[Congressional Record Volume 142, Number 100 (Tuesday, July 9, 1996)]
[Senate]
[Pages S7421-S7460]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               SMALL BUSINESS JOB PROTECTION ACT OF 1996

  The PRESIDING OFFICER (Mr. Brown). Under the previous order, the 
Senate will now resume consideration of H.R. 3448, which the clerk will 
report.
  The assistant legislative clerk read as follows:

       A bill (H.R. 3448) to provide tax relief for small 
     businesses, to protect jobs, to create opportunities, to 
     increase the take-home pay of workers, to amend the Portal-
     to-Portal Act of 1947 relating to the payment of wages to 
     employees who use employer-owned vehicles, and to amend the 
     Fair Labor Standards Act of 1938 to increase the minimum wage 
     rate and to prevent job loss by providing flexibility to 
     employers in complying with minimum wage and overtime 
     requirements under that act.

  The Senate resumed consideration of the bill.
       Pending:
       Kennedy amendment No. 4435, to amend the Fair Labor 
     Standards Act of 1938 to provide for an increase in the 
     minimum wage rate and to exempt computer professionals from 
     the minimum wage and maximum hour requirements, and to amend 
     the Portal-to-Portal Act of 1947 relating to the payment of 
     wages to employees who use employer-owned vehicles.
       Bond amendment No. 4272, to modify the payment of wages 
     provisions.
  The PRESIDING OFFICER. The time until 12:30 p.m. shall be equally 
divided between the Senator from Delaware and the Senator from New York 
or their designees.
  Mr. KENNEDY. Mr. President, may I ask the Senator a question? Did the 
Senator include a vote on the TEAM Act after the Defense authorization? 
Is that referenced in the Senator's list of votes?
  Mr. NICKLES. The Senator is correct.
  Mr. KENNEDY. I thank the Senator.
  The PRESIDING OFFICER. Who seeks recognition?
  Mr. ROTH addressed the Chair.

[[Page S7422]]

  The PRESIDING OFFICER. The Senator from Delaware is recognized.
  Mr. ROTH. Mr. President, America's most valuable economic resource is 
the spirit of enterprise that moves in our people. This spirit is 
reflected in men and women and families that build businesses on 
dreams, personal risk, and good ideas. It is reflected in the strength 
of our communities, communities held together by commerce. It is 
reflected in the strong economic status our Nation enjoys, indeed, in 
our superpower status. And it is reflected in the security and 
opportunity we enjoy as individuals.
  The responsibility of Congress, of Government in general, is to help 
promote an environment where this spirit can flourish, especially among 
America's small business men and women.
  How important is it that we succeed in this endeavor? Consider that 
there are 22 million small business owners in America today, and that 
each year another 800,000 new small startups are created. Consider that 
nearly 6 out of 10 Americans get their paychecks from small businesses 
and that small business represents 99.8 percent of all American 
businesses. They contribute more than half of our sales in our country. 
They provide more than half of our economy's output and 55 percent of 
all new innovations each year.
  Consider, Mr. President, that of the 25 million future jobs that will 
be needed to provide employment for Americans, 75 percent will come 
from small business. Recently, I heard that the majority of small 
businesses today are being created by women. With these trends in mind, 
we can see how important it is that we succeed in passing a small 
business bill that meets the real needs of America's entrepreneurs, a 
bill that unleashes enterprise and rewards risk taking.
  Toward this end, Senator Moynihan and I have spent a great deal of 
time taking comments from our colleagues pertaining to this small 
business bill. We have consulted with the leadership on both sides of 
the aisle. We believe we have developed an amendment that addresses the 
requests and comments we received.
  Before turning my attention to the managers' and leaders' amendment, 
however, I would like to address the tax provisions to the small 
business bill that are proposed by the Finance Committee.
  For small business, the only thing worse than excessive taxation is a 
visit from the people at ``60 Minutes.'' Frankly, Mr. President, I know 
several small business men and women who would rather face Mike 
Wallace. Excessive taxes are the sludge that binds the gears of small 
business, and we must do something about them.
  The tax provisions proposed by the Finance Committee represents a 
good start. They lift some of the burden that is borne by small 
businesses. They make it easier for small business men and women to 
hire, to expand, to modernize. Our tax provisions facilitate the 
ability of small businesses to offer retirement plans for their 
employees. They allow businesses to bring more employees into pension 
plans.

  Beyond all of this, we make both undergraduate and graduate education 
more affordable for employees by extending the tax-free treatment of 
employer-provided education assistance. These are incentives that will 
go a long way toward creating an environment for growth, job creation, 
economic security, and real opportunity for Americans. Legislation with 
similar tax incentives passed the House by a vote of 414-10.
  Specifically, what this bill does is provide an increase in the 
expensing of small business equipment from the current $17,500 annual 
amount to $25,000 by the year 2003. It offers a package of subchapter S 
corporation reforms that will improve the ability of small business men 
and women to use this corporate status. Among a number of reforms, the 
principal changes include increasing the number of subchapter S 
corporation shareholders, easing the use of subchapter S corporations 
in the area of estate planning, broadening the access of subchapter S 
corporations for small banks, employee stock ownership plans and 
charities, and granting greater flexibility in the use of multiple 
subchapter S corporations. Additionally, the reforms will permit 
taxpayers to keep subchapter S corporation status, and allow 
corrections for inadvertent mistakes.

  Our bill also contains pension simplification proposals, including 
spousal IRA's and a new kind of pension plan for small business. Our 
purpose here is to increase access to the pension system for the 
millions of small business employees who currently do not have this 
important security. One of my major objectives is that spouses be 
treated equally when it comes to pension benefits and individual 
retirement accounts. Currently, a homemaker can only contribute up to 
$250 to an IRA. Under our plan, they would be able to invest up to 
$2,000, the same amount contributed by their spouses.
  In addition, our package permits tax-exempt organizations to set up 
section 401(k) opportunities for their employees, and it simplifies 
pension rules for employers who currently offer pension plans. Beyond 
this, we offer a package of proposals that extend tax benefits that 
have expired. These important benefits include the tax credit for 
research and development which keeps us competitive in the global 
economic community. They include credits for the very expensive costs 
associated with the development and testing of drugs for rare diseases. 
These are often referred to as ``orphan drugs''--orphans because their 
limited demand makes it otherwise cost prohibitive to research, 
develop, and market them.
  Included in the package of extenders is an extension of the section 
29 alternative fuels credit. This credit provides an incentive for the 
production of clean and environmentally friendly energy sources.
  Mr. President, in the last 5 years, small businesses have created 9 
out of 10 new jobs. In fact, small business provided all the net new 
jobs from 1987 to 1992. Mr. President, 9 out of 10 of these firms have 
fewer than 20 employees. They are, indeed, the heroes on the front 
line. With these changes to the tax law, these small business men and 
women will have greater incentives and resources to move our economy 
forward.
  Should anyone doubt how stalwart these men and women are compared to 
those in other countries, should anyone doubt that Government policies 
have consequences on their ability to succeed, I refer to a recent 
article from the London Sunday Telegraph. According to that paper,

       The United States has created 30 times more new private-
     sector jobs in the European Union over the last 20 years. . . 
     The British Treasury reported that the EU created fewer than 
     1 million net jobs, compared with more than 31 million 
     produced by the more deregulated American economy.

       The stark Treasury figures paint a much grimmer picture 
     than the Foreign Office' recent White Paper on Europe, which 
     claimed that the EU had created 8 million jobs over the same 
     period.
       Compiled from independent figures, the Treasury tracks 
     detailed employment patterns between the two trading blocks 
     for 1974-1994. With roughly similar populations during that 
     period of around 250 million, they show the United States 
     created 31,306,000 net new jobs in the private sector to 
     Europe's 823,000. . .
       Speaking in London on Friday. . . the French commissioner 
     for a single currency, admitted that overzealous EU 
     regulation had taken its toll on job creation.

  Mr. President, taxation and regulation do have profound influences on 
the ability of nations to create jobs. What we propose is to take some 
of the burden off the backs of American small business men and women. 
My hope is that this is only a beginning, but it is a good beginning.
  Now, our tax provision to the Small Business Job Protection Act of 
1996 passed the committee unanimously. There is no reason why we cannot 
see similar success here on the floor.
  Mr. President, I now turn our attention to the managers' and leaders' 
amendment. In developing this amendment, I believe we have maintained 
the goals that were set out in crafting the campaign finance reform 
bill. Our objectives were, first, to retain the bipartisan spirit of 
the bill. Second, to stay with two basic themes: To create incentives 
for small business and economic growth; and to extend many of the 
important tax provisions that have either expired or are set to expire. 
Our third objective sought to refrain from opening up controversial 
issues, issues that would divide Republicans and Democrats here on the 
floor.

[[Page S7423]]

                           Amendment No. 4436

              (Purpose: To provide additional amendments.)

  Mr. ROTH. Mr. President, I send to the desk a copy of the managers' 
and leaders' amendment.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Delaware [Mr. Roth], for himself, Mr. 
     Moynihan, Mr. Lott, and Mr. Daschle, proposes an amendment 
     numbered 4436.

  Mr. ROTH. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. ROTH. Mr. President, I note that a copy of the amendment and its 
explanation will be available on the desk of each Senator on the Senate 
floor.
  Many Members of the Senate have raised tax proposals for 
consideration in this managers' and leaders' amendment. Some of these 
proposals are outside the scope of the objectives I mentioned. Other 
proposals are relevant to our objectives but they are controversial or 
costly.
  This managers' and leaders' amendment strives to stick with the small 
business and extenders themes, so these controversial, nongermane 
proposals are not included.
  Mr. President, the major components of the managers' amendment are:
  First, to extend most of the expired provisions to December 31, 1997. 
This is a half-year extension. I note that the section 29 alternative 
fuels credit is extended to December 31, 1998, and the grandfather for 
certain publicly traded partnerships is extended to December 31, 1999.
  Second, this amendment provides additional pension simplification 
provisions. Most of these are directed at protecting spouses of pension 
plan participants.
  Third, at the request of a bipartisan group of Labor Committee 
Senators, led by Senator Kassebaum, our amendment offers a 
clarification of the effect of the Harris Trust Supreme Court case. The 
Harris Trust case overturned 20 years of Labor Department policy 
regarding insurance companies. It created additional uncertainty about 
the liability of insurance companies that fund employee benefit plans. 
Our proposal adopts the Labor Committee's directive to the Labor 
Department, mandating a clarification of the treatment of insurance 
companies under the Employee Retirement Income Security Act [ERISA].
  In a recent letter from Secretary Robert Reich, he stated the Labor 
Department's strong support for the Labor Committee's bill. In that 
letter, the Secretary writes: ``The legislation will provide the 
guidance necessary to avert disruption in the insurance industry, 
thereby improving the security of American workers' pension plan 
assets.''
  Fourth, our amendment provides additional clarifications of the 
worker classification safe harbor known as section 530. This concerns 
the distinction between employees and independent contractors for 
employment tax purposes. I believe these additional clarifications are 
necessary steps to help clear up the confusion and controversy in 
worker classification.
  Mr. President, the managers' and leaders' amendment is fully offset, 
and I would like to comment on a couple of these.
  First, the managers' and leaders' amendment adopts a proposal from 
the President's budget that denies the personal exemption deduction and 
dependent care credit if taxpayers do not supply the dependent's Social 
Security number. I believe this proposal is necessary to insure against 
fraud.
  Another important offset is the extension of the 10-percent air 
ticket and cargo excise taxes.
  The House bill did not include an extension of this ticket tax. The 
aviation program's authorization terminates on September 30, 1996. In 
response to concerns raised by Commerce Committee members, the Finance 
Committee bill extends the ticket tax through the end of this year as 
an interim measure to ensure adequate funding for the aviation program 
until it is reauthorized.
  Under the managers' and leaders' amendment, the air ticket and cargo 
excise taxes are further extended until April 15, 1997--an additional 
3\1/2\ months. This is an extension I agreed to reluctantly and one I 
believe should be revisited in conference with the House.
  Mr. President, I believe the managers' and leaders' amendment lives 
up to the spirit of the bipartisan Finance Committee bill. I urge my 
colleagues' support.
  Mr. President, I yield the floor.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York is recognized.
  Mr. MOYNIHAN. Mr. President, I will not take a great deal of time 
this morning as I spoke yesterday, and there are Senators who wish to 
speak to other provisions of this bill. But I would take as much time 
as is required to state my gratitude to and admiration for the work of 
the chairman, our chairman, Senator Roth.
  Mr. President, would you care to pause for a moment and ask, how many 
unanimous, bipartisan, 100-page bills have you seen come to the Senate 
floor in the 104th Congress? I think not many. I dare to think there 
has not been even one.
  The chairman has crafted a major tax cut--a major tax cut. It comes 
from a unanimous Finance Committee, and it has other matters attached 
to it. But I hope that as we debate those other matters, we would not 
overlook the substantive, important revenue provisions in this bill.
  I just want to say it is very difficult to make it look easy, and the 
chairman has managed that. I want to express my appreciation.
  I would particularly call attention to the employer-provided 
educational assistance provisions in this bill. This, Mr. President, is 
almost surely the most successful education program the Federal 
Government sponsors. A million persons a year are provided higher 
education by their employers, and the tuition is tax free.
  I had occasion to speak about this yesterday. Outside the 
organizations involved, not many people would know of this program. 
There is no bureau in the Department of Labor for employer-provided 
educational assistance, and no bureaucracy; it has no titles, no 
confirmations, no assistant secretaries. A million persons a year are 
sent by their employers to higher education, about a quarter for 
graduate-level education, with the understanding that they are capable 
of doing work at higher levels and skills and compensation, and that it 
is mutually rewarding to the individual and the firm.
  To say again, a quarter of these individuals are going to graduate 
schools, and very complex ones. Ask any major employer about their 
training systems, and they will say nothing is more helpful than being 
able to send a promising young person, or middle management person, to 
a graduate school to learn a new field, learn a field that has 
developed since that person had his education. That can be very rapid 
in many technologies. Consider the area of software: 16 years is 
another era.
  We have had employer-provided educational assistance in place since 
1978, but we have been on and off about keeping it in place. It has 
expired. Now we are going to bring it back--retroactive to the last 
day's expiration, up to December 31 of this year. In the managers' 
amendment, we extend it another year.
  I would like to simply say to the chairman that I hope early in the 
next Congress we can make this provision permanent so it can be 
depended on. This will permit workers to make it part of their plans. 
They can go off to the University of Delaware and take another degree 
in advanced chemistry, and then come back in another, better, position. 
It is part of your career program, and it should be. This is a 
wonderful piece of unobtrusive social policy.
  I would also like to thank the chairman for including in the 
managers' amendment a version of the expatriation proposal I first 
introduced in 1995. I will not go into the details at great length, but 
we have resolved the expatriation issue in this bill. Expatriation is 
the matter of individuals, wealthy individuals, who renounce their 
American citizenship in order to avoid American taxes. This is no small 
sum. In the course of the next 10 years, this provision will pick up 
$1.7 billion.

[[Page S7424]]

  This issue arose in 1995 when the Finance Committee reported a bill 
to restore the health insurance deduction for the self-employed. We 
were going to include expatriation at that time, and yet we had a 
series of communications from scholars of the first order, including 
Prof. Paul B. Stephan III, a specialist in both international law and 
tax law at the University of Virginia Law School; Mr. Stephen E. Shay, 
who served as international tax counsel at the Department of the 
Treasury; Detlev Vagts of Harvard Law; Andreas F. Lowenfeld of New York 
University Law; and particularly Prof. Hurst Hannum of the Fletcher 
School of Law and Diplomacy at Tufts University, who raised the 
question of whether our statute was legal under the International 
Covenant on Civil and Political Rights, which the United States 
ratified in 1992. It is our law, treaty law, and it is therefore the 
supreme Law of the Land under article VI of our Constitution.
  Section 2 of article 12 of the international covenant states: 
``Everyone shall be free to leave any country, including his own.''
  The expatriation legislation had seemed to legal scholars to raise a 
question of infringement of the treaty and, in effect, the law would 
fall before the treaty, the treaty being the higher law. Professor 
Robert F. Turner, a professor of international law at the U.S. Naval 
War College, so testified before the Finance Committee. Although other 
experts gave us contrary opinions, it was clear to us that the Senate 
should not act improvidently on the matter. Genuine questions of human 
rights under international law, and the solemn obligations of the 
United States under treaties, were in question. So when the conference 
committee met on the self-employed health deduction bill, we had no 
alternative but to defer a decision on the matter until we got it 
straight. To do otherwise, obviously, would have been not only 
imprudent but irresponsible.
  Even so, there are persons in the Chamber who wondered whether or not 
we were looking after millionaires who renounce their citizenship and 
move to the Bahamas, and there were some rather heated exchanges. I 
said at that time that you never have to be more careful of human 
rights than when you are dealing with persons who are despised. Nobody 
thinks very much of a millionaire who chooses to become a Bahamian and 
keeps his membership in the Woonsocket Yacht Club.
  In the ensuing months, a general consensus developed that it was 
possible to craft legislation to curb the abuse of expatriation without 
violating our international legal obligations. Which is precisely what 
this bill does. We were determined, and we now bring to the floor, Mr. 
President, a measure which addresses the problem--and which will raise 
$1.7 billion over 10 years. Although not many people expatriate, their 
tax liabilities are significant. So this provision will raise $1.7 
billion. The Finance Committee has a record, we hope, of being vigilant 
about abuses but also concerned and careful about rights. So, Mr. 
President, I would like to thank again the chairman for this work. We 
have done it well.
  We are going to have to be careful in conference about the provisions 
on Puerto Rico. We have major provisions we have decided to end after 
60 years, the provisions under section 936 of the Internal Revenue 
Code, but I think we are doing so in a way that is acceptable to the 
elected officials in Puerto Rico and all in all is a good job. It took 
us 2 years to get it right, and we bring it before you with pride and 
confidence that it will be enacted--whatever else happens in the course 
of the day.
  Mr. ROTH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware is recognized.
  Mr. ROTH. I thank my good friend and colleague, Senator Moynihan, for 
his contribution to the development of both the Finance Committee 
legislation as well as the managers' amendment. It could not have been 
done without his contribution. I just want it to be known that he has, 
as always, brought great intelligence, skill, and knowledge to this 
most important task.
  I share with him his interest and concern in education. I think it is 
only fair to say that in today's world, where technology and knowledge 
are changing so rapidly, there has never been a time for it to be more 
important that we keep the most well educated people anywhere in the 
world, and certainly Senator Moynihan has been a leader in that effort.
  I have to say to my distinguished colleague that many of these 
extenders I think are critically important. One of my first questions 
on it is, Why don't we make them permanent? Unfortunately, we have a 
problem of cost and budget rules, but this is something that we will 
have to look at jointly in the future.
  Mr. MOYNIHAN. Mr. President, I take that remark with great 
encouragement. I think the chairman is right. When the chairman is 
right, he will figure how to do what is right. I thank him very much.
  Mr. ROTH. At this time, I am happy to yield to the senior Senator 
from Kansas.
  The PRESIDING OFFICER. The Senator from Kansas is recognized.
  Mrs. KASSEBAUM. Mr. President, I very much appreciate the chairman of 
the Finance Committee yielding to me for just a moment to comment on 
one aspect of the bill. I think the package that has been put together 
by the Finance Committee under the distinguished leadership of both the 
chairman and ranking member is an important package. I am 
particularly pleased that, for example, there has been provision for 
educational assistance and the orphan drug tax credit. These were 
expiring credits that have been extended that I think are very 
important. I am also pleased that the extension of the airway and 
airport trust fund has been acknowledged, and I would like to speak to 
the clarification of the application of ERISA to insurance company 
general accounts. This has also been included in the managers' package, 
and I am not sure that it is clearly understood. I am very appreciative 
of it being included, and I think it was important to do so. If I may, 
Mr. President, just for a moment speak to what this is about.

  The Department of Labor has been working closely with all parties for 
nearly 3 years to address the complex issue raised by the Harris Trust 
decision of the Supreme Court in December 1993. They ruled then in John 
Hancock versus Harris Trust that this longstanding practice of 
including pension assets as part of a general account could violate 
ERISA. The Court recognized it was overturning the Department's ruling 
and that its decision created the possibility of serious disruptions in 
the pension marketplace. It indicated, however, that any problems could 
be addressed legislatively or administratively. So that is what this is 
about, and that is why this bill has the full support of this 
administration. The administration believed that it had to be addressed 
legislatively and that was the only way that we could fully acknowledge 
the difficulties that were apparent by the Supreme Court's decision.
  In its January 17, 1996 letter of support, Secretary Reich writes 
that the legislation:

       Will provide the guidance necessary to avert disruption in 
     the insurance industry, thereby improving the security of 
     American workers' pension plan assets.

  Let me make clear the ERISA Clarification Act, as this is called, 
does not overturn Harris Trust. Rather, it requires the Labor 
Department to issue guidance by March of next year as to how insurance 
companies are to deal with pension plans in the future. To protect the 
rights of plan participants and beneficiaries, consistent with the 
Harris Trust decision, any guidance issued by the Department must 
contain strict standards that companies must meet in order to qualify 
for the relief. Failure to comply with these rules will subject any 
company to all the sanctions imposed by ERISA on those who violate the 
fiduciary responsibility and prohibited transaction rules.
  The legislation also prevents the Harris Trust decision from being 
applied retroactively. This is appropriate because the life insurance 
industry has relied for almost 20 years on Government's interpretation 
as to how it was to act under the statute and because exposing the 
industry to retroactive liability could severely threaten the security 
of pension assets.
  In response to some initial concerns raised by the administration and 
others, the legislation before us contains

[[Page S7425]]

several modifications. Most important: No. 1, the legislation contains 
new, stricter standards to ensure that any guidance issued by the Labor 
Department must fully protect the rights and interests of plan 
participants and beneficiaries; and, No. 2, the legislation would not 
grant relief from proceedings based on fraudulent or criminal 
activities by insurers. I would also like to point out the bill does 
not affect any ongoing civil actions.
  I think this is very important that this be included in the 
management package at this time. This is in addition to the State 
insurance regulations that already provide important protections to 
contract holders, so I am confident that there is the protection there 
that is necessary, and it is important that this be enacted at this 
time in order to ensure the security of pension assets for millions of 
American workers and retirees who hold assets in insurance company 
general accounts.
  So I am very pleased and express my appreciation, again, to both the 
distinguished chairman and ranking member of the Finance Committee for 
including this important legislation in their managers' amendment.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time? The Senator from 
Massachusetts.
  Mr. KENNEDY. Will my friend, the ranking minority member of the 
Finance Committee, be willing to yield 10 minutes?
  Mr. MOYNIHAN. Of course. The Senator spoke eloquently yesterday, and 
I look forward to hearing him do the same today.
  Mr. KENNEDY. Mr. President, will the Chair let me know when there is 
a minute and a half left, please.
  Mr. President, the other part of this debate is about the basic, 
underlying issue, which is whether this country is going to respond to 
the very powerful needs of working families who are working 40 hours a 
week, 52 weeks a year, playing by the rules, trying to provide for 
their families. That is really the underlying issue which the Senate is 
going to be voting on in the early afternoon. I wish to address that 
particular part of the debate and the alternatives which will be before 
the Senate.
  Minimum wage workers are the people who do some of the most thankless 
jobs in America. They are Head Start schoolteachers, they are teachers' 
aides who work with the 50 million of our young people in kindergarten 
through 12th grade. They are health care workers who look after our 
parents in nursing homes and in hospitals all across this country. They 
clean the offices and restrooms, collect the garbage at the curb, make 
the beds in fancy hotels, mop up the floors in public schools and 
hospitals. Minimum wage workers are the people who make the engine of 
our economy work while laboring behind the scenes and toiling at the 
drudgery jobs that must be done for America to thrive.
  Minimum wage workers have dreams for their families, their children, 
and their future, just like all other Americans. They have served their 
country in war and peace, and they still believe in the American dream. 
They cry into their pillows at night when their children are sick and 
they have no money for the doctor. They are giving to America, not 
taking from America. They are fighting to stay off welfare because of 
the shame they would feel if they took a handout from a Government 
established for the people and by the people. Their faces pressed 
against the windows of our affluence, they see the riches and abundance 
that so many take for granted but so often seems beyond their reach. 
But if they work hard and well, they know their children will have a 
greater chance for a better life.
  The minimum wage increase the Senate will vote on today will bring 
millions of those workers closer to that dream, and I urge the Senate 
to vote in a spirit of generosity that extends a helping hand, not the 
back of your hand, to all those who need and deserve this help. Today, 
we have the opportunity to put action behind the rhetoric of family 
values. If we really care about work, about families, about children 
and the future, we will vote for an increase in the minimum wage for 
all workers.
  If we care about helping the working poor, then we must support an 
increase in the minimum wage, regardless of the size of the company 
they work for. If we want to help minorities and women and single 
parents, then we must raise the minimum wage for all workers without 
the so-called opportunity wage. If we want to help adults stay off the 
welfare rolls, we must raise the minimum wage.
  Support for the minimum wage is an effective way to achieve the basic 
goal of improving the lives of American workers. Raising the minimum 
wage is long overdue. The increase we are voting on today should take 
effect as soon as possible, obviously prospectively, I hope some 30 
days after the President signs it into law. And it should be available 
to all minimum wage workers.
  I urge the Senate to reject artificial limitations on the size of the 
company or the time the worker has been on the job. Reject the 
gimmickry and chicanery we see in the Bond proposal.
  A fair minimum wage is the goal. No one who works for a living should 
have to live in poverty, and I urge the Senate to vote for the 
Democratic amendment and against the Republican amendment.
  Mr. President, this issue is about the number of individuals earning 
the minimum wage and whose hopes and dreams are in the future. They are 
about Tonya Outlaw of Windsor, NC, the parent of two girls, ages 6 and 
8. She works as a teacher at the Kiddie World Child Development Center. 
She worked there for 3\1/2\ years. She used to work at the Purdue 
chicken factory, where she used to earn more than minimum wage, but it 
was not enough to pay for child care. In order to work, Tonya needed 
child care for her children. Working at Kiddie World provided a 
solution.
  Now Tonya earns $4.25 an hour, and it is very hard to get her family 
the things they need. She said sometimes it is hard to provide her 
children with things they need like coats, medicines, and other types 
of essential needs. Tonya is unable to afford the insurance that they 
make available at her children's school, and she is unable to provide 
her children the medicine they need when they are sick. If they 
increase the minimum wage, she hopes to afford a place of her own, for 
her family. It is time for her to get a raise in the minimum wage.
  It is time for Alvin Vance, who is 45 years old and works picking up 
residential garbage. He earns the minimum wage of $4.25 an hour. He 
works 50 hours a week, counting 10 hours of overtime. This provide him 
with about $200 take-home pay. Alvin receives no health benefits or 
paid vacation, no paid sick days. If Alvin is sick, he will go to the 
charity hospital where he can obtain services with little or no charge.
  Alvin receives no AFDC, WIC, or food stamps. His rent is $125 a month 
for a one-room shack in a high-crime neighborhood. He has no car and 
must get a ride or walk to work, which is 7 miles away. It is time for 
him to get a living minimum wage.
  We heard comments today about the bipartisanship which has 
accompanied the provisions in this proposal that has been recommended 
by the Finance Committee. Just to point out once again the 
bipartisanship which has existed on the minimum wage in the past, Harry 
Truman in 1949, with President Eisenhower in 1955, President Kennedy in 
1961 and 1963--increases; President Johnson in 1967 and 1968, President 
Nixon and President Ford, 1974 through 1976; President Carter, 1978 
through 1981, President Bush, 1990 to 1991. This has been a bipartisan 
effort.
  This is what Senator Bob Dole said in 1974:

       A living wage for a fair day's work is a hallmark of the 
     American economic philosophy.

  President Nixon, April 1974, on signing the minimum wage:

       The federally legislated minimum wage for most American 
     workers has remained static for 6 years despite a number of 
     increases in the cost of living. Raising the minimum wage is 
     now a matter of justice that can no longer be fairly delayed.

  We go into the more recent years in 1989 and 1990, President George 
Bush:

       It gives me great pleasure to sign into law the first 
     increase in the minimum wage since 1981.
       I have called for an increase in the minimum wage that 
     would protect jobs and put more money in the pockets of our 
     workers. . . I am pleased to sign it. It offers promise of 
     better wages for working men and women.


[[Page S7426]]


  Senator Dan Coats during the debate on the minimum wage increase:

       Let me state that I am one Senator who is convinced that an 
     increase in the minimum wage is justified. I do think that by 
     doing so, we can assist an element of the public, the working 
     poor, often those a step below or just a step above welfare 
     and above poverty. And that since the minimum wage has not 
     been increased since January of 1981, and since it has lost 
     in that time period nearly 20 percent of its value to 
     inflation, then an increase in the minimum wage is justified.

