[Congressional Record Volume 141, Number 55 (Friday, March 24, 1995)]
[Senate]
[Pages S4545-S4551]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           MAJOR LEAGUE BASEBALL ANTITRUST REFORM ACT OF 1995

  Mr. LEAHY. Mr. President, I thank my good friend, the distinguished 
senior Senator from New York and my neighbor. And like the 
distinguished Senator from New York, I, too, hope that we will some day 
actually have baseball played. I share his sense of patriotism in all 
things. I admire his sense of history. But I suspect he, like I, is at 
many, many events this time of year when our national anthem is played. 
We are all very proud to hear it, but we sometimes, as spring arrives, 
wait for the words, ``Play ball,'' right after it is played.
  So the Major League Baseball Antitrust Reform Act of 1995 is being 
introduced, Mr. President. It is being introduced by Senators Hatch, 
Thurmond, and myself. I want the Senate to know why I back this.
  Senator Thurmond and I introduced on February 14 an earlier version 
of this legislation to remove the antitrust law exemption that major 
league baseball has enjoyed for over 70 years. Major league baseball, 
unlike practically any other business in this country, has an exemption 
from the antitrust laws, and Senator Thurmond, Senator Hatch, and I, 
and others, feel that should be removed.
  Actually, we are just saying that nobody should be above the law. We 
did this for Congress. We passed the Congressional Accountability Act, 
something I backed for years, which applies the same laws to Congress 
as apply to everybody else. We are just saying baseball should live by 
the same laws as everybody else.
  I regret very much that the owners of major league baseball teams and 
major league baseball players have been unable to get through their 
impasse. Mediation has not been successful. Presidential entreaties 
could not do it. Congressional pleas for a voluntary settlement have 
gone for nought.
  What we have always thought of as our national pastime may become a 
thing of the past. I am afraid that what we saw as children when we 
would follow games, when we would go to our Little League games and 
identify with various major leaguers at that time is gone. Seniors who 
look forward to the joys of spring training and following their 
favorite teams on radio, youngsters who identify with heroes in the 
world of baseball, this will be gone.
  And let us not forget so many who make monthly mortgage payments by 
being vendors of everything from T-shirts to hot dogs, who park the 
cars, who take the tickets.
 These people are also out of a job.

  There is a public interest in the resumption of major league 
baseball. I am concerned that the owners show no intent of really 
getting a strong commissioner who might look out for the best interest 
of baseball. That is what the commissioner is supposed to do--not the 
private interest of those who make the money from baseball, whether 
owners or players, but rather for the best interests of baseball 
itself.
  Our antitrust laws are designed to protect consumers, but for over 70 
years consumers have not seen these applied to baseball, on the 
assumption that there would be a strong commissioner and the major 
league would operate in the best interest of baseball. But that is not 
what is going on.
  In Vermont, where I grew up, virtually everybody was a Red Sox fan. 
Now there is divided loyalty between the Red Sox and the Montreal 
Expos, and there is also the minor league team, the Vermont Expos.
  We also have jobs in the State of Vermont that rely on baseball. 
There is a company called Moot Wood Turnings in Northfield Falls, VT. 
``Turnings'' is wood turnings. They make the souvenir, replica baseball 
bats, the little bats that have been passed out for 40 years on bat day 
at baseball games. They had to drop a third of their 24-person work 
force because of the strike last summer. That is just one small 
company. These are not people who make a great deal of money. They make 
$5 and $6 an hour, and they were out of work because a small group of 
people cannot figure out how to divide up $2 billion. It makes 
absolutely no sense.
  We had a chance last year to right this situation when we were 
considering a bill to repeal baseball's antitrust exemption, but we 
decided to hold off in the Senate, thinking that maybe everybody would 
work it out. Right after that, negotiations between the major league 
baseball owners and players disintegrated. We saw a preemptive strike, 
the unilateral imposition of a salary cap, failed efforts at mediation, 
the loss of one season and likely obliteration of a second, and pleas 
from all corners to get it going again.
  I think if we had repealed this out-of-date, judicially proclaimed 
immunity from the antitrust laws, this matter would not still be 
festering. No other business, professional or amateur sport, has this 
exemption from law that major league baseball has enjoyed and, Mr. 
President, has abused.
  In fact, one of the players who testified at the Judiciary Committee 
hearing this year asked a very perceptive question. He said, let us 
suppose that baseball did not have an antitrust exemption and let us 
suppose they were in the sorry state they are in today and then let us 
suppose baseball came to Congress and said, ``Oh, by the way, we cannot 
clean up this mess we have, but would you kindly give us an antitrust 
[[Page S4546]] exemption? Would you pass a special law to exempt us 
from the antitrust laws''--something nobody else has. Mr. President, 
they would get laughed off Capitol Hill. There would be no antitrust 
exemption passed for them.
  So the question is, if we would not enact it today, why do we allow 
them to have it? Why do we not just end it? It is something that should 
be done.
  I am concerned about the interest of the public. I am concerned 
particularly about the interest of baseball fans. I am not here to 
speak on behalf of the baseball owners or the players. Former 
commissioner Fay Vincent said:

       Baseball is more than ownership of an ordinary business. 
     Owners have a duty to take into consideration that they own a 
     part of America's national pastime--in trust. This trust 
     sometimes requires putting self-interest second.

