[Congressional Record Volume 141, Number 61 (Monday, April 3, 1995)]
[Senate]
[Pages S5030-S5047]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         SELF-EMPLOYED HEALTH INSURANCE ACT--CONFERENCE REPORT

  The Senate continued with the consideration of the conference report.
  Mrs. BOXER. Mr. President, I wish to now take the floor to thank the 
Senator from Massachusetts for what he has done by bringing forward 
such an important issue really, not only to the Senate but to the 
people of the United States of America.
  We are going to see on Friday, I say to my friend, a big celebration 
on the steps of the Capitol. Those Republicans who signed the Contract 
With America are going to be celebrating and saying how great it is 
that they passed a number of those provisions.
  Well, I think what the Senator from Massachusetts is pointing out is 
that there are more people than just those Republicans who are going to 
be celebrating; some of those people are going to be the millionaires 
and the billionaires who got away with it again, who again got away 
with what I call tax murder. I actually call them tax traitors, because 
what they do is they make a lot of money in this country, millions and 
hundreds of millions, sometimes billions, and then they renounce their 
citizenship to escape any kind of State taxes. I think that is 
unpatriotic. I think it is in many ways acting like a traitor to this 
Nation.
  This Senate, on a very clear vote, said let us end that kind of tax 
loophole. The Senator from Massachusetts was completely struck, as was 
I and others in this Chamber, when the tax 
[[Page S5031]] bill came back from the other Chamber, from the 
Republicans in the House who are so proud of their contract. And guess 
what? That tax loophole was not closed.
  So on Friday, when the Republicans are celebrating their contract, 
there will be a celebration in a lot of places across this great land, 
where people will be saying, ``Oh, thank goodness, I still have that 
kind of a loophole.''
  All the Senator from Massachusetts was asking us to do on Friday was 
to go on record, because it is too late to change that conference 
report. We do not want to hold it up. It does some other very important 
things, and we care about the small businesses and the farmers who are 
concerned about their tax deductibility for their health care, which is 
in that bill.
  All the Senator from Massachusetts was asking was for a simple sense-
of-the-Senate resolution so the Senate could go on record and say we 
are not turning our back on fixing this problem. We stand for average 
people in this Senate Chamber. And we are going to fix this problem and 
we are going to stop this tax loophole for the millionaires and 
billionaires who would renounce their citizenship in America to get 
away with having to pay their fair share of the taxes.
  And guess what happened? The Republican leadership said, ``No way. We 
are not going to have that vote.''
  Well, I hope some agreement can be reached--and I tell my friend that 
I stand with him--so that at some point in the near future we will have 
that vote so that people in this country will understand that the U.S. 
Senate is not changing its mind on fixing this loophole.
  I also want to thank the Senator from Massachusetts and the 
Democratic leader, Tom Daschle, for bringing forward an amendment that 
I think is a very important amendment to the supplemental 
appropriations bill that is before this Senate.
  The chart that the Senator from Massachusetts, Senator Kennedy, has 
put together shows what would be restored by our Democratic leader's 
amendment.
  If ever you wanted to know the difference between Democrats and 
Republicans, here is your chance. Mean-spirited, unnecessary cuts put 
forward in an appropriations bill, a rescissions bill; unnecessary.
  For AmeriCorps, the Daschle amendment will restore $210 million. I 
ask my friend from Massachusetts, is that correct?
  Mr. KENNEDY. The Senator is correct.
  (Mr. JEFFORDS assumed the chair.)
  Mrs. BOXER. I wish to engage my friend in a colloquy.
  I had a wonderful experience visiting an AmeriCorps Program in Los 
Angeles. I want to tell my friend that the Americorps volunteer--and by 
the way, our Republican friends say: They are not volunteers. They get 
a stipend. They get money for their education. They are not volunteers.
  Well, I say to my friend, could these people do this work without a 
stipend? Could they live? Could they give of themselves and back to 
community if they did not have the stipend? Did not the people in the 
Peace Corps, I say to my friend, have a way to live while they gave 
their service?
  Mr. KENNEDY. If I could answer my friend, the Senator from 
California. She is putting her finger on a very important point, which 
is that voluntarism should not be just a luxury for the wealthiest 
individuals. There are many young people with limited resources that 
want to have an opportunity to give something back to their 
communities. We see that time after time.
  What we are basically saying to those young Americans is: if you are 
prepared to give something back to your community, you will also have a 
stipend, which is effectively a minimum wage, to be able to live. You 
will also be able to get the equivalent of a year's down payment on 
your tuition at a State university to continue your education.
  I like to think that part of our Nation's value system is to try and 
encourage young people to be involved in a selfless way, to give 
something back to their community and, second, to encourage people to 
move ahead in terms of their education.
  Finally, let me say to my friend, the Senator from California, that 
we effectively had an agreement here in the United States Senate when 
we passed the national service program. We are going to have $300 
million in the first year, $500 million in the second, and $700 million 
in the third. We had very strong bipartisan support for that 
commitment. I think there was only a handful of Senators that voted 
against it. Now we have established a service program where young 
people have been recruited on the basis of an agreement and 
understanding that was reflected in the bipartisan effort.
  The AmeriCorps Program, however, was targeted for a 75-percent 
reduction, more than any other single program. And I do not think that 
it is a coincidence that it happened to be a top priority of President 
Clinton's--one that he spoke about during the course of his campaign. 
He stated that it was one of his greatest initiatives and he spent a 
great deal of his own personal time and involvement to see that it 
became a reality. I can just say, from a personal point of view, each 
time he comes to Boston, he meets with these young Americorps 
volunteers and continues to inspire them, as he does others who are 
involved in voluntary programs.
  These cuts are effectively taking the rug right out from underneath 
these volunteers. All we are saying to our colleagues is not to go back 
on your word to these young people. And that is what this amendment is 
all about.
  Maybe next year, we are going to have to fight to try and get what 
resources are available for that program.
  But are we now saying to the young people in the AmeriCorps Program 
who are committed to making a contribution to their communities that 
the rug is pulled out from underneath them?
  Mrs. BOXER. Mr. President, I thank my friend, because I have to say 
that I did notice broad support for this when it came up. The Senator 
from Massachusetts certainly worked on it, as chairman of the committee 
at that time. Very few spoke out against it.
  It is hard for me to believe, as the Senator has pointed out, that 
this is not some kind of political attack. Because President Clinton 
said during his campaign, just as the Peace Corps, which sent our young 
people abroad, was so effective in helping people abroad, let us have 
that in America where we have problems in our schools, where we have 
problems in our nursing homes, where these young people can give 
something back and have a sense of community and of giving back.
  And so the Daschle amendment, as my friend points out, will restore 
this funding.
  I will tell you one story about my visit to a school in Los Angeles, 
where I meet with an AmeriCorps volunteer and some of the students in a 
pretty tough school. This school is made up of kids who were basically 
first-generation Americans. Their parents work in the garment district 
in Los Angeles in very, very tough conditions, minimum wage conditions.
  And, of course, that is another issue, I say to Senator Kennedy, that 
he has lead the fight on. We have opposition from the Republicans, 
unanimously. God forbid we should raise the minimum wage, which is at a 
40-year low in terms of purchasing power.
  And they say, ``Oh, it helps get teenagers into the job market.'' 
Most of the people on minimum wage, as the Senator knows, are adults. 
They use that money to live on and try to provide for their families. 
That is another issue. But it all fits into the same pattern, I say to 
my friend.
  Very quickly, they did away with closing a tax loophole that helps 
the billionaires; just dropped it right out of the conference. But with 
a lot of forethought and talk about the deficit, and a lot of time to 
concentrate, they cut money for young people, for their hopes, for 
their dreams, for their future.
  And they say they care about the deficit. Not one of them voted for 
the $500 billion deficit reduction that every Democrat took a risk and 
went down to that well and voted for. And we have had the biggest 
deficit reduction in our history. We have had 3 years of declining 
deficits, and the smallest work force since John Kennedy with a 
Democratic Congress.
  We did not take a meat ax to these programs, I say to my friend. We 
took a scalpel.
   [[Page S5032]] We closed loopholes. We said to the wealthiest in 
this country--those over $200,000--you may have to pay a little more. 
Over on the House side with their contract, they want to give a 
contract to those who earn $200,000 a year.
  When I went to the school, I say to my friend, I met a little child 
who was shot in a drive-by shooting, and an AmeriCorps volunteer went 
to see him in the hospital every single day and turned that child's 
life around. This is a living, breathing human being, first-generation 
American who now believes in this country.
  I say to my friend, they say that sometimes children ask the best 
questions. Do you know what some of those kids talked to me about, the 
ones who were afraid of losing their school lunch program? Here is what 
they said:
  ``Who gets the money if you cut us out of the program?''
  I could not believe they asked that question.
  ``Who gets the money, Senator, if I do not get my lunch?''
  And I have to tell them, ``The Republicans want to give a tax break 
to the wealthiest people in this land, and I won't let them do that and 
take food out of your mouth.''
  I do not care if I am saying something popular or unpopular, but I am 
going to stand on this floor with my friend until hell freezes over 
before that happens in this U.S. Senate.
  I see that my friend has put another chart up here. I ask him to 
explain it, if he would do that.
  Mr. KENNEDY. I will be glad to. I had not anticipated we would be 
debating this issue at this time, but I think perhaps it is 
appropriate.
  This is a chart showing that the top 12 percent of taxpayers get more 
than half of the tax benefits in the Republican plan. More than 50 
percent of the tax benefits would go to those individuals who earn over 
$100,000.
  I think this makes the point that the Senator has been talking about. 
What we are faced with in these rescissions is the cutbacks in the 
various programs which have been identified by the Senator from 
California--in AmeriCorps and drug-free schools. We had a very 
important and eloquent debate on the problems of violence in our 
schools and how we are going to deal with it.
  Other programs targeted for cutbacks include:
  The chapter 1 program, which was completely revamped in the last 
Congress, again, with strong bipartisan support. If the Senate 
rescissions stand, 70,000 children across the country will not be 
participating in these programs which try to assist young people that 
come from economically disadvantaged communities.
  Goals 2000--this cut will result in 1,300 school districts not 
participating in education reform programs.
  The Head Start programs, which have been tried, tested, and 
reevaluated.
  The WIC nutrition program, school-to-work, child care, and the list 
goes on and on.
  These cuts, as the Senator has talked about, are going to be used for 
the House Republican tax cut, which will go to the top 51 percent of 
the taxpayers.
  That is fundamentally wrong, as the Senator from California 
understands. I do not believe that that is what the Americans are 
really for.
  You would hardly understand that this is what is being cut here. You 
will hear general comments about how we have to cut back on programs 
and discretionary spending in order to deal with the deficit. The fact 
is, the programs which are being cut back are to be used for the tax 
cut to the wealthiest individuals. I just do not think that is right. 
This is the argument that the Senator from California is making, and I 
welcome the chance to join with her.
  Mrs. BOXER. I say to the Senator in closing my comments that I did 
not come here to take from the kids and give to the rich. And I did not 
come here to throw the women and children over first. And that is 
exactly what the Republicans are doing in this Congress.
  Cut the WIC Program, the Women, Infants, and Children Program that 
gives nourishment to pregnant women who may not be able to afford it? 
Every dollar we put in that program saves from $3 to $10. Why? Because 
we give them nourishment--cheese, milk, and things they need.
  I have a pregnant daughter right now--the light of my life. I am 
going to have my first grandchild. Every day I call her: ``Did you take 
your vitamin pill? Are you eating right?''
  I say to my friends, we ought to care about the pregnant women in 
this country who may not have a mom or a dad to call them up in the 
morning, who may not even have the education to know that it is 
important. And, listen, it pays off. It pays off because we have 
healthier children and less costs, less costs to put these babies in 
incubators, not to mention the humanity involved here.
  Where is our decency here? I do not know. But what I know is that I 
am proud to be associated with the Senator from Massachusetts. I think 
what he is pointing out is a tie-in between these tax breaks for the 
wealthiest people among us and the taking from the children. I think it 
is reprehensible, and I will join that fight. The fight has just begun, 
I say to my friends.
  I yield the floor.
  Mr. KENNEDY. Mr. President, parliamentary inquiry. Cloture has been 
invoked; am I correct?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. KENNEDY. So now each Member is entitled to speak up to an hour; 
am I correct?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. KENNEDY. Mr. President, I do not intend to use all the time, and 
I have every expectation we will have a final vote on this sometime in 
the early or midafternoon, a time to be set by the majority and 
minority leaders. I thought that process would be worked out. I did 
want to be able to address the Senate for just a few moments at this 
time on the issue of the tax loophole.
  The current tax laws contained an unjustified tax loophole that 
exists for billionaires who renounce their American citizenship in 
order to avoid taxes on the wealth that they have accumulated as 
Americans. I commend the Finance Committee for closing the loophole in 
its action on the 25-percent health care deduction for small business. 
The Finance committee took the action despite the fact that the revenue 
gained was not needed to pay for the health care deductions for small 
business owners in the bill.
  In fact, the committee requested that the revenues be used for 
deficit reduction, exactly the type of action necessary if we are 
serious about achieving a balanced budget.
  Closing this loophole would raise $1.4 billion over the next 5 years, 
$3.6 billion over the next 10 years, according to the Senate Finance 
Committee report.
  In too many cases, we close tax loopholes only when we need to raise 
revenues for specific spending measures, whether they involve direct 
expenditures or tax expenditures. In this case, the committee closed 
this flagrant loophole as soon as it was brought to the committees's 
attention, and rightly so. All of us thought the issue was settled. Now 
it comes back to us from the Senate-House conference and the loophole 
has been reopened.
 And the outrageous tax break for two dozen or so of the most wealthy 
individuals in the country will remain wide open. This is all 
happening, of course, at the same time that we are cutting Federal 
funds for basic investment and for the future of children and working 
families. Funds for education, housing, and vital social services are 
all being drastically cut at the very time our Republican colleagues 
are deciding that this tax break is not flagrant enough to be 
terminated immediately.