  It had lost nearly 20 percent of its value in 1989, and Dan Coats at 
that time was supporting an increase. Now it is at the lowest level of 
purchasing power in 40 years, and the economy's strength certainly 
clearly justifies this increase.
  Mr. President, this is an issue about work. It is an issue about 
children.
  The PRESIDING OFFICER. The Senator is advised he has 1\1/2\ minutes 
remaining.
  Mr. KENNEDY. I thank the Chair. This is an issue about children, the 
children of working families that are working hard and trying to make 
it. This is an issue about women. More than 60 percent of the full-time 
minimum wage recipients are women. It is an issue about families and 
family values. It is an issue about the taxpayers, because this is 
going to lift over some 100,000 families out of poverty, 300,000 
children out of poverty, reducing the burden on the taxpayers, on AFDC 
and the Food Stamp Program and other support programs.
  Most of all, it is about work. Are we going to honor work in our 
society? Are we going to say men and women who play by the rules, work 
hard 40 hours a week 52 weeks of the year are going to have a living 
wage for themselves, their children, and their future? That is the 
option that will be here to vote on at 2:15 and 2:30 this afternoon. I 
hope we will support Senator Daschle's amendment.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mr. GRAMM. Mr. President, recognizing that we are unlikely here on 
the floor of the Senate to repeal the law of supply and demand, as many 
of our Members would like us to try to do, we have included in this 
debate a tax bill, H.R. 3448, the Small Business Job Protection Act of 
1996, which was put together on a bipartisan basis to try to offset 
some of the negative impacts of an increase in the minimum wage, 
especially as it relates to increasing unemployment among young people 
with low skill levels. What I would like to do this morning is talk 
about some very positive provisions in that bill and explain why I am 
for the Small Business Job Protection Act of 1996.
  I want to talk specifically about four provisions of this bill that I 
have been directly involved in, and explain to my colleagues why they 
are important and why it is critical that this bill pass and why we 
must send a bill to the President which can be signed.
  The first issue I want to talk about has to do with agricultural club 
dues. We have had, since 1987, a running dispute between the Internal 
Revenue Service and the Farm Bureau about Farm Bureau dues. In this 
bill, we have a provision that I and others have pushed which says to 
the Internal Revenue Service that: First, dues to the Farm Bureau are 
not taxable Farm Bureau income; second, that the Farm Bureau is a 
nonprofit agricultural research and business promotion institution 
which is owned by its members; and third, that being part of the Farm 
Bureau is being part of agriculture.

  Interestingly enough, the Internal Revenue Service did not oppose our 
effort to say to them that in the future, Farm Bureau dues will not be 
viewed as income to the Farm Bureau. Yet for some unexplainable reason, 
the Internal Revenue Service has continued to press ongoing lawsuits 
against Farm Bureaus in Florida, Georgia, Illinois, Kentucky, Michigan, 
Missouri, North Carolina, Tennessee, Texas, Washington State and 
Alabama. In these States, there is ongoing litigation--instituted by 
the Internal Revenue Service--where the IRS is trying to force the Farm 
Bureau to pay taxes they do not owe.
  I do not understand how the Internal Revenue Service can say that 
they are willing to be supportive of an act of Congress that defines 
that for all future times, dues to the Farm Bureau are not taxable 
income, but yet refuses to go back and drop all these lawsuits. We had 
hoped in the Finance Committee to work out an agreement on this issue. 
I worked with the chairman and the ranking member who were hopeful that 
the Internal Revenue Service would issue a position paper saying that 
it would drop these existing lawsuits, but the Internal Revenue Service 
has refused to do that.
  In fact, Mr. President, I ask unanimous consent that a letter to this 
effect, from the Assistant Secretary of the Treasury for Tax Policy, be 
printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                   Department of the Treasury,

                                    Washington, DC, June 24, 1996.
     Hon. Phil Gramm,
     U.S. Senate,
     Washington, DC.
       Dear Senator Gramm: This letter is in response to the 
     question you raised at the Senate Finance Committee mark-up 
     held on Wednesday, June 12, 1996 concerning farm bureaus.
       Last year, in Revenue Procedure 95-15, we clarified that no 
     tax is to be imposed on associate member dues payments 
     received by tax-exempt agricultural organizations unless the 
     organization's principal purpose in forming or availing 
     itself of an associate member class was to produce income 
     from an unrelated trade or business.\1\ The approach in the 
     ruling reflects current law. See National League of 
     Postmasters v. Commissioner, sl. op. (4th Cir. June 14, 
     1996,), affirming T.C. Memo 1995-205 (May 11, 1995).
---------------------------------------------------------------------------
     \1\ As noted in the Senate Finance Committee report 
     accompanying H.R. 3448, the focus of the inquiry under the 
     Revenue Procedure ``is upon the organization's purposes in 
     forming the associate member category (and whether the 
     purposes of that category of membership are substantially 
     related to the organization's exempt purposes other than 
     through the production of income). . . .''
---------------------------------------------------------------------------
       While Rev. Proc. 95-15 was being developed, the IRS 
     suspended its examinations of agricultural organizations to 
     ensure that any associate member dues issues that had been 
     raised would be resolved consistently with the analysis in 
     the Revenue Procedure. We are confident that as the IRS 
     finishes the remaining examinations on this issue, it will 
     follow the Revenue Procedure in analyzing the activities of 
     farm bureaus and the income they receive with respect to 
     their associate members.
       Of course for periods to which the proposed legislation 
     would apply (Section 1113 of the Small Business Job 
     Protection Act of 1996), the treatment of associate member 
     dues paid to agricultural organizations would follow the 
     statute as amended.
       Nevertheless, if there are cases under audit for taxable 
     years beginning prior to December 31, 1994 which cannot meet 
     even the test of the Revenue Procedure, it is not possible to 
     provide administrative relief, other than relief that may be 
     available under section 7805(b) of the Internal Revenue Code. 
     Thus, you should be aware that, because each case will be 
     determined according to its own facts and circumstances, we 
     cannot assure you that the IRS will provide administrative 
     relief in these pre-effective date cases beyond the guidance 
     provided in Revenue Procedure 95-15.
       Please call us if you have any further questions.
           Sincerely,
                                                 Donald C. Lubick,
                          Acting Assistant Secretary (Tax Policy).

  Mr. GRAMM. Mr. President, to get to the bottom line, basically, the 
Internal Revenue Service has said that no matter what Congress does in 
terms of defining dues to the Farm Bureau as nontaxable income, they 
are going to pursue these lawsuits anyway. So we will be offering later 
as part of the managers' amendment an amendment that I have authored 
which basically says to the Internal Revenue Service, ``We have made a 
decision in Congress, we want these frivolous lawsuits to be dropped, 
and we want them to be dropped now.''
  This is an issue that should be settled. The position of the IRS is 
indefensible in the opinion of the vast majority of Members of Congress 
and is indefensible in the opinion of the vast majority of the American 
people. We not only want the IRS to stop doing this in the future, we 
want them to go back to these old lawsuits and end this harassment once 
and for all.
  We are taking a major step in that direction in this bill. In an 
amendment that the chairman will offer on my behalf later and on behalf 
of others, we are also going to go back and, in essence, say to the 
IRS, ``Drop these lawsuits and end this issue once and for all.''
  The second issue that I think is important in this bill is also 
another IRS issue. For some unexplainable reason, roughly 3 years ago, 
the Internal Revenue Service decided that newspapers

[[Page S7427]]

and paperboys were cheating the Internal Revenue Service. The Internal 
Revenue Service, in a series of lawsuits filed all over the country 
against major daily newspapers, said that paperboys--and I use the term 
``paperboy'' because there is no comparable gender neutral term in the 
English language that I have found, and though I was once a paperboy, 
if someone has a gender neutral term, I will be happy to use it--but 
until they do, I will use the one that people recognize.
  In any case, the Internal Revenue Service has argued that paperboys 
are not legitimate independent contractors and that they have, in 
essence, conspired with newspapers to avoid being employees and, in the 
process, have not paid Social Security taxes, withholding taxes, 
unemployment insurance, and Medicare taxes. The ultimate objective of 
the IRS, it appears, is to force paperboys to become employees of daily 
newspapers.
  Mr. President, in the grand scheme of things this is not a very 
important issue. But I was once a paperboy--I threw 106 newspapers--and 
for the life of me, I cannot understand why the IRS wants to destroy a 
system which allows literally hundreds of thousands of young people, 
both boys and girls, to be independent businesspeople.
  If the IRS had its way, it would raise the cost of having a daily 
newspaper delivered to your door and it would destroy an opportunity 
that has been part of the American system of small business since 
almost the colonial period. In my opinion, the negative impact of this 
approach goes far beyond newspapers and the cost to those who read 
them.
  Let me make the point as succinctly as I can: I am trained as an 
economist, and at some point in my career I became interested in 
various historic economic periods in America, the greenback and free 
silver movement period, and other periods in the 18th and 19th 
centuries. One of the things which I discovered was that people in the 
18th and 19th centuries, for some unexplainable reason, understood 
economics and understood how our economy works much better than 
educated people do today.
  After having looked at this, I concluded that the reason this was so 
is that in the world of the 18th and 19th centuries--when most people 
were farmers or independent businesspeople--most people actually bought 
things, produced things, and sold things. They were both buyers and 
sellers in the market at the same time, and because of this, just 
carrying on their daily business provided a tremendous educational 
experience for them about how this great economic system works.
  Today, when people graduate from college, they go to work for some 
big company or for the Government, and for most of their lives they 
specialize in one particular field. They may buy things, they may sell 
things, they may produce things, or they may even deal with the huge 
paperwork and litigation trail that often goes with it--but very few 
people in America today are actually engaged in all facets of any 
business.
  One of the reasons that I have taken on this paperboy issue with a 
very strong commitment and zeal is that being a paperboy is one of the 
last jobs left where young people are actually in business for 
themselves. They buy their newspapers from the newspaper and then sell 
it to their customers. I bought 106 copies of the Ledger-Enquirer from 
the local newspaper and delivered it to 106 residences and businesses. 
I collected the money, as literally millions of paperboys have done 
since the colonial period, and in the process not only did I earn 
money, but I learned about how our market system works. I think it is 
vitally important that we not let the Internal Revenue Service destroy 
this great educational and business system that is available to young 
people all over America. So I have championed this provision in the 
bill that says to the Internal Revenue Service, get out of the paperboy 
business. Let paperboys be independent businesspeople. Stop challenging 
their independent status. Do not destroy a great American institution 
which not only brings the newspaper to our home at 6 o'clock in the 
morning, at a very low price, but also is a great business and learning 
opportunity for the young people of this country.
  So I am very proud of this provision. Is it going to change the 
world? No. But for hundreds of thousands of young people all over 
America, it is going to preserve their opportunity to be an independent 
businessperson. It is going to preserve a great American institution 
and it is going to tell the Internal Revenue Service to go make war on 
somebody else and leave America's paperboys alone.
  The third provision in the bill that I want to talk about is the 
research and development tax credit. This credit came into place in 
1981 in an effort to try to encourage American businesses to invest in 
research and development. If I had the chart with me that I have used 
around the country, I could show that in every single year since 1970 
Japan and Germany have invested a higher percentage of their gross 
domestic product in nondefense R&D than has the United States of 
America.

  We need more research and development if we want to produce the 
products of the 21st century, if we want to be competitive in the world 
market. If we really want higher wages in this country, we should not 
simply just mandate them in Congress, we should promote investment in 
research and development. We should promote investments which develop 
new products, which develop new tools, and which develop new ways of 
doing things. We need to be the leader of the world in science and 
technology, and extending the R&D tax credit is a critical part of that 
effort.
  Quite frankly, Mr. President, I am disappointed that we are only 
extending the R&D tax credit for 18 months. This tax credit should be 
made permanent because people need to know with certainty that if they 
undertake a long-term R&D project--that if they try to bring a new 
product on to the market, or to develop new tools and new techniques, 
or to bring the power of science to the farm and to the factory--that 
there will be a consistent and favorable tax policy.
  The R&D tax credit is broadly supported on both sides of the aisle. I 
think it is absolutely imperative that we adopt this bill and put the 
credit back into place, and eventually I want to make it permanent. 
This business of taking important features in the tax structure and 
every 6 months or every year going through the process of re-debating 
it creates uncertainty and it greatly reduces the positive benefit to 
the country of long-term research, development, and experimentation 
expenditures by private businesses. So I think it is imperative that we 
make this tax credit permanent. I am pleased that we are reinstituting 
it. I see it as a positive step forward, but I do not think we are 
going far enough.
  One final issue: Senator Hutchison has sponsored, and I have 
cosponsored, a bill to eliminate a terrible inequity in the Tax Code. 
And that terrible inequity is that if you work outside your home and 
the company you work for does not have a private retirement program, 
you can put up to $2,000 a year tax free into an individual retirement 
account. If, however, you decide to stay at home and raise your 
children and be what is traditionally called a homemaker, you lose the 
ability to put $2,000 a year into your individual retirement account.
  I believe, and Senator Hutchison believes, that the Tax Code 
discriminates against people who decide to stay at home to raise their 
children and to provide for their family.
  I want to make it very clear that neither Senator Hutchison nor I are 
trying to make a value judgment here as to what people should do. My 
mama worked all during my childhood because she had to. My wife has 
worked because she wanted to. But the point is this, the Tax Code 
should not discriminate against people based on whether they make a 
decision to work outside their home or inside their home.
  The provision that is in our bill makes it so that regardless of 
whether a person decides to take a job in the economy or whether they 
decide to stay, and work, in their home and to raise their children, 
they have the equal right to provide for their retirement and to 
provide for their individual security.
  Under this provision we will let a homemaker, as well as someone who 
works outside the home, set up an individual retirement account, and we 
will allow them to put up to $2,000 a year tax free into that account. 
The net result will be to strengthen families and

[[Page S7428]]

to allow people who stay at home and raise their children to build up a 
retirement program like other people can. We will be eliminating an 
antifamily element in the Tax Code, and, therefore, I think this is an 
important provision.
  I am equally committed to the goal of trying to expand what people 
can use individual retirement accounts for. Last year, we were 
successful in both Houses of Congress in opening up individual 
retirement accounts to allow them to be used to build up a nest egg for 
a downpayment on a first home, to be used for college tuition, and to 
be used for major medical expenses. I think this is an important step 
in creating a lifelong saving program which will not only expand 
national savings and enrich the country in the process, but will make 
it easier for people to prepare financially for the expenditures that 
they are going to have to face during their lifetimes. In making it 
easier to save, we will make families stronger, we will make people 
more secure, and we will spread happiness, which is the only legitimate 
aim of a free government.

  I am afraid that with all of our efforts here to defy logic and 
economics and to repeal the laws of supply and demand that we are going 
to forget that there are other provisions being voted on today. 
Individually, they do not represent Earth-changing policy, but getting 
the IRS out of the business of trying to force the Farm Bureau to pay 
taxes on dues, getting the IRS out of the business of trying to destroy 
the independent contractor status of paper boys, extending the R&D tax 
credit, and letting homemakers have the same right to build up 
retirement that those who choose to work outside the home have are all 
important changes in tax policy.
  I think these changes will be beneficial to the country as a whole as 
well as to the individuals who are directly affected. I want to thank 
our chairman for his leadership on this bill and for allowing 
individual Members who care strongly about these small issues, which 
often end up falling through the cracks, to get them into this bill. I 
yield the floor.
  Mr. MOYNIHAN. Mr. President, I congratulate the Senator from Texas 
for a very careful exposition. I think this is perhaps the first time 
he has been on the floor as a member of the Committee on Finance.
  As many academic theories go, there are problems sometimes with 
reality. This Senator from New York at age 12 was a paperboy. He had 
learned if at 9 o'clock at night you bought 10 copies of the Daily News 
and 5 copies of the Daily Mirror at 96th Street and Broadway and then 
sold them in places of entertainment along Amsterdam Avenue, if you 
bought them for 2 cents and you sold them for 5, you had a profit of 
150 percent capital that very day. I knew all of this by the age of 13. 
Somehow by age 16 I had forgotten it entirely. And here I am, looking 
for Social Security. That is why I insist Social Security will be 
there.
  Thanking the Senator, I have the honor to yield 8 minutes to the 
distinguished Senator from Minnesota.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Mr. WELLSTONE. The Democratic minimum wage amendment that is pending 
which I cosponsored is simple and straightforward. It would increase 
the Federal minimum wage from $4.25 an hour to $5.15 an hour. That is 
90 cents over 2 years, not even indexed for inflation.
  Mr. President, the increase in the minimum wage for our Nation for 
working families in our Nation is a matter of simple justice. Mr. 
President, the Republican alternative to this bill is in many ways, I 
think, worse than the House-passed bill. It is certainly not a step 
forward; rather, it is a great leap backward. First of all, Mr. 
President, the Republican amendment argues that a family would not 
receive a raise until January 1, 1997. That would deny people an extra 
$500. That is important. We want this minimum wage to take effect right 
now. For people who have significant wages, for people who have 
significant incomes, $500 may not seem like much, but for many 
families, for many wage earners who just make a little bit over $8,000 
a year, that additional $500 is a difference that makes a difference.

  Second of all, the Republican alternative would create a subminimum 
wage that would apply to all workers regardless of age for a 6-month 
period. Mr. President, this particular part of their alternative I find 
to be egregious. I know of no other word. In other words, we are saying 
there will be a 8-month period for wage earners, regardless of age, 
regardless of experience, regardless of background. They call this an 
opportunity wage. I, instead, call it an exploitation wage. It to me 
makes no sense at all. You are 55 years of age, you have been 
downsized, you had a good job, and you are saying through this 
amendment, that as a matter of fact, people who have been downsized now 
have to start out at $4.25 an hour, and for 6 months work at that. They 
cannot even receive $5.15 an hour. Mr. President, for a 55-year-old 
out-of-work steelworker in Hibbing, MN, that is not justice. For a 38-
year-old waitress in Sauk Centre, that is not justice. For a 27-year-
old young man working in a grocery store in Rochester, that is not 
justice.
  To make the argument that is not just teenagers, it is everybody, 
regardless of their age, regardless of their experience, that for 6 
months they make $4.25 an hour, not even $5.15 an hour, I think, is no 
less than a scandal.
  Finally, Mr. President, the exemption, the small business exemption, 
is unprecedented, it is unnecessary, it creates a two-tier wage 
structure, and about half of the 10 million or so wage earners and 
families that would be benefited by this would no longer benefit.
  Mr. President, when I look at this alternative and I look at all of 
the exemptions, I look at all the delays, and all of the rest of it, it 
is hard to determine under the Republican alternative, who, if anyone, 
would actually receive an increase even if their bill was to become 
law. There are so many loopholes and so many exemptions to the Bond 
alternative that after all is said and done, if it was passed, it is 
hard to even figure out who would actually receive an increase.
  Mr. President, we should have no illusions about this on the floor of 
the Senate. Justice delayed is justice denied, and the Bond amendment 
does not represent a step forward.
  Mr. President, I would like to talk about this minimum wage debate 
and this vote, which I think is a historic vote on the floor of the 
Senate, in a national context and in a family context. I do not think 
this is a vote really about the minimum wage. I think it is about more 
than a minimum wage. For the vast majority of Minnesota families and 
families in this country, they view this as providing a foothold into 
the middle class. Over 50 percent of the minimum wage workers are 
adults, they are not teenagers. Over 60 percent of the minimum wage 
workers are women, and for these women and these men and their 
families, an additional $1,800 is a difference that makes a difference. 
It means you can buy the groceries and put food on the table. In a cold 
weather State like Minnesota you can pay the heating bill. You might be 
able to afford your tuition at a community college.

  Mr. President, this is not about just the minimum wage. It is more 
important than the minimum wage. This is about the squeeze that 
families feel. This is about the concerns that people have that their 
children in their twenties cannot find employment that they can count 
on. That is to say, a job that pays a decent wage. This is about the 
concern that people have that they cannot afford to send their kids to 
college. This is about the concern that people have that they cannot 
make ends meet. This minimum wage amendment that we have introduced 
represents a step forward for our country. Justice delayed is justice 
denied. The Bond alternative does not represent a step forward, Mr. 
President. It represents a step backward.
  Now, I will not go through the whole political economy debate but I 
will make two final points. Point one, you look at Salomon Bros. report 
on this and they say if you raise the minimum wage you have people who 
can consume more and the economy does better and it creates more jobs, 
and then you have 100 economists that signed the letter, including a 
Nobel laureate economist, and they say this is a modest increase, it 
will not lead to a decrease in jobs. We use to have bipartisan support 
for raising the minimum wage. We used to believe it was the right thing 
to do. We

[[Page S7429]]

used to believe it was a matter of fairness and justice. We should pass 
this minimum wage in its strongest form.
  Mr. President, the National Retail Federation, in talking about the 
Bond amendment said, ``Passing the Bond amendment is probably our best 
chance to kill the minimum wage increase.'' ``Passing the Bond 
amendment is probably our best chance to kill the minimum wage 
increase.''
  Senators, colleagues, if you vote for this amendment, that is what 
you are doing. You are killing the minimum wage increase. There are so 
many exemptions built into it and so many loopholes that all of the 
wage earners and all of the families that could benefit will not be 
able to benefit. We are not going to be able to fool anybody. You 
cannot duck and run. You cannot hide. You cannot duck for cover. You 
cannot look for a political cover vote--and that is what this amendment 
is.
  We should vote for this minimum wage. It is long overdue. It is the 
right thing to do. I hope that there will be very strong support for 
it.
  Mr. President, let me just finish on a somewhat different note and 
just reference some of the remarks that my colleague from Illinois is 
going to make.
  I am concerned with the managers' amendment. We now just had a chance 
to see the specifics. It is very long, very involved, and there are a 
number of provisions in this amendment that I am extremely concerned 
about.
  My colleague from Illinois I might ask very briefly to speak about an 
important Supreme Court decision and what is in this managers' 
amendment.
  Mr. SIMON. Yes. There are a number of things. I thank my colleague 
for yielding.
  The PRESIDING OFFICER. The Senator is advised that the time has 
expired.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. GRAMM. I yield 10 minutes to the distinguished Senator from 
Missouri.
  Mr. WELLSTONE. I wonder whether I might ask unanimous consent for 1 
more minute so my colleague can finish this.
  Mr. GRAMM. Mr. President, if we could amend the unanimous-consent 
request so that the distinguished Senator from Minnesota has 1 more 
minute but at the expiration of that minute the distinguished Senator 
from Missouri be recognized for 10 minutes.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. WELLSTONE. I thank my colleague.
  Mr. SIMON. I thank my colleague. There are several provisions in 
here.
  First of all, ESOP's--we take away the advantage. We have always said 
ESOP's are a good thing. Now we retreat on that. Harris Trust is a 
provision that protects the pension funds. I do not know how much is at 
stake here; $300 billion is one figure. I heard $500 billion, another 
figure.
  This complicated thing we are acting on without a hearing. I do not 
think it makes sense.
  Then, finally, we are changing the small business provisions on 
401(k) plans so that highly compensated executives will have advantages 
over those of lesser incomes.
  I think the managers' amendment is a very bad amendment.
  The PRESIDING OFFICER. The Senator from Missouri is recognized.
  Mr. ASHCROFT. Thank you, Mr. President.
  I am pleased to have this opportunity to participate in the debate 
that relates to the compensation levels received by American workers. 
It is an important debate, in my judgment, because it allows us to 
address the problem which is understood by people across the political 
spectrum and around the country.
  The fact is that take-home pay has declined by 6.3 percent since its 
1989 level. Americans' tax burden has been going up while their take-
home pay has been going down. Currently, we charge people more for 
government than we have at any other time in history. That troubles me. 
Americans spend more on taxes than they do on food, clothing and 
shelter combined.
  This concept of wage stagnation, of the flatness of wages, has really 
caused the American people to be troubled. The Senator from Minnesota, 
Senator Wellstone, recently--in fact, just a few moments ago--talked 
about the fact that families are struggling to make ends meet, are 
worrying about how they get their kids to college, are worrying about 
being able to move into the work force and are worrying about getting 
the kind of experience which is necessary in order to become 
productive, long-term workers in our economy.
  So I think there is an important condition to be addressed. It is a 
condition of wage stagnation, of a flatness in terms of take-home pay.
  As I spent the last couple of weeks, or almost a couple of weeks, 
home in Missouri, I worked with workers side by side. I worked with a 
group of workers in the Eagle Pitcher Corp. which manufactures 
batteries for use in satellites. I did assembly line jobs and those 
workers are concerned about their take-home pay. I worked in the food 
service industry. And, yes, those workers are concerned there about 
their take-home pay. One day I worked in the apparel industry--in 
manufacturing of clothing and uniforms. And those workers also are 
concerned about their take-home pay.
  While individuals are concerned about their take-home pay--none 
mentioned an increase in the minimum wage. They understand that the 
minimum wage is something that would address only between 4 and 5 
million people in this country, and many of those individuals are not 
full-time workers.
  I think we need to address this problem of wage stagnation far more 
substantially than we would if we were to increase the minimum wage.
  There are problems attendant with increasing the minimum wage which 
would intensify the economic difficulty for individuals, not relieve 
it. For instance, the Congressional Budget Office indicates that a 90-
cent increase would create employment losses in the country from 
100,000 to up to 500,000 jobs lost. I do not think we want to craft 
relief that will cause a significant number of American workers to lose 
their jobs.
  Seventy-seven percent of the American Economists Association 
responded that a minimum wage increase would have job losses that are 
substantial.
  Even the Democratic Leadership Council opposes a minimum wage 
increase. Even the Clinton administration understands this concept. 
Secretary Reich, in a letter to President Clinton, dated July 20, 1993, 
wrote: ``A full assessment of where to set the minimum wage should 
consider a wide range of factors beyond its income effects on the 
working poor. After all, most minimum wage workers are not poor.''
  So if we really want to try to increase the take-home pay for 
individuals, I do not think the minimum wage is a very good way to do 
it.
  First, many of those who are on the minimum wage are not poor people. 
About 57 percent of these workers are in households with income of over 
$45,000.
  Second, we do not want to shrink the job base for this country in the 
process of helping people.
  So what kinds of alternatives are there for helping people with flat 
wages which also do not shrink the job base but grow the job base, 
which do not just address 4 to 5 million people but address 70 or 80 
million people? What are the kinds of things that we can do to provide 
relief that really would help families--generally--across the board, 
rather than focus on less than 5 percent of the American work force?

  I believe that there is such an opportunity, and I have offered it in 
the U.S. Senate. Almost all of the individuals who speak so eloquently 
in favor of the minimum wage voted against this proposal. But the truth 
of the matter is this proposal would help almost 80 million workers 
instead of 4 million workers. It is something that would grow the job 
base of the United States by a half million jobs instead of shrink it 
by a half a million jobs.
  It would be something that would allow a broad base of Americans to 
have more take-home pay rather than just helping a few. It is this--
right now, as Americans pay more in taxes than we have ever paid in 
history, we pay double taxes on the Social Security taxes which we have 
deducted from our paychecks. It is money we never see.

[[Page S7430]]

  The money actually is taken by our employer and sent to the 
Government. It is the Social Security tax of 6.2 percent of our income. 
Then we are later charged income tax on that same tax which we have 
already paid.
  If we were to allow this tax to be deductible to ordinary workers 
like it is deductible to corporations which pay the other half of the 
Social Security tax, we would have a $1,770 impact on the average two-
earner working family, and that would benefit 77 million-plus workers 
instead of 4 million-plus workers. It seems to me, if we want to 
address this challenge in our culture, which has recognized the 
flatness in take-home pay, we ought to do it on a broad base for 
Americans rather than a narrow base, and we ought to do it in a way 
that grows this economy rather than stunts the economy.
  As the economists have indicated, a mandated increase in the minimum 
wage could result in up to 500,000 jobs lost. However, the economists 
have indicated there would be 500,000 jobs gained if we were to provide 
this kind of tax relief to American families.
  I think we ought to find ways to grow ourselves into helping people 
out of wage stagnation rather than stunt the economy and hope there 
would be those who would benefit as a result, in spite of the fact we 
had substantial job losses. The reasons are substantial to provide 
deductibility of our Social Security taxes which we pay from our income 
taxes.
  First, it is necessary to eliminate this double taxation on American 
families.
  Second, corporations which pay the other 6.2 percent of a person's 
earnings in order to make the total combined 12.4 percent of earnings, 
deduct their share--yet, the average worker cannot deduct their share. 
This fundamental lack of fairness, this disparity in tax treatment 
between the corporate side and the individual side should be resolved.
  Finally, if we really want to help American workers. We ought to be 
looking out for workers generally rather than a very small segment of 
workers, many of whom are only part-time employees. Many of whom are 
the youngsters like my children. They began work in the fast food 
industry. Well, some 40 years ago I began work in the fast food 
industry myself, or at least in the ice cream industry. I do not think 
there was really fast food in those days. But I think we ought to find 
a way to help American families generally, and we can help American 
families generally by providing tax relief for American families 
generally. It is tax equity because it would give the American family 
the same tax break that the American corporation enjoys. It would be 
tax fairness because it would stop a double taxation on American 
families. And it would help grow the economy rather than slow the 
economy, which is the way we ought to try to move people ahead in terms 
of their own wages.
  That ought to really be the focus of our endeavor. We ought to try to 
benefit families generally. We ought to try to provide help and 
assistance to the 70 or 80 million wage earners that could be assisted 
from this proposal rather than limit our assistance to the 4 million or 
so individuals who are involved in the minimum wage category.
  I believe there has been an appropriate recognition, a diagnosis, if 
you will, of a discomfort in the American body politic. The diagnosis 
is for wage stagnation. I believe we can remedy that by providing tax 
relief for American families generally, rather than seeking to focus 
our efforts on a very small segment of the American population.
  The PRESIDING OFFICER (Mr. Campbell). The Senator's time has expired.
  Mr. ASHCROFT. Mr. President, if my time has not been consumed, I 
would reserve the remainder.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. MOYNIHAN. Mr. President, I yield 8 minutes to the distinguished 
Senator from California.
  The PRESIDING OFFICER. The Senator from California is recognized for 
8 minutes.
  Mrs. BOXER. I thank the Chair. I thank very much Senator Moynihan who 
has been working so hard to put together a measure this body can pass 
and feel good about. I thank him specifically for helping us with some 
very important provisions dealing with pension protection for widows. 
Without going into those details, I see that it has been included in 
the managers' amendment, and I am very grateful because what happens 
many times, I say to my friend, is that when a person loses a spouse--
in this particular case I am talking about, it is usually a woman left 
in a circumstance where the pension that they were receiving together 
drops from 100 to 50 percent, and there are ways to fix that so the 
couple gets two-thirds in pension, so that there is no dropoff after a 
death. What we have been saying is that this option ought to be 
available, and the committee, on a bipartisan basis, has recognized 
this, and I am grateful to all sides on that.

