[Congressional Record Volume 141, Number 167 (Thursday, October 26, 1995)]
[Senate]
[Pages S15720-S15747]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                REAL FAMILIES VERSUS REPUBLICAN RHETORIC

  Mr. ROCKEFELLER. Mr. President, Republican rhetoric is that working 
families will be helped, but I question if this will be true for real 
families in West Virginia.
  This Republican package seeks to cut Medicaid funding by a whopping 
$187 billion over 7 years. But people deserve to understand what such 
harsh cuts mean. Medicaid covers poor children, pregnant women, the 
disabled, and low-income seniors who need nursing home care. What 
happens to these people and their families when we slash Medicaid 
funding?
  Coming from West Virginia, when I think of a family, I think about 
the children, parents, and grandparents. What happens to parents 
struggling to balance raising children and caring for aging parents?
  If a working family gets a new child tax credit but loses Medicaid 
nursing home coverage for an aging parent, what is the overall effect 
on that family? The child tax credit is $500 a year for some families 
lucky enough to qualify, but the loss of Medicaid nursing home coverage 
will cost those same families $16,000 to $30,000 a year.
  For example, Julie Sayres of Charleston, WV cared for her mother who 
suffers with Alzheimer's disease as long as she could at home. But as 
her mother's illness got worse, she had to move to a local nursing home 
where Julie can visit her daily. Julie may get a partial child tax 
credit of $500 under this package, but if she cannot get Medicaid 
coverage for her mother in the nursing home when her mother's meager 
savings are exhausted, Julie and her family will be much, much worse 
off. That child tax credit will not cover even a month of nursing home 
care for her mother.
  This is real story about a family hurt, not helped by this package.
  In my State of West Virginia, over 21 percent of our residents rely 
on Medicaid, and I worry about what will happen to them and the health 
care system in my State as it tries to absorb more than $4 billion in 
cuts--West Virginia simply cannot afford this.
  A headline from the Charleston Daily Mail last week reads: 
``[Medicaid] Cuts May Affect Infant Mortality.''
  This catches one's attention. It demands closer scrutiny and careful 
thought. The article reports:

       With the help of Medicaid-funded programs, West Virginia's 
     infant mortality death rate decreased from 18.4 deaths per 
     1,000 in 1975 to 6.2 deaths per 1,000 in 1994, better than 
     the national rate of 8.0 deaths per 1,000 births.
       Medicaid has greatly increased poor women's opportunities 
     to get medical care, said Phil Edwards, the administrative 
     assistant for the Bureau of Public Health's Division of 
     Women's Services. ``By making them eligible, they go in for 
     prenatal care earlier than they would otherwise,'' he said. 
     ``Every dollar you spend on this side in prevention, you save 
     four on the other side where you don't have to treat an at-
     risk patient,'' Diane Kopcial of the state maternal and child 
     health office said.

  Mr. President, I believe this article should make us all stop and 
think before we impose such cuts in Medicaid. Do we really want to 
jeopardize nursing home care for seniors? Do we really want to slide 
backward on infant mortality?
  I do not want to go backward. I understand that Medicaid needs reform 
and our amendment recognizes that there are responsible ways to reduce 
the rate of growth in Medicaid spending. But we should not throw 
seniors out of nursing homes, deny poor mothers access to prenatal care 
and possibly return to times when our infant mortality rate rivals some 
Third World countries, or turn our backs on the disabled.
  We should think about the real families in West Virginia and cross 
this country who depend on Medicaid for basic, vital health care.
  Mr. President, I ask unanimous consent that the full article from the 
Charleston Daily Mail, be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

            [From the Charleston Daily Mail, Oct. 20, 1995]

                    Cuts May Affect Infant Mortality

       The state Medicaid Crisis Panel began wrapping up its work 
     as health officials expressed concern that federal cuts in 
     the program could reverse progress the state has made 
     reducing infant deaths.
     
[[Page S15721]]

       The panel appointed by Gov. Gaston Caperton will recommend 
     ways to cut $200 million out of the Medicaid program this 
     year to balance the budget. It recommend long-term changes 
     that should prepare the program to handle likely federal 
     cuts.
       Medicaid is a health care program for the poor and 
     disabled. The federal government pays 75 percent of the cost 
     and the state pays the rent.
       At the insistence of Administration Secretary Chuck Polan, 
     the Department of Health and Human Resources will prepare a 
     priority list of money-saving measures it already is taking 
     and those it thinks the state should take.
       The list, with the amount each change would save, will be 
     presented at the panel's meeting next Thursday.
       The group will begin discussing its recommendations then, 
     but will meet final time on Oct. 29 to reach an agreement, 
     said Chairman from Haywood.
       Meanwhile, state health officials and worried that proposed 
     federal Medicaid cuts could increase infant mortality.
       With the help of Medicaid-funded programs, West Virginia's 
     infant death rate decreased from 18.4 deaths per 1,000 births 
     in 1975 to 6.2 deaths per 1,000 births in 1994, officials 
     said. The national rate is 8.0 deaths per 1,000 births.
       Diane Kopcial of the state maternal and child health office 
     said that when Medicaid expanded in the 1980s the state:
       Recruited physicians to care for Medicaid patients.
       Built a referral system with hospitals in Charleston, 
     Morgantown and Huntington.
       Began the Right from the Start program to serve Medicaid-
     eligible woman during their pregnancies and 60 days after 
     they give birth. It also serves infants up to age 1. The 
     program provides nutritional counseling, parenting education, 
     and transportation to medical appointments.
       The Women, Infants and Children program also provides 
     nutrition and health education, free food and breastfeeding 
     information for women and children under 5.
       Medicaid has greatly increased poor women's opportunities 
     to get medical care, and Phil Edwards, the administrative 
     assistant for the Bureau of Public Health's Division of 
     Women's Services.
       ``By making them eligible, they'll go in for prenatal care 
     earlier than they would otherwise,'' he said.
       ``Every dollar you spend on this side in prevention, you 
     save four on the other side where you don't have to treat an 
     at-risk patient,'' Kopical said.
  Mr. SARBANES. Mr. President, I rise today to join my Democratic 
colleagues in opposition to the Republican proposal to replace the 
joint Federal-State Medicaid Program with a block grant to the States.
  Medicaid currently guarantees that 36 million low-income pregnant 
women, children, disabled, and elderly Americans have access to 
hospitals, physicians, nursing homes, and other basic health care. The 
Republican plan would eliminate this guarantee and cut Medicaid by $182 
billion by the year 2002.
  What the Republicans are proposing is to cut Medicaid and then lower 
the standards States must meet because they know that the standards 
cannot be met with the lower level of funding. In a recent letter to 
Members of the Senate, the National Association of Counties expressed 
quite correctly the natural consequence of this proposal. I quote from 
that letter:

       We do not believe that States will find enough budgetary 
     efficiencies without reducing eligibility. The flexibility 
     given to States in the operation of the proposed 
     restructuring will trickle down to counties in the form of 
     flexibility to raise property taxes, cut other necessary 
     services or further reduce staff.

  The Republican plan endangers the future health, well being, and 
productivity of millions of low-income pregnant women, poor children, 
and disabled Americans. It jeopardizes the long-term care of millions 
of our elderly. And these sweeping policy changes have been proposed, 
passed out of committee--and may well be passed by the Senate--without 
one official public committee hearing.
  Because of this, I joined with a number of my Democratic colleagues 
earlier this month in convening several hearings on the Medicaid and 
Medicare programs. We wanted to hear from the people who will be 
affected by the proposed changes. During those hearings, we heard some 
very moving testimony regarding the impact the Republican plan to cut 
Medicaid will have on the lives of average, hard working middle-class 
Americans. Since many Members were unable to hear this very moving 
testimony, I would like to insert in the Record one of the more 
compelling statements presented at these hearings by Ms. Mary 
Fitzpatrick from Dickson, Tennessee.
  There being no objection, the material was ordered to be printed in 
the Record, so follows:

                     Testimony of Mary Fitzpatrick

       My name is Mary Fitzpatrick. I live in Dickson, Tennessee, 
     about 50 miles outside of Nashville. Once again, I am in 
     Washington to speak on behalf of the rights and needs of 
     citizens in nursing homes. I use the word ``again'' because 
     it was eight years ago that I sat before members of Congress 
     and described a pattern of neglect and poor care that led to 
     my mother's death in a nursing home in 1984. I spoke then 
     because I wanted to do whatever I could to prevent another 
     human being from the pain and denial of dignity that my 
     mother, Maggie Connolly, endured. I did not want any other 
     family to have to bear the agony of watching a loved one 
     suffer because of lack of basic services and a system that 
     fails to protect frail, vulnerable people. And I want to 
     spare others the despair my family felt trying to persuade 
     the state of Tennessee to enforce nursing home standards.
       The account I gave eight years ago helped achieve 
     bipartisan support for the 1987 Nursing Home Reform Act. 
     Imagine my shock in learning of the current proposal to 
     undermine this law.
       I cannot believe Congress would consider returning to a 
     system that renders quality nursing home care an option for 
     states, especially when I know what the state did for my 
     mother--absolutely nothing.
       Obviously, lawmakers in Washington are out of touch with 
     ordinary people. And that's who people in nursing homes and 
     their families are--ordinary individuals seeking a safe 
     setting and adequate services during en emotionally, 
     physically trying time.
       Ordinary people understand the need to control the federal 
     deficit. Ordinary people realize the importance of ensuring 
     accountability for public dollars paid to the nursing home 
     industry each year.
       What is beyond our comprehension is how elected officials 
     can support a proposal that will hurt people who can not 
     speak out for themselves.
       As I explained in 1987, after my mother's admission to the 
     nursing home, my daily routine soon became one of cleaning up 
     my mother's waste, bathing her and changing her linen as soon 
     as I arrived each afternoon. The facility denied my mother 
     this basic care. I even had to fight for the supplies to 
     provide that care myself.
       My mother raised three children, and until a stroke at age 
     47 had worked in a bag manufacturing plant. Prior to her 
     admission to the nursing home, she suffered from Parkinsons 
     disease and congestive heart failure and lost her ability to 
     speak. In 1983, her condition quickly deteriorated. After a 
     two week hospital stay, she became incontinent and her 
     doctors advised us she would need to go to a nursing home. I 
     favored a nursing facility near my home. Unfortunately, my 
     mother's source of payment, Medicaid, was not preferred by 
     that facility which refused her admittance.
       Upon recommendation and a tour of the chapel, lunchroom and 
     some of the residence floors, we chose a facility then called 
     the Belmont Health Care Center. From day one, my brother, 
     sister and I visited mother regularly. My brother even 
     changed shifts so that he could see her each afternoon,. I 
     would come by directly from work, missing dinner to stay 
     until 8:30 or 9:00 p.m. Weekends also involved regular visits 
     from family and friends. There was never a day during my 
     mother's nursing home stay that she did not receive care and 
     attention for several hours from family members or friends. 
     Still, the problems began almost immediately.
       On the third day of my mother's nursing home stay, I found 
     her seated in her own waste in a wheelchair. Giving up on 
     finding any staff to assist me, I changed mother's clothing 
     and cleaned her up myself. Soon after I was unable to find 
     any clean linens and was informed of a new policy allowing 
     each residents just two sets of linens. I was persistent and 
     was able to obtain some fresh linens. But there was always a 
     shortage of supplies and on many days, I had to search the 
     linen closets on several floors to find a single set of clean 
     bed linens.
       Within six weeks my mother developed her bed sore. 
     Eventually the sores covered her body, making it impossible 
     for her to lie without pressing on the painful skin ulcers. 
     By the time she died eight months later at the age of 75, one 
     of the original sores measured about three inches across and 
     nearly two inches deep. The staff never carried out the 
     instructions on regularly repositioning her. My brother, 
     sister and I would turn her while we were there, but she was 
     supposed to be turned every two hours around the clock. Nor 
     was there sufficient staff to properly care for my mother's 
     bed sores. Two nurses showed me how to clean the bed sores 
     and told me where to purchase special medical dressing. I 
     bought and used them regularly, but the nursing home 
     administration continued telling me that they couldn't find 
     out whether the pharmacy carried these dressings.
       There were other problems. Residents like my mother who 
     were unable to reach out for water could go for many hours 
     without anything to drink. My mother's roommate told us how 
     my mother once had dabbed a Kleenex and spilled water on a 
     tray and held it in her mouth to relieve her thirst. 
     Throughout this ordeal none of the family or friends caring 
     for my mother knew where to go for help. Finally a friend 
     located someone on the 
     
[[Page S15722]]

     Tennessee Department of Health and Environment Nursing Home 
     Inspections staff. I called him and explained our concerns 
     about retaliation. He promised confidentiality and said 
     someone would be out within the next few days. But it wasn't 
     until a few weeks that a state inspector came. One of my 
     complaints involved getting proper care for my mother's bed 
     sores.
       Then two days after the state inspector's visit I came to 
     the facility and found my mother's sheets soaked in blood. 
     She was lying on her side crying. I pulled back the covers 
     and saw her bed sores had been debrided, which means 
     surgically cut to remove the dead tissue. I was shocked to 
     find that the procedure had been performed at the nursing 
     home instead of the hospital. Given the seriousness of the 
     bed sores, she must have been in agony. But when I asked what 
     they could do for the pain, I was told, ``Tylenol is all we 
     can give.''
       I think mother probably went into shock. But, in any event, 
     she died two days later on July the 7th, 1984. When I was 
     getting ready to go to the funeral home the state inspector 
     called me to say that they had been out a few days before to 
     investigate my allegations of three weeks ago. He said I 
     would be pleased to know that most of my complaints had been 
     substantiated. I told him it was too late. My mother was 
     dead.
       The undertaker told me he had never seen a body is such bad 
     condition, and that he had to enclose the lower half of 
     mother's body in a plastic bag. One of the most disturbing 
     things about this whole ordeal is that my mother was aware of 
     what was going on, even though she could not express herself, 
     other than through gestures and facial expressions. And, all 
     the while, I was haunted by the fact that other people in 
     nursing homes, both young and older, were going through the 
     same hell that my mother went through.
       It has been very difficult to have to relive this 
     experience the second time around. But, it is even harder to 
     accept the fact, Congress is preparing to destroy a law that 
     would have saved my mother and so many others, so much pain 
     and suffering. Thank you for the chance to speak. I would be 
     glad to try and answer any questions.

  Mr. SARBANES. Mr. President, Ms. Fitzpatrick laid out before us in 
detail commonly found nursing home conditions before passage of Federal 
nursing home minimum quality standards. The Republican plan we are 
considering would repeal the minimum quality standards for nursing 
homes. In my view, such a proposal is mean spirited and illogical.
  Morton Kondracke in a recent column described the consequences of 
this proposal:

       The Republicans need to face up to the fact that, if they 
     go through with their planned reforms in poor people's 
     healthcare, instances of abuse, neglect, broken bones, urine-
     soaked beds and filthy surroundings will multiply in the 
     years to come.

  Mr. President, those were the very conditions that led to the 
enactment of the 1987 legislation. And now they want to repeal these 
standards. They want to repeal them because they know that without them 
some nursing home--some, not all--but some nursing homes will be able 
to absorb the reduced funding by lowering their standards of care. They 
will return to the old days of mistreatment and nontreatment which Mary 
Fitzpatrick and Morton Kondracke described as a means of cutting costs 
to respond to the slashed funding. Other nursing homes--the ones that 
do not lower their standards--may simply stop serving those families 
which cannot afford to pay $50,000-$60,000 a year for nursing home 
care. And who will this affect? The 4 million elderly who depend on 
Medicaid for their nursing home care and their families.
  Mr. President, our Government should not renege on its commitment to 
ensuring that millions of needy, disabled, and elderly Americans 
receive essential basic health care. The Republican proposal, which 
would eliminate such guarantees, could have disastrous consequences for 
many citizens, and I would strongly urge my colleagues not to go down 
this path.
  Ms. MIKULSKI. Mr. President, I rise today in strong support of the 
Democratic leadership amendment to restore over $125 billion to the 
Medicaid Program.
  Our Republican colleagues constantly remind us how important family 
values are to them. I think that's great. Families are the backbone of 
our society. They provide nurturing and loving environments for our 
children. They provide stability and safety, and foster values we need 
to become better people and a better society.
  What are family values? I'll tell you what I think they are. I think 
family values are honoring your mother and father. I think family 
values are honesty--keeping promises. Family values are care and 
dedication to the well-being of those you love.
  Family values are not breaking promises, they are not telling your 
mother and father that they'll have to do without medical care, and 
they're absolutely not about risking the safety of your parents when 
you can no longer provide the care they need and have to put them in a 
nursing home.
  Mr. President, there are 18 million children in the United States who 
depend on Medicaid. There are more than 900,000 elderly people who 
depend on Medicaid for their nursing home care. There are 6 million 
disabled Americans who depend on Medicaid.
  The wealthy won't be affected by these draconian cuts. It's likely 
that the vast majority of the 100 Senators in this room won't be 
affected, nor will most of the 435 Members of the House.
  The people who are affected are normal, regular, everyday Americans. 
Not big-time lobbyists; not big-money campaign contributors. The people 
who are affected are people like my neighbors, my mom, and the kids who 
go to St. Stanislaw's Catholic School right down the street from me.
  Mr. President, there are 6 million disabled Americans who rely on 
Medicaid because they cannot get private health insurance. It's not 
because they don't want it. It's not because they can't afford it. It's 
because no private insurance company will cover them. Without Medicaid, 
where will they go? I believe that I am my brother's keeper. We have a 
responsibility to our fellow women and men. Make no mistake about it.
  Mr. President, Medicaid is a program that benefits a broad spectrum 
of Americans. One in five children in America--18 million kids--receive 
their health coverage through Medicaid. One in five. Healthy children 
are the first step to a strong America. The next generation must be 
healthy in body and mind in order to make the large contribution to our 
society that we're all trying to prepare them for.
  These kids don't understand Medicaid. They don't understand the 
process, and, quite frankly, they probably don't care. But their 
parents do. Their parents worry themselves sick about whether or not 
we're going to take away their ability to get medical care for their 
kids.
  I worry myself sick about that too. But there's a difference. I have 
a vote on this floor, and I have the bully pulpit. And I want them to 
know that I'm on their side. I'm fighting for them. I want the parents 
of the 18 million children on Medicaid to know that I stand ready to 
help them help themselves.
  I'm glad this legislation does not repeal the Spousal Impoverishment 
Act. I authored this act in 1988. And I'm here to tell you I'm standing 
sentry to make sure this critical protection is maintained.
  My dad died of Alzheimer's disease. My mom, my sisters and I made use 
of a long-term care continuum in Maryland. We took Dad to a geriatric 
evaluation center at Johns Hopkins to be sure we knew what was wrong 
with him and how to keep him at home with us longer. We used adult day 
care to stretch out his ability to stay with us and to help with 
respite care for my mother--a heart bypass survivor. But we reached a 
point when we knew we couldn't give him the level of care that he 
needed. And we had to bring him to a nursing home.
  I visited my dad all the time at his home. It wasn't a Cadillac, 
Gucci-style nursing home. Dad would have hated that. It was a real 
nursing home with real patients who had real families.
  Over time I got to know those families. I listened to their stories--
to their trials and their tribulations. I heard stories about how you 
had to spend down your life savings to $3,000 before you could qualify 
for help. Families had to go into bankruptcy while they were trying to 
practice family responsibility.
  My dad wasn't the kind of guy who wanted a fancy tombstone. He wanted 
to make sure that what he left behind would help others. I made a 
promise that I'd try to change the cruel rules of Government that 
penalize families who have saved all their lives.
  I'm so proud that with the help of great men like Lloyd Bentsen, 
George Mitchell, Ted Kennedy, and the members of the Finance Committee, 
we changed that law so that now you can 

[[Page S15723]]

keep your home, you can keep assets up to $15,000, and the spouse at 
home can have an income of up to $1,000 a month. So, I'm glad that this 
won't be repealed, and I want to make sure it never, ever is. I want 
all Senators to know that in this regard, we've done well by the 
American people.
  Unfortunately, I cannot say the same for the rest of the bill. In 
this legislation we are repealing nursing home safety standards! That 
is horrific.
  As I just said, my father was in a Chevy Cavalier nursing home--not a 
Cadillac nursing home. But we all knew that he would be fed, he would 
be taken care of, he would receive his medication, we wouldn't have to 
worry about restraints, we wouldn't have to worry about abuse. We knew 
that because of the standards, dad would be safe.
  In 1983 Congress commissioned a study by the Institute of Medicine at 
the National Academy of Sciences. This study revealed shocking 
deficiencies in nursing home care. In 27 States, at least one-third of 
facilities had care so poor that it jeopardized health and safety.
  Some nursing home residents have been treated in conditions which are 
worse than prisons. Worse than prisons!
  In 1987 Senator Pryor led the charge to enact the standards which now 
protect nursing home residents. He's still leading that charge, and I 
thank him for that.
  Now we want to repeal those standards? Not this Senator. I will not, 
under any circumstance, allow anyone in this body to put the lives of 
men like my father at risk.
  Saying ``yes'' to this amendment says yes to keeping promises, it 
tells our seniors, our children and the disabled that we care about 
their well-being. That we will help them if they've played by the rules 
and if they're making the effort to help themselves. And that we will 
not let those few nursing home profiteers put them at risk in the name 
of turning a buck.
  I urge my colleagues to support this amendment.
  Mrs. FEINSTEIN. Mr. President, I rise today to support the amendment 
offered by Senator Graham.
  The bill before us creates a Medicaid block grant, a blank check, to 
States with virtually no rules, no specified benefits, no rules of 
eligibility.
  The amendment would retain the current Medicaid Program, but impose a 
spending limit per individual recipient, an individual cap. This 
approach would hold down cost increases without undermining Medicaid as 
a health insurance program.


                         Medicaid in California

  Medicaid, called Medi-Cal in my State, pays for health care for 6 
million Californians. Out of these 6 million, 38 percent are children. 
Medicaid pays the bills of over 60 percent of children in California's 
children's hospitals. At Oakland Children's Hospital, it pays for 70 
percent.
  Medicaid provides 70 percent of hospital care to the poor in my 
State. Of total Medicaid dollars, over 59 percent is spent on the 
elderly and disabled and 41 percent to families.
  One million Americans are infected with HIV/AIDS. In California, 
there are over 150,000. Medicaid provides health insurance for 40 
percent of all people with HIV/AIDS, including 90 percent of all HIV-
infected children. In California, Medicaid pays for 50 percent of all 
HIV/AIDS care. Medicaid pays for 55 percent of HIV-related public 
hospital care and 41 percent of private hospital care.
  In my State, Medicaid paid $719 million for emergency services for 
illegal immigrants, last year, according to the California Department 
of Health Services.
  Medicaid is a fundamental health safety net in California, insuring 
everything from basic inoculations for poor children to sophisticated 
advanced treatment for AIDS.


                        Medicaid Cost Increases

  As a former mayor, I know the difficulty of balancing budgets and 
keeping costs under control. And there is no doubt that Medicaid costs, 
along with general health care inflation, have grown at double digits, 
creating tremendous pressure on government budgets at all levels.
  The amendment before us reins in Medicaid's growth, but instead of 
cutting $187 billion, it cuts $62 billion, one-third of the cut in the 
Republican bill.


         Why the Graham Amendment is Better than the Roth Bill

  Why is this approach preferable to the committee bill?
  First, it does put restraints on spiraling costs.
  Second, it preserves coverage for those who cannot get health 
insurance on the private market because of costs or the individual's 
health condition.
  Third, a per capita cap can respond to changing conditions--
population growth, recessions, base closings, natural disasters, 
immigration.


                      California and Fluctuations

  The per capita cap approach in this amendment would enable my State 
to respond to all the economic fluctuations that we live with daily.
  Unemployment in California has not dropped below 7 percent since 
1990. While the country added 3 million jobs between 1991 and 1993, 
California lost nearly 450,000.
  Base closures and realignments have erased more than 200,000 jobs, 
sucking $7 billion out of the State's economy. Defense and aerospace 
industries are downsizing.
  Some 6.5 million or 23 percent of our nonelderly population are 
without health insurance. In some urban areas, the uninsured rate is as 
high as 33 percent. Over half, 58 percent of the uninsured, are 
children and young adults.
  Employer-provided health insurance is declining. Two-thirds of 
Californians employed by firms with fewer than 25 employees do not 
receive health insurance.
  California is home to 38 percent of all legal immigrants in the U.S.
  A flat block grant with a fixed pool of money cannot respond to 
changing needs like this. A formula that is responsive to numbers of 
beneficiaries, like this amendment, can.


                           Nursing Home care

  The amendment before us would preserve nursing home standards, 
standards that S. 1357 eliminates.
  Responding to a National Academy of Sciences report, Congress in 1987 
enacted nursing home standards to promote quality of life of nursing 
home residents and to prevent abuse and neglect. This bill repeals 
those standards, rules designed to prevent bedsores, dehydration, 
malnutrition, infection; rules designed to protect privacy and human 
integrity. These standards have reduced injury and cut the use of 
chemical restraints, which in turn has reduced costs.
  In California, 65 percent of our 113,000 nursing home residents rely 
on Medicaid. This is 113,000 elderly and disabled people, patients 
with, for example, Alzheimer's, AIDS, and ventilator needs.
  Twenty-one percent of nonelderly nursing home residents are disabled. 
Seventy-five percent of nursing home residents are women. The typical 
nursing home resident is an 83-year-old widow with multiple chronic 
conditions, such as crippling arthritis or osteoporosis.
  We should not take away these minimal protections for the most frail 
and make them victims again.