  All citizens of the United States have a basic right to leave the 
country and live elsewhere and to relinquish their citizenship. That is 
not what this provision is about. Every citizen has the right to 
repatriate. We would not want the Tax Code to be used to outlaw that 
action.
  At the same time, though, we do not want the Tax Code to be an 
enticement to citizens to renounce their citizenship. The law would not 
prevent individuals from shifting their assets and citizenship to a 
foreign country; rather it would make sure that those who have amassed 
great wealth through the U.S. economic system pay their fair share of 
taxes.
  Last year, approximately 850 individuals renounced their citizenship, 
but 
[[Page S5033]] only a handful of those would have been affected by this 
legislation. The tax loophole we are trying to close is not one that 
applies to all those who renounce their citizenship. As a result, it is 
wrong to call this an exit tax. It only applies to those with a minimum 
of $600,000 in unrealized capital gains, which would necessitate a 
minimum of $5 million of net worth. All those below that level of 
liability could renounce their citizenship without the IRS ever 
questioning their motives. But the fact of the matter is that many of 
these wealthy individuals are leaving the country for only one reason--
to avoid taxes that they rightfully owe the Government.
  In some cases, the individuals involved have the best of both worlds. 
They renounce their citizenship, avoid millions of dollars of tax 
liability, but still spend up to 6 months a year in the United States. 
In many cases, their families stay in the United States, taking full 
advantage of the U.S. standard of living and quality of life.
  In other cases, wealthy individuals are gaining from the system to an 
even greater degree. They are renouncing their citizenship to avoid 
European taxes, also. Then they take up European citizenship but live 
part time in a Caribbean tax haven so they cannot be taxed by their new 
European home country.
  Some have suggested that this provision would unlawfully restrict the 
fundamental right of voluntary expatriation and emigration. This is not 
the case. The State Department has stated that this provision does not 
conflict with the international human rights law concerning an 
individual's right to freely emigrate from his or her country of 
citizenship. It also recognizes that a state, in order to protect its 
interest, may impose economic controls on a departure as long as such 
controls do not result in a de facto denial of an individual's right to 
emigrate.
  Requiring individuals to pay taxes on gains that accrue prior to 
expatriation does not constitute a de facto denial of an individual's 
right to leave a country.
  These are comparable taxes to those which U.S. citizens or permanent 
residents would have to pay were they in the United States at the time 
they disposed of the assets or their debt. Under the current law, if 
the IRS suspects that an individual has renounced his or her 
citizenship in order to avoid taxes, it will attempt to tax the 
holdings for an additional 10 years. The IRS must establish that it is 
reasonable to believe that the individual gave up citizenship to avoid 
taxes. The burden of proof that the move was not for tax reasons falls 
on the former citizen.
  Current law needs to be tightened because individuals are easily 
evading it. The law provides for that with the taxing of their income 
for an additional 10 years after expatriation. But they avoid the tax 
completely by postponing the realization of gains for the first decade 
after leaving the United States.
  So the concept has been at least included in the tax law. As I 
understand from the experience, that law provides that 10 years after 
expatriation, that income has basically been hidden or shielded. And 
the Finance Committee addressed that issue and was to be able to 
recover what was necessary.
  The Finance Committee report itself states:

       The committee is concerned that present law--

  So this is not a new law; it is a new way of dealing with the 
loopholes that exist.

       The committee is concerned that under present law, which 
     bases the application of the alternative method of taxation 
     under section 877, proof of a tax avoidance purpose has 
     proven difficult to administer. In addition, the committee is 
     concerned that the alternative method can be avoided by 
     postponing the realization of U.S. source income for 10 
     years. The committee believes that section 877 is largely 
     ineffective to tax U.S. citizens who expatriate for the 
     principal purpose to avoid the tax.
       The proposed provision is similar to those in other 
     countries, including Canada and Australia. The concept is 
     also similar to laws in many States, where individuals who 
     move to other States are taxed on compensation earned before 
     the move though it may not be received until after the move.