  On the other issue about which I rise to speak, I am not as pleased 
because I am worried. I am worried that while we take up the minimum 
wage, there will be enough votes to carry what I consider to be an 
egregious loophole, and I think if it does pass--and I am very hopeful 
it will not--what we will be doing here today really is more of a sham, 
because we have information which says that if the Bond amendment 
passes--and I know my friend from Missouri really believes it is the 
right thing to do, and I respect his view; I just do not happen to 
agree with it--if the Bond amendment would pass, 50 percent of those 
who would get a minimum wage increase would not get that increase.
  I think that would be a little bit akin to going to a birthday party 
for twins, and you can imagine two little children 6 years old, 7 years 
old, and you give a gift to one and nothing to the other. I do not 
think anyone in America would do that. I do not think we should treat 
our working people that way. Simply because one works for a large 
corporation and another for a small should not mean that we punish the 
one who works for a small corporation. By the way, the definition of 
such a corporation is $500,000 in business, which is not exactly a mom 
and pop operation. And so I am worried about this vote today. I am 
excited, frankly, that we finally come to the point where we have a 
chance to vote for a clean minimum wage. I am not so sure the body will 
do so.
  Really, the question today is whether there will be a straightforward 
increase in the minimum wage, which is at a 40-year low. That increase 
will go soon to the people at the bottom of the economic ladder that my 
friend from Massachusetts, Senator Kennedy, I think, has described so 
well--who these people are and what they do. They are at the very 
bottom of the American economic ladder. They work very hard. They earn 
well below the poverty level. We are calling for a slim dime-an-hour 
increase for those people over 2 years--over 2 years. I think we ought 
to just do that the way we have done it in the past.
  Again, the Senator from Massachusetts has pointed out that under 
President Nixon we have done it, under President Bush we have done it, 
under President Kennedy we have done it, under President Carter we have 
done it, and we really did not set up a two-tiered permanent system. We 
never did that before. We should not do it now. We have never set up a 
subminimum wage. We have never done that before. We should not do that 
now.
  I just want to point out to my colleagues that the issue of the 
minimum wage in many ways is about people who are struggling to earn 
money for their families, and many of them are women. As a matter of 
fact, most of the people on the minimum wage are adults, and most of 
those are women.
  There is a particularly egregious part of the Bond amendment that I 
hope Members will look at and vote against. That has to do with those 
workers at the bottom of the ladder who count on tips--in other words, 
waitresses and waiters and others. Now, again, these are the people who 
work with the sweat of their brow, and they go home at night and they 
can barely stand on their feet. I want you to know that 80 percent of 
those people are women. They are women. What we are going to do here is 
freeze in their minimum wage because, under the current law, people who 
count on tips get half the minimum wage. Actually, it used to be 60 
percent, but we changed that in the 1980's. They get half the minimum 
wage and then they get their tips to

[[Page S7431]]

compensate. In the Bond amendment we freeze that at the current half of 
the current minimum wage, and therefore those folks are frozen in place 
and they are going to go down the economic ladder.

  Why would we do that when we have a chance today to send a message, 
Republicans and Democrats alike, that we think everybody ought to be 
brought along in this economic recovery? We hear there is good news out 
there. There is good news out there. There is more to be done, but we 
are seeing that unemployment rate go down.
  So my message here this morning is this: Why do we not just do the 
right thing? Just do it. Just vote for an increase in the minimum wage 
the way we have done for so many years. And this argument that, oh, 
jobs will be lost and it will be inflationary--if we had that attitude 
we would still have people working for 50 cents an hour. If we truly 
believed that every single minimum wage increase was going to bring 
loss of jobs we never would have increased the minimum wage. Why do we 
not do the right thing today?
  Mr. President, I hope we will defeat the Bond amendment and pass a 
clean increase in the minimum wage.
  Mr. MOYNIHAN. I thank the Senator from California.
  The PRESIDING OFFICER. Who yields time?
  Mrs. KASSEBAUM. Mr. President, I yield 10 minutes to the Senator from 
Utah.
  The PRESIDING OFFICER. The Senator from Utah, [Mr. Bennett], is 
recognized.
  Mr. BENNETT. Mr. President, one of the things that continues to amaze 
me in my service in the Senate is how we, in this body, spend all of 
our time projecting and conjecturing about the future and not much time 
looking at the past in an attempt to find out if there is a model that 
can give us a more sure understanding of the future than the 
projections of professional pundits and economists. In this debate on 
minimum wage, we do have a clear model from the past which illustrates 
what happens when the minimum wage is raised. I want to spend some time 
this morning talking about this model.
  By coincidence, the best summary of this model appeared in this 
morning's New York Times. Under the headline, ``Thesis, Rise in Wages 
Will Hurt Teenage Group,'' we have the following:

       At one time, Sidewinder Pumps Inc., in Lafayette, La., 
     would hire a dozen or more young people to work each summer 
     at minimum-wage jobs like weeding or expanding the parking 
     lot--tasks that were not really essential to the company but 
     that let it give teenagers a taste of what paid work is like.
       When the Federal minimum wage went up in the early 1990s, 
     the company cut back to three or four summer workers. And 
     this year the prospect of another increase led the company to 
     end this quarter-century tradition.

  The last time Congress raised the minimum wage this company cut back 
the number of minimum wage earners. Now, some are proposing to raise 
further the minimum wage and this company is now eliminating more jobs. 
This situation is not theory, but actual experience, actual practice.
  The article goes on to give us some statistics:

       In March 1990, just before the Federal Government raised 
     the minimum to $3.80 from $3.35, 47.1 percent of teen-agers 
     had jobs, but that promptly began a slide that carried it 
     down to less than 43 percent a year later, when the $4.25 
     wage kicked in. The figure then tumbled to 39.8 percent by 
     June 1992 before slowly recovering to 43.2 percent now.
       ``The timing of the drop in teen-age employment is 
     absolutely coincident with the increase in the minimum, 
     whereas for other groups the recession's bite was delayed,'' 
     declared Finis Welch, an economics professor at Texas A&M 
     University and a prominent student of the subject.

  In other words, the last time the minimum wage was raised, the group 
that was hurt the most, in terms of unemployment, statistically and 
historically, was teenagers. The article states:

       Black teenagers, often most in need of basic job skills, 
     fared even worse. At the beginning of 1990, 28.8 percent of 
     this group held jobs. But lack of hiring and dismissals drove 
     this down to 22.5 percent by January 1991 and to a low of 
     20.4 percent in August 1991. Not until April 1996 did it 
     recover to 28 percent.

  In other words, they started out at 28 percent. The minimum wage was 
raised, and black teenagers saw employment go all the way down to 20 
percent. It has taken 6 years to get back to 28 percent. And now some 
want to again raise the minimum wage so that black teenagers can see 
their employment go back down, the way it did the last time the minimum 
wage was raised.
  The article continues:

       ``Teenagers shouldered a disproportionate share of the 
     burden'' even after allowing for their ranks contracting from 
     demographic trends, said Erich Heinemann, an economist at 
     Brimberg & Co., a Wall Street firm. ``To a very significant 
     degree,'' he added, ``the 1990-1991 recession was a teenage 
     recession.''

  The article summarizes:

       [Some have] found the 1990-91 experience persuasive.
       ``The last increase turned out to be a cruel joke for low-
     skilled teenage workers,'' he declared. ``To the extent that 
     the minimum is raised high enough to positively affect wage 
     levels,'' he contended, ``it will negatively affect the 
     demand for labor.''

  Like many in this body, I worked as a teenager. I started out when 
the minimum wage was 40 cents. You do not earn a lot of money at 40 
cents an hour. Frankly, the money was not the most important reason for 
me to work. It seemed important at the time, in fact, it seemed like a 
tremendous boon to me because I was earning more money than I received 
in allowance from my parents. But looking back on it, the most 
important thing I gained from working at age 14, was the experience of 
going to work: Showing up on time, staying the full work period whether 
I was bored or not, punching out at the proper time, dressing in proper 
attire--the kinds of experiences which I find far more valuable than 
the money. We are denying these experiences to more and more teenagers 
when we raise the minimum wage. Fortunately, the amendment by the 
Senator from Missouri will allow many teenagers to continue to have the 
work experience that this Senator had when he was a teenager.
  For me, the lessons learned from the last increase in the minimum 
wage are persuasive. We should learn from the past. We should learn 
from what happened last time and be very, very careful about raising it 
this time.
  At the risk of sounding more demagogic than I would like, I say to 
teenagers who lose their jobs, to black teenagers who see a repetition 
of what happened in 1990-91 when they appealed, ``Where did the jobs 
go,'' the answer might be, ``Talk to the senior Senator from 
Massachusetts. In the name of trying to help you, he has fashioned a 
program that has destroyed your jobs.''
  I know the Senator from Massachusetts does not have that motive. I 
know he is acting out of the best of intentions. But I say that past 
experience in raising the minimum wage indicates that history will 
repeat itself and we will again see jobs lost. I plead with the senior 
Senator from Massachusetts in the name of the teenagers whose jobs will 
be destroyed, to examine past history and do his best to see to it that 
we do not repeat the mistakes made 6 years ago.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. MOYNIHAN. Mr. President, I am happy to yield 8 minutes to the 
junior Senator from Massachusetts.
  The PRESIDING OFFICER. The Senator from Massachusetts, [Mr. Kerry], 
is recognized for 8 minutes.
  Mr. KERRY. Mr. President, thank you very much. I thank the Senator 
from New York.
  Mr. President, let me address some of the concerns that were just 
raised by the Senator in Utah. The facts show that through the years, 
there may be individual instances where there is a tailoff in the 
numbers of teenagers who might be hired by a particular company but, 
broadly speaking, the number of teenagers who are helped by the 
increase in the wage is much greater. The fact is that any company that 
requires a certain amount of work to be done is going to pay somebody a 
wage to do that work that they want to get done. They are not just 
hiring teenagers as a matter of altruism.
  Generally speaking, we in the U.S. Congress have recognized our 
responsibility to make up for that gap so that teenagers have the very 
opportunity that the Senator from Utah talks about. That is why 
historically we have had a Summer Jobs Program, until our Republican 
friends in recent years have seen fit to zero it out--zero it out.

[[Page S7432]]

  The basic issue here remains the same: What are we willing to give in 
America as the value of an hour's work? We decided that in the late 
1930's, and under every President since then, Republican or Democrat 
alike, with Republican votes and Democratic votes--we have raised the 
minimum wage. And with what impact, Mr. President? With the impact that 
unemployment has gone down and the wages of more Americans have at 
least come up closer to the poverty level.
  My friend from Texas earlier said we should not monkey with supply 
and demand. But this is the same Senator who is down here voting to 
preserve the wool and mohair subsidy. If that is not monkeying with 
supply and demand, not to mention all of the pages in here of different 
tax provisions, subchapter S provisions, depreciation allowances--we 
monkey with it every single day. The question is, For what social 
purpose do we do that?
  The fundamental issue before the U.S. Senate is, for people who work 
hard and play by the rules, do they deserve a raise? Not a handout--a 
helping hand up, yes, but not a handout. The way you send that message 
is to value the work with a living wage.
  We have done that before, Democrats and Republicans alike. We have 
raised the minimum wage closer to the poverty line, not a great level, 
but that is what we feel we can do in the best balance against job loss 
and other market forces.
  I acknowledge there are market forces. We do not want to monkey with 
the level that is so high that you would, in fact, generate enormous 
unemployment. But the proposed increase would not put our country in 
danger of reaching that level.
  In Vermont and Massachusetts, we raised the minimum wage at the 
beginning of this year. New Hampshire and New York refused to raise the 
minimum wage. Unemployment in Massachusetts and Vermont went down. 
Unemployment in New York went up and New Hampshire went up.
  Mr. President, it is clear historically that raising the minimum wage 
may create minor dislocations. My friend talks about one company laying 
off five people in this article in the New York Times. Five people who 
are kids, teenagers at the minimum wage, let's say 8 weeks of 
employment, if they take some time off in the summer, is $288. So we 
are now being told that a company is going to deny a teenager $288 for 
8 weeks of work. It is hard for me to believe that if that job was 
necessary, that company is not going to produce enough product or sell 
enough goods to make up $288 for a teenager to work. What we need is a 
little more ethic in America where our corporations understand an 
obligation to try to hire teenagers, to try to pay people a decent 
wage.
  We know the statistics. We are living in a country that now has the 
third highest number of poor children since 1964. Two-thirds of the 
people on the minimum wage are adults, not teenagers, and most of them 
are women. In my State of Massachusetts, almost 5 percent of the 
children in Massachusetts live in families where at least one parent 
works full-time but the family still lives below the poverty line. 
Nationally, more than 2 million children live in families which would 
get a raise if the minimum wage is increased to $5.15 an hour.

  The question is, should these children and their families get an 
increase in the minimum wage, and should the Congress fill the gap to 
help those teenagers have a summer job? Then everybody benefits 
correctly and we do not create a Hobson's choice of denying both of 
them everything: No summer jobs and no minimum wage, and the country 
can get poorer together. That is really what we are talking about here.
  We have heard this argument year in and year out. We keep hearing it: 
``Oh, if you raise the minimum wage, America isn't going to get 
stronger.''
  From 1938 to now, look at the number of jobs we have created, look at 
the increased strength in America, look at the stock market go up. Last 
year, the stock market went up 34 percent in 1 year, and corporations 
took record profits. But the consumer debt in America went up. The 
consumer debt in America is at the highest level in history.
  So we are going to vote today on whether or not someone at the bottom 
of the economic ladder who has seen their income decline and their 
wages decline in the last years is going to get an opportunity to work 
for less than three-quarters of the rate of poverty.
  If you work at the minimum wage in America a 40-hour week, 52 weeks a 
year, you earn $8,500 a year. Try and live on that. The poverty level 
for a family of four is $16,000 a year. The poverty level for a family 
of three is $12,500. Can we not even find it in our capacity, where we 
have the most expensive, rich pensions in American history, where we 
have a salary--all of us --at $130,000 a year, to raise the minimum 
wage for people working at the bottom of the economic ladder? That is 
the test of the conscience of the Senate today.
  The efforts of the Republicans to come in with an exemption for two-
thirds of the companies in this country is wrong. In combination with 
the rest of their amendment, one-half of the people working for the 
minimum wage would be denied an increase. This is a vote over right and 
wrong, and I think history has proven that it is right to raise the 
minimum wage.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mrs. KASSEBAUM. Mr. President, I yield 10 minutes to the senior 
Senator from Colorado, Senator Brown.
  The PRESIDING OFFICER. The Senator from Colorado, Senator Brown, is 
recognized for 10 minutes.
  Mr. BROWN. Mr. President, I thank the Senator from Kansas for her 
kindness in yielding time.
  We are debating today as if one side is in favor of raising wages and 
the other is not. With all due respect to my dear colleagues, I suggest 
that is not the question. Both sides are in favor of wages going up. As 
a matter of fact, anyone who serves in the U.S. Congress, ought to have 
at the center of what they are here for an effort to promote and 
improve the lives and the compensation of the working men and women of 
America.
  However, there is a real and a legitimate difference of opinion about 
how you increase wages, and compensation. Many of my colleagues 
sincerely believe Government is the way to set prices for products and 
services in an economy. But let me point out that countries that have 
taken that philosophy to an extreme, that have put that philosophy into 
effect in a broad range of both services and goods in a market have had 
disasters. There is no question as to why countries have abandoned 
socialism across the world. They have abandoned it because it is a 
disaster.
  The real price-setting mechanism that is efficient and productive and 
perhaps most carried, in terms of job opportunities, is a market 
system. To suggest the Government is the right one to determine the 
right wage for every individual is absurd.
  Perhaps some will vote for this because it does a little damage, and 
I think in some areas that is probably true. But the problem with it is 
this says more than simply set a wage; it says it is illegal for 
someone to work a job that pays under a certain amount, even if that 
person wants to. It becomes illegal for you to take that job even if 
there is no other job available.

  I hope Members will take a look at who this legislation impacts. We 
have heard the passionate rhetoric from people, many of whom have never 
held a minimum wage job in their lives. I think sometimes you can be 
more impassioned when you have not had that opportunity. But, Mr. 
President, the ones who are primarily affected are not necessarily 
four-member families. The ones who are primarily affected are people 
who are getting their first job, oftentimes teenagers. Do we want them 
to do better? Absolutely. But no one should vote on this measure 
without realizing what its impact is going to be.
  I look back on the jobs that I had as I grew up. I think of them 
because they were very, very important in helping me understand how to 
work, how to be productive, how to accept responsibilities. One of the 
first jobs I had was as a dishwasher in the local restaurant down the 
street. It was a job on Friday or a Saturday night. I was not a 
Catholic, but I was very thankful for Catholics because they had an 
affinity for fish on Friday nights. This restaurant served fish and 
thus had a job for a dishwasher.

[[Page S7433]]

  That job has been eliminated now. The higher costs have encouraged 
them to automate much of the function. Yes, they still have some 
dishes, but now it is different. Two things have happened. One, they 
have automated, and, two, the higher cost of labor has caused many 
restaurants to skip recyclable dishes and simply use paper plates. 
Those who go to McDonald's or Burger King or many of the other fast 
food restaurants know what that means, but they may not understand the 
jobs that are lost because we have the fast food operations.
  I was a lawn boy. It was a great job. I worked 40 hours a week in 
high school, long days on Saturday and Sunday. It is the way I paid my 
way through school. Most of those jobs are gone now, at least in the 
area we were in. Not all of them, but in the area we were in, many of 
them no longer put in the kind of vegetation that needs the intense 
care that it did. Some of them, thankfully, are still available. But 
this change in wage will affect the job opportunities that are 
available to kids.
  I was a busboy and a waiter. Those jobs with fast food restaurants 
have largely been dropped. I worked in a service station for 4 years. 
Those jobs primarily have been dropped, not all of them but most of 
them. You have now self-service in your filling stations. I assume we 
have a whole generation who does not really know what a full-service 
gas station is. It used to be a great source of jobs for teenagers.
  Mr. President, the point is this, this measure will have an impact, 
not necessarily on the families, but will have an impact on jobs 
available to kids. Mr. President, you ask yourself, what happens to 
kids who get out of school at noon--and there are a lot of school 
districts in this country that end at noon or 12:30; in Colorado I know 
there are some that end at 12:30 and 1 o'clock--and there is no one 
home because mom is out working, as my mom was, until 6 o'clock at 
night or 7 o'clock at night?
  Ask yourself what happens to a teenaged boy--I say teenaged boy 
because I think the propensity to get into trouble is greater for them 
than for girls; but I suspect both are subject to that problem. You ask 
what happens to them with little homework from their schools and 4 or 5 
hours off in the afternoon and no job.
  Mr. President, I can tell you what happens. All you have to do is 
look around this country and see what happens. You deny those kids 
jobs, and you do not keep them busy, you create a crime problem and a 
juvenile problem of epic proportions. No one should look at what 
happens in this country today and not understand that the absence of 
job opportunities for teenagers and for high school kids, both male and 
female, is a major factor in the rise of juvenile delinquency.
  So, Mr. President, people will vote on their philosophy. Some will 
say they are doing something to help out low-income people. But, Mr. 
President, we also should keep in mind what we do to young people when 
we deny them job opportunities. We reduce the chance to learn, the way 
to earn your way out of poverty. I yield the floor, Mr. President.

  The PRESIDING OFFICER. Who yields time?
  Mr. MOYNIHAN. Mr. President, I have the great pleasure of yielding 8 
minutes to the distinguished Senator from Illinois, a scholar and a 
friend.
  The PRESIDING OFFICER. The Senator from Illinois, Senator Simon, is 
recognized for 8 minutes.
  Mr. SIMON. I thank my colleague from New York, and I thank him for 
his leadership.
  I strongly support the minimum wage and I oppose the Bond amendment. 
The speech that my friends from Colorado and Utah just made about 
teenagers, if the Bond amendment said, let us not apply it to those 
under 18, then, frankly, I might even consider voting for such an 
amendment. I think that would make a little bit of sense. I do not 
think the Bond amendment, as it is constructed, does make sense.
  Raising the minimum wage clearly is needed. I hear the phrase 
``welfare reform'' around here a great deal. But 95 percent of it is 
not welfare reform. This bill raising the minimum wage probably will do 
more for welfare reform than all the bills that are called ``welfare 
reform'' around here because you give people a chance to earn a little. 
You give them an option.
  Twenty-four percent of our children in this Nation live in poverty. 
No other Western industrialized nation has anything close to that. If 
you need a good argument for campaign finance reform, look at what is 
happening in the minimum wage. What if the people at the minimum wage 
were big contributors? Would we have this kind of a problem? The 
minimum wage would pass overwhelmingly. And this is a women's issue; 58 
percent of the people who draw the minimum wage are women. We ought to 
be doing better than this.
  Having said that, Mr. President, I am concerned about some provisions 
in the basic bill, the small business provisions, and the managers' 
amendment which I am going to ask for a vote for and will oppose. On 
the basic bill, we knock out the incentive to banks to finance ESOP's, 
the employee stock option plans. This is a legacy of Senator Russell 
Long, and it is a good legacy for our country. ESOP's should be 
encouraged, not discouraged. Let no one fool themselves; knocking out 
this financial incentive for ESOP's virtually kills the chance for 
additional ESOP's in this country.
  Second, the modification of the 401(k) plans. Here it is geared to 
helping people in the higher income brackets. Here is a letter from the 
American Academy of Actuaries. Let me just quote from this letter.

       There is likely to be increased discrimination in favor of 
     highly compensated employees. Such redistribution of 
     contributions in favor of higher income workers could tarnish 
     401(k) plans to the extent that they would no longer receive 
     the support needed in Congress to justify their cost to 
     taxpayers.

  Under current law, if lower income employees put in 1 percent, or 
defer 1 percent, higher income employees can defer 2 percent. There is 
a whole series of limitations. Under this proposal, if a lower income 
employee puts in 1 percent, the higher income employee can defer 9.5 
percent. It is clearly for the benefit of those in the high-income 
brackets who work for corporations.
  Then, finally, Mr. President, in the managers' amendment, which is a 
procedure under which we put this in--and we did not have a chance to 
modify it, no amendments; and the same on these other provisions that I 
just talked about--this reverses the Hancock versus Harris Trust 
decision in the U.S. Supreme Court. It is an ERISA thing. I have to 
tell you candidly--I see the chair of our committee here, and she knows 
this--I do not know that much about ERISA, and, real candidly, I do not 
think anyone in the U.S. Senate really understands ERISA. It is a very 
complicated thing.
  I do know this, that we are moving back on safeguarding the pension 
funds of workers with this amendment. What the Harris Trust decision 
did was, it said that the John Hancock Co., when it set aside pension 
funds in stocks, had to meet the ERISA standards. But what John Hancock 
was doing was taking these other funds and putting them--let me read 
the Supreme Court decision, the group annuity contract No. 50, which is 
what they call it there.

       Group annuity contract No. 50 assets were not segregated, 
     however. They were part of Hancock's pool of corporate funds 
     or general account out of which Hancock pays its cost of 
     operation and satisfies its obligations to policyholders and 
     other creditors.

  They do not think they had to meet ERISA standards. The Supreme Court 
said you have to meet ERISA standards here, and the managers' 
amendment, with all due respect to my friends who are sponsoring this, 
the managers' amendment reverses that decision and says that insurance 
companies, when they do not have these fixed stocks and put the rest in 
the general pool, they continue to do that, out of which they take all 
these expenses.

  Let me just point out one unusual feature of this bill. Mr. 
President, you have been here a while in this body and in the other 
body. Listen to this: ``The amendment made by this section shall take 
effect on January 1, 1975.'' Have you heard about a bill like that 
before? Why does this take effect January 1, 1975? To protect insurance 
companies who have abused these pension funds so they do not have to 
meet ERISA standards. That is not good legislation, my friends. We 
ought to be protecting pension funds, not loosening the protection.
  I have great respect for Senator Moynihan, Senator Roth, Senator 
Lott,

[[Page S7434]]

and Senator Daschle, but I think this is a move in the wrong direction. 
The managers' amendment ought to be defeated. We should not reverse 
that Supreme Court decision. Justice Thomas wrote the dissent and took 
the side of the insurance companies. The U.S. Senate, with this vote, 
will take the side of the insurance companies. There is huge money 
involved. I was told about $300 billion in assets are affected here. I 
received a call from our former colleague, Senator Howard Metzenbaum, 
who said, ``You are wrong. It is $500 billion.'' I do not know what it 
is. Maybe it is $100 billion. Whatever it is, it is a lot of money. We 
ought to be doing everything we can to protect pension funds, not to 
move in the other direction.
  Mr. President, when the time comes on the managers' amendment, I will 
request a vote. I will vote against it. I know what the situation is 
and I recognize that I will be outvoted but I want to make clear I am 
not part of moving in this direction.
  Mrs. KASSEBAUM. Mr. President, I yield myself 2 minutes from the 
leaders' time.
  The PRESIDING OFFICER. The Senator is recognized.
  Mrs. KASSEBAUM. If I may respond briefly to my good friend and 
colleague and member of the Labor Committee as well, some clarification 
on the Harris Trust. I have spoken earlier to it and I will not 
reiterate. I certainly agree, ERISA is complicated. It is something all 
of us struggle to understand.
  In this particular situation, as I pointed out, the administration is 
strongly for this. This particular language in the managers' amendment 
does not overturn the Harris Trust. What it does is require the Labor 
Department to issue guidance by March of next year as to how insurance 
companies are to deal with pension plans in the future. Because the 
Supreme Court decision created some concerns about how these would be 
handled as plan assets, there needs to be a clarification. Until that 
clarification is given, much is in doubt, and many workers will be 
seriously hampered by uncertainty regarding their pension plans and how 
it would be counted as a plan asset.
  I just suggest to the Senator from Illinois, we made two changes 
which we hoped would address some of the concerns that had been raised 
by the Senator from Illinois. One was the legislation would not grant 
relief from proceedings based on fraudulent or criminal activities by 
insurers. I know that had been a concern. That language is now clearly 
stated. Second, that the legislation gives the Secretary of Labor 
authority to ensure that insurers do not engage in prohibited 
transactions prior to the issuance of final guidelines.

  I had hoped that might take care of some of the concern of the 
Senator from Illinois.
  Mr. SIMON. If my colleague would yield.
  Mr. MOYNIHAN. I yield to the Senator from Illinois.
  Mr. SIMON. Mr. President, I am happy to respond. Some of what the 
Senator says is correct, and I appreciate the changes that were made. I 
do think this area is complicated enough we should have at least had a 
hearing. Here we are passing this massive change without a hearing. I 
think it is not a good way for a legislative body to proceed.
  Mrs. KASSEBAUM. Mr. President, just to respond, we have considered 
this in the last Congress as well. We have not had a full-blown hearing 
but it is something Senator Metzenbaum, as part of the Labor Committee 
in the last Congress, raised. It has been under consideration for some 
time as all parties were trying to find common ground. It was hoped 
this was the common ground that would succeed.
  Mr. MOYNIHAN. Mr. President, I yield 8 minutes to the Senator from 
Connecticut.
  Mr. DODD. I thank my colleague. I commend my colleague from New York 
and others who have been responsible for putting this matter together. 
Before getting to my comments on the minimum wage, let me also address 
the issue raised by our colleague from Illinois that our colleague from 
Kansas responded to, and that is dealing with the Harris Trust matter.
  Mr. President, let me say categorically and unequivocally to you, Mr. 
President, as well as to our colleagues, there is nothing in the 
managers' amendment that reverses the Harris decision by the Supreme 
Court--nothing at all. To put it briefly here, for 20 years the 
industry had operated on a set of guidelines established by the 
Department of Labor. No action was brought by the Department of Labor. 
It relied on the guidance as a means of how they did business dealing 
with pensions. In fact, no one can demonstrate any wrong that was done 
at all.
  The Supreme Court reached its decision in 1993 and and said using the 
guidance of the Department of Labor is invalid. The Court also in the 
decision then recommended that the Department of Labor or Congress 
establish new guidelines and regulations by which these pensions would 
be regulated. The Department of Labor thought it would be better if 
Congress acted and they acted on their own, and it ought to be done 
statutorily rather than by regulation. So for the past year and a half 
the Department of Labor, the industry, and those of us who have been 
involved in this matter, have spent about a year and a half putting 
together this amendment that is prospective, deals forward, and sets up 
a series of regulations that will not go into effect until next June, 
after serious consideration.
  We do not establish the regulations, the Department of Labor does. 
What those who are opposed to us doing this have in mind is that they 
want to have the retroactivity and to go back into those 20 years that 
the industry was allowed, through no action at all, to operate under 
Department of Labor guidances. Obviously, it could be a windfall to the 
trial lawyers to go back and bring actions based on 20 years of 
practice. We are trying to respond to that decision at the direction of 
the Court and to do so in a comprehensive, thoughtful way. That is what 
we have done.
  I point out that the language of this amendment dealing with the 
Harris Trust passed the committee 14 to 2 in a bipartisan vote. A lot 
of effort went into this. I commend my colleague from Kansas, Senator 
Kassebaum, who did a remarkably fine job, along with her staff. Bob 
Reich, the Secretary of Labor sent a letter to the chairman of the 
committee, Senator Kassebaum and Senator Kennedy urging adoption of 
this legislation. They spent a long time at it. As our colleague from 
Illinois pointed out, ERISA is complicated, but to suggest somehow we 
are reversing the Harris decision is just totally, completely, 
fundamentally incorrect.
  What we are trying to do is deal with a situation that, if we do not 
address, puts pensioners at risk by leaving the situation with only the 
Harris decision and no corrections being made.
  So I say, with all due respect to those who oppose this, this is a 
windfall, or could potentially be something that the trial lawyers 
would love to dive into for 20 years based on the Harris decision. We 
are saying, for 20 years that is how it operated. No one complained 
about it. No wrong was done. We are correcting a situation.
  I commend those who have been involved in this for bringing us to the 
point where we are going to finally straighten this matter out, as it 
should be.
  For those reasons I hope, at least on that basis, that our colleagues 
will vote against the managers' amendment that deals with a number of 
issues.
  Let me now reach, if I can, to the substance of what is the major 
debate and argument, and that is dealing with the minimum wage 
increase.
  Mr. President, I ask unanimous consent that the sum and substance of 
my prepared remarks be printed in the Record.
  There being no objection, the statement was ordered to be printed in 
the Record, as follows:

                              Minimum Wage

       Mr. President, nearly 6 months ago, President Clinton came 
     before a joint session of Congress with a commonsense 
     proposal--increasing America's minimum wage from $4.25 to 
     $5.15 an hour.
       Considering that we've joined together in the past--in a 
     bipartisan manner--to raise the minimum wage and lend a hand 
     to working Americans, this would seem to be a straightforward 
     initiative.
       However, since January 1996, the snow melted, the 
     temperatures swelled, and the flowers began to bloom, but for 
     America's working families the minimum wage remains very 
     close to a 40-year low.

