[Congressional Record Volume 142, Number 47 (Monday, April 15, 1996)]
[Senate]
[Pages S3311-S3317]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. HATCH:
  S. 1666. A bill to authorize the Federal District Court for the 
Central Division of Utah to hold court in Provo and St. George; to the 
Committee on the Judiciary.


 THE CENTRAL DIVISION OF UTAH FEDERAL DISTRICT COURT AUTHORIZATION ACT 
                                OF 1996

  Mr. HATCH. Mr. President, today I introduce a bill that would permit 
the Federal District Court of the Central Division of Utah to hold 
court in Provo and St. George. Under the relevant statutory provision, 
title 28, United States Code, section 125, District Court for the 
Northern Division of Utah may be held only in Ogden, and District Court 
for the Central Division of Utah may be held only in Salt Lake City.
  The central division of Utah, however, is quite expansive: it 
encompasses 23 counties and spreads from the Salt Lake region down to 
Utah's southern

[[Page S3312]]

border. Due to the division's size, those involved in district court 
proceedings, whether as litigants, jurors, or lawyers, must travel to 
Salt Lake City for district court. The district judges and others in 
Utah have become concerned about inconveniences that have arisen due to 
the statutory constraints on the places of holding court in Utah.
  On January 9, 1996, the district judges for the District of Utah 
voted to approve an amendment to title 28, United States Code, section 
125 that would permit district court for the central division of Utah 
to be held not only in Salt Lake City, but also in Provo and St. 
George. The bill I introduce today embodies those changes. The Utah 
State Bar supports the bill.
  This bill will help Utahns by facilitating the administration of 
justice in Utah, and by permitting easier access to the district courts 
to citizens and litigants throughout Utah, who have often had to travel 
to Salt Lake City to have their cases and concerns heard.
  Provo itself is a significant city with a population of 86,835. The 
neighboring city of Orem, UT, adds a population of 67,561 to Provo's 
immediate region. St. George, while a smaller city, is located in the 
southwest corner of Utah, and would provide a convenient location for 
citizens of southern Utah.
  The minor modifications embodied in the bill will place Utah in a 
similar position to many other States in which district court may be 
held at numerous statutorily designated locations. The vast majority of 
States enjoy far more than two places in which district court can be 
held. Just to cite a few examples, 13 cities in Alabama are designated 
as cities in which district court may sit, 11 cities in Arkansas are so 
designated, 17 cities in Georgia are named, 12 cities in Iowa are 
included, and 23 cities in Oklahoma are listed.
  Under current law, only Delaware, Hawaii, Maine, New Hampshire, and 
Rhode Island stand with Utah in having two or fewer locations in which 
district court may be held. Utah is the largest of those States. Even 
with the change, a mere four cities in Utah will be designated as 
places for holding district court.
  I note for my colleagues that the bill does not require any 
additional appropriations or any courthouse construction. It simply 
permits court to be held in two additional locations.
  I ask unanimous consent that the entire text of the bill be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1666

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

     SECTION 1. HOLDING OF DISTRICT COURT IN PROVO AND ST. GEORGE, 
                   UTAH.

       Section 125(2) of title 28, United States Code, is amended 
     by inserting ``, Provo, and St. George'' after ``Salt Lake 
     City''.
                                 ______

      By Mr. KENNEDY:
  S. 1668. A bill to improve the job and income security and retirement 
security of the American worker, and for other purposes; to the 
Committee on Finance.