                    Medicaid--a Middle-Class Program

  Medicaid is health insurance for low-income Americans and the 
disabled. But it is important to understand the implications Medicaid 
has for the middle-class. Nursing home standards, which are required as 
a condition of receiving Medicaid payments, benefit every nursing home 
resident of whatever income.
  By cutting Medicaid, we add to the rolls of the uninsured which means 
that more people show up in emergency rooms with exacerbated illnesses. 
We all pay for that.
  Medicaid reimbursement to our public hospitals enables these 
hospitals to have up-to-date trauma centers and emergency rooms which 
serve Medicaid and non-Medicaid patients. These are critical 
institutions in many communities on which we all depend. Indeed, these 
institutions are at the economic core of thousands of communities and 
they provide jobs.


                           A Basic Protection

  The committee bill makes drastic cuts in Medicaid and it revamps the 
program in a way that cannot respond to the growing needs of California 
and changes a steadfast program of health insurance to an arbitrary, 
ill-defined block of Federal funds.
  The bill purports to transform Medicaid. I'm afraid that it destroys 
Medicaid.

[[Page S15724]]

  I oppose the committee bill. I commend my colleague from Florida for 
his amendment and I support him.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRAHAM. Mr. President, I yield the Senator from Washington 2 
minutes.
  The PRESIDING OFFICER. The Senator from Washington.
  Mrs. MURRAY. Mr. President, I thank my colleague from Florida for 
this very important amendment he has brought before us today. It seems, 
so often when we come out on the Senate floor, we get caught up in the 
charts and graphs and ``Senatese" terms that we hear so often and we 
forget what we are doing affects very real people and very real 
families across this country. I want to talk about one of those very 
real people. He is a young child. He is 21 months old. He lives in my 
State. His mother wrote me a desperate letter saying, ``Please do not 
take away Medicaid.''
  Her son, Abe, was born with a severe medical disorder. He needs a 
modified ventilator to breathe 22 out of every 24 hours. In his short 
21 months, he has had many surgeries to help put fingers on his hands, 
to help him breathe, to help him live. His mother said, without 
Medicaid, Abe would not be here.
  This mother is desperate because she knows, as all of us do, that if 
we change this bill in the way that is being proposed by the 
Republicans, she will have to fight for Medicaid coverage with everyone 
else in my State who is desperately going to be looking for help, and 
it is very likely that Abe will not have his ventilator once this goes 
to our States.
  I went out and I talked to hundreds of parents in my State who have 
children at Children's Orthopedic Hospital in my home State. These are 
parents who did not expect to have a child with a severe medical 
disorder. They did not expect to have a child with asthma, who was in 
the hospital every other week. They did not expect to have a child who 
had leukemia. And they did not expect that they would have to quit 
their job to stay home and take care of that child. They did not expect 
that their own medical insurance would run out within a very short time 
because of the limits on insurance. And they never expected to have to 
turn to the Federal Government to ask for help.
  But I can tell you everyone of those parents needs our help and this 
amendment will send that assurance back to them. I urge my colleagues 
to support it.
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time?
  Mr. ABRAHAM. Mr. President, how much time is left on each side?
  The PRESIDING OFFICER. Two minutes for the Senator from Michigan and 
7 minutes and 30 seconds the Senator from Florida.
  Mr. ABRAHAM. I would prefer not to use our 2 minutes at this point.
  Mr. GRAHAM. Mr. President, I ask unanimous consent that off of the 
general debate on the bill there be 3 minutes yielded, one of which 
will be yielded to the Senator from Wisconsin as well as 1 minute for 
debate of this motion.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. I thank the Senator from Florida and I thank the Chair. 
If we do not make changes very quickly, I am very concerned that older 
people in our society are going to get the message from this budget 
that we have changed our attitude toward their contributions in 
building this society. What other impression are senior citizens 
supposed to get, when a huge percentage of balancing the budget is 
based on enormous, and I think in many cases unjustified, changes in 
Medicare, changes that will increase the premiums of seniors in this 
country well beyond what they would have been.
  Equally bad is something that is being discussed, as we sit here 
today, over in the Senate Aging Committee, namely the completely 
unjustified elimination of the Federal nursing home regulations from 
OBRA 1987. What fiscal or other justification is there for saying to 
older people who now must be in a nursing home after a hard life, a 
life of work and contribution to country and family, that we are not 
going to be sure on a national level that people are protected from 
unhealthy and unsafe conditions?
  Those of my colleagues who served in State legislatures, or served as 
Governors of their State, will certainly confirm that Medicaid makes up 
a huge portion of the State budget.
  And, Mr. President, if they have any passing knowledge of their 
State's Medicaid program, they will also confirm that the bulk of the 
Medicaid budget, and the source of the greatest growth in that budget, 
is probably the growing demand for long-term care services, typically 
nursing home care.
  This is certainly true for Wisconsin.
  But, Mr. President, in Wisconsin, back in the late 1970's, we came to 
the realization that unless significant reforms were enacted, the 
rapidly increasing nursing home use would be too heavy a load for the 
States' budget to sustain prudently.
  Through a bipartisan effort--and Mr. President, I stress bipartisan 
because Governors and legislators from both parties supported the 
effort--we made some significant reforms to our long-term care system.
  The centerpiece of that reform was the creation of a home and 
community-based program, called the Community Options Program, or COP.
  COP provides flexible, consumer-oriented and consumer-directed 
services that help keep the disabled of all ages in their own homes and 
communities.
  It builds upon the existing set of so-called informal supports--the 
caregiving done by family members and friends.
  Mr. President, the results have been dramatic.
  Between 1980 and 1993, while Medicaid nursing home use increased by 
47 percent nationally, in Wisconsin Medicaid nursing home use actually 
dropped 15 percent.
  Mr. President, long-term care reform is the key to taming our 
Medicaid budget.
  But that is not the route pursued in this bill.
  Instead of a comprehensive reform that would help States cope with 
the growing population of those needing long-term care services, this 
bill cuts and runs.
  It cuts the Federal Government's share of this growing burden by $182 
billion over the next 7 years.
  It runs away from the problem of a mushrooming population needing 
long-term care by block granting the program and dumping responsibility 
in the laps of State policymakers.
  Mr. President, this is a prescription for disaster.
  For 30 years, States have made policy decisions based on one set of 
rules.
  Based on those rules, over those 30 years an infrastructure of long-
term care has evolved that is heavily skewed toward expensive, 
institutional care.
  That was not by accident.
  The system that developed in that time produced the incentives that 
resulted in this institutional bias.
  But, Mr. President, that infrastructure cannot change overnight.
  And it certainly will not change simply because the Federal 
Government slashes funding and runs away from the problem.
  Just the opposite is likely to happen.
  Today, Medicaid is essentially a provider entitlement.
  Providers of specific services are funded, and that infrastructure, 
which has been so influential at both the State and Federal level in 
writing the rules which produced the system we have today, is not going 
to disappear.
  That skewed infrastructure is well situated at the State level to win 
the fight for the pool of resources this bill greatly reduces.
  This bill is not reform; it merely makes a flawed situation even 
worse.
  The same problems that exist in Medicaid today will exist under this 
bill.
  Mr. President, I urge my colleagues to support this motion to commit, 
and let the Finance Committee craft a product that will let States wean 
themselves off of their addiction to expensive institutional services 
and instead move toward helping families keep their disabled loved ones 
at home, utilizing consumer-oriented and consumer-directed home and 
community based care. So I hope we support the Graham amendment.

  The PRESIDING OFFICER. Who yields time?
  Mr. GRAHAM. Mr. President, I wish to reserve the balance of our time 
including the additional 2 minutes which were yielded for my close.

[[Page S15725]]

  I yield to the Senator from Michigan for any final debate in 
opposition to the motion.
  Mr. ABRAHAM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. ABRAHAM. Mr. President, I yield myself 1 minute to just 
recapitulate the point that has been made on our side in the last hour 
of debate.
  Our position is quite simple--that if States are given the kind of 
flexibility that has in part been given for waivers to run Medicaid 
Programs, they can bring down the rate of growth of these programs far 
more effectively than a Federal bureaucracy in Washington; that, 
indeed, the growth rates are growth rates that decrease but growth in 
spending that has been outlined in the reconciliation bill can still 
provide the sorts of benefits that all of us want to see for our 
citizens, if we let the States, the people closest to those in need, 
run these systems.
  In my State of Michigan, our Governor, our legislature, and our 
department of social services insist that they can make our program 
even more efficient at the rate of growth that is proposed in this 
legislation if they are simply given the opportunity to do so. We have 
come to a point when health care costs are skyrocketing in the public 
sector but are being brought under control in the private sector 
through such things as competition and other market factors.
  Let us give the States the chance to do some of the same things this 
legislation does. That is the reason we have included this approach and 
State flexibility in the reconciliation package.
  At this point, I yield the remainder of our time to the Senator from 
Missouri.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. ASHCROFT. Mr. President, I ask unanimous consent to have printed 
in the Record an article from the St. Louis Post-Dispatch from January 
31, 1995, which bears testimony to the fact that:

       Missouri also wants to start a managed care system for its 
     600,000 Medicaid recipients. It would use the money saved to 
     provide medical coverage to another 300,000 Missourians who 
     do not qualify for Medicaid coverage now and who also cannot 
     afford insurance.

  So it would really provide insurance for about half of the 
individuals who currently are uninsured in the State. That is what the 
promise of this potential is.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

           [From the St. Louis Post-Dispatch, Jan. 31, 1995]

GOP Gears Up To Grapple With Medicaid: States Could Design Own Programs

                           (By Kathleen Best)

       Republican Congressional leaders said they would take up 
     legislation in the next few weeks that could dramatically 
     change the way states provided medical services to the poor.
       Illinois Gov. Jim Edgar said after a meeting with GOP 
     Congressional leaders that they were willing to consider 
     giving states lump-sum payments and letting them design their 
     own health-care programs for the poor.
       ``Let us determine who's going to be in the program,'' 
     Edgar said. ``If the money's not there, then we'll have to 
     make some tough decisions.''
       In return for greater state flexibility, the states would 
     have to agree to hold down future costs, which they split 
     with the federal government.
       ``They seemed very sympathetic and agreeable to giving us 
     flexibility,'' Edgar said. ``And they said they would like to 
     try to get this thing going within the next few weeks.''
       Edgar, a Republican, is the lead negotiator of Medicaid for 
     the Republican Governors Association. He met Monday with Sen. 
     Robert Packwood of Oregon, head of the Senate Finance 
     Committee, and with Rep. John Kasich of Ohio, the House GOP's 
     point man on the federal budget.
       Edgar said no firm agreements came out of the meeting. But 
     he said both House and Senate GOP leaders ``are willing to 
     move much quicker than we had hoped for,'' in part to try to 
     hold down increasing costs for the program.
       Medicaid is now the third largest entitlement program in 
     the nation after Social Security and Medicare. The health 
     benefits to the poor cost states five to eight times more 
     each year than providing cash, food and other benefits to 
     poor mothers with children.
       For the last few years, Medicaid also has been one of the 
     fastest-growing programs. Illinois, for example, now spends 
     more on Medicaid than it does on education. And Missouri 
     spends more on Medicaid than on any other program.
       Both states are seeking permission from the Department of 
     Health and Human Services, to change their Medicaid programs. 
     But those requests--both pending for months--remain 
     unanswered.
       Illinois wants to move to a managed care system that would 
     encourage the poor to get medical treatment from health 
     maintenance organizations or a designated family physician 
     rather than seeking more expensive care in emergency rooms.
       Missouri also wants to start a managed care system for its 
     600,000 Medicaid recipients. It would use money save to 
     provide medical coverage to another 300,000 Missourians who 
     do not qualify for Medicaid coverage now and who also cannot 
     afford insurance.
       Edgar said the reforms that he would push for would do away 
     with the need for states to seek federal permission to make 
     such changes. Such permission is now required because the 
     federal government pays for 50 percent of Medicaid costs in 
     Illinois and 60 percent of the costs in Missouri.
       Federal reimbursement rates are based on the per capita 
     income of a state, which means poorer states get more federal 
     money.
       ``One of the major things driving the Congress right now is 
     the bottom line--how do you balance the budget,'' Edgar said. 
     ``You can't balance the budget unless you attack the Medicaid 
     problem.
       ``We're not talking about just throwing people off the 
     rolls, but creating a more efficient program,'' he said.
       Although Medicaid affects millions of poor Americans and 
     accounts for billions of dollars in annual spending, the 
     issue had remained on the sidelines of the welfare reform 
     debate while Congress focused on changing the programs that 
     provided cash, food and housing to mothers with children.
       ``The discussion of welfare reform has been far too 
     narrow,'' Missouri Gov. Mel Carnahan said. ``It really comes 
     from some of the anecdotal talk about the welfare queen and 
     all this sort of thing as opposed to really thinking through 
     what you want to do--lifting people up to self-sufficiency 
     and work.''
       President Bill Clinton, in a meeting Monday morning with 
     the National Governors' Association, said he would be willing 
     to consider some changes in Medicaid, but he provided no 
     specifics, participants said.
       Clinton promised the governors more flexibility in their 
     welfare programs but insisted on safeguards for children.
       Donna Shalala, secretary of health and human services, said 
     later that if the federal government did not give states 
     permission to experiment with Medicaid, ``then we will have 
     failed with welfare reform.''
       Edgar said he planned to meet again next week with GOP 
     congressional leaders to work out a consensus on what needed 
     to be changed. In the meantime, he said, he would talk to 
     both Democratic and Republican governors.
       He predicted that changes in Medicaid would not set off the 
     same kinds of partisan wrangling that have kept the nation's 
     governors from reaching an agreement on food, housing and 
     cash assistance to the poor.
       ``Welfare is important, but if you really want to get to 
     what drives most governors up the wall, it's Medicaid,'' he 
     said.

  Mr. ASHCROFT. Mr. President, I also ask unanimous consent to have 
printed in the Record, another St. Louis Post Dispatch article, 
published on the 24th of November of last year, which is similar:

       State officials estimate that that provision would result 
     in health insurance coverage for 300,000 people who cannot 
     afford it today--about half the State's uninsured.

  That provision referred to is one which would waive Federal 
regulations and allow the State to design its own program.
  I thank the Chair.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                   [From the St. Louis Post-Dispatch]

 GOP Plan May Let Missouri Alter Medicaid--Waiver Would Allow Coverage 
                      of Half of State's Uninsured

                           (By Kathleen Best)

       A promise by congressional Republicans to give the states 
     more flexibility could help Missouri win federal approval of 
     a dramatic shift in the way it provides medical services to 
     its poor.
       ``Since this is a request for state flexibility, it is in 
     line with the Republican agenda,'' said Donna Checkett, 
     director of the Missouri Division of Medical Services.
       Missouri wants a waiver of federal regulations that would 
     allow it to rein in the cost of providing medical services to 
     the poor at the same time it expands the program to include 
     about half of the state's uninsured.
       Health care for the poor would be provided through a new, 
     managed-care system designed to hold down costs by, for 
     example, encouraging people to seek treatment from family 
     doctors, rather than going to emergency rooms, which are more 
     expensive.
       The state would contract with doctors, hospitals and health 
     maintenance organizations to care for the state's 600,000 
     Medicaid participants.
       In addition, Missourians who now earn too much to qualify 
     for Medicaid but too little to buy private health insurance 
     would be allowed to buy into the state-run program at reduced 
     rates.
       State officials estimate that that provision would result 
     in health insurance coverage for 
     
[[Page S15726]]

     300,000 people who cannot afford it today--about half the 
     state's uninsured.
       Before Missouri can put the new system in place, it needs 
     approval from the U.S. Department of Health and Human 
     Services. With Republicans poised to take control of federal 
     purse strings, department officials are likely to be 
     encouraged to look favorably on such waiver requests.
       Missouri made its formal application for a waiver last 
     summer and is now answering questions about its proposal.
       Checkett said the most nettlesome problems resolve around 
     how to provide care for poor people with chronic mental 
     illness.
       ``There have been a lot of questions--both from Washington 
     and in the state--about whether individuals who are 
     chronically mentally ill should go into managed care,'' she 
     said.
       ``We're concerned about how to balance the protections we 
     need to provide (for the mentally ill) with cost control.''
       The mentally ill tend to need lots of expensive medical 
     care. But the nature of their illness often makes managing 
     that care nearly impossible as some move in and out of 
     institutions, sometimes living on the streets and 
     occasionally disappearing from the system.
       ``Managed care is tricky with basically health people,'' 
     Checkett said. ``It's more challenging when you are dealing 
     with the Medicaid population. When you are dealing with the 
     mentally ill, you need to strike a balance very carefully and 
     be very certain how appropriately you have balanced the cost 
     interest with protecting a vulnerable population.''
       The state originally proposed setting up a pilot project 
     that would carve out a package of behavioral health services 
     for everyone on Medicaid that would be managed by a 
     behavioral health organization.
       But that approach resulted in howls of protest from mental 
     health advocates and others, and has been, in effect, 
     scrapped.
       Chekett said no alternative plan had been decided, although 
     negotiations were under way.
       ``Missouri is not alone in wrestling with this, I can 
     guarantee you,'' said Checkett, who is chairman of the 
     association representing state Medicaid directors.
       ``If you were to poll other states, you would find this 
     issue of how to treat individuals with chronic mental illness 
     has been a big one. It's been the hardest project I've ever 
     worked on.''
       A final decision on the mental illness question will be 
     made by Gov. Mel Carnahan and is expected by Jan. 15, when 
     the state plans to present its answers to 259 questions posed 
     by federal regulators.
       Checkett said the other difficult questions on the list 
     centered on how the state would provide managed care in rural 
     areas of Missouri, where there are few doctors and fewer 
     opportunities to impose cost controls.
       ``Those are questions we have ourselves and are working 
     on,'' she said. ``We hope we will be able to pay better rates 
     for primary care under a managed care system, which would 
     encourage more doctors to take on more Medicaid recipients.''
       Some doctors in rural areas now limit the number of poor 
     patients they will see because the state pays proportionately 
     higher rates for treating the poor at hospitals and in 
     emergency rooms.
       ``Now, we spend $2.5 billion a year with a heavy bias 
     toward institutional settings,'' she said. ``We want to 
     change that.''
       Checkett said she hoped that if all the answers are 
     submitted by mid-January, the state can begin negotiating 
     details of final approval in the spring. That schedule would 
     coincide with a review by the Missouri Legislature. 
     Legislators must appropriate the funds to pay for the 
     revamped program.
       But the same Republican majority in Washington that may 
     make it easier for the states to experiment with new 
     approaches may also throw a wrench into carrying out such 
     plans.
       GOP legislators already have begun talking about major 
     changes in Medicaid and welfare funding, which could force 
     Missouri back to the drawing board.
       ``I am concerned, just looking at Medicaid, that there will 
     be serious discussion about entitlement caps,'' Checkett 
     said. ``I don't know what it means.''

  The PRESIDING OFFICER. Who yields time?
  Mr. ASHCROFT. Mr. President, I ask unanimous consent that an 
editorial which appeared in the St. Louis Post Dispatch entitled 
``Missouri's Wise Shift to HMOs,'' be printed in the Record.
  It states, in part:

       The Carnahan administration made the right move in deciding 
     to use HMOs to provide medical care for the 154,000 St. Louis 
     area residents eligible for Medicaid.

  The potential of a waiver is similar to what we would have in a block 
grant.
  There being no objection, the editorial was ordered to be printed in 
the Record, as follows:

           [From the St. Louis Post Dispatch, Oct. 14, 1995]

                     Missouri's Wise Shift To HMO's

       Regional Medical Center appears to have won big in 
     Missouri's decision to shift all Medicaid recipients in the 
     St. Louis area into health maintenance organizations. The 
     state itself is a winner, too.
       The Carnahan administration made the right move in deciding 
     to use HMOs to provide medical care for the 154,000 St. Louis 
     area residents eligible for Medicaid. Otherwise, these 
     patients would be cared for under fee-for-service programs 
     with few ways to control costs. HMOs, by contrast, agree to 
     treat patients for a fixed monthly fee, regardless of the 
     services the patients require.
       HMOs do this profitably by stressing prevention and managed 
     care that denies patients access to unneeded and costly 
     medical specialists, procedures and tests. The Carnahan 
     administration estimates that the shift to HMOs could save 
     the state as much as $11.6 million in the first 12 months. 
     That may seem like a mere ripple in a Missouri Medicaid 
     budget of about $2 billion, about half of which comes from 
     state funds, but these savings mark an important step toward 
     improved cost control.
       Seven HMOs have contracts with Missouri to treat the 
     state's Medicaid patients. Their monthly per-patient fees 
     vary. The fee for Medicaid-eligible women between the ages of 
     21 and 44, for example, ranges from $120.30 to $127.35. The 
     monthly per-patient fee for children between the ages of 7 
     and 13 ranges from $42.95 to $46.39.
       Regional is a big winner because at least 33 percent of the 
     121,890 Medicaid patients have enrolled in HealthCare USA, 
     the HMO co-owned by Regional. Two other HMOs also are using 
     Regional as the preferred provider of services under their 
     plans. Some officials estimate that Regional could end up 
     providing care for nearly half the Medicaid-eligible patients 
     in the St. Louis area.
       Whether these numbers will be sufficient to help Regional 
     balance its budget and provide care for the uninsured is 
     uncertain. In the last fiscal year, the hospital provided $40 
     million in care to indigent patients. This year, the hospital 
     is facing a shortfall of at least $11 million because of 
     reductions in federal funds for indigent care. In all 
     probability, the city and county, which set up Regional, will 
     have to cover this deficit.
       Ideally, Regional's entry into the HMO business will help 
     it pay more of its bills without having to rely on local 
     subsidies. But the city and county must keep in mind that 
     lots of the community's indigent patients don't have access 
     to Medicaid. In other words, St. Louis and St. Louis County 
     will continue to have an obligation to assist Regional in 
     providing care for these patients.

  Mr. ASHCROFT. Mr. President, I also ask unanimous consent to have 
printed in the Record an article from the Tennessean, published on 
October 24, 1995, which praises the success of Missouri's use of 
managed care for its Medicaid population.
  I thank the Chair.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  [From the Tennessean, Oct. 24, 1995]

                     TennCare Could Take Some Notes


                      Coventry exec compares plans

                           (By David A. Fox)

       Tennessee may be in the vanguard of Medicaid reform with 
     its TennCare program, but Missouri is the state that is 
     pulling off Medicaid privatization most successfully, a local 
     managed care executive said yesterday.
       With a more incremental approach, Missouri has managed so 
     far to avoid some of the problems that have plagued Medicaid 
     reform here and in Florida, said Philip Hertik, chairman of 
     Conventy Corp. Nashville-based Coventry, which does not 
     participate in TennCare, is one of seven organizations that 
     last month began enrolling St. Louis Medicaid members in 
     private managed care plans.
       In a speech to a national conference of the Health Industry 
     Manufacturers Association at Loews Vanderbilt Plaza Hotel. 
     Hertik cited several strengths of the Missouri plan to 
     provide health care to the poor at a contained cost. Among 
     them:
       Missouri initiated its plan in just one area, rather than 
     throughout the entire state.
       It put the managed care contracts out for bid.
       It prohibited marketing of the private plans directly to 
     Medicaid beneficiaries.
       A neutral company was chosen to gather data from each plan 
     and distribute the information to Medicaid members for use in 
     making their selection.
       Missouri geared its plan only to the poor, beginning with 
     people in the Aid to Families with Dependent Children 
     program.
       By contrast, TennCare began in January 1994 covering both 
     the poor and uninsured statewide, at predetermined rates with 
     aggressive marketing to Medicaid members. As a consequence, 
     the $3.1 billion program serving 1.1 million residents 
     started with great confusion among its members, with griping 
     by providers whose reimbursements were slashed and with some 
     apparently improper member-recruitment practices by at least 
     one private health plan.
       Hertik called the privatization of Medicaid ``the biggest 
     thing in managed care in the past 15 years'' and one of 
     several trends revamping the industry. With the companion 
     trend toward privatizing Medicare, he forecast that market 
     leverage increasingly will shift to managed care 
     organizations and away from hospitals and other providers, 
     such as home health, which traditionally have received a 
     majority of their payments directly from government programs.
       Probably the most obvious trend facing managed care 
     organizations is the wave of 
     
[[Page S15727]]

     mergers and acquisitions. But Hertik said this trend differs 
     from consolidation waves in other industries that frequently 
     are sparked by efforts to achieve operating efficiencies from 
     such things as volume buying and the elimination of redundant 
     services.
       ``All of this is aimed at market leverage, rather than just 
     economies,'' he said.
       The deals, including health maintenance organizations 
     buying traditional indemnity insurors, are intended to 
     increase the membership in local managed care plans.
       ``But having sheer size on a national scale and strong 
     balance sheets don't necessarily make you the high-quality, 
     low-cost provider in local markets where the purchasing 
     decisions are made,'' he said. ``It's just a little troubling 
     knowing that its market leverage at the base of this 
     consolidation.''
       Hertik also identified two other trends:
       The reaching of ``an inflection point'' heralding ``price 
     competition as more the rule of the day'' instead of boom-
     and-bust cycles in health insurance underwriting.
       An emphasis by managed care companies in managing care, 
     rather than just costs, by establishing clinical guidelines, 
     practicing disease management and measuring outcomes.