  I am also concerned about some of the answers I got from some of 
major league baseball's representatives. In fact, I should note here on 
the floor that the answers that they sent, their written answers, are 
in severe variance with their hearing testimony on several points. In 
other words, they said one thing at the hearing and they said something 
else after, in their answers. I think the public should look at what 
they did, because either they are grossly mistaken on one point or they 
are not telling the truth on another.
  For example, I asked the acting commissioner whether fans who reject 
replacement players and replacement games would retain season tickets 
when the strike ended and major league players return? He testified 
unequivocally and without hesitation, ``Yes, sir.'' But in his written 
response to the same question, he did not confirm his testimony. 
Instead, he responded that policies with regard to season tickets and 
priority seating are handled by the clubs individually.
  Well, he has given two answers. One has to be honest, and one 
contradicts the other. At the hearing, I asked whether major league 
baseball owners, who benefit from a special antitrust exemption in 
order to be able to join together with regard to sports broadcasting, 
would make an unqualified commitment that major league baseball playoff 
and World Series games would continue to be broadcast over free 
television through the year 2010.
  The acting commissioner responded in the affirmative. But when he got 
away from the TV lights and cameras and the hearing, he answers that 
``it is not possible to make an unqualified commitment that far into 
the future.''
  I think the public is being shortchanged by the policies and 
practices of major league baseball and by such disregard for the 
interests of the fans as evidenced from the hearing record.
  They ought to have a little bit of competition. If we withdraw the 
antitrust exemption, they will have it. There is no joy here in 
Washington as we continue these proceedings--just a sense of loss, lost 
opportunities, lost innocence, and lost stature for a game that once 
symbolized America like no other.
  I commend our chairmen, Senators Hatch and Thurmond, for taking up 
this challenge. We will move forward on it.
  Mr. MOYNIHAN. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. MOYNIHAN. 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. MOYNIHAN. Mr. President, in the spirit of bipartisan harmony I 
would like to yield 5 minutes, or such time as he requires, to the 
distinguished senior Senator from Missouri.
  The PRESIDING OFFICER. The Senator from Missouri is recognized.
  Mr. BOND. Mr. President, I want to express my sincere appreciation to 
my good friend, the senior Senator from New York. We have worked 
together on many important projects.
  This is a measure before the Senate today that is very important to 
small business people all across this country. Today, the person who 
operates a small business has many problems. There is nothing so 
glaring as the failure of the code, as it now stands, to give any 
deduction for the payment of health insurance for the business owner or 
that owner's family.
  This 25-percent deduction level, as we all know, expired December 31, 
1993. According to the Treasury Department, approximately 3.2 million 
self-employed taxpayers cannot currently deduct any of their health 
insurance premiums, unless this is corrected. The 3.2 million taxpayers 
represent approximately 30 percent of the unincorporated business 
owners in America today.
  We had hoped last year, and we talked a great deal in health reform, 
about the need to put the small business owner on the same footing as 
the employee of a large corporation who can receive, essentially, 100 
percent deductions for the cost of health care premiums.
  Large corporations already are able to exclude these costs, and their 
employees do not have to report them on their tax returns. We are 
putting entrepreneurs at a very, very serious disadvantage. This 
problem afflicts small business owners who are farmers, who are 
ranchers, who are truck drivers. These people deserve fair tax credit 
treatment.
  One of the biggest concerns that we have today is that without this 
deduction many families are left without health insurance because of 
its already high cost. We think this is a terrible impact on the 
families. It is very hard to imagine a more difficult problem for them 
to face. Nearly one-quarter or 23 percent of the self-employed are 
uninsured today. About 4 million of those who do not carry health 
insurance are in families headed by a self-employed worker.
  This deduction makes insurance more affordable and helps to get the 
families the health insurance that they need and deserve to get. 
Whether these are small businesses in the town or the city, or farmers, 
or truck drivers, as I said, or ranchers, these people deserve to have 
the same kind of tax treatment.
  The bill provides for a permanent extension of the deduction, which I 
think is long overdue, and would provide retroactive deduction for the 
1994 returns. These returns are due April 17.
  We must act swiftly so that those people who have paid the health 
insurance claims last year will be able to deduct them. Unfortunately, 
we were not able to act in time for farmers' returns, which were due on 
March 1.
  If we delay this bill further and are not able to get it to the 
President on time, even more people who are eligible for the deduction 
will have to file amended returns.
  This is going to burden the IRS with paperwork, not to mention what 
is even more important, the burdens on the people who have to refile. 
Mr. President, it is tough enough to have to file an income tax return 
one time. It is certainly no pleasure to have to file one again.
  I think it is also very, very important--and I commend the managers 
of the bill and the sponsors of the legislation--that we are making 
this measure permanent. For years the self-employed have been subjected 
to the uncertainty of not knowing whether the extension would be 
granted for the deduction. I think it has made it very difficult for 
those people to plan. This should take that problem away.
  I am concerned about the fiscal pressures and the need for deficit 
reduction, but this is not an area where we ought to economize. Small 
business, farmers, ranchers, truck drivers--they and their families 
need to have the health care that this will encourage them to have.
  I would like to go further. If we have an opportunity, if the money 
its available, count me in on seeing if we cannot get the deduction to 
a par with those people who work for large corporations. But I am very 
pleased we are moving on this. I commend the managers of the bill, the 
chairman and ranking member of the committee as well as the sponsors. 