[[Page S7435]]

       Because, over the past 5\1/2\ months, the Republican 
     leadership in Congress has utilized every possible tool to 
     block this legislation.
       They've tried to convince the American people that raising 
     the minimum wage will cost jobs--even though study after 
     study shows this to be untrue.
       They raised erroneous economic arguments--even though 101 
     economists, including 3 Nobel Prize winners, endorse an 
     increase in the minimum wage.
       They've asserted that minimum wage recipients are wealthy 
     high school kids flipping hamburgers--even though more than 
     73 percent of minimum-wage workers are adults.
       Even though more than 47 percent are full-time workers and 
     4 in 10 are the sole wage earner for their families.
       Now today, after nearly 6 months the Republican leadership 
     in Congress is finally giving the Senate an opportunity to 
     cast a vote on the minimum wage.
       But, it seems just as we climb one mountain, my colleagues 
     across the aisle put another one in the way.
       Because what we have before us today is not an amendment to 
     increase the minimum wage.
       Instead we have an amendment that would eviscerate the 
     minimum wage.
       Under the provisions of the Bond amendment one would be 
     hard pressed to find any American who actually would benefit 
     from this phony increase.
       First of all, it would exempt an entire category of 
     Americans from the minimum wage's benefits--namely the 10.5 
     million who work for companies that make less than $500,000. 
     That represents two-thirds of all workplaces.
       Second, the Bond amendment would delay any increase until 
     January 1, 1997.
       So after making working families wait nearly 6 months for 
     Congress even to vote on a minimum wage, Republicans would 
     make Americans--struggling to get by--wait an additional 6 
     months to see any benefit. But, that's only the beginning.
       Exemptions in the Bond amendment would force working 
     Americans to wait 180 days after starting a new job before 
     receiving a minimum wage increase.
       This provision along with the delay in implementation until 
     January 1, 1997, would mean America's working families would, 
     at the earliest, not receive the benefits of an increased 
     minimum wage until July 1997.
       Now, I know my colleagues across the aisle say this 
     provision is necessary to protect small businesses.
       Well, I say, what about working families? Who will protect 
     them?
       Certainly not this legislation. Because under the Bond 
     amendment working Americans would be at the mercy of their 
     employers.
       There is absolutely nothing in this amendment to stop a 
     business from paying a new employee at the subminimum wage 
     for 179 days, firing them, and then turning around and hiring 
     a new worker, whom they could then pay at the same subminimum 
     wage.
       Under the Bond amendment, there is little incentive for a 
     business to keep a new employee for more than 180 days and 
     provide a minimum wage increase.
       Instead, for millions of American workers struggling to 
     work their way out of poverty and make ends meet, their 
     newfound paychecks would be replaced by pink slips or another 
     subminimum wage-paying job.
       Well, Mr. President, in my State of Connecticut and 
     throughout America, working families cannot afford to wait 
     any longer for a real increase in the minimum wage.
       And if we're going to be truly serious about helping those 
     Americans that work hard and play by the rules, then an 
     immediate and unequivocal increase in the minimum wage should 
     pass by a unanimous vote.
       Now, I realize that the Democratic proposal of an extra 90 
     cents an hour may not seem like a lot.
       But, raising the minimum wage would benefit nearly 12 
     million Americans.
       For those Americans who are struggling to get by at $4.25 
     an hour this increase represents $1,800 in potential income.
       Raising the minimum wage could pay for 7 months of 
     groceries, 1 year of health care costs, or more than a year's 
     tuition at a 2-year college.
       Today, the annual income of a minimum wage worker is $8,500 
     a year--well below the poverty level for a family of three, 
     which is $12,500.
       In fact today, nearly one in five minimum wage workers 
     lives in poverty.
       How can any American expect to bring themselves out of 
     poverty or pull themselves up by their bootstraps when 
     they're expected to raise a family on $8,500 a year?
       The fact is, at the present rate minimum-wage workers have 
     little hope of ever earning their way out of poverty.
       But if the rate is increased the dream of reaching the 
     middle class becomes attainable.
       Over the past year I've heard a lot of talk from the other 
     side of the aisle about encouraging responsibility and a 
     strong work ethic among our Nation's welfare recipients. I 
     think it's something we can all agree upon.
       But, it's utter hypocrisy to talk about encouraging 
     responsibility while we ask our Nation's poorest citizens to 
     live on a meager wage of $36 a day.
       I know my colleagues on the other side of the aisle like to 
     claim that raising the minimum wage would cause unemployment.
       But, according to The New York Times a 90-cent minimum wage 
     increase would probably eliminate fewer than 100,000 of the 
     approximately 14 million low-paid jobs in the economy. That's 
     less than a 1 percent loss.
       In addition, studies done after the minimum wage was raised 
     in 1990 demonstrate that not only did it have a negligible 
     effect on job loss, but in some locales it actually brought 
     higher employment.
       The fact is, a higher minimum wage is not only a stronger 
     incentive to work, but it reduces turnover, increases 
     productivity and lowers cost for retraining and recruiting.
       The minimum wage is not, and should not be, a political 
     issue.
       In fact, I am pleased to see that members from both sides 
     of the aisle are coming to the realization that low-wage 
     workers in this country deserve a pay raise.
       The Republican amendment before us today would leave 
     millions of Americans mired in poverty, barely able to make 
     ends meet and struggling to put food on the table.
       Today, we have an historic opportunity to reverse that 
     trend and lend a helping hand to millions of America's 
     working families.
       I strongly urge all my colleagues to reject the Bond 
     amendment and continue the bipartisan tradition of supporting 
     the minimum wage as a living wage for working Americans.

  Mr. DODD. Mr. President, I am saddened by this day that we are 
involved in a lengthy debate about the increase in the minimum wage. 
This should not be happening. It really should not be happening. We are 
talking about a 90-cent increase over 2 years. It has been 5 or 6 years 
since we have had any increase at all.
  The notion somehow that a family--remember, more than 73 percent of 
the people who get the minimum wage are over the age of 20. If you are 
on the minimum wage and you are age 20, it is not inconceivable that 
you are raising a family. We are not talking about teenagers. Few are 
over the age of 25. Some are. Obviously, then the number comes down. 
You have a sizable number of people between the ages of 20 and 25. But 
to suggest somehow that you can live on $36 a day--that is what the 
minimum wage is--$36 a day, with more than 73 percent of the people 
earning the minimum wage over the age of 20, and that we can't find it 
here possible to come up with a 90-cent increase for those people.
  If you will just consider the great debate we had here over last 
year's welfare reform, one of the major matters of debate and concern 
is, how do you avoid people falling back into dependency and on to 
public assistance? How do we get people who are living on welfare to 
move from welfare to work? That has been the subject of major debate 
and discussion here.
  How ironic, indeed, in this day in July that we are now going to 
potentially reverse or deny the opportunity for people who are making a 
minimum wage today, to get a modest increase over the next 2 years. 
With the minimum wage close to a 40-year low in terms of earning power, 
how do we prevent people from tumbling back into welfare?
  It seems to me that this ought to be passing unanimously on a voice 
vote. This ought not be the subject of an acrimonious debate on minimum 
wage at the very hour we are trying to move people from welfare to 
work. How can we say to people that if you get a minimum wage job, the 
most you can hope to make is $8,500 a year or $36 a day? I do not know 
of anywhere in America that you can live on $36 a day any longer. In 
fact, that is almost $4,000 less a year than is the poverty level for a 
family of four--which is $12,500.
  Frankly, as our colleagues know, there is no illusion. The Bond 
amendment is designed to just blow significant holes through the 
minimum wage and would take away from the roughly 10 million people who 
would otherwise qualify for the minimum wage and deny them the 
opportunity--those 10 million Americans--from seeing any benefit from a 
minimum wage increase.
  Our colleague from Minnesota earlier pointed out the benefits of 
$1,800. That is what a minimum wage increase of 90 cents amounts to--
$1,800 a year. With $1,800, you could afford a year of health insurance 
for yourself, or at least participate in health insurance. It is more 
than a year's tuition for the average 2-year community college, $1,800 
a year. Think what a benefit that might be for someone at that minimum 
wage level trying to better themselves, trying to improve themselves, 
to be able to get an education, to move themselves further along, to 
avoid tumbling back, as I said earlier, into a life of dependency on 
State, local, or Federal welfare;

[[Page S7436]]

$1,800 a year could buy groceries for a family for 7 months.
  So while I know people say we have to protect small business, I 
understand that. But of one study that I have seen done, says of the 
approximately 14 million low-paid jobs in the economy that could 
potentially be affected--there may be fewer than 100,000 jobs that 
would be adversely affected by a minimum wage increase. One of the most 
conservative studies done says 100,000 people out of 14 million people.
  I appreciate and understand the concern of wanting to protect small 
businesses. But how about protecting these people out there that we 
talk about all the time, who are getting off welfare, staying off 
welfare, and going to work? They need protection as well.
  Lastly, I would point out, as someone earlier did--I believe my 
colleague from Massachusetts--we have now done away pretty much with 
the summer JOBS Program. Again, what an irony indeed that we would be 
sitting here today talking about youth employment at the very time we 
ought to be trying to put kids to work during the summer. Then we turn 
around and deny, of course, a minimum wage increase that could 
potentially affect and benefit those younger people, as well, who would 
be looking for some employment, to be able to participate and 
contribute to their own educational needs and costs of participating 
and contributing to their family's financial needs.
  I will conclude as I began on this point. Again, I am saddened by 
this debate. This should not be happening--this debate.
  This is something that we passed and which has enjoyed strong 
bipartisan support. When President Bush took the leadership on it, it 
had bipartisan support. We have spent so many weeks. We have gone from 
the winter now into the depths of summer arguing for an increase in the 
minimum wage. I think it is a sad day, indeed, for this body.
  So I urge my colleagues for the remaining hour or so which we have 
before the vote to search their souls on this issue and support this 
minimum wage increase, and oppose the Bond amendment, which would gut 
this effort.
  I thank my colleague.
  Mr. MOYNIHAN. I thank my friend from Connecticut for clarifying most 
particularly the provision in the managers' amendment concerning the 
pension fund. I hope they listened to it carefully, and also the 
remarks of the chairman of the Committee on Labor and Human Resources, 
the senior Senator from Kansas.
  Mr. President, I yield 8 minutes to my distinguished friend and 
neighbor from Vermont.
  The PRESIDING OFFICER. The Senator from Vermont is recognized.
  Mr. LEAHY. Thank you. I thank my good friend from New York State. We 
have the privilege of living parts of the year in the northern parts of 
our two States. I commend him for the strong work that he has done on 
this. He has been a stalwart supporter, as well as the Senator from 
Connecticut and the Senator from Massachusetts, of the question of the 
minimum wage.
  Mr. President, it really comes down to this: Working Americans 
deserve the opportunity to earn a decent wage.
  It has been more than 5 years since the last increase in the minimum 
wage. You would think when it has been more than 5 years, that would be 
enough reason to increase the minimum wage, just that issue alone. But 
during the last 5 years, living costs have not stood still. In fact, 
the cost of living has gone up.
  Since 1991, the average monthly gas bill has gone up. Since 1991, the 
average monthly electric bill has gone up. In fact, in my home State of 
Vermont, where many Vermonters use wood stoves to heat their homes, and 
when it is 20 below zero--that is not a luxury in heating your homes--
but since 1991, the average cost of a cord of wood has gone up. But 
throughout all this time, the minimum wage has stayed the same.
  The basic living costs of working Americans in every area--food, 
heat, shelter, transportation--have gone up. But the minimum wage has 
remained the same.
  In fact, the minimum wage is at a 40-year low, as far as its buying 
power. The minimum wage earner today grosses only $8,840 a year.
  I defy anybody in this body to try to raise a family on that amount 
of money. But there are people who do.
  In Newport, VT, the most rural area of my home State, Brian Deyo and 
his family have been trying to do just that. In fact, the Wall Street 
Journal reporter met Mr. Deyo and his family and wrote the article 
about the sheer harshness of life on the minimum wage.
  Mr. Deyo works full time in a hockey stick factory. He brings home 
$188.40 a week. A lot of the time he and his wife have had to choose 
between paying rent, or buying food, or paying the medical expenses for 
a chronically ill daughter.
  They talk about sometimes during especially tough times, Mr. Deyo 
will take his last $5 and go down to the hardware store and buy a box 
of bullets to go hunting in the Vermont woods because that is the only 
way his family is going to eat. And he will go out there and hope that 
he gets lucky and finds a deer.

  But I think Mr. Deyo said it better than any of us ever could. He 
said, and I quote him, ``I'm proud to be a working man. I only wish I 
could make a living.''
  So I ask unanimous consent that a copy of the Wall Street Journal 
article about Brian Deyo and his family, entitled ``Minimum Wage Jobs 
Give Many Americans Only a Miserable Life,'' be printed in the Record 
after my remarks.
  The PRESIDING OFFICER (Mr. Ashcroft). Without objection, it is so 
ordered.
  (See exhibit 1.)
  Mr. LEAHY. But as the Wall Street Journal points out, Brian Deyo is 
not alone. Many working families depend on the minimum wage. In fact, 
73 percent of those affected by the proposed minimum wage increase are 
adults. Many are trying to support their families on a minimum wage, 
and that minimum wage has been mauled by inflation. This should be a 
bipartisan issue.
  The distinguished Senator from Connecticut just said, as others have, 
the last time it was raised it was--I believe my good friend from New 
York will agree with this--under a Republican President, and the time 
before that, the Senator from New York reminds me. We had Republicans 
and Democrats joined together on this. The last minimum wage increase, 
which was a 2-year 90-cent increase just like the one that is under 
consideration today, received overwhelming bipartisan support when it 
was voted on in 1989. In fact, it passed the House by a vote of 382 to 
37--better than 10 to 1. It passed the Senate by a vote of 89 to 8--
again, better than 10 to 1.
  Back then, Senator Dole and Speaker Gingrich voted for raising the 
minimum wage, but today some of my colleagues on the other side of the 
aisle fiercely oppose any raise in the minimum wage. I find it ironic 
that some of the same Senators who would vote to give tax breaks to the 
wealthy are against giving working families a raise. Some have said 
they will fight with ``every fiber of their being'' the idea that a 
person who works 40 hours a week could make as much in a year as 
Members of Congress make in a month.
  So let us not play politics with the lives of working families 
struggling to live on the minimum wage. We need to pass a minimum wage 
increase now. I hope my colleagues will support Senator Kennedy's 
amendment and support this bill to make the minimum wage a living wage.
  Let us be serious about what we are talking about. Let us think, 
would any of us accept for ourselves or our families the basic minimum 
wage today? Would any of us accept the idea that our family, members of 
our family, would try to support a family, whether it is our children, 
our siblings, cousins, or anybody else, at the minimum wage?
  They cannot live on it in Vermont. They cannot live on that in 
California or Texas or, frankly, Mr. President, in any State in this 
country. So let us let the Senate at least stand up and do the right 
thing.
  Mr. President, I yield back to the Senator from New York.

[[Page S7437]]

                               Exhibit 1

             [From the Wall Street Journal, Nov. 12, 1993]

    The Working Poor: Minimum-Wage Jobs Give Many Americans Only a 
                             Miserable Life


 in rural vermont, some go week to week, hoping no major bills hit them

                       hunting bear for the table

                           (By Tony Horwitz)

       Newport, VT.--On payday, Brian Deyo's sole purchase is a 
     $4.96 box of cheap bullets known as ``full metal jackets.''
       Mr. Deyo works full time at a hockey-stick factory. He 
     takes home $188.40 a week. After rent and utilities, that 
     leaves about $20 for food--and no margin at all for 
     misfortune, such as the one Mr. Deyo now faces. Vermont's 
     brutal cold hit freakishly early this fall, and he must buy 
     heating oil three paychecks ahead of plan.
       ``Every day I'm making choices,'' says Mr. Deyo, who has a 
     wife and a chronically ill two-year-old daughter. ``Do I pay 
     the rent and risk having the power cut? Or do we take a 
     chance on both and buy food?''
       This payday, the choice is clear: He's two weeks late on 
     the rent, and the fuel tank must be filled. Unable to afford 
     food, he will hunt for it. Stalking through the icy woods 
     beneath the Green Mountains, Mr. Deyo mulls his life. At age 
     28, he senses he has done something wrong, but he isn't sure 
     what. ``I'm proud to be a workingman,'' the son of two 
     factory workers says. ``I only wish I made a living.''
       ``Making work pay'' has become a Clinton administration 
     catch phrase, but one that appears increasingly hard to 
     fulfill. Put simply, the aim is to lift working Americans 
     above the poverty line--a threshold that Mr. Deyo and 9.4 
     million others currently don't reach. Almost 60% of poor 
     families have at least one member working. ``Someone who 
     plays by the rules and tries to work full time should be able 
     to support a family,'' says Lawrence Katz, chief economist at 
     the Labor Department.
       However, with universal health insurance--one means toward 
     achieving this goal--under siege, the administration has 
     retreated from another. In late October, after arguing for 
     months that a modest rise in the minimum wage is needed to 
     help pull workers out of poverty, Labor Secretary Robert 
     Reich shelved his campaign until after Congress votes on 
     health-care reform. This delay was welcomed by business 
     groups, which argue that an increase would cost jobs because 
     employers would automate, relocate overseas or cut staff to 
     recoup higher labor costs.
       But what's often obscured by such policy debate is the 
     sheer harshness of life in low-wage America. The minimum 
     wage--currently $4.25 an hour--was mauled by inflation in the 
     1980s and now provides an income so meager that welfare 
     recipients often do better if they turn down jobs paying it. 
     A full-time minimum-wage worker grosses $8,840 a year--$2,300 
     under the poverty line for a family of three. In 1979, the 
     same worker earned $459 above the line.
       The depressed minimum wage also anchors the bottom end of a 
     pay ladder so low that even people who, like Mr. Deyo, climb 
     up a few rungs are still in poverty. In fact, such workers 
     often are worse off than those earning $4.25 an hour because 
     they are more likely to be adults and heads of households 
     qualifying for little or no government assistance. Many 
     minimum-wage workers are young part-timers with other income 
     from spouses or parents.
       ``Families where the main breadwinner is making $5 or $6 an 
     hour--these are the people who are really hurting,'' says 
     Gary Burtless, a labor economist at the Brookings 
     Institution. This largely forgotten group also helps account 
     for the 44.3% jump in the number of working poor between 1979 
     and 1992.
       America's working poor are mostly white, mostly high-school 
     educated and disproportionately rural--a profile that is 
     typified by the three-county corner of Vermont known as the 
     Northeast Kingdom. This bucolic landscape of moose crossings, 
     maple-syrup stands and scarlet foliage also harbors 10% 
     unemployment, closed mills and ramshackle homes.
       Barbara Stevens runs a crisis center in Newport, a town of 
     4,700 that is a two-hour drive from Burlington. The morning 
     after the first big chill, her office was crammed with 
     disheveled people unprepared for the winter and seeking help. 
     Many were on their way to work. ``They'd say things like, 
     `I've got two kids and no oil in the furnace, so we slept in 
     the car last night with the heat on,' '' Ms. Stevens says.
       One such visitor is Mr. Deyo, the hockey-stick worker. Late 
     paying his bills, he has had his electricity disconnected 
     several times. This is a special calamity for Mr. Deyo; his 
     daughter has asthma and relies on a ventilator. Letters from 
     Ms. Stevens and local doctors have helped him to get his 
     power switched back on.
       Ironically, Mr. Deyo is earning more than he ever has. 
     After years of minimum-wage jobs, he gets $5.50 an hour 
     stenciling trademarks onto hockey-stick blades. His annual 
     gross income is so near the poverty line that now he 
     qualifies for very little public assistance. In principle, 
     this suits him fine; he's a former National Guardsman and 
     a conservative Republican wary of government and liberal 
     ``do-gooders.'' But in practice, just a minor setback--
     even a blown-out tire on his 1980 Buick--sets off a cycle 
     of late bills, ruined credit ratings and shakey 
     employment.
       Though the cost of living here is low, his take-home pay of 
     $188.40 a week barely covers his fixed costs: $60 rent for a 
     cramped apartment, about $40 for heat, $40 for power (high 
     because of his daughter's ventilator and humidifier), $10 for 
     gasoline and $15 for installment payments on the family's few 
     possessions. The Deyos can't afford a phone. That leaves 
     about $20, mostly spent at a discount market that sells 
     dented cans and crushed boxes.
       ``We don't buy taped boxes because the food could have 
     spilled on the floor and been scooped back in,'' says Roxanna 
     Deyo, who stays home because she is loath to put her frail 
     child in day care.
       The Deyos also live in terror of small shocks that can 
     knock them off their tightrope budget. Three years ago, for 
     instance, their car developed transmission trouble. Unable to 
     afford a $500 repair bill, Mr. Deyo had to abandon the car--
     and his job cleaning kitchens at a ski resort more than an 
     hour's drive away.
       Soon afterward, the Deyos, seeking work in higher-wage 
     Massachusetts, sold all they owned to go there. But they ran 
     out of money before finding jobs. Two years later, they are 
     still making payments on the used, now-tattered furniture 
     they bought on their return north. Many needs are put off 
     indefinitely. Plagued by painful, rotted teeth, Mr. Deyo 
     waited two years until he was laid off and eligible for 
     Medicaid before having a few pulled.
       Week to week, the Deyos still cling to one luxury. To 
     ``break the constant tension,'' Mr. Deyo says, he buys a 
     take-away dinner every Saturday, usually a plain pizza 
     costing $5.99.
       ``I feel like I'm doing what I'm supposed to do,'' says Mr. 
     Deyo, who dreamed of studying forestry when he graduated from 
     high school but couldn't afford the fees and went to work at 
     McDonald's instead. ``I work hard, my family's together. But 
     I'm running just to stay where I am, which isn't a real great 
     place.''
       His most recent frustration: an attempt to free his family 
     of rent--and of their grim quarters--by purchasing a $24,000 
     trailer to park on his parents' land. A local bank refused 
     his loan request, citing ``excess obligations'' and 
     ``insufficient income.''
       One upbeat note: the Deyos, who anxiously await their 
     annual rebate from the earned-income tax credit to catch up 
     on bills and buy appliances, should see the amount double in 
     early 1995 to about $3,200 because of a recent change in the 
     law.
       A growing number of Americans share the Deyos' plight. 
     Lawrence Mishel of the Washington-based Economic Policy 
     Institute says 28% of adult workers are at wage levels too 
     low to keep a family of four out of poverty, compared with 
     21% in 1979. He also notes that their privation has deepened: 
     14.3% of adult workers now earn wages below 75% of the 
     poverty line, triple the 1979 percentage.
       Mr. Mishel and other economists cite various reasons, such 
     as the decline of manufacturing jobs and of unions in an 
     ever-more technological economy. In addition, minimum-wage 
     increases, which tend to bump up the whole bottom of the pay 
     scale, didn't occur between 1981 and 1990. That especially 
     hurt young workers, such as Mr. Deyo, who began working 
     during the 1980s at the minimum wage and have edged up very 
     slowly ever since.
       However, the depressed minimum wage may have kept alive 
     some jobs that otherwise would have vanished. Along Newport's 
     railroad tracks, in an old flour depot, American Maple 
     Products Corp. employs 40 people bottling syrup and making 
     candy Santas and other treats. The family-owned company is 
     typical of the light, often-marginal businesses that employ 
     many low-wage workers nationwide.
       ``Maple candy,'' the company's president, Roger Ames, dryly 
     observes, ``is not your basic growth industry.''
       Starting most workers at the minimum wage, Mr. Ames ekes 
     out profits of 3% on sales from what he admits is a creaking 
     plant. At one conveyor belt, nine people fill jugs with 
     syrup, then cap, date and box the jugs by hand--a task, Mr. 
     Ames says, that costly new machines can perform with two 
     workers. Nearby, two people run a 50-year-old device that 
     drops candy into molds, while other workers use their fingers 
     to smooth the fuzzy edges left by the plant's old tools.
       ``If you're paying the minimum wage and it takes 20% more 
     time to do a job than it should, it doesn't seem that 
     critical,'' Mr. Ames says.
       He adds that a 50-cent increase in the minimum wage would 
     cost him about $100,000 a year and force him to ``take a hard 
     look'' at labor-saving machinery. He would stop replacing 
     workers who leave or retire and go to a peacework system that 
     might penalize older employees.
       ``I don't have a sweatshop mentality,'' Mr. Ames says. But 
     he says neither he nor other employers are likely to raise 
     their pay simply out of charity, particularly in a 
     competitive industry. ``If you had someone who mowed your 
     lawn every week for $5, would you reach in and pay $10 the 
     next week?'' he asks.
       Moreover, he is under no pressure to raise pay because few 
     employers deviate from the prevailing wage. The result: an 
     uncompetitive labor market that traps low-skilled workers 
     even as they climb the pay scale. Connie Lucas went to work 
     at American Maple 12 years ago at the minimum wage and now 
     earns $6.10 an hour. With a weekly take-home pay of only 
     $151.50, and worried

[[Page S7438]]

     about the plant's future (her husband also works there), she 
     decided to seek another job.
       ``But every opening offers the same--$4.25, $4.25, $4.25,'' 
     the 35-year-old Ms. Lucas says. ``I can't afford to work 
     another 12 years just to get back to where I am.''
       Bonnie Buskey wonders whether she can afford to work at 
     all. Last spring, both she and her husband were unemployed 
     and received about $1,000 a month in public assistance. Now, 
     he works in construction, and she works full time at American 
     Maple at the minimum wage. Together, they bring home about 
     $1,200 a month.
       But Ms. Buskey pays a baby sitter $2 an hour to look after 
     her two girls for part of the day, slicing her real wage 
     during those hours to $2.25. And now that the Buskeys are off 
     welfare, they no longer qualify for Medicaid. Unable to 
     afford health insurance, Ms. Buskey spent a week's pay on a 
     recent visit to the dentist and lives in dread of serious 
     illness.
       ``The message from the government seems to be, `Stay home, 
     vegetate in front of the TV, and you'll be better off,' '' 
     the 29-year-old says. Asked why she doesn't, she shrugs. 
     ``Good old American pride. I like to think that I earn 
     whatever I get.''
       In fact, some people do quit jobs because they can do 
     better on benefits. Ms. Stevens, the Newport social worker, 
     says she feels forced to advise jobless people to turn down 
     work at or near the minimum wage. ``I have to tell them, `The 
     job's good for your soul and good for your mind but not for 
     your pocketbook,' '' she says.
       Trapped at the bottom by the low minimum wage, such workers 
     also must compete with people sliding down the pay ladder. At 
     the hockey-stick factory, Mr. Deyo's brother-in-law and co-
     worker, Garth Shannon, has never worked for the minimum wage. 
     His first job after finishing high school was at a shoe 
     factory that paid $9 an hour. But after a wage dispute, the 
     plant moved to the Dominican Republic, and Mr. Shannon has 
     bounced down the pay scale ever since, enduring plant 
     closings, layoffs and menial jobs.
       ``Most people plan for when things get better,'' says the 
     35-year-old Mr. Shannon, who wears thick glasses on which he 
     pays monthly installments. ``I try to plan for when things 
     get worse.''
       As a foreman, he is among the factory's best-paid workers, 
     earning $5.95 an hour. But with a family of five, his poverty 
     is even worse than Mr. Deyo's. He heats his jerry-built home 
     with a wood stove in which he burns old doors and other scrap 
     timber salvaged from abandoned houses. He burns kerosene 
     lamps to save on electricity. Like the Deyos, the Shannons 
     can't afford a telephone. They also couldn't afford a 
     foundation when they built the house seven years ago; stones 
     and wood props keep it from sliding downhill.
       A conservative man with a fierce work ethic, Mr. Shannon 
     has urged his wife to work part time rather than stay home 
     with their youngest daughters, age five and eight. As a 
     nursing-home housekeeper, who earns $4.61 an hour and brings 
     home $20 a week after baby-sitting bills. ``Work is what made 
     this country great,'' says Mr. Shannon, who has draped an 
     American flag across the front of his house.
       But as he cooks home-made pizza for his girls, he confesses 
     to occasional despair at how little his labor provides for 
     his family. the worst moment came when his five-year-old's 
     kindergarten class took a day trip to a zoo in nearby Canada. 
     The Shannons couldn't afford the $12 bus fare and were too 
     proud to borrow. ``We kept her home that day so she wouldn't 
     feel bad about missing the trip,'' he says.
       David Price, Mr. Shannon's and Mr. Deyo's boss, is 
     sympathetic. He helped pay for Mr. Shannon's glasses and 
     recently gave him his own children's outgrown clothing. But 
     like Mr. Ames at American Maple, Mr. Price doesn't need to 
     raise pay to keep his 13 workers; he has 500 job applications 
     on file.
       So Mr. Price does small things, such as treating workers to 
     a birthday lunch. In October, it was Mr. Deyo's turn. 
     Devouring a prime-rib sandwich, he confides that it is his 
     first meal out in six months. Mr. Price also gives workers a 
     turkey at Christmas and a ham at Easter; Mr. Deyo still has a 
     bit of ham left, in his freezer, ``for emergencies,'' he 
     says.
       But there is little else in the larder. So, on payday, 
     after banking his check to cover the rent, Mr. Deyo buys 
     bullets and drives to his brother-in-law's home. The two men 
     hike off in search of an animal Mr. Shannon recently spotted 
     in a cornfield. ``I've never eaten bear,'' Mr. Deyo says 
     excitely, toting a used military rifle he bought for $80. 
     ``But they look like they have a lot of meat on them.''
       The two men soon find tracks but no bear. At dusk, after 
     two hours of tramping through dense woods, Mr Deyo spots a 
     crow--``edible if you cook it just right,'' he says. But he 
     can't get close enough for a shot. Frustrated, he aims at a 
     chipmunk. Mr. Shannon talks him out of it. ``There wouldn't 
     be enough meat there for a sandwich,'' he says.
       Exhausted and cold, the two head back. Mr. Deyo tosses his 
     gun in the trunk. Mr. Shannon touches his brother-in-law on 
     the arm. ``It could have been worse,'' he says. ``At least we 
     didn't waste any bullets.''

