significant difference existed 
regarding coverage of community events and human interest stories. No 
significant difference existed as to coverage of crime, accidents and 
fire. And there was no significant difference in the amount of time 
devoted to racially significant stories. In sum, she could find in that 
study no evidence that minorities programmed to minorities.
  She did another study in 1986. This time she studied four television 
stations, one in Corpus Christi which was owned by Hispanics; another 
one in Detroit--the minority owned station she had studied previously; 
one in Jackson, MS, that was black-owned; and a station in Bangor, ME, 
that was 100 percent black-owned, principally by 35 black professionals 
who were mostly from Chicago.
  What she discovered was interesting. In Corpus Christi, which is 48 
percent Hispanic, this station owned by Hispanics attempted to 
broadcast marginally to Hispanics but they had difficulty getting 
advertising revenue, and they did the best they could. But she also 
discovered that there were other stations in Corpus Christi. These are 
radio stations owned by whites that were broadcasting to Hispanics--48 
percent of the market. We can understand why.
  The Detroit study was no different than she had seen 2 years before. 
The two stations--one black-owned, one not--still broadcast similarly.
  In Jackson, MS, about 40 percent of the population is black. But the 
black owned-station did not program any differently than the other 
stations programmed. All of the stations were aware that there was a 40 
percent black audience; it did not matter if they were owned by 
minorities or not.
  Then in Bangor, ME--the interesting one--Bangor has only about .2 
percent black population. And although the station studied was totally 
owned by blacks, they said it was first and foremost a profit-oriented 
entity. The goal of the news management was to have 
[[Page S4537]] similar news coverage as the other two local stations. 
It is understandable.
  Then we have the Trotter study in Boston in 1987. This study compared 
the types of news coverage by five newspapers and then three television 
stations and two radio stations, one white-owned and one black-owned.
  They discovered among the newspapers, initially, a tremendous 
diversity in the way the news was covered depending upon whether you 
were black-owned or not. But then look at the papers that were being 
studied. The Boston Globe and the Boston Herald were immense big 
dailies, not black-owned. The three black-owned papers were the Bay 
State Banner and the Boston Greater News, both published weekly; and 
the Roxbury Community News, published monthly.
  They, in essence, were ``narrow casting'' as can be done in the 
print. We still find all kinds of foreign language newspapers in this 
country, printed in this country, for a narrow population. Those three 
black-owned papers in Boston, two weeklies and a monthly, were 
programmed to some extent to a black audience. But we can do that in 
print; a person can do that. Say, if I have 5, 10 percent or 15 percent 
interest in this, I can make a little profit on it. But the two big 
papers, the Boston Globe and the Boston Herald that were in essence 
printing broadly for everybody, printed for the broad audience.
  Then regarding the radio stations studied in Boston--one white-owned 
and one black-owned--again what the Trotter study concluded was 
interesting. We should think of it in the context of our use of the 
words ``narrow'' and ``broad.'' What do we call the function of radio 
and television stations? We call it broadcasting. It is almost 
impossible to limit your signal to a particular segment--to broadcast 
it to a particular segment of the population. A person might get a 
particular segment to listen --broadcast country and western, or soul, 
or all news. Whoever likes that will listen. No way can a person shut 
out everybody else who might want to listen.
  What the Trotter study discovered on the broadcast properties was 
that they all broadcast ``broad'' whether they were owned by whites or 
owned by minorities. They all regarded themselves as part of the 
overall community. No significant difference.
  Then we get to the CRS study, the Congressional Research Service 
study, which admitted in itself it had some shortcomings. It was done 
in 1986, but it was done by sending out a questionnaire. It had, 
basically, sort of multiple choice and then check boxes as to what kind 
of programs are done, no personal interviews. All the stations did not 
respond, but it was a broad study. There is a question as to whether it 
was deep or not--it is hard to tell.
  From this study came the principal reliance of the courts, or the 
principal criticism by the courts, of the FCC's policy, because it 
finally came to the courts.
 And, in the Metro Broadcasting case, the Supreme Court, in a 5-to-4 
decision--although it is interesting that 4 of the 5 in the majority 
are now gone and have been replaced by the other 4 that have been 
appointed since 1990--it relied upon, basically, the CRS study and said 
there is evidence that a minority-owned station programs more likely to 
a minority audience than would a nonminority-owned station.

  But in a blistering dissent when the same case was in a lower court, 
Judge Williams said as follows:

       Hispanic targeting is obviously more likely to be 
     profitable in Miami than in Minneapolis. Thus, if specific 
     minorities are more likely to own stations in areas where 
     they are numerous (which seems likely), the difference in 
     ``targeting'' that the Report hesitantly attributes to the 
     owners' racial characteristics may be due simply to their 
     rational responses to demand.

  This was the difficulty with the study. How do you tell if a 
station--if it is in a city that has a 30- or 40- or 50-percent 
Hispanic listening audience or a 25- or 35- or 40-percent black 
audience and is owned by a minority--programs a certain way because it 
is owned by a minority or programs that way because that is the 
audience there is to listen to it? And that is what the minority, both 
at the lower court and then 5 to 4, with Sandra Day O'Connor writing 
the dissent in the Supreme Court--that was the difficulty they found. 
And she says, ``First,'' in the dissent, ``the market shapes the 
programming to a tremendous extent. Second, station owners have only 
limited control over the content of programming. Third, the FCC had 
absolutely no factual basis for the nexus when it adopted the policies 
and has since established none to support its existence.''
  In essence, she said there is no evidence to conclude that because 
minorities own a station they broadcast to minorities.
  Now, however you look at these two or three reports, where you could 
read them one way or the other, there are two glaring problems with 
them. One, the CRS, the biggest study, did not include television in 
its analysis. So you have no evidence. They just did not cover any 
television stations. And, while they included women, the report 
basically concludes that women-owned stations do not program 
specifically to women. So if your hope in giving a minority certificate 
to a seller who sells to women is to get whatever women's programming 
might be--whatever that is--you do not get it. It is no different than 
any other station that is owned by a man.
  So, in these multiple studies, you have this situation: Some arguable 
evidence--some--that a minority-owned station might program to 
minorities. But to me, the overwhelming evidence is that it depends 
upon the market that you are in, rather than the ownership. Second, as 
to women, there is no evidence that they program to women at all.
  In fact, again, I started this speech talking earlier about my 
experiences. In Oregon--I do not know if this is true in many other 
States--our second biggest market is Eugene, OR. I know what its 
population is. I do not know what the thrust or radius of the 
broadcasting market is, but I would guess 300,000; and Medford, OR, I 
guess would be our third biggest market, and I guess it would be 
200,000. Each of the towns have the three network affiliates. In each 
of the towns, two of the network affiliates are owned by women. 
Ironically, in each of the towns, the affiliates are owned--I mean in 
Medford and Eugene--each of the affiliates are owned by the same woman. 