  The PRESIDING OFFICER. Who yields time?
  Mr. GRAHAM. Mr. President, has the Senator from Michigan completed 
his presentation?
  The PRESIDING OFFICER. There are 14 seconds remaining for the Senator 
from Michigan, and 7 minutes and 30 seconds remaining for the Senator 
from Florida.
  Mr. ABRAHAM. Mr. President, I yield the remainder of my 14 seconds.
  Mr. GRAHAM. Mr. President, there is time we received, 3 minutes of 
general debate and 1 minute which was used by the Senator from 
Wisconsin. And I ask for the other 2 minutes, as well as the balance of 
our time on this amendment for my closing remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRAHAM. Thank you, Mr. President.
  Mr. President, it has been an illuminating debate but almost as 
illuminating by what has not been said as what has been said.
  What are some of the things that have been omitted? One of the major 
omissions is, how did the majority party arrive at the figure of $187 
billion as the basis of its reduction in Medicaid expenditures by the 
Federal Government over the next 7 years? What was the source of that 
number? How was the calculation of the efficiencies and flexibilities 
that were going to be incorporated in this program used to derive the 
ultimate number of $187 billion?
  The reason that there has not been an answer to that question is 
because there is not an answer to that question. The $187 billion was 
derived, not by a rational assessment of what would be the needs of the 
program or what will be the per capita increase in costs in delivering 
health care, but rather as a means of deriving a set of dollars to fund 
a tax cut for the wealthiest of Americans.
  The fact is that the Medicaid Program has been operating at a per 
capita level of expenditure less than the national average in terms of 
all private sector health care spending, 7.1 percent in the private 
sector, 7 percent in Medicaid. This is what has been the level of 
Medicaid expenditure per capita. Under this bill, the proposal is to 
slash Medicaid from a 7 percent growth to a 1.4 percent growth.
  Mr. President, I would defy anyone to say that is not going to result 
in a significant collapse of the Medicaid system's ability to serve the 
most vulnerable population in our country.
  The second question that has not been discussed is, why has the 
Medicaid Program been growing at the rate that it has been growing?
  Let me suggest three reasons, one that we ought to be very proud of, 
and that is that we are doing as a Nation a much better job of helping 
the poorest and most at risk of our children. Infant mortality in the 
United States has dropped by over 21 percent in the last decade. Infant 
mortality in America has dropped by over 21 percent in the last decade. 
We ought to be proud about that, and it has occurred because in large 
part we have extended Medicaid coverage to more and more at-risk 
mothers, and we have provided the kind of appropriate health care 
immediately after birth. We should not be ashamed of that.
  Second, Medicaid has increased because of the aging of Americans. 
What has not been pointed out is that 60 percent of the Medicaid 
expenditures do not go to poor children and their mothers. Sixty 
percent of the expenditures go to the disabled and particularly to the 
frail elderly. In my State, 70 percent of Medicaid expenditures go to 
the disabled and the frail elderly.
  That happens to be the segment of our population which is growing at 
the fastest rate. In most States the fastest growing generational 
component of the population is people who are over the age of 80--the 
very population that is most likely to need Medicaid assistance for 
long-term care.
  The third reason for the increase in the number of persons on 
Medicaid has been the decline in private insurance coverage 
particularly for children. In 1977, 71 percent of the children of 
working Americans had their health care covered through their working 
parents. Today, in 1993, that number is down to 57 percent and 
projected in the year 2002 to be 47 percent. There has been almost a 1-
to-1 increase in the poor children on Medicaid as there has been a 
decline in poor children covered through a parent's health care policy.
  Those are three basic reasons why Medicaid has been increasing over 
the last few years, not because of oppressive Federal regulations.
  Another thing that has not been discussed is the allocation formula. 
Would you like to see the allocation formula among the States? There it 
is. That is the arithmetic allocation formula contained in the 
Republicans' Medicaid proposal.
  This formula, when you get through all the algebra, says that those 
States which today are receiving 4 and 5 times as much per capita as 
other States will continue to receive 4 to 5 times as much. We are 
seeing a pattern. We saw it in welfare reform and now we are seeing it 
in Medicaid, and that is identify the problem, decry the status quo, 
and then retain the funding formula of the current program. We did it 
in welfare reform, and we are about to do it again in Medicaid.
  It would be like George Washington, after having won the American 
Revolution, saying, ``but we are going to continue to pay tribute to 
George III.'' The very reason that we fought the war would have been 
forgotten.
  Mr. President, we need to have a funding formula that treats all 
Americans fairly wherever they live. This bill of the Republicans 
continues basically the current funding formula into the indefinite 
future.
  What is going to be lost under the Republican proposal? We are going 
to lose the flexibility of an effective State-Federal partnership--
those States that experience growth, those States that experience 
economic decline, those States that experience a natural disaster. We 
had 12,000 people added to the Medicaid role in Florida within days 
after Hurricane Andrew because not only were their homes blown away, 
their jobs were blown away and they became eligible for Medicaid. And 
they needed it because of the disaster through which they just lived. 
That flexibility is going to be lost in this program. We are also going 
to lose the adequate funding of a Federal partner, and we are going to 
lose national standards particularly in the area of nursing homes.
  It is not surprising that President Reagan said that the Medicaid 
Program should not be turned over to the States but that the Medicaid 
Program should be federalized in order to have a national standard of 
health care. Where are the voices for President Reagan today? This 
great advocate of a strong national program to protect the health of 
our children needs to be heard today.
  I close by saying there is a better way. We are proposing in this 
motion, first, that we have a rational reduction in Medicaid. What we 
essentially are saying is that we will propose to restrain Medicaid to 
1 percentage point less than the private sector rate of growth in 
health care spending. And with that 1 percent restraint, that is, that 
the per capita for Medicaid will be 6.1 percent per year over the next 
7 years, we will save $62 billion. We think that we can make that kind 
of a change without ravaging the system, and we would distribute the 
money through a per capita cap.
  This maintains the individual entitlement to Medicaid coverage and 
creates incentives to maintain health care coverage. It provides for 
funding into each of the four categories of principal 

[[Page S15728]]

Medicaid populations, that is, poor children, their mothers, the 
disabled, and the frail elderly, so that we will not create what is, I 
believe, an inevitable result of the block grant approach which is 
going to be a war at the State level among those four groups of 
beneficiaries.
  We would also allow for a continuation of innovative programs such as 
the program in the State of Tennessee. We believe that the kinds of 
flexibility that we would provide, which would make it easier for 
States to move into managed care and easier for States to use 
community-based services to meet the needs of the elderly, will produce 
some real economies and therefore reduce the rates of expenditure over 
the next 7 years, an attainable goal without collapsing the system.
  It is interesting, Mr. President, that the proposal that I make 
today, the per capita cap alternative to block grants, is the proposal 
which was introduced in the Senate on June 29, 1994, by our 
distinguished majority leader, cosponsored by 39 Republican Members. A 
similar program was introduced by our colleague, the senior Senator 
from Texas, and the junior Senator from Rhode Island, also promoting a 
per capita cap on Medicaid as a means of reforming the system.
  Mr. President, I believe that we have a program that will achieve 
significant savings without sacrificing the safety net that Medicaid 
has represented. We can have these reforms while retaining a program 
that is vital to 37 million of our most vulnerable Americans. What we 
will sacrifice is a little piece of the tax break that we are about to 
give to the wealthiest of Americans in order to assure minimal health 
care standards for the poorest and most vulnerable of Americans.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. GRAHAM. Mr. President, I ask unanimous consent that statements 
from scores of organizations in opposition to the Republican plan and 
in support of the proposal that is before us be printed in the Record 
and that an analysis of the mandates which are contained in the 
Republican proposal also be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                      May 3, 1995.
       Dear Senator: The undersigned organizations are opposed to 
     eliminating the entitlement status of individuals under the 
     Medicaid program. The Medicaid program provides basic health 
     and long term-care services to over 33 million American men, 
     women, and children. Eliminating the entitlement status would 
     jeopardize coverage for these seniors, families, children, 
     and persons with disabilities, at a time when employers are 
     dropping coverage and the number of uninsured persons 
     continues to rise.
       We understand that, in the interest of deficit reduction, 
     savings must be achieved in the Medicaid program. However, 
     extreme and disproportionate cuts in the Medicaid program 
     will result in more Americans uninsured and in poor health, 
     disincentives for providers to serve this population, and 
     untenable cost shifting to state and local governments, 
     providers and private payers. We stand ready to work with you 
     on ways to achieve reasonable levels of savings without 
     endangering the access of millions of beneficiaries to 
     essential health care. We do not believe that ending the 
     entitlement nature of the Medicaid program would achieve 
     these objectives.
           Sincerely yours,
       AIDS Action Council.
       Alzheimer's Association.
       American Academy of Family Physicians.
       American Association of University Women.
       American Civil Liberties Union.
       American College of Physicians.
       American Federation of State, County & Municipal Employees.
       American Federation of Teachers, AFL-CIO.
       American Geriatrics Society.
       American Network of Community Options and Resources.
       American Nurses Association.
       American Public Health Association.
       American Speech-Language-Hearing Association.
       Americans for Democratic Action.
       Association for the Care of Children's Health.
       Automated Health Systems, Inc.
       Bazelon Center for Mental Health Law.
       Bridgeport Child Advocacy Coalition.
       Catholic Charities USA.
       Catholic Health Association.
       Center for Community Change.
       Center for Science in the Public Interest.
       Center for Women Policy Studies.
       Center on Disability and Health.
       Children's Defense Fund.
       Coalition on Human Needs.
       Connecticut Association for Human Services.
       Consumers' Union.
       Council of Women's and Infants' Specialty Hospitals.
       County Welfare Directors Association of California.
       Families USA.
       Family Service America.
       Human Rights Campaign Fund.
       International Ladies' Garment Workers' Union.
       International Union of Electronic, Electrical, Salaried, 
     Machine and Furniture Workers.
       International Union of United Auto Workers.
       Legal Action Center.
       Legal Assistance Resource Center of Connecticut.
       Mennonite Central Committee, Washington Office.
       National Association of Child Advocates.
       National Association of Children's Hospitals and Related 
     Institutions.
       National Association of Counties.
       National Association of Developmental Disabilities 
     Councils.
       National Association of Homes and Services for Children.
       National Association of People with AIDS.
       National Association of Protection and Advocacy Systems.
       National Association of Public Hospitals.
       National Association of School Psychologists.
       National Association of Social Workers.
       National Citizens' Coalition for Nursing Home Reform.
       National Coalition for the Homeless.
       National Community Mental Health Care Council.
       National Council of Senior Citizens.
       National Easter Seals Society.
       National Education Association.
       National Family Planning and Reproductive Health 
     Association.
       National Jewish Community Relations Advisory Council.
       National Mental Health Association.
       National Treatment Consortium.
       National Women's Law Center.
       Neighbor to Neighbor.
       NETWORK: A National Catholic Social Justice Lobby.
       OMB Watch.
       Planned Parenthood Federation of America.
       Protestant Health Alliance.
       Service Employees International Union.
       Spina Bifida Association of America.
       The Alan Gutmacher Institute.
       The American Geriatrics Society.
       The Arc.
       United Cerebral Palsy Associations.
       West Virginia Developmental Disabilities Planning Council.
       Women's Legal Defense Fund.
       World Hunger Year.
       YWCA of the U.S.A.
                                                                    ____

                                                 October 24, 1995.
       Dear Senator: As groups deeply concerned with the health 
     and well-being of America's children and families, we are 
     writing to express our fundamental opposition to the proposed 
     House and Senate reconciliation bills' Medicaid provisions.
       The physical and mental health of America's children today 
     determines the social and economic health of the whole nation 
     in the future. Unfortunately, our children's health is 
     already at risk: we lag behind many other industrialized and 
     some developing nations on key indicators like infant 
     mortality, low birthweight, prenatal care, and immunizations. 
     The Medicaid proposals in the reconciliation bills will make 
     this situation far worse.
       Already, nine and a half million U.S. children lack any 
     health insurance. Even though just as many parents as ever 
     are employed, children have been losing private, employer-
     based insurance at a rate of 1 percent a year for more than a 
     decade. Medicaid has been making the difference, as its 
     increased coverage of children from working poor and near 
     poor families has kept the number of uninsured children from 
     skyrocketing.
       But as the drop in private insurance continues, if Medicaid 
     shrinks instead of picking up some of the slack, children 
     will lead in paying the price. With a $182 billion Medicaid 
     cut, in the seventh year of the cut 6\1/2\ million children 
     would lose eligibility if the cut is translated into 
     eligibility reductions applied proportionately to all groups 
     (e.g., children, people with disabilities, the elderly, and 
     other adults). Then 19 million children would be uninsured in 
     2002. In fact, we fear that political conditions in state 
     capitals will lead children to bear a disproportionately 
     large share of any Medicaid cuts, so the number of uninsured 
     children would be even larger.
       The United States can invest now--in immunizations, 
     preventive care and early treatment--or it can pay later in 
     more expensive remedial care and the high social and 
     productivity cost of children growing up unhealthy. We all 
     support fiscal responsibility in the federal budget, but to 
     balance the budget on the backs of children and destroy a 
     system of assured health care that is fundamental to the 
     health of millions of America's children and pregnant women 
     is unacceptable.
           Sincerely,
       Action for Families and Children (DE),
       Adolescent Pregnancy ChildWatch, Los Angeles County (CA).
       Advocates for Children and Youth, Inc. (MD).
       
[[Page S15729]]

       Advocates for Youth.
       Advocates for Connecticut's Children and Youth (CT).
       Agenda for Children (LA).
       Aids Foundation of Chicago (IL).
       Aids Policy Center for Children, Youth, and Families (NJ).
       Alaska Children's Services, Inc. (AK).
       All Saints Church, Pasadena (CA).
       American Academy of Family Physicians.
       American Academy of Pediatrics, Connecticut Chapter (CT).
       American Academy of Pediatrics, Utah Chapter (UT).
       American Federation of State, County and Municipal 
     Employees.
       American Medical Student Association/Foundation.
       American Nurses Association.
       American Occupational Therapy Association.
       American Public Health Association.
       American Speech-Language-Hearing Association.
       Americans for Democratic Action.
       Anacostia/Congress Heights Partnership (DC).
       APPLEServices/Crisis Center of Hillsborough County, Inc. 
     (FL).
       Arkansas Advocates for Children and Families (AR).
       Arkansas Children's Hospital (AR).
       A Sign of Class (MN).
       Asian and Pacific Islander American Health Forum (CA).
       Association of Medical School Pediatric Department Chairs.
       Baystate Medical Center Children's Hospital (MA).
       Bazelon Center for Mental Health Law.
       Beckland Home Health Care, Inc. (MN).
       Belfast Area Child Care Services, Inc. (ME).
       Bellefaire (OH).
       Berkeley Oakland Support Services (CA).
       Bread for the World.
       California Children's Hospital Association (CA).
       Cash Plus (IN).
       Catholic Charities Office for Social Justice (MN).
       Center for Human Investment Policy (CO).
       Center for Law and Human Services, Inc. (IL).
       Center for Multicultural Human Services (VA).
       Center on Disability and Health.
       Center for Public Policy Priorities (TX).
       Center on Work & Family at Boston University (MA).
       Central Nebraska Community Services (NE).
       Chatham-Savannah Youth Futures Authority (GA).
       Chicago Coalition for the Homeless (IL).
       Child Abuse Coalition, Inc. (FL).
       Child Advocacy/Palm Beach County, Inc. (FL).
       Child Advocates, Inc. (TX).
       Child Care Connection (AK).
       Child Care Connection (FL).
       Child Welfare League of America.
       Children's Action Alliance of Arizona (AZ).
       Children's Advocacy Institute (CA).
       Children's Defense Fund.
       Children's Health Care (MN).
       Children's Home Society of Minnesota (MN).
       Children's House, Inc. (NY).
       Children's Medical Center of Dayton (OH).
       Children's Memorial Hospital (IL).
       Children's Rights, Inc. (NY).
       Citizen's Committee for Children of New York (NY).
       Citizen's for Missouri's Children (MO).
       Citizen's Committee for Children of New York (NY).
       Citizenship Education Fund.
       City of Alameda Democratic Club (CA).
       Coalition for a Better Acre (MA).
       Coalition for Family and Children's Services in Iowa (IA).
       Coalition for Mississippi's Children (MS).
       Coalition on Human Needs.
       Coleman Advocates for Children and Youth (CA).
       Colorado Association of Family and Children's Agencies, 
     Inc. (CO).
       Colorado Council of Churches.
       Colorado Foundation for Families and Children (CO).
       Community Action Program of Palm Beach County (FL).
       Community Concepts, Inc. (ME).
       Community Empowerment Concepts (MD).
       Community Psychologists of Minnesota (MN).
       Concerned Graduate Students in Public Health in Seattle 
     (WA).
       Congress Park Plaza Apartments Resident Services (DC).
       Connecticut Association for Human Services (CT).
       Coordinated Child Care of Pinellas, Inc. (FL).
       Corpus Christi American Federation of Teachers (TX).
       Council on Women's and Infants' Specialty Hospitals.
       Courage Center (MN).
       Covenant House (NY).
       Council of the Great City Schools.
       Crossroads Program, Inc. (NJ).
       Driscoll Children's Hospital of Corpus Christi (TX).
       Elim Transitional Housing, Inc. (MN).
       Elks Aidmore Children's Center (GA).
       Episcopal Community Services, Inc. (MN).
       Equality Press (CA).
       Face to Face Health and Counseling Service, Inc. (MN).
       Families USA.
       Family and School Support Teams (FL).
       Family Resource Coalition (IL).
       Family Resource Schools (CO).
       Family Support Network (MO).
       Family Voices.
       Firstlink (OH).
       Florida Legal Services, Inc. (FL).
       Food Research and Action Center.
       For Love of Children.
       Fremont Public Association (WA).
       Friends of Children (WI).
       Friends of the Family (MD).
       Friends of Youth (WA).
       General Board of Church and Society, The United Methodist 
     Church.
       General Federation of Women's Clubs.
       Georgians for Children (GA).
       Greater New Brunswick Day Care Council (NJ).
       Hathaway Children's Services (CA).
       Health and Welfare Council of Nassau County, Inc. (NY).
       Healthy Mothers/Healthy Babies, Florida Association (FL).
       Hinds County Project Head Start (MS).
       Hispanic Human Resources (FL).
       Johns Hopkins Child & Adolescent Health Policy Center.
       Indiana Coalition on Housing and Homeless Issues (IN).
       Institute on Cultural Dynamics and Social Change, Inc. 
     (MN).
       Interhealth (DC).
       Jack and Jill of America, Inc.
       Jacksonville Area Legal Aid, Inc., (FL).
       Juvenile Law Center (PA).
       Kansas Action for Children (KS).
       Kansas Association of Child Care Resource and Referral 
     Agencies (KS).
       Kansas Association for the Education of Young Children 
     (KS).
       Kern Child Abuse Prevention Council, Inc. (CA).
       Kids Public Education and Policy Project (IL).
       Lakeside Family and Children's Services (NY).
       Lawyers for Children, Inc. (NY).
       Legal Assistance Resource Center of Connecticut (CT).
       Los Alamos Citizens Against Substance Abuse (NM).
       Los Angeles Coalition to End Homelessness (CA).
       Louisiana Maternal and Child Health Coalition (LA).
       Lucille Salter Packard Children's Hospital (CA).
       Lutheran Children & Family Services of Eastern Pennsylvania 
     (PA).
       Masschusetts Advocacy Center (MA).
       Mennonite Central Committee, Washington Office.
       Mental Health Association in Texas (TX).
       Merrie Way Community for Arts and Humanities (CA).
       Michigan Coalition for Children and Families (MI).
       Michigan Council for Maternal and Child Health (MI).
       Michigan League for Human Services (MI).
       Minnesota Association of Community Mental Health Programs 
     (MN).
       Minnesota State Council on Disability (MN).
       Mississippi Human Services Coalition (MS).
       Montana Low Income Coalition (MT).
       Mothers Protecting Children, Inc. (CT).
       Multnomah County Chair Beverly Stein (OR).
       National Association of Child Advocates.
       National Association of Counties.
       National Association of County and City Health Officials.
       National Association of Homes and Services for Children.
       National Association of Public Hospitals.
       National Association of School Nurses.
       National Association of Social Workers.
       National Association of Developmental Disabilities 
     Councils.
       National Center for Clinical Infant Programs (Zero to 
     Three).
       National Center for Youth Law.
       National Committee to Prevent Child Abuse.
       National Community Mental Healthcare Council.
       National Council of Jewish Women.
       National Council of Senior Citizens.
       National Easter Seal Society.
       National Education Association.
       National Family Planning and Reproductive Health 
     Association.
       National Mental Health Association.
       National Parenting Association.
       National Perinatal Association.
       National Puerto Rican Coalition, Inc.
       National Safe Kids Campaign.
       National Women's Law Center.
       Neighbor to Neighbor.
       New Orleans Bread for the World (LA).
       Nome Receiving Home (AK).
       North American Council on Adoptable Children (MN).
       North Carolina Advocacy Institute (NC).
       Oklahoma Healthy Mothers, Healthy Babies Coalition (OK).
       Oklahoma Institute for Child Advocacy (OK).
       Orange County Parent Child Center (VT).
       Panhandle Assessment Center (TX).
       Parent Action of Maryland, Inc. (MD).
       Parent to Parent of Vermont (VT).
       Parents Anonymous, Inc. (CA).
       Parry Center for Children (OR).
       Penn State University, Allentown Campus (PA).
       Pennsylvania Association of Child Care Agencies (PA).
       Pennsylvania Partnerships for Children (PA).
       
[[Page S15730]]

       Philadelphia Citizens for Children and Youth (PA).
       Planned Parenthood Federation of America.
       Planned Parenthood of Palm Beach County (FL).
       Presbyterian Child Advocacy Network (KY).
       Preventive Services Coalition of Erie County (NY).
       Priority '90s: Children and Families (MI).
       Project H.O.M.E. (PA).
       Public Welfare Coalition of Illinois (IL).
       Redlands Christian Migrant Association (FL).
       RESULTS.
       Richland County Children Services (OH).
       Rise, Inc. (MN).
       Robins Nest, Inc. (NJ).
       Same Boat Coalition (NY).
       Sasha Bruce Youthwork, Inc. (DC).
       Southern Regional Project on Infant Mortality.
       Spina Bifida Association of America.
       State Communities Aid Association (NY).
       Statewide Youth Advocacy, Inc. (NY).
       Support Center for Child Advocates (PA).
       The Adaptive Learning Center (GA).
       The Arc.
       The Child Care Connection (NJ).
       The Children's Alliance (WA).
       The Children's Health Fund (NY).
       The Coalition for American Trauma Care.
       The Connecticut Alliance for Basic Human Needs (CT).
       The Council for Exceptional Children.
       The Episcopal Church.
       The Foundation for the Future of Youth.
       The Health Coalition for Children and Youth (WA).
       The Kitchen, Inc. (MO).
       The National Association of WIC Directors.
       The Ohio Association of Child Caring Agencies (OH).
       The Presbyterian Church (USA), Washington Office.
       The United States Conference of Mayors.
       The Urban Coalition (MN).
       TransCentury (VA).
       Tulsa Area Coalition on Perinatal Care Community Service 
     Council (OK).
       Ucare Minnesota (MN).
       United Child Development Program (NC).
       University of Vermont Department of Social Work MSW program 
     (VT).
       Unitarian Universalist Association, Washington Office.
       Unitarian Universalist Service Committee.
       United Cerebral Palsy Associations.
       Utah Children (UT).
       Vermont Center for Independent Living (VT).
       Vermont Head Start Association (VT).
       Voices for Illinois Children (IL).
       Voices for Children in Nebraska (NE).
       Washington State Child Care Resource and Referral Network 
     (WA).
       Westchester Children's Association (NY).
       Wisconsin Council on Children and Families (WI).
       Women Leaders Online.
       Women's Committee of One Hundred.
       Women's Legal Defense Fund.
       World Institute on Disability (CA).
       Wyoming P.A.R.E.N.T. (WY).
       Youth Law Center.
                                                                    ____

                                                 October 24, 1995.
       Dear Senator: On behalf of the nation's pediatricians and 
     children's hospitals, the American Academy of Pediatrics and 
     the National Association of Children's Hospitals urge you to 
     make sure that regardless of how Medicaid is restructured 
     Congress includes basic protections for the health coverage 
     of children and adolescents.
       This is the message we are seeking to bring to all members 
     of Congress and the public in a new paid advertisement we are 
     running this week in the national press. We are enclosing a 
     copy for you. It outlines the protections children and 
     adolescents need in coverage, medically necessary and 
     preventive care, access to pediatric care, and immunizations 
     under a restructured Medicaid program.
       These kinds of protections make good sense, because 
     children and adolescents represent over half of all 
     recipients of Medicaid. In fact, Medicaid pays for the health 
     care of one fourth of the nation's children and adolescents 
     as well as one third of the country's infants. Protecting 
     their health coverage, regardless of the state in which they 
     live, is a low cost but high return investment not only in 
     children's well-being today but also in the health and 
     productivity of at least one third of the nation's future 
     work force. Medicaid coverage for a child averages only one-
     eighth the cost of coverage for a senior citizen.
       We were heartened by the bipartisanship of the Senate 
     Finance Committee in addressing the need for children's 
     coverage. It would require all states under a restructured 
     Medicaid program to cover poor children and pregnant women. 
     We believe most members of Congress share in this conviction.
       Your vote on Medicaid legislation this year may be the 
     single most important vote you will cast for the health of 
     our nation's children in this decade. Please vote to protect 
     America's most important resources: our children
           Sincerely,
     Joe M. Sanders, Jr., M.D.,
       Executive Director, American Academy of Pediatrics.
     Lawrence A. McAndrews,
       President and CEO, National Association of Children's 
     Hospitals.