This will have important impacts on the health of many, many people, 
many of those who are in small businesses and their families.
  I thank the distinguished Senator from New York for yielding the time 
and I urge my colleagues to support this very important measure.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER (Mr. Cochran). The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I know I speak for the distinguished 
[[Page S4547]] chairman when I thank the senior Senator from Missouri 
for his incisive remarks.
  I am pleased to see on the floor our colleague from the Committee on 
Finance, the distinguished Senator from Illinois. I yield her 10 
minutes, as she evidently desires, but in fact as much time as she 
requires for her statement, which I look forward to.
  The PRESIDING OFFICER. The Senator from Illinois.
  Ms. MOSELEY-BRAUN. Mr. President, I thank the Senator from New York, 
and the chairman of our committee. I stand to speak with regard to H.R. 
831.
  I am a strong supporter of the provision that is at the heart of H.R. 
831, the permanent extension and increase of the deduction of health 
insurance costs for the self-employed. There is no question that the 
health insurance expenses of millions of self-employed individuals 
around this country should be treated more like taxpayers who work for 
larger businesses.
  Corporations that provide health insurance coverage for their 
employees get 100-percent deductibility for the portion of the health 
insurance costs of their employees that they pay. The employees of 
those companies use after-tax dollars only for that portion of health 
insurance costs not paid for by their employers.
  Most businesses in this country provide health insurance coverage for 
their employees, as does the Federal Government, and State and local 
government. Employer-provided health insurance is at the heart of this 
country's system of health insurance coverage, and the tax 
deductibility of employer-financed health insurance costs encourages 
employers to provide that insurance.
  However, millions of Americans do not work for large corporations and 
do not have access to the kind of group health insurance plans that 
large corporations often provide. Because they are self-employed, these 
Americans usually have to pay more for their health insurance. Because 
they are self-employed, there is no 100-percent tax deduction for the 
employer-provided portion of health insurance costs.
  Congress has attempted to at least partially remedy this serious 
inequity by providing a 25-percent deduction of the health insurance 
costs of the self-employed. This provision of the Tax Code, however, 
was only temporary, and expired at the end of 1993. What that means is 
that, unless this Congress acts--now--all of the self-employed 
Americans across this country will face a serious tax increase when 
they file their 1994 tax returns next month.
  That is clearly a totally unacceptable result. It is unfair, it is 
inequitable. It is simply wrong. That is why I strongly support the 
provisions in the pending substitute for H.R. 831 that restores the 25-
percent deduction for health insurance expenses retroactively, so that 
it covers the 1994 tax year, the provisions that increase that 
deduction to 30 percent, beginning in 1995, and the provisions that 
make that deduction permanent, eliminating any possible future 
repetition of the kind of situation we find ourselves in right now.
  Restoring the deduction, increasing it, and making it permanent is 
the right thing to do. It eliminates the kind of anxiety and 
uncertainty
 that self-employed Americans are facing right now, and assures them 
that Congress is committed to addressing the disparity in the tax 
treatment of health insurance costs incurred by self-employed 
Americans, and Americans who work for larger businesses, for the 
nonprofit sector, or for government.

  Self-employed Americans are hard-working and make an enormous 
contribution to our economy. We should not, we must not, make it more 
difficult for them to make that contribution by handicapping their 
ability to access health care.
  Unfortunately, Mr. President, the Finance Committee has chosen to end 
this unacceptable, inequitable, and unfair situation by creating 
another one. The price for a public policy of moving towards greater 
equity in the Tax Code treatment of the health insurance expenses of 
the self-employed, is the creation of a totally unacceptable, 
inequitable, and unfair policy in the tax treatment of the purchase of 
broadcast or certain other communications businesses by minority 
Americans, and, in some circumstances, women. I am, of court, speaking 
of the provisions in the committee substitute repealing the provisions 
known as section 1071.
  I strongly oppose the repeal of section 1071 for both procedural and 
substantive reasons. It is a statement that Congress does not care 
about diversity of voice in major portions our Nation's communications 
industry which, after all, are using the public airwaves, or franchises 
granted by the public. And it is a statement that Congress does not 
care about Americans who have proceeded in good faith to spend 
literally millions of dollars based on the existence of section 1071. 
They are being taught a very bitter, expensive lesson, never to rely on 
the government's word, or to take actions based on the law, because the 
Government may decide, in a matter of just a few weeks to repeal that 
law--retroactively.
  Most Americans, I am sure, have never heard of section 1071, and it 
is fair to say that, until 2 months ago, most Members of Congress knew 
little or nothing about it. And there was no particular reason for 
Congress to focus on the section. After all, it was enacted in 1943 as 
part of the revenue act of that year to help implement a new policy 
that prohibited the owners of radio stations from owning more than one 
radio station in a given market.
  What section 1071 action does is to provide the Federal 
Communications Commission with the authority to defer capital gains 
taxes arising from transactions involving communications properties. 
Essentially, it permits those gains to be rolled over as a nontaxable 
event. It does not eliminate even one dollar of tax liability; it 
simply postpones the date when that tax liability must be paid.