  The law would be limited in its scope. It would not apply to real 
estate or pensions, regardless of their value. We already tax gains on 
real estate of foreign citizens as a result of the sale of property. 
Under the Finance Committee reform, the State Department would notify 
the IRS when anybody relinquishes their U.S. citizenship. The State 
Department would provide appropriate information to assist the IRS in 
enforcing the provision.
  As the report of the Senate Finance Committee stated on this 
provision, it is fair and equitable to tax expatriates on the 
appreciation of their assets when they relinquish their U.S. 
citizenship.
  I regret that Congress is unable to act now to close this 
billionaires' tax loophole in the current tax bill. We know that our 
Republican colleagues are quick to call for deep cuts in programs that 
help working families, children, college students, senior citizens, and 
other deserving Americans. So it is ironic that our Republican 
colleagues show so much solicitude for the least-deserving Americans--
those who want to renounce their citizenship in order to evade their 
fair share of taxes on the massive fortunes they have accumulated from 
the blessings of America. This tax loophole should be closed as soon as 
possible.
  So, Mr. President, it was my purpose--and I am joined by a number of 
my colleagues. Although we were not technically able to do so in terms 
of the parliamentary situation in which we finds ourselves, at least we 
should be accorded an opportunity to vote on a resolution that would do 
just that--that is, remedy this situation.
  I would expect that it would have overwhelming support. I would 
expect that it would have unanimous support. I see on the floor my 
friend and colleague, the chairman of the Finance Committee. As I noted 
earlier today, he had given assurance, as did the Senator from New 
York, that this issue would be resolved in the conference, along with 
other members of the Finance Committee. Senator Bradley authored the 
provision in the Finance Committee, and he indicated that as well.
  It seems to me, Mr. President, that Members ought to be able to 
express the sense of outrage that is felt by their constituents and be 
able to speak to this issue in support of a resolution that would urge 
that at the earliest possible time, there be action on this particular 
loophole. We do not doubt for a moment the sincere, dedicated, 
committed desire of the Members I mentioned and other members on the 
committee to do so.
  To many of us who have been around long enough to know that when we 
are in those conferences and the House has a different view about this, 
that getting a unanimous, recorded vote by the membership, Republican 
and Democrat alike, with the strong assurances of the members of the 
Finance Committee, majority as well as minority, and all Members of the 
Senate on this, that this would be an issue that would be resolved and 
resolved in a timely fashion, and that this real injustice to all of 
the other American taxpayers--because when we have this kind of 
loophole, make no mistake about it, it is the hard-working men and 
women that are paying the taxes, playing by the rules, that make up the 
difference.
  Every time you have this kind of a windfall and you create that 
deficit, what are we asked to do? We are asked to address the problems 
of the deficit. Here are where the cuts come. That is what we are being 
asked to do here--to cut the child care programs, the WIC Program, cut 
the Head Start Program. Why? For deficit reduction. And one of the good 
reasons we have it is because we have a loophole like the one I have 
just mentioned. It seems that the least we can do is to have a sense-
of-the-Senate resolution that reflects the combined body here of the 
Senate on the earliest possible time. I wish we could have worked out a 
process prior to the vote.
  I understand that we will move to a vote. Of course we will have an 
opportunity to offer it on the underlying measure, in terms of the 
rescissions later on.
  It would seem to me that it would be wise for the leadership to give 
a very clear indication about their support and make it easy to resolve 
this. Announce to the world that tomorrow at 10 o'clock, this afternoon 
at 5, we will vote on this. We will close this down.
   [[Page S5034]] But we cannot do that. We hear, ``We are for it,'' 
but we will not be given an opportunity to vote on it. We are not going 
to say when we can get a vote on it. We have to conclude that if this 
is the case, why do we not just say at a time certain that we will get 
a resolution on this matter such that the majority leader and the 
minority leader and the members of the Finance Committee will all say, 
``This is an expression of the unanimous vote of the Senate.'' That is 
what we are desiring to do.
  We are saying to the House of Representatives that the Senate of the 
United States--Democrats and Republicans--are all aligned together. We 
believe that action has to be taken, that this loophole has to be 
closed. We are prepared to go on record. We are prepared to set the 
time to do so.
  I want just to finally indicate that I am very hopeful that we can do 
it. I will be eager to try and work with the leadership to try and 
establish that time. I will also be forced to remind our body, if we 
are not able to do it, as to what, really, is at issue.
  It is the issue of fundamental fairness. An issue of which side are 
we on. Are we on the side of working families who are in the lifeline 
programs that reach the children of this country? In the child care 
programs, where we have long lines of parents trying to get quality 
child care? Or the school-to-work program for the 70 percent of the 
individuals who do not go on to 4-year college and want to be able to 
find employment? This program, which has strong bipartisan support, 
reflects a combination of business and educators and parents trying to 
get people into work.
  Other programs include the WIC nutrition program, which was spoken to 
so eloquently by our friend and colleague, the Senator from California. 
The Head Start Program, which was reviewed by a bipartisan commission, 
virtually had a unanimous vote when it passed out of the Labor and 
Human Resources Committee, and had strong support in the House.
  Goals 2000 education reform, which incorporates many of the ideas and 
suggestions of the previous Secretaries of Education.
  The Chapter I Program that focuses on the educationally 
disadvantaged.
  The Safe and Drug Free Schools Program--we obviously know that as 
much as we do to reform our education system, if we do not have a safe 
school, none of this will matter.
  Finally, regarding the AmeriCorps Program, we must not pull the rug 
out from underneath the young men and women who are beginning to reap 
its benefits and serve their communities.
  This is really something that I think all Americans can understand.
  I see other colleagues that want to speak here this afternoon. I 
would hope that we will all understand the impact of these cuts when we 
vote on this measure. I can give the assurance to the membership we 
will get a vote on it, hopefully sooner than later.
  The PRESIDING OFFICER. The majority manager is recognized.
  Mr. PACKWOOD. I thank the Chair.
  It was almost 25 years ago that I traveled around the country with my 
good friend, the senior Senator from Massachusetts. I was then on the 
Labor and Public Welfare Committee. He was, I believe, chairman of the 
Health Subcommittee. We were doing health hearings around the country 
going to hospitals, holding hearings.
  There is no question that his compassion for the poor is unrivaled in 
this body. Sometimes, however, that compassion is confused by the 
volume of his oratory and the velocity of his statistics.
  Volume and velocity are not necessarily accuracy. He uses the word 
``cut, cut, cut.'' Only in this Government--not in any State government 
that I know--only in this Government do we use the word ``cut'' as 
follows: cut means we are going to spend less than we thought we were 
going to spend in the future, even though it is more than we are 
spending now. That is a cut.
  This would be a cut, to an average layperson. I am making $1,000 a 
month. I think I am worth $1,200 a month. I go to the boss and say, I 
am worth $1,200. And the boss says I don't have $1,200. I will give you 
$1,100. You do not tell your wife you got cut $200; you got $100 raise. 
It is not as much as you hoped but more than you are getting.
  I defy you to ask any average normal citizen in this country to 
define ``cut'' the way we define it.
  Having said that, we will take a look at the quantity of money we now 
spend. The Federal Government--and we hate to be cavalier about this 
but I will round it off--the Federal Government this year will spend 
about $1.5 trillion--``t,'' trillion, $1.5 trillion.
  If we were to spend $1.5 trillion a year for the next 7 years--and 
the reason I pick that is the year 2002 we are hoping to get to a 
balanced budget--we would spend about $11 trillion. We are planning to 
spend under current law, if we do not change the current law at all, we 
do not add anything like long-term care to Medicare, we do not add 
anything more to AmeriCorps or Head Start, over the next 7 years 
instead of spending $11 trillion, as we would spend if we spent the 
same amount every year, we would spend $15 trillion. That is if we do 
not change the laws. And we would still have the perpetual deficits.
  In order to balance the budget by the year 2002, instead of $15 
trillion spent over the next 7 years, we need to spend about $14 
trillion. I want to emphasize, again, we are spending roughly $1.5 
trillion now.
  If we continue to spend it over 7 years, we would spend about $11 
trillion. To balance the budget, we can do it and spend $14 trillion. 
That is not a cut from what we are now spending--Social Security is not 
going to go down, Medicare is not going to go down, Medicaid will not 
go down, education will not go down, food for the poor will not go 
down. They are all going to go up, not down.
  The reason that people use the word ``cut'' is because they have a 
vested interest in the program. Often, they are bureaucrats who 
administer it and aggrandizement and biggering is good for bureaucracy. 
The more you can bigger, the better.
  So we have come with this concept only, really, in the last 20 years, 
of what a cut is: Spending less than we were otherwise going to spend 
but more than we are spending now.
  Unfortunately, the press has picked it up. They say Republicans plan 
to cut--whatever it is. So let me give an example. Let us take some of 
the programs that my good friend from Massachusetts has. Let us take 
Head Start and let us say we were going to spend $500--$100 a year on 
it over the next, let us say, 5 years: $500; and let us say we were 
going to spend $100 a year on school lunches for the next 5 years: 
another $500; and $100 on child care per year. So over 5 years, you 
have $500 we would spend on Head Start, $500 on school lunches, and 
$500 on child care. That is $1,500 we would spend over the next 5 
years.
  Let us say, however, that the current law--no change in the current 
law, we do not have to vote for anything--would say that on these 
programs we will spend $200 a year. So over 5 years, instead of 
spending $500, we would spend $1,000 on each program. So on the three 
programs, instead of spending $1,500, we spend $3,000.
  Now let us say the Republicans come forth and say, ``We think, over 
the next 5 years on those three programs, instead of $1,500 that we are 
now spending if you were to flatten it out, we think we should spend 
$2,500; not $3,000, $2,500.'' The argument would be made we have cut 
the programs $500.
  We have not cut the programs. We have increased the spending $1,000. 
It just is not as much as advocates of each of those programs would 
like. And we, everyone in this body, knows we are faced with this.
  In comes a group whose principal purpose is education. It can often 
be conservative Republicans, let us say it is the National Association 
of School Boards. Except in very big towns, my experience has been that 
school board members are often Republicans, somewhat conservative, and 
they want to balance the budget. But they are on the school board, so 
in they come and say, ``Yes, I am for the balanced budget amendment, I 
am for balancing the budget, but education is a special problem and you 
must increase spending for education. If we have to balance the budget, 
you should take it from someplace else.'' They leave.
  In the next week comes the National Association of Hospital Boards of 
Directors. These are almost invariably Republicans, also. They are the 
town's 
[[Page S5035]] elite, the town's 400. They are generous in their 
charity. They give money to the hospital. In they come, and they 
understand the fastest growing program we have is health and they want 
to balance the budget. But they say, ``You have to understand that 
health is in a special category. If the budget must be balanced, take 
it out of education.'' They leave.
  In comes the National Association of the Chiefs of Police, and to 
them the most critical problem facing this country is crime and the 
budgets for their police department. These people are normally 
reasonably conservative, also. Probably if they had to vote on a 
balanced budget amendment, they would vote four or five to one for a 
balanced budget. But fighting crime is unique and different and, ``If 
there is not enough money for everything, we should take it out of 
education and health so that we have it for crime.''
  None of these people are malevolent. Each of these people sees the 
world through their eyes. Each of them sees it through the programs 
that they administer or are committed to--and are committed to out of 
perfect decency. Yet, if you do not see the world as they see it, if 
you say, ``Listen, somehow instead of spending $3,000''--we are now 
spending on the average only $1,500 --``we have to cut it to $2,500,'' 
which is really a $1,000 increase, but in order to pare down the 
increase by $500, we have to take a little bit off of the increase in 
education and a little bit off the increase in health and a little bit 
off the increase in crime prevention--each one of them is mad at you 
because you did not see the world as they saw it.
  I want to emphasize, again, when we finally get the welfare reform 
bill on the floor, when we finally get the entire budget bill on the 
floor--if we ever get it on the floor--and if we have a budget that 
gets us to a balance in 7 years, spending will be up for health, up for 
education. It may be down in defense. It will be up for child care. It 
will be up for almost every social program we know.
  Aha, but the opponents are going to say, we cannot guarantee that 
because you are going to block grant it. By block granting, we simply 
mean we are going to give to the States some of these programs, with 
some money, and tell them to administer it.
  Let me take the example I have used, these three: Head Start, school 
lunch, and child care. As I say, we are now spending $100 each year, 
$300 a year on the three of them; over 5 years, that is $1,500. But if 
we did not make any change in the law over those 5 years, we would 
spend $3,000. So let us say we say to the States we will make you a 
deal. We think you are closer to the people than we are. We think you 
know your problems better than we do. The problems of Oregon may not be 
the problems of New York. Certainly, the problems of Newport, OR, are 
not the problems of New York City. We are going to give to the States 
for these three programs $2,500 over 5 years, and say to the States, 
``You spend it as you want on these three programs: Head Start, school 
lunch, and child care.''
  But we do not say in each case how much they have to spend on each of 
those programs. They just have to spend the aggregate $2,500 on those 
three programs. The States that are stable, with relatively lower 
divorce rates, with only one person in the household working, may not 
have the same child care problems that an urban area with illegitimate 
birth rates of 50 or 60 or 70 percent and no man around in the 
household, they may have a different problem about child care. It may 
not be as critical as it is when you are trying to get a woman off 
welfare, get her a job, and she has a child and the child is 1 or 2 
years of age, and she is 19 and not quite out of high school--dropped 
out. She needs child care.
  Maybe that State says, ``We are going to have to spend more on child 
care than even what the Federal Government might have planned to have 
spent on that particular program. But we will spend a little bit less 
on Head Start or a little bit less--not less than we are spending, less 
than was planned to be spent.''
  So the argument will be made, if you give these programs to the 
States, there is no guarantee that they will have the compassion and 
the knowledge and the interest to take care of Head Start and school 
lunch and child care the way a compassionate Federal Government would. 
Not only that we understand the problems better, the argument goes, so 
we have to have programs that have a myriad of Federal regulations that 
go with them--not only do we understand them better, we are more 
compassionate. State legislators do not care about children, they do 
not care about nutrition, they do not care about Head Start. Governors 
are callous, backward people who have no concern that their children 
are well educated and well fed.
  That is just baloney. We know it. For us to say at the Federal level 
that the Governors and the State legislatures do not care about these 
problems is outrageous. They care as much as we do, and they are closer 
to the problem than we are.
  So let us get over this argument about cut, cut, cut. Are there going 
to be reductions in spending from what we would otherwise spend if we 
are going to balance the budget? Yes.
  Will those be reductions from what we are now spending? No. Will they 
be somewhat less than the most wild-eyed, zealous partisan of these 
particular programs that they would like spent on their programs? 
Perhaps. We are going to have to ask everybody in this country to share 
in the reduction of the increase--not a cut --a reduction of the 
increase. This battle we are going to have at another time.
  I mention this only because my good friend from Massachusetts has 
talked about this expatriate tax provision in the bill that is 
currently before us which would allow the self-employed in this country 
to take a 25-percent deduction for health insurance which they 
purchase, and 30 percent starting in this year, and has said we have 
cut out the tax on the wealthy and we favor the wealthy at the expense 
of the poor at the very same time that we are cutting Head Start, and 
AmeriCorps. I say again we are not cutting. He likes to use the term. 
But we are not cutting. At the same time we are reducing the increase, 
we are cutting the tax on the malevolent rich who flee their country to 
avoid taxation.
  First, in this country, if you leave it for purposes of avoiding 
taxation, we can tax you for 10 years. My good friend from 
Massachusetts has said, yes. But for 10 years. You can leave this 
country and you have what we call unrealized capital gains. Perhaps the 
price of a stock goes up. The value goes up but you have not sold it, 
and you do not sell it for 10 years. That is an unusual situation. It 
is very unusual for somebody to leave and not touch their assets for a 
decade. But if they leave this country now to avoid taxation, we can 
tax them for 10 years.
  I will tell you what happened with this expatriate tax provision. I 
am frank to admit it was mostly my error in moving too rapidly. The 
House bill did not have this provision in it at all. We were doing what 
we call the markup on this bill, and Senator Bradley offered the 
provision to tax the expatriates. We had relatively little discussion 
about it. We adopted it without even a rollcall vote; no hearings; did 
not really grasp the significance of what we might be doing. We have 
done this before in this body.
  I remember John Williams, who was a Senator from Delaware, Senator 
Roth's predecessor, who served here 24 years, and he and I overlapped 
by 2 years. I was elected in 1968 he retired in 1970. But he used a 
wonderful expression once in which he said, ``We make more mistakes in 
haste than we lose opportunities in delay.''
  I will give you one mistake we made. This tax provision that we put 
in the Senate bill only applies to American citizens. We have any 
number of people who come to this country from Cuba, Italy, Poland, 
Germany, and they are legal immigrants. They work here. They pay their 
taxes here. They are good citizens. They participate in life while they 
are here. But at the end of 30 or 40 years of work, and they have been 
very successful and have made a fair amount of money, they choose to go 
back home. The tug of the home country is there for people. So they go. 
They never became an American citizen. They are here legally. There is 
no complaint about that. They paid their taxes; no complaint about 
that. This bill does not apply to them. They never became an American 
citizen.
  But take the same person from Poland, or Germany, or Cuba who comes 
here, becomes an American citizen, is 
[[Page S5036]] naturalized, decides to go back to the home country, 
they are taxed. We did not know that. It just did not occur to us.
  I will give you another example. This is at variance of many 
naturalized citizens; some who fled Cuba or were forced out of Cuba 
when Castro seized control; in many respects confiscated much of their 
property. You had engineers and doctors coming here in 1960, 1961, 1962 
and went to work in the most menial of occupations here because they 
had been driven out of their home land and had not yet passed licensure 
exams here, and had no money here. And over 30 years they have become 
very successful. They are the leading citizens in the movement to free 
Cuba of its dictatorial control. They will one day be successful. Some 
of them have become citizens, some not. My hunch will be when Cuba is 
free many of them will want to return home. That does not mean they are 
bad Americans, although in some cases they have not taken out 
citizenship. But it means they want to go back to their country when it 
is freed.
  Are we going to tax them? Are they leaving for tax reasons? Are they 
leaving for patriotic reasons? Our bill taxes them no matter what. How 
many occasions have we had where citizens all over this world have had 
to flee their country and go into exile for 5, 10, 15 years because of 
a repressive government at home and they could not return until that 
government became free? And then they go home. How are they to be 
taxed? We did not consider it.
  I will give you another example. A wealthy father sets up a trust for 
his grandson. The grandson marries a foreigner, perhaps met the 
foreigner when the grandson was a student overseas or in the military 
overseas and takes out citizenship in that country. The grandfather is 
still alive. The trust is revocable. Is the grandson, when he leaves 
this country, taxed on what we would call the corpus, the amount of 
that trust, even though he has not gotten it and may not get it? We do 
not know. We did not consider that problem. Nobody raised that problem.
  I will give you another example. A person works here all their life. 
They are very successful. The employer for whom they work has been 
putting aside money in their pension plan. Finally, the accumulated 
pension plan with the interest and everything on it is significant and 
the person is to get x amount of dollars a month from the time they 
retire. He retires at 60, and goes back home. It is an American 
citizen. I think the way this is drawn that corpus, that amount in the 
pension plan, is taxed immediately. I think. I am not sure. Then I 
think the payments are taxed also when you get your pension. Did we 
intend that or did we not intend that? I am not sure what we intended.
  I say this only to attempt to ameliorate the argument that this was 
done at the behest of or because of the rich in this country; this was 
adopted in haste and we did not grasp its full consequences.
  In addition, it was not in the House bill and the House with a vote 
on the floor before we went to conference with them instructed their 
conferees not to accept this provision. So the chairman of the Ways and 
Means Committee and I have jointly put out a release saying we want the 
Joint Tax Committee, which is the professional group that so well 
advises the House and the Senate, to study this problem, give us a 
report by June 1. We will have hearings on it. There will be 
legislation enacted. And the effective date of it will be February 6 of 
this year so people cannot now get under the deadline in an attempt to 
flee the country at the moment before the law is in effect.
  So the problem will be taken care of. But it will be taken care of in 
a responsible way. I say again, in this case, in my judgment we did not 
act irresponsibly. We did not act malevolently. We just did not grasp 
the consequences of what we were doing.
  So I hope that the debate and the discussion would not be one of 
rancor and class warfare, that we are excusing the rich, and in order 
to do that we must eliminate programs for the poor. That is not the 
debate over this issue. It is a debate over equal protection of the 
laws, and under the equal protection of the laws everyone in this 
country is to be treated equally--the poor, and the rich, and you do 
not suffer a particular penalty solely because you are rich. A penalty 
that may--I emphasize ``may'' because we do not know--be unwise, may be 
unfair, may in some cases violate international treaties that we have 
agreed to. We are not sure.
  I hope we can adopt very soon the conference report that we are 
discussing so that roughly 3.2 million self-employed working Americans 
in this country will know whether or not they can take a 25-percent 
deduction for health insurance premiums that they buy for themselves.
 They are not employed. Their employer is not paying for this. They pay 
for it. The longer we delay, the tougher it is going to be for them to 
know whether or not they can make this tax deduction, which is now 
going to have to be filed in just 12 more days.

  So I thank the Chair. I hope we can conclude this debate not in a tax 
on the poor or a tax on the rich or an argument that the provision is a 
tradeoff so we have to cut programs for the poor. It is not that. And 
when this whole debate on spending and welfare and block grants is 
over, I hope it will be very clear to America that no one is cutting 
programs for the poor. The question is are we willing to somewhat 
restrain the increases so that we might achieve a balanced budget, so 
that those very children we are talking about now do not face the 
possibility of bankruptcy of this Nation or the bankruptcy of the 
Social Security System or the bankruptcy of Medicare--and that is only 
6 or 7 years away--so that they do not have to face that and pay for it 
because we refused to have the courage or the wisdom or the foresight 
to attempt to modestly reduce the increase in spending sufficiently to 
give them a balanced budget.
  I thank the Chair.
  The PRESIDING OFFICER (Mr. Kempthorne). The distinguished Senator 
from Illinois is recognized.
  Mr. SIMON. Mr. President, I am pleased to speak on the Daschle 
amendment. Let me just comment briefly on the observations of my friend 
from the State of Oregon.
  It is true that the volume of Senator Kennedy's remarks does not 
necessarily mean that there is virtue to his remarks, but in this case 
I believe there is virtue in his remarks. And because my colleague from 
Oregon speaks in a calm, less passionate voice does not mean 
necessarily that there is virtue to everything he had to say, some of 
which I agree with, some of which I do not. That we should provide tax 
breaks for the self-employed in their health insurance we agree 
completely.
  When my colleague from Oregon says that this particular tax break is 
designed so that we have equal protection for everyone, the poor and 
the rich alike, it is true that if you are either poor or you are a 
millionaire and you move to the Caribbean and you renounce your 
American citizenship, you can get this tax break. But there are not 
going to be very many poor people who are going to take advantage of 
that. This is designed for those who are more fortunate economically.
  When my friend argues that all we have to do in the future to achieve 
a balanced budget is to restrain spending, he is correct. If you assume 
and we were to pass, we were to pick up one more vote for a balanced 
budget amendment, if we had no cuts in interest rates--and every 
projection, CBO, Data Resources, all of them say we will have reduction 
in interest rates--if we were to have no changes in Social Security, we 
could increase spending 1.7 percent a year between now and the year 
2002 and achieve a balanced budget. So that argument by Senator 
Packwood is absolutely correct.
  I serve on the Budget Committee. I want us to use not what we call 
euphemistically the current services budget but where we are now. That 
is how a family does it, as Senator Packwood says correctly.
  But the Senator from Oregon is incorrect when he said these are not 
cuts. What he said, if he were making a speech on the 1996 budget, 
would be accurate. In the rescission, what we are saying to groups is 
we are giving you the money. Indian housing, we have told them we have 
appropriated X-number of dollars--I do not know the amount--for 
desperately needed housing on Indian reservations, and now we are 
coming along saying we are taking 
[[Page S5037]] back $100 million of the money that you received. And 
you look through this.
  To AmeriCorps, Senator Daschle will restore $210 million, 
overwhelmingly supported by the American public; 90 percent support the 
idea. The Los Angeles Times showed 60 percent of the people who call 
themselves conservative support the idea.
  Republican Governors. Montana's Governor says:

       While balancing the budget, fighting mandates, and 
     streamlining government, I am committed to this community 
     service program for Montana.