  Mr. MOYNIHAN. Mr. President, may I just thank the Senator from 
Vermont. The remark by Mr. Deyo, ``I'm proud to be a working man. I 
only wish I could make a living,'' needs to be underscored.
  Mr. HELMS. Mr. President, in the first place, raising the minimum 
wage is a political issue, not an economic issue. In order to adjust 
the perspective, it should be remembered that the Senator from 
Massachusetts may be revealing a bit of a forked tongue on this phony 
political issue.
  That is why I am supporting the Lott-Bond amendment which honestly 
and clearly addresses the real issues of this debate.
  For years, Senator Kennedy served as chairman of the Senate Labor and 
Human Resources Committee--prior to his losing his chairmanship in the 
1994 elections. To my knowledge the issue of minimum wage increase was 
never brought up, even once, by Senator Kennedy during the 2 previous 
years before he lost his chairmanship.
  But, Mr, President, I recall that in 1995, when the State Department 
reorganization bill became the pending business in the Senate, there he 
was, the same Senator from Massachusetts, who was the first to pop his 
head up and begin as the lead-off filibusterer among the Democrats who 
had their orders to stymie a bill that would have saved the American 
taxpayers billions of dollars while clearing a lot of dead wood from 
the U.S. foreign policy apparatus.
  And what was the subject of Senator Kennedy's filibuster? He was 
shouting at the top of his voice about the dire need to raise the 
minimum wage--a subject, bear in mind that had prompted not a peep out 
of Chairman Kennedy during those years when he headed the Senate Labor 
and Human Resources Committee.
  But now, the political issue of raising the minimum wage is before 
the Senate and, at the outset, it would be unfair to the American 
people to fail to warn them that if the minimum wage is raised, the 
American economy is likely to suffer in a number of ways. Americans--
particularly teenagers, minorities, and low-skilled workers--can expect 
a significant loss in job opportunities. Moreover a mandatory wage 
increase will result in countless small businesses throwing in the 
towel. It has always happened, and it always will.
  Increasing the minimum wage will therefore harm the working poor and 
high school and college students. It will not help them. According to a 
respected University of Chicago economist, Kevin Murphy, every 10-
percent hike in the minimum wage reduces job availabilities by 1 
percent, with the greatest loss of jobs occurring among the working 
poor, and among students.
  This is why I support the Bond amendment which will curtail some of 
the harsh effects of a minimum wage increase. The Bond amendment will 
exempt small businesses from the increase in the minimum wage, and it 
will allow for a training wage for newly hired employees for the first 
6 months. As we all know, most new jobs are created by small 
businesses.
  The Wall Street Journal confirms Professor Murphy's warning, saying,

       . . . to the degree that economists ever reach a consensus 
     on anything, they concur that the minimum wage increases 
     unemployment among low-skilled workers. What's clear is that 
     anyone in the White House with an economics degree has 
     been told to hold his or her nose while the political 
     types try to relaunch the Clinton presidency on a minimum-
     wage hike.

  Mr. President, while proponents of a minimum wage increase tearfully 
pretend to be concerned about the welfare of America's least well-to-do 
citizens, I dare say the proponents are really interested in the next 
election. As I stated at the outset, this minimum wage issue was locked 
onto the back burner when the Democrats controlled both ends of 
Pennsylvania Avenue. In fact, President Clinton never even mentioned 
the minimum wage, not once, when Mr. Clinton's party controlled 
Congress in 1993 and 1994.
  Then when the Democrats lost control of Congress, there came the 
minimum wage issue drowning in phony tears. And with it, the crack of 
the whips of the powerful labor union bosses. When all that happened, 
President Clinton made haste to mention the minimum wage issue more 
than 47 times.
  Mr. President, let's play just suppose: Just suppose Congress and the 
President do increase the minimum wage, what can the American people 
expect?

[[Page S7439]]

  The warning has come time after time from bipartisan economists--loss 
of jobs, higher labor costs, and consequential higher prices for 
American consumers.
  Economists at the Heritage Foundation, for example, estimate that a 
90-cent increase in the minimum wage will result in more than 200,000 
fewer entry level jobs in 1999. Furthermore, according to an article in 
The Wall Street Journal ``Lawrence Lindsey, a governor at the Federal 
Reserve Board, says internal staff studies suggest a 90-cent increase 
would reduce employment by about 400,000 jobs over the long term.''
  Retail prices will, in turn, increase through 1998 because employers 
will pass their increased costs on to the consumers, with the consumers 
being hit hardest. Unemployment among teenagers will increase by an 
expected 20 percent and will put an end to many entry-level jobs. This, 
of course, will deny young unskilled people the priceless opportunity 
to gain work experience.
  Labor costs for small businesses, and larger ones as well, will 
increase, forcing many business owners to make substantial adjustments 
in the way they do business in order to stay afloat.
  How will employers deal with these new demands imposed on them by the 
Federal Government? They will, of course, pass the costs on to the 
consumers, raising prices for food, goods and services. Many will have 
to eliminate employees, or reduce benefits to employees--or both. Even 
new Democrat economist Rob Shapiro concedes as much.
  Proponents of the increase in the minimum wage want to keep secret 
the fact that 80 percent of minimum wage earners are not below the 
poverty line. To the contrary, a high percentage of minimum wage 
earners are members of middle-income families. The Bureau of Labor 
Statistics confirm that 37 percent of minimum wage earners are 
teenagers. The vast majority of high school and college students are 
working at summer jobs, not struggling to feed their families because 
they are secondary wage-earners in their families.

  Moreover, many of these minimum wage earners in fact take home more 
than $4.25 an hour. The Bureau of Labor Statistics confirms that ``Just 
over half were employed in retail trade, and another one-fourth worked 
in services. It should be recognized that for many working in these 
industries, tips and commissions may supplement the hourly wages 
received.''
  So let the record be clear--despite the statements of Senator Kennedy 
and other proponents of raising the minimum wage--the babble of voices 
is trying to sell political nonsense. If Congress really wants to help 
America's working families, it would reduce taxes instead of increasing 
the minimum wage.
  Twenty-eight million households would benefits from a $500 per child 
tax credit--but Mr. Clinton vetoed that idea.
  In North Carolina, 758,648 households would have more take-home money 
with the $500 per child tax credit. But only 42,876 of those households 
would benefit from the minimum wage increase.
  Mr. President, I receive thousands of letters each week, and one of 
them came from Bruce Stakeman of Durham, a small business owner. In 
explaining the minimum wage to his son, Jeremy, Mr. Stakeman said:

       I told (Jeremy) that I had a very large yard of 4 acres and 
     would pay him $1 for him to cut. He said no way! I don't 
     blame him. $2.? No. $3.? No. This went on until we reached 
     the dollar amount for which he would be willing to cut my 
     grass. I told him this was the minimum wage. He agreed. If a 
     13-year-old can understand this, why is it so hard for well 
     educated people in Washington to?

  Mr. President, I ask unanimous consent that Bruce Stakeman's letter 
be printed in the Record at the conclusion of my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. HELMS. Mr. President, one doesn't have to be a rocket scientist 
to understand this issue. It's simply a matter of common sense, and 
reviewing Thomas Jefferson's ideas about the free enterprise system.
  The American people deserve better than to be misled by political 
schemes. After all, in the mid-thirties, when President Franklin D. 
Roosevelt signed the Social Security legislation into law, he warned 
that this program must never be allowed to become into a political 
football.
  Mr. President, look at who's booting around this political football.

                               Exhibit 1


                             Environmental Technologies, Inc.,

                                                   April 18, 1996.
     Hon. Jesse A. Helms,
     Raleigh, NC.
       Dear Mr. Helms: This is my response to the desire of the 
     liberals to raise the minimum wage. My thirteen year old son 
     and I were in the car when the news came on the radio, about 
     President Clinton's desire to raise the minimum wage. Having 
     owned a small business and managed others I understand the 
     problems associated with its raising. I then began to explain 
     this to my son, Jeremy.
       Suppose you owned a small business. Let's say for this 
     example we use a restaurant and minimum wage is $4.00 per 
     hour. You have five teenagers employed making $4.00 per hour. 
     You as the employer have taken the chance to start a business 
     and give people a chance to earn a fair wage. You are making 
     a living, but not getting rich. I then asked him, the 
     government tells you that you have to pay the new minimum 
     wage of $5.00 per hour. You want to maintain your standard of 
     living, what do you do? He responded, you could raise your 
     prices. What might happen, I asked? You might lose some of 
     your customers. What else could you do? You could let one of 
     the employees go. Now you have an unemployed person drawing 
     unemployment compensation.
       Then we discussed what the minimum wage should be? I told 
     him I had a large yard of four acres and would pay him $1.00 
     for him to cut it. He said, no way! I don't blame him. $2.00? 
     No. $3.00? No. This went on until we reached the dollar 
     amount that he would be willing to cut my grass. I told him 
     this was the minimum wage. He agreed. If a thirteen year old 
     can understand this, why is it so hard for well educated 
     people in Washington to?
       In Durham, just about everywhere I go has a help wanted 
     sign on their window. Never have I seen a sign for minimum 
     wage, most start at $5.00 per hour. As you see I am opposed 
     to raising the minimum wage. It may mean the difference in my 
     son getting a starter job where he can learn how to work 
     outside the home. Thank you for this opportunity to express 
     my opinion.
           Sincerely,
                                                Bruce A. Stakeman.

  Ms. MOSELEY-BRAUN. Mr. President, I rise in support of the Small 
Business Job Protection Act of 1996. This legislation will help small 
businesses invest, grow, and create new jobs. I am pleased to be able 
to say that this is a bill that enjoys bipartisan support; it is a 
testament to the progress that can be made when Senators from both 
sides of the aisle work together.
  This bill increases the level of investment by small businesses that 
can be expensed, rather than capitalized and depreciated from the 
current $17,500 level to $25,000. It reforms subchapter S corporation 
laws, most significantly by increasing the maximum number of 
shareholders in an S corporation from the current 35 to 75. And it 
gives business employers a number of other tools designed to promote 
job creation, expansion, and prosperity.
  To further stimulate job creation, the bill creates a new tax credit, 
the work opportunity tax credit. This new credit replaces the current 
targeted jobs tax credit program. The work opportunity tax credit 
encourages employers to hire people from populations suffering from 
high unemployment, who are on government assistance, or who have 
limited education. The work opportunity tax credit would also create 
incentives to hire 18 to 24 year olds who are on food stamps for 90 
days, which will promote self-sufficiency and help prevent these 
individuals from returning to the welfare system. By creating this new 
category for 18 to 24 year olds, employers will have an inducement to 
hire young people who are all too often overlooked. Additionally, the 
minimum employee work requirement would be reduced from 500 to 375 
hours. This will enable employers to benefit from the credit to 
compensate for job training costs associated with hiring individuals 
that generally need extra training and attention.
  This bill not only helps small businesses, it also expands 
opportunity for education, which is a priority of mine. I was delighted 
to work with Chairman Roth to ensure that employer-provided educational 
assistance was retroactively reinstated and extended for graduate 
education. However, I am troubled by the failure of the House to extend 
the program for graduate-level study. I firmly believe that employer-
provided educational assistance should

[[Page S7440]]

be a priority within this bill, and I hope that this can be resolved in 
conference.
  I am very pleased to have had the opportunity to work with Members on 
both sides of the aisle for the inclusion of the Spousal IRA Equity 
Act. For the first time, women who stay at home to care for the 
family's children will have the ability to place the same amount of 
money in a tax-free IRA as men who work outside the home. Each spouse, 
including whichever spouse is the family homemaker, will now have the 
opportunity to make a deductible IRA contribution of up to $2,000 a 
year.
  This bill partially corrects another problem area that affects 
millions of women. Earlier this year, I introduced the Womens' Pension 
Equity Act of 1996. I am pleased to see that this small business tax 
legislation includes two of the most important provisions from my 
women's pension bill. One provision requires the IRS to create a model 
form for spousal consent with respect to survivor annuities. Another 
provision would require the Department of Labor to create a model 
qualified domestic relations order form.

  Pensions are often the most valuable financial asset a couple owns--
earned together during their years of marriage. Unfortunately, it is 
now all too easy for a woman to unknowingly compromise her right to a 
share of her spouse's pension benefits in case of divorce if both 
spouses do not sign a complete QDRO form. These provisions would make 
it more likely that women will be able to protect their rights to 
pensions.
  This legislation also extends for 6 months the currently expired 
excise tax on commercial airline tickets. This 10-percent ticket tax 
has historically been the principal source of funding for the aviation 
trust fund. Since the tax expired last year, however, the fund has been 
without a revenue source, and has been spending down its balances.
  The ticket excise tax was designed to ensure that users of our 
aviation system played a major role in financing of the Federal 
Aviation Administration, and these revenues have been used to help the 
FAA enhance airline safety, and ensure that the airline industry safely 
meets the needs of the traveling public. Without this revenue, the 
long-term ability of the FAA to perform its safety mission could be put 
at risk.
  I therefore support the short-term extension of the ticket tax. 
However, commercial aviation has changed radically since the ticket tax 
was first imposed in the 1970's. The old system may no longer be 
appropriate to today's aviation industry--or tomorrow's. I therefore 
urge the administration to use the 6-month period provided by this bill 
to evaluate whether the 10-percent excise tax on tickets should be 
extended for the long term in its current form, or whether it should be 
replaced with another concept more attuned to the realities of the 
modern aviation industry.
  The financing system imposed by the Federal Government to pay for the 
FAA must build on the strengths of the dynamic American aviation 
industry. I therefore strongly urge the administration to take the next 
6 months to review the current funding needs of the FAA, and work to 
craft a permanent system for financing aviation that meets the 
interests of the American traveling public and of all the other 
participants in that system.
  There are a number of other features in this bill that make a lot of 
sense, and that will be of significant benefit to our country, but 
rather than speak further on provisions of the bill that already 
command broad, bipartisan support, I would instead like to address a 
few issues that I believe need further review. Given the current floor 
situation, it is not possible to fully address all of these issues here 
on the Senate floor. That review will therefore necessarily have to 
take place in the upcoming Senate-House conference.
  The House bill, for example, contains a provision that would tax 
nonphysical compensatory damage awards. Under the House language, 
victims of sex discrimination, race discrimination, and emotional 
distress would be required to pay taxes on any damages they receive 
resulting from a successful lawsuit in any of these areas of the law. 
Singling out this category of damages for differential tax treatment is 
wrong and discriminatory, and it would make it more difficult for 
people who suffer these harms both to access the court system and to 
achieve justice. I am therefore pleased and commend my colleagues in 
the Senate for excluding this provision, and I hope that the Senate 
language is adopted in conference.

  The Research and Experimentation tax credit is another area that will 
need careful attention in conference. I have worked hard with my 
colleagues Senator Baucus and Senator Hatch to ensure that the R&E tax 
credit is extended in the bill now before this body, and I am pleased 
that the R&E tax credit will be extended effective July 1, 1996. 
However, I am deeply concerned by the fact that it was neither extended 
in the House version nor retroactively reinstated in the Finance 
Committee to cover the gap created by our failure to act. The last 
extension of the credit expired on June 30, 1995, and based on six 
prior extensions of the credit, businesses had every reason to expect 
that the credit would be extended without creating a gap where the 
credit is not available. If Congress is now to reverse that series of 
precedents, we might well create a chilling effect on business research 
and development investment. We need to make the R&E tax credit 
permanent, so that there will be no future gaps in the availability of 
the credit.
  The section 29 tax credit for nonconventional fuels is yet another 
area that needs further consideration. This tax credit is good for our 
environment. For example, recovering and managing landfill gas such as 
methane has improved the quality of life around landfills, reduced 
smog, and alleviates global warming. With this tax credit, landfill gas 
has become a practical fuel for use in conventional electrical 
generating equipment. However, the extension of the credit will be less 
effective as it relates to coal unless the placed in service date is 
changed from January 1, 1998 to January 1, 1999, given the scope and 
complexity involved in converting coal into synthetic fuels.
  While I believe these issues need to be addressed, I want to 
reiterate that the bill as it was reported from the Finance Committee 
is a good bill. Women, children, and working people will all benefit if 
this bill can be enacted, and it will help promote job creation and 
economic growth. I want to commend my colleagues on the Finance 
Committee, particularly Chairman Roth and the ranking Democratic 
member, Senator Moynihan, who have worked hard to produce a bipartisan 
bill that promotes growth and stability among small businesses.
  I will speak separately on the minimum wage amendments that have been 
offered to this bill. At this time I only want to remind all of my 
Colleagues that this bill will not and cannot become law if this body 
passes a minimum wage provision that works against the interests of 
working Americans. I therefore urge all of my colleagues to vote for 
the minimum wage amendment being offered by the distinguished Senator 
from Massachusetts, Senator Kennedy, and against any attempts to 
undermine this long overdue, and very modest increase in the minimum 
wage.
  The Finance Committee worked in a bipartisan way to create a bill 
that commands broad support. It is a bill of which we can be proud, and 
of which the American people can be proud. If we continue the 
bipartisanship that brought the bill this year, if we continue to work 
together to put the interests of the American people first, we can 
ensure that this bill remains bipartisan, and that it becomes law. The 
alternative, to continue a politics of confrontation and gridlock, is 
not in the public interest, not in our national interest, and will 
result in creating another legislative failure out of what would 
otherwise be a significant legislative success. I strongly urge my 
colleagues not to let that happen. I urge my colleagues to cast votes 
based on the bipartisanship that has brought the bill this far. I urge 
the Senate to vote against gridlock and for the American people, so 
that this bill can become law.
  Mrs. MURRAY. Mr. President, I rise today in strong support of the 
Kennedy amendment and as a cosponsor of the minimum wage increase.
  I cannot sit idle as I hear of those struggling to live on today's 
minimum wage. I thought, like many of you, that the minimum wage earner 
was my

[[Page S7441]]

daughter or one of her friends: a teenager flipping burgers or taking 
food orders to earn some extra cash for new clothes or a movie.
  That is the misperception though. The sad fact is that 73 percent of 
those earning between $4.25 and $5.14 an hour are over the age of 20. 
That represents 9 million adults who will attempt to live on $8,840 
this year. One-third of these adults are the sole income-earners in 
their families. If these adults were supporting a family of three, they 
would fall $2,682 below the Federal poverty line.
  I am immensely troubled with the fact that 58 percent of those 
struggling with a minimum wage are women; 5.2 million women, many of 
these single mothers, would benefit directly from this increase.
  These single moms are trying. Trying to raise two kids on a below-
poverty income. And how does Congress reward these single parents? By 
attacking Medicaid that would have paid for her son's asthma medicine. 
By cutting her child care support that allows her to work. By taking 
away funding for nutrition programs that pay for her kids to eat at 
school or day care. By eliminating her Head Start Program that gives 
her kids a chance at starting school ready to learn. By refusing to add 
90 cents to her hourly wage--a wage that pays for heat, clothing, and 
food.
  Aren't these the individuals and families we are trying to keep 
employed and off of Federal support? Instead, this Congress has 
targeted the low-income family through cut after cut and a resistance 
to move them above the poverty line.
  This amendment does not eliminate jobs, it barely keeps people 
working, who otherwise would be completely reliant on public support. 
If we had only passed this amendment a year ago, it would have meant 
that the single mother would have earned an additional $2,000 today. To 
that low-income family, that would have meant more than 7 months of 
groceries, 4 months of rent, a full year of health care costs, or 9 
months of utility bills.
  I did not reach my decision to support the minimum wage easily. I 
have listened carefully to the concerns of small business owners from 
across my State, who have highlighted the implications of this 
increase. I don't want to see prices for the American consumer rise or 
jobs eliminated. But I don't think an increase to the minimum wage will 
end employment in small business, either.
  It has now been over 5 years since the last minimum wage increase. We 
must remember that the value of the current minimum wage has fallen by 
nearly 50 cents since 1991 and is now 27 percent lower than it was in 
1979. Now is the time to adjust that inequality and demonstrate a true 
commitment to our working families.
  A slight increase in this wage provides those who work hard and play 
by the rules an increased opportunity and a chance to succeed. If any 
of my colleagues oppose the minimum wage, I urge them to live on $8,840 
this year and then reconsider their vote.
  Mrs. FEINSTEIN. Mr. President, I rise to support increasing the 
minimum wage from the current floor of $4.25 to $5.15 per hour, the 90-
cent increase being phased-in in two stages over the next year.
  This issue is about making ends meet. It's about people being able to 
pay the rent and put food on the table, and the bottom line is, the 
current minimum wage is simply not enough to live on.
  A person working full time at minimum wage today does not even make 
enough money to meet the Federal poverty level. An American working a 
40-hour week makes an annual salary of $8,640--nearly $300 below the 
Federal poverty level of $8,910. For a family of two, the poverty level 
is $11,920.
  The minimum wage is supposed to be a safeguard against poverty-level 
wages, but for millions of Americans, the cost of living has outpaced 
any protection afforded by the minimum wage.
  Many families in this country are just one paycheck away from 
disaster--whether it is an illness, the need to move, or simply the car 
breaking down--many people living paycheck to paycheck live in fear 
that they may not make it this month or the next. They live in dread of 
the next heat wave that could force them to choose between paying the 
extra-high electric bill or buying the kids a new pair of shoes.
  We don't have a magic wand to fix their situation, but in my view we 
do have an obligation to maintain a minimum wage level that, at the 
very least, keeps pace with the cost of living.
  Let me give you an example of what raising the minimum wage just 90 
cents would mean to a family:
  It means $1,800 more money every year; enough to pay 4 months of 
rent; enough to cover health care costs for a whole year; enough to pay 
9 months of utility bills; and enough to buy 7 months worth of 
groceries.
  Maintaining a minimum wage that makes sense is especially important 
for States like mine with a higher than average cost of living:
  A loaf of bread in Los Angeles, at $1.34, is double that of the 
United States average of 75 cents.
  A gallon of milk in the United States costs $1.41 on average, but in 
San Diego it costs $1.71.
  A can of tuna that costs 69 cents on average costs 90 cents in San 
Diego.
  In San Francisco, housing costs are 160 percent higher than the 
national average.
  The cost of health care in Los Angeles is 37 percent higher than the 
national average.
  The cost of transportation is 22 percent higher and there a fewer 
lower cost alternatives.
  The minimum wage does not just affect teens who are working their 
first job. Seventy percent of Americans who receive the minimum wage 
are adults over 20 years old. Forty percent are the sole breadwinner in 
their family and more than three of every five are women, many of whom 
are single women supporting a family.
  A decent wage has long been a hallmark of this country's promise. It 
means a livable wage for a fair day's work. It means providing for your 
family and staying off welfare. A decent minimum wage honors work. I 
hope my colleagues will join me in passing this amendment. It will mean 
a great deal to a lot of hard-working Americans.
  Mr. HATFIELD. Mr. President, I agree that Congress should increase 
the minimum wage standard. I have voted for reasonable minimum wage 
increases in the past and will certainly vote for the reasonable 
increase of the minimum wage today.
  As this Congress discusses welfare reform, it has been emphasized 
time and time again that those who can work should work. However, with 
the minimum wage today at $4.25 an hour, a person laboring 8 hours a 
day, 5 days a week, 52 weeks a year would gross only $8,840. The 
minimum wage is already very close to its lowest real value in over 40 
years. In addition, paired with inflation, the minimum wage increase of 
1989 has been virtually nullified. If the minimum wage in January 1978 
had kept pace with the Consumer Price Index, for example, the current 
level would be $6.40 in 1996. If we expect those on welfare to work, we 
can at least ensure that a minimum wage is a living wage and by voting 
for an increase in the minimum wage today we will have taken steps to 
assure those who are working are justly compensated for their work.
  The minimum wage, established in 1938 by the Fair Labor Standards Act 
has been raised 17 times, more recently in 1989 and 1991. I voted both 
for final passage and the conference report of the wage increases in 
1989, which raised the minimum wage to $3.80, and 1991, which raised it 
to its current level. A minimum wage provides vital protection for 
those workers who are not union members or who have few if any skills 
and little bargaining power. With bipartisan support, Congress should 
raise the minimum wage to $5.15 per hour and I support that increase.


           clarification of section 4271 aviation excise tax

  Mr. PRYOR. Mr. President, H.R. 3448 reinstates all airport and airway 
trust fund excise taxes, including the section 4271 tax on the 
transportation of property by air. In Revenue Ruling 80-53, the 
Internal Revenue Service clarified that this excise tax does not apply 
to charges paid by the U.S. Postal Service for accessorial ground 
services. Although the Internal Revenue Service has followed the same 
interpretation in an unpublished ruling involving a commercial carrier, 
there seems to be confusion about the application of section

[[Page S7442]]

4271 to commercial integrated carriers that provide accessorial ground 
services, in addition to air transportation.
  In reinstating section 4271 excise tax, is it your view, Senator 
Thompson, that the statutory language of section 4271 is to be 
interpreted and applied to commercial carriers in accordance with the 
holding of Revenue Ruling 80-53--i.e., that amounts reasonably 
attributable to accessorial ground services of commercial carriers are 
not taxable under section 4271? If you agree with this statement, would 
you also agree that any uncertainty about the present or future 
application of section 4271 to commercial carriers should now be 
eliminated.
  Mr. THOMPSON. I agree.


