[Congressional Record Volume 142, Number 59 (Thursday, May 2, 1996)]
[Senate]
[Pages S4619-S4627]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           THE WORKING FAMILIES ECONOMIC SECURITY ACT OF 1996

  Mr. WELLSTONE. Mr. President, I rise today to introduce the Working 
Families Economic Security Act of 1996. This legislation is an effort 
to bring together in one comprehensive bill a number of items that have 
been on my legislative agenda for working families over the years, 
along with a number of new ideas, and to move forward on them in this 
Congress. It does not address every issue vital to the economic 
prosperity of American families; it does not pretend to. It is simply 
one more way of ensuring that bread-and-butter economic issues, which 
are so important to people in my State and throughout the country, are 
brought back front-and-center to the attention of this Congress, which 
has so far all but ignored them. Passing this omnibus legislation would 
be a good step toward protecting the working people who are the 
backbone of our economic, political and social system. This bill 
contributes significantly to efforts within the Democratic caucus in 
the Senate on improving the paycheck security, health security, and 
retirement security of all Americans.
  The very real and historic changes that have rocked the American 
economy have helped some Americans, but have done great harm to many 
others. While some of the statistics that we use to measure the 
performance of the economy and to gauge the standard of living seem to 
show that the U.S. economy is doing well, the reality for many is that 
good-paying jobs are being lost in the face of unprecedented downsizing 
by many firms. Many of the new jobs that are being created pay lower 
wages; corporate executives' salaries are rising, while workers' 
salaries are declining; the health insurance system is inadequate to 
the tasks of the modern workplace. There is deep apprehension and 
concern about the future.
  Let me give just one recent example from Minnesota. I visited during 
the recess with members of the Cusick family in Duluth about their 
economic worries. A life-long resident of Duluth, Ken Cusick will 
graduate this Spring from the University of Minnesota-Duluth. He has 
three kids and a wife who works, and yet they struggle every day. They 
worry about having money to pay for groceries, day care costs for their 
kids, and rising education costs.
  Their lives reflect a broader reality in our country. Underneath the 
numbers which reflect record highs in the stock market, low 
unemployment, and slow growth in the economy, a time bomb is ticking 
for American families. Many workers are in fact being left behind, with 
only dim hope for a brighter future. They are working more and earning 
less. And even though some Clinton administration economic advisers 
have begun to highlight certain positive economic news, including in a 
report last week that challenges certain assumptions about lay-offs and 
jobs in the economy, I agree with Labor Secretary Reich: it is still 
true that for many, especially low and moderate income working people, 
the economic recovery is spotty, partial, and has failed to increase 
their real take-home pay.
  Many working families today are afraid. Workers fear losing their 
jobs, having no money for retraining, losing their pensions and health 
care, not being able to take care of aging parents, and paying for 
their kids' college. And they are angry that their wages are stagnant 
while corporate executives--even those who may be failing in their 
jobs--reap windfall salaries for downsizing their firms, and putting 
good people out of work.
  Twenty years ago the typical CEO of a large company earned 30 or 40 
times the salary of an average worker. Today that CEO earns almost 200 
times more. A recent survey of American CEOs reported in the New York 
Times indicates that CEO compensation last year rose at the fastest 
rate since the mid-1980's, skyrocketing by 31 percent in 1995 alone. 
This increase was double the rise in 1994, and triple the one in 1993. 
This illustrates a larger societal trend that is spinning out of 
control: the vast majority of the economic gains in today's economy are 
going to the very wealthy few, while working men and women are being 
short-changed.
  For example, from WWII until the 1970's, American workers were 
responsible for an almost 90 percent increase in productivity. In 
return, their real wages increased by over 95 percent. But from 1973 to 
1982, workers got only half as much of an increase in real wages as 
they gave in new productivity. And from 1982 through 1994, they got 
only a third as much.
  This legislation addresses a number of basic economic concerns of the 
average American. It includes an increase in the minimum wage; a means 
to directly address government subsidization of growing wage 
disparities, protections for striking workers, a streamlining and 
expansion of job retraining, and modest health care portability 
reforms. It embodies a number of initiatives that I've worked on over 
the years, as well as some new ideas that I think must be part of an 
economic program to provide real economic security for America's 
families. I know this Congress won't act on all these initiatives, but 
I hope we will act on some this year. Those which remain may have to 
wait for a new Congress to be elected, controlled by a Democratic Party 
which considers the interests of working Americans priority one.


                              Minimum Wage

  This provision would raise the Federal minimum wage from the current 
$4.25 to $5.15 by 1997. But unlike some other approaches, it proposes 
to index the minimum wage to prevent its erosion by inflation or by 
long periods of Congressional inaction to the point where it is no 
longer possible for minimum wage workers to lift themselves or their 
families out of poverty. This measure provides for modest but overdue 
increases and, most important, begins to narrow the gap between the 
minimum wage and a living wage. I am

[[Page S4620]]

pleased that we are now moving forward on the minimum wage, and I 
intend to push it forward with Senator Kennedy and others until it's 
enacted. So far, we've been blocked from even getting a clean, up-or-
down vote on raising the minimum wage, but that can't be blocked 
forever. Sooner or later, democracy must rule, and we will get a vote.

  It is unacceptable that today an American who works full-time, year 
round at the minimum wage--even with the expanded earned income tax 
credit--does not earn enough to bring a family of three above the 
poverty line. At $4.25 an hour, a person working 40 hours a week at the 
minimum wage earns just $170 a week--before taxes and Social Security 
are deducted.
  The current Federal poverty line for a family of four is about 
$15,500. Even with the tax credits available to them under current law, 
and food stamps, a family with one worker at the minimum wage would end 
up about $900 below the poverty line. But at $5.15 an hour, this same 
family would--when you factor in the earned income tax credit and a 
food stamp benefit--be lifted above officially defined poverty levels. 
This 90-cent increase would literally lift them above the line. For 
people like 26-year-old Mike Kochevar, a single dad living in Hibbing 
while he attends the Hibbing Community College, raising the minimum 
wage even modestly would be a big help. He works two jobs, and is 
struggling to make it.
  What would such an increase mean for these workers, in practical 
terms, in their daily lives? It would mean an extra $1,800 or so in 
their pocket, for one thing. And that means more than 7 months of 
groceries, or rent and mortgage payments for a few months, or a full 
year of health care costs, or a season of heating bills in my State.
  I know that minimum wage opponents will make the same dire 
predictions of job loss and damage to the economy that have been made 
every time the minimum wage has been increased since 1938. But the 
textbook economic theory that increases in the minimum wage result in 
large job losses has never had solid empirical support. Recent studies 
by leading economists who examined the results of the most recent 
increases in both State and Federal minimum wages have concluded 
otherwise. I was sent to Washington to be on the side of hardworking 
Minnesotans who are struggling to make ends meet. That's why I am 
pushing this so hard, and why I intend to push it until it's enacted 
into law.