  As initially reported by the Senate Finance Committee in 1943, the 
provision would have allowed a rollover if the sale or exchange of the 
property was required by the FCC as a condition of the granting of the 
application. However, the provision was broadened during the conference 
with the House of Representatives. The conference report stated that, 
because:

       . . . the Commission does not order or require any 
     particular sale or exchange, it has been deemed more 
     appropriate to provide that the election, subject to other 
     conditions imposed, shall be available upon certification by 
     the commission that the sale or exchange is necessary or 
     appropriate--I want to emphasize this part--to effectuate the 
     policies of the commission with respect to ownership or 
     control of radio broadcasting stations.

  In 1954, the FCC's authority to defer capital gains taxes in 
transactions involving the sale of radio stations was broadened to 
include television stations. In 1973, the FCC's authority in this area 
was broadened yet again, to encompass cable systems.
  Until 1978, this authority was used virtually exclusively by the kind 
of people who then owned radio, television, and cable systems, and that 
certainly, at the time, did not include minorities or women.
  It was not until 1956 that even one radio station in this entire 
country was owned by a minority, and it was not until 1973 that there 
was even one television station in the Nation owned by a minority. It 
was not until 1974 that the FCC first awarded a new radio station 
license to a minority-owned company the same way it had awarded tens of 
billions of dollars' worth of broadcast spectrum to nonminorities--for 
free--by an FCC comparative hearing.
  The truth is, Mr. President, that the FCC initially handed out 
virtually all of the broadcast spectrum to nonminorities free of 
charge, and then used section 1071 over and over and over again to 
allow them to roll over the huge capital gains they made in tax-free 
transactions that allowed them to defer their tax liability. The FCC, 
as it handed out the spectrum owned by all Americans relied heavily on 
the question of the previous broadcast experience of competing 
applicants in awarding new licenses. Yet for several decades, even 
broadcast training was denied to minorities in this country and in some 
parts of this country as a matter of law.
  State universities were legally barred from admitting minorities at 
the time these stations were originally given out. State-owned public 
broadcasting authorities refused to hire or train them. State 
legislatures denied black 
[[Page S4548]] State colleges the funds to start broadcasting programs 
or to apply for broadcasting licenses. For example, the FCC routinely 
granted broadcast licenses to colleges and universities that were 
segregated by law, such as WBKY-FM, serving the University of Kentucky, 
which was licensed in 1941, WUNC-FM, serving the University of North 
Carolina, which was licensed in 1952, and KUT-FM, serving the 
University
 of Texas, among many others.

  These segregated policies helped ensure that a generation of 
minorities would be denied the skills and the access necessary to enter 
the broadcast industry--with the FCC's full endorsement and 
ratification.
  The extent of the FCC's complicity is illustrated by the case of 
Broward County Broadcasting versus FCC. This 1963 case involved a radio 
station, WIXX, located in a community with a large African-American 
population, a population that received no black-oriented programming 
from any station serving that market. WIXX decided to devote its 
program schedule to black-oriented news, public affairs, and music. The 
city government complained to the FCC that WIXX was offering a format 
which the city did not need and did not want. The FCC, in turn, threw 
the station into a public revocation proceeding, which placed its 
broadcast license in jeopardy. Faced with the loss of the ability to do 
business, the station dropped its black programming, and the FCC 
quietly dropped the charges of ``character violation.''
  These policies kept minorities from participating in the free 
broadcast spectrum ``gold rush'' that was going on in America. And by 
the time these policies were ended, the gold rush was over, and there 
was no more spectrum to allocate for free.
  In 1978, the FCC finally recognized its role in denying minorities 
any opportunity to participate in the gold rush and to enter the 
broadcast or cable industries. That year, the FCC announced a policy of 
promoting ownership of broadcast facilities by offering an FCC tax 
certificate to those who voluntarily sell such facilities to minority 
individuals or minority-controlled entities. The FCC's policy was based 
on the view that minority ownership of broadcast properties would 
provide a significant means of fostering the inclusion of the views of 
minority Americans in programming, thereby better serving the needs and 
interests of the minority community and enriching the range of material 
available to the nonminority audience. The FCC subsequently expanded 
its policy to cover the sale of cable systems, as well.
  In 1982, during the Reagan administration, the FCC further expanded 
its tax certificate program. At that time, the FCC decided that, in 
addition to those who sell properties to minorities, investors who 
contribute to the stabilization of the capital base of a minority 
enterprise would be able to receive a tax certificate on the subsequent 
sale of their interest in the minority entity.
  This became an incentive for investors to help with preserving and 
expanding diversity of voice.
  The FCC program is not a set-aside or a quota. It functions in the 
same voluntary manner as the FCC's other uses of tax certificates. The 
FCC does not require a percentage of licenses to be controlled by 
minorities, it does not require media properties to be sold to 
minority-controlled businesses, it does not require a set percentage, 
nor does it require a nonminority seller of media property to a 
minority-controlled business to even request a tax certificate.
  So there is nothing compulsory. There are no quota aspects of the tax 
certificate policy at all. The direct beneficiaries of the tax 
certificate may or may not be the minority member. In many instances it 
may be the nonminority seller and/or the investors who participate in 
the acquisition with the minority purchaser. The benefit to potential 
minority purchasers is the incentive it creates for sellers, and the 
enhanced access to capital it provides.
  The FCC certificate program then operates as a key to unlock the door 
of opportunity for minorities who have a role in the broadcast industry 
in our Nation.
  There can be no question that minority entrepreneurs have a tougher 
time accessing the capital markets of this country. The FCC recognized 
this fact, and the minority ownership program has expanded that access 
to capital.