So in Eugene, OR, you have Carolyn Chambers owning a television 
station, going head to head with Patsy Smullin, who owns a television 
station. And in Medford, OR, the same two women own two stations, going 
head to head in competition. I defy you to go to Eugene, OR, and watch 
any of the stations and try to figure out from looking at what is on it 
whether it is owned by a man or a woman. You cannot. I understand why. 
These are two canny women. They are successful businesswomen. They 
understand their markets.
  So now you ask yourself--and this is where we are coming, now, down 
to the third issue. Remember, I said there are three types of remedies 
in the history of civil rights litigation.
  One is remedies for individual discrimination. Suzy Goldberg cannot 
buy the house. She is discriminated against. She sues, she wins, she 
gets the house and damages. That is one.
  Two, you have remedies based on a history of discrimination. Let us 
say it is in employment. A business has not hired blacks, or trade 
unions have not let minorities in for years, and you sue and your 
remedy is a class entitlement in which you say: We are going to require 
the business to hire so many women or promote so many women; or we are 
going to require the trade union to let in so many minorities until 
they reach a certain quota and we are going to give this preferential 
hiring right to any number of people in the class that has been 
discriminated against even though they individually have not been 
discriminated against, but you have a history of discrimination.
  And then the third type of remedy is in a situation where you have no 
history of discrimination. This is where the difficulty comes in 
Federal programs, and it is an interesting distinction that the Court 
makes. When the Court is reviewing discrimination on the part of State 
or local governments, or businesses or trade unions, there must be 
evidence of past discrimination before there can be a remedy of any 
kind. But if the Federal Government is imposing some kind of hiring 
preference or admittance preference or whatever, the Court does not 
require any showing of discrimination. They 
[[Page S4538]] have made a distinction between Federal actions, whether 
they are administrative or congressional fiat or findings; they do not 
require any finding of past discrimination.
  That brings you to the situation where we are now with the Federal 
Communications Commission, where you have no history of showing of past 
discrimination in the sale of broadcasting properties, and where at 
best the only justification for the minority tax certificates is the 
argument that minorities or women program differently, and you get 
diversity. As I say, the evidence on this is mixed. Is that a 
sufficient justification for setting aside part of the television and 
radio spectrum for women and minorities?
  Without getting into the argument as to whether it is or it is not, 
the question you ask yourself is: Do we want a Government policy that 
says we are going to attempt to help minorities or to help women where 
there is no evidence of discrimination? And in order to help them, we 
will give them a preference and, of necessity, as there is a limited 
amount of these properties, the preference will have to exclude 
somebody else who could have otherwise bought the station or might have 
otherwise bought the station.
  I want to tell you what I think is the danger of this policy. It is 
not so much a danger as to whether or not we want to have a policy of 
giving preference where there is no discrimination. What bothers me is 
that the Federal Government is first defining minority and deciding 
what voices it wants to hear in broadcasting.
  I will tell you one group that is not included that I would think 
would have a legitimate complaint. It is Americans of Arab ancestry. 
They do not count as a minority. They are Caucasian, so they do not 
count. I would wager that the average American watching television news 
today thinks of anybody of Arab ancestry as a terrorist--they are going 
to blow up the plane, blow up the World Trade Center, or assassinate 
our diplomats. It is totally unfair to the millions of Americans of 
Arab ancestry who are hard-working, decent Americans, who send their 
kids to school--but they do not count as a minority. They cannot get 
any tax preference for the purchase of a radio station or television 
station because the Federal Government has made its decision as to 
which voices will be allowed. And when any government has the right to 
make that decision, that is a danger to be frightened of.
  Most of us in the Senate can still remember the attacks that came 
before, during, and after Nazi Germany about the Jewish-owned press. 
The New York Times was singled out by the Fascists as supported by the 
Government. They were not, but it was the allegation: supported by the 
Government. It was a front for Franklin Roosevelt. That is the kind of 
fear I have, a fear of the consequences when governments begin to 
determine who is going to have the right to be the voice of the people.
  You think back in history. Again I come back to what in my mind 
amounts to discrimination against Americans of Arab ancestry. It is 
particularly ironic if you think back in history. When we were going 
through the Dark Ages and Western Christendom was going through the 
Dark Ages, we progressed through holding on to repositories of learning 
in a few monasteries for practically 1,000 years. You had these great 
Moslem centers of learning, and Jewish centers of learning. Ironically, 
almost all of them were in what is present-day Iraq. Here were the 
candles of learning and education which we kept burning. Western 
Christendom was almost on the brink of intellectual extinction.
  So times change. Were there periods in our history where we needed to 
have group entitlements to remedy past discrimination? I emphasize that 
again. Group entitlements to remedy evidence of past discrimination? 
Maybe. Maybe not. That was the Philadelphia plan. The Philadelphia 
plan, for all of its good intentions, when it set goals and timetables 
could not avoid quotas because there was no way to get there without 
counting.
  But I really want to ask a broader question--we do not need to answer 
it really today in this bill--as to whether or not we want group 
entitlements where there is no evidence of past discrimination. Not an 
iota. And we allow the group entitlements at the expense of others in 
different groups because of the Government decision that we want to 
prefer some people over others where there is no evidence of 
discrimination.
  So as we start this debate--I do not mean today--as we start it in 
this Congress and in this country, and it is coming in the years, I 
hope we begin this debate with understanding and not malice. I hope we 
can conduct this debate with gentleness rather than rancor. I hope we 
conclude this debate with love, charity, and the hope that all 
individuals of any race or ethnic background can finally achieve their 
rightful day in the Sun where they do not have to live in the shadow of 
the suspicion that they got there because of a preference.
  I wish that we had not had to come to this today or any other day. 
But we are here.
  So let us continue, as I hope, in spirit of fairness and let us make 
the decision as to whether or not this country wants to go down the 
path of group entitlements without any evidence of discrimination.
  I thank the Chair.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, might I begin by--once again, not the 
first time and not for the last--expressing my great admiration for the 
clarity, openness, and wisdom with which the Senator from Oregon, the 
distinguished chairman of our committee, has spoken. I have nothing of 
the depth or breadth of his observations to offer myself today.
  But I would make just a very few comments, some of which might 
resonate with the chairman. He mentions that I was in the Kennedy 
administration. I was, in fact, Assistant Secretary of Labor for policy 
planning in the Kennedy and Johnson administrations. I was present at 
the creation, if you could say, when Vice President Johnson went down 
Pennsylvania Avenue, and left this Chamber. He had two principal 
activities in the Federal Government, not many, after rather enormous 
energy was given to assignments: The space committee, which was mostly 
interested in whether--the great issue at the time--that would we build 
the supersonic transport. All the major transport planes in this 
country had been begun as military models. They had gotten bigger and 
faster and so forth.
  Finally, they came along with the supersonic. It could get you 
anywhere in no time at all but with only a platoon of marines. And was 
it really worth it? The Defense Department said we will turn it over to 
civilian manufacture, if they want to. In the end, as you know, we 
decided not to and the Europeans decided to do so.