       Enclosure.

How To Make Sure They're Still Smiling After Congress Gets Through With 
                               Medicaid.

       It should go without saying that the key to having a 
     healthy America in the future is keeping children healthy 
     today.
       Those of us who spend every moment of our working lives 
     keeping children healthy want to say it anyway.
       Because at this moment, Congress is making drastic changes 
     to the Medicaid program, the most serious side effect of 
     which is that the health care needs of millions of children 
     will not be sufficiently guaranteed.


             congress is taking the ``aid'' out of medicaid

       The Congressional block grant proposals could leave it to 
     the States to determine who is eligible to receive benefits 
     and what kind of benefits will be offered.
       Today's system at least guarantees specific preventive 
     health care benefits vital to the health and well-being of 
     many children from poor and working families.


            congress must build in certain basic guarantees

       Regardless of how Congress changes Medicaid overall, the 
     following protections should be included:
       1. Children and adolescents from low-income families must 
     maintain guaranteed Medicaid coverage.
       2. Medically necessary care, including preventive services, 
     must not be compromised.
       3. Children and adolescents must retain access to 
     appropriately trained and certified providers of pediatric 
     care.
       4. children should be guaranteed all age appropriate 
     immunizations.
       Let's protect America's most important, most vulnerable 
     resources: our children. Let's help keep them healthy. And 
     smiling.
                                                                    ____


            [From Consortium for Citizens with Disabilities]

                         A Message to Congress


  congressional medicaid ``reform'' proposals will harm children and 
              adults with disabilities and their families

       Member organizations of the Consortium for Citizens with 
     Disabilities Health and Long Term Services Task Forces are 
     extremely concerned about the impact that both the House and 
     Senate Medicaid ``reform'' proposals will have on the lives 
     of children and adults with disabilities and their families. 
     We strongly urge you not to support these proposals and to 
     carefully reconsider how to ``reform'' the Medicaid program 
     so that children and adults with disabilities and other 
     individuals with low and very low incomes are not harmed.
       The proposals reported out of the House Commerce and Senate 
     Finance Committees make harmful, fundamental changes to the 
     Medicaid program--a program which now is the largest source 
     of federal and state funding for services and supports for 
     individuals with disabilities. It has been access to 
     critically needed health and related services and to 
     essential community-based long term services and supports--
     provided through the Medicaid program--that have enabled 
     families to stay together and children and adults with 
     disabilities to live fuller and more productive lives in 
     their communities.
       Specific CCD concerns relate to the following issues:
       While the Senate proposal maintains a guarantee of health 
     care coverage for low income individuals with disabilities, 
     the House proposal completely eliminates the current 
     individual entitlement status of Medicaid for people with 
     disabilities.
       Neither the Senate or House proposals would require states 
     to provide any specific services, except for childhood 
     immunizations.
       Medicaid is no longer an entitlement and if there is no 
     requirement for the provision of a full range of services, 
     people with disabilities will lose access to critical health 
     and long term services, and supports. For people with 
     disabilities and serious health conditions, the lack of 
     access to health and health-related services and supports 
     will lead to an exacerbation of existing health problems and/
     or disabilities, as well as the emergence of additional 
     health problems and secondary disabilities. For people with 
     long term care needs, the lack of Medicaid coverage will lead 
     to the loss of services and supports that help them to live 
     more independent lives in the community--in some cases 
     leading to homelessness and inappropriate 
     institutionalization. In addition, families of children with 
     disabilities will have their economic security undermined as 
     they try to pay for essential health and long term services. 
     It is important to remember--especially in a nation where the 
     number of individuals insured through their employer 
     continues to decrease--that for many people with 
     disabilities, Medicaid has been the only health care 
     coverage available.
       While both proposals include state level ``set-asides'' for 
     certain vulnerable populations, i.e. families with pregnant 
     women and children, elderly individuals, and low income 
     people with disabilities under age 65, the proposed funding 
     formula for these set-asides would mean that states could not 
     continue to provide the full range of services and supports 
     that they now provide for children and adults with 
     disabilities.
       States would be permitted--within these broad categories--
     to determine what services to provide. According to the House 
     proposal, for each set-aside category, states 
     
[[Page S15731]]

     would have to spend 85 percent of the average percentage of 
     the state's Medicaid spending from FY 1992 through FY 1994 
     devoted to mandatory services (what the state now must cover) 
     for people in that category. According to the Senate 
     proposal, for each set-aside category, states would have to 
     spend 85 percent of the state's Medicaid spending in FY 1995 
     on mandatory services for people in that category.
       This formula does not take into consideration spending on 
     optional services (what the state now chooses to cover). For 
     people with disabilities, this is a major blow. Current 
     optional services are the ones most likely to be of critical 
     importance to children and adults with disabilities and 
     dollars currently spent towards them would not be counted 
     towards the disability set-aside. Optional services include 
     the following: speech, physical, and occupational therapy, 
     psychological services, clinic services, prescription drugs, 
     dental services, eyeglasses, prosthetic devices, 
     rehabilitative services, home and community based services, 
     ICF-MR services, personal care services, respiratory care 
     services, and case management.
       In addition to the loss of the personal entitlement to 
     specific required services and the weak funding formula, both 
     the House and Senate proposals eliminate consumer and quality 
     assurance protections and federal oversight in Medicaid 
     services or Medicaid funded facilities.
       This includes elimination of federal nursing home and ICF/
     MR regulations and even the minimum requirement that funds be 
     spent on active treatment for individuals in institutional 
     settings rather than merely custodial care. While Congress 
     continues to speak of the value of devolution and state's 
     rights, the CCD remembers when states could not or would not 
     provide needed services and supports for children and adults 
     with disabilities and their families. There are well 
     warranted and deep-seated fears in the disability community 
     that the loss of minimum federal standards coupled with 
     intensifying fiscal pressures will mean that some states 
     return to institution-based custodial care with the 
     consequent loss of individual freedom, rights, and quality of 
     life. The public policy and the original intent behind 
     federal oversight requirements currently attached to funding 
     for certain Medicaid long-term services must be remembered 
     and respected. The proposals also permit the states to move 
     more people into managed care plans while at the same time 
     removing current consumer protections related to managed 
     care.
       The CCD strongly urges you to carefully reconsider how to 
     ``reform'' the Medicaid program and not to support the 
     passage of the provisions in the Medicaid Transformation Act 
     of 1995 as part of the budget reconciliation bill. We ask you 
     not to eviscerate a program that has allowed millions of 
     children and adults with disabilities to live fuller and more 
     productive lives in the community because they now have 
     access to both acute health care and needed long term 
     services and supports. The CCD does not support the status 
     quo on Medicaid. We do believe, however, that there are 
     changes to the program that can be made that will not 
     penalize those who now benefit from the program. These 
     include the elimination of the current incentives for 
     institutional care and the provision instead of incentives 
     for home and community-based long term services and 
     supports.
       Finally, the CCD supports efforts to reduce the federal 
     deficit. However, the CCD strongly believes that it is 
     unfortunate that most of the programs on the table for 
     deficit reduction are those of importance to children and 
     adults with disabilities--such as Medicaid, children's 
     Supplemental Security Income, housing, social services, jobs, 
     and education. It is also unfortunate that Congress is 
     endeavoring to balance the budget using only 48% of the 
     federal budget and that 48% comes at the expense of programs 
     of critical importance to the lives of people with 
     disabilities.
       The CCD asserts that the individual entitlement status of 
     Medicaid to a mandated set of benefits for children and 
     adults with disabilities must be maintained.
       The CCD asserts that federal reimbursement should be 
     maintained for the full range of acute and long term services 
     and supports that are presently available, including optional 
     services which states now choose to provide through their 
     Medicaid programs. In addition, the states should be required 
     to continue to contribute at least their current share of 
     funds to finance Medicaid services and supports.
       The CCD asserts that the federal requirements that states 
     meet certain standards of care and continue appropriate 
     quality assurance measures, as well as due process and other 
     consumer protections must be maintained.
       The CCD asserts that managed care should be an ``option'' 
     and not the only avenue of services for people with 
     disabilities and that strong consumer protections, including 
     timely and appropriate access to all necessary services, 
     supports, and providers must be ensured.
       The CCD asserts that current incentives for institutional 
     care built into the Medicaid program must be eliminated and 
     replaced with incentives for the provision of home and 
     community-based long term services and supports.


       1995 ccd health and long-term services task force members

       Adapted Physical Activity Council.
       Alliance of Genetic Support Groups.
       American Academy of Child & Adolescent Psychiatry.
       American Academy of Neurology.
       American Academy of Physical Medicine and Rehabilitation.
       American Association for Respiratory Care.
       American Association of Children's Residential Center.
       American Association of Spinal Cord Injury Psychologists & 
     Social Workers.
       American Association of University Affiliated Programs.
       American Congress of Rehabilitation Medicine.
       American Foundation of the Blind.
       American Horticultural Therapy Association.
       American Network of Community Options & Resources.
       American Occupational Therapy Association.
       American Orthotic and Prosthetic Association.
       American Physical Therapy Association.
       American Psychological Association.
       American Rehabilitation Association.
       American Speech-Language-Hearing Association.
       American Therapeutic Recreation Association.
       Amputee Coalition of America.
       Association of Academic Physiatrists.
       Association of Maternal and Child Health Programs.
       Autism National Committee.
       Bazelon Center for Mental Health Law.
       Brain Injury Association.
       Center on Disability and Health.
       Children's Defense Fund.
       Children & Adults with Attention Deficit Disorders.
       Epilepsy Foundation of America.
       International Association of Psychosocial Rehabilitation 
     Services.
       Joseph P. Kennedy, Jr. Foundation.
       Mental Health Policy Resource Center.
       National Alliance for the Mentally Ill.
       National Association for Music Therapy.
       National Association for the Advancement of Orthotics and 
     Prosthetics.
       National Association of the Deaf.
       National Association of Developmental Disabilities Council.
       National Association of Medical Equipment Suppliers.
       National Association of People with AIDS.
       National Association of Protection and Advocacy Systems.
       National Association of State Directors of Developmental 
     Disabilities Services.
       National Association of State Directors of Special 
     Education.
       National Association of State Mental Health Program 
     Director.
       National Center for Learning Disabilities.
       National Community Mental Healthcare Centers.
       National Consortium on Physical Education and Recreation 
     for Individuals with Disabilities.
       National East Seal Society.
       National Health Law Program, Inc.
       National Industries for the Blind.
       National Mental Health Association.
       National Multiple Sclerosis Society.
       National Organization for Rare Disorders.
       National Organization on Disability.
       National Rehabilitation Association.
       National Spinal Cord Injury Association.
       National Therapeutic Recreation Society.
       NISH.
       Paralyzed Veterans of America.
       President's Committee on Employment of People with 
     Disabilities.
       Research Institute for Independent Living.
       The Accrediation Council on Services for People with 
     Disabilities.
       The Arc.
       United Cerebral Palsy Associations.
       World Institute on Disability.
                                                                    ____

                                                 October 24, 1995.
       Dear Senator Dole: As providers of long-term care services, 
     we are concerned that the current Finance Committee proposal 
     to impose a block grant financing mechanism for Medicaid 
     fails to ensure that adequate resources will be made 
     available to meet the needs of our nation's elderly, 
     disabled, and infirm. We fear that the proposed annual 
     increases in federal Medicaid funding for state programs will 
     be insufficient to meet the quality of care needed by 
     residents of long-term care facilities and subsequently 
     reduce access to services. Furthermore, the failure to meet 
     the resource needs anticipated in future years for these 
     services will negate the many advances made in this area as a 
     result of the enactment of the nursing home reform provisions 
     of OBRA '87.
       We urge you to support the retention of federal oversight 
     of nursing home quality linked to a statutory provision 
     ensuring that adequate financial resources are made available 
     to meet prescribed levels of service. Although this linkage 
     can take several forms, the current formulation which backs 
     the nursing home reforms of OBRA '87 to a statutory direction 
     that payors of services (both federal and state) must ensure 
     the payment of adequate rates has proven a workable mechanism 
     and should not be repealed.
       Federal nursing home reform standards, joined with existing 
     reimbursement standards have resulted in a steady improvement 
     in the quality of long-term care services. Without such a 
     linkage, this quality of care cannot be sustained. It is our 
     sincere desire to move forward with the quality of care 
     provided in nursing homes, and recognize that 
     
[[Page S15732]]

     the ability to do so is dependent upon the provision of 
     adequate financial resources.
           Sincerely,
         American Health Care Association (AHCA); American 
           Association of Homes and Services for the Aging (AAHA); 
           Catholic Health Association; InterHealth; Horizon CMS; 
           Clinton Village Nursing Home, Oakland, California; 
           Qualicare Nursing Home, Detroit, MI; Westmoreland 
           Manor, Greensburg, PA; Services Employees International 
           Union (SEIU); American Federation of State, County, and 
           Municipal Employees (AFSCME); United Auto Workers 
           (UAW).
                                                                    ____



                             National Association of Counties,

                                 Washington, DC, October 24, 1995.
       Dear Senator: The National Association of Counties (NACo) 
     strongly opposes the block granting of Medicaid and the loss 
     of a federal guarantee to benefits. Counties will be saddled 
     with significant cost shifts as a result of capping the 
     federal contribution to Medicaid.
       We do not believe that states will find enough budgetary 
     efficiencies without reducing eligibility. The flexibility 
     given to states in the operation of the proposed 
     restructuring will trickle down to counties in the form of 
     flexibility to raise property taxes, cut other necessary 
     services or further reduce staff. In many states, counties 
     are required to serve individuals with no private or public 
     health insurance. The cuts to the program will have the 
     effect of increasing the costs of that state mandate.
       Individuals will continue to have health needs, regardless 
     of the payor source. That is why we have always supported the 
     intergovernmental nature of the Medicaid program and the 
     assurance that there is some minimum level of coverage 
     guaranteed to eligible individuals, regardless of the state 
     in which they reside. While we support the increased use of 
     managed care and the further targeting of the 
     disproportionate share program, we believe that provisions in 
     the bill overall will harm many current recipients and the 
     counties which serve them.
       If you have any questions about our position, please call 
     Tom Joseph, Associate Legislative Director, at 202/942-4230.
           Sincerely,
                                                   Larry E. Naake,
     Executive Director.
                                                                    ____


              Bureaucracy Created by the GOP Medicaid Plan

       In the Medicaid debate, the GOP has stressed that offering 
     states block grants will reduce federal and state 
     bureaucracy. However, a review of the GOP Medicaid Plan 
     indicates that it creates as much bureaucracy as it purports 
     to reduce. Some of the bureaucratic initiatives included in 
     the plan are important and necessary; however, the argument 
     that the GOP plan reduces bureaucracy just doesn't add up. 
     The following is a very conservative estimate of the total 
     number of new bureaucratic requirements created by the GOP 
     Medicaid plan:

Number of new requirements for each submitted Medicaid plan..........32
Number of States and District of Columbia (times)....................51
                                                               ________

    Total number of new requirements for all plans (=)............1,632
Additional committees, advisory panels, demonstration projects, etc. 
  (+)................................................................15
                                                               ________

    Total number of new bureaucratic requirements (=).............1,647

Note: The total does not include drug provider pricing reports or other 
federal and state drug-related reports.

       Specifically, the proposal requires:


                              Section 2100

       Page 2--A state plan is required for reimbursement under 
     this bill.
       The state plan must be approved by Secretary.


                              Section 2101

       Page 4--State must establish performance measures to 
     evaluate Medicaid plan.
       Independent review required of state performance.
       Page 5--Strategic objectives and performance goals in state 
     plan must be updated not later than every 3 years.


                              Section 2102

       Page 5--Extensive annual reports must be prepared by states 
     and submitted to Congress.


                              Section 2103

       Page 6--Every third year, each state must provide for an 
     independent review of the state Medicaid plan.


                              Section 2104

       Page 12--Each state Medicaid plan must provide a 
     description of the process under which the plan shall be 
     developed.


                              Section 2105

       Page 13--States required to provide public notice and 
     comment on their Medicaid plan.
       Page 14--States are required to established advisory 
     committees for the establishment and the monitoring of the 
     Medicaid plan.


                              Section 2106

       Page 16--The Secretary shall provide for the establishment 
     of a Medicaid Task Force.
       Page 16--An advisory group to the Medicaid Task Force shall 
     be created comprised of representatives from seventeen 
     national health care organizations.
       Page 18--The task force shall report to Congress by April 
     1, 1997, with recommendations regarding objectives and goals 
     for states in the implementation of a Medicaid plan.
       Page 19--Creation of an Agency for Health Care Policy and 
     Research.


                              Section 2111

       Page 19--Each state Medicaid plan must meet certain Federal 
     eligibility and benefit requirements.


                              Section 2113

       Page 31--States may set up premium and cost sharing 
     mechanism including co-payments and deductibles.


                              Section 2114

       Page 35--If a state contracts with a capitated health care 
     organization, the state must annually provide before the 
     beginning of the contract year--public notice and an 
     opportunity for public comment on amounts spent.


                              section 2115

       Page 37--Each state will develop its own criteria for 
     providing benefits and geographic coverage.


                              section 2117

       Page 40--Establishment of new income rules for 
     institutionalized spouse in determining eligibility for 
     Medicaid. Also, rules establish a hearing process relating to 
     a monthly allowance for the non-institutionalized spouse.


                              section 2121

       Page 59--Establishment of complex formula for the allotment 
     of block grant funds to states.
       Page 84--By April 1, annually, the Secretary shall compute 
     and publish in the Federal Register proposed obligation and 
     outlay allotments for each State.
       Page 85--GAO shall report to Congress annually a report of 
     preliminary allotments.
       GAO shall submit an annual report analyzing allotments.


                              section 2122

       Page 87--Quarterly reports shall be filed by the States 
     estimating the total sum to be expended in such quarter.
       Page 90--Procedure established for disputes with respect to 
     overpayment to the States.
       Page 97--States given authority to impose health care taxes 
     on providers.
       Page 111--Limits established on the amount that a state may 
     use a grant to carry out a program for which a waiver was 
     granted.


                              section 2123

       Page 113--Limits on payments for nonlawful aliens, 
     abortions and assisted suicides. States must establish 
     procedures that funds not be used for unauthorized purposes.


                              section 2124

       Page 119--Methodology for grants to be determined by HHS.


                              section 2131

       Page 119--Separate state audit required annually. 
     Additional ``verification'' audit required if first audit not 
     acceptable. Audit reports must be available to both HHS and 
     the public. Each State must adopt fiscal control measures to 
     insure compliance. State or private plans must provide HHS 
     with records of any audit conducted by anyone on any provider 
     offering services through he plan.


                              section 2132

       Page 121--Each state is required to develop separate fraud 
     prevention procedures. Additionally, if an individual or 
     provider is excluded due to a violation of this section, a 
     state must file a separate notification of the violation with 
     the appropriate state licensing board and HHS.


                              section 2133

       Page 123--States must create a mechanism that notifies the 
     Secretary of HHS of any formal proceedings, including 
     outcome, against an individual provider or provider entity. 
     Additionally, the State must provide the Secretary of HHS 
     with documentation of these formal proceedings. HHS must 
     notify all relevant federal agencies, providers under 
     contract, licensing boards, State agencies, utilization and 
     quality control peer-review organizations, State Medicaid 
     Fraud Units, hospitals and other providers, the Attorney 
     General, and the Comptroller General. Program to be 
     coordinated through HHS.


                              section 2134

       Page 127--Each state required to provide a separate State 
     Medicaid Fraud Unit. This unit must be attached to the State 
     Attorney General or other appropriate state agency. The State 
     must establish formal procedures for referral of fraud, 
     patient ``abuse and neglect'' complaints, and overpayment 
     cases to the State Attorney General.


                              section 2135

       Page 131--Each State must develop procedures for 
     determining when a third-party payor is legally obligated to 
     pay a claim, when beneficiaries acquire the rights, when they 
     may assign those rights, and laws that mandate coverage of 
     children. Any denial of benefits to a child must be 
     documented. States must also create a procedure for wages or 
     tax return garnishment.


                              section 2137

       Page 142--Each State must develop separate ``Quality 
     Assurance Standards for Nursing Facilities,'' consisting of 
     separate treatment standards, administrative policies and 
     procedures, operational bylaws, Quality Assurance systems, 
     resident assessment procedures, staff qualifications, and 
     utilization review procedures. These standards are subject 

     
[[Page S15733]]

     to public comment before acceptance by the State legislature.
       Each State must also create a nursing facility 
     certification program, whose records must be available to the 
     public. This program must be audited every four years.


                              section 2138

       Page 150--Requires public access to any compliance survey 
     conducted by any state agency. Each state must create 
     separate record-keeping requirements.


                              section 2151

       Page 151--Each state must submit separate ``Part C'' 
     Medicaid plans.


                              section 2152

       Page 151--Allows for amendment of a States Medicaid plan 
     ``at any time.''


                              section 2153

       Page 153--Requires HHS to ``promptly'' review (within 30 
     days) any plan or amendment submitted. Requires notice non-
     compliance, and a state response or revision of the plan must 
     follow. Creates administrative hearing procedure for 
     determination of non-compliance if requested by the state. If 
     dissatisfied, state may appeal to the appropriate U.S. court 
     of appeals. Any decision may be appealed to the U.S. Supreme 
     Court.


                              section 2173

       Page 174--If a state has an Indian Health Program, the 
     state plan must separately define who and what will be 
     eligible.


                              section 2175

       Page 182--Requires HHS (or each state separately) to reach 
     separate rebate agreements with each eligible drug 
     manufacturer before reimbursement. Any exceptions must be 
     submitted for review and approved by HHS. If a rebate 
     agreement is in place at the time this Act is passed, the 
     state has the burden of showing that such rebate agreement 
     saves as much or more money as the requirements of this new 
     Act.
       Page 192--Requires each state to submit a report of the 
     total number of covered drug units used, including form, 
     dosage, and package size.
       Page 193--Drug manufacturers must submit a report listing 
     the ``average'' price of an eligible drug sold for at the 
     beginning of a rebate period. Drug manufacturers are also 
     required to submit a report at the end of a rebate period 
     noting both the ``average'' and the ``best'' price the drug 
     sold for.
       Page 199--Secretary and states both have authority to 
     resolve conflicts over rebate amount.
       Page 200--Secretary or state must compute rebate formulas 
     for each separate drug, manufacturer, and rebate agreement.
       Page 207--Any State may subject any drug to a separate 
     prior authorization program prior to filling a prescription.
       Page 208--Secretary required to periodically update the 
     list of ineligible drugs.
       Page 209--Each state may set up separate formularies if 
     approved by HHS.
       Page 211--Outlines the specific requirements of a state 
     ``Prior Authorization Program.''
       Page 212--HCFA required to establish reimbursement limits 
     for ``therapeutically equivalent'' drugs.
       Page 213--Secretary must ``encourage'' states to establish 
     an electronic claims processing system.
       Page 214--Requires HHS to submit an annual report to the 
     Senate Finance Committee and House Commerce Committee 
     outlining individual and total drug costs, the impact of 
     inflation of such costs, any significant trends in drug 
     pricing, and the administrative costs of compliance with the 
     drug-rebate program.
       Page 224--Requires HHS to establish a ``Medicaid Drug 
     Rebate Task Force.''


                              section 7194

       Page 228--Requires HHS and HCFA to develop a classification 
     system for children with special health care needs.
       Page 229--Creates a grant program for demonstration 
     projects using the criteria developed for classifying 
     children with special health needs. Requires these projects 
     to submit annual and final reports to HHS.
       Page 232--Requires CBO to conduct an annual analysis of the 
     impact of the new Medicaid amendments and to submit a report 
     to the Senate Finance Committee and House Commerce Committee.