  In 1987, Congress explicitly endorsed the FCC's actions in expanding 
the tax certificate program to encourage expanded minority ownership of 
broadcast and cable systems. That year's Commerce, State, Justice, 
appropriations bill contained language locking in the tax certificate 
program, they thought. The committee report on the bill stated 
``Diversity of ownership results in diversity of programming and 
improved service to minority and women audiences.'' Similar language 
has been included in every annual appropriations bill since that time, 
until now.
  Between 1978 and 1994, the FCC issued 317 tax certificates under its 
minority ownership program. Radio stations represented about 83 percent 
of the certificates issued, television stations 8 percent, and cable 
systems, about 9 percent. These certificates helped minorities enter a 
business which, as I have outlined, was virtually completely closed to 
them. And it did so not by taking away a license from anyone, or 
through any form of direct financial assistance to the minority buyers, 
but, as I have already stated, through tax deferrals for potential 
sellers of radio and TV stations, and cable systems, and potential 
investors who were willing to enter partnerships with minority buyers 
to purchase these properties.
  The program has begun to make a difference, but it is worth keeping 
in mind that, out of the 1,342 television stations operating in the 
United States, only 26, or about 1.9 percent are owned by women. 
African-Americans owned less than that, only 21 stations, Hispanics 
owned 9, and Asians owned 1.
  In radio, the situation is a little better. Out of the 10,244 radio 
stations operating in the United States, 394, or about 3.8 percent are 
owned by women, another 172 are owned by African-Americans, 111 by 
Hispanics, 4 by Asians, and 5 by native Americans.
  These are the public airwaves we are talking about, Mr. President, 
and cable systems that require public approvals in order to function. 
Every American ought to have the right to participate in this industry, 
and there should be enough diversity of voice to ensure that our 
broadcast and cable systems meet the needs of all of our people.
  And research confirms a link, or the nexus, between expanding 
minority ownership and diversity of voice.
  By diversity of voice we mean the notion that the airwaves that we 
communicate on as Americans will include the views of everybody and not 
just one segment of the population or community, but of all segments of 
the population and the community. And in that diversity comes the kind 
of vitality that will keep our Nation vital and keep our democracy 
alive.
  You will recall George Orwell talked in ``1984'' about the wave of 
communication happening, and big brother sent one message to the people 
at all times. There were no alternative messages, alternative points of 
view, alternative perspectives to encourage people to think for 
themselves. The whole idea of diversity of voice is that the entire 
community benefits when it has the point of view and the perspective of 
all our people, when the perspective and the information that is 
communicated through the public airwaves represents the whole panoply 
of Americans in this country and that we can all participate and draw 
from our diversity as a source of our strength.
  The Supreme Court made this clear, in a case of Metro Broadcasting, 
Inc. versus FCC. In that case, the Supreme Court held that benign, 
race-conscious measures mandated by Congress are constitutionally 
permissible, based on a record of empirical evidence demonstrating a 
nexus between minority ownership and diversity in programming.
  There were five studies of this connection cited in the Metro case, 
including a study by the Congressional Research Service, ``Minority 
Broadcast Station Ownership and Programming: Is There a Nexus?'' 
(1988).
  That is to say, does minority ownership encourage diversity of views?
  This study, which looked at radio data collected by the FCC from over 
9,000 radio and TV stations, showed a strong correlation between 
minority ownership and programming targeted 
[[Page S4549]] to minority ownerships and expansion of diversity of 
voice for everyone. The other studies all had similar findings, showing 
differences in programming, including news programming, and differences 
in the willingness to hire women and minorities as employees.
  Mr. President, what the Finance Committee and the House of 
Representatives are now proposing with this legislation, however, is to 
terminate this progress toward diversity, to terminate the 1071 tax 
certificate program and to do so retroactively and with virtually no 
notice at all.
  The committee report sets out three reasons for terminating the 
program. It says that the tax certificate program has evolved far 
beyond what Congress originally intended. The report makes this 
argument even though it was Congress that gave the FCC broad discretion 
to set the terms of the tax certificate program.
  Second, the committee report argues that the FCC standards for 
issuing the certificates are vague and therefore subject to significant 
abuse. It asserts that the FCC's determination of control does not 
guarantee that a minority purchaser will continue to manage the 
broadcast or cable property after the tax certificate has been issued.
  Third, the report argues that the tax certificate program is not 
supervised and reviewed by the Internal Revenue Service, and that the 
FCC does not request information regarding the size of the tax benefit 
or otherwise act to ensure that the nonminority seller does not get the 
entire benefit of the certificate.
  Mr. President, these arguments, it seems to me, are sufficient to 
warrant a reasoned, deliberate and careful review of this program and 
not the total elimination retroactively of it. As a general matter, I 
believe that all Federal programs should be periodically reviewed. We 
should take a look at everything to make sure it works as it was 
intended to work by this Congress, to make sure that it is more 
efficient. However, that commonsense principle, I believe, should not 
be exploited as a blanket license to just carelessly throw out 
longstanding Federal laws without any review before the fact, without 
any chance to take a look at it. And yet that is exactly what we are 
saying here.
  No study of the effectiveness of section 1071 was undertaken by the 
House of Representatives before it rushed to repeal this legislation. 