  Michigan's Governor:

       AmeriCorps captures the promise found in all its citizens, 
     young and old, who see problems in their communities and work 
     together to solve them.

  Massachusetts' Governor:

       Governors of both parties have shared my enthusiasm for 
     national service.

  Title 1 helps poorer people, the disadvantaged. The reality is we do 
not do a very good job in the field of education in disadvantaged 
communities. I am not saying all education in disadvantaged communities 
is terrible, but it needs a lift.
  It is very interesting that Sweden, which does not have the income 
disparities we have in the United States, spends two to three times as 
much for education in the disadvantaged areas as in the more affluent 
areas. We do the opposite.
  I was on a call-in program this morning with station WILL in 
Champaign, IL, and a faculty member of the University of Illinois got 
on the phone and he interpreted my remarks as being negative about 
American education. But he made this significant observation. He said 
some of the finest students we have come from the Chicago suburbs.
  The Chicago suburbs. Not the city of Chicago, where the need is so 
great, where, frankly, we are not spending the money. If there is any 
question about the value of title I since it was enacted, the gap 
between black and white students has narrowed significantly. For 9-
year-olds, the gap in achievement test scores has closed by 18 percent 
in math and 25 percent in reading.
  This program works. And this is a program we are going to cut back on 
if we do not adopt the Daschle amendment. The dropout rate for 16- to 
24-year-olds has declined significantly for all students, from 17 
percent in 1967 to 11 percent in 1993. The decline in the dropout rate 
has been even more dramatic for African-American students, going from 
28.6 percent in 1967 to 13.6 percent in 1993: even with the present 
appropriation that this rescission would cut back without the Daschle 
amendment, 13 percent of high-poverty schools will receive no funds at 
all. In the city of Chicago, the Chicago school district, you have to 
achieve 56 percent of poverty in your school before you receive any 
help. Clearly, a needed program.
  Goals 2000. We hear a lot of talk around here how we are going to 
help the States. Goals 2000 says to the States you set your standards, 
you establish the program, and we will provide some assistance. We cut 
back on that.
  Safe and drug-free schools. Cut back $100 million out of $472 million 
appropriated. We are going to solve the problem of crime not just by 
building more prisons but by drug treatment programs, drug prevention 
programs, education programs--very much needed.
  Head Start. Every study shows Head Start pays off in this country.
   And just about every Head Start program has a waiting list of young 
people to get into the Head Start program.

  I visited the Head Start program in Rock Island, IL, where, like 
every Head Start program, they have a waiting list. In Rock Island, IL, 
on Monday morning, one group of children come in; Tuesday morning, a 
second group comes in; Wednesday morning, a third group, and so forth.
  I asked the woman in charge: What would it mean if you could have the 
same children in here not just 1 day a week but all week? She smiled 
and said, ``You can't believe the difference it would make in their 
lives.''
  We save money by not funding Head Start so that all young people who 
need the help can get into it, but it is extremely shortsighted.
  The WIC Program; every study shows it pays off tremendously. That is 
the health program for women, infants, and children.
  School-to-work. I heard Gov. Tommy Thompson from Wisconsin--and, as 
the Presiding Officer knows, he is a good Republican Governor--I heard 
him praise what we did in school-to-work. We are spending a huge amount 
of our education dollar for those young people who go on and get a 
bachelors degree, but 75 percent of our students do not do that. 
School-to-work is designed for everyone, but particularly for those who 
are not going to go on to get that bachelor's degree. There was $30 
million cut out of that.
  Year-round youth training, under the JTPA Program, cut $100 million. 
With the kind of youth unemployment that we have, I do not think it 
makes sense.
  Immigrant education. I hear a lot of speeches that we ought to make 
English the official language around here. I do not know what it would 
mean, incidentally. Would that mean you cannot get a translation if you 
are in court if you speak Chinese or Spanish or some other language?
  But it is interesting that when we come up for immigrant education to 
have classes so that people can learn the English language--and that is 
really the way you make English the official language, let people learn 
the language, and we ought to do that--we are cutting $8.8 million out 
of that.
  I believe that the amendment by Senator Daschle is a sound amendment.
  I agree with Senator Packwood and I agree with our Presiding Officer 
that we need a balanced budget amendment and that we ought to start 
from a zero base and not a current services budget. My hope is, and my 
belief is, that Senator Domenici is going to do that with the Budget 
Committee this year.
  But, I think it is a mistake to cut back, particularly in this area 
of education.
  I note on the floor the presence of the Senator from Vermont, who has 
been rightfully telling us for some time we ought to be spending a 
higher percentage of our budget on education.
  It is very interesting, as interest has grown because of the deficit, 
we have spent less and less on education. In fiscal year 1949, believe 
it or not, 9 percent of the Federal budget went for education. Today, 2 
percent of our budget goes for education. We will spend 11 times as 
much this year on the gross interest expenditure as we will spend on 
education.
  Mr. President, I hope we will adopt the Daschle amendment. This 
should not be a partisan matter. I think it makes sense. I hope we will 
do the right thing for the future of our country and vote for it.
  Mr. President, I yield the floor.
  Mr. JEFFORDS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Vermont is recognized.


                         Privilege of the Floor

  Mr. JEFFORDS. Mr. President, I ask unanimous consent that Cory 
Heyman, a Jacob Javits fellow in my office, be granted floor privileges 
for today's proceedings.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. JEFFORDS. Mr. President, I would like to talk to my colleagues 
about the rescissions bill and also, in a broader context, about the 
situation with respect to education in the country.
  I am going to run through a relatively large number of charts today, 
each of which is very significant and with a great deal of information 
involved. As time progresses through the spring, I will go over each of 
these areas in greater detail.
  But I think now, as we begin talking about the rescission bill, it is 
important that we examine the cuts in the critical area of education.
  When it becomes necessary to cut, it is easiest when everyone holds 
hands and says, ``Oh, let's take our cuts and suffer together.'' 
However, in some cases, cuts may exacerbate the deficit problem, not 
ease it. Education is a critical item in this regard.
  Earlier this year, business representatives from the Business Round 
Table, the National Alliance of Business, NAB, and the chamber of 
commerce approached me with concerns about the state of the work force 
and its ability to meet the increasing effective international 
competition.
  As a result, this Wednesday, a summit will be held here in 
Washington 
[[Page S5038]] with business and education leaders, parent and student 
representatives, and political leaders.
  I would like to share with you today the facts I will share with them 
on Wednesday. It is my hope that, when you review this information, you 
will agree that cutting educational funds could be most 
counterproductive to deficit reduction and for our future.
  When the Berlin Wall came down, we all breathed a sigh of relief. But 
as we were beating against the wall over the decades since World War 
II, our economic competitors were beating us in entering into the 
evolving markets around the world. They now stand ready to meet the 
demands of the new markets of Asia, Eastern Europe, and the rest of the 
world.
  Ours remains the most productive economy in the world, but our 
failing educational system and the inability to provide the necessary 
work force for our industry is seriously threatening our edge and our 
economic future.
  Most worrisome is that the gap between our level of learning and that 
of our major competitors is increasing--that is, it is getting worse--
not decreasing. Especially in the critical areas of math and science, 
American children trail their counterparts in Europe and Asia. And they 
are losing ground.
  Let us take a look at the status of our education. I would remind 
everyone that in 1983, Secretary of Education Bell, under the Reagan 
administration, set forth ``A Nation at Risk'' and analyzed our 
educational system, analyzed where we stood in the world and declared 
that this Nation was at serious risk. In fact, he went on to say, in 
words of this nature, that if an enemy of this country had forced upon 
us the educational system that we have in this country today, we would 
consider it an act of war.
  Since that time, 1983, a number of serious reports, documents and 
books have been written, all saying the same thing. We have had two 
summits since then. We established goals in 1989, which were adopted 
this past year, to determine where we must be in order to be 
competitive in the international world.
  I think this first chart that I will show you, chart A, kind of says 
it all with respect to where we are with the rest of the world in those 
critical areas of math education. Look at it. You can hardly even see 
it is on the chart.
  But the most startling aspect of this chart is to look at who No. 1 
is--China--China, by far. And when you consider that it has a 
population of nearly 1.2 billion people and when you consider the 
serious deficit that we have in our trade with China, can you not help 
but be concerned that this is a serious problem.
  But if you do not like that one, if you do not care about the 
international scene, if you do not think we have to worry about our 
market, take a look at this next chart. This is the one which shakes me 
up the most.
  This one says that over half of the high school students in this 
country who graduate are functionally illiterate. That means they are 
unable to perform basic tasks to get a job.
  That is so startling to me that I cannot help but wonder whether or 
not this Nation is going to survive if we do not do something.
  The business community is deeply concerned about this. In fact, there 
was a report that came out a few weeks ago, which was reported in the 
New York Times and elsewhere, which indicated that businesses do not 
even bother to interview high school graduates anymore. It is not worth 
their time. They are not educated enough. What business does then is 
spend some $200 billion a year to train and educate their workers. I 
will show a chart later which illustrates the costs associated with a 
well-trained work force.
  Let us take a look at where we stand. We established a goal under 
Goals 2000, that everyone shall be educated at least to meet certain 
basic standards. We set forth a curriculum and standards in the 1983 
report, ``A Nation at Risk.'' In 1990, only 22 percent of our high 
school graduates were adequately educated in the recommended core 
curriculum.
  We have a serious problem. Yet, we have a hard time convincing many 
of that. I found myself going to my own local high school and asking 
the question:
  ``How are we doing?"
  And they said, ``We're doing fine.''
  Then they told me, ``Well, our kids now are taking calculus and some 
of them are taking it in their junior year.''
  I said, ``Wow, that's great, I didn't get it until I was in 
college.''
  However, the problem with that is if you are in Taiwan, Japan, or 
other areas, you are getting calculus in your freshman year. And one 
wonders why we are so far behind.
  I think the only way we can get people to understand is to show the 
impact it is having upon the Nation as a whole. I feel in this Nation, 
we have a tendency--I know I do--to compare our school system with the 
one in the next county or our State with another State, but we fail to 
compare it with those of our competitors.
  If you take a look at this chart, and you will see as we go through 
these charts, if we do not have an educated population and if you as an 
individual do not have an adequate education, you will not have an 
adequate earning capacity in this Nation, to give you the kind of 
lifestyle you desire.
  This chart basically shows that education means a job, and the more 
education you have, the more money you are going to make during your 
life. It also indicates that about 25 percent of the people who are 
school dropouts, many of whom are also functionally illiterate, have an 
extremely difficult time finding employment.
  But as this shows, if you get a bachelor's degree your earning 
potential almost doubles; if you go up to a master's, it will double 
again. The point is if we do not have an educated population, if you 
are not well educated, you have a very limited earning potential.
  Let us take a look now at the differences this means in the standard 
of living in this country. As I indicated, our education has not kept 
up. Our competitors are beating us. This is a chart which is used over 
and over again to show that in the last 20 years or more, the person 
who drops out of high school has seen a decrease of 35 percent--I 
repeat, a decrease of 35 percent--in their real income.
  If you only have a high school diploma, you have seen an 18-percent 
decrease in your median family income, and if you had some college but 
did not graduate from college, there has been an 11-percent decrease 
over the last 20 years in your standard of living. Only those who went 
to college and beyond have seen an increase in their standard of living 
over the past 20 years. That is a sad commentary on where we are.
  I think it is important that we keep this in mind and recognize that 
we have to improve the educational system. In a few moments, I will go 
on to explain what must be done and how I hope we can accomplish it.
  Now let us get to the area we are discussing today and will be 
discussing in the next few months, and that is, what does the budget 
do, what impact does it have on our future budgets? What we find on 
this chart is that over half a trillion dollars in costs are suffered 
by this Nation because of a failed educational system.
  Let me run through these figures. It costs $225 billion to our 
businesses each year--$225 billion each year--for remedial education, 
to teach the young people the things they should have learned up 
through high school, and for skill education, the things that they need 
to have to hold a job which will help us in our international 
competition in order to increase our Nation's productivity.
  We spent $208 billion for various welfare expenditures in this 
Nation. This is yet another reflection of what happens when people are 
not sufficiently educated. There are some 80 million functionally 
illiterate individuals in this country who cannot fully contribute to 
our economy; $43 billion is the cost of crime to our society; 
incarceration costs anywhere from $20,000 to $60,000 per inmate, money 
which could be put to better use. Money is not the only way we suffer 
from crime; it also poses a danger to our society. Yet when we 
recognize that close to 80 percent of the people incarcerated are 
school dropouts, it indicates how extraordinary the impact of education 
is on our society.
   [[Page S5039]] We have $200 billion for expenditures on our citizens 
for lost productivity as well as, I mentioned, training.
  What I want to point out is if we decrease our expenditures in 
education, then we increase the social costs and in turn our deficit 
will grow. But equally important--it is not shown on this chart--is 
that if we did not have to pay for these undereducated individuals and 
if there was not the drain on the economy their lack of education 
caused, we would actually have $125 billion more in revenue.
  So when we cut back on education, we run the risk of not only 
increasing social costs but also decreasing the amount of revenues we 
will have at our disposal.
  Let me go on and talk about the basic question which is relevant to 
the area of the deficit.
  There are people who will say--and they are correct--that lack of 
money is not necessarily the problem and, in many cases, this is true. 
We spend more than any other society does, as a percentage of our gross 
national product, on education. But what we do not do is get our kids 
to learn as much as other young people do in this world.
  Let us take a look at one of the areas that should graphically 
display why we are behind our international competitors. The only thing 
we need to look at in this country is the number of hours our kids 
spend watching television.
  Look at that chart, it shows that we have far outpaced all of the 
other children in the world by the amount of time they spend on 
education, and yet we have the least amount of time spent on homework.
  Yes, the problem is not just necessarily money. There is no question 
about it. A lot has to do with parents, a lot has to do with our 
culture, which sometimes puts leisure time and TV ahead of homework.
  Let us take a look at the next chart. The next chart I want to point 
out is that even though we expend a lot more money than other countries 
do on our education, there are still areas we all agree are important 
and yet there are dire insufficiencies. For example, programs that 
assist lower-income individuals.
  First of all, studies show that early intervention helps. A Michigan 
study, which was a 20-year longitudinal study, indicates that although 
kids will catch up in educational aspects, many who suffer for special 
education needs, will suffer social misadjustment. Yet all of those 
problems decrease substantially if you have a program like Head Start 
preschool education.
  I remember when I first came to the Senate. A group of CEO's came to 
my office. I thought they would talk about tax relief, but they said 
the thing we need to do right away is to fully fund Head Start in order 
to get our educational system up to par.
 I will never forget that meeting because it made me fully aware of the 
educational needs of this Nation.