  Mr. EXON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nebraska.
  Mr. EXON. Mr. President, I congratulate the excellent statement and 
arguments that have been made by my distinguished colleague from 
Florida on the matter at hand. I believe we are about ready to come 
down to the end of this and go on to the education amendment. But 
before we proceed, I wish to yield 1 minute to the Senator from 
Connecticut.
  Mr. DODD. I thank our colleague from Nebraska.
  Mr. President, I apologize for being tied up in the Committee on 
Banking and Housing. I think as we look at this legislation people have 
to ask the fundamental question of who is being hurt by this proposal. 
No one is suggesting we ought not to make reforms in these programs to 
make them more efficient. But when 4.4 million children over the next 7 
years, as the estimates say, will lose the kind of protection that 
Medicaid has provided, that in my view goes too far. I think the 
American people are responding to that. It is extreme. Clearly, 
corrections need to be made, but this goes way beyond what most 
Americans think is right and fair.
  If we are going to invest in the future and promote growth, then 
these young children who have no other safety net to protect them are 
going to be lost in that process. It is bad enough to place at risk 12 
million Americans, 8 of whom are in effect adults with long-term care 
needs. But for almost 5 million children who may lose Medicaid in this 
country who are born into these circumstances and will start their 
lives in this way, I think is wrong headed; I think it is extreme; I 
think it is unfair; and I think it is dangerous for this country's 
future.
  I thank my colleague for yielding.
  Mr. EXON. Mr. President, after conversation with several Senators, 
including my distinguished colleague from Michigan, I think we have 
general agreement now that we will, under the previous order, move to 
the next order of business, which is the so-called education amendment.
  The time under that amendment will be controlled by the Senator from 
Massachusetts, Senator Kennedy, who I think is ready to offer the 
amendment. In the interest of conserving time--we have had a general 
agreement--and I ask unanimous consent at this time that instead of the 
2 hours, 1 hour each side, on the education amendment, that the time be 
reduced to 90 minutes or 45 minutes per side. I propose that as a 
unanimous consent request.
  The PRESIDING OFFICER (Mr. Burns). Is there objection?
  Mr. ABRAHAM. Mr. President, the majority does not object. We support 
the 90-minute time agreement.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. EXON. I thank the Chair. I hope at this time the Chair could 
recognize the Senator from Massachusetts.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.


                           Amendment No. 2959

(Purpose: To strike those portions of the Committee on Labor and Human 
Resources reconciliation title that impose higher student loan costs on 
   students and families, by striking the 85 percent fee imposed on 
colleges and universities based on their student loan volume, restoring 
  Federal interest payments on subsidized student loans during the 6-
   month grace period in which graduates look for jobs, eliminating 
interest rate increases on parent (PLUS) loans, and eliminating the 20 
percent cap on direct lending, and to provide an offset by striking the 
          provisions that dilute the alternative minimum tax)

  Mr. KENNEDY. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk shall report the amendment.
  The bill clerk read as follows:

       The Senator from Massachusetts [Mr. Kennedy] for himself, 
     Mr. Simon, Mr. Pell, Mr. Dodd, Mr. Harkin, Ms. Mikulski, Mr. 
     Wellstone, Mrs. Feinstein and Mrs. Murray, proposes an 
     amendment numbered 2959.
       On page 1409, beginning with line 8, strike all through 
     page 1410, line 25.
       On page 1421, beginning with line 15, strike all through 
     page 1423, line 13.
       On page 1424, beginning with line 2, strike all through 
     page 1425, line 16.
       Strike chapter 3 of subtitle B of title XII.

  Mr. KENNEDY. Mr. President, I yield myself 6 minutes.
  Mr. President, we are 2 days into this debate on the budget 
recommendations of our Republican friends in the U.S. Senate. We had an 
opportunity yesterday to debate the issue of whether we are going to 
cut $270 billion out of the Medicare program in order to give tax 
breaks for the wealthy individuals and corporations.
  Today we had the debate about whether we are going to take $180 
billion away from the neediest children in our society and from the 
seniors of our country who have made such a difference to our Nation 
and put them at greater risk.
  The third element in this whole Republican proposal is to deny, or 
move towards denying, the sons and daughters of working families the 
opportunity to achieve the American dream, that is, in the area of 
higher education.
  The whole debate on higher education was a key debate in the 1960's 
between President Kennedy and President Nixon. During that time, this 
country went on record to provide help and assistance to the young 
people of 

[[Page S15734]]

this country. We reserved three-quarters of a Federal assistance 
program for grant money and one-quarter for loans. The programs built 
on the enormous success that this country saw at the end of World War 
II. We expended, in today's dollars, $9 billion on education assistance 
to those who came back and fought in World War II.
  It is an interesting fact, Mr. President, that the analysis of this 
program proved it was a remarkable success. In fact, every dollar was 
actually given in grants--not loans--and returned some $8 to the 
Federal Treasury.
  This Nation was committed to higher education. This Nation was 
committed to the young people of this country, to their hopes and 
dreams for a future America. But under the Republican proposal, 
effectively what they are saying is, ``We're going to take some $10 
billion away, away from the students of this country, and make it more 
complex, more difficult, and in many instances deny the dreams of those 
young people.'' For what reason? For the reason of providing the tax 
breaks for wealthy corporations and wealthy individuals.
  That is what this is about, Mr. President. That is what this is 
about. The amendment that we have offered today responds to that 
provision of the Republican bill.
  First of all, the provision that institutes a new student loan tax 
that requires colleges and universities to pay the Federal Government 
an annual fee of .85 percent of their student loan volume is struck. In 
addition, the amendment strikes provisions that eliminate the interest-
free grace period, a concept that has been supported by Republicans and 
Democrats since the student loan program began.
  We also strike the increased interest rates on parents in the PLUS 
loans, which are necessary loans for parents that do not have great 
assets. Striking the increased interest rates will help those parents 
continue to take advantage of the PLUS loans. Finally, the amendment 
strikes provisions capping the direct loan program at 20 percent of 
loan volume. The program is now at almost 40 percent participation.
  The amendment takes us back to the existing law which will permit any 
college in this country, in any State, to choose to participate in the 
direct loan program. Not under the Republican program.
  What we are saying is: If colleges, their boards of trustees, 
parents, faculty, teachers, young people want to move toward a direct 
loan program, that choice ought to be available at the local level. The 
Republican proposal denies colleges and universities and their 
communities the right to choose a loan program that works for them. 
That right to choose was a bipartisan agreement that was made in 1993. 
I believe that denying colleges and universities the right to choose is 
unwise and unfair.
  And, Mr. President, we offer a full offset for this change to the 
Republican proposal, so that our amendment is budget neutral. We will 
return help and assistance to the students of our country by striking 
the provisions of the Finance Committee's reconciliation bill that 
dilute the alternative minimum tax on corporations.
  The alternative minimum tax on corporations sets a minimum corporate 
tax liability. It was passed in 1986 because many corporations were 
escaping any kind of tax payment. And you know what the Republicans 
did? They relaxed it to benefit corporations by $9.2 billion. And so 
the Senate of the United States will have a chance today to say, ``Do 
we want to relax the alternative minimum tax for corporations by $9.2 
billion or do we want to provide the help and the assistance for the 
sons and daughters of working families?"
  We have effectively voted on this amendment before, and we are going 
to see if the whiplash of the Republican leadership is going to march--
force the Republicans to march in lock step to reject what they have 
supported in May: a reduction in the cuts to students.
  We are taking the changes in the alternative minimum tax that 
provided easier payments for the largest corporations of this country 
and using them for the deficit reduction requirements for education and 
leaving these programs alone. That is what this amendment does.
  Mr. President, I do not think we have to make the case, or should 
have to make the case, that education is central to the American dream. 
But under the Republican proposal, they change that dream into a 
nightmare. The idea that the Republican proposal is a shared sacrifice 
is malarkey.
  They say, ``There's a shared sacrifice in our Human Resources 
Committee's proposal.'' The shared sacrifice is two-thirds--two-thirds 
of the burden is going to be on the sons and daughters of working 
families. Half of them earn below $20,000 a year; two-thirds of them 
below $40,000. It is interesting to note that these are the same people 
whose taxes are going to be increased under the EITC. These are the 
same people that are going to have to provide additional help and 
assistance to their parents to increase the copayments and the 
deductibles.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. KENNEDY. I yield 2 more minutes.
  Again, these are the same people whose taxes will be increased under 
EITC, as Senator Moynihan clearly pointed out when he put the chart 
before the U.S. Senate and the American people. We are already going to 
have to pay increased payments under this bill.
  What do our Republican friends have against working families? They 
raised the EITC that goes to the low-income, working families. And now 
they are denying the opportunity for education for many of the sons and 
daughters.
  Mr. President, I want to just point out that a $250 increase in the 
cost of college will cause roughly 20,000 fewer students from working 
families to enroll. Because there are almost $1,000 in additional costs 
to working families just in the grace-period provisions of the 
Republican proposal, 80,000 young people in this country will not go to 
college because of the increased burden that their families will not be 
able to pay.
  Now, there will be a time when someone says, ``This is really a very 
minor slap on the wrist for these families.'' They will point out, 
``Look, you are only talking about $900 for the grace period, only $500 
more under the PLUS loans, and only $25 under the institutional 
loans.''
  Mr. President, that all adds up. In my State of Massachusetts, 
working families will have to pay more than $200 million in additional 
costs. That is wrong. It is a transfer of wealth from working families 
to the already wealthy individuals in our country. Therefore, I hope 
that this amendment is agreed to. It is a responsible amendment. We 
have debated this issue many times and we have said that we believe 
that education is fundamental to the future of America and young 
Americans. Why should we dampen, and in many instances extinguish, the 
hopes and dreams of the sons and daughters of working families?
  That is the choice here. We can strike the alternative minimum tax or 
we can dock the sons and daughters of working families.
  I yield 5 minutes to the Senator from Rhode Island who has been a 
former chairman of the Education Committee and who has made such a mark 
in education policy.
  The PRESIDING OFFICER (Mr. Ashcroft). The Senator from Rhode Island.
  Mr. PELL. Mr. President, I thank my colleague. I am very, very 
pleased to be an original cosponsor of this critically important 
amendment. What we are talking about here is a capital investment in 
the future of our Nation. Passage of this amendment would accomplish 
the objective of taking students and their families, not completely, 
but partially out of harm's way.
  First, it would strike the first-time-ever fee on institutions of 
higher education. This fee of .85 percent, based on the total amount of 
money borrowed by students and parents at every institution of 
learning, is an unprecedented move and a cost that would undoubtedly be 
passed along to students in higher fees. Once established, I am afraid 
that it will increase over time.
  Second, this amendment would strike the increase on the interest rate 
in the Parent Loan Program. Some argue that the increase would be so 
small as to be insignificant. I disagree.
  A parent who borrows for 4 years of college at a typical 4-year 
public university will borrow a total of $27,000. If those loans are 
repaid over 10 years, the increase in the interest rate will mean those 
parents will have to pay an 

[[Page S15735]]

additional $1,400. If they take advantage of extended repayment, the 
cost could well increase to $2,800. Neither of these figures is 
insignificant.
  A parent who borrows at a private university will borrow more than 
$66,000. Repayment over a 10-year period will mean an additional $3,400 
that parents will have to pay because of the increase in the interest 
rate. If repayment is extended over 20 years, the additional cost to 
the parent will be nearly $6,900, or $7,000.
  Third, the amendment would strike the 20-percent cap on the Direct 
Loan Program. This would leave alone the direct loan conference 
agreement of 2 years ago. It would mean that we would continue to have 
a spirited competition between direct and regular loans, a competition 
that has brought students improved services, better rates and more 
benefits.
  And fourth, the amendment would strike the elimination of the 
interest subsidy during the grace period. This is of vital interest to 
students who have just completed their education and are out looking 
for a job. Proponents argue that the cost of eliminating the grace 
period will be small, but to a student who is just beginning a job, 
every dollar counts.
  In terms of the package, I point out that while one change might 
appear small, the combined impact of the four changes addressed in this 
amendment is considerable. Students and their families will feel the 
impact of these changes. Instead of taking them out of harm's way, it 
will place them directly in the line of fire. We can avoid that outcome 
if we adopt this amendment. I urge my colleagues to join me in voting 
for it. If ever there was a capital investment amendment to improve the 
competitive ability of our Nation, this is it.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. KENNEDY. I yield 5 minutes to our friend and colleague and former 
member of the Labor and Human Resources Committee, Jeff Bingaman.
  The PRESIDING OFFICER. The Senator from New Mexico is recognized.
  Mr. BINGAMAN. Thank you very much, Mr. President. I thank the Senator 
from Massachusetts for yielding me time.
  Mr. President, I am in strong support of the Kennedy-Simon student 
loan amendment. It does deal with a very serious problem that I see in 
this budget reconciliation bill.
  Very simply, what we are talking about here is $10.8 billion that is 
to be reduced or eliminated out of the funds that will otherwise be 
made available to students over the next 7 years, students who want to 
go to college and who do not have the financial means with which to go 
to college.
  That $10.8 billion is presented by the Republican majority as being 
fairly shared. We are going to try to charge some of that to the loan 
industry and some of that to the students and families themselves.
  I have a chart here, Mr. President, which I think makes the point 
pretty clearly that the cost, that $10.8 billion, is not fairly shared. 
What this chart shows is that something like 30 percent of this entire 
$10.8 billion, $3.1 billion specifically, will be additional costs to 
the loan industry; 70 percent of the entire cut in education is costs 
to students and their families. That is $7.6 billion over 7 years.
  Let me talk about some of the specific things that we are doing to 
increase the costs to students and families during that time, because 
some of it is precedent setting and, in my view, it is a very bad 
precedent and reflects very badly on our country.
  One which has been referred to by both the Senator from Massachusetts 
and the Senator from Rhode Island is that we are starting, for the 
first time, to charge interest on the loan from the day of graduation. 
That may seem like a small item and, in some larger global sense, it 
may be, but it signifies something about what the Congress is about in 
this reconciliation bill.
  Always before, the idea was when students graduated from college, we 
would give them a 6-month grace period in which to get a job, in which 
to begin to receive regular monthly paychecks, before they were charged 
the interest on that loan.
  But we are eliminating that in this legislation. Here the idea is 
that we can pick up $2.7 billion over the next 7 years by eliminating 
that grace period and starting to charge that interest from the day 
they graduate. I think that is a shortsighted, mistaken and wrong 
policy decision.
  A second item that I particularly want to focus on that I think is 
perhaps even a worse precedent is this whole idea of charging a tax to 
schools that want to make a student loan. In my State, the schools that 
are making Federal student loans are generally schools that are trying 
to provide education to moderate-income families and students. They 
would be charged, under this bill, .85 percent, nearly 1 percent of the 
value of the loan, at the time the loan is originated.
  When I bought a house, I remember that they charged me a loan 
origination fee. You always shop around to see where can you get the 
fewest points, where will they charge you the fewest points for your 
house loan. The Government has never charged points for student loans 
before. We have never charged origination fees when we made a loan to a 
student to go to school.
  This year, for the first time, we will begin to charge an origination 
fee. Now we charge it to the institution. The school itself has to pay 
the student loan and, of course, that builds in an incentive for the 
school perhaps to look for more financially capable students. They do 
not have that cost. They do not need to worry about origination fees if 
they get students that, in fact, do not need student loans. I think it 
is a very bad precedent. I think when you start charging an origination 
fee for a student loan, it is a sad day in our Nation's history. That 
is exactly what we see proposed in this bill. That would, supposedly, 
result in the Federal Government picking up $2 billion over the next 7 
years.

  We are increasing the interest rates on family interest. That is 
another $1.5 billion. And then by capping the amount of direct student 
loans that can be made, presumably we are going to pick up $1.4 
billion.
  Mr. President, this amendment would strike the most onerous 
provisions of the reconciliation bill by striking the provisions that 
increase the costs of loans for students and their families.
  The Republicans propose that almost 70 percent of the $10.8 billion 
cuts in the current student loan system be shouldered by students and 
their families. Only $3.1 billion is borne by the loan industry and 
$100 million by cost sharing with States. The overwhelming majority of 
these cuts, shown in red on this chart, would be shouldered by the very 
students the program is intended to help. Only 30 percent of the cuts, 
shown in yellow on this chart, are imposed on banks, guaranty agencies, 
and secondary markets in the student loan industry. That means that 
directly or indirectly the wrong people suffer. It will cost needy 
students more to borrow.
  The Kennedy-Simon amendment fixes that. It strikes all portions of 
the Labor and Human Resources Committee reconciliation title that 
impose higher student loan costs on students and their families. Let me 
show you how.
  First, the amendment would restore a 6-month interest-free grace 
period following graduation. That means that interest would not accrue 
on student loans for 6 months after graduation giving students time to 
look for a job. This amendment strikes the Republican cut of $2.7 
billion for the interest-free grace period. The amendment would thereby 
save an individual student between $700 and $2,500, depending on the 
length of study and amount borrowed.
  Next, the amendment eliminates a new .85-percent fee on new student 
loans. It strikes the $2 billion Republicans would save by introducing 
this new loan fee. The Republican plan would force colleges either to 
absorb this new tax on student loans or pass it on as increased 
students fees. This would have meant about $25 every year for about 14 
million students with new loans. It would have effectively penalized 
schools for accepting needy students.
  Next, the amendment eliminates the rise in interest rates families 
pay for student loans. Without this amendment, the increase in PLUS 
loan interest rates could amount to up to $5,000 a family. This 
increase would be paid by the very families who lack other assets 

[[Page S15736]]

against which to borrow, and must therefore borrow most heavily from 
this program to afford 4 years of college.
  Finally, the amendment eliminates the 20 percent cap on the direct 
loan program. The program is now at 30 to 40 percent and has made the 
student loan process much quicker and more efficient for participating 
students.
  This amendment is good policy for the Nation. In New Mexico, it will 
be absolutely essential. It will enable a better education for some 
students who otherwise would not go to college. Colleges in New Mexico 
have volunteered my office the numbers of their students on Federal 
financial aid because, they tell me, they know is vital for the 
students they serve. They say three New Mexico colleges alone have well 
over 20,000 students receiving some form of Federal financial aid. At 
the University of New Mexico, there are about 10,000; at New Mexico 
State University, about 9,000; at Western New Mexico University, about 
1,400. Other colleges have more.
  More important, over 70 percent of all financial aid in most New 
Mexico colleges is Federal. In some it is almost the only source 
available. In New Mexico Highlands University and New Mexico Junior 
College in Hobbs there is very little financial assistance that is not 
Federal. These schools serve students to whom financial assistance is 
absolutely essential, whose families cannot sustain higher levels of 
personal debt. Other States may be richer than New Mexico. But in my 
home State, this amendment would make the difference in reducing the 
level of student and family debt to a point that working families feel 
it is within their reach. This would enable some students to go to 
college who otherwise might not go. Graduating from college is no 
longer a ticket to the good life; it has become a mandatory 
qualification for most entry-level professional jobs.
  This bill strikes at the heart of the Federal Government's commitment 
to education; the Kennedy-Simon amendment renews that commitment to 
making college accessible to qualified students regardless of 
privilege. I urge my colleagues to adopt this amendment.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. BINGAMAN. I urge my colleagues to support the Kennedy-Simon 
amendment.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. How much time remains?
  The PRESIDING OFFICER. The Senator has 28 minutes.
  Mr. ABRAHAM. I yield myself such time as I may need to make a brief 
statement or two regarding this amendment. And then I will yield time 
to another Member on our side.
  The chairman of the Senate Labor and Human Resources Committee and I 
were chatting here on the floor, and the Senator from Kansas indicated 
to me a couple of things. Members on both sides are probably aware that 
there are discussions going on now that may directly address much of 
the content of this amendment in a way that would be very similar to 
what is being proposed here. Those discussions are going on as we 
debate this issue.
  There is likely to be, from our side, an amendment which would be 
responsive to some of these concerns, many of which were raised in the 
Labor and Human Resources Committee--Members on both sides of the 
aisle--during the debate.
  For the students who are watching today and listening to our 
proceedings, or their families, I want to point out a couple of factors 
which, once again, the chairman of the committee reminded me of, which 
we discussed during our deliberations on this.
  First of all, nothing in the reconciliation package will, in any way, 
affect the volume of loans available to students. In other words, the 
growth rate of student loan volume will continue unabated under the 
Republican package. Students who are hoping to get loans will have 
those loans available. We are not contracting the size of the loan 
volume. I believe it will be in the vicinity of $26 billion annually 
under this package.
  In addition, I point out concerns that have been raised hear about 
the origination fee that is part of this package. There was an 
amendment, as the President will remember, brought before the committee 
that would have eliminated the origination fee. It was opposed and 
voted down. I believe every Member of the minority party voted against 
an amendment that would have eliminated those origination fees.
  I want to, once again, point out just for clarification, insofar as 
the grace period issue is concerned, we are not asking students to 
begin paying back their loans upon completion of school. Our changes 
only go to the issues of when interest begins to accrue. Students will 
still have 6 months after they graduate before they are required to 
begin paying their student loans. Indeed, as I think everybody is 
aware, the overriding goal we have here in this reconciliation package, 
and more broadly in our budget, is to bring the budget into balance.
  Mr. President, when we do that, we not only will bring down interest 
rates for the Federal Government, we also will bring down interest 
rates across America for everybody. When those interest rates come 
down, they will not just come down insofar as what we pay on the bills, 
it will be for what people pay on home mortgages and with respect to 
student loans. As those student loan interest rates come down, they 
will, I believe far more effectively, help students to finance their 
college education than anything we are doing here today, because a much 
lower student loan rate is going to mean far less total dollars spent 
by students than anything else we could do here in the U.S. Senate.
  I also note that in our finance package here in the reconciliation 
bill, there also is a student loan deduction available to people who 
are paying student loans, for middle-income families. That, too, will 
help to offset the burdens of college education that middle-class 
families in this country pay.
  So we are trying to be responsive. We are not reducing the volume 
rate. We are not requiring students to begin paying their loans 
earlier; and, most important, we are trying to balance the budget so 
that interest rates on student loans will be so low that they will help 
students in the kind of ways students want most, which is a total 
amount of money being paid back, lower than what they have to pay back 
today.
  I yield 10 minutes to the Senator from Montana.
  Mr. BURNS. Mr. President, this is the first time I have come to the 
floor to comment on this reconciliation package. I guess the first 
thing we tried to look at with regard to this is the tax cuts and also 
the cuts in spending. One has to look at it from the standpoint of how 
it affects home. What does it do for my home State of Montana? There 
are some things not in this package that I think, if you want to do 
something about a farm bill, give farmers accelerated depreciation and 
income averaging, we would not need a farm bill, if you want to be fair 
with agriculture because of the conditions under which they work.
  But in this package, I congratulate Senator Domenici, the chairman of 
the Budget Committee and, of course, the Finance Committee, for their 
exceptionally hard work to try to balance and make it fair. Tax relief 
for families is the biggest part of this tax relief provision. It goes 
to families. Now, we hear talk on the other side of the aisle this 
morning about a cutback in programs. Why do you think there are tax 
cuts in here? Because it allows families to make the decision on how 
they want to spend their money, not how it is spent here in Washington, 
DC; it is for them who live in the hinterlands. There is tax relief for 
senior citizens and small businesses.
  When you look at my State of Montana, that is going right down the 
line where we need a little relief. And we close some loopholes for 
corporations. So they did exceptional work on this. We have heard about 
the tax break for the rich, corporate welfare, and all of this, those 
loopholes for the corporations. They have been closed. Frankly, I have 
not seen a lot of that. This tax package, as a total revenue cost over 
a 7-year budget, is around $245 billion. However the cost is reduced by 
elimination of those corporate loopholes, which saves the Government a 
little over $21 billion over 7 years. That net cost makes us back to 
$224 billion. We can get bogged down in figures. I know how easy that 
is.