Nor has the Senate undertaken the opportunity to fully study the merits 
of section 1071. The majority leader of this body stood in the Chamber 
just last week talking about the fact that there are over 160 Federal 
programs he would like to see reviewed as part of a comprehensive 
review of Federal affirmative action policies. And the majority leader 
asked two Senate committees to hold hearings as part of that review. 
The majority leader also commended this administration for its ongoing 
review of affirmative action policies and programs.
  All of these suggestions that there be a review indicate to me that 
the Finance Committee should have at least awaited the results of the 
administration's efforts and should have considered whether or not 
section 1071 was working, whether it had problems, whether its 
objectives were important ones, and whether or not reform rather than 
retroactive elimination would have been more appropriate.
  That is not what is happening with this bill, Mr. President. Instead, 
we see a rush to judgment. Instead, what we see is an unwillingness to 
confront the fact that minorities and women have been excluded from the 
broadcast and cable industries and that minorities and women continue 
to have access-to-capital problems that are significantly greater and 
different than other potential acquirers.
  Indeed, what we see is a total disregard of the policy considerations 
having to do with diversity of voice that led to the creation of this 
tax certificate program in the first place.
  This hasty repeal would not just eliminate a genuinely worthy 
minority ownership program; it would also repeal all of the other uses 
of the FCC tax certificates. For example, a broadcast or cable licensee 
is eligible for a tax certificate when it divests a media property in 
order to comply with the FCC's cable/broadcast cross-ownership policy 
and the newspaper/TV cross-ownership policy. Repeal of section 1071, 
therefore, eliminates a reasonable incentive for FCC licensees to 
comply with FCC policies.
  Repealing section 1071, moreover, does not mean ending capital gains 
rollovers in the future. There will still be many, many ways to 
structure transactions in ways that will avoid capital gains taxes. And 
in fact the experience is that the most recent sales in the cable 
industry have all been tax-free transactions that did not involve the 
tax certificate program which was calculated to give minorities and 
women a chance.
  Some recent examples illustrate this point. Time/Warner announced in 
January of 1995 that it will acquire KBL Communication from Houston 
Industries in a tax-free stock transaction with an estimated purchase 
price of $2.2 billion. Time/Warner has also announced a tax-free 
acquisition of Summit Communications for $350 million via a stock 
exchange. Again, no tax rollover questions there. Cox Cable acquired 
Times Mirror Cable in a tax-free merger with an estimated price of $2.3 
billion. Minority entrepreneurs, however, because they frequently lack 
the access to capital of long-established companies, cannot rely on 
section 328 of the Tax Code which authorizes those tax-free 
transactions. Instead, they have had to rely and have relied on section 
1071.
  That is why it is particularly troubling that the proposal before the 
Senate is to retroactively repeal section 1071 simply because a 
particular African-American businessman is involved in a large 
transaction that is eligible for a tax certificate and the resulting 
capital gains tax deferral. The rush to undo this transaction ignores, 
in my opinion, some important facts. The first is that the transaction 
that precipitated the House Committee's action, the so-called Viacom 
transaction, is not the only pending transaction at the FCC. There are 
at least 19 others.
  Second, all of these acquirers have justifiably relied on the 
existence of section 1071, which has now been in place for over 17 
years and which has been explicitly endorsed by Congress over and over 
again through the appropriations process.
  In the Viacom transaction, the purchasing group has incurred 
literally millions of dollars in out-of-pocket expenses for costs such 
as legal fees, commitment fees, and travel. The prospective minority 
purchaser has made it clear that he was entering into the transaction 
in order to run the company, not to purchase it for a quick resale or 
turnover. Enormous amounts of time and energy and faith in our 
Government have been placed in putting this transaction together. Major 
banks have committed to participate. And the transaction was not 
hastily entered into in the last 30 days in order to get in under the 
wire before the repeal of this section. But the House of 
Representatives and the Finance Committee seemed to ignore all the time 
and money and energy that have been expended, all the faith and 
confidence in laws that have been around for 17 years and seemingly 
went out of its way to repeal this section with a retroactive effective 
date to get at this transaction which because of its size had made the 
newspapers.
  Mr. President, I believe what we see here is a good example of why 
people are so cynical about Government. What we see here is an effort 
to ignore the facts, to ignore the good-faith reliance on section 1071 
exhibited by the prospective purchaser in all transactions now pending 
before the FCC. What we see here is a total disregard of the equities 
and due process in an effort to rush to judgment.
  Mr. President, retroactive effective dates are very unusual in the 
Senate. In fact, this body has a long and consistent history of using 
one of three dates as the effective date of a tax change that reduces 
or eliminates tax redemptions, exclusions or similar provisions. The 
usual choice for those effective dates are the date of enactment, the 
first December 31st of the year of enactment, or the first taxable year 
beginning after one of the first two dates.
  Putting aside tax rate changes, Mr. President, the Senate has 
departed from the usual effective dates only in rare circumstances 
where there has been a legitimate concern about the ability of 
taxpayers to rush the market 
[[Page S4550]] and therefore avoid changes. Even in those rare cases 
where Congress was closing loopholes in the tax law because taxpayers 
were abusing the system, Congress adhered to the standards of fairness 
to ensure that taxpayers would have sufficient notice and could plan 
their private transactions, so that the business community could plan, 
the taxpayers could plan, so they could order their affairs in reliance 
on our activity.