                  SBIC Participating Security Program

  Mr. BOND. Mr. President, I ask unanimous consent that I be allowed to 
engage in a colloquy with the managers of the bill and the Senator from 
Arkansas [Mr. Bumpers], regarding a correction that is needed for the 
Small Business Investment Company Participating Security Program.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BOND. This is an issue that arose so recently that it has proven 
impossible to address it in this small business tax bill, even though 
this would be the perfect forum for it because it is a tax issue having 
a serious impact on SBIC's. So we are hopeful that this issue can be 
taken care of in the conference committee on the small business tax 
bill.
  Specifically, we are talking about a correction that is critical to 
the continuation of the newest form of SBIC: the participating 
securities SBIC. The need for and the language of the correction are 
supported by Treasury, SBA, and the SBIC industry.
  As you know, Mr. President, SBIC's are small, privately managed and 
privately capitalized venture capital firms that are licensed by SBA to 
invest solely in U.S. small businesses. In return for their agreement 
to invest and to put 100 percent of their private capital at risk 
before Government funds are at risk, SBIC's are eligible to draw 
additional capital, or leverage, which is raised by the sale of SBA-
guaranteed certificates. Leverage is repaid with interest, and a share 
of the profits in the case of participating securities SBIC's, as 
investments mature. At a time when strictly private venture capital 
funds are less and less inclined to invest in the $250,000 to $3 
million range critical to small businesses and more and more interested 
in investing in foreign companies which compete with our U.S. small 
businesses, the need for the SBIC program is perhaps greater than ever.
  The participating securities SBIC is a new form of SBIC financing 
that was created by Congress in 1992 to stimulate equity, vis-a-vis 
debt, investment in small U.S. businesses. With that legislation, 
Congress created not only a vehicle that has attracted substantial 
private capital for equity investment in small U.S. companies, but also 
created the mechanism by which the U.S. Treasury--and thereby the 
taxpayers--share directly in profits made by these SBIC's from their 
investments. To date, 35 participating securities SBIC's with $565 
million in private capitalization operating in 17 States have been 
licensed by the SBA. By the close of fiscal year 1996, it is estimated 
that the Government will have received over $500,000 in profits over 
and above principal and interest factors from these new SBIC's. When 
one considers that nonprofit sharing SBIC's provided early financing to 
companies such as Apple Computer, Intel, Federal Express, and Cray 
Research, it is understandable why so many are excited about this new 
form of industry-led partnership with Government. It is a true 
partnership that will see U.S. taxpayers share both directly and 
indirectly in the profits associated with the creation of new jobs, 
technologies, and overall economic development by the small firms in 
which SBICs invest.
  As referenced above, leverage funds for participating securities 
SBIC's are raised quarterly by sale of SBA-guaranteed certificates by a 
funding trust set up for this purpose. The certificates are 10-year 
obligations with interest payable quarterly. Because the participating 
securities issued by SBIC's to the trust in return for the leverage 
raised by the trust's certificate sales are equities which do not 
require the SBIC's to pay any amounts unless they have earnings, which 
they likely will not have while holding the stock of the small 
companies they invest in, the SBA's guarantee of the payment of both 
regular interest and principal is the critical element which supports 
the sale of the certificates through public capital markets. In 
recognition of SBA's guarantee as the primary reliance factor for 
investors, in all fundings to date, the Internal Revenue Service, 
through private letter rulings, has characterized the SBA-guaranteed 
certificates sold by the trust as obligations of the U.S. Government 
and not as those of the participating securities SBIC's being funded by 
the trust. These rulings have supported the six sales that have 
occurred thus far in the short history of the new program.
  At this point, Mr. President, I wanted to ask my good friend from 
Arkansas, Senator Bumpers, a question regarding the intent behind the 
enabling legislation for this program when it was passed in 1992. 
Because the Senator from Arkansas was chairman of the Small Business 
Committee at that time, he is probably better qualified than anyone in 
this body to opine on this matter. And my question is this: Was the 
intent of the enabling legislation for the participating securities 
program that the SBA-guaranteed certificates sold by the trust were to 
be obligations of the U.S. Government and not obligations of the 
participating securities SBIC's being funded by the trust?

  Mr. BUMPERS. That was certainly my intent, and I believe the intent 
of the members of the Small Business Committees of both the House and 
Senate, when we acted on this legislation in 1992. I feel confident 
that this was the understanding of the other Members of this Chamber, 
as well. Frankly, to treat these certificates as debt instruments 
backed by the full faith and credit of the United States is the only 
way to make this program work. If they were not, the investors would 
demand a far higher return on their investment because the risk would 
be significantly higher. And the important aspect of that fact at 
present is that without this change, the cost of this program to the 
Federal Government will be substantially more. The consequences of 
failing to cure the definitional defect are severe. Either future 
leverage fundings would be impossible, thereby directly ending the 
program, or the uncertainty surrounding the nature of the certificates 
would dramatically increase their cost, thereby effectively ending the 
program in our view. Not only would a valuable program have been killed 
unnecessarily, but the Government might be liable for unfunded leverage 
commitments outstanding at this time, perhaps as much as $90 million, 
and, perhaps, losses of the $565 million in private capital that has 
been committed to the program to date in reliance on the availability 
of leverage capital at reasonable rates. For this to happen because of 
a lack of definitional clarity would be unfortunate indeed.
  Mr. BOND. So this characterization of the SBA-guaranteed certificates 
sold to the public as U.S. Government debt is what permits the 
certificates to be sold to the broadest possible base at the lowest 
possible interest rates.
  Mr. BUMPERS. That is correct. And currently the rate is the rate for 
10-year Treasury bonds plus approximately 75 basis points.
  Mr. ROTH. If I might ask a question at this point, it is my 
understanding that heretofore, the IRS has been willing to confirm that 
these certificates are debt obligations of the United States 
Government. Is that correct?
  Mr. BOND. That is correct. The IRS has provided private letter 
rulings to that effect on six occasions in the past. Unfortunately, 
just last week, the IRS made a final decision that it is unwilling to 
give a permanent revenue ruling that would so characterize the 
certificates for all time. The IRS believes that the language of the 
statute is ambiguous with respect to congressional intent and fears 
that a ruling based on the ambiguous language might have negative 
consequences in non-SBIC areas. However, notwith-standing this 
unwillingness of IRS to issue a revenue ruling, the Department of 
Treasury is not opposed to a legislative correction to clear up the 
issue of congressional intent.
  Mr. MOYNIHAN. If I could make one inquiry of the Senator from 
Missouri.

[[Page S7443]]

 There is significant time sensitivity to this issue, is there not? 
What happens to the SBIC Participating Security Program if we do not 
resolve this issue soon?
  Mr. BOND. It could be in trouble by the end of the year. Without 
clarifying language, it could well be impossible to sell any more 
certificates following the August 1996 quarterly offering. And let me 
add that the reason this issue was not raised earlier was that, up 
until last week, the SBA and IRS believed it could be worked out 
administratively. But at that time, the IRS determined it needed a 
legislative fix, and that is why we are here today. We have asked the 
Joint Committee on Taxation for a revenue request, which we hope will 
be ready post-haste.
  Mr. MOYNIHAN. Well, this is certainly an issue that needs to be 
addressed.
  Mr. ROTH. I thank the Senator from Missouri and the Senator from 
Arkansas for bringing this matter to our attention. Although the 
Participating Security Program is relatively new, it appears to have 
great potential for small business. Let us see what we can do to 
resolve this issue.
  Mr. BOND. I thank the managers and my friend from Arkansas for taking 
the time to discuss this important issue.


                    disallowance for business meals

  Mr. BAUCUS. Mr. President, I would like to engage the chairman of the 
Finance Committee in a colloquy regarding a provision in the Small 
Business Job Protection Act.
  Section 1120 of the act provides an exception from the 50 percent 
disallowance for business meals for certain remote seafood processing 
facilities.
  It is my understanding that this provision is intended to address a 
specific issue related to these seafood processing facilities, and is 
not intended to imply congressional intent on other exceptions to the 
50 percent disallowance on business meals claimed by taxpayers.
  Mr. ROTH. The Senator is correct.
  Ms. MOSELEY-BRAUN. Mr. President, I rise today to talk about just a 
few of the compelling reasons that this Congress should support a real 
increase in the minimum wage.
  By raising the minimum wage, this Congress can close the ever 
increasing gap between the working people of this country and the 
wealthy, help ensure that there is a market for all the goods and 
services the workers of this country produce, stop paying assistance 
and start collecting taxes, and honor the American tradition of 
rewarding hard work and perseverance.
  The current minimum wage is not a living wage for the millions of 
American's who support themselves and their families on $4.25 an hour. 
Today, 10 million Americans earn the minimum wage--well below the 
poverty line for a family. In my State alone, over 10 percent of the 
work force earns the minimum wage--545,647 Illinoisans earn $4.25 an 
hour. This means that an Illinoisan, working 40 hours a week, 52 weeks 
a year, earns only $8,840.
  The legislation we are considering today would increase the minimum 
wage by 90 cents over the next year. It has been almost 5 years since 
the minimum wage was last increased. During this time, the real value 
of the minimum wage has, of course, declined. While wages have stayed 
the same, prices have increased, as I'm sure anybody who has gone to 
the grocery store or the doctor's office lately can tell you. It is no 
wonder then, that the working people of this country are faced with a 
declining standard of living.
  As I have pointed out to the Senate before, in the 1980's, 80 percent 
of Americans did not improve their standard of living. While the 
average wage increased 67 percent, the average price of a home 
increased by 100 percent, the average price of a car increased 125 
percent, and the cost of a year in college increased by 130 percent. 
The minimum wage increased by only 23 percent. In fact, a recent study 
stated that the decline in the value of the minimum wage since 1979 
accounted for between a 20- and 30-percent increase in wage inequality 
in this country.
  It is important to understand that workers earning the minimum wage 
are not just young people working at their first job--although many 
young people contribute to their family's income.

  The majority of the people earning the minimum wage--two-thirds--are 
adults. Many of these are parents raising families on under $9,000 a 
year. The poverty rate for a family of four is $15,600.
  Close to 60 percent of those earning minimum wage are women. These 
are women who are taking responsibility for themselves and their 
children. They go to work every single day, and still the minimum wage 
does not provide them with a living wage on which to raise their 
families. It is a travesty that a mother or father working full time--
40 hours a week, 52 weeks a year--cannot support a family or get out of 
poverty, no matter how hard they work.
  A 90-cent increase in the minimum wage would provide a full-time 
worker earning the minimum wage with $1,800 a year in additional 
income. That money could pay more than 7 months of groceries, rent or 
mortgage for 4 months, a full year of health care, or 9 months of 
utility bills for a family living on the minimum wage. The money would 
make a world of difference to that family. That money would also be 
part of the economy.
  A family that can pay for rent, groceries, or health care is putting 
money back into the economy. That family is buying goods and services 
produced by other workers. That family is also earning taxable income 
and reducing the need for public assistance. An increase in the minimum 
wage helps people to contribute to, rather than drain, the Nation's 
economy.
  It is not only the lowest paid workers who will benefit from this 
increase. All those who earn a dollar or two above the minimum wage 
should see their income rise. This will increase the pool of consumers, 
increase taxable earnings, and improve the lives of countless American 
families.
  Paying a living wage does not mean that jobs will be lost. Last year, 
a group of respected economists, including three Nobel Prize winners, 
concluded that an increase in the minimum wage to $5.15 an hour will 
have positive effects on the labor market, workers, and the economy. 
Any job loss is negligible compared to the benefits an increase in the 
minimum wage would produce.
  Some argue that small businesses should be exempt from the minimum 
wage increase. We should remember that the minimum wage bill is 
attached to the Small Business Jobs Protection Act of 1996, a bill that 
provides $6.5 billion in tax benefits for small businesses over 10 
years.
  Even more to the point, however, is the fact that small businesses 
which right now pay a living wage to their employees are at a 
competitive disadvantage to those which do not. By setting a floor, a 
minimum wage, we will level the field for business. If there is a 
consistent basic wage among businesses, no worker's livelihood will 
become the basis for competitive advantage. We should help small 
businesses to pay a living wage, not allow them to be penalized if they 
do so.
  Workers are our greatest resource. The American worker is more 
lasting and more valuable than all our coal and oil. The American 
worker made this country great. We should recognize the contributions 
of our workers and reward those who work long and hard to earn a 
living. We must be especially careful to ensure that those workers 
caring for children are able to do so. Parents working full time to 
support their families must be able to support their families.
  I urge my colleagues to vote against the Bond amendment. That 
amendment strips the wage increase of any real meaning by providing 
exceptions and loopholes that will leave millions of workers without 
the minimum wage increase they deserve.
  I urge my colleagues to vote for the Kennedy amendment. This 
amendment covers more of America's minimum wage workers with less 
delay. This amendment responds to the wishes of the American people and 
provides a real increase in the minimum wage.
  Our country is founded on the belief that hard work is the foundation 
of success--this is the American dream. Congress should encourage, not 
discourage, effort and perseverance. A minimum wage should provide a 
living wage for those who are working day in and day out to provide for 
themselves and their families. Family values and

[[Page S7444]]

the American dream are ideas we like to talk about, but today we can 
actually make them more real for millions of Americans.
  Mr. MACK. Mr. President, I rise today in support of S. 295, the 
Teamwork for Employees and Management Act.
  This bill, which I am proud to cosponsor, amends the National Labor 
Relations Board Act to permit teams of employees in nonunion settings 
to work with management to address workplace issues of mutual interest. 
Under current law, only union representatives can represent workers in 
communication with management.
  In an article in this week's edition of the AFL-CIO News, union 
members were urged to call their Senators and tell them that ``the TEAM 
Act is an underhanded effort to prevent workers from forming unions.'' 
This is simply false. The TEAM Act merely gives non-union workers an 
effective voice for change in the workplace. In essence, the bill 
extends the same rights to non-union workers which union members 
already possess. How can that be such a bad idea?
  Employee participation on labor/management teams gives them the 
opportunity to make significant and valuable contributions to their 
companies. Employee involvement teams are about respect and fairness 
for all workers. Today's worker's have much to offer about the work 
they perform, and employers have learned to listen to them.
  Even President Clinton agreed with this concept. In his 1996 State of 
the Union Message he said: ``When companies and workers work as a team, 
they do better--and so does America.'' I could not agree more.
  Mr. President, there are many difficult issues facing America's work 
force. One area which should be neither challenging nor stressful is 
the relationship between labor and management. I believe that Congress 
must offer policies which improve the quality of work life and reduce 
the tension between managers and workers. The TEAM Act is such a 
proposal. This bill intends to break down the communication barriers 
between employers and employees, and as a result, establish more 
cooperative labor/management relationships in American companies.
  Mr. President, I urge my colleagues' support of this legislation. 
American laws should be designed to stimulate and encourage cooperation 
and teamwork in the work force, rather than suppress such activities. 
The time has come to pass the TEAM Act.
  Mr. DOMENICI. Mr. President, millions of Americans worry about their 
ability to retire, pay the bills and not be a burden to their children. 
Some worry because their employer is unable to provide them with a 
pension. Others worry about whether their existing pensions will be 
there for them when they retire.
  This bill is a blessing for all of these workers. It will make it 
easier for people to get pensions and will protect pensions of those 
who already have them.
  Thirty-six million Americans work for small businesses that can't 
afford to provide pensions to their employees. These 36 million people 
will benefit from the simple pension plan created in this legislation. 
This plan allows small businesses tax-favored treatment when they 
establish pension plans for their workers, and it eliminates most of 
the redtape associated with creating a pension plan.
  Two million Americans who work for tax-exempt organizations will, for 
the first time, be eligible to sign up for 401(k) savings plans.
  In addition to pension reforms, the bill includes provisions that 
help small businesses and their workers. They include creation of the 
work opportunity credit designed to encourage the hiring of hard-to-
place workers, and an increase in expensing for small business to help 
the Nation's job creators grow and create more jobs. The work 
opportunity tax credit replaces the targeted jobs tax credit which I 
helped author. The reforms update that legislation.
  The bill changes the S corporation laws to make it easier for 
families to maintain their enterprises and the bill extends a popular 
tax provision that allows employers to provide their workers with 
educational assistance on a tax-favored basis.
  This bill also includes an expansion of IRA provisions for homemakers 
so that they can contribute $2,000 to an IRA.
  The bill and managers' amendment also extends the R&D tax credit 
through December 31, 1997.
  Out of the six areas of tax law, the most complex for small business 
owners are the independent contractor rules, depreciation, alternative 
minimum tax, inventory accounting, pension rules, and the home office 
deduction.
  This bill addresses the independent contractor rules and pension 
rules. This is a very good start.
  The tax title contains revenue offsets to pay for the relief granted 
to small businesses and pensions. The bill reduces the deficit by $100 
million in 1996 and by $1.1 billion in 1997.
  A few of the revenue offsets are from the vetoed Balanced Budget Act: 
reform of section 936 possessions tax credit, repeal of the 50-percent 
exclusion for financial institution loans, elimination of the interest 
allocation exception for certain nonfinancial corporations, revision of 
the expatriation tax rules.
  The bill also reinstates the airport and airway trust fund taxes 
through April 15, 1997.
  This bill contains many tax provisions passed by Congress last year 
in the Balanced Budget Act which was vetoed by President Clinton.
  Congress believes that it is worth sending the small business tax 
relief to the President again in this minimum wage bill.
  Despite the current tax burden, small business is the fastest 
growing, most vibrant sector of our economy. The bill provides much 
needed relief so that businesses can create even more new jobs.
  I hope that next Congress we will enact comprehensive tax reform. 
Instead of limited expensing, there could be expensing and no 
depreciation calculation. We would eliminate the alternative minimum 
tax and get rid of inventory accounting.
  If we enacted the USA tax plan introduced by Senator Nunn and me the 
Tax Code would get much simpler.
  There are 5 million employers in the United States today. Some 60 
percent employ 4 employees or fewer and 94 percent employ fewer than 50 
employees.
  Tax regulations and compliance burden ranks highest among small 
business people's problems and concerns.
  A recent NFIB tax survey found that 79 percent of those responding 
said we should substantially change the Federal Tax Code as it affects 
both business and individuals.
  Current code smothers small business.
  Arthur Hall of the Tax Foundation found that small business owners--
small corporations with assets less than $1 million--pay a minimum of 
$724 in compliance costs for every $100 paid in income taxes. This is a 
total of $28.6 billion in compliance costs for these small business 
owners, compared to $3.9 billion paid in income tax.
  Additionally, small firms bear a compliance burden at least 24 times 
greater than big business.
  There is growing recognition by politicians, economists, and all 
citizens alike of a disturbing fact--the burden created by Federal 
income tax and other Federal regulations falls predominantly and 
disproportionately on the very people who we rely upon to create jobs--
small business owners.
  Endless paperwork associated with tax regulations takes more and more 
time, allowing less and less time to run their businesses.
  The alternative minimum tax and depreciation calculations mean 
endless hours of work and high accountants fees, often for little 
bottom line tax benefit.
  Additionally, 53 percent said payroll taxes are less fair or much 
less fair than business income taxes.
  One-half of small business owners start their business with less than 
$20,000, most of which is from personal savings or family savings. The 
unlimited savings allowance in the USA tax will make it much easier for 
entrepreneurs to get started. This means more new businesses and more 
new jobs.
  I am pleased to support the tax title of this bill; however, we need 
comprehensive reform.


           Providing Equal Tax Treatment To Software Exports

  Mr. LEAHY. Mr. President, I am disappointed that the tax package in 
the

[[Page S7445]]

Small Business Job Protection Act, H.R. 3448, does not include any 
provisions to correct the foreign sales corporation tax to provide 
equal treatment to computer software exports.
  I believe the managers of the bill, Senator Moynihan and Senator 
Roth, have done a fine job on the tax provisions in this legislation, 
except for this one issue. I want to thank Senator Moynihan for his 
support and I will continue to work with him and other Senators to 
correct this tax discrimination because it has hampered the 
competitiveness of our software industry for far too long.
  In 1971, before the birth of the software industry, Congress created 
tax incentives for U.S. companies to bolster exports. In an 
increasingly competitive global economy, Congress realized that U.S. 
businesses must export to succeed. Since 1987, however, the Treasury 
Department has interpreted the law to exclude most U.S. software 
exporters from receiving these benefits.
  Correcting this inequity will protect U.S. software development jobs 
and encourage economic growth through increased software exports. The 
United States is currently the world leader in software development, 
creating more than 500,000 high-wage, high-skill jobs in this country. 
Our tax policy should be encouraging the creation of more of these 
jobs, not hindering the ability of our software companies to compete in 
the global economy.
  Correcting this problem does not grant special treatment to the 
software industry. It would merely restore equal treatment under 
existing law. Fixing this anomaly in our tax law makes economic and 
common sense. I urge my colleagues to provide equal tax treatment to 
software exports as soon as possible.
  Ms. MIKULSKI. Mr. President, I am voting to raise the minimum wage. 
This increase in the minimum wage is long overdue. While opponents have 
tried to kill this increase, inflation has killed the value of the 
current wage.
  The bill before us today has two major components. First of all, it 
raises the minimum wage from $4.25 an hour to $5.15 an hour. This is a 
major step in improving paycheck security for America's workers.
  Second, the bill contains a number of tax provisions. Many of these 
provisions are designed to benefit small business, and to address 
concerns that small business might be hurt by the wage increase the 
bill provides.
  One tax provision of special importance to me is the language that 
expands the availability of spousal IRAs. Along with Senator Kay Bailey 
Hutchison, I am the author of the Homemaker IRA Bill. Sixty of our 
colleagues have joined in cosponsoring our bill to allow homemakers to 
get a full IRA deduction. So we are delighted that our bill, which is 
so important in providing retirement security for American families, 
has been included in this legislation.
  If this Congress fails to raise the minimum wage, we will be letting 
down millions of hard working men and women. We will be letting down 
the 130,000 Maryland workers who will benefit from an increase.
  The last time we acted to raise the minimum wage was 1989. When we 
add in what inflation has done to that increase in the last 7 years, 
the minimum wage is at its lowest level since 1955--40 years. How many 
in this Chamber would be satisfied with 1955 wages?
  When I say I am for a minimum wage increase I want to make clear that 
I will not vote for the Republican amendment. The Republican amendment 
is an attempt to have it both ways. Tell the voters you voted for an 
increase, but don't tell them that the millions of working men and 
women who need the increase will never get it. Under the Republican 
amendment, two thirds of all workplaces--and 10.5 million employees--
would be denied the minimum wage increase.
  The Republican amendment delays the increase for another half year. 
It effectively cuts out all waiters and waitresses, and others who 
depend on tips. This is a particular concern to women. Women represent 
some 80 percent of tipped employees.
  The Republican amendment denies an increase to every worker, 
regardless of age, for the first 6 months on any new job. The 
Republican amendment will not result in an increase in the minimum wage 
but it will result in an increase in the public cynicisms about 
Washington.

  The Democratic amendment is straightforward, and it will raise the 
minimum wage. Under our proposal the minimum wage will increase from 
$4.25 an hour to $5.15 an hour by the second year. This is a modest 
proposal that will not kill jobs, but will help America's families.
  Mr. President, some will argue that the minimum wage doesn't really 
help families or adult workers, but that is not what the facts tell us. 
The facts are that over 60 percent of workers receiving the minimum 
wage are adults. And over one-third of minimum wage earners are the 
only wage earners in their families.
  Too many workers are losing ground. Too many people are working 
longer and working harder, but their checks are getting smaller. These 
people don't work on Wall Street and they don't work in this Chamber, 
but they do work in every corner of the United States and every place 
in between. They live their lives trying to meet their day to day 
needs. In a country where voters wonder if Washington is interested in 
improving their lives, raising the minimum wage is one small signal we 
can send that says we do care.
  Mr. President, I also want to mention my support for the small 
business tax package that will become a part of this legislation if it 
is passed. I am pleased that we have a bipartisan agreement on a tax 
package that will provide some needed tax changes.
  Some have denounced a minimum wage increase as being antibusiness. 
These same people fail to mention the nearly $11 billion in tax cuts 
that are a part of this legislation. Extension of the research, 
education, and targeted tax credits are all important tax deductions 
that I have long supported. I believe the continuation of these credits 
will help businesses as well as help the country.
  I am also very pleased that this tax package includes an expansion of 
the IRA for spouses. I want to take this opportunity to commend Senator 
Hutchison, with whom I introduced the bill early last year to provide 
homemaker IRA's. Senator Hutchison has been such an able and staunch 
advocate for our legislation, and I am pleased that it is included in 
the bill before us. By passing this we are finally recognizing the 
value of the labor of all the spouses who work at home.
  Mr. President lets pass a minimum wage increase. One that is real and 
one that is needed.
  Mrs. FRAHM. Mr. President, few would disagree that small businesses 
are the backbone of the American economy. From the mom-and-pop general 
store, to the diner on Main Street, small businesses play an integral 
role in keeping our economy moving. In fact, these enterprises create 
half of all of the new jobs created in this country.
  The greatest obstacle facing small business today is the Federal 
Government itself. Ronald Reagan had it clear in his mind when he said 
what the test of an economic program should be: ``Government has an 
important role in helping develop a country's economic foundation. But 
the critical test is whether the Government is genuinely working to 
liberate individuals by creating incentives to work, save, invest and 
succeed.''
  Sweeping tax reform is the only way to truly unleash America's 
potential and free small business from the burden of Government while 
encouraging savings, investment and real prosperity. However, until we 
have someone in the White House who puts the interests of small 
businesses and the American people before politics, this type of 
complete tax reform seems impossible.
  In the meantime, passing the Small Business Job Protection Act 
provides immediate and meaningful relief for small businesses in Kansas 
and the rest of the Nation. The specific provisions of this bill will 
enable small businesses to increase capital investments, enhance job 
and overall economic growth, and provide retirement savings options for 
their employees. This is the proper role of Government.
  People are worried about the economy and more specifically their 
financial futures. When I talk to Kansans, one thing is abundantly 
clear--people are fearful of their post-employment futures. They wonder 
if they will be able to afford to retire despite all of

[[Page S7446]]

their years of hard work. For many the only option is to work until 
they no longer can. The American dream of a secure retirement becomes 
more and more of a dream and less of a reality every day.
  Currently, complex regulations and the resulting high costs keep 
small businesses from offering retirement plans to their employees. 
Only 19 percent of workers in businesses with fewer than 25 employees 
had employer provided pensions made available to them, and only 14 
percent participated. A major contributing factor to this dismal 
statistic is the sky-high cost per participant of establishing and 
maintaining these pensions.
  This bill will fix this situation, making pensions accessible to more 
Americans, and helping to secure their financial futures. A lifetime of 
hard work should be accompanied by the earned reward of a secure 
retirement.

  To me, Kansas common sense dictates that our policy toward small 
business should support creation and growth, In fact, during the 
1980's, they accounted for an increase of more than 20 million jobs 
alone--20 million. It is vital that we look to protect America's small 
enterprises. We cannot afford to send hard-working Americans to the 
unemployment lines.
  However, I am very concerned that a mandatory increase in the minimum 
wage, will excessively raise labor costs, forcing employers to either 
close down or dramatically decrease the number of people that they 
employ.
  We must remember that protecting small business protects small 
business employees. A minimum wage increase without substantial 
protection for small business will destroy hundreds of thousands of 
entry-level and low-wage jobs. Many Americans rely on these jobs for 
their very survival.
  The solution here is not the quick fix of simply paying individuals a 
bit more per hour--the prudent, long-range solution is providing these 
individuals with the training they need to land higher paying jobs. A 
minimum wage increase will substantially decrease the funds that small 
employers will be able to spend on the training of entry-level 
employees to prepare them for higher paying jobs.
  Although I oppose any effort to increase the Federal minimum wage, I 
certainly support Senator Bond's small business exemption provisions. 
Since small enterprises are the hardest hit by a minimum wage increase, 
they are in the greatest need of relief to continue to be competitive.
  If we are going to pass legislation that makes such important strides 
in protecting small business, and more importantly, the people who 
depend on them--we cannot take a giant step backward by simply creating 
new obstacles for these hard-working entrepreneurs to overcome.
  Again, raising the minimum wage is not the feel-good cure-all. 
However, tax relief and a minimum exemption for small business are 
steps in the right direction. Any minimum wage increase must be coupled 
with such provisions if we are to keep hard-working Americans from a 
trip to the unemployment office.
  It is my top priority to help bring some commonsense conservatism to 
the U.S. Senate. I urge my colleagues to do the same. By supporting a 
small business protection bill with a minimum wage increase, we take 
one step forward and two giant steps back. We owe it to the American 
people to keep their dreams of a brighter future alive.