  Vice President Johnson would concentrate on that, and have meetings 
all Saturday and Sunday. But mostly he was concerned with a Department 
of Labor subject of the employment of minorities in units. He threw 
himself into that effort.
  I can remember walking into Secretary of Labor, Arthur Goldberg's 
office one morning and there on Steve Schulman's desk were three pink 
slips saying ``Call Camel.'' He was in Afghanistan, the Vice President 
at that point, in that celebrated effort in which he took a camel 
driver, and gave him a truck and ruined the man's life. They did not 
have any spare parts for the trucks but with camels you could go. But 
he was thinking of this mission and all.
  When he became President and was dealing, he was confronting, and you 
were very sensitive. If I can say to the Senator that Judge Silverman, 
commenting on the Philadelphia plan, pointed out that they discovered 
that the absence of other groups in those building trade unions was not 
a matter of discrimination against as discrimination for. There has 
been a great deal of literature, apocalyptic, grandiose, about the 
nature of the labor movement and what it would do for the world, 
transformation, and so forth.
  But still the most demanding text was written out of the University 
of Wisconsin in the 1920's by Selig Perlman, called the ``A Theory of 
the Labor Movement,'' in which he broke the hearts of a whole 
generation of progressives by saying the labor movement arises from the 
perception of the 
[[Page S4539]] scarcity of economic opportunity. There are not many 
jobs. There are only some jobs for plumbers in this town, and it would 
be very careful who gets to do the plumbing, trying to restrict it to 
your circle because the economic opportunity was scarce. That was 
published, ``A Theory of the Labor Movement,'' in 1928.
  But it also became clear as we began these efforts that we were 
dealing with issues of caste in American life, then very real, but also 
class. Particularly in the Labor Department they had been able to 
understand the class issues; that these merged in many circumstances.
  There is in the current issue of The New Republic an article by 
Richard Kahlenberg called ``Class, Not Race.'' It proposes a 
distinction which is real. But I do not think an exclusive 
consideration of either one gets you into a lot of difficulty. But he 
points out. He said:

       In Lyndon Johnson's June 1965 address to Howard University 
     in which the concept of affirmative action was first unveiled 
     did not ignore class. In a speech drafted by Moynihan, 
     Johnson spoke of the aftermath of caste discrimination which 
     had the effect of class disadvantage. That was the first 
     assertion of affirmative action as a Presidential policy.
  The speech was given in June 1965, and on September 24, Executive 
Order 11246, part one, nondiscrimination in Government employment. This 
was directed to discrimination and nondiscrimination in employment by 
Government contractors and subcontractors, addressing yourself to the 
old refrain ``no Irish need apply'' phenomenon.
  We provided that the Federal contractor had to agree to take 
affirmative action to ensure that applicants are employed and that 
employees are treated during employment without regard to their race, 
creed, color or national origin. That is the first use of affirmative 
action.
  In 1967, I had departed then but all work was done in the Labor 
Department--very important, the Labor Department--in 1967, the 
Executive Order 11246 was amended to apply to gender discrimination as 
well, by President Johnson. And then again in 1969--and peripatetically 
I am back, I am in the White House--President Nixon went further in 
Executive Order 11478 to speak basically to quantitative measures:

       The head of each executive department and agency in the 
     United States Government shall establish and maintain an 
     affirmative action program of equal employment opportunity 
     within his jurisdiction, in accordance with the policy set 
     forth in section 1, to assure that recruitment activities 
     reach all sources of job candidates.

  At this point, not to sound too theoretical, we are getting behavior 
of organizations. Two phenomena took place. One is that Federal 
executives seeking to bolster the legitimacy and widen the support for 
these affirmative action programs included successively new groups 
identified in one form or another, thinking that this would widen 
support--Native Americans, an obvious example.
  But I remember, in the 1970's, running into a list that had been 
compiled in the Department of Health, Education and Welfare which on 
one line in a list of categories had the category Maylays and Aleuts. 
It is a little hard to be clear what exactly the relationship between 
Maylays and Aleuts was, but somebody had it in their head. We will deal 
more effectively, with the kind of openness of mind and heart that the 
Senator has spoken of, if we are aware that we are not alone in this 
matter. Ethnic divisions are the primary source of division in the 
world today, class division having turned out to be much less 
powerful--not absent but much less powerful. The problem is, as the 
Senator has referred, once you list 10 groups, you have excluded 110 
groups. So then you go to 11 and then you will go to 12. But you never 
reach a point where there is nobody that has not been excluded, and 
indeed our affirmative action programs today on behalf of minorities 
cover about 75 percent of the population.
  The second point to make, if I may--and I am sure the distinguished 
Presiding Officer would recognize this--it is invariably, inexorably 
the pattern of bureaucratic behavior--I know it is a bad word but it is 
a reality--to seek to quantify. They will say count up and then we will 
know. It is Weberian uniformity. I have got to be able to say I have 
the same standards you have and let us measure by these same standards 
which will turn out to be quantitative. Let us see who has done the 
better job.
  I think if we demystify a lot of this, we will do a better job in 
handling it, with the openness that the Senator talks about, because 
let us not have any illusion about the problems of equality in the 
United States. There are very real problems of equality. The Senator 
from Oregon nodded agreement at this point. They are enduring problems 
and a democracy inevitably and properly addresses them, and does so in 
settings of great emotion because the one basic fact is that we are a 
Nation defined by credo rather than by territory and blood, and the 
credo of equality is very powerful in the United States. In the end, 
you have to be very sensitive to perceptions that it is not being 
equally applied, and that is one of the things we are going to deal 
with here.
  If my friend would permit, however, I would like to address the more 
pedestrian but yet more urgent matter before us which is the 
restatement of the 25-percent tax deduction for the health insurance 
expenses of the self-employed, which is the measure before us today.
  Authority for this tax deduction expired at the end of 1993. The 
health care reform legislation reported by the Finance Committee last 
year would have reinstated it on a timely basis, but obviously we did 
not get that legislation passed. Thus, we have a situation where the 
filing deadline for the 1994 tax year is fast approaching and the self-
employed are left with no health insurance deduction. It is imperative 
that we act promptly on this legislation so that more than 3 million 
self-employed individuals across this country can file their 1994 tax 
return by the April 17 filing deadline. We must act quickly, and I am 
confident we will.
  Of course, reinstating the deduction costs revenue. In order to avoid 
increasing the deficit, we must offset its cost with other provisions. 
And I was concerned, with colleagues on both sides of the aisle, that 
we have decided to pay for the health insurance deduction with a 
provision that has a long history and is controversial, as the chairman 
observed.