                             Income Equity

  As I have already noted, in recent years there has been a growing 
wage gap between senior corporate executives and their employees. What 
is more remarkable is that the Federal Government helps to subsidize 
this disparity by allowing corporations to deduct these fantastic 
salaries. Current law prevents employer deductions for employee 
salaries over a million dollars, with an exception for performance-
based pay. I believe it is unfair for employers to deduct the first 
million dollars of the huge and growing salaries of corporate 
executives, while the real wages of workers are declining. This 
provision is a modest proposal; it is meant to ensure that the United 
States is not subsidizing gross wage disparities through the Tax Code, 
by barring employers from writing off that portion of salaries above 
the ratio set in the bill. Specifically, it would prohibit employers 
from deducting employee compensation--salaries, wages and bonuses--that 
are more than 25 times higher than the salary of their lowest paid 
worker.


                    Protections for Striking Workers

  This legislation is needed to protect American workers who go out on 
strike. There are two central principles of American labor law: workers 
have a right to organize without being retaliated against for 
exercising that right. And they have a right to negotiate wages, 
benefits and other items through collective bargaining. Since the 
1980's, these rights have been seriously jeopardized, with the use of 
permanent replacements for striking workers increasing dramatically. 
Employers often use the permanent replacement of striking workers--or 
threat of their use--to undermine collective bargaining agreements, and 
bring in new employees. Mergers and acquisitions, leveraged buyouts, 
and the rise of a new breed of employers focused solely on short-term 
profits has created a new climate for labor-management relations, in 
which workers are considered by some to be expendable, and negotiated 
agreements subject to arbitrary and one-sided suspension.
  Under current law, while employers may not fire employees for 
engaging in a legal economic strike, they may permanently replace 
striking workers; a distinction only a lawyer could love. This 
provision would bar the hiring of permanent replacements for striking 
workers. Recent strikes where employers have hired permanent 
replacements for striking workers, or have threatened to, underscore 
the urgent need for this change. Without it, the right to strike is 
nothing more than a right to be fired. A related provision would 
require the timely mediation or arbitration of initial contract 
negotiation disputes, to prevent employers from refusing to negotiate 
first contracts with a duly-elected bargaining unit.
  Under my legislation, employers would be compelled to negotiate in 
good faith with a new bargaining unit. This measure would provide that, 
if within 60 days of bargaining unit certification a first contract is 
not agreed to, the parties would enter into negotiations with the help 
of a mediator. If within 30 days the mediator could not bring the two 
sides to agreement, the contract would go to binding arbitration.
  Those provisions of this bill that I've outlined go a long way toward 
protecting people in their current jobs, and bolstering their wages. 
But we must also address the concerns American workers have about their 
futures.


                           Lifelong Learning

  We in Congress have a responsibility to help American workers plan 
and improve their futures. To prepare our work force for future jobs. 
And to provide some security while people are in transition between 
jobs. One of the most important forms of help that we can provide 
American working people is relevant, effective job training delivered 
in the most efficient way possible for jobs that really exist, and that 
pay a decent wage.
  Lifelong learning has never been more critical, and we must do all we 
can to give people access to the resources they need to retool their 
skills. For too long, the Federal job training system has been too 
cumbersome, with duplicative programs that have not always been 
effective. And so this legislation includes provisions to streamline 
and consolidate these programs, and expand job training opportunities 
for workers. Carol Turner, director of older worker retraining for the 
Duluth Workforce Center, confirmed for me the other day that in her 
city, this kind of coordination, coupled with expanded local control, 
is critical to getting people off welfare and increasing their standard 
of living.
  It would streamline the job training process for all Americans, 
including welfare recipients, by consolidating existing programs, and 
establishing state and local work force development boards to 
coordinate programs within each State. It would encourage States to 
develop one-stop delivery systems for employment services; my State has 
been one of the leaders in this field. It provides continued funding 
for summer jobs and other special training programs that have been so 
successful. And it imposes a cap on the amount of job training funds 
that can be used by States for economic development activities, to make 
sure that Federal funds are in fact being used for retraining. The bill 
retains Job Corps as a national program, with strict national oversight 
standards, a zero-tolerance drug policy, and other key reforms.


                        Health Insurance Reform

  One of the most alarming developments for workers has been the 
growing fear of losing their health insurance. In order to help workers 
plan for their futures, this legislation will make it easier for 
individuals and employers to buy and keep health insurance--even when a 
family member or employee becomes ill. And it will allow people to 
change jobs without fear of losing their health coverage. For folks 
like the Edgett family of Duluth, who lost their coverage when they 
decided to start their own small business, these kinds of efforts to 
make health care more affordable and more portable would be a big help. 
And the same goes for millions of other Americans.

[[Page S4621]]

  Despite past State and Federal reform efforts, the lack of 
portability of health insurance remains a serious concern for many 
Americans, particularly those with preexisting health conditions. The 
General Accounting Office estimates that as many as 25 million 
Americans could benefit from this legislation.
  This legislation builds upon and strengthens the current private 
insurance market by guaranteeing that private health insurance coverage 
will be available, renewable, and portable; by limiting preexisting 
condition exclusions; and by increasing the purchasing clout of 
individuals and small employers through incentives to form private, 
voluntary coalitions to negotiate with providers and health plans. It 
also provides for parity between mental health and other health care 
benefits; its adoption would be an historic step forward in our 
treatment of those with mental health problems in this country.
  Enactment of the bill would help millions of workers who lose their 
employer-based coverage and are then turned away by other insurers. It 
also would make it easier for workers to change jobs or start their own 
businesses without fear of losing their health insurance. It would 
accomplish this by prohibiting employers from denying coverage of a 
preexisting medical condition to an applicant for more than 1 year. 
After that year, no preexisting condition limits could be imposed on 
anyone who maintains coverage, even if the person changes jobs or 
insurance plans. In addition, individuals switching from a group plan 
to an individual plan could not be denied coverage as long as they 
maintained continuous coverage. Finally, health plans would not be 
allowed to drop enrollees who pay their premiums, even if they become 
chronically ill.
  The bill also includes provisions to protect retirees, their spouses 
and dependents from abrupt termination--or substantial reduction--of 
certain health care benefits. It would require courts to order 
employers to provide benefits while benefit disputes are litigated, 
impose upon employers the burden of proof when health care contracts 
are silent or ambiguous about changes, and require advance warning by 
employers of their intent to modify retiree benefit packages.
  While this is by no means comprehensive reform, it is a good first 
step. Even people with good health insurance coverage cannot count on 
protection if they lose or change jobs, especially if someone in their 
family has a preexisting condition. Our current health care system 
allows insurers to collect premiums for years and then suddenly refuse 
to renew coverage if individuals or employees get sick. It also allows 
insurers to routinely deny coverage to different types of businesses 
from auto dealers to restaurants.
  Many States, including Minnesota, have already enacted standards for 
insurance carriers, but because ERISA preemption prevents States from 
regulating self-funded health plans, only Federal standards can apply 
to all health plans. More and more employers in Minnesota have been 
choosing to offer self-funded plans to employees. Such plans now enroll 
about 1.5 million people, up from 890,000 in 1992, and about 50 percent 
of all privately insured residents. Current estimates also show that 
more than 400,000 Minnesotans--including 91,000 children--are 
uninsured.