                              section 936

  Mr. MOYNIHAN. Mr. President, last year, the Senate voted to terminate 
section 936 and provide for a 10-year grandfather period, with various 
restrictions, for existing companies doing business in Puerto Rico. 
Many of us were uncomfortable leaving Puerto Rico without any economic 
incentives to replace section 936 following its termination. I want to 
commend and thank the distinguished chairman of the Committee on 
Finance for his leadership in reporting out, as part of the Small 
Business Job Protection Act of 1996, language that begins to address 
this serious problem.
  The provision we are considering today is a step toward encouraging 
job creation for the 4 million American citizens in Puerto Rico by 
putting in place a long-term wage credit for companies currently doing 
business in Puerto Rico. This provision also moves toward the program 
that we established in 1993. The chairman is to be commended for 
recognizing the importance of this modification, and I urge the Senate 
to insist on this modification when we go to conference.
  While this bill provides security for the almost 150,000 employees of 
companies currently doing business in Puerto Rico, it does not address 
the issue of new investment and new jobs under a wage credit program, 
and leaves in question the adequacy of the incentive at the end of 10 
years.
  Mr. ROTH. My distinguished colleague from New York makes some good 
points, and his views reflect his long standing interest in the 
economic stability of Puerto Rico. Let me note that I view section 936 
as an overgenerous tax benefit. However, I recognize that our provision 
for a continuing wage credit provides significant economic stability 
for Puerto Rico and enhances job security for these many thousands of 
employees of U.S. firms. I included the continuing wage credit in the 
Finance Committee bill as a response to the concerns raised by Senator 
Moynihan about Puerto Rico.
  Mr. GRASSLEY. Mr. President, I rise today in strong support of the 
business tax provisions in this legislation. In particular, I want to 
speak about a tax item that I had an opportunity to help include in the 
legislation. People from my State of Iowa, and other farm States, have 
been actively seeking tax relief. This tax bill is a giant step in the 
right direction.
  In particular, young farmers and all consumers will benefit from the 
inclusion of legislation that we call the Aggie Bond Improvement Act, 
S. 1674. Young farmers will benefit from the improved access to the 
farming profession. Consumers will benefit from the addition of a new 
generation of farmers into the profession that guarantees the flow of 
cheap food into our Nation's supermarkets.
  Aggie bonds are tax exempt bonds used for first time farmers. I 
introduced the Aggie Bond Improvement Act with Senators Pressler, 
Baucus, and Moseley-Braun in order to improve the popular first time 
farmer programs administered by various state authorities. These 
authorities issue tax exempt bonds to finance loans for first time 
farmers. With the help of the authorities, these usually younger 
farmers must secure a participating private lender. This legislation 
protects the Government's interests because this is a Government and 
private sector partnership where the private sector lender assumes all 
of the risk.
  However, problems exist in the current program, and this legislation 
corrects some of those problems. The biggest problem is that the 
current first time farmer program does not allow a young farmer to 
purchase the family farm. Because the success of our Nation's farming 
industry has followed from passing our farmland to succeeding 
generations, the current program discriminates against families and 
thereby discourages success.
  Under current law, a son who is farming with his father, and meets 
certain eligibility tests, may qualify to use aggie bond financing to 
buy farmland from a stranger, but not from his father, or even his 
grandfather. Ironically, the father or grandfather could also use the 
aggie bond program to sell farmland to any qualified beginning farmers, 
as long as that farmer is not related to him. Thus, fathers or 
grandfathers and sons can use aggie bond financing, but not if the 
transaction involves the sale of the family farm from one generation to 
the next.
  This imposes an unfair burden to family farms when compared to 
nonfarm family businesses. In nonfarm family businesses, such as 
manufacturing or retail businesses, inter-generational sales can use 
all of the tax and purchase benefits that are available in sales 
between unrelated parties. Thus, when purchasing the family business, 
children of nonfarm business persons compete fairly with the open 
market place.
  However, children of farm families do not have a level playing field 
when compared to unrelated buyers. Instead, they have a huge financial 
burden on them. This is easily explained by the fact that they have to 
pay a higher rate of interest to get loans to buy the same farmland 
that unrelated persons can buy.
  I will add that there is an aging generation of farmers on the land 
that

[[Page S7447]]

would like to retire, but cannot because the next generation cannot 
afford the capital to buy the land. In my State of Iowa, and I think in 
most agricultural States, the average age of our farmers is in their 
upper fifties. In 5 to 6 years we will have 25 percent of our farmers 
wanting to retire. This legislation to improve the State aggie bond 
programs simply makes the necessary transactions possible. Though it is 
only a small provision in the greater bill, the aggie bond legislation 
in this Small Business Job Protection Act is extremely important to 
farm States and consumers alike. Therefore, the tax legislation in the 
Small Business Job Protection Act earns my resounding support.
  Mr. President, at this point I ask unanimous consent to have printed 
in the Record after my remarks a letter that I received from a resident 
of Knoxville, IA. Her name is Leslie Miller, and I think that she does 
an outstanding job of quantifying and personalizing the importance of 
this aggie bond legislation.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                      Iowa State Savings Bank,

                                      Knoxville, IA, July 8, 1996.
     Hon. Charles Grassley,
     U.S. Senate, Hart Senate Office Building, Washington, DC.
       Dear Senator Grassley: I am writing to express support for 
     H3448 because it contains provisions originally included in 
     your bill, S1674. The most important of these provisions 
     would expand the use of tax-exempt aggie bonds to include 
     financing the sale of farmland between related parties. These 
     important changes are needed to ease the financial burdens 
     involved with shifting family farming operations from one 
     generation to the next.
       Iowa State Savings Bank has frequently used aggie bond 
     financing (through Iowa's Beginning Farmer Program) to lower 
     interest costs to beginning farmers. We have found this 
     program successful in helping young farmers acquire the base 
     they need to survive in farming. We have been frustrated that 
     this program has not been available to finance transactions 
     between related parties, particularly sales between parents 
     and children.
       Under current law, a son who is farming with his father, 
     and meets certain eligibility tests, may qualify to use aggie 
     bond financing to buy farmland from a stranger, but not from 
     his father (or even his grandfather). Ironically, the father 
     (or grandfather) could also use the aggie bond program to 
     sell farmland to any qualified beginner farmer, as long as 
     that farmer is not related to him. Thus, fathers (or 
     grandfathers) and sons can use aggie bond financing, but not 
     if the transaction involves the sale of the family farm from 
     one generation to the next.
       This inequity imposes an unfair burden to family farm 
     businesses when compared to family businesses that are non-
     farm in nature. In non-farm family businesses, such as 
     manufacturing or retail businesses, inter-generational sales 
     can use all of the tax and purchase benefits that are 
     available in sales between non-related parties. Thus, 
     children of non-farm businesspersons compete fairly with the 
     open marketplace, when purchasing the family business.
       However, children of farm families to do not have a ``level 
     playing field'' when compared to non-related buyers. Instead, 
     they have a huge financial burden placed on them that can be 
     best explained by the following examples. These examples use 
     average land values from the 1995 Iowa Land Value Survey, 
     released in December, 1995 by Iowa State University. The 
     values are based on estimates as of November 1, 1995, as 
     compiled by Mike Duffy, an extension economist in Farm 
     Management at ISU.
       Example 1: Assume that a farmer wants to sell his 270 acre, 
     average-sized, Marion County farm. He prices the farm at 
     $1200 per acre (the county average price) which totals 
     $324,000. He is willing to take 20% down payment and will 
     finance the sale with a 25-year contract. If he sells this 
     farm using the aggie bond program, his interest is tax-
     exempt, so he could charge about 6.5% interest. If he sells 
     the farm to his son, the interest cannot be tax-exempt, so he 
     will have to charge 9.03% interest (the higher interest is 
     needed for the father to receive the same amount of after-tax 
     money that he would get under the aggie bond program).
       Under these conditions, the non-related buyer would pay the 
     father a total of $531,426 over the life of the contract. On 
     the other hand, the son would wind up paying $661,583 over 
     the life of the contract. This means the son would pay 
     $130,157 more to buy the farm, than a non-related person 
     would pay. The difference is an extra $5206 per year (or an 
     extra $19.28/acre per year), which places the son at a huge 
     financial disadvantage.
       (Note: If the father charges his son the same 6.5% interest 
     rate, then he must sell the farm to his son for $1386/acre to 
     get the same after-tax dollars from his 25-year contract.)
       Example 2: Assume the same size farm, but use the Iowa 
     state average of $1,455/acre. This brings the purchase price 
     to $392,850. Also assume a 20% down payment and a 25-year 
     contract. Under these conditions, a non-related buyer, paying 
     6.5% interest will pay $644,353 over the life of the 
     contract. A son, paying a taxable 9.03% interest, will pay 
     $802,169 over the life of the contract. Thus, the son would 
     pay $157,816 more than a non-related person would pay for the 
     same farm. This is a difference of $6,313, per year (or 
     $23.38/acre per year). Again, the extra dollars make it 
     difficult for the son to survive in farming.
       We believe that the changes proposed in H3448 will affect 
     15 to 18% of our borrowers. This number can only increase as 
     other children recognize that it may be possible for them to 
     buy their family farm. H3448 can also be of immediate benefit 
     to farmers in poor health, who are reluctant to sell their 
     farm to strangers, but might sell it to a child willing to 
     start farming.
       We ask that you share the information in this letter with 
     those who would not support the changes proposed in H3448. 
     Thank you, once again, for your diligent work on behalf of 
     beginning farmers and farm families everywhere.
           Sincerely,
                                                 Leslie S. Miller,
                                                   Vice President.


                  contributions in aid of construction

  Mr. GRASSLEY. Mr. President, this small business tax bill includes 
legislation that helps home buyers.
  The provision is called contributions in aid of construction. It 
repeals the gross-up tax imposed on families building homes since the 
1986 Tax Act.
  It will save families and small businesses up to $2,000 off the price 
of a new home or building. The gross-up tax is one where under current 
law, regulated public utilities must include in their taxable income 
contributions from customers, or potential customers. These utility 
services include water and sewer systems.
  Customers routinely must finance the cost to the utility of extending 
the necessary capital improvements to the family home. Therefore, State 
utility commissions require that homes hoping to get utility services 
contribute to the company both the cost for the capital improvements 
necessary to extend the service, and the amount of tax that the utility 
will have to recognize on the receipt of the funds or assets needed for 
those improvements.
  This gross-up tax can increase the cost of the contribution in aid of 
construction by 70 percent.
  The cost to families of the present law encourages the proliferation 
of small, uneconomical, and environmentally unsafe water and sewer 
systems.
  This legislation is paid for by the water utility industry. 
Contributions in aid of construction are so important that the water 
utility industry has volunteered to change the depreciable lives of its 
property to finance the law change.
  Over a 10-year period, this legislation in the chairman's mark raises 
an extra $200 million more than is necessary to pay for the 
legislation.
  The contributions in aid of construction legislation is important tax 
relief for families, and I believe that it is an outstanding addition 
to this legislation.


               CHURCH PENSIONS AND PENSION SIMPLIFICATION

  Mr. President, I am pleased that this manager's amendment contains, 
in the pension simplification portion, provisions which will help 
clarify the treatment of church pension plans. The amendment would 
allow combined pension plan coverage for self-employed clergy. It would 
allow pension plans established prior to the enactment of ERISA, which 
is the case for many of the church plans, to use the new definition of 
highly compensated employees. It authorizes, but does not require, the 
Treasury to design safe harbors from the nondiscrimination rules for 
church plans. And it allows for the payroll deduction of pension 
contributions for clergy on foreign missions. The final bill will also 
retain a change in the tax treatment of parsonage allowances which will 
benefit many ministers.
  Mr. President, we included last year in the Finance Committee's 
portions of the Balanced Budget Act legislation which Senator Pryor and 
I introduced early in this Congress designed to deal with many of the 
problems the church plans were having with the rules pertaining to 
highly compensated employees and to nondiscrimination. Ultimately, 
those provisions were dropped from the legislation on the grounds that 
they did not meet the requirements of the Byrd rule. If the legislation 
we are considering today is enacted, Mr. President, we will have gone a 
long way toward taking care of the

[[Page S7448]]

most serious of the problems faced by the church plans. Of course, much 
will depend on the Treasury Department's willingness to develop rules 
for non-discrimination with which the church plans can live. I am 
optimistic that can be done, Mr. President. I believe that, as the 
Treasury Department reviews the situation faced by the church plans 
because of the way many of the interested denominations are organized, 
Treasury staff will conclude that it is practically impossible for many 
of the church plans to do the kind of data collection and analysis 
necessary to demonstrate compliance with the nondiscrimination rules. 
This is certainly not to say that these plans discriminate; but it is 
to say that Treasury should help work out a method to insure that such 
plans can more easily demonstrate that they do not.
  I will conclude with just a word about the main pension 
simplification provisions in the bill, Mr. President. And that is to 
say that these simplification represent a major step forward. Their 
enactment should ultimately result in more pension plans being created, 
particularly by smaller businesses. Since it is that segment of the 
business community that has the greatest difficulty in offering 
pensions to their employees, enactment of these provisions should 
result in a major increase in pension coverage. Ultimately, that means 
more savings and more income for retirees. These simplification 
provisions have been on our congressional agenda for several years. It 
is high time they were enacted.
  Mr. BYRD. Mr. President, the Senate is today considering a 
legislative proposal to increase the federal minimum wage, which 
currently stands at $4.25 per hour. Few actions taken by this body can 
effectuate more immediate and discernable effects on our nation's low-
wage earners than increasing the minimum wage. Many of these minimum 
wage earners are struggling to make ends meet in today's paradoxical 
economy, where continued economic growth has been accompanied by rising 
economic inequality among our nation's citizens. Indeed, we are 
entering a time where President Kennedy's famous saying, ``A rising 
tide lifts all the boats,'' might be made more appropriate if it 
included an exception for those diminutive vessels that may be washed 
away and sunk by the indiscriminate waves of economic growth. Consider 
a report issued by the U.S. Census Bureau on June 20, 1996, that 
revealed that income inequality, based on the most commonly used index 
measure, increased 22.4 percent from 1968 to 1994, despite considerable 
economic growth in that same period. For example, in 1994, a household 
with an income in the 95th percentile earned $109,821, while a 
household with an income in the 20th percentile earned $13,426. The 
former household earned 8.2 times as much as the latter. In 1968, 
however, a household with an income at the 95th percentile earned just 
six times that of a household at the 20th percentile. Clearly, we have 
seen growing economic disparity in our nation, and there is no 
indication of this perilous trend reversing itself. If we are to combat 
this nefarious problem, we must first identify its causes. The 
aforementioned Census Report presents several reasons for the growing 
income disparity. Specifically, the report states:

       The wage distribution has become considerably more unequal 
     with more highly skilled, trained, and educated workers at 
     the top experiencing real wage gains and those at the bottom 
     real wage losses. One factor is the shift in employment from 
     those goods-producing industries that have disproportionately 
     provided high-wage opportunities for low-skilled workers, 
     towards services that disproportionately employ college 
     graduates, and towards low-wage sectors such as retail trade. 
     . . . Also cited as factors putting downward pressure on the 
     wages of less-educated workers are intensifying global 
     competition and immigration, the decline of the proportion of 
     workers belonging to unions, the decline in the real value of 
     the minimum wage, the increasing need for computer skills, 
     and the increasing use of temporary workers.

  While, as the report states, there are numerous contributors to 
rising economic inequality, the declining value of the minimum wage 
must be addressed if we are to seriously combat this insidious trend.
  Mr. President, as passed by the House of Representatives, H.R. 3448 
would increase the statutory minimum wage from its current level of 
$4.25 per hour to $4.75 per hour this year and $5.15 per hour next 
year. In inflation adjusted terms, the proposal would restore the 
minimum wage to roughly the same level it had after the most recent 
1991 increase went into effect. If no action were taken this year with 
respect to the minimum wage, it would continue approaching a 40-year 
low in real buying power by 1997. Included in the House-passed minimum 
wage increase is an exemption for employees under 20 years of age who 
are in their first 90 days of service to an employer--the so-called 
``Opportunity'' Wage. A similar, albeit temporary, provision was 
included in the last minimum wage increase in 1989, and, despite the 
fact that the Department of Labor found that few employers actually 
used this ``training'' wage, it is being reestablished on a permanent 
level in the bill before us today. While I question the logic of 
rehashing this failed experiment, I nevertheless intend to support the 
bill as it currently stands. It will restore the minimum wage to a 
reasonable level by making work pay for a substantial number of our 
lowest-wage earners.

  Mr. President, it should be noted that the value of the minimum wage 
in real, or inflation adjusted, dollars peaked in 1968 and has since 
fallen gradually to less than 60-percent of that value. According to a 
report by the Congressional Research Service, the value of the minimum 
wage today would have to be $7.13 per hour to be worth as much as it 
was in 1968. Mr. President, the proposal before us today would only 
increase the minimum wage by 90 cents per hour over two years--hardly 
enough to bring it close to its 1968 inflation-adjusted level. Yet, we 
are told by many that this minimum wage increase is unnecessary and 
excessive. The Republican leadership has cleverly crafted an amendment 
to the House-passed minimum wage increase that would effectively deny 
even this modest minimum wage increase to a substantial number of 
deserving workers. The Republican amendment to H.R. 3448 would not only 
delay the increase until next year, but it would also extend the 
``Opportunity'' wage to 180 days of service for all employees, not just 
to those under the age of 20. In addition, the Republican amendment 
would exempt all businesses with less than $500,000 in annual sales 
from the minimum wage increase. The Department of Labor estimates that 
this provision alone would deny the minimum wage increase to 10.5 
million workers. In my own state, West Virginia, this small business 
exemption would exclude nearly 67,000 workers from coverage under the 
new minimum wage increase. Clearly, this amendment represents an 
attempt to eviscerate the minimum wage increase entirely. If we are to 
approve a real increase in the minimum wage, we must defeat this 
tendentious amendment.
  Mr. President, allow me to reiterate that we are engaged in a 
fundamental debate about fairness. We are considering a proposal to 
increase the federal minimum wage from $4.25 per hour by just 90 cents 
to $5.15 per hour. In my own state of West Virginia, this increase in 
the minimum wage would affect nearly 100,000 workers--about 23 percent 
of West Virginia's estimated 425,000 employed wage and salary workers. 
According to the U.S. Department of Labor, in 1995, the percentage of 
West Virginians paid wages at or below the $4.25 minimum wage was 10.2 
percent, which was the highest in the nation and nearly twice the 
national average of 5.3 percent. The pending minimum wage increase 
would give a raise of up to $1,800 a year to these workers that could 
be used to pay for seven months of groceries, nine months of utility 
bills, or four months of housing costs. In addition, many of these low-
wage earners are women who represent their families sole source of 
income. According to the 1990 Census, more than 80 percent of single 
parent families in West Virginia were headed by women. In short, the 
pending minimum wage increase would help lift many low-income families 
above the poverty line--not with work-deterring welfare checks, but 
with higher wages for hours worked.

  Mr. President, in conclusion, I would like to reemphasize my support 
for the modest minimum wage increase that is before us today. It is a 
proposal that will affect the lives of many of our most needy citizens. 
It is not akin to

[[Page S7449]]

handing out welfare checks; the minimum wage only applies to those who 
work. Moreover, in the context of welfare reform, it is essential that 
we create incentives for current recipients to work and earn a decent 
living. The current minimum wage earner who works 40 hours a week earns 
just $170 a week, or about $680 a month. Every Member of this body 
earns nearly that much in one day. So, I hope that all Senators will 
view the minimum wage increase in the context of fairness, and not 
partisanship. In addition, I ask that all Senators consider the growing 
income inequality that I have already discussed. We are slowly becoming 
a nation of haves and have-nots--we are losing those in the middle. 
This trend does not augur well for the future of our Nation. Aristotle 
admonished mankind more than 2000 years ago about how important it is 
to maintain a healthy, sizable middle class, or what he described as 
the ``middle people.'' He writes in ``Politics'':

       It is the middle citizens in a state who are the most 
     secure: they neither covet, like the poor, the possessions of 
     others, nor do others covet theirs as the poor covet those of 
     the rich. . . . It is clear . . . that the best partnership 
     in a state is the one which operates through the middle 
     people, and also that those states in which the middle 
     element is large, and stronger if possible that the other two 
     altogether, or at any rate stronger than either of them 
     alone, have every chance of having a well-run constitution.

  We must remember Aristotle's insightful words. While the minimum wage 
will not instantly lift any poor, low-wage earner to the middle class, 
it will provide a more accessible ladder for those who, although they 
may lack certain skills, have the energy and determination to fulfill 
their own American dream. Let us give them that chance.
  Mr. President, I yield the floor.
  Mr. HARKIN. Today we get the opportunity to assure that 12 million 
American workers are provided with a much needed and much deserved 
raise. The value of the minimum wage is 50 cents less than it was when 
it was last increased and it's headed for a 40-year low. At last we 
have the chance to increase the minimum wage so that American families 
aren't working harder for less.
  Some say that working Americans don't deserve a raise. I say look at 
the facts. In my home State of Iowa our minimum wage is 40 cents above 
the national law. The increase has meant more money in the pockets of 
Iowa workers and more money spent in our local economy. Jobs are up, 
unemployment is down, and our economy is stronger.
  Look around the Nation. Two-thirds of minimum wage workers are 
adults. Nearly 60 percent are women. More than one-third are the sole 
breadwinners.
  Now think about this. Last year, the CEO's in America's top companies 
made an average of over $4.3 million--about $12,000 a day. Meanwhile 
someone working for minimum wage made $8,500 a year. That means that a 
top CEO made more in 1 day than a minimum wage worker earns in well 
over a year. That's not right and it's not good for America.
  The one thing spoiling this vote today is an amendment offered by the 
majority. They delayed this vote for as long as they could and they're 
still trying to stack the deck against working Americans. The Bond 
amendment is even more extreme than the Goodling amendment that was 
rejected as too extreme by House Republicans. Through a host of 
exemptions, denials, and delays, the Republican minimum wage proposal 
is designed to provide the minimum possible minimum wage increase to 
the minimum number of people.
  First, the Bond amendment delays the increase until January 1, 1997--
that means that for another 6 months, minimum wage workers will go 
without a raise, as they already have for more than 5 years. This works 
out to about $500 in pay that employees would receive over the next 6 
months, money that could be spent on crucial family needs like health 
care, food, and housing.
  Next, they want to create a subminimum wage for all workers. Their 
proposal would allow employers to pay all new employees a subminimum 
wage of $4.25 an hour, for 6 months. That means that no matter how old 
you are and how much experience you have, if you start a new job, your 
value to your employer is equal to the most inexperienced employee. 
That's far worse than the opportunity wage passed by the House that 
affected young workers age 20 and under for 90 days.
  And last, the Bond amendment would exempt 10.5 million workers--two-
thirds of all companies--from a minimum wage coverage by providing for 
an across-the-board exemption for small businesses with less than 
$500,000 annual sales. This is unnecessary. The economy has added more 
than 10 million jobs since the last minimum wage increase and small 
business has led the way.
  The Bond amendment is a blatant attempt to derail the opportunity to 
give America a raise. The National Retail Association admitted as much 
in one of their action alerts to members. Referring to the Bond 
amendment the alert advised members that, ``It is our last chance and 
best hope for stopping the minimum wage increase this year.''
  The majority is trying to two-step with the working Americans. They 
say for every step forward, working Americans have to take two steps 
back. Well, we don't do that dance and I urge my colleagues to reject 
the Bond amendment.
  The bottom line: America deserves a raise. Profits and productivity 
are up. There is room to give workers a wage they deserve without 
harming economic growth. The rest of the economy shouldn't be doing 
better than the people who make it run.
  So I urge my colleagues to support a raise in the minimum wage. It is 
the right thing to do and it is overdue.
  Mr. President, I also want to make brief remarks on the tax 
provisions in the bill.
  I am a strong supporter of the pension improvements: increasing the 
ability of small businesses to establish pension plans with far less 
paperwork. Too many smaller businesses do not have pension plans. And, 
this legislation will help in that area. We need to do more to increase 
the availability of pensions and to secure further protections against 
inappropriate actions that reduce pension benefits.
  The higher expensing limits allowing more capital purchases to be 
deducted will be helpful to many small businesses.
  The extension and modifications in the targeted jobs tax credit, now 
called the work opportunity tax credit and the extension of the 
exclusion of employer paid higher education costs are an excellent step 
toward increasing the ability of Americans to improve their education 
and job skills. We need to help people get their first leg up the 
ladder of success and we need to improve the skills of workers. The 
measure also extends the R&D tax credit which I have long supported.
  I am also pleased that the Senate once again passed provisions to 
block billionaires from gaining tax advantages from renouncing their 
citizenship. This is long overdue reform.
  So, while I believe certain provisions can and should be improved in 
this bill, overall it is a victory for American workers and will 
provide needed help to small businesses. I hope conferees are named 
promptly and a strong bill is quickly sent to the President in a form 
he will sign.


                     minimum wage and nursing homes

  Mr. HATCH. Mr. President, I would like to ask the bill's proponents 
about one serious ramification of a minimum wage increase, that is, the 
effect this increase will have on the Medicaid Program. Almost one-half 
of Medicaid dollars are spent in long-term care, primarily for the 
elderly. It stands to reason that an increase in the minimum wage will 
affect all health care providers, including those who are providing 
care under Medicaid.
  Nursing homes are large employers of minimum wage workers. They 
employ significant numbers of nurse aids, orderlies, food service, and 
housekeeping staff who all contribute to the care of nursing home 
patients. Labor costs account for about 60 percent of all nursing home 
costs.
  However, unlike other businesses, the nursing home industry is unable 
to reduce its staff. The level of care that is required both by 
internal quality standards and by Federal regulations means that 
nursing home staff, particularly those individuals who are directly 
providing patient care, cannot be reduced.
  In short, nursing homes are caught in a catch-22. They cannot adjust 
the size

[[Page S7450]]

or configuration of their staffs; so they suffer a significant increase 
in labor costs. Yet, unless the minimum wage increase is taken into 
account in determining Medicaid reimbursement rates, nursing homes 
cannot recover any of the increase.
  So, unlike any other business, which can either reduce its number of 
workers or pass the increased costs on to consumers, nursing homes are 
simply left to absorb it. I am very concerned that this will have a 
serious adverse impact on our nursing homes both in the short- and 
long-run. In our country, we need to be able to depend on these 
facilities to provide quality care for our frail elderly and infirm 
population.
  Does the Senator from Massachusetts agree with me that the Fair Labor 
Standards Act should be a factor in determining nursing home 
reimbursements under Medicaid?
  Mr. KENNEDY. Yes, I do. Major nursing home reform passed Congress in 
1987 as part of the Omnibus Budget Reconciliation Act [OBRA], Public 
Law 100-203. This act required significant changes in staffing and 
training requirements, quality of care, patient services, and 
enforcement of new nursing home standards. Because Congress was 
concerned about the ability of the nursing home industry to absorb 
costs of this magnitude, special language was included to ensure that 
the Medicaid reimbursement systems of the States were altered to cover 
these costs. Just as care was taken to ensure that the Medicaid 
reimbursement system adequately accommodated the OBRA 1987 cost 
increases, I believe it is fair to do so in conjunction with a new 
minimum wage law. The increase in the minimum wage should be taken into 
account in plans submitted by States to HCFA. The Federal nursing home 
quality standards have been enormously successful in improving the 
quality of care and quality of life of our nursing home residents and 
we do not want to do anything to diminish the successes we are 
achieving as a result of those reforms.
  We are all well aware that States now are setting Medicaid rates, not 
on the basis of costs incurred by facilities in providing long-term 
care services, but rather on State budgetary constraints. A recent 
survey of nursing homes nationwide indicates that in half the States, a 
majority of facilities do not receive Medicaid rates that cover the 
actual cost of providing care to their Medicaid patients. This 
situation will only worsen if States are not held accountable for 
recognizing increased labor costs that facilities will incur under this 
new minimum wage law.
  Mr. HATCH. I think we agree that any increases in the minimum wage 
should be a factor in Medicaid reimbursements. I thank my colleague for 
this clarification.
  Mr. HARKIN. Mr. President, I wanted to lend my support to the 
colloquy between my colleagues Senators Hatch and Kennedy relative to 
nursing homes and the minimum wage. In their colloquy my colleagues 
note that nursing homes, many of which, particularly in rural areas 
like my State of Iowa, are funded primarily through the Medicare and 
Medicaid programs. Nursing homes provide vital services to our elderly 
and disabled citizens and they employ many minimum wage workers who 
provide direct care to these residents. Therefore, this minimum wage 
increase, which will help these valued workers and help increase their 
retention, will have an impact on nursing homes costs. And that should 
be reflected in Medicare and Medicaid payments. It is essential that 
state Medicaid payments be reasonable and adequate to enable well-run 
facilities to meet and exceed the quality standards set by law.
  I thank my colleagues for raising this important issue and I 
appreciate the opportunity to express my agreement with their 
statements.
  Mr. BINGAMAN. Mr. President, finally, the issue of raising the 
minimum wage has come to the floor for a vote. It has been disturbing 
during these many months that the Republican leadership has employed 
extraordinary legislative tactics, some quite complicated and 
perplexing even for our parliamentarians, to keep the Members of this 
Chamber from voting on this issue.
  In the State of New Mexico, which I represent, more than 10 percent 
of the work force, approximately 80,000 workers, would receive a wage 
increase if this legislation is passed. Let me put in stark perspective 
what we are talking about.
  Minimum wage levels today are approaching their lowest levels in 
history. Despite having raised the minimum wage 17 times since 1938, 
each time with bipartisan support, the minimum wage will hit its lowest 
level in real dollars in January 1997. Two-thirds of those earning the 
minimum wage today--and working full time--are adults, and 40 percent 
of those earning minimum wage are the sole breadwinners for their 
families. For working hard, trying to stay in the mainstream of those 
wanting to get ahead in this economy, these workers make just $8,840 a 
year. And usually, they don't have health coverage. They don't have 
gain-sharing. They aren't covered by pension benefits. And their 
training resources are usually very limited, if not non-existent.
  This is a subject that we should have been allowed to vote on long 
ago. Americans need to know that we support those who want to work to 
get ahead. A family of four earning less than $16,039 is classified as 
one in poverty. And yet, we have a substantial portion of America's 
work force earning $8,840 a year--well under the poverty level. 
Furthermore, I think that we must recognize that women represent 60 
percent of the work force earning minimum wage, and that occupations 
with the highest percentage of minimum wage workers are women. This is 
not acceptable.
  Earlier this year, I issued a report entitled ``Scrambling To Pay the 
Bills: Building Allies for America's Working Families.'' In that 
report, I endorsed an increase in the minimum wage--which I strongly 
support today. However, we tried to do some other things in that report 
as well. One of these was to address the huge disparity between what 
the CEO of a firm made in salary compared to the lowest-paid employee 
of that respective firm. Numerous objections came from the business 
community that we were attempting to set up a ratio that did not 
reflect a reasonable ratio between the highest and lowest paid workers 
for a company. When we wrote this, I mistakenly assumed that the lowest 
paid employee was probably earning somewhere about $15,000 a year--and 
50 times that figure would allow the CEO to earn $750,000 a year, in 
order to receive some tax advantages we were proposing. That same week, 
the Washington Post reported that CEO's of America's top 100 firms 
earned an average salary over $4 million.