  Title 1. That is, again, an educational program for low-achieving 
students in high-poverty areas, to help bring them up to par. Funding 
this program fully would be another $12 billion a year.
  Special education. I was on the committee that wrote the special 
education law in 1975. It was a necessity. The courts ruled that every 
child in America is entitled to an appropriate education. We wrote the 
law that established the national criteria to make sure that people 
would be in compliance with the Constitution. We said we would fund it 
at 40 percent of the total costs of special education in the country. 
If we were funding it at 40 percent right now, many educational needs 
would be met and schools would not be in the dire circumstances they 
are in. Some 44 States are in crisis, as far as funding education. That 
would cost us another $11 billion a year if we were to fully fund the 
needs for special education--the funds that we promised our Nation when 
we passed that law many years ago.
  To reach full funding for all three categories, it would require 
another $31 billion a year. That is to increase costs in programs that 
everybody has agreed are essential and necessary to education.
  Mr. President, in conclusion, I want to say that we are faced with 
serious problems with respect to the deficit of this Nation. We know 
that we have to bring down the cost of Government. But it is important 
to remember the importance of educational funding as we go forward. 
Right now, 50 percent of our young people do not have the basic 
requirements of education to meet the demands of this Nation in order 
to be ready for a job. That is intolerable.
  Take a look at international competition. People out there are 
seizing our markets. At a time when markets are expanding rapidly in 
Asia, Eastern Europe, and central Asia, we are not ready and will not 
be ready unless we change right now the priority that education 
receives in this Congress and in the country.
  As I said, we will be having a summit meeting this week on Wednesday 
and we will have leaders from all over the country who will be 
examining what we should do as a country to ensure that our work force 
is ready for the next century and that our industry, which has provided 
us with a bountiful living over many years in the past, will be there 
when we need it.
  On the positive side, I note that recently we had six young men that 
were involved in an international math competition. They not only came 
in first, but they had perfect scores. But as I pointed out earlier on 
a chart, it is the average that counts. Our average is among the worst, 
not the best.
  Mr. President, I have traveled to cities and around this country and 
I have found programs that swell my heart with pride, and I feel that 
there is hope and there are ways that we can succeed. But those 
examples are few and far between. I have seen much more that indicates 
to me the frightful direction that our educational system is taking.
  Mr. President, it is up to us in this body, in the Congress, to 
ensure that we do not do what is so tempting in these times of strife, 
and that is cut education along with other programs. We should do all 
we can to make sure that we bring education to a capacity that will 
meet our needs in the next century. Mr. President, if we do not help 
our kids, then this country will fail. I feel very strongly, as 
chairman of the Senate Subcommittee on Education, that I have a 
responsibility to make sure this body is aware of what must be done.
  I yield the floor.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, I want to, at the outset, commend my 
friend and colleague from Vermont for the focus and attention he has 
placed in the area of education. I think all of us in this body know 
that he has been a real leader, along with my friend and colleague from 
Connecticut, Senator Dodd, in trying to bring a much greater focus and 
attention about the importance of the total investment in education as 
a national priority. He has been prodding this institution--and I know 
the appropriators--to try to give that major focus and attention.
  As chairman of the Education Committee now, he continues his work, 
not only in attempting to shape and refashion existing programs more 
efficiently, but also in terms of the priorities of investing in 
education. I welcome his strong and clear statement. It is a very 
important statement. I just want to say that it is one that should be 
listened to.
  I think during the course of this week, after the disposition of the 
conference report, which I expect to be done in a very short period of 
time, we will be back on the broader issues of Senator Daschle's 
amendment and Senator Dole's amendment; and then, if those are not 
successful, as I understand it, there will be additional opportunities 
later in the week to focus on different parts of the composite 
amendment, and in particular on education. So we will have some 
opportunity to, in a more exact way, address the priorities of 
education. I certainly am hopeful that we can reflect in our ultimate 
rescissions bill some of the priorities that he has talked about.
  Mr. President, I wanted to just take a few moments of time to address 
some of the points that were made by my friend and colleague, the 
Senator from Oregon, about the various cuts that were being proposed 
and the impact there was going to be in terms of real people across the 
country.
  I think there was reference made to the various provisions of the 
underlying amendment, which is the Daschle 
[[Page S5040]] amendment, which brings some restoration of the funding, 
or at least does not eliminate moneys that were authorized and 
appropriated. As I think the membership understands, we are not talking 
about additional appropriations. We are talking about appropriations 
that have already been made and now are being diminished, or have been 
targeted for reduction by the rescission program and the amendment 
which will be before the Senate again this afternoon, which will 
restore some of that funding in some of these key areas.
  The Senator from Oregon was pointing out that really these cuts are 
not really so bad because they are not really cuts, but they are a 
reduction in the increase in expenditures. I know that is perhaps the 
desire of some and perhaps the intention of a number. But the fact of 
the matter is, particularly when you take a look at what is happening 
over in the House of Representatives, it is the Senator from 
Massachusetts talking about real cuts; it is, for example, the CBO that 
talks about some $7 billion in current services, cuts in terms of the 
total nutrition programs, their estimate in terms of the nutrition 
programs. The Food Stamp Program would be cut some $21 billion over the 
next 5 years.
  So I think that, quite frankly, these are more than just a reduction 
in increases. You are going to have some real impact and effects in 
terms of what is happening in the local communities. That is what I am 
getting when I travel around my State of Massachusetts from people who 
have been working in the vineyards for a long period of time and have a 
good understanding and awareness of the various programs and what they 
mean in terms of the local communities.
  Of course, when we talk about Head Start programs, as my friend and 
colleague from Illinois pointed out, we are only talking about 35 to 38 
percent of the total eligible children who are receiving it. We are 
very far behind the curve.
  I think the Senator from Vermont reviewed that in greater detail, as 
well as some of the other education priorities, such as the school 
nutrition programs.
  Currently, schools participating in the lunch program are reimbursed 
for every lunch served to a child. Children from families with incomes 
at or below 130 percent of the poverty level are eligible for free 
meals. Children between 130 percent of poverty and 185 percent of 
poverty are eligible for reduced-price meals. Children over 185 percent 
of poverty pay full price.
  The School Lunch Program operates in 95 percent of all public 
schools, representing 97 percent of all public school children. The 
cash reimbursement rates are $1.75 for each free meal, $1.35 for each 
reduced-price meal, and 17 cents for paid meals.
  While reduced-price lunches must cost no more than 40 cents, no 
limits are imposed on the amount of money that can be charged for a 
full-price meal. Some 25 million children participate in the School 
Lunch Program--at different levels, obviously, in terms of the support.
  During the last recession, the number of school children receiving 
school lunches increased by 1.2 million.
  We are now, even on the school lunch programs that are talked about 
in the House, that slack will not be picked up automatically in the 
School Lunch Program, but will be up to the whim of the priorities in 
the various States.
  If we look at what has happened in the States, particularly with 
regard to children over the period of the last 10 years, 3 million more 
children are living in poverty in the last 4 years. No one can have a 
great deal of satisfaction that they are the ones whose needs will be 
attended to.
  Currently, as the number of children eligible for free and reduced-
price meals increases, the amount of Federal funds spent on the program 
increases. That is because we made a decision that meeting the 
nutritional needs of children is in our national interest and, 
therefore, all children who are eligible for a free or reduced-price 
lunch will be offered one. That fundamental national commitment has 
been altered or changed with the Republican block grant proposal.
  With the block grants proposal, it says, well, we will leave it up to 
the States. We think the States will do that, but we are not saying, as 
a matter of national policy here in the Senate of the United States, 
that that is going to happen.
  We might expect they will, we might hope they will, but we are not 
providing them either with the resources to do it or the guarantees 
that it will be done.
  That is a major difference. We can quibble about all that we want in 
terms of what is happening, but the fact of the matter is, children 
will not get that fundamental guarantee, which is so important.
  As I mentioned, the House proposal reverses that decision. Instead of 
guaranteeing every child a hot lunch--subsidized, of course, for those 
who cannot afford to pay for lunch--the House bill caps the amount of 
funds available for school-based nutrition programs, including school 
lunch.
  So if the Republican position prevails, there will be no guarantee 
that a hungry child will be fed at school. There is no guarantee of 
that. There is now. That is a fundamental difference. Once the funds 
are used up by the States, that is it. Children are not guaranteed a 
lunch.
  In fact, since the nutritional standards will be repealed if the 
House position prevails, the children fed will not meet the basic 
nutritional standards. We are not only repealing the guarantee, but we 
are repealing the nutritional standards.
  As we pointed out before, the savings, so to speak, are being used 
for the tax cuts.
  There is no flexibility built in for the economic emergencies, 
whether national, State, or local emergencies, and regardless of their 
nature. We will have repealed the entitlement nature of the program, 
replaced it with a cap amount of funding containing no adjustments for 
changes in the economy, population growth, or food price increases.
  Some supporters of the block grants proposal try to make the argument 
that the block grants provide more children with school lunches. This 
is simply not plausible. To take a program that automatically provides 
schools with reimbursement for each child's meal based on a family 
income and replace it with a program that does not guarantee each child 
a meal, that does not adjust the funding based on the number of poor or 
low-income children needing lunch, that does not adjust for food price 
growth, is a cut in the program. It is a cut in the program, any way 
that you look at it.
  If the number of poor and low-income children who need a school lunch 
grows beyond the funding that is authorized, children will have to be 
denied a free lunch or be required to pay more than they can afford, or 
receive an inferior lunch. Or maybe those who can pay will pay two, 
three, or four times as much as they do pay now, the sons and daughters 
of working families, as well.
  Then we hear, well, there is more money in this program. More money 
compared to what? Compared to what CBO estimates is necessary to 
continue providing lunches to all school children who need them, like 
we do today?
  No. According to the CBO, in fiscal year 1995, all child nutrition 
programs are funded at about $11.6 billion. It is $7.6 billion for 
child nutrition programs like school lunch, school breakfast program, 
summer food service; $400 million for commodities; $17 million for 
special milk; $3.4 billion for WIC. Funding would drop to $11.3 billion 
in fiscal year 1996 under the House Republican proposal; $6.6 billion 
for the school-based nutrition program and $4 billion for the family 
nutrition block grant.
  That is a $300 million cut, without even looking at inflation, 
without even looking at the 5-year numbers, without even looking at the 
fact that beyond food price growth, the school age population itself 
will grow by 4-percent to 6-percent during the next 5 years. And the 4 
percent to 6 percent growth does not include adjustment for any type, 
in the event that the economy slows down or unemployment increases.
  Mr. President, I just cannot accept that this is just a reduction 
here on the funding of programs that are meeting our needs. They just 
are not doing it. That is true not only on the nutrition programs, but 
also on the other programs.
  I talked about the school lunch programs. And the rescission bill 
will reduce, in addition to the $2.5 billion cut 
[[Page S5041]] from child care programs over 5 years in the House bill, 
will deny 378,000 children child care.
  There are only 750,000--this is part of the child care program, very 
small child care return--but looking at the current situation, only 
750,000 out of 8 million children eligible for child care currently 
receive assistance.
  Many States have waiting lists for child care assistance that are 
simply astounding. GAO found waiting lists of 40,000 children in Texas 
and 255,000 children in California, taking as long as 2 or 3 years to 
get help in those States.
  During 1993, Florida and Illinois each reported waiting lists of 
25,000 children. A recent report by the Urban Institute found that it 
can take 5 years to get a child care slot in San Francisco. Birmingham, 
AL, alone has 5,000 families on a waiting list.
  The idea that people can come to the floor and say, ``We are cutting 
the existing child care program,'' that it has gone through the 
appropriations--we are trying to just have a very, very, modest return 
of a child care program, based upon those kinds of needs.
  Try to find, for working families in my State of Massachusetts, child 
care for $5,500. You will be lucky in any part of the State. Some are 
more costly in a number of communities. At the same time, we are 
putting pressure on these same parents to move out of a welfare 
situation--they may have small children and they want to work.
  We have to ask, what is happening to the parents when they are not 
able to get child care? They are either not getting jobs or they are 
locking up their kids, or they are getting completely inadequate 
coverage for their children.
  Quality child care creates opportunity and increases productivity--
not just for one generation, but for two generations.
  The GAO recently reported that assistance with child care makes it 
much more likely that low-income mothers will be able to work. And no 
wonder. The costs of child care consume over a quarter of the income of 
poor working families, as compared with just 7 percent of the income of 
nonpoor families. Without child care assistance, it is virtually 
impossible for many poor parents to go to work. What is happening out 
here is they are cutting back on these programs even more.
  Child care is not about giving parents a blank check. It is about 
giving them a fair chance. Cutting children makes no sense. It will 
only pass the real life tragedy of dependency on from this generation 
to the next.
  Families cannot afford that--and neither can we. That is why I 
support the restoration of funding for child care assistance for 
working families in the Daschle amendment.
  The Senate rescission package also cuts $35 million from the WIC 
Program, which provides nutrition assistance to 7 million low-income 
women and children. It has long received bipartisan support, because it 
saves money in health costs in the long run by reducing the incidence 
of infant mortality and low-birthweight babies.
  Since its inception, the WIC Program has been a stunning success. GAO 
has found that it has saved $1 billion--$1 billion--in medical expenses 
through the age of 18. We have spent $300 million and saved $1 billion. 
If that is not a wise investment for our Nation's children, I do not 
know what is.
  Yet as many as 70,000 fewer children will be served by the WIC 
Program each month over a 12-month period as a result of this 
unjustifiable cut.
  We are talking about, here, really is basically investment in 
children and good quality care. We are talking about WIC. We are 
talking about the Head Start Program, chapter 1, the drug-free schools. 
These are the programs we are trying to restore.
  As I mentioned earlier in the course of the day, at a time when, 
evidently, we have seen the loss of $3.6 billion, that has been lost 
somewhere in that conference, hopefully to be recovered at an early 
time, many of us are out here trying to restore these programs which 
are lifelines to the children in this country, it underscores the 
importance of the Daschle amendment.
  In a March 7, 1995, Boston Globe editorial, Prof. T. Berry Brazelton 
of Harvard Medical School wrote:

       Simply put, WIC works. And it works because it has forged 
     an effective combination of state and federal involvement. 
     The states administer the program, but under strict federal 
     guidelines that ensure high nutrition standards, clear focus 
     and consistent impact. The risk in our rush to right our 
     nation's fiscal house is a loss of the very guidelines that 
     have made WIC so successful.