[[Page S15737]]

  We have to keep reminding America through this whole debate that the 
single largest revenue item in this tax package is a $500 per child tax 
credit, which has a cost of about $142 billion. What is wrong with 
letting families hang on to their money? They earned it. Sure, there 
are some Government services they want to pay for and it takes some 
amount of dollars to provide services that only Government can offer. 
We know that. But when they start making the decisions for all parts of 
your life, then that is where the real debate starts. Nobody is 
debating public safety here or doing some of the things for the society 
that has to be done.
  This package provides for an adoption credit; a marriage penalty 
credit; deductions for student loan interest, for the first time; 
deductions for contributions to individual retirement accounts. These 
tax breaks--about $28 billion, or so--are 13 percent of the total cost 
of the package, and are targeted for folks who are middle-income folks. 
There is $40 billion in capital gains tax reform. There, again, we hear 
``cut taxes for the rich.'' Capital gains tax is a voluntary tax.
  You do not have to pay capital gains tax. You do not have to pay it 
because you do not have to sell.
  The real wealthy folks can get around it because they know how to 
move those things around with tax laws and different laws.
  On capital gains, this helps even the homeowner whenever he sells his 
home and wants to retire. Everybody whose assets appreciate, pays 
capital gains taxes--that is, if they sell.
  So it is not for the rich. It is for all Americans that are smart 
enough to get a hold of some assets that appreciate, and they pay taxes 
on them.
  We visited with a very knowledgeable man from Kansas and he said over 
$7 trillion of assets would flow onto the market if the capital gains 
was cut in half. Imagine what that would do to the American economy. 
Imagine what that would do to the tax coffers of the Treasury of the 
U.S. Government, so that maybe we can do some things that we want to 
do.
  We have to think a little bit--just think a little bit. Capital gains 
is basically a voluntary tax. Just a voluntary tax.
  Another provision in this package, the estate and inheritance tax 
provision on that reform. Folks who leave estates--those estates have 
been taxed and taxed and taxed and the interest they make on that has 
been taxed and taxed and taxed and then when they die they are taxed 
again.
  I think of all of the ranches and farms in the State of Montana where 
money had to be spent for insurance policies to protect themselves so 
they could pay the inheritance taxes so the farm or the ranch can stay 
in the family.
  Needless, needless expense. They paid taxes on that land, and 
property tax, income taxes, investment taxes, and then when the key 
family member passes on there is another estate tax that has to be paid 
again.
  Hard-working families--the only thing they have on these farms and 
ranches is just the land. They have not made a lot of money. They do 
not have a lot of cash. They just do not have a lot of cash.
  In effect, these death taxes are robbing American communities of a 
tradition of values that local family-run businesses provide. I 
wholeheartedly support that provision. If you feel for a young man that 
is trying to start off in the agriculture business, my goodness, do not 
strap him with a debt that he cannot work his way out of.
  If you think there is not some disparity there, I will give you just 
a little idea on what it is like to farm. I was walking down the 
grocery store aisle the other day and found out that Wheaties cost 
$3.46 a pound. Do you realize that we are only getting $2.50 a bushel 
for a bushel of wheat that has 60 pounds of wheat in it?
  They wonder--it is a little bit of disparity here. You want that man 
to keep on producing food and fiber so the American people can eat 
cheaper than any other society on the face of this Earth.
  A while ago I listened to my distinguished colleague from the other 
side of the aisle challenge the estate tax credit. Their argument is 
focused on the unfairness of giving a tax break to any estate that 
exceeds $5 million.
  I have asserted the top one half of the top 1 percent of the American 
people fall into that category. They should not be getting a tax break 
in the first place. I agree.
  I must depart from my distinguished colleagues on the other side of 
the aisle for two reasons. I believe any death tax is on its face 
unfair. If we are going to keep these small businesses, these farms and 
ranches in the families of traditional values, we have to take a look 
at what we do in the taxing situation.
  Taxes that cost jobs--the alternative minimum tax, we did not get all 
that we needed in this, but if there is one place that creates jobs and 
opportunities, it is here. When you tax small corporations, small 
family businesses, make sure that they keep two sets of books to see 
which one is a higher set of taxes than the others, that takes away 
from this business of the ability to expand, to expand their business.
  Under the committee's package, the method of depreciation is 
conformed but the useful life is not.
  One major problem with this is that business will start to have to 
suffer the unnecessary costs of maintaining two sets of books on each 
depreciable assets of the performing two tax computations to determine 
that they do not fall into the alternative minimum tax bucket.
  Two sets of books--needless, costly. We could be investing that in a 
bigger payroll. That is what creates jobs.
  In conclusion, we should talk about some good things that are in this 
package. Talk about the good things that people are going to say we 
will keep more money in your neighborhood, for your quality of life, 
that you can make the decisions on how you want to spend the money and 
not be looking toward this 13 square miles of logic-free environment or 
answers that sometimes just do not work in our local communities.
  That is what this debate is all about--where the power is, the power 
of the purse string. With the tax credits and some reform we will do 
the responsible thing and not the irresponsible thing of saying, 
``Let's wait until next year,'' or ``Let's accept the status quo,'' and 
we know what the results of that are.
  I yield the floor.
  Mr. KENNEDY. I yield 5 minutes to the Senator from Illinois.
  Mr. SIMON. Mr. President, I rise in strong support of the education 
amendment offered by my colleague from Massachusetts.
  I glanced through this two-volume reconciliation thing this morning 
and I found all kinds of things. Here is a provision for the Hetch 
Hetchy Dam. I have no idea where the Hetch Hetchy Dam is or what it 
means.
  It has very little significance for the future of our country, but 
what does have significance for the future of our country is what we 
are doing in the field of education.
  The Presiding Officer may be too young to remember the GI bill after 
World War II. There was a fight on the GI bill. The American Legion, to 
their credit, said ``Let's have educational benefits as part of the GI 
bill.'' The other veterans organizations said, ``Let's have a cash 
bonus for veterans.''
  Fortunately, the American Legion prevailed and we put the money into 
education. We lifted this Nation.
  Now we face the same choice. Do we have a tax loophole here that is 
being put in, which the Kennedy amendment says, ``Let's not put that 
tax loophole in,'' or do we put the money in education? The Kennedy 
amendment says put the money in education.
  I want to address specifically the question of direct lending. Let me 
say to my colleagues on the Republican side, this is not a Democratic 
idea. The first person that suggested it is Congressman Tom Petri, a 
Republican from Wisconsin.
  My cosponsor of this legislation in the U.S. Senate was Senator David 
Durenberger, a Republican from Minnesota. When he was approached and 
said we ought to have the free enterprise system work and have the 
banks and the guaranty agencies profit from it, Dave Durenberger said, 
``This is not free enterprise; it is a free lunch.'' That is the 
reality.
  There is not a school in the country, not a college or university, 
that is on direct lending, that wants to go back to the old system.

[[Page S15738]]

  Colleges and universities like it, the students like it, taxpayers 
like it for reasons I will get into in a minute, and for my colleagues 
on the Republican side who say we like to do away with paperwork, I 
have heard speeches on both sides on that, every college and university 
says this does away with all kinds of paperwork. This is a change not 
just for a speech but for a vote. If the colleges and universities like 
it, if the students like it, if it is good for the taxpayers, why are 
we limiting direct lending? My friends, the only beneficiaries are the 
banks and the guaranty agencies and their lobbyists. And we have just 
seen in the newspapers that the banks have record-breaking profits. If 
we want to have a bank subsidy bill, let us call it that, but do not 
put the name of ``student assistance'' on it. Let us not play games.

  Who are these people who are fighting direct lending? The Student 
Loan Marketing Association, Sallie Mae, created by the U.S. Congress. 
The salary of the chief executive officer of Sallie Mae, 3 years ago 
was $2.1 million. All they do is student aid, guaranteed by the U.S. 
Government. The guaranty agency, one in Indiana, USA--the chief 
executive officer earns $627,000. We pay the President of the United 
States $200,000. And that one guaranty agency is spending $750,000 on 
lobbying on this.
  We face a choice. Are we going to help students and parents and 
taxpayers or the banks and the guaranty agencies? It is very, very 
clear. This is brazen, Mr. President, brazen. We have to help people.
  Indiana University says there is 90 percent less paperwork with 
direct lending, 25 percent fewer errors, easier adjustments, faster 
disbursement. I have heard a lot of talk about unfunded mandates around 
here. This is an unfunded mandate you are imposing on colleges and 
universities. Iowa State University, for example, testified they have 
been able to take four people who used to work in student loans because 
of the all the paperwork and everything, and have them do other things. 
And they have been able to cancel some of their computers that they 
have, for $400 a month.
  If I may have 1 more minute?
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SIMON. It is very, very clear what the public interest is. 
``Banks Cash In, Taxpayers Lose on Loan Programs,'' USA Today says.
  Government employees--we hear a lot, let us simplify. This is what we 
are told: 500 employees direct lending; 2,500 Government employees. 
That does count the guaranty agencies.
  Then here is what CBO says about the 20 percent cap that is in here 
right now: Under current law, direct lending will save us, over 7 
years, $4.6 billion.
  What we did on the budget resolution, we said count administrative 
costs for direct lending but not for the old program. So, because of 
the phoniness--and even the Chicago Tribune says they are cooking the 
books here--you theoretically save $600 million. The real saving is a 
saving of $4.6 billion.
  If we are interested in helping students, colleges and taxpayers, we 
ought to be voting for the Kennedy amendment.
  The PRESIDING OFFICER. Who yields time?
  Mr. ABRAHAM. Mr. President, I yield 10 minutes to the Senator from 
Washington.
  The PRESIDING OFFICER. The Senator from Washington is recognized for 
10 minutes.
  Mr. GORTON. Mr. President, I believe that it is important constantly, 
during the course of this debate, to return to fundamental principles, 
to the broad policy goals which we as a nation ought to seek for the 
betterment of our society and for a brighter future for those who 
follow us. In returning to those fundamental principles, there is no 
better place to start than with this fundamental principle enunciated 
by Thomas Jefferson almost two centuries ago. And I quote our third 
President:

       The question whether one generation has the right to bind 
     another by the deficit it imposes is a question of such 
     consequence as to place it among the fundamental principles 
     of Government. We should consider ourselves unauthorized to 
     saddle posterity with our debts and morally bound to pay them 
     ourselves.

  The staff notes I have here with me this morning have, at one place, 
the notation ``they,'' that is to say the opponents to this resolution, 
``do not wish to balance the budget.'' But I do not believe that to be 
true. I have not heard any argument at any time this year from a Member 
of this body that has not included in it at least lip service to the 
concept of a balanced budget. But, of course, there are three ways to 
that goal, or at least three kinds of oratory which give lip service to 
Thomas Jefferson's principle.
  The first is to state the principle but always to have an objection 
to any course of action which will make that principle a reality. And 
that is the common approach of those who oppose the resolution we have 
before us today.
  The second way, a way that seems to have very little support on the 
other side of the aisle but clearly actuates the President of the 
United States, is to define the problem out of existence. I will come 
back to that in just a moment.
  The third way, the hard way, the difficult way, is actually to make 
basic changes in our laws and in our spending policies, that will in 
fact lead us to a balanced budget.
  To return for a moment to the President's approach of defining it out 
of existence, I would also like to quote him. Just a little more than 2 
short years ago, the President of the United States said:

       The Congressional Budget Office was normally more 
     conservative about what was going to happen and closer to 
     right than previous Presidents have been. I did this so we 
     could argue about priorities with the same set of numbers. I 
     did this so that no one could say I was estimating my way out 
     of this difficulty. I did this because, if we can agree 
     together on the most prudent revenues we are likely to get if 
     the recovery stays and we do the right things economically, 
     then it will turn out better for the American people than we 
     said. In the last 12 years, because there were differences 
     over the revenue estimates, you and I know that both parties 
     were given greater elbow room for irresponsibility. This is 
     tightening the reins on Democrats as well as Republicans. Let 
     us at least argue about the same set of numbers so the 
     American people will think we are shooting straight with 
     them.

  In those eloquent words the President said let us all agree that we 
will use the projections of the Congressional Budget Office.
  That was then. This is now. Earlier this year the President presented 
a budget to us which never, in his own terms, included a deficit of 
less than $200 billion. Later, when it turned out that Republicans were 
serious about balancing the budget, the President said, ``Me, too. I 
can do it. And I can do it without pain. I can do it without changing 
any major policies in the United States. I can do it by defining it out 
of existence. I will abandon my allegiance to the Congressional Budget 
Office. I will simply estimate that interest rates and inflation will 
be lower and revenues will be higher, and without any major changes at 
all we can balance the budget.'' So he defined the problem out of 
existence.
  The day before yesterday in this body we had a straw poll, as it 
were, on whether or not the President's approach was acceptable. And it 
lost by a vote of 96 to nothing. The other side of this aisle, quite 
properly, rejects that approach. But it also rejects the approach of 
any significant changes. So, at this moment, nominally we are debating 
education. They do not want any changes. Previously we were debating 
Medicaid. They do not want any changes. Before that we debated 
Medicare. They do not want any changes. In fact, you can go down a 
litany of spending programs, and they do not want any changes. But they 
would like to have a balanced budget. It just is not a high enough 
priority.

  Mr. President, to return to the Congressional Budget Office, we now 
know that we are not simply engaging in a game of whether or not it is 
appropriate to balance the budget. We know what the positive results of 
balancing that budget will be. The Congressional Budget Office says 
that if we actually change the laws appropriately interest rates will 
be sufficiently lower and economic growth will be sufficiently higher 
so that the Federal Treasury will be $170 billion better off by the 
time the budget comes into balance in the year 2002. That is only the 
Federal Treasury. That is not the other hundreds of billions of dollars 
which will be in the 

[[Page S15739]]

pockets of the American people because they have better jobs and higher 
wages.
  That is what this exercise is all about, a better break for America.
  So what are we proposing to do? We are proposing to say to the 
Americans, if we go through this process, if we make these changes, we 
are going to give that $170 billion back to you in lower taxes on 
working Americans, and a little more besides because we have been 
responsible enough to balance the budget.
  So when we get right down to it, Mr. President, that is what this 
debate is all about.
  First principles--the moral duty not to load our spending on the 
backs of our children and grandchildren; and the economic benefit--an 
economic benefit I suspect Thomas Jefferson did not suspect--of acting 
in a responsible fashion, both because we will create more opportunity 
for our people and because we can appropriately lower our taxes.
  That is the difference between the two parties. That is the 
difference between a yes and a no vote on this resolution.
  The PRESIDING OFFICER (Mr. Burns). Who yields time?
  Mr. KENNEDY. Mr. President, how much time remains?
  The PRESIDING OFFICER. The Senator from Massachusetts has 20 minutes 
and 54 seconds.
  Mr. KENNEDY. I yield 4 minutes to my colleague.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. HARKIN. I thank the Senator for yielding.
  I just could not help but hearing my friend from Washington saying we 
have a moral obligation. Yes. We do. We have a lot of moral obligations 
to our children and to the future. One of the most important 
obligations is to ensure that future generations have the ability to 
get a decent, sound education so that they can raise their families and 
so that they can compete in the world marketplace. That also is a moral 
obligation.
  What this reconciliation bill does is pull the rug out from under 
that obligation that we have for future generations.
  Mr. President, we hear a lot of talk about the tax breaks that are in 
this bill. Those of us on this side have been talking about the $245 
billion tax breaks for the wealthy that will come at the expense of the 
elderly and Medicare cuts. There is an $11 billion cut in student aid 
in this bill, the largest cut in student aid in our history. But what 
we are not hearing about are the hidden taxes that the Republicans have 
in this bill, the ``stealth taxes.'' This is what they are hitting 
students with to pay for those tax breaks for the wealthy.
  This chart illustrates this right here. This budget adds about $700 
to $2,500 of debt per student by eliminating the interest subsidy 
during the grace period. That is a hidden tax on our students. It also 
includes up to $5,000 in additional expense for families who use the 
PLUS program by raising their interest rates. It is another tax on 
students and their families. It imposes a direct Federal tax of .85 
percent on colleges and universities participating in the student loan 
programs; a direct tax on colleges. Of course, they are going to have 
to pass that on to their students.
  Last, of course, it forces schools out of the direct loan program 
that has been so successful.
  So we hear about the tax breaks to the wealthy. We do not hear about 
the stealth taxes that are in the Republican bill, and mainly it falls 
on students.
  Mr. President, there was an article recently in the Des Moines 
Register which I ask unanimous consent to have printed in the Record at 
this point.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                     [From the Des Moines Register]

                   The Reality of Cutting Student Aid

                            (By Rekha Basu)

       If you want to talk to Robin Kniech, you'd best catch the 
     Drake University junior early, before she heads for class or 
     checks in at one of her five jobs, which add nearly 40 hours 
     to her already full load.
       Between the baby sitting, secretarial and other work, 
     Kniech just manages to eke out her $1,200 tuition 
     contribution. The rest of the $14,100 is made up from merit-
     based scholarships and college loans.
       Last week, which was Save Student Financial Aid Week, 
     sponsored by Drake Democrats, Kniech was also out rallying 
     students against proposed cuts to federal student aid. For 
     her, it's a subject of more than political interest. Any 
     cuts, however small, could tip the delicate balance she has 
     crafted to get a college education.
       ``I don't have any financial support from my parents,'' 
     says Kniech. ``I don't have any more hours to squeeze, and if 
     I were to lose $300 in aid, I probably wouldn't be in 
     school.''
       Just when you start thinking there's no other sacred zone 
     left for congressional Republicans to tamper with, along 
     comes another. If it isn't school lunches or aid to families 
     with minor children, or programs that give disadvantaged 
     preschoolers a fighting start, if it isn't rolling back 
     federal standards governing the care of elderly in nursing 
     homes or the health care of low-income people, then it's 
     gashes into the very programs that enable people to go to 
     college so they can hope to get decent jobs. At Drake, 
     several hundred thousands dollars could be lost, according to 
     John Parker, director of financial planning. Some 60 percent 
     of Drake students get need-based assistance.
       This is a tough issue to get your arms around, given the 
     rather confusing tangle of college-aid programs and formulas. 
     But the bottom line is the GOP plans to take $10.4 billion 
     out of student-loan entitlement programs and apply it to 
     deficit reduction. The legislation targets Stafford loans--
     private loans secured by the federal government, which you 
     might remember as Guaranteed Student Loans. That's what they 
     were called when I got one for graduate school. A whopping 90 
     percent of Drake law students and 40 percent of 
     undergraduates now get them.
       It also hits loans to parents to help finance their kids' 
     educations, and several loan programs originating with the 
     federal government but administered by the university, such 
     as the Perkins loan. That cut alone would knock off aid to 90 
     Drake students.
       Some proposals that might seem benign can cut quite deep. 
     One would force student recipients of subsidized Stafford 
     loans (those given to the highest-needs students) to start 
     accruing interest charges immediately on graduation, instead 
     of after the six-month grace period they now have. The added 
     debt could be just enough to derail Kniech's plans to join 
     the Peace Corps. ``This hits at high-needs students harder 
     than anybody else,'' says Parker.
       There's also a proposal to raise both the ceiling and floor 
     on the major federal grant program, Pell grants, 
     disqualifying some 250,000 students nationwide, costing 75 
     Drake students about $40,000, and affecting students' 
     eligibility for other grants. And more.
       If you're tempted to argue that a student like Kniech 
     should set her sights on a less costly education, forget it. 
     She couldn't afford community college. She'd have to pay more 
     than twice what she's paying out of pocket.
       Viewed piece by piece, the cuts may not look like much. And 
     Drake Republicans have countered with flyers pointing to the 
     programs which aren't slated for actual cuts (but contain no 
     increases for inflation), or the growth in funding of the 
     Pell grant program. But every cut matters to students 
     struggling to stay afloat. ``There are students at Drake who, 
     if they had to come up with another $50 they just flat out 
     couldn't do it,'' Parker says. And there's the precedent. As 
     senior Tanya Beer put it, ``I think we're moving more toward 
     education for the privileged rather than education as a 
     right.''
       The financial-aid story offers an interesting juxtaposition 
     of GOP fact and rhetoric. While the cheerleaders of 
     congressional Republicans like to rail about elitist 
     liberals, the scheme unfolding in Congress is built around an 
     unparalleled elitism, deliberately cutting off avenues for 
     advancement for those starting out at a disadvantage, even as 
     they are admonished to stay in school and work harder.
       So excuse Robin Kniech if the politicians' lectures about 
     working her way up ring a little hollow. She's keeping her 
     end of the bargain, and a 3.8 grade-point average. She just 
     doesn't have anything left to give up.

  Mr. HARKIN. It is entitled ``The Reality of Cutting Student Aid.''
  I will read a couple of items from it:

       If you want to talk to Robin Kniech, you'd best catch the 
     Drake University junior early, before she heads for class or 
     checks in at one of her five jobs, which add nearly 40 hours 
     to her already full load.
       Between the baby sitting, secretarial and other work, 
     Kniech just manages to eke out her $1,200 tuition 
     contribution. The rest of the $14,100 is made up from merit-
     based scholarships and college loans.
       ``I don't have any financial support from my parents,'' 
     says Kniech. ``I don't have any more hours to squeeze, and if 
     I were to lose $300 in aid, I probably wouldn't be in 
     school.''

  John Parker, director of financial planning, said that 60 percent of 
Drake students get need-based assistance.
  ``There are students at Drake who, if they had to come up with 
another $50, just could not, flatout could not, do it,'' Parker said.
  I think I will end on this note, a good note. The writer of the 
article said:

       So excuse Robin Kniech if the politicians' lectures about 
     working her way up ring a little hollow. She's keeping her 
     end of the bargain, and a 3.8 grade-point average. She just 
     doesn't have anything left to give.


[[Page S15740]]

  Mr. President, here is what is happening at one of our regent 
universities, the University of Northern Iowa, the smallest of our 
three state universities. For the 1990-91 school year the average loan 
of a student per year was $2,589. That was in 1991. Today that is up to 
$4,395, and, if this reconciliation bill passes, that is going to climb 
even higher. This bill just piles more debt on students. That is going 
to discourage students from going to school and seeking a higher 
education.
  Who does it hit? It hits moderate- and low-income families the 
hardest. That is why we have to defeat this reconciliation bill and 
make sure that these students can get a decent education.
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time?
  Mr. KENNEDY. I yield 4 minutes to the Senator from Connecticut.
  The PRESIDING OFFICER. The Senator from Connecticut is recognized.
  Mr. DODD. Thank you, Mr. President. I appreciate my colleague 
yielding me this time.
  Mr. President, I am a cosponsor of this amendment and strongly 
support this amendment. Many good arguments have already been made here 
this morning. In fact, the chart used earlier by my colleague from New 
Mexico I think makes the case. Seventy percent of the cuts proposed in 
the bill before us will fall on students and their families; 30 percent 
are industry losses.
  I suppose in the context of a huge budget, some may say what is $7.6 
billion in all of this? I suppose there are not many people here in 
this body who would understand what this will mean to millions of 
Americans. The impact seems relatively minor when you start talking 
about $100, $300, or $500 a year. But they are not minor costs for most 
Americans.
  There is a failure to appreciate, whether it is Medicaid, Medicare, 
higher education, that while these numbers of $90, $100, $200, $2,000, 
or $2,700 do not seem like anything large in the context of people of 
the upper-income levels, to working families in this country, these 
amounts make the difference between getting an education, getting 
health care, losing the job, or falling back into poverty. And for many 
of these families, they will be hit time and time again by the 
provisions of this bill--they will pay more for health care, receive 
less earned income tax credit and pay more for college.
  Our colleague from North Dakota the other day offered an amendment on 
the cuts in Medicare. He said cannot we forgo the tax breaks for people 
making in excess of $250,000 a year? The savings to us would be $50 
billion over 7 years, if we just said nobody over $250,000 gets a tax 
break. We could have saved $50 billion, if we had followed that 
amendment. But this Senate said no. We are even going to provide the 
tax breaks for people making in excess of a quarter of a million 
dollars.
  Just think what that $50 billion would do. We would not have to be 
debating this amendment. Mr. President, $7 billion of that $50 billion 
could go to these middle-income families out there that are going to 
feel the pinch in higher education.
  Mr. President, we all appreciate and know that in a global economy in 
the 21st century we are going to have to produce the best-educated, and 
the best-prepared generation that this country has ever produced if we 
are going to be effective. That is common sense. Everyone ought to 
understand that.

  Yet as you increase these costs on these families, we are going to 
watch students fall through the cracks. We are going to lose that 
talent and ability merely because we want to provide a tax break for 
people making in excess of a quarter of a million dollars. I do not 
know anyone who believes, if you have to make a choice as to which of 
those two groups you benefit when there are scarce resources, it ought 
not go to people earning a quarter of a million dollars rather than to 
those of modest means pursuing higher education.
  I think it is regretful; I think it is sad, indeed, that this 
institution could not make the simple decision of saying to those at 
the highest incomes: Wait a while. Maybe next year or the year after we 
can provide a tax break for you. But right now we need to assist 
families struggling to meet the costs of higher education.
  This $7.6 billion is going to fall heavily on those families out 
there trying to make ends meet, trying to send their kids to college 
and trying to make difficult choices that make this possible.
  Let me just quote one recent survey. It shows that business that made 
an investment in the educational attainment of their work force--as 
reported by corporate managers--resulted in twice a return in increased 
productivity of a comparable increase in work hours and nearly three 
times the return of an investment in capital stock. That is corporate 
managers talking about the importance of investments in education. I 
hope this amendment is adopted.
  There are 11 million young Americans who are in our public higher 
education institutions. Cannot we today offer some relief, some hope 
for them even if it means saying to those making more than a quarter of 
a million a year, you are going to have to wait a while to get your 
break, to see to it that those 11 million families, those 11 million 
children get the opportunity for a decent education? That choice ought 
to be clear.
  I urge adoption of the amendment.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. ABRAHAM addressed the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. ABRAHAM. At this time I yield 10 minutes to the Senator from 
Oklahoma.
  The PRESIDING OFFICER. The Senator from Oklahoma is recognized for 10 
minutes.
  Mr. NICKLES. Mr. President, I wish to thank my colleague from 
Michigan. I compliment him on his leadership. I just mention that many 
of the allegations and statements that are made are certainly not 
taking a look at the overall big picture.
  I wish to help students, too. I understand that there may be a 
leadership amendment that is going to make some modifications in the 
proposals that are being discussed. I think I will wait for the 
discussions on the specifics until that amendment is offered. It will 
be accommodating some of the concerns that have been raised because I 
think all of us--I happen to have four kids, two of whom are in higher 
education right now. That costs a little money. But I will tell you the 
best news we could give my kids that are going to college is to balance 
the budget.
  We only have one proposal before us to balance the budget. That is 
the proposal that the Republicans have put forth that will give us a 
balanced budget. I remember going to a town meeting not too long ago 
and somebody who was about 23 years old raised their hand and said: 
Senator, will I ever see a balanced budget in my lifetime?
  They were just as serious as they could possibly be. Later today, or 
maybe tomorrow, we are going to be voting on a balanced budget. But 
there is only one. President Clinton does not have a balanced budget. 
We do. When you think of somebody going to college and talking about 
college loans, what a heck of a deal it is right now that they inherit 
such enormous national debt. Let us at least stop it.
  The only proposal that we have before us to stop it is our proposal 
to balance the budget. Now, we may make some modifications in the 
proposal to alleviate some of the concerns that have been raised 
specifically dealing with student loans. So again I will leave that 
alone for the time being.
  Let us talk about what we are doing for all American families. I 
heard my colleague say, well, this is $10 billion. We are giving 
American families $140 billion of tax cuts. If they have children, they 
get a tax cut under our proposal, $500 per child. If you have four 
children, that is $2,000. That is pretty significant. And families get 
to decide if they want to use that money for education, for 
transportation, or for other things. Families make that decision. I 
think that is important.
  I also want to talk about the benefit of a balanced budget for the 
average American family. If you have a $100,000 mortgage--it seems like 
that is a large amount but that is not that unheard of today--you will 
have savings--it is estimated by independent sources that by having a 
balanced budget you will 

[[Page S15741]]

have a 2-percent interest rate reduction, maybe as high as a 2.7-
percent reduction on a $100,000 mortgage. That boils down to savings of 
over $2,000 per year, actually $2,162 per year.
  Also, if you have a student loan, let us say an $11,000 student loan, 
that is $216 in savings just in the fact that interest rates have come 
down. If you have a car loan of, say, $15,000, you have savings of 
$180. Those total savings of $2,500 per year if we are able to bring 
interest rates down by balancing the budget. So I think students have a 
real interest in seeing us balance the budget.
  I also want to talk about some of the misstatements that have been 
made. Are families better off at different income levels? Because I 
heard some people say some lower-income families are getting a tax 
increase. That is totally false, totally, completely false. And so 
again I wish to look at what happens to families under this proposal. 
Families that make, say, $5,000, they do not pay any income tax. They 
pay zero income tax. Right now they get an earned income credit of 
$1,800. They get it under present law. That is what they are going to 
get under our proposal.
  What about families making $10,000? They still do not pay any income 
tax. They get a $3,110 EIC. Next year they are going to get an increase 
that goes to $3,200.
  What about families that make $15,000? Right now, they get a check 
from Uncle Sam of $2,300. They do not write Uncle Sam a check. They 
still pay zero income tax and next year they are going to get a bigger 
check, $2,488. So that is an increase. That is an improvement.
  What about families that make $20,000? Well, they get an EIC of $832. 
With two children, they are presently paying zero tax. Next year, they 
are going to get from us, EIC goes up to $1,429.
  You might say, why? Well, the tax credit reduces their tax deduction 
so they get a higher EIC.
  What about a family that, say, makes $30,000. You have a lot of 
families making $30,000 that are sending kids to school. Right now, 
they are writing Uncle Sam a check for $929. Under our proposal, they 
will receive an EIC of $171 and pay no income tax. That is over a 
$1,000 improvement for that family. And actually every family beyond 
here will receive over a $1,000 improvement. Right now, if they are 
writing checks for $2,000, they will write a check for $900. That is 
over a $1,000 improvement.
  A $40,000 family would write a check to Uncle Sam right now with two 
children, $3,500. Under our proposal, they will write a check for 
$2,400. Again, they save $1,100. They save in the child credit. They 
also save from the reduction in the marriage penalty.
  A family making $50,000 would write a check for $5,000. Under our 
proposal, they will write a check for $3,900. They will get a $1,100 
savings. They can use that money for education. Our whole propose is 
targeted at families, and families can decide how to spend that money. 
And people with children are concerned about education. We are going to 
let them keep their money so they can decide how it should be spent. I 
think that is awfully important.
  We have heard a lot of rhetoric that bothers me because it is not 
factual. Lower-income groups are going to have their taxes raised. Not 
true. In many cases they are alluding to earned income credits, and so 
on. Those grow. I happen to be pretty familiar with them. I am going to 
put them in the Record. Maybe everybody can be familiar with them. 
These credits are growing every year. We give taxpayers a tax cut if 
they have children and they want their children to go to school.
  It is interesting; after the debate we had last night, somebody 
called my office about 11 o'clock and said: I am kind of embarrassed 
because my daughter, who is going to school, going to college received 
an earned income credit of $300. He said the reason why I am 
embarrassed is because I am a millionaire. But in present law they 
qualify. Does that make sense? I said, well, why would your daughter 
qualify? Well, she forgot to tell them that I gave her $18,000 to 
support her college education. But under present law she can qualify if 
she does not report that income. Now, we try to tighten down on EIC, so 
we report other income and say that income should be counted.