               THE AMERICAN WORKERS ECONOMIC SECURITY ACT

  Mr. KENNEDY. Mr. President, throughout the decades of the cold war, 
the paramount national concern was national security. Now with the end 
of the cold war, concern is growing rapidly over another type of 
security. This type of security has four aspects: job security, 
financial security, health security, and retirement security. For 
millions of individuals and families, the proper word in each of these 
aspects of their lives is ``insecurity,'' not ``security.'' No 
political party deserves to prevail if it fails to address these 
concerns and propose a plausible strategy to end them.
  The heart of the current crisis of economic insecurity is the growing 
realization that growth and prosperity no longer benefit all families 
fairly. The quarter century after World War II was a golden era. Hard 
work paid off as the economy grew and income rose for all. But no more.
  Superficial signs of prosperity abound. The stock market has soared. 
Inflation is consistently low and unemployment is down. But the 
prosperity is less than it seems. Americans are working harder and 
earning less. Their standard of living is stagnant or sinking. They are 
worried about losing their jobs, losing their health insurance, 
affording their children's education, caring for their elderly parents, 
and somehow still saving for their own retirement.
  The rich are still getting richer but more and more families are left 
out and left behind. The rising tide that once lifted all the boats is 
now lifting only the yachts.
  Mr. President, these two charts reflect, I think, in a dramatic way 
what has effectively been happening in the U.S. economy over the period 
of the recent years. From 1947 to 1979, virtually 30 years, we found 
that in each of the groups, the bottom 20 percent, second bottom 20 
percent, the middle 20 percent, the top 20 percent, the second top 20 
percent, and even the top 5 percent of Americans for almost 30 years--
30 years--effectively grew together, the real family income group. All 
Americans moved along and moved along together during periods of time 
when we had both recessions and inflation. Cumulatively over this 
period of time all Americans went along together.
  But from 1979 to 1993, in the most recent period of time, taken 
collectively, we will find out that those again at the bottom level, 
the next to the bottom level, and even in the middle have been 
virtually losing ground; that is, the bottom 60 percent, while the top 
40 percent have been moving well, and the top 5 percent has seen great 
growth, and the top 1 percent the largest growth. That reflects almost 
two-thirds of the American families over this period of time from 1979 
to 1993 have been, in most instances, working harder, struggling longer 
hours, and have been gradually falling behind in terms of the real 
family income growth during this period, while those at the top end 
have seen this extraordinary growth.
  Mr. President, once now profitable companies are even laying off good 
workers at unseemly rates for even fatter profits, even higher stock 
prices, and even more astronomical salaries and benefits for CEO's. And 
to add insult to injury, the fears on Main Street are met by cheers on 
Wall Street.
  We saw that in recent times when we saw the dramatic increase in the 
total number of jobs just a short while ago, 600,000 or 700,000 new 
jobs, and the stock market going down over 100 points. And we saw it 
conversely when we saw bank mergers that were taking place just several 
weeks ago, a couple months ago, that saw the announcement of the loss 
of some 20,000 jobs, and the stocks as a result of the mergers going 
right up through the roof.
  Mr. President, the Republican Contract With America is now largely 
defunct because it would have made these problems worse. Its massive 
cuts in Medicare, education, and other priorities would have 
exacerbated the security of most families, and the lavish tax breaks 
for the wealthy would have worsened the income gap. Clearly, the 
Republican strategy is to comfort the comfortable and afflict the 
afflicted.
  The Republican strategy is designed to exploit the income gap--but do 
nothing to solve it. In fact, half of all the spending cuts in the 
vetoed Republican budget came from programs benefiting the neediest 20 
percent of families. Less than a tenth came from the top 20 percent, 
while two-thirds of the Republicans' proposed tax breaks would flow to 
the top 20 percent, while the bottom 20 percent actually faced a tax 
increase.
  So we found even in the last proposal more was being demanded from 
the working families, less from the wealthiest individuals, and yet 
those families were going to be the ones who were going to benefit the 
greatest amount from those proposed cuts and benefits from the Tax 
Code. Practical steps, not demagoguery, are needed to deal with each of 
the four economic insecurities facing individuals and families.
  In other times, Congresses have enacted restraints on runaway free 
enterprise to end abuses and bolster the public interest. The most 
obvious precedents are the antitrust laws, civil rights laws, the child 
labor laws, minimum wage, Social Security, Medicare, Medicaid, and 
Federal aid to education.
  Today is April 15--tax day. Ordinary Americans across the country are 
filing their income taxes and wondering about their job security, their 
stagnant wages, their health care, their retirement, their ability to 
educate their

[[Page S3313]]

children, while our Republican colleagues are proposing tax breaks for 
the wealthiest individuals and corporations in America.
  Let us work together to increase economic security for all families. 
We can find ways to align the interest of individuals and industries 
and allow them to grow together so that corporations and shareholders 
can still reap profits, but not at the expense of the wages and 
standards of living of their employees.
  We should provide incentives to make it more profitable for employers 
to create jobs than eliminate them, share gains with employees rather 
than channel them solely to the CEO's and shareholders, and provide 
reasonable job training, health, and retirement benefits. We can pay 
for all those incentives by closing perverse incentives in the Tax Code 
that encourage firms to move jobs overseas and treat workers as 
disposable.
  Action on several fronts is already underway. The Kassebaum-Kennedy 
bill to guarantee health insurance for workers has bipartisan support 
and will be taken up this week in the Senate. It will deal with two 
flagrant problems in health insurance today--the excessive use of 
exclusions, the preexisting conditions, and the loss of insurance 
coverage when employees lose their job or change their job.
  The lesson of the health reform debate of 1994 is that a sharply 
divided Congress cannot make far-reaching changes in election years. 
Instead of repeating that mistake, we should enact the reforms that 
have broad bipartisan support and that are achievable this year, if 
both sides in the ongoing health reform debate refrain from piling on 
controversial additional provisions.
  Second, it is time to raise the minimum wage, which will soon reach 
its lowest level in 40 years. April 1 marked the fifth anniversary of 
the last increase in the minimum wage. Raising it from $4.25 an hour to 
$5.15 an hour, in two steps this year and next year, as President 
Clinton has proposed, will increase the wages of 13 million 
Americans. It will be interesting to see whether Senator Dole and other 
Republicans are prepared to join us as the debate goes on.