  I refer to section 1071 of the Internal Revenue Code which authorizes 
the Federal Communications Commission to provide tax deferral to 
sellers of broadcast properties when such sales effectuate FCC 
policies, including sales to minority purchasers to foster program 
diversity. This bill would retroactively repeal section 1071 so that 
even those transactions which had been negotiated in reliance on 
section 1071 could not go forward. One thing is clear as we consider 
this bill--there were other ways to pay for the reinstatement of the 
deduction.
  Mr. President, many assertions have been made about the FCC tax 
certificate program, some justified, some not. I, and many of my 
colleagues, recognize that valid questions have been raised about the 
way that section 1071 is currently being administered. But, before we 
act on this bill, we should be clear that other options were available, 
short of outright repeal on a retroactive basis. I proposed an 
amendment in the Finance Committee that would have paid for the health 
insurance deduction at an increased level of 30 percent, avoid the 
issue of retroactivity, and provided a moratorium of up to 2 years on 
the FCC's issuance of tax certificates. During the moratorium period, 
no FCC tax certificates would be issued and applications for tax 
certificates would not be processed by the FCC. The Administration is 
undertaking a comprehensive review of all Federal affirmative action 
programs. The moratorium would have provided adequate time for the 
Congress to take a careful look at section 1071, consider any 
recommendations from the administration, and make changes in an orderly 
way. Section 1071 was enacted more than 50 years ago, in 1943, and its 
application to sales of broadcast properties to minority purchasers has 
been in place for 17 years, since 1978. It is only reasonable to expend 
more than a few weeks when making significant changes to the provision. 
Unfortunately, the necessity of acting quickly on the extension of the 
self-employed 
[[Page S4540]] health insurance deduction has precluded that kind of 
deliberation.
  The amendment that I offered in the Finance Committee to this 
legislation would have eliminated the retroactive aspect of the repeal 
of section 1071. Our colleagues in the other body, and more recently 
the Senate Finance Committee, have voted to repeal section 1071 on a 
retroactive basis--that is, retroactive to January 17 of this year, the 
date on which the Chairman of the Ways and Means Committee issued a 
press release raising concerns about the provision. The best 
information we have is that there are at least 19 transactions that 
were negotiated in reliance on the existence of section 1071 and had 
FCC tax certificate applications pending on January 17. In many of 
these cases, the parties had signed definitive purchase agreements, 
subject only to issuance of an FCC tax certificate, filed applications 
for FCC tax certificates, and expended hundreds of thousands--in some 
cases, millions--of dollars in negotiation costs. All done in reliance 
on an FCC policy that had been in place for 17 years and had been 
expressly reaffirmed by Congress in each annual appropriations bill for 
the FCC since 1987, most recently in appropriations legislation passed 
in August 1994.
  Businesses cannot plan, cannot negotiate, and cannot compete on a 
fair basis under the threat of this kind of retroactive reversal of the 
law. The critical issues are adequate notice and justified reliance. 
Many of us believe that the affected parties justifiably relied on the 
law in effect when they entered into their transactions, and that the 
notice they received was not adequate. This kind of retroactive 
legislating should not be done. I regret that it is in this bill, but 
the time has now run out for alternatives if we are to get the self-
employed health insurance deduction reinstated within a reasonable 
period before tax returns for 1994 must be filed.
  Mr. President, we could have addressed the need to extend the self-
employed health insurance deduction in a timely manner without 
retroactively repealing the Minority Broadcast Tax Preference Program. 
We must act promptly to reinstate the 25 percent tax deduction for the 
health insurance expenses of the self-employed. And, we will. I regret, 
however, that my colleagues did not accept the amendment I offered in 
the Finance Committee which would have allowed us to review this 
provision more carefully, correct what must be fixed and retain what 
has clearly worked for so many years.
  Mr. President, I see the Senator from Maine has been on the floor. I 
think he wishes to address this.
  I yield the floor.
  Mr. COHEN addressed the Chair.
  The PRESIDING OFFICER (Mr. THOMAS). The Senator from Maine.
  Mr. COHEN. Mr. President, first let me say that we have heard 
presentations here this morning by, I believe, two of the most 
intellectually gifted, eloquent Members of the U.S. Senate, both of 
whom have a long record in the field of civil rights and affirmative 
action programs that attempt to rectify policies of discrimination.
  The PRESIDING OFFICER. Let me interrupt the Senator.
  Who is yielding time?
  Mr. PACKWOOD. Mr. President, I yield as much time as the Senator may 
need.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. COHEN. I thank the Senator for yielding.
  I would like to discuss the broader issue involved here. Since this 
particular bill is said to be the first wave of an oncoming assault on 
all affirmative action programs, I would like to discuss the subject in 
a broader context.
  First, commenting on the statement of the Senator from New York, we 
are trying to provide very much needed relief to the self-employed, a 
tax benefit that had expired last year for self-employed individuals 
who need to purchase health insurance. That deduction expired last 
year. It needs to be restored.
  In my own opinion, we need to expand it as we try to reform our 
health care system. Many of us would like to see the self-employed put 
on the very same footing as the employers who now claim a 100-percent 
deduction. Obviously, that will involve a revenue loss and we will have 
to find ways to pay for it. That, of course, is the second component of 
what we are talking about here today, finding ways to pay for the 
restoration of a tax benefit that we would like to see not only 
restored but increased.
  I think what is remarkable from my perspective, in reading today's 
Washington Post front page story about the mood that is sweeping the 
country, one that the polls tell us is overwhelming, that is the 
rejection of the whole notion of affirmative action.
  Many people assert today that we are living in a color-blind society. 
I feel that is a flagrant falsehood. I do not for one moment believe 
that we live in a color-blind society. I think, quite to the contrary, 
perhaps we are more color conscious than ever by virtue of the social 
developments that have taken place in the past 10, 20, 30 years.
  There is also a notion that not one of us should ever be held 
responsible for past discrimination. In other words, you could have 
what you call 2 centuries or 4 centuries of absolutely reprehensible 
conduct and its impact on the minority groups, and there should be no 
curative or restorative responsibility borne by today's generation. 
That is a sentiment which apparently is very widely held.
  Another widely held view is that unqualified blacks and minorities 
are taking jobs away from more qualified white males, and some would 
even argue genetically intellectually superior individuals. They refer 
to ``The Bell Curve.''
  It has also been stated that reverse discrimination--which, I think, 
is a misnomer, reverse discrimination, because discrimination really 
means you have the power to discriminate, to hold someone down or back. 
For most people who fall into the category of minority, they do not 
have power. But, nonetheless, assuming you accept the phrase ``reverse 
discrimination,'' some have said it is an evil equal to slavery. I find 
that to be more than a mild exaggeration, given the history of what has 
taken place in this country.
  And, of course, most people believe, and all of us here share in that 
belief, that we are fundamentally opposed to discrimination.
  On one hand, we are fundamentally opposed to discrimination; namely, 
basing our decisions and judgments of people on the color of their skin 
or the texture of their hair, their gender. We are all opposed to that, 
but we also reject any affirmative programs to rectify discrimination 
where, in fact, it exists.