  While I am committed to fighting for comprehensive reforms that would 
include everyone and enable working families to afford health care 
coverage as good as Members of Congress have, I recognize that this may 
not happen this year. At the very least, we should act on reforms that 
would address some of the most egregious inequities in our current 
system, as well as those that would allow States to expand access and 
contain costs.


                             Pension Reform

  It is clear that this country needs strong, enforceable pension 
protections. The President has made some recent proposals to strengthen 
pension security, which we should consider seriously in the coming 
months. But the new Republican majority is moving in the other 
direction. They have passed so-called reforms, vetoed once, that would 
again make it easy for companies to raid ``over-funded'' pension plans. 
At a minimum we must preserve protections in current law that prohibit 
companies from raiding the pension plans of their employees. As we have 
all seen, overfunded plans can quickly become underfunded with a change 
in interest rates, or changes in the stock markets. For example, if 
interest rates decline by 2 percent--as they did between November 1994 
and December 1995--a plan's funding level can drop from 125 percent to 
around 90 percent within a matter of weeks.
  During the 1980's, when pension assets grew with a rising stock 
market, companies took over $20 billion from over 2,000 pension plans 
covering 2.5 million workers and retirees. In many cases, these 
companies took the funds from overfunded plans while allowing 
significant underfunding in other plans. In 1990, this practice was 
stopped virtually dead in its tracks by changes in law which made such 
raids prohibitively expensive by imposing a 50-percent excise tax on 
companies that did it. Republican proposals to weaken these and related 
pension rules could allow companies to draw another $15 billion or more 
out of these plans, potentially effecting another 4 million workers and 
retirees in 6,000 plans over the next 5 years. Similar efforts to dip 
into workers' pension plans have been a major problem for workers in my 
State, including those who worked for many years at Reserve Mining Co.
  There is a real problem with the low rate of private savings in this 
country, including for retirement. Comprehensive pension, Social 
Security, and other retirement security reforms are difficult issues to 
address adequately. Even so, it is critical that we do so, especially 
since there are many proposals, some quite radical in their scope, now 
floating around to do things like privatize the Social Security System 
and create so-called super-IRA's, allowing people to invest all or part 
of their Social Security funds in the stock markets, instead of in 
Government securities--where they would be more secure but perhaps 
offer slightly lower overall returns.
  As the baby boomer generation moves toward retirement, these 
retirement security issues, along with questions about savings rates, 
portability of pensions, 401(k) plan use, and related matters could 
become more urgent. To look at the long-term implications of these and 
other proposed changes to our retirement security policies, I am today 
calling for the establishment of a bipartisan commission to make 
recommendations to Congress on how best to reform our retirement 
security programs in a way that would have the most beneficial impact 
on the largest number of people, similar to a bill that was introduced 
recently on the House side.


                        Corporate Accountability

  The rash of lay-offs, corporate restructurings, and other economic 
dislocations that have rocked the American economy pose serious 
problems for American workers, their families, and communities, and 
have contributed to the widening income gaps in our society. For years, 
we have seen a growing trend toward an almost exclusive focus on the 
bottom line in many corporations, with firms caught in a web of 
leveraged buy-outs, mega-mergers, swiftly changing markets, and other 
forces. While we are all committed to a free economy, we cannot sustain 
a prosperity that permits us to be divided between the wealthy few and 
the worried many.
  Corporations must keep in mind the interests of all of their 
stakeholders in making economic decisions, and not just stockholders. 
Workers, communities, State governments which provide economic 
incentives, suppliers and contractors, and a host of other stakeholders 
should all be considered as firms make economic decisions.
  This bill attempts to create incentives for firms to engage in more 
responsible, forward-looking, stakeholder-driven decisionmaking. It 
outlines a proposed set of corporate responsibility principles that 
businesses would have to observe as a condition to qualify for certain 
preferential treatment in Federal contracting. These principles 
include, among others, providing a safe and healthy workplace; ensuring 
fair employment, including avoiding discrimination in hiring; observing 
environmental protections; promoting good business practices; 
maintaining a corporate culture that

[[Page S4622]]

respects free expression; and encouraging similar behavior by partners, 
suppliers and subcontractors. This proposal would require that, in its 
procurement process, the Federal Government give a preference to 
contractors that adopt and enforce this corporate code of conduct; it 
would also provide for periodic reviews to ensure compliance with the 
code.
  I believe we must encourage responsible citizenship by firms doing 
business with the Government, and this provision moves us in that 
direction. I am skeptical of providing additional tax subsidies as some 
have proposed, and I think this alternative approach deserves 
consideration. I know that there are a host of other approaches, such 
as those that have caught fire in my State and elsewhere, which require 
that a living wage--not just a minimum wage--be paid by companies that 
receive government benefits. I want to pursue this and other similar 
ideas which are bubbling up from the grassroots, because I think they 
too are interesting ways to prompt firms to act more responsibly, and 
to combat the growing layoffs that have so shaken our economy.