  That is not what has happened here, Mr. President. The provisions 
repealing section 1071 therefore represent a dramatic departure from 
the general procedure for drafting effective dates. After reviewing the 
facts and precedents, I remain convinced there is no policy reason to 
justify singling out this particular section of the Internal Revenue 
Code for an unprecedented formulation of an effective date.
  It is worthwhile to compare the effective date for the repeal of 
section 1071 in this bill to the precedents. First, there is the 
January 17, 1995, effective date. What is the significance of this 
date? Well, Mr. President, it is the date on which the chairman of the 
House Ways and Means Committee issued a press release indicating the 
committee would review this section and that they might consider 
repealing the section, in which case he intended to use a January 17 
effective date.
  When has this body ever allowed a single Member of the House of 
Representatives to unilaterally dictate the effective date of a tax 
change?
 When the chief of staff of the Joint Committee on Taxation was asked 
this question during the Ways and Means markup, I understand that he 
cited the tax-exempt leasing bill that was introduced by former 
Congressman Jake Pickle. Well, in that case, the majority leader, 
Senator Dole, introduced a companion bill in the Senate. And in that 
case, the retroactive effective date was made all but moot by three 
very generously, broadly applicable transition rules and a host of 
targeted rules.

  The most recent and more relevant example of an effective date that 
was sent by press release occurred in the Tax Reform Act of 1986. 
However, in that case, taxpayers were put on notice in 1984--2 years 
before the press release--when Treasury published a tax reform 
proposal. In that case, a press release was issued to revolve the 
difference between a retroactive January 1, 1986, effective date in a 
House provision dealing with tax-exempt bonds, and a Senate provision 
with a January 1, 1987 prospective date. What is important to note is 
that this was a joint press release; it was signed not only by both 
chairman of the House and Senate tax-writing committees, but also by 
the two ranking members and the Secretary of the Treasury. It is also 
interesting that the parties involved chose a date well after the 
retroactive January 1, 1986, House bill; they agree instead on 
September 1, 1986.
  It is interesting, in that situation also there was consensus, an 
agreement between both bodies with regard to the setting of an 
effective date. Again, that is not what happened here. Here, because of 
a press release of one Chamber by one individual, the Senate has rushed 
to judgment to adopt that and thereby undo the work that all these 
actors in the private sector have undertaken in reliance on section 
1071.
  This is the precedent that this body will overrule if we approve the 
effective date in H.R. 831 for the repeal of section 1071.
  I mentioned earlier that Congress has departed from the general rule 
where there was a perceived abuse of the tax law. The general practice 
in those situations has been to use the date of the committee action as 
the effective date, and even then to provide fair and reasonable 
transition rules. For example, in the 1990 revenue reconciliation bill, 
Congress shut down a loophole through an amendment to section 355 of 
the Internal Revenue Code. The 1990 act was passed on October 27, 1990, 
and signed into law on November 5, of that year. In that case, the 
general effective date applied to securities purchased after October 9, 
1990--the
 day before the Ways and Means Committee reported out the bill, but 
Congress also provided a transition rule where the material terms of a 
transaction were described in a written public announcement before 
October 10, 1990, and SEC filing was made before that date. The same 
rule was provided in another section of the 1990 act dealing with debt 
exchanges.

  Another example is provided by the 1989 Revenue Reconciliation Act. 
Again, there were perceived abuses by businesses making debt-financed 
stock sales to ESOP's; there, the general effective date for an 
amendment that modified the partial interest exclusion for ESOP loans 
was for loans made after July 10, 1989, the day before that provision 
was presented in a chairman's mark to the Ways and Means Committee.
  In the Revenue Act of 1987, which was signed into law on December 22, 
1987, Congress closed a loophole that allowed ``C'' corporations to 
avoid LIFO recapture by converting to ``S'' corporation status. There 
the effective date was December 16, 1987--the date of the conference 
committee action. Moreover, a transition rule was provided where there 
was a board of directors resolution before the December 16 date.
  Why are taxpayers with applications pending before the FCC not 
deserving of transition relief? The only concrete answer that I have 
received to this question is that the size of the one of those 
transactions, the Viacom transaction, is just too great--the 
implication is that we would somehow save tax revenues if we refuse to 
provide a reasonable and appropriate transition rule--and so the 
committee substitute before the Senate has no reasonable and 
appropriate transition rule.
  Just yesterday, Mr. President, this Senate, by a very strong vote of 
69 to 29, approved a form of line-item veto authority for the President 
of the United States. Senator after Senator stood up to explain how 
unfair it was that the Congress was, in effect, blackmailing the 
President, by linking pork-barrel items with must items in a single 
bill. Yet that is what we see here today. Those who want the Senate to 
consider the option of reforming section 1071 have no choice but to be 
linked up, in effect, be blackmailed by the fact that we also want to 
see the reform with the self-employed health insurance deduction issue. 
We want to see the health insurance passed, but now we are being forced 
by the committee action to accept this ill-considered rush-to-judgment, 
unfair, retroactive repeal of section 1071.
  As I stated at the outset, I am a strong supporter of that provision; 
and I agree that it needs expedited consideration. However, there is no 
reason that the section 1071 issue had to be linked to that provision. 
The committee substitute now before us has offsets sufficient to ensure 
budget neutrality even without the provision repealing section 1071.