  I would like to say, respectfully, to my colleagues that we have yet 
to fully and honestly confront the fact that racism is an evil that is 
not simply a stained chapter in our history books. It still flourishes 
in many overt and, I would suggest, even more subtle ways.
  We tell ourselves that we practice our religious teachings in terms 
of loving our fellow man, until a controversy arrives or a conflict in 
our emotions or our loyalties, and then the darker angels of our nature 
surface and they lash out and they blame or condemn those whose race or 
gender is different from our own.
  I recall during the Iran-Contra hearings--those were chaired by our 
distinguished colleague from Hawaii--by virtue of the fact that we had 
a very popular lieutenant colonel testifying before that committee, the 
hate mail started to pour in, hate mail directed at Senator Inouye--a 
floodtide of nasty, negative epithets directed toward a man who had 
given his limb, offered his life in defense of this country. And yet, 
because he had the audacity to question a Marine, a popular Marine, 
suddenly the hate surfaced and was directed at him.
  I thank our colleague from New Hampshire, Senator Rudman, who spoke 
out vocally and strongly against that, condemning the indulgence of 
racial hatred. Because, suddenly, the poisonous emotions started to 
bubble up, and the hate-mongerers said, ``Ah-ha, there is a minority. 
How dare he challenge one of us.''
  And so, this has been our past and I think it will continue to be our 
future unless there are major changes that will take place, hopefully 
during our lifetime, but I doubt that.
  So we have to go back and ask what was the basis for affirmative 
action.
  The Senator from Oregon, gave a very perceptive analysis of its 
birth. 
[[Page S4541]] But I think it is partly guilt, partly guilt on our 
part. And with reference to the Philadelphia story, so to speak, the 
Philadelphia plan, some saw it as partly political expediency.
  The guilt came about because we had recognized that we had 
perpetrated a monstrous evil, that we had enslaved a people, that we 
had called them only three-fifths human, that we had destroyed their 
families, their dignity, their pride, and that we had deprived them of 
opportunity. We had prohibited them from learning to read or write or 
vote. And then we insisted that they should be willing to fight and die 
for America, but they could not sleep in the same barracks, they could 
not eat in the same dining halls, they could not drink from the same 
fountains.
  I do not know whether the Senator from Oregon saw the article that 
appeared in the Washington Post about a week or two ago about the 
Tuskegee airmen. It was a poignant story. It was a reunion of the 
Tuskegee airmen, a group of black pilots who flew back in World War II. 
It was a very emotional reunion for them. There were tears welling up 
in their eyes as they were telling their stories.
  They had to fight two wars. They had to fight a war against Hitler 
and they had to fight one against an inner rage that was burning inside 
them toward a society that said they could be equal only on the fields 
of slaughter.
  We recall not too long ago in our history that we were turning German 
shepherd dogs on blacks who were marching or sitting in, hoping to 
enjoy the equal rights and privileges that we have under the 
Constitution. We blasted them with fire hoses.
  It was in the wake of the marches and the sit-ins and, I might 
suggest, the assassination of Martin Luther King, Jr., that we, as a 
society, finally recognized and admitted that we had not measured up to 
our professed ideals, either as individuals or as a nation.
  That gave birth to the affirmative action programs to break down the 
barriers in the worlds of construction and housing and corporate 
finance and banking and, yes, even eventually in the communications 
world.
  The purpose, as the Senator from Oregon has suggested, was not to 
give unqualified people special preferential rights, but rather to give 
people who were, in fact, qualified and eager and ambitious the 
opportunity to enter into fields that had been denied them solely by 
virtue of the color of their skin or their gender. That was the purpose 
of the affirmative action program.
  The Senator from Oregon said it was inevitable--quoting those who 
were the formulators of the program--inevitable that the affirmative 
action programs would lead to quotas--inescapable. All of us are 
opposed to quotas, because it is just the reverse of what we are trying 
to do; namely, not give any group preferential treatment by virtue of 
the color of their skin or the nature of their gender who are 
unqualified, but rather to use some affirmative action to allow those 
who are, in fact, gifted and willing and able to break through barriers 
that may be made of glass or concrete.
  I mentioned expedience, by the way. The Senator from Oregon pointed 
to the Philadelphia plan. It has been written that Richard Nixon seized 
upon the plan back in the seventies, to get at the Democrats, to break 
through the trade and contruction unions who had at that point, and to 
this day, I suspect, still basically support the Democratic Party. That 
this was a way to really drive a wedge into the Democratic Party by 
opening up that particular marketplace, so to speak, to blacks who had 
been denied that opportunity.
  So the question is, have we been successful? I suggest only partly. 
The Senator from Oregon rightly talks about stereotypes. What happens 
to Arab-Americans in this country? We immediately see the stereotype of 
a terrorist. How unfair, as he has pointed out.
  The same thing is true for African-Americans in this country. We see 
them, do we not, as athletes? We are witnessing the return of Michael 
Jordan and a tremendous outpouring of pride and near hysteria at his 
returning. We see them as entertainers. But do we see them as 
entrepreneurs, as such? Not really.
  As a matter of fact, there have been stories about the problem out in 
L.A. right now. All of us--not all of us, but many millions of people 
in this country--are mesmerized by the trial going on in Los Angeles 
right now. Why is it, as the trial attorney Jerry Spence suggests, that 
African-Americans look through a different lens than we do because they 
have had a different experience than we have had. That experience has 
not been a pleasant one, apparently, in Los Angeles.
  Story after story starts to emerge about prominent actors or athletes 
who have been followed right to their homes, to their doorsteps because 
they happen to be driving a Mercedes or another expensive car, and 
immediately, of course, what do the police suspect? ``Must be a stolen 
car.'' Either that or, ``He is a drug dealer. Let's arrest him or stop 
him. Let's see the identification and make him prove ownership.'' So 
there are still stereotypes which exist to this very day.
  Talking about affirmative action programs, I think the Senator from 
Oregon pointed out the CRS study was at least deficient in one respect. 
It had not analyzed television. I was going to ask the Senator from 
Oregon or the Senator from New York as to whether or not there is any 
relationship between minority ownership in programming, whether he has 
ever watched Black Entertainment Television? That is minority owned. 
There is a great story involved in that particular television station.
  The owner, Robert Johnson, when he was applying to college, 
Princeton, was initially denied admission, except that he was then 
allowed to enter through a minority admissions program. He ended up 
finishing sixth in his class.
  What he gained from that entry into Princeton was access to other 
Princetonians, access to capital, access to influence. And had he not 
had that opportunity to break through that barrier that initially had 
been denied him, he would not be in the position that he is today.
  So he started Black Entertainment Television about 20 years ago with 
a personal investement of--I do not know-- $25,000, $30,000, $40,000, 
whatever it was. Today, that station is probably worth $300 or $400 
million.