                         Fair Trade Under NAFTA

  Many Americans today are concerned about losing good jobs in this 
country when U.S. employers seek cheaper labor abroad. I did not 
support the North American Free-Trade Agreement. I believed then, and 
do now, that this particular agreement is not in the best interests of 
the workers of Mexico, Canada, or the United States. I believe we have 
an obligation to guarantee that workers and environmental interests are 
not compromised. And so I have included a title in my omnibus 
legislation that is an effort to strengthen NAFTA and at the same time 
protect the interests of all workers.
  The legislation I am proposing would direct the President to 
renegotiate portions of the North American Free-Trade Agreement to 
address the negative effects of the agreement's implementation since 
January 1994. The renegotiation would seek to achieve the original 
promises of NAFTA: to improve the standard of living and quality of 
life for United States citizens, as well as those of Mexico and Canada. 
A positive, fair NAFTA would open markets in a way that promotes a 
high-wage, high-skill strategy of growth for the whole continent, 
promotes environmental and consumer protection, and contributes to real 
development and democracy.
  Instead, available evidence indicates NAFTA has failed and has 
contributed to a substantial U.S. trade deficit, loss of jobs, 
suppression of wages, and to downward pressure on environmental and 
health standards and conditions.
  I am not opposed to free trade. I am in favor of fair trade and fair 
trade agreements. I believe these changes would take us along the road 
of building a solid foundation for the future of our workers, our 
health, and the future of the entire region.
  Mr. President, I hope this bill, and other measures to bring the 
issues of economic security for working families back to center stage, 
will be acted on soon. I intend to continue to press legislation to 
address these issues here in the Senate--it was what I was elected to 
do. I urge my colleagues to cosponsor this important legislation, and 
to support its key elements as I bring some of them to the Senate floor 
in the coming months.
  Mr. President, the Working Families Economic Security Act of 1996 is 
really an effort on my part as the Senator from Minnesota pulling 
together a lot of different legislation and a lot of work that I have 
been doing in the Senate over the years and putting it into one bill. 
The reason I do so is that I really feel as if Minnesota and the 
country are kind of leading the way in telling us what we must do, the 
work that they think is important that connects to their lives.
  I am a cafe politician, and I try to spend as much time as possible 
with coffee and pie--probably too much pie--in cafes in Minnesota, just 
sitting down with people and talk and listen --and listen. What I hear, 
Mr. President, is, ``Senator, I am retired. I don't want anybody to 
take my pension away.''
  One provision in this legislation makes it crystal clear there can be 
no skimming of hard-earned pension money. That belongs to the 
employees. It belongs to nobody else. No large multinational 
corporation will be allowed to skim pension money from any man or woman 
retired in Minnesota or anywhere in the country. People say to me in 
cafes in Minnesota, ``Senator, it is just outrageous to me that if I 
have a bout with cancer in my 50's, I might see my insurance policy 
canceled.''
  This bill includes the insurance reform provisions that we should 
pass anyway that make sure that the insurance companies no longer are 
able to continue with this discrimination. It is just outrageous that 
an insurance company would not provide coverage to someone because of a 
bout with an illness, or that somebody cannot transfer from one job to 
another or start a small business in Minnesota or in Colorado or in New 
Mexico with this kind of discrimination against them because they have 
had a bout with cancer or because they are a diabetic.
  Mr. President, Minnesotans say to me in cafes, ``Senator, I don't 
know what your colleagues are thinking, but let me tell you, $4.25 an 
hour to $5.15 an hour, increasing the minimum wage nationwide is an 
additional $1,800. For that, I can pay my energy bill; for that, I can 
purchase health insurance for myself and my children; for that, I can 
go to a community college; for that, I can put food on the table.'' 
This includes raising the minimum wage to $5.15 an hour.
  Mr. President, Minnesotans say to me in cafes, ``Senator, I am really 
worried because I am 50 years old and I read the papers and I know that 
people are being downsized, restructured out of work. What will happen 
to me?'' So there is a strong emphasis here on education and job 
training in this legislation. I think we have to redefine education as 
a teacher. It is no longer K through 12. It is for longer--K through 
higher education. It is K through 65. People should not just be spit 
out of the economy with nowhere to go, people who have worked hard and 
are skilled. We should give skilled men and women an opportunity, if 
they lose their job in one company through no fault of their own, to be 
able to go back to school to have the skills development to find a job, 
a good job, somewhere else in the economy. There is a strong emphasis 
on education and job training.

  Mr. President, this legislation also focuses on, in general, the 
issue of economic opportunities. People say to me in cafes, ``Senator, 
our children are in their 20's. They cannot find a job paying a decent 
wage with decent fringe benefits.''
  So, Mr. President, let me just say, I think from pension funds to 
health care to decent jobs at decent wages, to educational 
opportunities, to putting an end to this obscene disparity tax, funded 
disparity between CEO's salaries and wage earners, to some sort of 
accountability, that we call on large multinational corporations to be 
accountable. I think this is the direction people want us to go in. 
These are the bread-and-butter economic issues.
  I say, by way of conclusion, that I think one of the mistakes--I do 
not believe in hate; I believe in honest debate. I think much of the 
mistake that the Gingrich Congress has made in 1994, there was a lot of 
campaigning on the bread-and-butter economic issues, and now Speaker 
Gingrich is taking the bread and butter, and working families do not 
like that. People want to see their kids have economic opportunities. 
These are the issues that matter: a good job, good education, 
opportunities to start a small business, having decent health care 
coverage, making sure that we focus on investing in our kids, making 
sure we invest in an economy that produces jobs that people can count 
on. That is what people are talking about in the cafes in Minnesota.
  That is what people are talking about under the roofs in their homes. 
That is what people are talking about on their farms. This Working 
Family's Economic Security Act of 1996 brings that together. I will 
take pieces of this legislation and bring amendments to the floor and 
make sure we have votes on this.
                                 ______

      By Mr. BINGAMAN (for himself, Mr. Pell, and Mr. Campbell):
  S. 1723. A bill to require accountability in campaign advertising, 
and for other purposes; to the Committee on Commerce, Science, and 
Transportation.

[[Page S4623]]

          the campaign advertising accountability act of 1996

  Mr. BINGAMAN. Mr. President, I rise today to offer legislation on 
behalf of myself and Senator Pell that I believe is a small, yet a very 
important step in reforming the campaign system that has led to 
widespread mistrust of the political process and mistrust of those who 
seek public office.
  Mr. President, the legislation that I am offering today is simple and 
straightforward. First of all, it would amend the new 
Telecommunications Act to provide that all legally qualified candidates 
for Federal elective office who refer directly or indirectly to another 
candidate for that office in a campaign advertisement must make the 
reference in person.
  If the candidate voluntarily chooses not to make the reference 
himself or herself, he or she would not be eligible for the lowest unit 
rate provided to candidates under section 315(b) of the Communications 
Act for the remainder of the 45-day period preceding the primary or the 
primary runoff election, or the 60-day period presiding the date of the 
general or special election. The candidate would, however, of course, 
continue to have access to the broadcast station at the same charge 
made for comparable use of the station by commercial users.
  Second, the bill requires that broadcasters who allow an individual 
or group to air advertisements in support of, or in opposition to, a 
particular candidate for Federal office, allow the candidate's opponent 
the same amount of time without charge on the broadcast station during 
the same period of the day.
  Mr. President, these are not new concepts. In the 99th Congress, 
Senator Danforth offered S. 1310, which would have required a broadcast 
station that allowed a candidate to present an ad that referred to her 
opponent without presenting the ad herself, to provide free rebuttal 
time to the other candidate. Since then, other variations of what have 
become known as talking heads legislation have been incorporated in 
overall campaign finance reform bills and introduced as free standing 
bills.
  Mr. President, I became interested in this issue last year when I 
read an editorial in the Washington Post by David Broder entitled, 
``Dirty Work for Dirty Campaigns.'' Mr. Broder referred to an issue of 
Campaigns and Elections which is a magazine for campaign consultants. 
The July 1995 issue contained an article about negative attack ads and 
quoted several campaign consultants. What the consultants admitted 
about campaigning today should shock the conscience of everyone in the 
Senate.
  Consultants are quoted as saying in reference to developing negative, 
attack ad, ``Welcome to the world of attack mail * * * It's a world of 
taunts, jeers, jabs, pointed fingers, and mudslinging.'' The 
consultants go on to write, ``Excite the emotions. It's much easier and 
more effective to persuade with the heart than with the head alone. 
Fear, anger, envy, indignation and shame are powerful emotions in the 
political arena.'' And, Mr. President, in what is perhaps the most 
revealing revelation about these consultants' campaign strategy, they 
write that the candidate should never take personal responsibility for 
attacking the opponent but, and I quote, ``It's always best to have 
someone else deliver the negative message, even if it's a third-person, 
unsigned piece. Keep your candidate at a dignified distance.'' Mr. 
President, I see nothing dignified about such a strategy. While the 
consultants were commenting on attack mail, I don't think it requires 
too much of a stretch to realize that the same rules apply to many of 
today 's television advertisements.
  Mr. President, a little over a year ago, I went through a costly, and 
negative campaign. right now, many of our colleagues are preparing to 
go through the same process and I say with all sincerity, that I do not 
envy my colleagues whether they are Republican or Democrat because I 
know that they will soon be subjected to many of the same negative, 
attack ads that I had to face in my race. Many of those ads will 
contain misrepresentations, distortions, and outright untruths. Perhaps 
an image will appear but it won't be the candidate's either. Instead, 
it will be the candidate hiding behind the message. And if it is not 
the candidate himself or herself who is orchestrating the attack ad, it 
will be some special interest group that is not subject to even the 
minimal restraints on spending and other restrictions that candidates 
are subject to.