  However, the provision repealing section
   1071 is in the bill. And it is clear that the need for action in the 
next 2 weeks to complete action on the health insurance provisions 
effectively precludes this Senator, or any member of the Senate, from 
acting to try to slow down this train, and to ensure that the 
objectives of the minority ownership tax certificate program get the 
attention they deserve.

  Let me conclude by reminding my colleagues that diversity of voice in 
our electronic media remains critically important, and that we have a 
responsibility to every American to see that entry is open enough to 
permit that business to meet the needs of all of our citizens. It is 
also critically important that Government act responsibly, and that 
Government keep it word. By repealing section 1071 retroactively, we 
are failing to meet our obligation to those who have in good faith 
relied on the law of the land, and our obligation to the American 
people generally to legislate responsibly.
  By repealing this section retroactively, we have also, I believe, 
taken a rush to judgment and put at great peril an important policy 
consideration having to do with diversity of voice.
  Mr. President, I intend to continue working on the issue raised by 
section 1071 and I intend to continue working to try to convince my 
colleagues in this body that the objectives of diversity of voice are 
important ones that must be preserved. I intend to continue speaking 
out on the issue of the importance of inclusion of women and minorities 
in every industry in this Nation, but certainly in communications, 
which has such a broad-range effect on the way that people see our 
country, the way that people see the world, the 
[[Page S4551]] kind of information to which they are given access.
  It is access to information that is at the heart of the section 1071 
program. And the notion that access to that information ought to come 
from as many places as we can manage, to the extent that section 1071 
has had a positive effect in encouraging diversity of voice, 
encouraging diversity of ownership, allowing women and minorities a 
chance to participate in an industry in which they were historically 
deliberately excluded, it had a salutary effect and meaning and reason, 
and it is something that we should protect and preserve in this body, 
and not otherwise.
  I think it is unfortunate that this retroactive repeal has been 
associated with this important health care initiative. I think it is 
something that I intend to continue to fight. And I hope, that as we 
move down the road in consideration of this tax legislation, we will 
not lose the one opportunity we had to unlock the door, to provide 
opportunity as a way of responding to concerns that may be misplaced, 
to concerns that need to be articulated and talked about, but concerns 
that we really have not looked closely enough at to see the benefit for 
all Americans.
  And so I hope that the health care deduction passes. I want to 
support that. I want to help that. But on section 1071, the fight is 
not over. The fight continues.
  I hope that what has happened here with regard to this retroactive 
repeal is a wake-up call to women, to minorities, to people in this 
country who care about diversity, who think that it is important, that 
we cannot sit back. And, as complex as this issue may seem, 
fundamentally it is a very simple one. It is an issue of whether or not 
the airwaves of this country are for all Americans or for some 
Americans. I believe that inclusion and diversity is the strength of 
our country and not otherwise, and I will fight to maintain access to 
the airwaves for all Americans.
  Thank you, Mr. President.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I most emphatically wish to state the 
debt in which we all find ourselves to the Senator from Illinois for 
her powerful and persuasive statement; her first on this particular 
subject, but not, I dare think and hope, her last.
  We will continue now with this debate.
  Mr. President, I yield 5 minutes to my friend and colleague, the 
senior Senator from Montana.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I thank my good friend, as well, the 
senior Senator from New York.
  Mr. President, in Montana, we have a saying--``it's not what you say, 
it's what you do.''
  For too long, Members of Congress said they only wish they could 
permanently extend the health insurance premium for the self-employed 
but that they didn't have the money to get the job done.
  For too long, Members said they wanted to increase the deduction 
beyond 25 percent--but they did not have the money.
  Today, we will vote on legislation that, at long last, permanently 
extends the health insurance premium deduction for the self-employed, 
and increases it from 25 to 30 percent for 1995 and afterward.
  What does this mean back home? Well, this is real. This means farmers 
and small business people get relief.
  I heard from Randy Koutnik in Helena who was planning to go into his 
own business. He needed the deduction so he could continue to afford 
health insurance coverage. I think this legislation is needed. It will 
help Randy, and many other hardworking, gutsy entrepreneurs like him 
start out on their own.
  Polly Burke of Missoula called me up to say how angry she was that 
self-employed individuals were losing their 25-percent health insurance 
premium deduction while corporations kept their 100-percent deduction. 
And I think Polly is right to be angry.
  Today we will take a first step to help Polly, Randy, and all self-
employed across America.
  My only complaint is that we should have acted earlier. For the cash-
basis farmers who had to pay their taxes by March 1, Congress is 3 
weeks late.
  It is true that those farmers can amend their returns and collect a 
refund. But amending the return will take time and, unless their 
accountants work for free, will cost these farmers money. Probably 30 
to 50 bucks apiece.
  But with today's action, Congress will at least do the right thing.
  We will permanently extend the health insurance premium deduction so 
Montana farmers, small business people, and all of America's self-
employed have at least one less thing to worry about in the years 
ahead.
  Mr. President, I intend to vote for this legislation and I strongly 
encourage my colleagues to vote for it. And I will push hard to make 
sure it gets to the President's desk fast, so the deduction is 
available to all the self-employed filing their tax returns before 
April 17.
  I thank the Chair, and I yield the floor.
  Mr. BYRD addressed the Chair.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. BYRD. Mr. President, I thank the distinguished Senator from 
Oregon [Mr. Packwood] for deferring to me briefly so that I might make 
a brief statement.


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