  I challenge anyone to watch the program. Is it different than CBS 
programming or NBC or CNN? I suggest to you the programming is quite 
different. It is quite different. And I suggest that that relationship 
between the ownership and his status has a great deal to do with that 
programming.
  The Senator from Oregon asked the question: Do we want to grant 
preferential treatment to groups where there is no evidence of past 
discrimination? But there is another question I think we can also ask: 
How do those who have been victims of past or present discrimination 
ever acquire that access to the capital that is necessary for them to 
be in a position to acquire radio stations or television stations?
  In other words, if you take the position that you have historically 
denied education to a group, let us say African-Americans, equal to 
that of another group, namely, white Americans, and then you, as an 
employer, say, ``I can't find any qualified blacks,'' that is the 
circular argument that those who are struggling to break through the 
barriers find themselves confronting.
  I come back to the issue of stereotypes. All of us recall the 
Clarence Thomas hearings and the Anita Hill testimony. What was really 
remarkable to me is the reaction of the people to those hearings. They 
said, ``Isn't it amazing there were so many articulate blacks 
testifying during the course of that hearing?'' Now, why should that be 
so stunning? The word associated with those blacks being 
``articulate,'' as if we expected them to be inarticulate. Again, 
another stereotype that they have to confront. We expect them to not be 
as educated or articulate as those in the white community.
  Mr. President, I ask the question: Should we discontinue preferential 
treatment to veterans in this country? I see the Senator from New York 
is rising quickly on his feet, having been a noble sailor in his youth. 
But we grant preferential treatment to veterans. Why? Because of the 
sacrifice they have made in serving their country as a group.
  Not every one of them served in the Persian Gulf or in Korea on Pork 
Chop 
[[Page S4542]] Hill or in Vietnam or at Iwo Jima--wherever it might be. 
Some stayed right here in the United States. Some sat behind a desk, 
never facing the threat of a bullet or a bayonet or a bomb. But we as a 
society say, nonetheless in hiring practices, we give preferences to 
our veterans, and we decide that.
  When the Senator from Oregon says it is dangerous whenever a 
Government decides to determine who is in and who is out, well, we are 
the Government. We are the elected officials. We decide. We are held 
accountable by our constituents, and we have decided that there is 
merit in that particular case.
  So I think this is just the beginning of a debate that needs to be 
approached, as the Senator from Oregon has said, with great 
sensitivity, with a recognition that this is a very powerful issue in 
this country; that it has the potential to become not only a wedge 
issue but a very damaging, polarizing issue in our society.
 We have to look to see whether or not everything should be scrapped in 
dealing with affirmative action. Let us say, for example, we have 
abuses in the Food Stamp Program, do we not? We have abuses in the 
welfare program, do we not? We have abuses in the Federal procurement 
programs, do we not? We have abuses in the workman's compensation 
programs and in the disability insurance programs. Has our answer been 
to terminate them, just kill the programs, they do not work. Or to stop 
feeding people and let them fend for themselves? We say, wait a minute, 
let us see if we cannot modify them.

  Maybe the States have a better idea. Maybe there are ingenious 
Governors, creative individuals at the State and local level, that can 
do a better job than we have done. But the answer has not been, let us 
just terminate it, it is not working.
  That is my fear, as we begin this debate, not on this issue 
specifically, but on the broader discussion of affirmative action, 
because if we simply go by what the polls say, there is no contest. But 
I think we have a higher duty than to simply read the polls and to 
really examine what is at stake here.
  The stereotypes continue, as I have said. I recall reading an article 
by columnist Michael Wilbon, a Washington Post sports writer. He 
described an incident where he and five friends, an investment banker, 
a venture capitalist, a manufacturing executive, a lawyer, and an 
international marketing director for a large company, went down to the 
Super Bowl. They were dining in a restaurant and the waitress kept 
coming over to the table saying, ``Who do you play for?'' Well, he is a 
noted sports writer, and he was in the company of a reputable lawyer 
and, as I recall, an accountant, and an investment banker. But the 
waitress would not take that for an answer. ``No, no, no, who do you 
play for?''
  So we have to deal with the issue of the stereotypes and what that 
means and what they continue to mean for individuals who try to break 
out of the stereotypes, who are trying to get into occupations and 
positions and to start a on a level playing field, which has not 
existed to date.
  Whatever failures have been in affirmative action programs, let us 
look at them carefully and let us try to see if we cannot change them. 
If there is no evidence of past discrimination in the field of 
communications, that is one thing. If this is indeed a system which has 
been exploited and abused by white corporate owners and not really 
serving the minority community, then it is time for a change and indeed 
maybe in this case even a termination.
  But I hope, Mr. President, as we begin this debate on affirmative 
action, that we approach it in the concluding words and with the 
concluding sentiments expressed by my friend from Oregon--with a sense 
of responsibility, not with a sense of hate or malice, or 
vindictiveness, or a simple urge to purge our laws as such of their 
preferential treatment to groups that historically have been 
discriminated against and continue to be discriminated against every 
day--every day of their lives.
  So I commend my colleague from Oregon and also my friend from New 
York. I hope that we can begin this process of fixing those programs 
that have been misused or abused. But I hope we will refrain from 
playing the wedge issue, which I know the Senator from Oregon, the 
Senator from New York would never do, because those wedge issues can 
become polarizing, divisive issues that will not serve this country 
well.
  I wanted to take the floor to express those sentiments. I know that 
is not the fashion in which you have proceeded. I commend the Senator 
for his comments as he expressed them.
  Mr. PACKWOOD. Mr. President, I want to respond to my good friend from 
Maine. He and I have probably been on the same side of more issues than 
any other person in this Chamber. He mentioned Bob Johnson, the founder 
of Black Entertainment Television. Well, I met him. Despite the fact 
that he was a Princeton man and as qualified as anybody, his problem 
was access to capital. I do not know what I would have done as a banker 
20 years ago if somebody came to me and said, listen, I have this idea 
for an all black entertainment channel. I do not know. It is 
interesting how he got the money. He could not get it from the banks. 
He went to John Malone of TCI. I think Malone is maybe one of the 
finest entrepreneurs in this country. Bob Johnson explained what he 
wanted to do. John Malone said, ``How much do you need?'' Bob said, 
``$500,000.'' Malone said--and I thought this is where Bob Johnson was 
so humorous. He said, ``All right, I will put up $125,000, but I want 
20 percent of your stock. I will loan you $375,000.'' Malone did not 
know that Johnson would have given him 80 percent of the stock. He got 
the $500,000 and he said to John Malone, ``I have not really been in a 
business. Do you have any advice? Malone said, ``Keep your expenses 
below your income.'' From that grew Black Entertainment Television.
  There is an interesting difference. Cable is more like the ethnic 
newspapers. Cable is narrowcasting. This is where a smart entrepreneur 
can say, I can make money on 5 or 6 percent of the audience, not 60 
percent. As you skim through the channels now, whether it is education, 
discovery, or history, I doubt if any of them have 50 percent of the 
audience, but they have 5, 10, 20 percent. There is money to be made.