  Mr. President, we hear that politicians are held in only slightly 
higher esteem by the public than lawyers and journalists. While that 
may be true, I know that my colleagues, regardless of their political 
affiliation, are honorable men and women who care about their 
respective States and our Nation. Unfortunately, the negative 
perception persists.
  I believe that one of the reasons for that is the trend in today's 
campaigns to attack, attack and attack--to go negative early and stay 
negative until the votes are counted. As Senator Danforth noted, 
legislation requiring the candidate herself to present ads that 
reference her opponent would serve the purpose, ``* * * to open up 
speech, open up the ability to respond, the ability to defend oneself. 
In the case of a candidate making a negative attack, we try to improve 
the sense of responsibility and accountability by making it clear that 
the candidate who makes the attack should appear with his own face, 
with his own voice.''
  I believe that the legislation I am introducing today will begin the 
process of restoring the confidence of the American people in public 
service as an honorable endeavor. I also believe that it passes first 
amendment scrutiny because it sets up a system of voluntary 
participation in receiving the benefits of section 315 of the 
Communications Act. A candidate's access rights to the airwaves in this 
instance are statutory, rather than constitutional. Congress 
established the requirements for candidates to be eligible for the 
lowest unit rate and Congress has the right to modify those 
requirements so long as the modifications reasonably balance the 
interest of candidates, broadcast licensees, and the public. 
Participation in this context is voluntary.
  Nothing in this legislation would prohibit a candidate from offering 
an ad that references her opponent without making the reference in 
person. A candidate could offer her ad in any format and no penalty, 
either civil or criminal, would attach for deciding not to following 
the strictures of this legislation. Broadcasters would not be burdened 
by this bill because it does not require them to provide any additional 
benefits to particular candidates. Instead, it leaves the choice of 
whether or not to participate in the system whereby the candidate 
receives a lowest unit rate charge to the candidate herself. And, 
finally, the public is not harmed by this bill. In fact, I find it 
difficult to believe that anyone would argue that the public would be 
harmed by requiring candidates to take responsibility for their 
statements. More openness, more honesty and more responsibility in 
campaign advertising would benefit all.
  Mr. President, last year the majority leader included campaign 
finance reform in the list of legislation that should be considered by 
the 104th Congress, and I commend him for that. In addition, our 
colleagues from Arizona and Wisconsin, Senators McCain and 
Feingold introduced a comprehensive campaign finance reform bill that 
has received a positive response in many corners. Unfortunately, I fear 
that, as the majority leader has noted, the differences between the two 
parties on comprehensive campaign finance reform could all to easily 
prevent the Congress from enacting comprehensive campaign finance 
reform. My legislation, on the other hand, is not a Republican or 
Democratic issue. If the elections of 1992 and 1994 demonstrated 
anything, it was that neither Republicans nor Democrats have a patent 
on the art of negative campaigning. Both sides have resorted to these 
types of ads and both sides have been the victims of them. My 
legislation, unlike the larger issues of campaign finance reform, 
should attract bipartisan support.

  Mr. President, we are about to enter the height of the American 
political season. It is no doubt just a matter of time before the 
negative advertisements begin to air across the country. By enacting 
the legislation we are introducing today, I believe that the Senate 
will take a major first step in bringing fresh air into the area of 
campaign reform and a major step toward

[[Page S4624]]

restoring dignity and confidence in our political process. I urge my 
colleagues to act on this matter at the earliest possible time.
                                 ______

      By Mr. THOMAS:
  S. 1724. A bill to require that the Federal Government procure from 
the private sector the goods and services necessary for the operations 
and management of certain Government agencies, and for other purposes; 
to the Committee on Governmental Affairs.


              the freedom from government competition act

  Mr. THOMAS. Mr. President, I rise today to introduce a bill called 
the Freedom From Government Competition Act, a bill that will create 
jobs and commercial opportunities for small businesses. I am joined in 
this effort by my friend and associate from Wyoming, Senator Simpson, 
as well as Senator Kyl and Senator Craig. I urge, of course, other 
Senators to join this effort.
  It has been the Federal Government's policy for a good long time to 
contract out services. We have not always enforced it, however. The 
purpose of this bill is to put some teeth in the policy; we ought to 
put into the private sector all those things that could be better done 
there, as opposed to having them done within the Federal Government.
  This bill establishes a process in which the Office of Management and 
Budget will identify Government functions that are commercial in nature 
and recommend a plan to contract out those activities to the private 
sector over a 5-year period. It is similar to H.R. 28 in the House, 
introduced by Congressman Duncan from Tennessee. It has bipartisan 
support of over 40 Members in the House and it is similar, 
interestingly enough, to a bill that was introduced by Senator Rudman 
in the 1980's here in the Senate.
  Significant portions of this idea were a part of the 1996 defense 
authorization bill, which had to do with procurement and moving some of 
these kinds of things into the private sector. This bill simply takes 
that concept and expands it further to other Federal Government 
operations.
  Government competition with the private sector, as we all know, is a 
big problem. Often bureaucracy wastes too much time and money on goods 
and services that could better be delivered by the private sector. Most 
of us, I think, agree with the notion we ought to limit those functions 
of the Government to things that can only be performed by the 
Government and put into the private sector the other functions. That, 
basically, is the purpose of my bill.
  It is also wrong, it seems to me, that the Government competes with 
the private sector. There ought to be competition, but the competition 
ought to exist within the private sector. For example, surveying and 
mapmaking can be done in the private sector. Indeed it should be. 
Training, education, janitorial services, laboratory services are all 
functions that can be performed by private industry. I proposed a 
similar bill when I served in our legislature in the State of Wyoming, 
urging and in fact setting up a process to contract out many services.
  This idea has been a major concern for some time. It was one of the 
top issues of the most recent White House Conference on Small Business, 
as you can imagine. State and local governments have had success, in 
some areas, privatizing. Massachusetts Governor Weld said, ``It's not 
an issue of public versus private. It's an issue of monopoly versus 
competition.'' I agree.
  The Department of Defense has had considerable success in contracting 
out some functions. The armed services are saving $1.5 billion a year, 
a 31 percent reduction, from outsourcing. So it is time for us to not 
only talk about it but to do it. This bill basically says to the Office 
of Management and Budget, come back to the Congress with a plan that 
makes this happen. It will create jobs, help small businesses and save 
billions of dollars.
  Mr. President, I urge my colleagues to take a look at this bill and 
join me in this idea of moving those nongovernmental functions that are 
performed by the Government into the private sector.
  Mr. President, I send the bill to the desk and ask it be 
appropriately referred.
  The PRESIDING OFFICER. The bill will be received and appropriately 
referred.
                                 ______