  Berry Brazelton, for those who have not either heard of him or read 
his articles, or listened to him on interviews, everyone who knows of 
his work with regard to children--he is really the Nation's favorite 
pediatrician. He is just an extraordinary human being who has appeared 
before our committees over a number of years and his words should be 
carefully considered and measured and, I think, adhered to.
  Dr. Louis Sullivan, Secretary of Health and Human Services in the 
Bush administration, said in a Washington Post article:

       . . . Among my concerns . . . is that we may inadvertently 
     strip programs of the national standards and guidelines that 
     make them work. In the case of WIC, nutrition requirements 
     guide the program toward better health, and Medicaid savings, 
     while avoiding the potential confusion associated with 
     creating a complex web of fifty state rules. Our children's 
     health is not defined by state boundaries. Our nutritional 
     standards should not be either.

  He makes the point good nutrition in schools, the WIC programs, are 
matters of national responsibility. The WIC Program, as I know our 
Members understand, has been something that has been enormously 
important. There is a very modest return in the Daschle amendment for 
that particular program.
  Both the House and the Senate rescission packages hit at-risk youth 
very hard: 80 percent of funding for year-round youth programs--the 
principal training and employment assistance for poor out-of-school 
youth--would be cut. Overall youth funding would be cut by about 40 
percent, and the number of youth served would be reduced by over half. 
The impact of these rescissions is compounded by the likelihood that 
the cuts may be permanent, meaning that for the next several years 
close to a million fewer youth each year will be served.
  We are in the process now of working to improve many of the youth 
training programs. We have 400,000 children every year who are dropping 
out of our high schools. They are a source of unrest in many of our 
local communities.
  We have woefully too few programs or efforts to try to reach out to 
these young people. What we are trying to work through now, with 
Senator Kassebaum, is to utilize the school-to-work programs for the 70 
percent of the children who do not go on into higher education. We want 
to work with the private sector in a partnership to move these young 
men and women into employment and also, as you develop those programs, 
to try to reach out to a number of the young people who may have 
dropped out of schools to bring them into the process as well.
  If you emasculate the existing programs, our chance to once again 
reach out to young people who are basically those at the highest risk 
in terms of the criminal element in our society will not come to 
fruition. It is serious, important, bipartisan efforts that are being 
worked through now. It seems, with the dramatic kinds of cuts that are 
suggested here, we will basically undermine, in a very significant way, 
some of the very useful work I think can still take place.
  Mr. President, I know others want to speak on the floor on these 
measures.
  Let me just say I am very hopeful we will move towards the completion 
of the conference report, that we will have an opportunity to vote on a 
resolution, which will hopefully be supported by Republicans and 
Democrats alike, that will address the tax loophole that has been 
identified and which was addressed by the Finance Committee earlier. I 
hope that we will be afforded that opportunity, and that Republicans 
and Democrats together will work to support that resolution.
  As we have heard, the majority leader and others, Republicans and 
Democrats, say it is their desire to address it. I am more than glad to 
do it. It is a sense of the Senate that:

       The Congress of the United States shall act as quickly as 
     possible to amend the Internal Revenue Code to end the tax 
     avoidance by U.S. citizens to relinquish their United States 
     citizenship.

  And the effective date of such amendment to the Internal Revenue Code 
should be February 6, 1995.
   [[Page S5042]] That statement has been incorporated by the majority 
leader, the chairman of the Finance Committee, the Senator from New 
York, and others on the Finance Committee as they desire. I hope we 
could either act on this resolution or a joint leadership resolution of 
the majority and minority leaders that would incorporate that concept.
  I do not believe there has to be additional debate and discussion 
about it. We have had a chance to talk about it. Let us set a time to 
be able to do it. Let us send a message at the time that we are going 
to be debating the rescission package and the Daschle amendment that we 
can afford to cut these programs for children--WIC, the school lunch, 
the Head Start Programs--but we still cannot agree to close the 
loophole that is worth $3.6 billion.
  I think the American people just cannot and will not understand it. I 
am very hopeful that we will be able to do it.
  Mr. President, I yield the floor.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina is recognized.
  Mr. HOLLINGS. Mr. President, let me commend the distinguished Senator 
from Massachusetts for what he is talking to now of fundamental 
programs that constitute investments--not spending--to save spending, 
to eliminate deficits. If there is one misgiving that we have with the 
ongoing exercise of the Contract With America --and it is good to bring 
in a new group and have a tonic, to turn our attention to where savings 
can be had--but in the zeal to try to bring about certain savings there 
is a mix of arrogance and more or less mob action pellmell for hell, 
let us just cut it all, everything, without any idea of what really 
saves money and what costs money.
  For instance, for every dollar spent on women, infants and children 
feeding we save at least $3. For every dollar spent on Head Start we 
save $4.75. For every dollar spent on title I education for the 
disadvantaged we save another $6.50.
  And having experienced government over the years, I have learned what 
saves money. For example, I had a problem 25 years ago with my own 
State on the subject of hunger and feeding. I had made a mistake as 
Governor. I had not paid too much attention to the hungry. In fact, a 
rejoinder had been given to me by my friend, the senior Senator, 
``Well, there was hunger and the hungry in the days of Christ, and 
there will be hunger in the days after we are long gone, and it is 
almost a given.'' Not so. Not so at all.
  At that time, I met and studied with those in the medical profession 
and in the nutrition discipline--Dr. Neville Scrimshaw at Harvard, Dr. 
Cravioto at Cornell, later at Columbia University, and Dr. Charles 
Upton Lowe, the chairman of the Committee on Nutrition of the American 
Academy of Pediatrics at that particular time. They had found that 
every adult has 13 billion brain cells in the cortex, and 10 billion of 
the 13 billion develop in the first 5 months in the mother's womb.
  However, there is as much as 20 percent less cellular development of 
those brain cells resulting from the lack of nutrition, the lack of 
synthesis of those nerve cells, and the lack of protein. It is much 
like taking a television set off the desk here and dropping it on the 
floor, putting it back here, and turning it on. The hundreds of wires 
of circuitry do not join, do not connect. And in the field of brain 
medicine, they call that organized or general brain damage. That child 
is stultified in the first 5 months in the mother's womb and comes into 
this world with organic, or generalized, brain injury, lacking an 
ability, if you please, to concentrate, to assimilate, to be educable 
in the fullest of senses.
  So I joined with Senator Humphrey after he came out of the Vice 
Presidency back into the Senate. I was not on the Agriculture Committee 
at that time. But we talked of this problem that we had in women, 
infants, and children's feeding. We found out that if we rendered 
protein supplements for expectant mothers, which now cost in the 
vicinity of around $400 over the 9-month period, we could save 
practically $30,000.
  I just visited in the university hospital in my own hometown, the 
Children's Hospital at the Medical University of South Carolina. They 
had some 85 low-birth-weight infants. In my early days they would have 
been unaccounted for and lost; little low-birth-weight infants of 1\1/
2\ pounds, 2 pounds, 2\1/2\ pounds. They had nurses around the clock. I 
will never forget it. It cost some $15 million to keep some 85 nurses 
going around the clock treating those little infants. The average stay 
for a low-birth-weight infant on that incubator in intensive care is 30 
days at $1,000 a day, or $30,000.
  So this is not a sick call by the distinguished Senator from 
Massachusetts for liberal spending programs. This is a studied 
investment by liberals, conservatives, Republicans, and Democrats alike 
to spend now to save billions later. That is the one misgiving I have 
about this so-called Contract With America because its proponents have 
no sensibility. They come here on the first day and all of sudden they 
have wisdom. Without any experience or a day in public service 
whatever, never having listened and learned anything, in a fell swoop 
they come in with across-the-board so-called spending cuts that 
actually will cost us billions.
  Mr. President, when that baby comes in as a low-birth-weight infant, 
like it or not, it is yours and mine. We are going to take care of it 
in some children's hospital, in some intensive care unit, and for the 
wealthy parent or the poor, that cost is really going to the general 
public.
  So we need to stop these penny-wise, pound-foolish cuts to preventive 
programs. We should never think in terms of tax cuts here for 
billionaires who have made their wealth in America and then renounce 
their citizenship in order to avoid taxes. It is almost a treasonous 
kind of activity in this Senator's mind and never should be dignified 
or recognized in law as a worthy project when we are going around 
cutting spending.
  I am for cutting spending. I am for freezing spending. I am for 
closing loopholes, and I am for taxes. I have challenged this body and 
all Senators to give me their realistic budget plans since January. I 
will never forget the distinguished chairman on the House side of the 
Budget Committee, Congressman Kasich. On December 18, 1994, on a 
national TV program he came on and said, ``Don't worry about it. We 
don't care what the President puts in. We have three budgets before us. 
We are going to introduce them. But before we have tax cuts in January 
we are going to have the spending cuts and have this budget.''
  Well, it is now April. It is going to be May or June before they get 
around to specifying their cuts. I met that particular challenge in 
January. I worked with the best of minds. I have introduced a list of 
cuts in the Congressional Record at least four times by now that shows 
that in order to get on a glidepath of balancing the budget by the year 
2002, you have to cut $37 billion in domestic discretionary spending in 
the first year. Even with those reductions, the interest cost rises 
faster than the cuts. That is the only good, solid, credible attempt I 
have seen to show the kinds of cuts that are necessary, and I do not 
think I could vote for them all. And cuts of even this severity would 
require 7 years to reach a balanced budget.
  I remember when President Reagan came to town. He said he was going 
to balance the budget in 1 year. Then, after he got in town, he said, 
``Oops. This is way worse than I thought. It is going to take me 2, 
maybe 3 years.'' So the Budget Committee started submitting 3-year 
budgets. Then by the mid 1980's, the committee said ``Whoops, it got 
worse. We are going to have 5-year budgets.'' Now they have 7-year 
budgets. And I can tell you, after a few more years, they are going to 
have 10-year budgets. It is like a football game where they keep moving 
the goalpost.
  A sincere effort to balance the budget will not cut out basic 
investments that save money in the long run. Realistically, it is going 
to take taxes as well as spending cuts, spending freezes, and loophole 
closings.
  I think the Senator from Massachusetts has really brought a sobering 
moment to this body that allows us to understand that the proposals 
before us do not save money. Oh, the national media, lazy as they are, 
are running around saying that this rescissions bill has so much in 
spending cuts, and they 
[[Page S5043]] refer to these fine investment programs as cuts. But I 
can tell you, when you consider the costs to Medicaid, to the 
hospitals, to the schools, to the workplace and the economy, and on 
down the line, you will find that the proposed cuts actually increase 
spending. This is the lesson of those children at the medical 
university.
  So I hope we can listen to this debate and understand that the Senate 
is not just in a race to get so many marks on the so-called Contract 
With America or whatever it is. It is a serious job of trying to cut 
back on overall spending while investing in programs that will save 
money in the long run.
  I yield the floor.
  Mr. SPECTER. Mr. President, I strongly support the conference report 
to H.R. 831, the Self-Employed Health Care Deduction Act.
  There are approximately 9 million self-employed business owners 
representing almost 10 percent of the working population. These 
individuals are employed in all types of industries: from mining and 
service industries to construction and manufacturing. They are the 
entrepreneurial small business men and women that spur our national 
economic growth. These are the individuals that embody the American 
dream. This provision is critical to their survival.
  My offices have been inundated with hundreds of calls from concerned 
taxpayers around Pennsylvania urging the Congress to reinstate the 
deduction. These callers are just a fraction of the 9 million self-
employed taxpayers that are relying on us to pass this measure as 
quickly as possible so they can continue to utilize this deduction for 
the 1994 tax year.
  Mr. President, I have consistently supported this deduction for the 
self-employed. In the 103d and the 104th Congresses, I introduced 
legislation to provide targeted health-care reform. One of the major 
provisions I included in that bill was 100 percent deductibility for 
health insurance for the self-employed. Under current law, businesses 
are permitted to deduct 100 percent of what they pay for the health 
insurance of their employees, but self-employed individuals may not 
deduct any of their cost because that provision expired on December 31, 
1993. It is hard to find a provision in the Internal Revenue Code that 
is more discriminatory than this one.
  According to the Congressional Research Service, 3.9 million 
uninsured workers are self-employed. Providing full deductibility of 
health insurance premiums, beginning with reinstatement of the 25 
percent deduction for 1994 and researching 100 percent by 1993 for 
self-employed individuals is a simple matter of fairness. It should 
also make health insurance coverage more affordable for the estimated 
3.9 million self-employed individuals and their families who are now 
uninsured.
  On January 19, 1995, I signed a letter along with 74 of my colleagues 
to Majority Leader Dole and Minority Leader Daschle urging them to 
reinstate this expired provision. I believed then, as I do now, that 
the interests of hard-working Americans need to be a top priority 
before the U.S. Senate.
  Accordingly, I urge my colleagues to support the reinstatement of 
this provision. This legislation is an important first step in 
providing tax fairness to our Nations' self-employed business owners.
  I thank my colleagues and I yield the floor.
  (At the request of Mr. Dole, the following statement was printed in 
the Record.)
 Mr. HATFIELD. Mr. President, I am pleased to announce my 
strong support for H.R. 831 which would permanently extend the 
deduction for health insurance costs for self-employed individuals. 
This legislation will allow, on a permanent basis, self-employed small 
business owners, sole proprietorships, and partnerships to deduct a 
portion of their health insurance costs for tax purposes. This 
legislation will assist those small businesses which are so vital to 
the economy of my State of Oregon, as well as the rest of the Nation. I 
am pleased that the 104th Congress is about to address this issue on a 
permanent basis.
  Mr. PRYOR. Mr. President, today we take a step forward to correct a 
situation adversely affecting small businesses and farmers which I have 
many times called an absurdity.
  During this tax filing season, over 9 million self-employed small 
businesses and farmers will fill out their tax returns. And when they 
do, they will learn first hand of how this absurdity affects them and 
their family. The absurdity I am speaking of Mr. President is that no 
part of their health insurance premiums are deductible in their 1994 
tax return due April 17--just over 3 weeks from today.
  This in contrast to owners of large corporations that have a 
permanent 100 percent deduction, and that typically pay smaller health 
care premiums because of their size. It is a double penalty Mr. 
President. A double penalty on innovators and job creators in our 
economy--people who should be encouraged, not penalized.
  Mr. President, this inequity must be corrected and it must be 
corrected quickly. This should be a high priority for this Congress, 
and I am very happy that we are taking up this matter today.
  I want to comment briefly on one aspect of this bill which is 
extremely important--and that is this deduction for health insurance 
will be made permanent.
  Many times we focus on the amount of the percentage deduction. In the 
past it has been 25 percent, and today's bill increases that percentage 
to 30 percent which is a very positive step toward the goal of a 100 
percent deduction which I hope we will continue to work toward. In 
fact, Senator Grassley, Senator Roth and I introduced legislation in 
January of this year to achieve a 100 percent deduction by 1997, and I 
look forward to working with them again in the future to meet this 
goal.
  But Mr. President, I cannot stress enough the importance of making 
this deduction permanent, and this is borne out by the history of the 
deduction.
  In 1986, the self-employed were first given 25 percent deductibility 
as part of the Tax Reform Act of 1986--with the understanding that it 
would be eventually increased to 100 percent, the same deduction 
incorporated business enjoy.
  In the Omnibus Budget Reconciliation Act of 1989, the deduction was 
extended for 9 months. In 1990, 25 percent deductibility was extended 
through 1991. And in 1991, 25 percent deductibility was extended 
through June 30, 1992. Mr. President, each time we scrambled to 
reinstate the deduction--uncertainty surrounding the deduction was 
high, and it was shameful to treat the self-employed in this way.
  But on June 30, 1992, the worst scenario happened--the deduction 
expired. Small businesses and farmers could not deduct the cost of 
their health insurance. The 1992 tax season came and went and still 
there was no reinstatement of the deduction because of the difficulty 
of moving any tax bill. Then, in August 1993, as part of the Budget 
Reconciliation Act, the deduction was retroactively reinstated from 
July 1, 1992, to December 31, 1993. Self-employed were required to 
amend their 1992 returns to take the deduction, and no doubt some 
failed to do so and lost their deduction.
  So that brings us to 1994 when the deduction once again expired, and 
no bill has been moved to correct the inequity--until today. Mr. 
President, this uncertainty is unpardonable and it must not happen 
again. Under this legislation the deduction will never again expire--it 
is permanent.
  Mr. President, we all understand the difficulty of moving a tax bill 
on the Senate floor where any of the 100 Senators my offer any 
amendment with no time limit. So that is why I and my friend and 
colleague on the Finance Committee, Senator Roth, sought signatures on 
a January 19, 1995, letter to Senator Dole and Senator Daschle stating 
that we would ``not support or offer any amendments to the 
legislation'' should they schedule it for Senate floor action.
  We were pleased to obtain 75 of our colleagues' signatures, and I am 
even more pleased today that no amendments will be offered and we will 
agree to the bill on a voice vote. I ask unanimous consent that a copy 
of the letter be printed in the Record, and I thank my colleagues for 
putting aside some issues very important to them in order to correct 
this problem and quickly as possible.
  [[Page S5044]] There being no objection, the letter was ordered to be 
printed in the Record, as follows:

                                                  U.S. Senate,

                                 Washington, DC, January 19, 1995.
     Hon. Robert Dole,
     Senate Majority Leader,
     Hon. Thomas Daschle,
     Senate Minority Leader,
     Washington, DC.
       Dear Senator Dole and Senator Daschle: We are writing to 
     you regarding the need to extend the 25% deduction for health 
     insurance for the self-employed, which expired at the end of 
     1993. As you know, more than 9 million self-employed business 
     owners, representing almost 10% of the working population, 
     lost the ability to take this deduction when the law expired. 
     It is our hope that the Chairman of the Ways and Means 
     Committee will soon take up this legislation as a stand-alone 
     bill, and that the House will soon pass this bill and send it 
     to the Senate.
       In order that we may move as expeditiously as possible, we 
     are writing to assure you that if you receive this 
     legislation, and if you schedule it for Senate floor action, 
     we will not support or offer any amendments to the 
     legislation. As many of these small business men and women 
     begin to file their 1994 tax returns, we believe that it is 
     essential that Congress act now to avoid the administrative 
     difficulties that could arise from amended returns if the 
     legislation is not passed until after April 15th. Thank you 
     for your consideration.
         David Pryor; Don Nickles; Jesse Helms; Arlen Specter; 
           Bill Roth; Chuck Grassley; Dirk Kempthorne; John 
           Warner; Mitch McConnell; Ted Stevens; Kit Bond; Dale 
           Bumpers; Chuck Robb; Paul Simon; Carol Moseley-Braun; 
           Joe Lieberman; J. James Exon; Connie Mack; Bob Kerrey; 
           John McCain; J. Bennett Johnston; Harry Reid; Wendell 
           Ford; Kent Conrad; Sam Nunn; Ernest Hollings; Jeff 
           Bingaman; Max Baucus; Kay Bailey Hutchison; Spencer 
           Abraham; Bryon L. Dorgan; Dan Coats; Patrick Leahy; 
           Herb Kohl; Barbara A. Mikulski; John Ashcroft; John 
           Glenn; John F. Kerry; Bob Graham; Hank Brown; Jay 
           Rockefeller; Mark Hatfield; Dianne Feinstein; Howell 
           Heflin; Ben Nighthorse Campbell; Slade Gorton; Fred 
           Thompson; Al Simpson; John H. Chafee; Trent Lott; Larry 
           Pressler; Larry E. Craig; Olympia Snowe; Lauch 
           Faircloth; Rod Grams; Rick Santorum; R.F. Bennett; Dick 
           Lugar; Jim Jeffords; Conrad Burns; Paul D. Coverdell; 
           Richard H. Bryan; Bill Frist; Craig Thomas; Jim Inhofe; 
           Mike DeWine; Jon Kyl; Strom Thurmond; Bob Smith; Phil 
           Gramm; John Breaux; Richard Shelby; Orrin Hatch; Bill 
           Cohen; Patty Murray.
  Mr. DOLE. Mr. President, we have before us the conference report to 
H.R. 831, permanent deduction of health insurance costs of self-
employed individuals. Passage of this conference report today will help 
3.2 million self-employed Americans across the Nation get one step 
closer to deducting a portion of their health insurance costs.
  The House has already passed this conference report. There are only 
14 more days to April 17--tax day. And the clock's ticking. It is 
critical that this bill be signed into law prior to that day.
  Since 1986, Congress has allowed the self-employed a 25-percent 
deduction for their health care insurance costs. Almost every year, we 
have had to extend the deduction, but we failed to extend it last year 
when it expired on December 31, 1993. Mr. President, H.R. 831 makes the 
deduction permanent. We don't want to leave the 3.2 million tax filers 
in 1994, hanging on the edge of a cliff every year. And we don't want 
to tell them that although corporations can deduct 100 percent of their 
health care insurance costs, small businesses cannot. We decided 9 
years ago that in order to make the playing field more equitable, we 
should allow small businesses to deduct their health care insurance 
costs. H.R. 831 allows them to deduct 30 percent of their annual health 
care insurance costs.
  Mr. President, I want to say to many of my colleagues that the 3.2 
million Americans we help today are farmers and small business owners 
that live and work all across America. Although we were able to raise 
the percentage of their annual health insurance costs that they can 
deduct from 25 to 30 percent, I am disappointed that we were unable to 
raise this level even higher. It was my strong desire that we should 
have been able to do so. But, we have been able to make this deduction 
a permanent one, so that these Americans will no longer have to worry 
about whether or not they will be able to take the deduction next year.


                          EXPATRIATE PROVISION

  Mr. President, included in the Senate version of H.R. 831 was a 
proposal to tax U.S. citizens who renounce citizenship. But, the 
measure was adopted without the benefit of hearings.
  Subsequently, the Finance Committee's Oversight Subcommittee held a 
preliminary hearing. The House also held a hearing on this issue 
earlier this week. This proposal raises important questions, and the 
hearing exposed some serious concerns.
  It is vital to enact H.R. 831, vital. But it is premature to enact 
this expatriate tax provision. We cannot delay action on H.R. 831 while 
we continue to consider alternatives to this expatriate provision.
  Let me be clear on this--because my colleagues on the other side of 
the aisle seem to believe that we are somehow opponents of the 
expatriate provision. We want to get this done. And it is clear that it 
will be effective as of February 6--but there are some serious problems 
with this provision, so we will not enact it today. The conferees on 
the bill have asked the Joint Committee on Taxation to study the 
provision and to look at other alternatives and get back to us by June 
1, 1995. And so, I would say to my colleagues that this sense-of-the-
Senate resolution, asking us to do what we are already doing, is 
nothing but a filibuster. A tactic to waste time that we can ill-
afford.


                          offsetting revenues

  We primarily pay for the deduction by repealing a Federal 
Communications Commission [FCC] program that I believe is not only 
ineffective, but costs the Federal Government billions of dollars.


                   the fcc's tax certificate program

  Congress, in 1943, gave the FCC authority to grant tax deferrals to 
owners of broadcast facilities who were forced to sell their properties 
to break up monopolies during World War II.
  In 1978, the FCC expanded this provision to give a tax preference to 
radio, television, and later cable broadcasters who sold their 
properties to minority-owned firms. For this policy, the FCC defines 
minorities as including blacks, Hispanics, American Indians, Alaska 
Natives, Asians, and Pacific Islanders.
  The greatest flaw in this program is that the economic benefit 
doesn't go to the minority buyer, the economic benefit does to the 
seller. It's like a kickback. If you sell to me and not the other guy, 
I'll give you a little extra something. And I won't be paying for it, 
the American taxpayer will. I don't understand it, and I don't 
understand why people would think this is benefiting
 minorities when the monetary gain is going to the seller.


                           affirmative action

  Now, don't get me wrong. I am proud of my civil rights record. And I 
have supported affirmative action in the past--that's no secret. But my 
record does not disqualify me from raising legitimate questions about 
the continuing fairness and effectiveness of affirmative action--
particularly when the affirmative-action label is used to describe 
quotas, set-asides, and other group preferences.
  Equal treatment, not preferential treatment, should be the standard. 
Equal opportunity, not equal results, must be the goal.
  Last week, as we debated this same bill on the Senate floor, my 
distinguished colleague from Maine, Senator Cohen, gave a very eloquent 
speech where he pointed out that America is not a color-blind society, 
and he's right.
  Discrimination continues to exist. The color-blind ideal is just 
that--an ideal that has yet to be achieved in the America of 1995. But, 
Mr. President, do you become a color-blind society by dividing people 
by race? Do you achieve the color-blind ideal by granting preferences 
to people simply because they happen to belong to certain groups? Do 
you continue programs that have outlived their usefulness or original 
purpose? The answer to these questions is, of course, a resounding 
``no.''
  The debate over affirmative action can be an opportunity to unite the 
American people--not divide us.


                               conclusion

  What we will accomplish here today is taking a million dollar, 
unjustifiable tax break, for millionaires, not minorities, and turn 
them into health care for ordinary Americans. Americans who really need 
it.
  I urge my colleagues to vote for this conference report.

[[Page S5045]]

  Mr. PACKWOOD. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Coverdell). 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.
  The PRESIDING OFFICER. Is there further debate on the conference 
report?
  Mr. MOYNIHAN. Mr. President, I would simply like to state for the 
Record the fact that the Committee on Finance, in dealing with the 
provisions on the payment of tax by persons who expatriate, was 
confronted by mixed assessments of the legality of such an action.
  The International Covenant on Civil and Political Rights, which the 
United States ratified in 1992, article 12, section 2 states: 
``Everyone shall be free to leave any country, including his own.'' The 
question is whether there is a restriction on this right.
  The point here is that present law provides that any taxpayer that 
renounces his or her citizenship for tax avoidance purposes is subject 
to the current tax on gains on U.S. assets for 10 years. This has been 
the law for roughly 30 years, but it has not been enforced. It probably 
has not been enforceable. Regulations have never been issued. And we 
mean to do, we mean to do.
  The President proposed this on February 6 in his budget, and what we 
will do in the end will be applied as of February 6. There will be no 
windows, no provisions of that kind.
  Just that the record might show that we have been trying to be 
orderly and have had some sense of due process here, on 24 March, I 
received a letter from Hurst Hannum, associate professor of 
international law at the Fletcher School of Law and Diplomacy, of whose 
eminence I need hardly to remind the Senate, in which he wrote to 
express his serious concern over the proposed exit tax and the issue 
which he had addressed in his 1987 book, ``The Right to Leave and 
Return in International Law and Practice.''
  We responded to him with information he wanted further on the matter. 
He writes on March 31 to say:

       As I noted then, what appeared to be the imposition of a 
     tax solely on the ground that a person was renouncing his or 
     her citizenship could interfere with the right . . . [under 
     article 12 of the Covenant].