  Right now with EIC, you qualify under the program if you make less 
than $26,000. Under our proposal we allow that to grow to $29,000. Some 
people say that is a Draconian change because the administration wants 
you to qualify for EIC if you make $34,600. That may be the majority of 
people in Alabama; that may be the majority of people in Michigan, 
maybe in Oklahoma. There are a lot of people in our State that make 
less than $34,000.
  So we curb the growth. Right now you can qualify if you have income 
less than $26,000. We allow that to grow under our proposal to $29,000. 
But the administration wants it to grow to $34,000.
  I had a millionaire call me last night and say, ``My daughter 
received a benefit that I don't think she should have. I think you're 
right. I think a lot of people are receiving this benefit that 
shouldn't. Let's try to target our assistance to those people who 
really need the help.''
  That is what we are trying to do, target our assistance. Some 70 
percent of this package is directed at American families that make less 
than $75,000 per year. Those are the families that are sending their 
kids to school. So let us be responsive. Let us be helpful. And let us 
make some of the changes that are necessary to make our economy grow.
  At the same time, let us balance the budget. I am really excited 
about the opportunity to balance the budget. I am bothered by the fact 
that the President of the United States had a press conference 
yesterday and he said, ``Look how great we are doing. The deficit has 
come down 3 years in a row. We are making real progress.''
  What he forgot to show is what happens in the future. According to 
the Congressional Budget Office, his deficit grows. He talks about $164 
billion in 1995, and it is less than it was the year before. I think 
that is great. I do not think he is entirely responsible for that. But 
what happens in the outyears? Well, the Congressional Budget Office 
says that it will be $210 billion in the year 2002. He forgot to tell 
everybody the deficit is going to go from $164 billion to $210 billion 
and over $200 billion almost every year, according to the Congressional 
Budget Office.
  That is not acceptable. There is a change. Some of us are very, very 
sincere. We mean it. We want to balance the budget. Some of us voted 
for a constitutional amendment to make us balance the budget, and we 
failed. We lacked one vote in the Senate. But we also said we should do 
it whether this amendment passes or not.
  Many people on the other side of the aisle said, ``We should pass a 
balanced budget. We don't need a constitutional amendment to make us do 
it.'' And if we had the right composition in this body, they would be 
correct.
  The PRESIDING OFFICER (Mr. Shelby). The Senator from Oklahoma has 
spoken for 10 minutes.
  Mr. NICKLES. I ask for an additional 2 minutes.
  The PRESIDING OFFICER. The Senator from Oklahoma is recognized for an 
additional 2 minutes.
  Mr. NICKLES. It would be correct if we had the composition in the 
body that would vote for a balanced budget. But I will tell my 
colleagues, we cannot balance the budget unless or until we are willing 
to contain the growth of the entire budget. And we have already had 
votes to say, ``Oh, let's don't reduce the rate of growth in Medicare. 
Oh, we're cutting $270 billion in Medicare.''
  The facts are, in Medicare, this year we are spending $178 billion in 
Medicare, and in the year 2002 we are going to spend $286 billion in 
Medicare. That is a significant increase. It is a 7 percent increase 
over that entire period of time, 7 percent per year.
  ``Don't cut Medicaid, for crying out loud. No. Medicaid is too 
sensitive.'' They forget to tell people Medicaid in the last 4 years 
has grown as much as 28, 29, 13, and 8 percent. Make that in 5 years 
then 9 percent. Medicaid has exploded in costs. Many States have 
figured out ways to dump their liability on the Federal Government. It 
used to be a 50-50 share for most States. Now they are figuring out 
ways to make it 70 percent Federal Government, 30 percent State. We are 
trying to reform that and curtail that growth.
  Mr. President, I think it is awfully important we balance the budget, 
and I 

[[Page S15742]]

compliment my colleagues for the proposal we have before us today. I 
yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. ABRAHAM. Mr. President, may I inquire as to how much time is 
left?
  The PRESIDING OFFICER. The Senator from Michigan has 8 minutes 40 
seconds.
  Mr. NICKLES. Will the Senator yield me----
  I ask unanimous consent, Mr. President, to have printed in the Record 
several charts and other material.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

 AMERICAN FAMILIES BETTER OFF TOMORROW THAN TODAY UNDER SENATE GOP BILL 
------------------------------------------------------------------------
                                      Today           Senate GOP Bill-- 
                             ----------------------         1996        
                                                   ---------------------
      AGI=Earned Income       EIC check  Tax check  EIC check  Tax check
                                 from     to Uncle     from     to Uncle
                              Uncle Sam     Sam     Uncle Sam     Sam   
------------------------------------------------------------------------
                        Married with Two Children                       
$5,000......................     $1,800          0     $1,800          0
$10,000.....................      3,110          0      3,208          0
$15,000.....................      2,360          0      2,488          0
$20,000.....................        832          0      1,429          0
$25,000.....................          0       $929        171          0
$30,000.....................          0      2,018          0       $950
$40,000.....................          0      3,518          0      2,450
$50,000.....................          0      5,018          0      3,950
                         Married with One Child                         
$5,000......................     $1,700          0     $1,700          0
$10,000.....................      2,094          0      2,156          0
$15,000.....................      1,359          0      1,525          0
$20,000.....................          0       $190        266          0
$25,000.....................          0      1,643          0     $1,083
$30,000.....................          0      2,393          0      1,833
$40,000.....................          0      3,893          0      3,333
$50,000.....................          0      5,393          0      4,833
                        Single with Two Children                        
$5,000......................     $1,800          0     $1,800          0
$10,000.....................      3,110          0      3,208          0
$15,000.....................      2,098          0      2,488          0
$20,000.....................        337          0      1,429          0
$25,000.....................          0     $1,424          0       $347
$30,000.....................          0      2,513          0      1,468
$40,000.....................          0      4,013          0      2,968
$50,000.....................          0      5,513          0      4,468
                          Single with One Child                         
$5,000......................     $1,700          0     $1,700          0
$10,000.....................      2,094          0      2,156          0
$15,000.....................        864          0      1,425          0
$20,000.....................          0       $685          0       $252
$25,000.....................          0      2,138          0      1,600
$30,000.....................          0      2,888          0      2,350
$40,000.....................          0      4,388          0      3,850
$50,000.....................          0      5,888          0      5,350
------------------------------------------------------------------------
85urce: Joint Committee on Taxation.                                    


                                                                                    EARNED INCOME TAX CREDIT                                                                                    
                                                                             [Historical and current law estimates]                                                                             
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                           Number of                                            
                   Calendar year                      Total cost      Percent     Outlay cost     Percent    Revenue cost     Percent        family        Percent       Average       Percent  
                                                      (billions)      growth      (billions)      growth      (billions)      growth     beneficiaries     growth        credit        growth   
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1975...............................................           1.3  ............           0.9  ............           0.4  ............      6,215,000  ............          $201  ............
1976...............................................           1.3             4            .9            -1            .4            16      6,473,000             4           200             0
1977...............................................           1.1           -13            .9            -1            .2           -39      5,627,000           -13           200             0
1978...............................................           1.0            -7            .8            -9            .2             0      5,192,000            -8           202             1
1979...............................................           2.1            96           1.4            74            .7           166      7,135,000            37           288            43
1980...............................................           2.0            -3           1.4            -2            .6            -6      6,954,000            -3           286            -1
1981...............................................           1.9            -4           1.3            -7            .6             3      6,717,000            -3           285             0
1982...............................................           1.8            -7           1.2            -4            .6           -13      6,395,000            -5           278            -2
1983...............................................           1.8             1           1.3             5            .5            -8      7,368,000            15           224           -19
1984...............................................           1.6            -9           1.2           -10            .5            -6      6,376,000           -13           257            15
1985...............................................           2.1            27           1.5            29            .6            24      7,432,000            17           281             9
1986...............................................           2.0            -4           1.5            -1            .5           -10      7,156,000            -4           281             0
1987...............................................           3.4            69           2.9            98            .5           -13      8,738,000            22           450            60
1988...............................................           5.9            74           4.3            45           1.6           256     11,148,000            28           529            18
1989...............................................           6.6            12           4.6             9           2.0            20     11,696,000             5           564             7
1990...............................................           6.9             5           5.3            14           1.6           -17     12,612,000             8           549            -3
1991...............................................          10.6            53           7.8            48           2.7            69     13,105,000             4           808            47
1992...............................................          13.0            23          10.0            27           3.1            12     14,097,000             8           926            15
1993...............................................          15.5            19          12.0            21           3.5            14     15,117,000             7           945             2
1994...............................................          19.6            26          16.5            38           3.1           -12     18,059,000            19         1,088            15
1995...............................................          23.7            20          20.2            22           3.5            13     18,425,000             2         1,265            16
1996...............................................          25.8             9          22.0             9           3.8            10     18,716,000             2         1,380             9
1997...............................................          26.9             4          22.9             4           4.0             5     18,907,000             1         1,425             3
1998...............................................          28.0             4          23.8             4           4.2             4     19,104,000             1         1,473             3
1999...............................................          29.3             5          24.9             4           4.4             5     19,369,000             1         1,519             3
2000...............................................          30.5             4          25.6             3           4.8            10     19,638,000             1         1,569             3
2001...............................................          31.7             4          26.9             5           4.8             0     21,200,000             8         1,639             4
2002...............................................          33.1             4          28.0             4           5.1             5     21,400,000             1         1,687             3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Joint Committee on Taxation: Provided by Senator Don Nickles, 10/20/95.                                                                                                                 


                                            EARNED INCOME TAX CREDIT                                            
                                             [Two or more children]                                             
----------------------------------------------------------------------------------------------------------------
                                                                                    Min        Max              
                                                             Credit    Maximum     Income     Income      Zero  
                           Year                             percent     credit    for max    for max     credit 
                                                                                   credit     credit     income 
----------------------------------------------------------------------------------------------------------------
                                                   Historical                                                   
1976.....................................................      10.00       $400     $4,000     $4,000     $8,000
1977.....................................................      10.00        400      4,000      4,000      8,000
1978.....................................................      10.00        400      4,000      4,000      8,000
1979.....................................................      10.00        500      5,000      6,000     10,000
1980.....................................................      10.00        500      5,000      6,000     10,000
1981.....................................................      10.00        500      5,000      6,000     10,000
1982.....................................................      10.00        500      5,000      6,000     10,000
1983.....................................................      10.00        500      5,000      6,000     10,000
1984.....................................................      10.00        500      5,000      6,000     10,000
1985.....................................................      11.00        550      5,000      6,500     11,000
1986.....................................................      11.00        550      5,000      6,500     11,000
1987.....................................................      14.00        851      6,080      6,920     15,432
1988.....................................................      14.00        874      6,240      9,840     18,576
1989.....................................................      14.00        910      6,500     10,240     19,340
1990.....................................................      14.00        953      6,810     10,730     20,264
1991.....................................................      17.30      1,235      7,140     11,250     21,250
1992.....................................................      18.40      1,384      7,520     11,840     22,370
1993.....................................................      19.50      1,511      7,750     12,220     23,049
1994.....................................................      30.00      2,528      8,425     11,000     25,296
1995.....................................................      36.00      3,110      8,640     11,290     26,673
                                                   Current Law                                                  
1996.....................................................      40.00      3,564      8,910     11,630     28,553
1997.....................................................      40.00      3,680      9,200     12,010     29,484
1998.....................................................      40.00      3,804      9,510     12,420     30,483
1999.....................................................      40.00      3,932      9,830     12,840     31,510
2000.....................................................      40.00      4,058     10,140     13,240     32,499
2001.....................................................      40.00      4,184     10,460     13,660     33,527
2002.....................................................      40.00      4,320     10,800     14,100     34,613
                                                 Senate Reforms                                                 
1996.....................................................      36.00      3,208      8,910     11,630     26,731
1997.....................................................      36.00      3,312      9,200     12,010     27,111
1998.....................................................      36.00      3,424      9,510     12,420     27,521
1999.....................................................      36.00      3,539      9,830     12,840     27,941
2000.....................................................      36.00      3,650     10,140     13,240     28,341
2001.....................................................      36.00      3,766     10,460     13,660     28,761
2002.....................................................      36.00      3,888     10,800     14,100     29,201
----------------------------------------------------------------------------------------------------------------
Source: Joint Committee on Taxation: Provided by Senator Don Nickles, 10/20/95.                                 


                                            EARNED INCOME TAX CREDIT                                            
----------------------------------------------------------------------------------------------------------------
                                                                                    Min        Max              
                                                             Credit    Maximum     income     income    Phaseout
                           Year                             percent     credit    for max    for max     income 
                                                                                   credit     credit            
----------------------------------------------------------------------------------------------------------------
                                                    ONE CHILD                                                   
                                                                                                                
                                                   Historical                                                   
1976.....................................................      10.00       $400     $4,000     $4,000     $8,000
1977.....................................................      10.00        400      4,000      4,000      8,000
1978.....................................................      10.00        400      4,000      4,000      8,000
1979.....................................................      10.00        500      5,000      6,000     10,000
1980.....................................................      10.00        500      5,000      6,000     10,000
1981.....................................................      10.00        500      5,000      6,000     10,000
1982.....................................................      10.00        500      5,000      6,000     10,000
1983.....................................................      10.00        500      5,000      6,000     10,000
1984.....................................................      10.00        500      5,000      6,000     10,000
1985.....................................................      11.00        550      5,000      6,500     11,000
1986.....................................................      11.00        550      5,000      6,500     11,000
1987.....................................................      14.00        851      6,080      6,920     15,432
1988.....................................................      14.00        874      6,240      9,840     18,576
1989.....................................................      14.00        910      6,500     10,240     19,340
1990.....................................................      14.00        953      6,810     10,730     20,264
1991.....................................................      16.70      1,192      7,140     11,250     21,250
1992.....................................................      17.60      1,324      7,520     11,840     22,370
1993.....................................................      18.50      1,434      7,750     12,200     23,054
1994.....................................................      26.30      2,038      7,750     11,000     23,755
1995.....................................................      34.00      2,094      6,160     11,290    24,396 
                                                   Current Law                                                  
1996.....................................................      34.00      2,156      6,340     11,630     25,119
1997.....................................................      34.00      2,227      6,550     12,010     25,946
1998.....................................................      34.00      2,305      6,780     12,420     26,846
1999.....................................................      34.00      2,380      7,000     12,840     27,734
2000.....................................................      34.00      2,455      7,220     13,240     28,602
2001.....................................................      34.00      2,533      7,450     13,660     29,511
2002.....................................................      34.00      2,615      7,690     14,100     30,462
                                                                                                                
                                                 Senate Reforms                                                 
1996.....................................................      34.00      2,156      6,340     11,630     23,321
1997.....................................................      34.00      2,227      6,550     12,010     23,611
1998.....................................................      34.00      2,305      6,780     12,420     24,021
1999.....................................................      34.00      2,380      7,000     12,840     24,441
2000.....................................................      34.00      2,455      7,220     13,240     24,841
2001.....................................................      34.00      2,533      7,450     13,660     25,261
2002.....................................................      34.00      2,615      7,690     14,100    25,701 
                                                   NO CHILDREN                                                  
                                                                                                                
                                                   Current Law                                                  
1976.....................................................        n/a        n/a        n/a        n/a        n/a
1977.....................................................        n/a        n/a        n/a        n/a        n/a
1978.....................................................        n/a        n/a        n/a        n/a        n/a
1979.....................................................        n/a        n/a        n/a        n/a        n/a
1980.....................................................        n/a        n/a        n/a        n/a        n/a
1981.....................................................        n/a        n/a        n/a        n/a        n/a
1982.....................................................        n/a        n/a        n/a        n/a        n/a
1983.....................................................        n/a        n/a        n/a        n/a        n/a
1984.....................................................        n/a        n/a        n/a        n/a        n/a
1985.....................................................        n/a        n/a        n/a        n/a        n/a
1986.....................................................        n/a        n/a        n/a        n/a        n/a
1987.....................................................        n/a        n/a        n/a        n/a        n/a
1988.....................................................        n/a        n/a        n/a        n/a        n/a
1989.....................................................        n/a        n/a        n/a        n/a        n/a
1990.....................................................        n/a        n/a        n/a        n/a        n/a
1991.....................................................        n/a        n/a        n/a        n/a        n/a
1992.....................................................        n/a        n/a        n/a        n/a        n/a


                                                                                                                

[[Page S15743]]
                                      EARNED INCOME TAX CREDIT --Continued                                      
----------------------------------------------------------------------------------------------------------------
                                                                                   Min        Max               
                                                            Credit    Maximum     income     income    Phaseout 
                          Year                             percent     credit    for max    for max     income  
                                                                                  credit     credit             
----------------------------------------------------------------------------------------------------------------
1993....................................................        n/a        n/a        n/a        n/a        n/a 
1994....................................................       7.65        306      4,000      5,000      9,000 
1995....................................................       7.65        314      4,100      5,130      9,230 
1996....................................................       7.65        324      4,230      5,290      9,520 
1997....................................................       7.65        334      4,370      5,460      9,830 
1998....................................................       7.65        346      4,520      5,650     10,170 
1999....................................................       7.65        357      4,670      5,830     10,500 
2000....................................................       7.65        369      4,820      6,020     10,840 
2001....................................................       7.65        380      4,970      6,210     11,180 
2002....................................................       7.65        392      5,130      6,410     11,540 
                                                 Senate Reforms                                                 
1996....................................................       0.00          0        n/a        n/a        n/a 
1997....................................................       0.00          0        n/a        n/a        n/a 
1998....................................................       0.00          0        n/a        n/a        n/a 
1999....................................................       0.00          0        n/a        n/a        n/a 
2000....................................................       0.00          0        n/a        n/a        n/a 
2001....................................................       0.00          0        n/a        n/a        n/a 
2002....................................................       0.00          0        n/a        n/a        n/a 
----------------------------------------------------------------------------------------------------------------
Source: Joint Committee on Taxation: Provided by Senator Don Nickles, 10/20/95.                                 



          [From the U.S. Senate--Republican Policy Committee]

     To: Budget and Tax L.A.'s.
     From: J.T. Young.
     Re: Earned Income Tax Credit.

       Once again we bring to your attention a piece run by 
     today's Washington Post that refutes the shrill political 
     posturing of the White House.

                         (By James K. Glassman)

                         A Program Gone Bonkers

       The road to a $5 trillion national debt is paved with good 
     intentions.
       Look at the Earned Income Tax Credit (EITC). Launched by 
     Gerald Ford, lauded by Ronald Reagan, expanded by George Bush 
     and Bill Clinton, it's based on welfare principles that even 
     a Republican (or a professed New Democrat) can love. The only 
     problem is that, like many other good ideas in Washington, 
     it's gotten completely out of hand.
       Currently, the EITC is the fastest-growing program in the 
     federal budget. It will cost the Treasury $24 billion this 
     year, up from less than $2 billion 10 years ago.
       In their giant reconciliation bill--the final budget 
     measure of the year--Republicans are trying to restrain this 
     growth. Under the Senate version, EITC costs will rise to $32 
     billion in 2002. In the budget language of Washington, that's 
     a cut. In any other language it's an increase--although not 
     so large as projected under the current law, which has costs 
     rising to $36 billion by 2002.
       The EITC is a sort of negative income tax. If you fall into 
     a certain earnings bracket, you don't pay the government; the 
     government pays you.
       The idea of the EITC is to put more money in the pockets of 
     low-income working families. If you don't work, you don't 
     qualify. Since the benefits are paid in cash and the rules 
     are simple, the Internal Revenue Service can administer the 
     EITC easily and cheaply.
       Believers in the free market like the notion that the EITC 
     doesn't force recipients to use funds for a particular 
     purpose like other federal programs (housing, food stamps). 
     Instead, it gives them money and lets them make their own 
     choices.
       The EITC is not only the fastest-growing entitlement 
     program, it's the broadest. In 1986 some 7 million families 
     were covered by the EITC, and the average-outlay by the 
     government was $281. This year 18 million families are 
     covered at an average of $1,265. In 1986 the maximum credit 
     taxpayer could receive was $550; today, it's $3,111.
       In Mississippi, a whopping 39 percent of families receive 
     the EITC; in Texas, 26 percent; California, 22 percent. With 
     this kind of penetration, the EITC follows a welfare 
     tradition invented by Franklin Roosevelt: To keep a program 
     alive, make sure money flows not just to the poor but to the 
     middle class. That's been the key to success for Social 
     Security, Medicare, student loans and farm subsidies.
       The EITC was begun as a modest program to help offset the 
     burden of payroll taxes on the poor and, through its unique 
     structure, to encourage them to work more. But the philosophy 
     soon became: ``Hey, if a little bit is good, then more is 
     better,'' says Bruce Bartlett, an economist who served in the 
     Bush Treasury Department.
       Today, the EITC is enjoyed by families making as much as 
     $26,672 a year, and that doesn't include outside income. 
     Under the tax law that President Clinton promoted and signed 
     two years ago, by 2002 families making $34,612 will qualify 
     for EITC benefits. The Senate wants to scale that figure back 
     to $30,200--which seems pretty sensible for a government that 
     already owes its creditors $4.9 trillion.
       At its core, the EITC is a massive income transfer scheme. 
     New IRS figures show that in 1993 the top 5 percent of 
     American earners paid 47 percent of the federal income taxes, 
     up from 37 percent in 1981. Meanwhile, the bottom 50 percent 
     of earners--thanks in large measure to the EITC--paid 5 
     percent of the taxes.
       The EITC, in other words, has created a veritable tax 
     holiday for about half the families in America.
       Many would say that's fair. But there's another question 
     raised by the EITC: Does it really encourage work? There's 
     doubt.
       For 1996, families with two or more children will earn 
     credits of 40 percent of their income until they reach 
     earnings of $8,910 annually. Then, they max out at a credit 
     (in nearly all cases, a cash payment) of $3,564. So far, so 
     good. Clearly, there's a big incentive to work, since a 
     dollar paid on the job becomes $1.40 in the pocket (minus 
     modest payroll taxes).
       If you earn between $8,910 and $11,630, you still receive 
     the maximum credit. Then the disincentive begins--you start 
     losing 21 cents of credits for every additional dollar you 
     earn. When your income reaches $28,533, your credits hit 
     zero.
       Again, this sounds fair. But the problem is that the EITC 
     forces lower-income Americans to face marginal tax rates that 
     are higher than those faced by the richest Americans.
       As Bartlett wrote recently in a brief for the National 
     Center for Policy Analysis: ``Families with incomes between 
     $11,000 and $26,000 are being taxed at the rate of 60 percent 
     on each additional dollar earned. . . . This total tax rate 
     includes federal, state and local taxes plus the reduction in 
     the EITC.''
       And these high marginal taxes definitely discourage work. 
     Economist Edgar Browning of Texas A&M reported in the 
     National Tax journal that nearly half of all families 
     receiving the EITC has less income than they would have had 
     without the tax credit--because the credit enticed them to 
     work less. And a University of Wisconsin study found that 
     ``on balance the EITC reduces the total hours worked.''
       Is there a solution to the EITC conundrum? One answer is to 
     remove the phase-out of benefits: Simply give all taxpayers 
     an extra 40 percent credit for the first $10,000 or so of 
     income. But that would be hugely expensive. Another answer is 
     to kill the EITC entirely. But that would be politically 
     impossible.
       The third course is to try to restrain a program gone 
     bonkers. That's what the Republicans are doing. At the same 
     time, however, they should admit that the EITC isn't quite so 
     glorious as they once thought. Maybe luring people out of 
     poverty is something that government just can't do.