      By Mr. BURNS (for himself, Mr. Pressler, Mr. Leahy, Mr. Dole, Mr. 
        Faircloth, Mrs. Murray, Mr. McCain, Mr. Wyden, and Mr. 
        Ashcroft):
  S. 1726. A bill to promote electronic commerce by facilitating the 
use of strong encryption, and for other purposes; to the Committee on 
Commerce, Science, and Transportation.


    the promotion of commerce on-line in the digital era act of 1996

  Mr. BURNS. Mr. President, I rise today to introduce the Pro-CODE 
bill, or the Promotion of Commerce Online in the Digital Era Act of 
1996, with the following cosponsors: the distinguished majority leader, 
Senator Dole, Senator Pressler, Senator Leahy, Senator Murray, Senator 
Wyden, Senator Nickles, Senator McCain, Senator Ashcroft, and Senator 
Faircloth.
  Like the title of the bill states, my primary objective with this 
legislation is to promote commerce both domestically and abroad. But I 
have two other goals that I believe will be achieved by Pro-CODE: one 
is to improve the competitiveness of American software companies with 
their foreign competitors, the other is to protect the intellectual 
property and privacy of both businesses and individuals.
  Mr. President, Pro-CODE would have a profound impact on our economy 
and the way each of us lives our life from day to day. It is a 
relatively simple bill,  but it deals with a term few of us are 
familiar with: encryption. Encryption is simply the use of a string of 
letters or numbers--or a key--to render our computer files and 
transmissions unreadable by people who have no business reading them. 
If you have the right key, you can unlock the code and have access to 
that information.
  Unfortunately, American businesses and computer users face a threat--
and it is a threat from their own Government--because the current 
administration will not let American companies export encryption at a 
level higher than 40 bits. This is a fancy word, but it means is that 
it is a level of security that can be cracked by your basic 
supercomputer in about one-thousandth of a second at a cost of a tenth 
of a cent. Companies can sell stronger encryption here at home, but it 
is too expensive to create two different standards, so they do not.
  What this means is that commerce and communication on computer 
networks including the Internet is not reaching its full potential. How 
many of you would feel secure sending your credit card number over the 
Internet--especially when you learn that reported invasions by computer 
hackers increased ninefold between 1990 and 1994? Or when Internet 
World magazine estimates that the actual number of unwanted computer 
penetrations in 1992 alone was 1.2 million? If you were a business, how 
many of you would feel secure passing sensitive information to your 
branches around the world or around the Nation? If you were an ordinary 
citizen, would you feel secure knowing that many of your records and 
files are subject to the kind of security that the cyber-criminals of 
today just laugh at?
  Yet that is the problem we face today, and my colleagues here today 
and I find it unacceptable. Just 3 months ago we passed a historic 
telecommunications law that is designed to make it easier to interact 
with each other. But the law--that vehicle which will take us along the 
information highway--is useless without the engine of information 
security driving it forward.
  Mr. President, our bill would allow the unrestricted export of mass-
market or public-domain encryption programs. It would also require the 
Secretary of Commerce to allow the export of encryption technologies if 
products of similar strength are available elsewhere in the world. 
Finally, it would prohibit the Government from imposing a mandatory 
key-escrow system in which the Government or another third party would 
have a back door to your computer files.
  I come from a State where distances can often keep us apart. From 
Eureka, MT, in the northwest to Alzada, MT, in the southeast is the 
same distance as from Washington, DC, to Chicago. Anything to bring us 
closer together will

[[Page S4625]]

give us benefits only enjoyed now by folks in larger areas. It will 
also give the mom-and-pop businesses in our smallest communities a leg 
up on their bigger competitors as we enter the information age.
  But my concern is also based on the effect the current policy is 
having on jobs and industry in this Nation. Because of our current ill-
advised policy, American companies will lose their share of the world 
market--which now stands at 75 percent--to foreign companies who do not 
have to abide by such restrictions. For example, I have discovered a 
World Wide Web page from a South African company that boasts 128-bit 
encryption. In many cases, these encryption programs are available to 
download from the Internet.
  Mr. President, American companies clearly are at a competitive 
disadvantage. A study by the Computer Systems Policy Project found that 
within just the next 4 years, American companies could lose $60 billion 
in revenues and American workers could lose 216,000 high-tech jobs. Our 
bill is a jobs bill that I'm sure the administration can agree with. 
But it is not only that. As you can see, it is also a consumers bill.
  One of the questions I have heard is, ``How does this legislation 
differ from a bill you are also sponsoring with Senator Leahy?'' The 
answer is, not a lot. However, Pro-CODE is narrower in its scope. It 
deals exclusively with the issue of commerce and omits the criminality 
provisions. In addition, it does not set up guidelines for a voluntary 
key-escrow arrangement. This is a streamlined measure that I hope to 
move quickly through the Committee on Commerce, Science, and 
Transportation and the Science, Technology, and Space Subcommittee, 
which I chair. We will have hearings on this bill, hopefully as soon as 
this month, and I hope to have at least one of those in the field where 
the people are affected most by this bill.
  In addition to the diverse and bipartisan group of Senators you see 
before you, support for this legislation in the private sector is both 
broad and deep. There are two homepages on the Web that are dedicated 
to tracking encryption legislation and making people aware of why it is 
needed. As with the blue-ribbon campaign, Internet users will be 
encouraged to download the golden key and envelope symbol. They will 
then be able to link to one of the two encryption pages and show their 
support for this effort.
  I am also sending today an open letter to the Internet community 
encouraging support for this bill, and I expect it to be made available 
to hundreds of thousands of Internet users. I will also make myself 
available for at least two online forums to discuss my bill with 
computer users. Mr. President, I urge support for this bill.
  Mr. PRESSLER. Mr. President, I am proud to join with my colleagues 
today to introduce the Promotion of Commerce On-Line in the Digital Era 
Act [Pro-CODE]. This bill will eliminate outdated, useless rules, and 
regulations so that American companies can compete effectively 
throughout the world in the global information technology industry. It 
will strengthen our economy, create jobs, and maintain the U.S. lead in 
telecommunications and information technology into the 21st century.
  The high-technology industry is the crown jewel of the American 
economy--growing exponentially each year and constantly creating new 
jobs. This is the future of our country's economic security.
  We are the world leaders in the technology revolution. Whether in 
hardware, software, browsers, semiconductors, cryptography, or other 
segments of the industry, we have the talent and capability to retain 
this lead indefinitely. The private sector is doing everything possible 
to expand this industry. Unfortunately, they frequently are held back 
by unnecessary or antiquated Government rules and regulations. 
Government should help, or at the very least, get out of the way.
  Outdated Government policy must change and it must change 
immediately. The future of this industry, its employees and our 
country's economy depends on this change.
  This is why I am an original sponsor of Pro-CODE. The Senate 
Committee on Commerce, Science, and Transportation, which I chair, will 
have jurisdiction over this bill, that basically, would allow unlimited 
export of commercially available encrypted software. I am committed to 
moving this legislation forward immediately and I am joined by others 
on the committee who fell the same way.
  The health of our national economy, and my home State of South 
Dakota's economy in particular, is heavily dependent upon exports. We 
must focus on expanding our present foreign markets and opening new 
ones in order to strengthen our businesses and maintain our economic 
hegemony. It is undisputed that American business can compete evenly 
with their foreign counterparts when operating on a level playing 
field. However, they are not always given fair treatment.
  When U.S. companies are treated unfairly vis-a-vis their foreign 
competitors, they lose contracts and their market share suffers. This 
leads to lower profits and less repatriation of those profits to the 
United States. We must do all we can to eliminate foreign trade 
barriers that restrict U.S. companies operating abroad. At the same 
time, we also must eliminate our own Government's discrimination 
against our American multinationals. To this end, the bill assists U.S. 
multinational companies, and high-technology companies in particular, 
by eliminating unnecessary restrictions on their operations.