  He says, ``I am gratified that the human rights issues related to 
this bill have become a subject of serious debate.''
  I said on Friday--it was commented on in our hearing--when we are 
dealing with civil rights issues, human rights issues, we must never be 
more careful than when the group involved is a despised group.
  I very much regret that the daily talking points of the Democratic 
Policy Committee today said what Democrats believe--``We believe that 
education for our children should not be cut.'' Fine, I so agree. 
``Especially while billionaire Benedict Arnolds are allowed to escape 
taxation.'' They are not going to escape taxation. I am not sure they 
are Benedict Arnolds. They are people making decisions that they have a 
right to make under international law, and the United States has the 
right to collect taxes from them, under our law.
  We now have a letter from Professor Hannum that says:

       In sum, imposition of a nondiscriminatory tax on accrued 
     income at the time citizenship is renounced, in a manner 
     consistent with the way in which that same income would be 
     treated at the time of death, does not appear to me to 
     violate either the internationally protected right to 
     emigrate or the (somewhat less well protected) right to a 
     nationality.

  Mr. President, I ask that the letters be printed in the Record, and I 
yield the floor.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                             Tufts University,

                                      Medford, MA, March 24, 1995.
     Re: Tax Compliance Act of 1995, H.R. 981.

     Hon. Daniel Patrick Moynihan,
     U.S. Senate.
       Dear Senator Moynihan: I am writing to express my serious 
     concern over the proposed ``exit tax'' included in Sec. 201 
     of H.R. 981. This concern is based not on an evaluation of 
     its tax consequences, an area in which I am not an expert, 
     but rather on the possible inconsistency of the tax with 
     fundamental international human rights norms and U.S. 
     international legal obligations.
       As you know, the U.S. is now a party to the Covenant on 
     Civil and Political Rights, article 12 of which guarantees 
     the right of everyone ``to leave any country, including his 
     own.'' By coincidence, the United States will present its 
     first report on compliance with the Covenant to the Human 
     Rights Committee in New York next week.
       Although I understand that the ``exit tax'' is based on 
     renunciation of citizenship rather than on leaving the 
     country, it is difficult to see how one can ``punish'' the 
     former without seriously compromising the latter. Indeed, the 
     imposition of confiscatory taxes has been a policy pursued by 
     many countries to discourage emigration, whether on purported 
     national security grounds, specious economic arguments, or to 
     prevent `'brain drain;'' I address these and other issues in 
     my 1987 book, ``The Right to Leave and Return in 
     International Law and Practice'' (Martinus Nijhoff).
       In 1986, a meeting of eminent American and European legal 
     experts adopted the ``Strasbourg Declaration on the Right to 
     Leave and Return,'' a copy of which I attach for your 
     information. I would particularly draw your attention to 
     article 5, which states, inter alia, that ``[a]ny person 
     leaving a country shall be entitled to take out of that 
     counry . . . his or her personal property * * * [and] all 
     other property or the proceeds thereof, subject only to the 
     satisfaction of legal monetary obligations, such as 
     maintenance obligations to family members, and to general 
     controls imposed by law to safeguard the national economy, 
     provided that such controls do not have the effect of denying 
     the exercise of the right.'' The tax in question would not 
     appear to meet these standards.
       Without having examined the provisions of Sec. 201 in 
     greater detail, I cannot state definitively that it would 
     violate international law. However, the human rights 
     implications of such a provision appear to be extremely 
     serious, and adoption of the law would seem, at best, to be 
     hypocritical, given the legitimate and consistent U.S. 
     insistence on free emigration from other countries over the 
     years.
       I hope that the Senate will examine these issues with great 
     deliberation before it decides to balance the budget on the 
     back of individual rights.
           Yours sincerely,
                                                     Hurst Hannum,
     Associate Professor of International Law.
                                                                    ____

                               Appendix F

        Strasbourg Declaration on the Right to Leave and Return

                     (Adopted on 26 November 1986)


                                preamble

       The Meeting of Experts on the Right to Leave and Return,
       Recognising that respect for human rights and fundamental 
     freedoms is essential for peace, justice and well-being and 
     is necessary to ensure the development of friendly relations 
     and co-operation among all states;
       Recalling that the Universal Declaration of Human Rights, 
     the International Covenant on Civil and Political Rights, and 
     the International Convention on the Elimination of All Forms 
     of Racial Discrimination, as well as regional conventions, 
     recognize the fundamental principle, based on general 
     international law, that everyone has the right to leave any 
     country, including one's own, and to return to one's own 
     country;
       Emphasizing that the right of everyone to leave any country 
     and to enter one's own country is indispensable for the full 
     enjoyment of all civil, political, economic, social and 
     cultural rights;
       Concerned that the denial of this right is the cause of 
     widespread human suffering, a source of international 
     tensions, and an object of international concern;
       Adopts the following Declaration:

                               Article 1

       Everyone has the right to leave any country, including 
     one's own, temporarily or permanently, and to enter one's own 
     country, without distinction as to race, colour, sex, 
     language, religion, political or other opinion, national or 
     social origin, property, birth, marriage, age (except for 
     unemancipated minors independently of their parents), or 
     other status.

                               Article 2

       Every state shall adopt such legislative or other measures 
     as may be necessary to ensure the full and effective 
     enjoyment of the rights set forth in this Declaration.
       All laws, administrative regulations or other provisions 
     affecting the enjoyment of these rights shall be published 
     and made easily accessible.
                               Article 3

       (a) No person shall be subjected to any sanction, penalty, 
     reprisal or harrassment for seeking to exercise or for 
     exercising the right to leave a country, such as acts which 
     adversely affect, inter alia, employment, housing, residence 
     status or social, economic or educational benefits.
       (b) No person shall be required to renounce his or her 
     nationality in order to leave a country, nor shall a person 
     be deprived of nationality for seeking to exercise or for 
     exercising the right to leave a country.
       [[Page S5046]] (c) No person shall be denied the right to 
     leave a country on the grounds that that person wishes to 
     renounce or has renounced his or her nationality.

                               Article 4

       (a) No restriction may be imposed on the right to leave 
     except those which are
       (1) provided by law;
       (2) necessary to protect national security, public order 
     (ordre public), public health or morals or the rights and 
     freedoms of others; and
       (3) consistent with internationally recognized human rights 
     and other international legal obligations.
       Any such restriction shall be narrowly construed.
       (b) Any restriction on the right to leave shall be clear, 
     specific and not subject to arbitrary application.
       (c) A restriction shall be considered ``necessary'' only if 
     it responds to a pressing public and social need, pursues a 
     legitimate aim and is proportionate to that aim.
       (d) A restriction based on ``national security'' may be 
     invoked only in situations where the exercise of the right 
     poses a clear, imminent and serious danger to the State. When 
     this restriction is invoked on the ground that an individual 
     acquired military secrets, the restriction shall be 
     applicable only for a limited time, appropriate to the 
     specific circumstances, which should not be more than five 
     years after the individual acquired such secrets.
       (e) A restriction based on ``public order (ordre public)'' 
     shall be directly related to the specific interest which is 
     sought to be protected. ``Public order (ordre public)'' means 
     the universally accepted fundamental principles, consistent 
     with respect for human rights, on which a democratic society 
     is based.
       (f) A restriction based on ``the rights and freedoms of 
     others'' shall not imply that relatives (except for parents 
     with respect to unemancipated minors), employers or other 
     persons may prevent, by withholding their consent, the 
     departure of any person seeking to leave a country.
       (g) No fees, taxes or other exactions shall be imposed for 
     seeking to exercise or exercising the right to leave a 
     country, with the exception of nominal fees related to travel 
     documents.
       h) Permissibility of restrictions on the right to leave is 
     subject to international scrutiny. The burden of justifying 
     any such restriction lies with the state.

                               Article 5

       a) Any person leaving a country shall be entitled to take 
     out of that country
       1. his or her personal property, including household 
     effects and property connected with the exercise of that 
     person's profession or skill;
       2. all other property or the proceeds thereof, subject only 
     to the satisfaction of legal monetary obligations, such as 
     maintenance obligations to family members, and to general 
     controls imposed by law to safeguard the national economy, 
     provided that such controls do not have the effect of denying 
     the exercise of the right.
       b) Property or the proceeds thereof which cannot be taken 
     out of the country shall remain vested in the departing 
     owner, who shall be free to dispose of such property or 
     proceeds within the country.


                        right to enter or return

                               Article 6

       a) No one shall be deprived of the right to enter his or 
     her own country.
       b) No person shall be deprived of nationality or 
     citizenship in order to exile or to prevent that person from 
     exercising the right to enter his or her country.
       c) No entry visa may be required to enter one's own 
     country.

                               Article 7

       Permanent legal residents who temporarily leave their 
     country of residence shall not be arbitrarily denied the 
     right to return to that country.

                               Article 8

       On humanitarian grounds, a state should give sympathetic 
     consideration to permitting the return of a former resident, 
     in particular a stateless person, who has maintained strong 
     bona fide links with that state.


                         procedural safeguards

                               Article 9

       Everyone has the right to obtain such travel or other 
     documents as may be necessary to leave any country or to 
     enter one's own country. Such documents shall be issued free 
     of charge or subject only to nominal fees.
                               Article 10

       a) Any national procedures or requirements affecting the 
     exercise of the rights set forth in this Declaration shall be 
     established by law or administrative regulations adopted 
     pursuant to law.
       b) Everyone shall have the right to communicate as 
     necessary with any person, including foreign consular or 
     diplomatic officials, for the realization of the rights set 
     forth in this Declaration.
       c) No state shall refuse to issue the documents referred to 
     in Article 9 or shall otherwise impede the exercise of the 
     right to leave, on the grounds of the applicant's inability 
     to present authorization to enter another country.
       d) Procedures for the issuance of the documents referred to 
     in Article 9 shall be expeditious and shall not be 
     unreasonably lengthy or burdensome.
       e) Everyone filing an application for any document referred 
     to in Article 9 shall be entitled to obtain promptly a duly 
     certified receipt for the application filed. Decisions 
     regarding issuance of such documents shall be taken within a 
     reasonable period of time specified by law. The applicant 
     shall be promptly informed in writing of any decision 
     denying, withdrawing, canceling or postponing issuance of any 
     such document; the specific reasons therefor; the facts upon 
     which the decision is based; and the administrative or other 
     remedies available to appeal the decision.
       f) The right to appeal to a higher administrative or 
     judicial authority shall be provided in all instances in 
     which the right to leave or enter is denied. The appellant 
     shall have a full opportunity to present the grounds for the 
     appeal, to be represented by counsel of his or her choice, 
     and to challenge the validity of any fact upon which a denial 
     or restriction has been founded. The results of any appeal, 
     specifying the reasons for the decision, shall be 
     communicated promptly in writing to the appellant.


                             final clauses

                               Article 11

       Any person claiming a violation of his or her rights set 
     forth in this Declaration shall have effective recourse to a 
     judicial or other independent tribunal to seek enforcement of 
     those rights.

                               Article 12

       No state may impede communication by any person with an 
     international organization or other bodies or persons outside 
     the state with regard to the rights set forth in this 
     Declaration, and no sanction, penalty, reprisal or harassment 
     may be imposed on anyone exercising this right of 
     communication.

                               Article 13

       The enjoyment of the rights set forth in this Declaration 
     shall not be limited because of activities protected under 
     internationally recognized human rights or other 
     international legal obligations.

                               Article 14

       Nothing in this Declaration shall be interpreted as 
     implying for any state, group or person any right to engage 
     in any activity or perform any act aimed at destroying any of 
     the rights set forth herein or at limiting them to a greater 
     extent than is provided for in this Declaration.

                               Article 15

       The present Declaration shall not be interpreted to limit 
     the enjoyment of any human right protected by international 
     law.
                                                                    ____

                                             Tufts University,

                                      Medford, MA, March 31, 1995.
     Re Tax Compliance Act of 1995, H.R. 981.
     Attention: Patricia McClanahan.

     Hon. Daniel Patrick Moynihan,
     U.S. Senate.
       Dear Senator Moynihan: I wrote you on 24 March expressing 
     my concern over the possible human rights implications of the 
     so-called ``exit tax'' called for in the above-referenced 
     bill. As I noted then, what appeared to be the imposition of 
     a tax solely on the ground that a person was renouncing his 
     or her citizenship could interfere with the right of every 
     person ``to leave any country, including his own,'' which is 
     guaranteed under article 12 of the Covenant on Civil and 
     Political Rights.
       I am gratified that the human rights issues related to this 
     bill have become a subject of serious debate, and I 
     appreciate your contribution to that debate. Having now 
     received additional and more specific information about the 
     tax, however, I have become convinced that neither its 
     intention nor its effect would violate present U.S. 
     obligations under international law.
       Although imposition of a special tax on those who wished to 
     renounce U.S. citizenship might be questionable, it is my 
     understanding that the tax in question is based on accrued 
     income and, in effect, treats renunciation of citizenship as 
     the financial equivalent of death for the purpose of 
     attaching tax liability. There are undoubtedly negative 
     consequences to the individual concerned in having to pay 
     taxes on gains while he or she is alive rather than after 
     death, but there is no internationally protected right to 
     escape taxation by changing citizenship. However, in order to 
     clarify that the purpose and effect of the proposed tax are 
     non-discriminatory, the language might be rewritten to offer 
     the individual the option of complying with the new tax or 
     electing to have realized gains taxed only as part of the 
     individual's estate--subject to an appropriate escrow account 
     being established for money which would otherwise be expected 
     to be beyond U.S. jurisdiction at the time of death.
       In sum, imposition of a non-discriminatory tax on accrued 
     income at the time citizenship is renounced, in a manner 
     consistent with the way in which that same income would be 
     treated at the time of death, does not appear to me to 
     violate either the internationally protected right to 
     emigrate or the (somewhat less well protected) right to a 
     nationality.
       Thank you for the opportunity to clarify my views on this 
     important matter.
           Yours sincerely,
                                                     Hurst Hannum,
                         Associate Professor of International Law.

  Mr. PACKWOOD. Mr. President, I believe we are ready to vote.
   [[Page S5047]] The PRESIDING OFFICER. If there is no further debate, 
the question occurs on agreeing to the conference report.
  So the conference report was agreed to.
  Mr. DOLE addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the majority leader.
  Mr. DOLE. What is the pending bill?
  The PRESIDING OFFICER. The pending business will be H.R. 1158.
  Mr. DOLE. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mrs. MURRAY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Chair recognizes the majority leader.

                          ____________________