  Third, Congress should reform the immigration laws to end antiworker 
abuses. Republicans and Democrats speak with one voice in urging the 
strongest possible crackdown on illegal immigration. But reforms and 
legal immigration are needed, too, in order to give American workers 
the protection they need and deserve.
  We should make it illegal for U.S. firms to lay off American workers 
and replace them with cheap imported foreign labor. Before U.S. firms 
hire foreign workers they should make a good-faith effort to hire 
qualified American workers. If we refuse to enact reasonable 
restrictions to protect U.S. jobs, we will fuel the drive for extreme 
restrictions that will slam the door unfairly against all immigrants.
  Other steps are also needed to assist the American workers. Today, I 
am introducing a bill to create a two-tier tax rate for companies and 
encourage firms to act more responsibly toward their employees. If a 
company invests in education and training for its workers, provides 
adequate health care and retirement benefits, shares its profits with 
its workers, increases the wages of its work force at or above the 
Consumer Price Index, and makes child care available for all workers, 
it will receive a 25-percent reduction in the income tax rate it pays 
on profits distributed as dividends to shareholders on this portion of 
its income.
  The corporate tax rate will be reduced to 26 percent for corporations 
now taxed at 35 percent, and corporate reductions will be available to 
corporations now taxed at other rates. Under this plan, CEO's who 
resist measures to treat workers fairly will feel the wrath of 
shareholders, whose dividends will be lower because the corporations 
fail to act responsibly.
  This is a two-tier tax rate for most-favored companies. I will show 
the difference between company A and a most-favored company, using this 
chart. What we find out is that if they have the profits, they retain 
the profits--in this case, they distribute them. They pay the $35. It 
will amount to $70 in this illustration if it is a most-favored 
company. If they retained $100, but distributed to shareholders the 
$100 distribution, this would be a $25 tax reduction on the shares 
distributed to the shareholders, which would mean there would be $26 on 
this segment, meaning there would be $61 rather than the $70.
  So, the drive for this kind of reduction will be the shareholders 
that will be involved in this decision. This will rely on their 
interest, their involvement, their pressure, rather than a governmental 
institution or a State institution to be able to move this process 
forward. They will see, with the distribution, that their taxes on that 
distribution will be reduced.
  We reward other countries with tariff benefits if they qualify as 
most favored nations. We should create a category of most-favored 
companies and reward them when they treat their employees as assets.
  In addition, the bill I am introducing today provides that the 
Federal Government, with its billions of dollars in Government 
procurement and contracting, will give preference to these companies 
that treat their employees well and qualify for the tax benefits--about 
$85 billion, $85 to $100 billion in various contracts. Those most-
favored companies would have the preference when competing with a 
nonfavorite for a particular contract. That would be true, as well as 
extended loan provisions that come through the various loaning agencies 
of the Federal Government. That is a smaller figure, about $20 billion, 
but it is still very, very important, particularly for smaller 
companies, and smaller companies would be very much encouraged to 
participate.
  The bill also places new restraints on corporate mergers and 
acquisitions, which are causing enormous job insecurity for workers and 
substantial layoffs and serious dislocations for entire communities. 
This provision strengthens the antitrust laws by requiring a review of 
the impact of these mergers on workers.
  The Federal Trade Commission, the Justice Department, the Labor 
Department, and the Securities and Exchange Commission will give 
greater scrutiny to the corporate transactions likely to result in the 
closing or downsizing of company, facilities, or plants that are part 
of the lifeblood of local communities.

  Now, Mr. President, what we are talking about are the mergers and 
acquisitions, the amendments to the antitrust law. These two companies 
want to merge, so they go through a review. Then there is a judgment 
that is made that they will be able to go through and the merger will 
take place. As part of the remedy process, the commissions will 
consider not just competition considered at the present time but also 
consider the impact on workers and communities. They will consider both 
of those.
  We are not assigning percentages to each of them but we are taking 
note that we believe that if we have established the antitrust laws to 
consider competition between the various companies, that we also ought 
to encourage them to take a look at what the impact is going to be on 
working families. Not to say that has to override, but just that it has 
to be considered as they are making the remedies, to go forward with 
any of the new mergers or with any of the divestitures. That is the 
place this will go on through. We see the total number of mergers--
2,800 last year. They have been escalating dramatically. About 20 
percent of those are reviewed carefully by the Federal Trade Commission 
and DOJ. Only a small amount of them ever get into this kind of a 
process, but that is an extremely important item and can make a very, 
very important difference.
  Mr. President, in addition, the bill eliminates the tax deductions 
that encourage mergers and acquisitions and leveraged buyouts that cost 
American jobs and line the pockets of the financiers of the deals. 
Another major section protects retirement security by encouraging 
companies to provide greater pension coverage for employees.
  Last Thursday, President Clinton proposed a series of needed reforms 
in the current laws applicable to workers who now participate in 
pension plans. These reforms will encourage new pension plans for small 
businesses, expands IRA eligibility, increases pension portability and 
prevents pension raiding.