  The Pro-CODE bill enjoys widespread bipartisan support. I believe 
this change in policy is vital if the United States is to maintain its 
worldwide lead in the development and sale of software technology. This 
is an industry key to the continued strength of our economy, however, 
export controls--true relics of the cold war--are hurting American 
companies' ability to sell their products overseas. We won the cold 
war. We must now disarm the weapons used to win that war before they 
are used against us.
  It is simply logical to allow U.S. companies to sell overseas some of 
the technology they currently are allowed only to sell within the 
United States. As you know, certain software readily available around 
the world and on the Internet is not allowed to be exported from the 
United States. Rules that once made sense are obsolete and harmful--
only to us--in today's rapidly changing world. Encrypted software, 
which serves to secure communications, is the future of the industry.
  If we fail to loosen our export laws, American companies face two 
unpleasant choices. First, they can simply stand by and watch their 
products be replaced by foreign competitors. This means losing this 
industry the way we lost consumer electronics, steel, and the auto 
industry in the past. In the more likely alternative, these companies 
will be forced to move their production and research facilities 
offshore. If this happens, not only will our economy suffer, but we 
will lose high-paying, high-technology jobs. We cannot afford either 
alternative. That is why I am fighting to correct this problem. We must 
do so--before it is too late.
  When I led the effort to enact the sweeping Telecommunications Reform 
Act my goal was to open up all aspects of the telecommunications 
industry to widespread competition. Without changes in other laws this 
goal cannot be fully achieved. Indeed, without such changes we risk the 
loss of markets such as software to foreign competitors because our own 
Government restricts the U.S. companies.
  The issue is a simple one--with the globalization of our information 
systems we must have secured transmissions. Those transactions should 
be protected by the best encrypted software available. That means 
American products.
  As the Federal Communications Commission proceeds with implementation 
of the Telecommunications Act it is important for Congress to keep a 
watchful eye on their deliberations. For example, some at the FCC 
support a mandated high-definition television [HDTV] standard. Not me. 
I will fight any FCC attempt to set mandated equipment standards. To 
establish such mandates would set a dangerous precedent which could 
chill competitive gains the United States has made throughout the 
world. The computer industry has grown and flourished because the 
Government did not set standards or impose mandates. The Government 
should not get into mandating standards.

[[Page S4626]]

  I also am working to bolster our competitiveness through the 
enactment of the international tax simplification for American 
competitiveness bill. The purpose of this legislation is to make 
technical corrections and simplification changes to the U.S. Tax Code--
eliminating some of the discriminatory and redundant application of 
rules of our companies. This bill likely will include a provision 
eliminating the discrimination against software under the foreign sales 
corporation rules. This too will help U.S. software exporters. This 
bill contains commonsense changes to the Tax Code designed to put 
United States companies on more equal footing with their key 
competitors in Japan and Germany. I intend to introduce this bill in 
the next few weeks. Here too, I expect widespread bipartisan support.

  I want to use my role as chairman of the Commerce Committee--with its 
jurisdiction over international trade and the Commerce Department--in 
combination with my membership on the Finance Committee--which has 
jurisdiction over trade and tax policy--to help strengthen American 
competitiveness overseas. Our economic future depends upon diligent 
efforts to ensure our companies are treated equitably not only by 
foreign countries, but by our own as well. We can compete with anyone 
given a fair chance. It is my goal to put America first.
  Mr. LEAHY. I am pleased to join a bipartisan group of Senators in 
supporting legislation to encourage the development and use of strong, 
privacy-enhancing technologies for the Internet by rolling back the 
outdated restrictions on the export of strong cryptography.
  As an Internet user myself, I care deeply about protecting individual 
privacy and encouraging the development of the Net as a secure and 
trusted communications medium. Current export restrictions only allow 
American companies to export primarily weak encryption technology. The 
current strength of encryption the U.S. government will allow out of 
the country is so weak that, according to a January 1996 study 
conducted by world-renowned cryptographers, a pedestrian hacker can 
crack the codes in a matter of hours. A foreign intelligence agency can 
crack the current 40-bit codes in seconds.
  Perhaps more importantly, the increasing use of the Internet and 
similar interactive communications technologies by Americans to obtain 
critical medical services, to conduct business, to be entertained and 
communicate with their friends, raises special concerns about the 
privacy and confidentiality of those communications. I have long been 
concerned about these issues, and have worked over the past decade to 
protect privacy and security for our wire and electronic 
communications. Encryption technology provides an effective way to 
ensure that only the people we choose can read our communications.
  Encryption is critical for electronic commerce really to flourish on 
the Internet, and for computer users to trust that their communciations 
will remain private. Today, I have sent out an open letter to the 
Internet about this encryption legislation. So that people reading the 
letter can be assured that it is really me sending it, I am using a 
popular encryption program called ``Pretty Good Privacy'', or ``PGP'', 
to authenticate my signature. This is yet another practical use of 
encryption, and an important one for electronic commerce.
  Maintaining the privacy and confidentiality of our computer 
communications and information is very important to all of us both here 
and abroad. I have read horror stories sent to me over the Internet 
about how human rights groups in the Balkans have had their computers 
confiscated during raids by security police seeking to find out the 
identities of people who have complained about abuses. The human rights 
groups have been able to get for free from the Internet an encryption 
program called Pretty Good Privacy (PGP) to protect their computer 
communications and files. These encrypted files are undecipherable by 
the police and the names of the people who entrust their lives to the 
human rights groups are safe.
  The encryption bill, called the Promotion of Commerce On-Line in the 
Digital Era (PRO-CODE) Act of 1996, which we introduce today, would:

       Bar any government-mandated use of any particular 
     encryption system, including key escrow systems and affirm 
     the right of American citizens to use whatever form of 
     encryption they choose domestically;
       Loosen export restrictions on encryption products so that 
     American companies are able to export any generally available 
     or mass market encryption products without obtaining 
     government approval; and
       Limit the authority of the Federal Government to set 
     standards for encryption products used by businesses and 
     individuals, particularly standards which result in products 
     with limited key lengths and key escrow.