  Ms. MIKULSKI. Mr. President, I must oppose the reconciliation bill we 
consider today because it impacts on parents, students, and families in 
ways they cannot afford; that is why I support and cosponsor Senator 
Kennedy's amendment to strike the student loan provisions in this bill 
that impose higher college costs on students and working families.
  Mr. President, the Labor Committee's proposal to save $10.85 billion 
through changes in the Federal Student Loan Program is simply 
unacceptable. It strikes a blow at the Federal Government's role in 
providing an opportunity structure for our Nation's youth. It threatens 
the future economic opportunity for young people who are today's 
students and tomorrow's work force, and it rejects help to those who 
practice self-help.
  The Labor Committee's reconciliation proposal is another strike at 
this Nation's opportunity structure. The Republicans want to levy on 
new tax on colleges and universities. The Republicans want colleges to 
pay a .85 percent tax on their total student loan volume. That is 
outrageous.
  It does not make a difference whether that tax is .85 percent or 2 
percent as originally proposed by committee Republicans. A tax is a 
tax. Colleges and universities will still have to pay a new tax to the 
Federal Government every year.
  Mr. President, colleges and universities all across my State of 
Maryland are adamantly opposed to this new tax.
  This new tax means that the University of Maryland in College Park 
will have to pay approximately $255,000 in taxes on its student loan 
volume each year. The University of Maryland in Baltimore will have to 
pay approximately $180,000.
  Private independent colleges will be especially hard hit. These 
colleges do not get substantial State financial support. This results 
in higher student loan volume. So, Loyola College in Baltimore will 
have to pay approximately $95,000 to the Federal Government.
  It means that Johns Hopkins University will have to pay about 
$204,000 and Western Maryland College will pay about $25,000 in taxes 
on student loans each year.
  Where will colleges get this money? They may be forced to pass on 
this new tax burden to students in the form of increased tuition, 
reduction in scholarships, or elimination of student services or 
programs.
  College tuition has already skyrocketed. Our undergraduate students 
borrow the maximum of $17,125 a year just to be able to afford a 
college education, to have access to increased opportunities and to 
achieve the American dream. But this reconciliation bill will leave 
some students out in the cold.
  This is unacceptable. It is not only a tax on colleges, but a tax on 
opportunity. Students in this country are 

[[Page S15744]]

told every day--do well, work hard, get a good education and you will 
be rewarded. But this kind of tax sends the wrong message to students 
trying to get ahead and trying to get ready for the future.
  Mr. President, the Congress passed the Higher Education Act 
amendments in 1992 to bring help to those who practice self help. It 
was meant to be Federal help to middle class families who are drowning 
in debt and trying to send their children to college.
  Yet, imposing a new tax is not only a hit on colleges and students, 
but also a hit on parents trying to help pay for their child's college 
education. This reconciliation bill increases the interest rate that 
parents will pay on loans and increases the overall cap on that 
interest.
  Mr. President, promises made must be promises kept. By cutting 
student loans, we are cutting the promises we made to students, to 
parents and to colleges.
  I believe in rewarding the good guys in our society who work hard and 
play by the rules. That means giving help to middle-class families 
where moms and dads struggle--maybe even working two jobs--to pay 
tuition to send their son or daughter to college.
  Mr. President, these families are paying loans on top of loans. We 
cannot turn our backs on them now.
  Our students need our support through Federal financial aid programs 
or through innovative initiatives like national service. But, we are 
doing away with those opportunities too.
  National service gives students an alternate way to afford college, 
and at the same time, national service helps meet some of our 
community's most critical needs.
  As an appropriator, I know firsthand how hard it is for the 
Government to come up with a balanced check book. But education must be 
our No. 1 priority. It is with me. It is for parents and students who 
balance their own check book every day and every semester. It should be 
a priority for this Congress.
  Mr. President, college is no longer a luxury. It is a necessity just 
to stay competitive in the job market. It is a dream come true for 
parents of first generation college students to see their children walk 
across the stage. I believe we should give people the chance to pursue 
their dream through earned opportunities. To rob them of this 
opportunity is robbing America of its future.
  I hope every member of the Senate will support Senator Kennedy's 
amendment to strike the student loan provisions from this bill. It is 
an important investment to this Nation's students and it is important 
to America's economic future.
  Mr. HOLLINGS. Mr. President, first I want to thank the Senator from 
Massachusetts for his great leadership on preserving student aid. He 
has moved quickly at every opportunity to stick up for students and 
parents, and his amendment today is sorely needed.
  Mr. President, student aid has a proud history in this country. Much 
of my generation went to college on the GI bill. Then we passed the 
Higher Education Act of 1965, helping boost college attendance to 
today's levels. Of the 13 million students in college today, half of 
them receive Federal grants and loans under that Act.
  Economically, budgetary, morally, this bipartisan policy of making 
student aid a priority has been right. Economic analysis shows that we 
have benefited 8 for 1 on our GI bill investment. Recent analysis shows 
that the investment in education is twice as productive as other 
workplace investments. And the lower income people in our society 
should not be shut out of an affordable college education. We need to 
make every effort every year to make sure that our higher education 
assistance policy builds our country rather than dividing it.
  But Republicans have come this year with the proposition to students 
that everyone has to help balance the budget. Students should take some 
time in the library and study this bill. Everyone does not pay. 
Students--particularly low-income students--are asked to pay $10.8 
billion more. But others--particularly those who can pay for college 
out of their pockets--get new tax breaks. These tax breaks and 
increased spending in other parts of the budget are much larger than 
the student loan cuts. In other words, this Congress could easily 
choose not to make students pay more, but the Republican leadership 
thinks it is more important to give more to certain constituencies 
before the next election, all the while crying balancing budget.
  Let me be specific about how Congress could avoid cutting student aid 
in this bill:
  First, we could lower the brand new tax break in this so-called 
budget-balancing bill from $245 billion to $235 billion.
  Second, we could trim back the proposed defense increase of over $50 
billion.
  Third, we could refuse to provide a new tax break for corporations 
currently paying the minimum allowed, which is what is offered in this 
amendment.
  The fact is, all of these alternatives--and many others--are 
unacceptable to the Republicans that wrote this budget because student 
aid was a much lower priority to them than new tax breaks.
  Mr. President, these student aid provisions are shameful. If students 
and parents knew what was in this bill, they would think we had gone 
off the deep end. This is not the way we balance the budget, it is the 
way we pander for the next election and put the budget out of balance 
in the long run. I urge my colleagues to support the Kennedy amendment 
to maintain our investment in education.
  Mr. AKAKA Mr. President, I rise to express my deep concern about cuts 
in education programs included in the reconciliation bill.
  The bill before us cuts $10.8 billion from the student loan program. 
These proposals include a 1 percent fee hike in PLUS loans, elimination 
of the grace period for recent graduates, the imposition of a 20 
percent cap on direct student loan volume, and an .85 percent school 
tax based on the institution's student loan volume. If you wanted to 
undermine deliberately higher education, it would be difficult to come 
up with a more destructive list of proposals. Plain and simple, these 
education cuts are irresponsible.
  Mr. President, the 1 percent fee hike for PLUS loans is regressive 
and could add $5,000 to a family's indebtedness for a college 
education. This may not mean much, but to a family struggling to make 
it on $25,000 a year, it could deprive a student of a college 
education. Moreover, this measure discriminates against families who 
haven't achieved the dream of home ownership, and who cannot take out 
home equity loans to finance college.
  Eliminating the grace period for recent graduates is similarly ill-
conceived. This provision would saddle graduates with additional 
financial burden at the most critical time in their careers. It could 
force graduates to settle for lower paying, less desirable jobs 
immediately upon graduation rather than providing them a reasonable 
opportunity to secure higher paying employment that better matches 
their skills and desires.
  The proposal to cap the direct loan program at 20 percent of the 
total student loan volume is misguided in three respects. First and 
foremost, it would discourage additional schools from participating in 
the program and reduce the opportunities for thousands of economically 
disadvantaged students who would not be able to qualify for guaranteed 
loans.
  Second, the 20 percent cap will ultimately drain the Treasury of 
billions of dollars because reinsurance fees and other subsidies will 
be paid to banks, secondary markets, and guaranty agencies. Direct 
loans have been a money saver because they cut out the middleman, 
reduce administrative overhead, and increase accessibility. Only the 
banks and other financial institutions stand to profit from the changes 
in this bill.
  Third, capping direct loans will effectively limit one of the most 
important side benefits of the program--providing competition to the 
banks. Without the direct loan program, the lending industry would be 
free to raise interest rates on their own student loan instruments, 
increasing borrowing costs to those who choose, or are forced to 
choose, private lending sources. This in turn is likely to lead to 
additional defaults, the costs of which will be borne by the taxpayer. 
I would be curious to learn how proponents of free enterprise explain 
this clearly anticompetitive initiative.

  Mr. President, the last major GOP education initiative is the 
proposed 0.85 

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percent tax on schools. Like the other proposals, this is a regressive 
inititaive that will discourage schools from participating in the 
direct loan program, force them to pass on the costs to students 
through increased tuition, and require them to tap into their already 
dwindling student financial aid budgets. Again, as with the other 
initiatives, this provision will disproportionately impact students 
from low- and middle-income families. It is ironic that as Republicans 
trumpet a $245 billion package of tax cuts that largely favor wealthier 
Americans, they seek to impose an indirect tax on students and families 
who can least afford it.
  Mr. President, these are some of the reasons why I oppose the 
education provisions contained in this measure. When added to the 
proposed wholesale reductions in discretionary education programs--from 
Head Start to Goals 2000, to campus-based aid--they constitute a plan 
to reduce access to quality education and harm our ability to compete 
in an increasingly sophisticated international marketplace.
  Reducing investment in education, which is already inadequate, will 
inevitably limit economic growth and undermine the standard of living 
of middle-class Americans in the 21st century. And it will close the 
window of opportunity for the economically disadvantaged among us who 
are pursuing the American dream.
  Mr. President, reducing our commitment to an educated, skilled work 
force in the name of deficit reduction is shortsighted and terribly 
misguided. As this country struggles to find its way in a global 
marketplace dominated by cheap foreign labor and high technology, 
withdrawing our investment in education amounts to economic suicide.
  This budget proves that Republicans are more committed to protecting 
the interests of the haves than in accommodating the aspirations of the 
vast majority of Americans who want only to improve the quality of 
their lives through hard work and education. Again, I believe this is a 
pennywise, pound-foolish approach that is shortsighted, mean spirited, 
and will cost the taxpayer money in the long run.
  If this budget is implemented, students of modest means may have to 
forgo a college education; others who are fortunate enough to achieve 
their baccalaureates may have to forgo their dreams of pursuing 
graduate study. And those students who leave college in the future will 
be saddled with huge debt burdens at a time when they are least likely 
to be able to afford payments.
  The proposals contained in this measure, in concert with the proposed 
reductions in fiscal year 1996 education appropriations measure, will 
ensure that our future work force is less educated, less productive, 
and less well off. This in turn will reduce the Nation's tax base, 
placing further upward pressure on the deficit--exactly the opposite 
effect from the stated purpose of this budget plan.
  This wholesale disinvestment in our most important resource, our 
young people, is not merely shortsighted, it is blind. Blind to the 
imperatives of the new global marketplace, blind to the effect that 
cuts in education will have on our ability to prosper in an 
increasingly complex world, and blind to the effect it will have on our 
deficit.
  But competitiveness, economic viability, and individual opportunity 
will not be the only victims of the proposed cutbacks in education. Our 
sense of civil community, of history, of tolerance, the ability to 
conduct informed, rational discourse--these are also the potential 
victims of this harsh and ill-conceived budget plan.
  For education is not just about making enough to feed the kids or to 
buy a new car or to own a home--it is also about preparing ourselves to 
carry out the responsibilities of citizenship in the world's oldest 
republic.
  Mr. President, no sane nation embraces ignorance. Yet, this is what 
the proposed resolution would have us do. I therefore urge my 
colleagues to reject this war on knowledge by opposing the education 
proposals contained in this measure that threaten our future.
  Mr. KENNEDY. How much time do we have?
  The PRESIDING OFFICER. The Senator from Massachusetts has 14 minutes.
  Mr. ABRAHAM. I am prepared to yield our time.
  Mr. KENNEDY. I was just going to yield 4 minutes to the Senator from 
Washington, and then we go with your side.
  Mr. ABRAHAM. Fine.
  Mr. WELLSTONE. Will the Senator yield?
  Could I ask the Senator from Michigan how much time will be yielded 
to the Senator from Idaho?
  Mr. ABRAHAM. The remainder of our time.
  Mr. WELLSTONE. OK. Thank you.
  The PRESIDING OFFICER. The Senator from Washington is recognized for 
4 minutes.
  Mrs. MURRAY. Thank you, Mr. President.
  I thank my colleague from Massachusetts for this amendment.
  As I sit here and listen to this debate today, I cannot help but 
wonder how many of our colleagues depended upon financial aid to 
advance their education and build the foundation for their careers. 
This is a highly educated body. And judging from the vast array of 
degrees that are conferred upon my colleagues, I would have guessed 
that many were dependent upon Federal assistance to finish their 
schooling.
  However, the proposal to eliminate $10.8 billion in student loans 
forces me to question whether any of my colleagues on the other side of 
the aisle ever relied on financial aid to get an education. I can tell 
you I would not be here today without Federal assistance that made my 
college education possible.
  I will also tell you that working families will be the hardest hit by 
this gutting of our student loan program. These middle-income families 
often do not qualify for full scholarships and cannot afford to pay 
full tuition, particularly when $20,000 a year for tuition is today's 
norm in higher education. Why sacrifice our Nation's future by limiting 
educational opportunities for young people?
  This bill could have targeted the student loan industry, but instead 
63 percent of the bill's student loan cuts fall directly on students 
and their parents. Take for example the increased rates on PLUS loans 
that are taken out by parents. I can tell you as a parent of two 
children entering the post-secondary world, I am concerned that 
families across this land will find these new loans out of reach. This 
aid is particularly important to those families without enough equity 
in their homes to take out a tax-deductible home equity loan.
  Mr. President, I am extremely concerned with the proposal to 
eliminate a small, but very important, element to those entering our 
work force. All of us realize the difficult challenges facing today's 
college graduate. The limited prospects of employment, coupled with 
financial independence, on top of an already mounting educational debt 
put many of our graduates today in fiscal hardship before they are ever 
able to contribute back to our society.
  To help these individuals during this difficult time, we have 
provided a 6-month grace period on their loan once they finish school. 
This is not loan forgiveness. It does not lead to increased deficits or 
defaults. It simply provides a new college graduate a few months to 
find a job and begin the process of becoming a contributing member of 
our society.
  Some say this is a minor provision, appreciated by few students. I 
will tell you, at the University of Washington, in Seattle alone, 
12,000 students will feel the impact of this grace period. It means 
$2.4 million to those students.
  Finally, Mr. President, let us discuss a program that is working. The 
direct loan program is producing enormous benefits for all. In a recent 
survey, 112 campuses using the direct lending program were polled, and 
90 percent reported satisfaction with the program.
  During this academic year more than 1,350 schools are making 
borrowing easier for their students through the direct loan program. It 
is praised by students and college presidents alike for its speed, 
efficiency, and lack of bureaucracy. Why are we capping this success at 
20 percent of total loan volume when we know it works? Let us give 
direct lending a chance to work for our schools and its students.
  Mr. President, these cuts in our student loan programs are not 
economic savings. They are only going to shortchange our country's 
future. When we 

[[Page S15746]]

sacrifice our next work force for the sake of quick economic savings, 
we all mortgage our economic prosperity. The cuts in student loans are 
a direct impact to every single working family who wants to know that 
their child will be able to go on to college in this country that we 
are so proud of.
  Mr. President, I yield back my time to the Senator from 
Massachusetts.
  The PRESIDING OFFICER. Who yields time?
  Mr. ABRAHAM. I yield the remainder of our time to the Senator from 
Idaho.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAIG. I thank my colleague from Michigan for yielding.
  Mr. President, I find that the debate that is currently going on on 
the floor interesting but not balanced. And I say that because, while 
we talk about our children and the great compassion that I think this 
Senate and this Congress has always demonstrated toward young people in 
need, there is another side to the story that must be told if we are to 
speak of balance.
  There is no question that we want as many of our young people as well 
educated as they can possibly become. We should encourage that kind of 
an environment. Clearly, the student loan program that is embodied 
within this package today will continue to educate as many as are 
currently being educated with the flexibility of growth to include 
more. While it changes the parameters of the obligation, it would be 
grossly unfair for anybody to portray that we are stepping away from or 
stepping back from our commitment to disadvantaged young people today 
seeking higher education.
  What is glaringly absent from the debate on the other side is the 
rest of the story. I will tell you that having an education, having a 
degree in an economy that does not create a job and hire you is the 
greatest of tragedies.
  The budget that we are seeking to bring about, in promises kept to 
the American people, is a budget in balance, and there is not an 
economist in this country today that will disagree that a budget 
imbalance causes the economy of this country to be more productive, 
more job creating, having the ability to pay higher wages and to hire 
the master's degrees and the doctorate degrees that oftentimes today go 
wanting and in their search for a job cannot find themselves able to 
pay the student loan.
  The future of our children, Mr. President, and our grandchildren does 
not depend on a student loan. It depends on the economy of this country 
and the vitality of that economy that produces the student loans that 
creates the jobs that offers the future and the opportunity.
  Most economists agree today that our current debt structure creates a 
2-percent drag on our economy, and that 2-percent drag costs us 
hundreds of thousands of high-paying jobs annually as we work to 
increasingly compete in a world marketplace.
  I find it absolutely amazing that this President will argue a $200 
billion deficit and a debt that heads toward $5 trillion and says that 
that is growth and that is opportunity and that is going to create a 
productive economy.
  Let me tell you what that kind of $200 billion deficit does to the 
average child of today, the college student of tomorrow, the job seeker 
in the future.
  The average child today will pay $5,000 additional taxes over their 
lifetime with that $200 billion deficit. The Clinton budget projects 
deficits of that range out through the year 2000, and that alone adds 
up to an additional tax burden of $40,000 in the lifetime of that 
child. Those are statistics from the National Taxpayers Union.
  Mr. President, in my opinion, that is the future. This Senator is 
going to vote for a dynamic program of student aid, but he is not going 
to deny that student the same opportunity that that student's parents 
had in their lifetime: to seek a better life, to have a job, to be 
productive, to be creative. That is our reality, and that is what we 
promise the American people.
  So I suggest to all of us today that this really is a debate about 
the child and the child's future and his or her opportunity to be 
productive, to have a rewarding experience in their life, because just 
like the security of Medicare and just like the security of Social 
Security, they are all bound inextricably to the productivity of an 
economy. Not debt, not layoffs, not a sluggish economy that is not able 
to get up to speed and to be competitive in a world marketplace.
  I am absolutely amazed that we cannot strike that balance or that we 
have to struggle so hard to argue that a balanced budget makes sense. 
Somehow this deficit syndrome that the President has caught himself in 
and is unable to escape--while he argued yesterday, ``Look at the 
productivity, look what I have done,'' what he failed to say, ``In the 
outyears, I am going to have to ask the American people for another 
large tax increase, because while my tax increase of a year ago has 
forced the deficit down, the Government has not changed its spending 
habits. And every program that I offer in my budget,'' i.e., the 
President, ``I want more spending and more Government and more growth 
in the most nonproductive sector of our society.''
  The American people last November said it very clearly. They said, 
``Sorry, Mr. President, you're wrong; you've got to change and our 
Government has to change and we have to make sense of something, 
because we sense our vitality is slipping away, our ability to make a 
living is slipping away.''
  I do not dispute what the other side is saying about the less ability 
of the American family to pay for their child's education, but have 
they ever stopped to ask why there is less ability, why can the family 
of today not provide as much for the child as the family of 20 or 30 
years ago? There is an obvious reason. They cannot provide the 
lifestyle. The economy has been dragged down by a debt structure and a 
Government that consumes ever greater a proportion of the gross 
national product of our country in the most nonproductive of ways.
  I do not dispute the need for Government, but I do dispute its size, 
I do dispute the debt, I do dispute the deficit, because economic 
common sense says, and most economists agree, that if this Government 
can live within its means, our economy will be a much more productive 
place, I say to my fellow Senators, and we all know what that means. 
That is opportunity, that is jobs, that is productivity, that is the 
average family being able to care for their children and having the 
pride to say to their children, ``You are going to have a better life; 
you are going to have greater opportunity; we want you to have that 
college degree, and we can assist you in doing so because our lives are 
better lives.''
  That is the issue at hand. It is the debt. It is the question of 
deficit. It is the drag on the economy and the nonproductive way that 
we have found ourselves increasingly caught up in, unable to provide 
those kinds of opportunities.
  I applaud what this side is attempting to do in response to the 
American people and future generations to come.
  You see, Mr. President, I have parents--like we all do--who grew up 
in the Depression days, and they tell me about the phenomenal 
difficulties and the attitudes that for a generation that experience 
provoked on the American scene; that somehow they thought less of 
themselves and less of their ability to produce because of the 
phenomenal negative economic experience that that generation went 
through.
  Can we assume that that could never occur again? Well, we should not, 
and that is what Republicans and Americans are doing today in their 
effort to produce a balanced budget to control the growth of Government 
and say to future generations, ``We heard you and we provided an 
economy that will give you the opportunity you seek.''
  The PRESIDING OFFICER. Who yields time?
  Mr. KENNEDY. I yield 2 minutes to the Senator from Massachusetts.
  Mr. KERRY. Mr. President, I am delighted to join my colleague from 
Massachusetts in supporting this amendment. As I listen to some of the 
rhetoric on the floor, I really feel like this is Alice in Wonderland 
out here. This is not a debate about whether we are going to reduce the 
deficit or balance the budget. The Republicans keep coming back and 
saying, ``By God, the only way we are going to deal with the deficit 
and the budget is to do these things.''
  The choice here is how we are going to balance the budget. They want 
to spend more money on B-2 bombers. 

[[Page S15747]]

 They want to continue the Market Promotion Program. They want to take 
a $5 million asset on a trust fund and give people a $1.7 million tax 
break. It is a question of how we are doing it.
  What we all understand is, we should not be doing it at the expense 
of students and at the expense of the colleges and universities that 
have entered into the Direct Loan Program so that you can put more 
money back into the pockets of the lending institutions. It just does 
not make sense.
  The Senator from Idaho stands up and says, ``We are going to take a 
lesser amount of money, but we are still going to be able to give you 
the same amount of education.'' I wish he had been there yesterday when 
the chancellor of the University of Massachusetts and the folks from 
Lowell, MA, and New Bedford and Fall River, which have 15 percent 
unemployment, working class people came in and said to me, ``Senator, 
if these cuts go through, our kids are going to drop out of 
school.'' And they are going to drop out of school because they are 
going to have $5,000 of additional costs in interest on the PLUS loan 
that is going to be $700 to $2,500 of debt because they eliminate the 
interest subsidy on the 6-month grace period. They are going to have a 
transfer tax on colleges and universities participating in the student 
loan program, and they are going to end, for half the universities, 
direct participation.

  Mr. President, those kids cannot go to school paying that additional 
money. But they are giving the money to people earning more than 
$300,000, and to all of these other interests. They are continuing 
additional defense spending. The question is how we will balance the 
budget. It should not be done on the backs of the future generation in 
education.
  The PRESIDING OFFICER. Who yields time?
  Mr. DOLE addressed the Chair.
  The PRESIDING OFFICER. The majority leader.
  Mr. DOLE. Mr. President, has leader time been reserved?
  The PRESIDING OFFICER. Yes.
  Mr. DOLE. I ask unanimous consent that I may use a portion of that 
leader time without it being charged against either side.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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