[[Page S3314]]

  In addition, I am proposing several other reforms to facilitate 
coverage for employees who do not have access to pension plans through 
their current employment plan. The bill establishes an individual 
pension plan mechanism for all individuals without access to employer-
based plans. Workers will no longer be dependent upon their employer 
for retirement planning and savings. The bill will provide portability 
to all these workers who could never before gain access to a pension 
plan. They will be able to take these plans with them from job to job. 
The employer's sole responsibility is the payroll deduction of the 
employees' savings.
  Less than 50 percent of the private work force is now covered by 
private pension plans. More than 68 million Americans have no pension 
coverage. Ironically, most of them work in smaller businesses, which 
are the driving force of the future economy. Yet their retirement needs 
are neglected. These are the workers who are the backbone of the 
economy during their working lives. They constitute more than half of 
the work force. We cannot ignore their retirement needs. Like health 
care, good pension coverage should be accessible, affordable, and 
portable.
  This chart demonstrates the alternative pension plan which is 
employer based. Here we have the IRA's. The proposal that I am 
introducing today, the individual pension plan which is the more 
acceptable, what this does, it says the employer will permit the 
contribution by the employee into a pension system, that that pension 
system is going to have to live up to fiduciary and ERISA standards, 
which will give greater protections for the individual pension plans 
and the advantage of portability over the IRA's. Individuals will be 
able to take, though, their portable pension plans with them.
  As we all know, most of the new jobs in the country are produced by 
the small businesses. Pension plans will serve the retirement needs of 
millions of existing and future small business workers with no pension 
options.
  Finally, the bill I am introducing expands educational opportunities 
for workers by offering them the tax benefits for employers and 
families. This is an issue that is familiar to most Members of this 
body. What we find out once again, to learn what is the level of income 
from those that both do not finish high school compared to those that 
complete various segments of their education. This chart is the average 
annual earnings by level of education. We see that those that do not 
finish high school and are employed earn $12,800; those that have 
professional degrees, earn $74,000. We know the stories of World War 
II. Every dollar invested was returned eight times to the Federal 
Treasury. The more incentives that we can provide to increase 
opportunities for education, the better off our economy and our ability 
to compete. We have incentives for both the training programs as well 
as tuition of programs spelled out.
  The bill pays for these provisions with revenues generated from the 
repeal of the incentives in the current tax law that encourage 
companies to close U.S. plants, uproot jobs in the United States, and 
transfer them to foreign countries abroad.
  We can save $40 billion or more over the next 7 years by repealing 
tax breaks for profits earned in foreign countries, tax exemptions for 
companies that transfer title to goods on the high seas to avoid U.S. 
taxes; price rigging by multinational corporations that minimize U.S. 
income and maximize income in foreign tax havens; sham corporations 
that generate huge tax deductions for moving plants and jobs overseas, 
and loopholes that allow billionaires to thumb their noses at Uncle Sam 
and renounce their American citizenship and move to a foreign tax haven 
to evade taxes on the massive wealth they have accumulated in America.
  The Members are familiar with this list because many of these have 
been offered by other Members of the Chamber at different times. We 
have already voted on the billionaires' tax loophole, which benefits a 
handful of Americans who have made substantial amounts of money--in 
some instances, billionaires. By renouncing their citizenship and 
moving overseas, they effectively escape all of the taxes on that money 
that was earned in the United States, and they avoid paying any of 
their tax obligations by just escaping and renouncing American 
citizenship. This is called the ``Benedict Arnold tax loophole.'' It is 
an appropriate name for it. The others are matters which raise some $40 
billion, and this is not even a complete list.
  We are, obviously, open to other recommendations, suggestions, or 
add-ons for this. But it does indicate that we do have an opportunity 
to reduce these kinds of incentives that, today, are impacting working 
families. We will hear that we should not use the Tax Code to achieve 
social outcomes. The fact of the matter is that these tax provisions, 
which exist in the Internal Revenue Code today, are all impacting and 
affecting adversely working families. We are saying, let us stop that. 
We cover the revenues here and provide the incentives for the American 
workers.
  The ``quiet depression'' facing American workers is the central 
economic, social, and political issue of 1996. When the economy is 
wrong, nothing else is right. Progress and opportunity for all is a 
fundamental American value. We know the problem. We know its urgency. 
The only thing that is unacceptable is to do nothing.
                                 ______

      By Mr. HARKIN:
  S. 1670. A bill to amend the Internal Revenue Code of 1986 to allow a 
deduction for postsecondary education expenses, to make permanent the 
exclusion for employer-provided education, and for other purposes; to 
the Committee on Finance.


              THE COMMONSENSE MIDDLE-CLASS TAX RELIEF ACT

 Mr. HARKIN. Mr. President, I introduce the Commonsense Middle-
Class Tax Relief Act.
  Today, middle-class Americans are working longer hours for smaller 
paychecks. American families deserve a raise. And that's just what my 
legislation provides--a raise in incomes, a raise in education and 
skills, and a raise in living standards.
  The Commonsense Middle-Class Tax Relief Act is based on a fundamental 
premise: a higher education means higher income.
  The bill would provide a $10,000 tax deduction for a person or their 
parents for the costs of tuition and fees at a college or for a 
vocational education. The full deduction would be available for 
families with an adjusted gross income of $80,000 and would be reduced 
as the income exceeded that level, being completely phased out when the 
taxpayer's income exceeded $100,000 for joint filing taxpayers.
  For individuals the full credit would be available for those with 
adjusted incomes of up to $60,000 phasing out completely at $80,000. 
For the current year, half of the $10,000 deduction would be available. 
The full $10,000 deduction would be available starting in 1997 and 
thereafter. This provision is similar to one proposed by President 
Clinton.
  Under existing law, post-secondary expenses can only be deducted 
under very narrow circumstances: if it is for the improvement of one's 
skills in a job a person holds above the skills needed to acquire that 
position, but to acquire additional skills required by the government 
or the employer to stay in the position.
  My measure also would restore the exclusion of employer-paid payments 
of post-secondary college and vocational education costs for 
improvement of an employee's job related skills that were allowed prior 
to January 1, 1995. It would make the exclusion permanent.
  The Commonsense Middle-Class Tax Relief Act will cut taxes on hard-
working families trying to get ahead, raise incomes, and prepare 
Americans for the 21st century. It will mean higher incomes, higher 
education, and higher quality jobs for hard-working Americans.
  Mr. President, education is key to both the raising of incomes of 
average Americans and to increasing the competitiveness of America in 
an increasingly global economy. I ask unanimous consent that a recent 
article in the Washington Post by Lester Thurow on this topic be 
included in the Record.
  Mr. President, I urge my colleagues to join me in support of this 
commonsense proposal. We should be able to agree on a bipartisan basis 
that this type of important middle-class tax relief is needed and will 
mean better opportunities and better incomes for millions of Americans.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