  This is the second encryption bill I have introduced with Senator 
Burns and other congressional colleagues this year. Both bills call for 
an overhaul of this country's export restrictions on encryption, and, 
if enacted, would quickly result in the widespread availability of 
strong, privacy protecting technologies. Both bills also prohibit a 
government-mandated key escrow encryption system. While Pro-CODE would 
limit the authority of the Commerce Department to set encryption 
standards for use by private individuals and businesses, the first bill 
we introduced, called the ``Encrypted Communications Privacy Act'', 
S.1587, would set up stringent procedures for law enforcement to follow 
to obtain decoding keys or decryption assistance to read the plain text 
of encrypted communications obtained under court order or other lawful 
process.
  To satisfy national security and law enforcement concerns, both bills 
have important exceptions to restrict encryption exports for military 
end-uses, or to terrorist designated or embargoed countries, such as 
Cuba or North Korea.
  I know this is not enough to satisfy our national security and law 
enforcement agencies, who fear that the widespread use of strong 
encryption will undercut their ability to eavesdrop on terrorists or 
other criminals.
  But U.S. export controls will not keep encryption out of the hands of 
criminals; these controls only hurt legitimate users and American 
business. Any criminal intent on encrypting his computer information or 
messages to avoid getting caught can go into any Egghead store and buy 
off-the-shelf Lotus Notes or Norton Utilities encryption program, both 
of which contain strong encryption that cannot be exported. It is then 
a simple matter just to slip the software disc into his pocket to 
smuggle out of the country.

  Actually, it is even simpler than that for a foreign terrorist or any 
criminal to get ahold of strong encryption. They don't even have to 
leave home. With a computer, a modem, and a telephone line, they could 
download for free off the Internet from anywhere in the world strong 
encryption, such as Pretty Good Privacy.
  Strong encryption has an important use as a crime prevention shield, 
to stop hackers, industrial spies and thieves from snooping into 
private computer files, and stealing valuable proprietary information. 
We should be encouraging the use of strong encryption to prevent 
certain types of computer and online crime.
  It is clear that the current policy toward encryption exports is 
hopelessly outdated, and fails to account for the real needs of 
individuals and businesses in the global marketplace.
  In one recent example, a major high-technology firm had a multi-
million dollar contract to sell digital television systems to China put 
at risk due to our export regulations. Why? The company suffered 
lengthy delays in getting export approval because the systems contained 
encryption technology to scramble TV signals--a critical component of 
the system to protect the intellectual property rights of the 
programming carried by the signal. Foreign competitors seeking to get 
into the vast China market were ready and willing to step into the 
company's place if it were unable to fulfill its contractual 
obligations. Two weeks after the contractual delivery date, the company 
finally got the export approval it sought. This example is particularly 
ironic since in trade negotiations, the United States has strongly 
urged China to protect intellectual property rights better.
  Encryption expert Matt Blaze, in a recent letter to me, noted that 
current U.S. regulations governing the use and export of encryption are 
having a ``deleterious effect * * * on our country's ability to develop 
a reliable and trustworthy information infrastructure.''

[[Page S4627]]

 This sentiment is echoed by the chief executive officers of 13 major 
U.S. computer systems companies, including IBM, Apple, Digital 
Equipment, Hewlett-Packard, and others, which recently reported that

       * * * encryption is the most practical and effective means 
     to protect valuable and confidential electronic information 
     traveling across open networks. The availability of effective 
     encryption is necessary to realize the full potential of the 
     Global Information Infrastructure (GII).

  The time is right for Congress to take steps to put our national 
encryption policy on the right course. The Pro-CODE bill, as well as 
the Encrypted Communications Privacy Act, S. 1587, are much-needed 
steps to reform our Nation's cryptography policy.
  Mrs. MURRAY. Mr. President, I am pleased to be joining Senator Burns, 
Senator Leahy, Senator Dole, Senator Pressler and others in 
cosponsoring the Promotion of Commerce On-Line in the Digital Era Act 
of 1996. The strong bipartisan support for this bill emphasizes how 
important our national encryption policies are becoming and reflects 
Congress' growing awareness of the issues surrounding the production 
and sale of encrypted software and hardware. I commend Senator Burns 
and Senator Leahy for their efforts in putting this legislation 
together.
  As many of my colleagues know, the Department of Commerce recently 
released a report stating there are tremendous international growth 
opportunities for software exporters in the next five to 10 years. 
Unfortunately, the Department of Commerce also acknowledged most U.S. 
companies don't pursue international sales because our export control 
laws are too cost prohibitive.
  Rather than dissuading international sales, our national policies 
should be encouraging American companies to enter the global 
marketplace. American software producers are losing tens of billions of 
dollars in lost sales due to outdated export controls. I recognize 
there are legitimate national security concerns underpinning the Export 
Administration Act. However, these archaic laws are no longer relevant 
to the post-cold-war world in which we now live. Today's national 
export controls should target those items that really need to be 
controlled in order to maintain national security. Simply, they should 
make better sense; it doesn't make sense to tell U.S. software 
producers they can't export a product that is already widely available 
on the world market.
  Senator Burns' bill makes sure our innovative private sector 
producers lead the way in developing acceptable encryption technology, 
and it makes sure government mandates and national export control 
policies do not hamper private sector developments.
  Mr. President, I introduced the Commercial Export Administration Act 
in the 103rd Congress, and I am pleased Senator Burns is incorporating 
the spirit of my language in his bill. My language reduced regulatory 
red tape and made it easier to export generally available mass-marketed 
commercial software. Washington state is home to some of the most 
innovative software producers in the world, and they are eager to 
export their goods. Unfortunately, our export controls keep Washington 
state's companies from penetrating the world market.
  Some of my colleagues may not know that Washington state's small and 
mid-sized high-tech companies provided more than 98,000 jobs in 1995.
  Mr. President, I mention this because our bill will increase exports 
and enable our high-tech companies to grow further. Higher growth means 
more jobs--plain and simple. A recent study revealed U.S. software and 
hardware exporters lost $60 billion in potential 1995 sales, and the 
study estimates a loss of 200,000 jobs in the industry by the year 
2000. Given the increase in international competition, we can no longer 
afford to hold U.S. companies back from potential world sales.
  This legislation is badly needed, and I urge my colleagues to join 
Senator Burns and me in supporting this bill.

                          ____________________