  The Senator put his finger, I think, on the most interesting issue 
here. No question, in my judgment, there is no discrimination in the 
sale of the broadcast property. If you have a radio station and you 
want to retire, you are going to sell to the highest bidder. One owner 
said, ``Even if you have blue skin and an eye in the center of your 
forehead, you will get it.'' The potential is limited to those who have 
the money to buy. Minorities, and maybe women to a lesser extent, did 
not have access.
  So now the question becomes this, and I do not know the answer. 
Because minorities have been discriminated against for centuries, and 
because women could never rise above--you remember the settlement with 
AT&T 15 years ago. There was a glass ceiling. You could be a Ph.D and 
be first in your class in all the schools, and there is a level beyond 
which you were not going to go. Because of the past discrimination and 
because of the past access to capital--the lack of it--we set up a 
preference program in an area where there has been proven 
discrimination, simply to say we want 5 percent women or 10 percent 
women to own, and we want 10 percent Asians and 5 percent this and 5 
percent that. You just do it. I am not sure I know the answer. But 
clearly, that is the discussion we are going to have.
  Mr. COHEN. Here is another example of the problems confronting 
minorities in this city. Many years ago--almost more than 20 now--I had 
a problem with a car. I purchased a used car. I had a problem with it 
and took it over to a dealer, which will remain unnamed. The dealer 
told me the cost for fixing that particular automobile would be $1,800. 
I said, ``$1,800? That is more than I paid for the car.'' I then came 
back to Capitol Hill and inquired, ``Does anybody know a good 
mechanic?'' which is hard to find in any city. They gave me the name of 
Clarence Davis. I went to see Clarence and I said, ``Can you fix this 
car?'' He said, ``Well, let me look around.'' He kind of tapped it here 
and there. He said, ``I can fix it.'' I said, ``How much?'' He said, 
``Do not worry about the money.'' I said, ``No, no, how much?'' He 
said, ``I am telling you do not worry about the money.'' So I, with my 
trusting soul, 
[[Page S4543]] handed him the keys to the car and said, ``OK, fix the 
car.'' Do you know what the bill was? It was $68. I will repeat that. 
It was $68. Behold, I had found a man, an honest mechanic. And sooner 
will a camel pass through the eye of a needle than you will find a 
mechanic that will charge you $68 for something somebody else wanted 
$1,800 for.
  I have maintained a relationship with this individual. He ended up 
working for another station on the hill, owned by a Korean family. He 
was their real source of income, because everybody wanted to go to 
Clarence in order to have their automobiles fixed. He is really a 
genius in fixing automobiles. Then it occurred to him that he is 
working for somebody else, and would he like to go into business for 
himself? The answer was: Of course he would. He had a clientele of 
mostly Senators and Congressmen. But guess what? He could not get a 
loan. No matter that he had his eye an a piece of property that was 
prime territory; it was a great bargain and it was an old Exxon 
station; it was closed down. He had a list of clients at least 75 long 
of Members of Congress and executive branch, who testified to his 
competence, and he showed a stream of income that would have more than 
paid for the mortgage. He could not get a loan. I sent him to every 
bank in Washington. He could not get a loan. So then I contacted a 
wealthy, white friend of mine, whom I had never asked a favor from in 
my life. I said, ``Here is a person who is talented, brilliant, and he 
cannot get a loan in this city.'' And the individual made the loan, and 
the business is there and is flourishing today.
 It shows the barriers that people are up against.

  Now here we are, in a predominantly black city, with a predominantly 
black clientele. Suppose now that individual, with a great record, 
history, clientele could not get a loan.
  That is what I am talking about when I say ``access to capital.'' 
Give a person the access to capital and they can perform and prevail as 
anyone else. But that has been the history of denial in this country.
  I say to my friend that I do not have the answer to it. I think the 
affirmative action programs were designed to achieve that. If they have 
gone astray, we ought to try to modify them as best we can. If it 
becomes the collective judgment of the people in this country, this 
Congress, that they no longer serve a socially useful goal, then 
obviously they will be terminated.
  I must say that we have not yet reached our ideal of a colorblind 
society. There are still many, many, racial stereotypes that exist 
today. They will not be easily eliminated. So we still have an 
obligation, I think, to help those who have the talent and the ambition 
and the desire to share fully in the real benefits and bounty of this 
country, who have been denied that opportunity.
  Mr. PACKWOOD. Mr. President, I yield such time as the Senator from 
Delaware may need.
  Mr. ROTH. Mr. President, I thank the distinguished chairman.
  Mr. President, what we are doing today is a most important step, one 
I have worked for for quite some time. I would like to thank the 
majority leader and the Finance Committee chairman for moving so 
quickly to pass this legislation--legislation that is extremely 
important for our hard-working farmers, as well as our job-creating 
small business men and women.
  Few people understand how very difficult it is to get a tax bill 
passed through both Houses of Congress within about 2 months' time. I 
believe we have been successful not only because of the efforts of 
Senators Dole, Grassley, Pryor, and me, but because our esteemed 
colleagues understand how important, how fair, this measure is.
  It has been my objective, along with Senators Dole, Pryor, Grassley, 
and others, to get the self-employed health insurance deduction passed 
retroactively for 1994; to have it passed before the filing deadline 
next month.
  Personally, I will continue to do everything I can to get this bill 
passed and out of conference with the House before April 17, the 
deadline this year for filing our taxes.
  This is so important to me that at the conclusion of the Senate 
session last year, I held up a vital Securities and Exchange Commission 
funding bill as long as I could because it was the last tax bill 
leaving the Congress. Since it was our last chance, as well, to get the 
25-percent deduction extended, I wanted to attach this legislation to 
that bill so that there would not be this administrative nightmare 
facing small businesses and farmers, because they might have to file 
amended tax returns.
  The Finance Committee chairman at that time, Senator Moynihan, joined 
in a colloquy agreeing we would take up the legislation early this year 
if I would let the SEC bill go forward. I reluctantly agreed. The new 
Finance Committee chairman, Senator Packwood, has kept that promise to 
move quickly, and we have. In fact, to pay for this bill, we have used 
some of the ways I suggested last year. In particular, I am pleased 
that we have enacted some of the changes I have been recommending on 
the earned-income tax credit.
  Earlier this year, in an effort to encourage the House to pass the 
25-percent health insurance deduction, I circulated a letter with my 
good friend and colleague, Senator Pryor, which was signed by 75 
Senators.
  That letter, sent to both leaders, stated that in order to move 
quickly, we would all agree not to support or offer any amendments to 
the legislation to extend the 25-percent deduction for health insurance 
for the self-employed when it reached the floor of the Senate. I 
believe this letter was instrumental in helping get this bill passed 
quickly.