[[Page S3315]]

                [From the Washington Post, Apr. 7, 1996]

               Preparing Students for the Coming Century

                         (By Lester C. Thurow)

       Consider an alphabetical list of the 12 largest companies 
     in America at the turn of the 20th century; the American 
     Cotton Oil Company, American Steel, American Sugar Refining 
     Company, Continental Tobacco, Federal Steel, General 
     Electric, National Lead, Pacific Mail, People's Gas, 
     Tennessee Coal and Iron, U.S. Leather and U.S. Rubber. Ten of 
     the 12 were natural resource companies. The economy then was 
     a natural resource economy, and wherever the most highly 
     needed resources were to be found, employment opportunities 
     would follow.
       In contrast consider the list made 90 years later by the 
     Japanese Ministry of international Trade and Industry, 
     enumerating what it projected to be the most rapidly growing 
     industries of the 1990s: microelectronics, biotech, the new 
     material-science industries, telecommunications, civilian 
     aircraft manufacturing, machine tools and robots, and 
     computers (hardware and software). All are brainpower 
     industries that could be located anywhere on the face of the 
     earth. Where they will take root and flourish depends upon 
     who organizes the brainpower to capture them. And who 
     organizes the power most efficiently will depend on who 
     educates toward that objective best.
       But back to the industries for the moment: Think of the 
     video camera and recorder (invented by Americans), the fax 
     (invented by Americans), and the CD player (invented by the 
     Dutch). When it comes to sales, employment and profits, all 
     have become Japanese products despite the fact that the 
     Japanese did not invent any of them. Product invention, if 
     one is also not the world's low-cost producer, gives a 
     country very little economic advantage. Being the low-cost 
     producer is partly a matter of wages, but to a much greater 
     extent it is a matter of having the skills necessary to put 
     new things together.
       Wages don't depend on an individuals's skill and 
     productivity alone. To a great extent they reflect team 
     skills and team productivies. The value of any single 
     person's knowledge depends upon the smartness with which that 
     knowledge is used in the overall economic system--the 
     abilities of buyers and suppliers to absorb that individual's 
     skills.
       In an era of brainpower industries, however, the picture is 
     even more complicated: The economy is a dynamic economy 
     always in transition--the companies that do best are those 
     able to move from product to product within technological 
     families so quickly that they can always keep one generation 
     ahead. Keeping one jump ahead in software, for instance, Bill 
     Gates's Microsoft had a net income running at 24 percent of 
     sales in 1995.
       If a country wants to stay at the leading edge of 
     technology and continue to generate high wages and profits, 
     it must be a participant in the evolutionary progress of 
     brainpower industries so that it is in a position to take 
     advantage of the technical and economic revolutions that 
     occasionally arise. Knowledge has become the only source of 
     long-run sustainable competitive advantage. Recent studies 
     show that rates of return for industries that invest in 
     knowledge and skill are more than twice those of industries 
     that concentrate on plant and equipment. In the past, First 
     World citizens with Third World skills could earn premium 
     wages simply because they lived in the First World. They had 
     more equipment, better technology and more skilled co-workers 
     than those who lived in the Third World. But that premium is 
     gone Today's transportation and communications technologies 
     have become so sophisticated that high-wage skilled workers 
     in the First World can work together effectively with low-
     wage unskilled workers in the Third World. America's 
     unskilled now get paid based on their own abilities and 
     not on those of their better-trained co-workers.
       Industrial components that require highly skilled 
     manufacturers can be made in the First World and then shipped 
     to the Third World to be assembled with ``low skill'' 
     components. Research and design skills can be electronically 
     brought in from the First World. Sales results can be quickly 
     communicated to the Third World factory, and retailers know 
     that the speed of delivery won't be significantly affected by 
     where production occurs. Instant communications and rapid 
     transportation allow markets to be served effectively from 
     production points on the other side of the globe.
       Multinational companies are central in this process: Where 
     they develop and keep technological leadership will determine 
     where most of the high-level jobs will be located. If these 
     firms decide to locate their top-wage leadership skills in 
     the United States, it will not be because they happen to be 
     American firms but because America offers them the lowest 
     cost of developing these skills. The decisions will be purely 
     economic. If America is not competitive in this regard, the 
     market will move on. The countries that offer companies the 
     lowest costs of developing technological leadership will be 
     the countries that invest the most in research and 
     development, education and infrastructure (telecommunications 
     systems, etc.).
       If the person on a loading dock runs a computerized 
     inventory-control system in which he logs delivered materials 