  Finally, I want to mention that we are not done with the deduction 
for self-employed, even though this bill will enact the legislation on 
a permanent basis for the first time. I believe it must still go 
forward. I believe we need to increase the 30-percent deduction to a 
full 100 percent, just like major corporations get for that health 
insurance. In fact, it was my amendment in the Finance Committee that 
increased the 25-percent deduction to 30-percent beginning in 1995 and 
forever after that.
  Although my amendment made progress, we have to go a lot further. I 
will continue to do everything I can to increase the deduction to 100 
percent.
  Mr. President, I yield the floor.
  Mr. PACKWOOD. Mr. President, I suggest the absence of a quorum.
  I ask that the time be charged equally.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, I would like to take just 2 minutes in 
support of the pending bill. Then I would ask unanimous consent to 
speak for 10 minutes as if in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Who yields time?
  Mr. MOYNIHAN. Mr. President, I am happy to yield such time as 
indicated to my distinguished friend from North Dakota.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I thank the Senator from New York. I did 
not know we were under a time agreement.
  First, let me say that I believe the matter of providing 
retroactively the 25-percent tax deduction for sole proprietorships and 
self-employed--including farmers--is very, very important.
  We should not have let that expired. It did. But now to make it 
retroactive, so that it is a seamless 25 percent, makes a lot of sense. 
I believe we ultimately ought to make sure that sole proprietorships 
are able to deduct 100 percent of their health care costs, just as 
corporations are.
 My State is a lot like old England. It is a State of shopkeepers, 
small business people, many of whom are sole proprietors and 
unincorporated, including family farmers. Across the street may be 
someone who is incorporated. They can, under current law, deduct all of 
their health care costs as a business expense. On the other side of the 
street someone in business, but unincorporated, is now 
[[Page S4544]] able to deduct zero. With the passage of this piece of 
legislation, he will be able to deduct only 25 percent; 25 percent is a 
step forward. That is good. We certainly need to restore that. But I 
have introduced legislation and supported legislation and fought for 
legislation for years to make sure that we treat all businesses alike--
unincorporated and incorporated.
  Health care costs ought to be fully, 100 percent deductible as a 
business expense for farmers and sole proprietorships just as it now is 
for corporations.
  So I commend the Senator from New York and the Senator from Oregon 
for bringing this legislation to the floor. I fully support it. I think 
the work the two Senators have done to correct this is admirable work 
and I hope we all can work together for a full 100-percent deduction 
for all sole proprietorships in the years ahead.
  Mr. PACKWOOD. Mr. President, I yield as much time to the Senator from 
Rhode Island as he may need.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, first I thank the distinguished chairman 
of the Finance Committee and the ranking member of the Finance 
Committee, the former chairman, for giving me this time.
  Mr. President, I am very pleased that this bill has come to the floor 
today and will be considered in an expeditious manner. I believe 
Congress needs to pass this legislation promptly so that hundreds of 
thousands of self-employed taxpayers can complete the filing of their 
1994 income tax returns.
  The bill reported by the Finance Committee includes sufficient 
revenues to pay for the extension of the health insurance deduction. 
That is covered. We also came up with additional money which will 
reduce the deficit by about $1.4 billion over the next 5 years. In 
terms of the entire Federal budget this is a modest amount--$1.5 
billion over 5 years. But it represents a step in the right direction.
  What concerns me about this bill, Mr. President, is that it provided 
a modest test--not a gigantic test but a modest test--of our desire to 
reduce the deficit; and I am afraid that we are in danger of failing 
that test.
  Let me review the bidding. The immediate need which prompted the 
quick consideration of this legislation was a desire to extend the 25-
percent deduction for the health insurance of self-employed individuals 
for 1994. Absent this action, they would not have been able to take 
that 25 percent deduction because it expired at the end of 1993. And we 
wanted to get this done before the filing date of April 17 for the 
income tax returns. That is the way it started out--take care of this 
year.
  In the Ways and Means Committee the members chose to permanently 
extend the deduction. In other words, the 25 percent deduction for 
health care costs paid by the self-employed was to remain permanently 
on the books. The Finance Committee went a step further by not only 
making it permanent but also increasing the deduction from 25 to 30 
percent for the year 1995 and thereafter.
  So what started off as a bill that would have cost $500 million, a 
half a billion dollars, to address an immediate need, turned into a 
bill that costs $3.5 billion over the next 5 years.
  I strongly support the 25 percent health insurance deduction for the 
self-employed. Always have. The mainstream coalition health care 
legislation that we presented last year included it. Indeed, we phased 
it up to a 100 percent over a period of years. And so, therefore, I can 
understand and sympathize with the effort to not only give the self-
employed the 25-percent deduction but to bring it up to 30 percent next 
year and the years thereafter. All that is understandable.
  I would make the point; however, that those who are working for a 
business where their insurance is not paid for by the employer and the 
individual must obtain his or her own insurance, cannot deduct a nickel 
of his or her payments for health insurance. The self-employed can, but 
if you are working for somebody else, you are employed by a corporation 
or a self-employed person, you cannot deduct the cost of your health 
insurance. You cannot deduct anything.
  So, yes, it is nice that we have gotten it up to 30 percent for the 
self-employed. But we have not done anything for those who work for 
corporations.
  But here is my concern, Mr. President. Sixty-six Senators in this 
body voted in favor of a constitutional amendment to provide a balanced 
budget amendment by the year 2002. Achieving that goal is going to take 
incredible effort. We are going to have to reduce Federal spending from 
what it otherwise would have been over these 7 years by $1.2 trillion.
  Now, even for somebody from Washington, DC, $1.2 trillion is a lot of 
money. That is a monumental challenge. Yet, here we have a bill that 
gave us some money to start down this deficit reduction path, to use 
toward the $1.2 trillion, and what is the action we take? We increase 
the deduction and make it permanent.
  I am going to support this bill as it was reported by the Finance 
Committee because we did exercise some discipline by providing for a 
modest amount of deficit reduction.
  But I greatly fear that, in the conference, the House conferees will 
say, ``Well, the Senate increased the deduction from 25 percent to 30 
percent. There is additional money in the bill that is directed toward 
deficit reduction. But let us not use it for deficit reduction. Let us 
use it to increase the deduction from 30 percent to 35 percent or 40 
percent,'' whatever the traffic will bear. And that, Mr. President, 
would be a very great mistake, a very great mistake.
  So I just want to go on record here to say that, should the conferees 
come back using up the money we set aside for deficit reduction for 
another purpose, I will not support that conference report. I believe 
it would be a great mistake. We in this body are determined to do 
something about these deficits. And to do something about it means we 
have got to make tough choices. It means we have to forgo attractive 
proposals, such as increasing the self-employed health insurance 
deduction.
  I thank the Chair, and I thank the managers for giving me this time.
  Mr. MOYNIHAN. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. PACKWOOD. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. PACKWOOD. Mr. President, I yield as much time to the Senator from 
Missouri as he may want.
  The PRESIDING OFFICER. The Senator from Missouri.

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