     right into his hand-held computer and the computer instantly 
     prints out a check that is given to the truck driver to be 
     taken back to his firm (eliminating the need for large white-
     collar accounting offices that process purchases), the person 
     on the loading dock ceases to be someone who just moves 
     boxes. He or she has to have a very different skill set.
       Factory operatives and laborers used to be high school 
     graduates or even high school dropouts. Today 16 percent of 
     them have some college education and 5 percent have graduated 
     from college. Among precision production and craft workers, 
     32 percent have been to or graduated from college. Among new 
     hires those percentages are much higher. In the last two 
     decades, the linkage between math abilities and wages has 
     tripled for men and doubled for women.
       The skill sets required in the economy of the future will 
     be radically different from those required in the past. And 
     the people who acquire those skill sets may not be the 
     unskilled workers who currently live in the first world. With 
     the ability to make anything anywhere in the world and sell 
     it anywhere else in the world, business firms can ``cherry 
     pick'' the skilled or those easy (i.e., cheap) to teach 
     wherever they live. American firms don't have to hire an 
     American high school graduate if that graduate is not world-
     class. His or her educational defects are not their problem. 
     Investing to give the necessary market skills to a well-
     educated Chinese high school graduate may well end up being a 
     much more attractive (i.e., less costly) investment than 
     having to retrain an American high school dropout or a poorly 
     trained high school graduate.
       Take Korea for example. In a global economy, what 
     economists know as ``the theory of factor price 
     equalization'' holds that an American worker will have to 
     work for wages commensurate with a Korean's wages unless he 
     works with more natural resources than a Korean (and no 
     American can, since there is now a world market for raw 
     material to which everyone has equal access); unless he has 
     access to more capital than a Korean (and no American can 
     since there is a global capital market where everyone borrows 
     in New York, London and Tokyo); unless he has more skilled 
     co-workers than a Korean (and no American can claim to 
     since multinational companies can send needed knowledge 
     and skills anywhere in the world); and unless he has 
     access to better technology than a Korean (and few 
     Americans have, since reverse engineering--tearing a 
     product apart to learn how it is made--has become an 
     international art form; highly refined in Korea). Adjusted 
     for skills, Korean wages will rise and American wages will 
     fall until they equal each other. At that point, factor 
     price equalization will have occurred.
       The implications for the future are simple. If America 
     wants to generate a high standard of living for all of its 
     citizens, skill and knowledge development are central. New 
     brainpower industries have to be invented and captured. 
     Organizing brainpower means not just building a research and 
     development system that will put us on the leading edge of 
     technology, but organizing a top-to-bottom work force that 
     has the brainpower necessary to make us masters of the new 
     production and distribution technologies that will allow us 
     to be the world's low-cost producers.
       To do this will require a very different American 
     educational system. And building such a system is the new 
     American challenge.
       Progress has to start by ratcheting up the intensity of the 
     American high school. The performance of the average American 
     high school graduate simply lags far behind that found in the 
     rest of the industrial world. Those Americans who complete a 
     college course of study end up catching up (the rest of the 
     industrial world doesn't work very hard in the first couple 
     of years of university education), but three-quarters of the 
     American work force doesn't ever catch up.
       The skill gap doesn't end there. Non-college-bound high 
     school graduates elsewhere in the industrial world go on to 
     some form of post-secondary skill training. Germany has its 
     famous apprenticeship system; in France every business firm 
     by law has to spend one percent of its sales revenue on 
     training its work force; and with lifetime employment as a 
     fact of life, Japanese companies invest heavily in the work 
     force's skills since they know that it is impossible to hire 
     skilled workers from the outside. In America, government-
     funded programs are very limited in nature, and, with high 
     labor-force turnover rates, American companies quite 
     rationally don't want to make skill investments in people who 
     will leave and take their skills elsewhere. The net result is 
     a compounded skill gap for those Americans who do not 
     graduate from college. Closing this gap and giving the 
     country a competitive edge should be America's number one 
     educational priority.
                                 ______

      By Mr. HARKIN:
  S. 1671. A bill to provide for cockpit voice recorders and flight 
data recorders on noncombat aircraft of the Armed Forces; to the 
Committee on Armed Services.


          department of defense noncombat aircraft legislation

 Mr. HARKIN. Mr. President, I am introducing a bill that 
requires all Department of Defense noncombat aircraft to have both 
cockpit voice recorders and flight data recorders. I was shocked to 
learn that the airplane that crashed in Bosnia with tragic loss of 35

[[Page S3316]]

lives including Ron Brown, the Secretary of Commerce was not equipped 
with those important devices.
  We need to thoroughly understand why any plane crash occurs. With 
that knowledge, was can better protect other planes of a similar type. 
In this case, the Department of Defense plane used was very similar to 
civilian aircraft. In other cases that may not be true. But, in all 
cases, we need to fully understand crashes and near crashes to better 
improve our safety record.
  The bill provides that the Department of Defense should establish 
rules to require that noncombat aircraft contain those devices within 
120 days of enactment and that the devices be in place within 1 year. 
The legislation provides that the requirements for the Department be as 
similar as possible to those used by the FAA.
  On April 9, I wrote to Secretary Perry about this issue and asked how 
many DOD noncombat planes do not have these devices and what would be 
the cost of placing those devices into those aircraft. It is possible 
that there may be some narrow category of non-combat aircraft where 
these devices would not be appropriate because of the specialized 
nature of the aircraft or extreme cost. If that is the case, I look 
forward to learning about the specific situations involved. There may 
be a need for some exceptions. But, I believe that the Congress should 
move forward to require that these devices be on DOD aircraft as 
quickly as possible. I hope that we will act to pass this legislation, 
perhaps with some modification, very quickly.

                         ADDITIONAL COSPONSORS


                                 S. 358

  At the request of Mr. Heflin, the name of the Senator from Nebraska 
[Mr. Kerrey] was added as a cosponsor of S. 358, a bill to amend the 
Internal Revenue Code of 1986 to provide for an excise tax exemption 
for certain emergency medical transportation by air ambulance.


                                 S. 605

  At the request of Mr. Dole, the name of the Senator from North 
Carolina [Mr. Helms] was added as a cosponsor of S. 605, a bill to 
establish a uniform and more efficient Federal process for protecting 
property owners' rights guaranteed by the fifth amendment.


                                 S. 743

  At the request of Mrs. Hutchison, the name of the Senator from 
Vermont [Mr. Leahy] was added as a cosponsor of S. 743, a bill to amend 
the Internal Revenue Code of 1986 to provide a tax credit for 
investment necessary to revitalize communities within the United 
States, and for other purposes.


                                 S. 773

  At the request of Mrs. Kassebaum, the names of the Senator from 
Michigan [Mr. Abraham] and the Senator from South Dakota [Mr. Daschle] 
were added as cosponsors of S. 773, a bill to amend the Federal Food, 
Drug, and Cosmetic Act to provide for improvements in the process of 
approving and using animal drugs, and for other purposes.


                                 S. 912

  At the request of Mr. Kohl, the name of the Senator from Oregon [Mr. 
Wyden] was added as a cosponsor of S. 912, a bill to amend the Internal 
Revenue Code of 1986 with respect to the eligibility of veterans for 
mortgage revenue bond financing, and for other purposes.


                                 S. 969

  At the request of Mr. Bradley, the name of the Senator from New York 
[Mr. D'Amato] was added as a cosponsor of S. 969, a bill to require 
that health plans provide coverage for a minimum hospital stay for a 
mother and child following the birth of the child, and for other 
purposes.


                                 S. 984

  At the request of Mr. Grassley, the name of the Senator from Montana 
[Mr. Burns] was added as a cosponsor of S. 984, a bill to protect the 
fundamental right of a parent to direct the upbringing of a child, and 
for other purposes.


                                S. 1027

  At the request of Mr. Brown, the name of the Senator from 
Pennsylvania [Mr. Santorum] was added as a cosponsor of S. 1027, a bill 
to eliminate the quota and price support programs for peanuts, and for 
other purposes.


                                S. 1028

  At the request of Mrs. Kassebaum, the name of the Senator from 
Maryland [Mr. Sarbanes] was added as a cosponsor of S. 1028, a bill to 
provide increased access to health care benefits, to provide increased 
portability of health care benefits, to provide increased security of 
health care benefits, to increase the purchasing power of individuals 
and small employers, and for other purposes.


                                S. 1043

  At the request of Mr. Stevens, the name of the Senator from Louisiana 
[Mr. Breaux] was added as a cosponsor of S. 1043, a bill to amend the 
Earthquake Hazards Reduction Act of 1977 to provide for an expanded 
Federal program of hazard mitigation, relief, and insurance against the 
risk of catastrophic natural disasters, such as hurricanes, 
earthquakes, and volcanic eruptions, and for other purposes.


                                S. 1183

  At the request of Mr. Hatfield, the name of the Senator from 
Connecticut [Mr. Dodd] was added as a cosponsor of S. 1183, a bill to 
amend the act of March 3, 1931 (known as the Davis-Bacon Act), to 
revise the standards for coverage under the act, and for other 
purposes.


                                S. 1232

  At the request of Mr. D'Amato, the name of the Senator from 
Mississippi [Mr. Cochran] was added as a cosponsor of S. 1232, a bill 
to amend the Internal Revenue Code of 1986 to exclude length of service 
awards to volunteers performing fire fighting or prevention services, 
emergency medical services, or ambulance services from the limitations 
applicable to certain deferred compensation plans, and for other 
purposes.


                                S. 1344

  At the request of Mr. Heflin, the name of the Senator from 
Connecticut [Mr. Lieberman] was added as a cosponsor of S. 1344, a bill 
to repeal the requirement relating to specific statutory authorization 
for increases in judicial salaries, to provide for automatic annual 
increases for judicial salaries, and for other purposes.


                                S. 1400

  At the request of Mrs. Kassebaum, the name of the Senator from New 
Hampshire [Mr. Gregg] was added as a cosponsor of S. 1400, a bill to 
require the Secretary of Labor to issue guidance as to the application 
of the Employee Retirement Income Security Act of 1974 to insurance 
company general accounts.


                                S. 1483

  At the request of Mr. Kyl, the name of the Senator from Minnesota 
[Mr. Grams] was added as a cosponsor of S. 1483, a bill to control 
crime, and for other purposes.


                                S. 1505

  At the request of Mr. Lott, the name of the Senator from Tennessee 
[Mr. Frist] was added as a cosponsor of S. 1505, a bill to reduce risk 
to public safety and the environment associated with pipeline 
transportation of natural gas and hazardous liquids, and for other 
purposes.


                                S. 1551

  At the request of Mr. Dorgan, the names of the Senator from Illinois 
[Mr. Simon] and the Senator from Minnesota [Mr. Wellstone] were added 
as a cosponsors of S. 1551, a bill to restore the broadcast ownership 
rules under the Communications Act of 1934 to the status quo ante the 
enactment of the Telecommunications Act of 1996.


                                S. 1574

  At the request of Mr. Bond, the name of the Senator from Virginia 
[Mr. Warner] was added as a cosponsor of S. 1574, a bill to provide 
Federal contracting opportunities for small business concerns located 
in historically underutilized business zones, and for other purposes.


                                S. 1578

  At the request of Mr. Frist, the names of the Senator from Montana 
[Mr. Burns] and the Senator from Alaska [Mr. Stevens] were added as 
cosponsors of S. 1578, a bill to amend the Individuals With 
Disabilities Education Act of authorize appropriations for fiscal years 
1997 through 2002, and for other purposes.


                                S. 1595

  At the request of Mr. Bradley, the name of the Senator from 
California [Mrs. Boxer] was added as a cosponsor of S. 1595, a bill to 
repeal the emergency salvage timber sale program, and for other 
purposes.

[[Page S3317]]

                                S. 1623

  At the request of Mr. Warner, the names of the Senator from Hawaii 
[Mr. Akaka] the Senator from Illinois [Ms. Moseley-Braun], the Senator 
from California [Mrs. Feinstein], and the Senator from Vermont [Mr. 
Jeffords] were added as cosponsors of S. 1623, a bill to establish a 
National Tourism Board and a National Tourism Organization, and for 
other purposes.


                                S. 1639

  At the request of Mr. Dole, the name of the Senator from Virginia 
[Mr. Robb] was added as a cosponsor of S. 1639, a bill to require the 
Secretary of Defense and the Secretary of Health and Human Services to 
carry out a demonstration project to provide the Department of Defense 
with reimbursement from the medicare program for health care services 
provided to medicare-eligible beneficiaries under TRICARE.


                                S. 1646

  At the request of Mr. Domenici, the names of the Senator from Arizona 
[Mr. Kyl] the Senator from Georgia [Mr. Coverdell], and the Senator 
from Arkansas [Mr. Pryor] were added as cosponsors of S. 1646, a bill 
to authorize and facilitate a program to enhance safety, training, 
research and development, and safety education in the propane gas 
industry for the benefit of propane consumers and the public, and for 
other purposes.


                                S. 1650

  At the request of Mr. Harkin, the names of the Senator from 
California [Mrs. Boxer] and the Senator from Rhode Island [Mr. Pell] 
were added as cosponsors of S. 1650, a bill to amend the Fair Labor 
Standards Act of 1938 to prohibit discrimination in the payment of 
wages on account of sex, race, or national origin, and for other 
purposes.


                         S. Joint Resolution 49

  At the request of Mr. Kyl, the name of the Senator from Virginia [Mr. 
Warner] was added as a cosponsor of Senate Joint Resolution 49, a joint 
resolution proposing an amendment to the Constitution of the United 
States to require two-thirds majorities for bills increasing taxes.


                         Senate Resolution 152

  At the request of Mr. Abraham, the name of the Senator from Tennessee 
[Mr. Frist] was added as a cosponsor of Senate Resolution 152, a 
resolution to amend the Standing Rules of the Senate to require a 
clause in each bill and resolution to specify the constitutional 
authority of the Congress for enactment, and for other purposes.


                         Senate Resolution 226

  At the request of Mr. Domenici, the names of the Senator from Maine 
[Mr. Cohen], the Senator from Hawaii [Mr. Akaka], the Senator from 
Rhode Island [Mr. Pell], the Senator from New Mexico [Mr. Bingaman], 
and the Senator from Georgia [Mr. Coverdell] were added as cosponsors 
of Senate Resolution 226, a resolution to proclaim the week of October 
13 through October 19, 1996, as ``National Character Counts Week.''


                         Senate Resolution 238

  At the request of Mr. Helms, the names of the Senator from Colorado 
[Mr. Brown] and the Senator from Iowa [Mr. Grassley] were added as 
cosponsors of Senate Resolution 238, a resolution expressing the sense 
of the Senate that any budget or tax legislation should include 
expanded access to individual retirement accounts.

                          ____________________