  I was wrong on two fronts. The lowest paid are earning less than 
$9,000 a year and the highest paid salaries are somewhere between 400 
and 500 times this figure. I don't think that this ratio reflects a 
fair balance between those who are working hard to help companies and 
communities prosper and those who are profiting higher up in the salary 
chain.
  We must defeat an effort here today sponsored by Senator Bond to 
exempt certain small businesses from paying a higher minimum wage to 
their employees. Of the more than 10 million workers who deserve a 
raise, the Bond amendment exempts nearly 5 million--and would have 
undermined the entire rationale for the minimum wage, which establishes 
a floor above which all employees can expect a fair and decent return 
for the work they expend on an employer's behalf. The Bond amendment 
would encourage employers to favor particular groups of workers over 
others, particularly younger workers over older ones. This is not 
acceptable and not just.
  The Bond amendment also creates a 6 month waiting period before the 
increased minimum wage kicks in. This is nothing more than a way for 
many employers with high turnover to keep from ever paying the minimum 
wage to those who work in high turnover industries. It is not uncommon 
for restaurants to experience more than 200-percent staff turnover in 1 
year.
  Workers can't support families--and can hardly support themselves--on 
$4.25 an hour. In the 17 previous times that the minimum wage has been 
raised, there have been naysayers who have predicted dire consequences. 
The economic trauma that had been predicted by these negative 
commentators

[[Page S7451]]

has never occurred, and it is wrong not to include minimum wage workers 
in the gains of an economy that is producing sky-high corporate 
salaries, historic corporate profits, and all time high stock market 
averages.
  Mr. President, we can't ignore hard working Americans working on the 
lower end of the economic ladder any longer. I strongly support this 
raise in the minimum wage, and I urge others to do the same.
  Mr. SHELBY. Mr. President, I want to express my support for 
provisions in the Small Business Job Protection Act of 1996, that will 
help make higher education a reality for thousands of young people in 
America.
  It is no secret that many families in our Nation are struggling to 
finance their childrens' education. College tuition costs have 
skyrocketed in the past decade increasing 95 percent at private 
institutions and 82 percent at public institutions. Some families will 
spend more than $100,000 just to send one child to college.
  Mr. President, the financial burdens facing parents with college-age 
children is overwhelming. The tendency of some in this Chamber would be 
to create a new Federal program to try to deal with this issue. Yet, 
many States, including Alabama, have shown that is not necessary by 
developing their own prepaid tuition funds. These funds allow parents 
to make a tax-free investment, years in advance of their child's 
enrollment in college, with the guarantee that the child's full tuition 
will be paid for by the State when he or she enrolls in college. These 
tuition plans provide parents some help in dealing with the exorbitant 
inflation in tuition costs.
  The Clinton administration, until very recently, was planning on 
taxing these State funds and the parents who invest in these plans. 
After months of encouragement, we have been successful in getting the 
administration to temporarily back off from taxing these funds and the 
working class families who invest in them. At the same time the 
President was cheering the benefits of lowering the cost of education 
through his new education tax credit, his administration was preparing 
to slap a new tax on families.
  Mr. President, this bill ensures that these funds will not be taxed, 
and it provides that parents will not have to pay taxes on the money 
they invest in these funds. These are two very positive steps, but I 
believe we should go further. Congress should ensure that students are 
not forced to pay taxes on their education when they enroll in college. 
Currently, the student is taxed on the difference between the value of 
the education services they receive from the State and the amount his 
or her parent paid for the prepaid tuition contract.
  Mr. President, the correct way to view these prepaid tuition 
arrangements should be as a prepayment of services, not an investment 
scheme to make money. When parents enter into these contracts with the 
States, they are trying to buy their child's future education at an 
affordable price. Neither they nor their children are trying to get 
rich. Therefore, I don't believe the Federal Government should saddle 
students with taxes on their college expenses. Students today are 
already facing a lifetime of enormous taxes to pay off the debts of 
previous generations. Now, the IRS would have these same people pay 
taxes on a service their parents purchased for them long before they 
enrolled in college.
  Unfortunately, because of the minimum wage issue, we were unable to 
offer amendments to this legislation. Had we been permitted, I would 
have offered an amendment to ensure that students would not be taxed on 
their college expenses. I am a cosponsor of Senator McConnell's bill 
which would accomplish that, and I applaud him for his efforts in this 
area. I will continue to do everything I possibly can to find ways to 
make education in America more affordable. The bill before us today is 
a significant step in that direction, and I look forward to working 
with Chairman Roth and others in the future to provide even more 
favorable tax treatment for families.
  Mr. BRYAN. Mr. President, the difficulty in bringing the issues we 
are voting on today before the Senate has resulted in an unfortunate 
parliamentary situation, where the bill is not open to amendments. 
While I generally support the bill, and plan to vote in favor of the 
bill today, I would have preferred the bill to be open to amendment, 
both to add other desirable provisions, particularly to the small 
business tax relief title, and to offer amendments to strike provisions 
which I believe are inappropriate.
  In particular, there is one provision which I am strongly opposed to: 
the provision which imposes income tax withholding on winnings from 
keno and bingo. Under current law, income taxes are withheld only for 
winnings where the odds are over 300 to 1, but bingo and keno are 
exempt. The bill being considered by the Senate today extends this 
withholding to bingo and keno winnings over $5,000, regardless of the 
odds of the wager.
  The change in withholding included in the bill is not included for 
any serious policy or enforcement reason. In fact, there is good reason 
not to require withholding on gambling winnings. For example, gambling 
winnings can be offset by gambling losses--drastically reducing the 
actual tax due from the winnings. Since withholding is intended to 
approximate actual tax liability, requiring withholding for a tax 
liability that does not exist runs counter to sound tax policy.
  Of course, requiring withholding on bingo and keno winnings was not 
included in this bill for tax policy or enforcement reasons--it was 
solely in order to raise revenue for other tax provisions of the bill. 
While I am supportive of these tax cuts, I object to offsetting them 
with a provision that will negatively impact only one segment of the 
economy, the gaming-entertainment industry.
  Tax withholding on bingo and keno winnings is unsound for policy 
reasons and unfair to an important industry in my State. This 
provision, and similar provisions proposed or adopted in recent years, 
continue to show a disregard and lack of knowledge concerning the 
gaming/entertainment industry in Congress and at the IRS. The revenue 
raised by this provision is relatively small--$69 million over 10 
years--but could cause significant harm in a legitimate industry.
  I will vote for this bill in spite of my opposition to increasing 
withholding on gambling winnings, but I urge the conference committee 
to drop this misguided attempt to raise revenue.
  Mr. HATCH. Mr. President, I support the tax provisions included in 
H.R. 3448, the bill now before us. These provisions are important, not 
only to small businesses, but to almost every American business. And, I 
am one who believes, Mr. President, that simplifying and lessening the 
tax burden faced by American entrepreneurs--both small and large--will 
have substantial benefits for workers as well. Unfortunately, the 
detriments of the minimum wage increase, which is also included in this 
bill, outweigh the benefits of the tax provisions in this bill.
  Mr. President, H.R. 3448 has much to recommend it. For example, I am 
pleased to see that the bill increases the amount of newly purchased 
equipment that a small business can expense from the current $17,500 to 
$25,000. This change will make it easier for these enterprises to 
afford to invest in new equipment. This will help not only small 
businesses but also those larger companies that supply equipment to 
them and will thus have a multiplier effect on the economy. Moreover, 
increasing the expensing allowance will decrease the recordkeeping 
burden these companies face.
  This bill also goes a long way toward reforming the tax treatment of 
S corporations. My colleague and friend from Arkansas, Senator Pryor, 
and I have long been advocating the need for S corporation reform. 
While this bill does not contain all of the reform measures that we 
introduced in our S. 758, the S Corporation Reform Act, it certainly is 
a very good step in the right direction.
  Many of my colleagues may not realize it, Mr. President, but there 
are nearly 2 million S corporations in the United States, most of them 
small businesses. These reform provisions are designed to ease their 
tax compliance burden and to increase these companies' access to 
capital.
  Another very good set of provisions included in this bill is that 
dealing with pension simplification. All of us

[[Page S7452]]

are aware, I think, of the special problems that small businesses face 
in providing pension benefits to their employees. It is no accident 
that fewer than 20 percent of the employees of small businesses are 
covered by a pension plan. The problem is twofold, Mr. President.
  First, many small businesses are afraid to commit to providing a 
certain percentage of their payroll every year to funding a pension or 
profit sharing plan. It's not that these businesses are stingy with 
their employees. Rather, many of them are operating on such thin cash 
flow margins that they are hesitant to add to their overhead and 
possibly overcommit their already strained resources.
  The second problem is probably even more widespread among small 
enterprises. This problem is that setting up and administering a 
pension plan is a very costly undertaking. Let's face it, Mr. 
President. Most small businesses in America are already struggling to 
keep up with the myriad rules and regulations that are piled on them by 
Federal, State, and local governments. The last thing they need is to 
have to learn and comply with the mind-numbing regulations governing 
pension plans contained in the Internal Revenue Code. Even hardened tax 
veterans admit that these rules are almost beyond comprehension for 
them. How is a small business man or woman supposed to master them? The 
alternative is paying big dollars for a specialist to administer the 
plan, again stretching the small firm's tight resources.
  This bill deals with both of these problems by providing for a new 
type of pension plan that allows small employers to sponsor pension 
plans with low employer contributions. It gives the business the 
flexibility to contribute a higher percentage of employee compensation 
in good years or to contribute as low as 1 percent in difficult years. 
At the same time, however, employees are given the benefits of tax 
favored treatment on both their own contributions and those of the 
employer.
  Moreover, Mr. President, H.R. 3448 simplifies the onerous compliance 
burden that now accompanies pension plan sponsorship. These rules are 
designed to take away the worst of the compliance headaches that are 
now keeping many businesses from offering pension plans to their 
employees. All in all, the pension reform provisions in this bill 
should go a long way toward increasing the retirement security of the 
millions of Americans who work for small businesses.
  Let me mention one other very important section of the tax bill now 
before the Senate. This bill temporarily extends a number of tax 
provisions that Congress has allowed to expire. These include the 
research and experimentation credit, the work opportunity tax credit, 
the orphan drug tax credit, and the tax credit for producing fuel from 
a nonconventional source. It is important to note, Mr. President, that 
these so-called extenders are important for small, medium, and large 
businesses alike. There are thousands of businesses in my home State of 
Utah, and millions across the Nation, that will find the extension of 
these provisions important in helping them to grow and create jobs in 
the future.
  But, as much as I like the tax title of this bill, Mr. President, I 
have to say that it is far from perfect. Let me just briefly outline 
what I see as its greatest deficiencies.
  As my colleagues know, the only reason we are voting on a tax bill 
today is because of the increase in the minimum wage that is also 
included in H.R. 3448. I believe strongly that mandatory increases in 
labor costs create any number of problems for both small businesses and 
workers. I will discuss those in a moment.
  The House of Representatives recognized the added burden placed on 
small businesses in particular and attached the small business tax 
provisions to the minimum wage bill in order to help alleviate some of 
the harsh results that the minimum wage increase will have on small 
enterprises.
  One harsh result that will come from a 21-percent increase in the 
minimum wage is the loss of jobs. According to CBO, it is estimated 
that increasing the minimum wage will mean that as many as 500,000 jobs 
will either be lost or not created.
  Yet, as beneficial as these tax provisions are, and they will have an 
indirect benefit to job creation, they are not designed to be big job 
generators. I would have liked to see provisions that would have at 
least offset the job losses that will result from the minimum wage 
hike.
  The best thing we could include in a bill designed to overcome the 
disemployment effect of the minimum wage increase is a cut in the 
capital gains tax rate. Such a change would unleash a significant 
portion of the estimated $8 trillion in unrealized capital gains that 
is out there in our economy. If we could free up only 10 percent of 
this mountain of capital--or $800 billion--the job creation that would 
result would overshadow the loss of jobs that will result from 
increasing the minimum wage.
  Don't get me wrong, Mr. President. The tax measures in this bill are 
positive provisions that will assist small businesses. They don't, 
however, have the job creation power that a capital gains tax cut has. 
So, if the Senate were really serious about helping workers or those 
who cannot find a job, we would concentrate our efforts on improving 
opportunities for those who may be unemployed or underemployed. The 
best way to do this is by expanding the availability of capital needed 
to create these opportunities.
  I am also concerned about the way that this bill extends the expired 
tax provisions. Ideally, Congress should find a way to make these 
provisions permanent. The continual expiration and reinstatement of 
these provisions leads to taxpayer skepticism about our tax laws and 
greatly reduces the effectiveness of the provisions. This is 
particularly true of the research and experimentation credit. The bill 
before us today does include an extension of the research credit, but 
only on a prospective basis from July 1, 1996. Therefore, the bill 
leaves a year-long gap, from July 1, 1995 to June 30, 1996, in which 
the research credit is not in effect.
  The research credit has been a part of the Internal Revenue Code 
since 1981, but only as a temporary measure. It has been allowed to 
expire seven times, counting the most recent expiration on June 30, 
1995. Each of the times that the bill expired before this last 
expiration, Congress has extended the bill on a retroactive basis. 
Thus, even though Congress often did not act until after the research 
credit had expired, it has always, until this bill, gone back and made 
the credit effective from the date of expiration.
  The seamless extension of the research credit is important because 
the businesses that have counted on the credit as an incentive to 
increase their research activities will now find that the credit is not 
available for an entire year. Many of these companies based their 
research plans on the availability of the credit. Why shouldn't they 
count on it being there? After all, Congress had never left a gap in 
its extensions of the credit before. The bill before us, however, 
breaks this faith and sets a very poor precedent. This gap, along with 
the temporary nature of the credit, will greatly reduce the 
effectiveness of this credit, Mr. President. I hope that this problem 
can be corrected in conference.
  Finally, Mr. President, let me briefly mention another flaw of this 
bill. In the name of closing a perceived corporate tax loophole, H.R. 
3448 dramatically reduces the benefits available to companies doing 
business in Puerto Rico under section 936 of the Internal Revenue Code. 
We could debate the merits and perceived abuses of section 936 all day. 
I simply want to point out to my colleagues that the focus of attention 
on this issue has been far too concentrated on a few companies that 
have reportedly reaped rich benefits from the section 936 credit, and 
far too little on the people of Puerto Rico, who have been able to pull 
themselves out of dire economic circumstances over the past few 
decades, largely as a result of the credit.
  I believe that Congress is being shortsighted in gutting section 936, 
Mr. President. Without the jobs that section 936 companies bring to the 
island of Puerto Rico, many U.S. citizens will find themselves in 
economic difficulties. Congress will likely spend more money in 
increased transfer payments through higher welfare benefits and 
unemployment benefits than will be saved through the tax changes 
included in this bill. At a minimum, we should

[[Page S7453]]

ensure that Puerto Rico has a permanent incentive to attract new jobs 
to the commonwealth.
  So, Mr. President, I am disappointed in the overall small business 
tax package. I favor its provisions, but I believe they should be 
stronger. The potential positive impact could be so much greater.
  My views on increasing the minimum wage are well known. I have long 
believed that raising the statutory minimum wage merely raises the 
rungs on the ladder of opportunity.
  I am also well aware of the opinion polls that show that a 
substantial majority of the American people believe that a raise in the 
minimum wage is a good idea.
  Many believe that this is a quick, painless way to help the 
disadvantaged in our society; many believe that a minimum wage hike is 
costless; and many believe that it has no adverse impact. I can only 
suggest that the people have not been given all the facts about this 
proposal.
  I wonder, for example, if the people realize that even the most 
optimistic estimate puts job loss at 100,000 entry level jobs. The 
Congressional Budget Office estimates the loss of 100,000 to 500,000 
jobs given a 21 percent increase in the minimum wage. Other estimates 
are higher.
  While there are always dissenters, there are few public policy issues 
on which there is such an overwhelming consensus among economists. 
Three-quarters of the members of the American Economic Association 
agree that minimum wage hikes have a disemployment effect that stifles 
employment opportunities for low-skilled workers.
  This position is summed up by William Baumol and Alan Blinder, who 
was a Clinton appointee to the Federal Reserve Board: ``The primary 
consequence of the minimum wage law is not an increase in the incomes 
of the least skilled workers, but a restriction on their employment 
opportunities.''
  The long and the short of it is simply that you cannot mandate an 
increase in the price of entry level or unskilled labor--which is 
exactly what the statutory minimum wage is--without reducing the demand 
for that labor.
  It is true that some workers will reap the benefit of the increase. 
But, by mandating wage increases we are going to destroy job 
opportunities for many others.
  Let me put it another way: Some workers will get a $36 a week raise. 
Potentially half a million workers won't have a job at all. I hope my 
colleagues do not break their arms patting themselves on the back for 
such benevolence.
  Now, let us look at the demographics of who would be helped and who 
would be hurt by the loss of job opportunities.
  There are more adult minimum wage earners in families earning $30,000 
per year than in families earning less than $10,000 per year. Forty 
percent of all minimum wage earners are teenagers and young adults 
living at home. They are not heads of household.
  A majority of minimum wage earners live in families in which they are 
not the principal breadwinner. Only about a quarter of all minimum wage 
earners are heads of household.
  The fact is that there is no way to target the benefit--to the extent 
there is one--only to those who are heads of households or working 
poor.
  The reality is that those who are not poor are more likely to get 
raises and those whose skills do not justify the higher wage will be 
out of jobs. Study after study has concluded that raising the minimum 
wage is an ineffective means of helping those who are disadvantaged.
  Kevin Lang, professor of economics at Boston University, has stated 
that ``Low-skilled adults in states that raised their minimum wage were 
often crowded out of the job market by teens and students.''
  Peter Brandon, of the Institute for Research on Poverty at the 
University of Wisconsin has found that ``welfare mothers in states that 
raised their minimum wage remained on public assistance 44 percent 
longer than their peers in states where the minimum wage remained 
unchanged.''
  If there was ever an issue for which the benefits were swamped by the 
downsides, this is it. And, those who we intend to help are exactly 
those who are most likely to be hurt.
  Yes, Mr. President, raising the minimum wage sounds like an easy way 
to help those who are working but still struggling to find their way 
out of poverty. It is no wonder that, lacking the facts, the American 
people would support this.
  Frankly, if I thought it would do what my friend Senator Kennedy says 
it will do, I would support it myself. If I believed we could improve 
the standard of living for all Americans by governmental fiat, I would 
be joining the Senator from Massachusetts on the other side of the 
aisle. Who would not want to stamp out poverty with the stroke of a 
pen?
  But, things just do not work that way. It is not that easy.
  The idea that there is no adverse impact from a mandatory increase in 
the cost of hiring workers is delusional.
  And, what's worse, this adverse impact is for nothing.
  This legislation will not be the economic salvation of minimum wage 
earners. Even for a minimum wage worker lucky enough to benefit from 
it, it will provide a $36 a week raise.
  It will take about $7.10 an hour to produce an income equal to the 
poverty level for a family of four. But, proponents will not suggest 
raising the wage to that level. Why? Because they know the 
consequences.
  This proposal to increase the minimum wage, like the emperor who has 
no clothes, is spurious. And, someone has to tell the truth. The 
American people deserve to know all the facts about this minimum wage 
hike.
  We have a lot of work to do yet during this Congress. It is 
disappointing that my colleagues on the other side of the aisle have 
become Johnny one-notes with respect to the minimum wage and have 
offered it to virtually every bill we have debated since mid-March.
  Is this the only idea they have to offer? It would certainly seem so.
  Let us get down to business on some proposals that will help working 
men and women--like tax cuts, a balanced budget, regulatory reform. Let 
us get the economy moving. Let us create new jobs and new 
opportunities, not jeopardize the ones we have.
  Mr. FEINGOLD. Mr. President, I rise today in support of the 
Democratic proposal to increase the minimum wage.
  First, let me address the issue of process.
  It has been clear for months that there is a majority in the Senate 
who have been prepared to vote for the modest $.90 increase over 2 
years which has been proposed. This increase would raise the current 
level set in 1989 at $4.25 to $5.15, in two 45 cent steps.
  Indeed, the majority of our colleagues have already voted to support 
an increase of this size.
  Yet, rather than allow this issue to be fully debated and voted upon, 
enormous time and energy has been spent on devising ploys to either 
block such a vote or to load it down with anti-labor poison pills.
  Mr. President, I'm relieved that this game playing is finally going 
to stop. I'm pleased that we will finally have the opportunity to have 
a clean, up or down vote on raising the minimum wage.
  We ought to raise the minimum wage because it is the fair, just, and 
necessary thing to do.
  It has been 5 years since the minimum wage was last adjusted.
  The minimum wage has been adjusted seven times since the minimum wage 
law was first enacted in 1938.
  Each time, opponents predicted economic disaster would follow any 
increase. None of those dire predictions came true. The American 
economy has continued to grow.
  Since the minimum wage was enacted, every President except Ronald 
Reagan signed an increase in the minimum wage into law.
  Adjusting the minimum wage at regular intervals is a routine task 
that should never have been turned into a pitched partisan battle.
  Indeed, Mr. President, it is remarkable that this fierce debate 
should be taking place in the 104th Congress. This Congress has been 
awash with statements about how we should have work, not welfare. Those 
are views that I, too, share. We should be promoting work, not welfare.
  But how can we encourage people to leave the welfare rolls and join 
the

[[Page S7454]]

work force when we fail to set a minimum hourly wage that provides a 
decent income?
  An American worker, working full-time, 40 hours a week, 52 weeks a 
year, at the current minimum wage would earn less than $9,000 per year.
  The current poverty level for a family of four is $15,600. Forty 
percent of those earning the minimum wage today are the sole 
breadwinners for their families.
  The 90 cent increase being proposed would make a real difference in 
the lives of these families, and encourage them to stay in the work 
force.
  It is estimated, Mr. President, that 12 million American workers--
200,000 in my own State of Wisconsin--would directly benefit from the 
increase being proposed in the Democratic amendment.
  The vast majority--more than two-thirds--are adult workers, not 
teenagers, and they are working to help support their families.
  Over 101 leading economists, including three recipients of the Nobel 
Prize in Economics, have refuted the argument that increasing the 
minimum wage would hurt the economy. Instead, they have concluded that 
the modest increase being proposed would have a positive, not a 
negative, impact upon the labor force and the economy in general.
  Apparently, Mr. President, many of my colleagues on the other side of 
the aisle remain unconvinced by the opinions of Nobel laureates. 
Although the amendment they are advocating purports to raise the 
minimum wage, it is difficult to imagine a worker who would actually 
have the opportunity to benefit from it, because it is so loaded down 
with exceptions.
  Actually, their amendment seems designed to assure that the status 
quo is maintained. It exempts all employees of small businesses with 
gross annual revenues under $500,000--the very businesses most likely 
to pay their workers the least. These businesses employ 10\1/2\ million 
people and comprise two-thirds of all American workplaces. Not all 
employees who work in such settings earn the minimum wage, but those 
who do deserve the same modest raise that others who work for more 
prosperous businesses receive, once this bill is passed and signed by 
the President.
  Another outrageous provision in the Republican amendment would create 
a permanent second class, subminimum wage. Employers would be allowed 
to pay new workers, regardless of age or experience, $4.25 an hour for 
their first 6 months on the job. Although my colleagues on the other 
side of the aisle refer to this lower rate of pay as a ``opportunity 
wage,'' there is no suggestion anywhere in their amendment that workers 
will receive training in exchange for this discriminatory treatment.
  This provision would be particularly harmful for migrant and seasonal 
agricultural workers, who rarely work for the same employer for 6 month 
periods of time. Up to 8,000 migrant workers are employed in my State 
of Wisconsin alone.
  Finally, adding insult to injury, the Republican amendment wouldn't 
even fully take effect for another year and a half.
  Mr. President, the workers who benefit from an increase in the 
minimum wage are likely to do something important with the extra 
dollars they receive: Spend them on goods and services for their 
families. That's good for everyone, as these dollars are plowed back 
into the economy, creating jobs and expanding economic growth.
  Mr. President, there seems to be a lack of understanding in the minds 
of some about the connection between the economic well-being of the 
average American worker and economic prosperity for the Nation.
  Some see the down-sizing of large companies and layoffs of thousands 
of workers across America as an unfortunate, but necessary part of 
increasing profits for Wall Street investors and attracting the 
investments of the multinational conglomerates.
  They fail to appreciate the fact, however, that if American workers 
don't have the money to purchase the goods and services, eventually 
both Wall Street and corporate America will feel the pain as well.
  The modest increase in the minimum wage being proposed is not a 
panacea for the troubling trends in the relationship between American 
workers and their employers. There is a growing feeling that the link 
between corporate responsibility and the workforce has been frayed 
almost beyond recognition and that American workers are coming to be 
regarded as disposable goods.

  In his campaign for the Republican Presidential nomination, Pat 
Buchanan tapped into this sense of abandonment of the average American 
worker by corporate America and by international trade agreements like 
GATT and NAFTA that appear to put the profits of large corporations 
ahead of the jobs of American laborers.
  Mr. President, let me stress that this growing separation between 
employees and their employers is not limited to corporate America or to 
minimum wage job holders.
  It is not limited to the worker flipping hamburgers at the local 
fast-food shop.
  It reaches into all levels of the work force, from the mid-level 
corporate executive to the filing room clerk, who are surviving the 
mergers and downsizing but wonder each night if they will be next.
  Not a week goes by without a story in some major paper documenting 
the anxieties of members of the work force, when companies like IBM and 
AT&T begin casting off thousands of long time employees. Many 
companies, still burdened by the debt acquisition of the leveraged buy-
out frenzy of the 1980's see themselves as having limited options and 
are forced, by economic pressures, to close factories, spinoff 
divisions, and lay off employees at all levels.
  Yet, some of the new employment trends cannot be attributed solely to 
economic pressures.
  I recently heard of a nonprofit agency, funded almost entirely by 
State and Federal grants which employed some 35 individuals. Yet only 
five of those people were regular, full-time employees. The rest were 
so-called contract workers--employees in every sense of the word, but 
forced to work without health care, without pension coverage, without 
sick leave, without vacation or other benefits.
  The Federal Government itself also engages in this practice, hiring 
people as temporary employees--again without the protections that 
regular workers receive.
  The vocabulary of the workplace is now filled with new terminology 
like outsourcing which describes the practice of laying off workers and 
replacing them with individuals--called either temporary workers, 
contract workers, or contingent workers--who lack the benefits of 
regular employees and can be treated accordingly, like disposable 
employees, to be purchased and discarded at will.
  Mr. President, I have raised issues which I know go beyond the simple 
question of whether it is time to increase the minimum wage because I 
think we need to start thinking about these broader questions.
  Secretary Reich has spoken out forcefully already about the need to 
re-establish the concept of corporate responsibility to the labor 
force. I would take that a step further and broaden it to the need to 
repair the deteriorating bonds between employers and employees in all 
sectors of our society.
  As we approach the turn of the century, there are troubling signs 
that we may be moving backward, toward relationships between workers 
and employers that are reminiscent of the 19th century. I seriously 
doubt anyone wants to see the workplace of the 21st century resemble 
that of the last century. America left that era behind long ago.
  A great Nation draws upon the strengths and contributions of all its 
people. John F. Kennedy said, in 1961, when he asked Congress 35 years 
ago to increase the minimum wage, ``Our Nation can ill afford to 
tolerate the growth of an underprivileged and underpaid class. 
Substandard wages lead necessarily to substandard living conditions, 
hardships and distress.''
  Let's do our job.
  Let's vote for an honest increase in the minimum wage.
  Let's acknowledge that America's prosperity rests upon the well-being 
of its people, its work force, and their families.
  Mr. KYL. Mr. President, it is regrettable that the bill that comes 
before us

[[Page S7455]]

today combines two unrelated and very different issues--tax relief with 
an increase in the minimum wage.
  I presume that the two issues were coupled in an effort to mitigate 
the adverse effect that the minimum wage increase would have on small 
businesses. It would not, however, mitigate the adverse effect on those 
individuals who will be unable to find jobs, or who will lose their 
jobs, on account of the increased wage that the Federal Government will 
have mandated.
  The Congressional Budget Office (CBO) estimates that the proposed 21-
percent increase in the minimum wage to $5.15 would create job losses 
of between 100,000 to 500,000. In addition, CBO has said that the 
creation of thousands of jobs could be inhibited if the minimum wage is 
increased.
  I have heard from numerous constituents who are opposed to an 
increase in the minimum wage. One motel management owner in Arizona 
wrote me to say that the tax repeal provisions of the bill are not 
enough to offset the negative ramifications of an increase in the 
minimum wage. Another constituent, the owner of a fast-food restaurant 
in Arizona, wrote to say that employees could be let go if the minimum 
wage is increased.
  Congress can best facilitate increased job creation and wages by 
decreasing governmental interference in business and reducing taxes. I 
ask unanimous consent that a recent Arizona Republic editorial that 
provides a good summary of why raising the minimum wage is a bad idea 
be reprinted in the Record.
  There being no objection, the editorial was ordered to be printed in 
the Record, as follows:

               [From the Arizona Republic, May 15, 1996]

                            Maximum Politics

       The tea-leaf readers in Washington predict congressional 
     approval of a hike in the nation's minimum wage, probably 
     coupled with some other tax-related legislation, in the next 
     few weeks. Alternative plans are to raise the wage, now at 
     $4.25 an hour, by 90 cents or $1.
       What makes the vote to raise the minimum wage a near sure 
     thing is that it has nothing to do with economics. Indeed, 
     most economists say raising the minimum wage is likely to 
     hurt those its supporters say they intend to help: the poor.
       It doesn't take a degree in economics to understand why. 
     Raise the price of labor to businesses and businesses are 
     likely to respond by trimming some jobs. How many is open to 
     debate. One familiar bench mark is that every 10 percent rise 
     in the minimum wage trims 1 percent to 2 percent of affected 
     jobs. Therefore, the legislation might endanger up to 200,000 
     U.S. jobs.
       But forget economics. As the Washington Post's Robert 
     Samuelson reports, it's election-year politics that's driving 
     the minimum-wage push. Plain and simple. Consider: President 
     Clinton says he's a backer of raising the wage. But in 1993 
     and 1994, asks Samuelson, guess how many times he advocated 
     raising it when his party controlled Congress? Zero. Nada. 
     Zip. Nil.
       In 1995 and the first part of 1996, by way of contrast, 
     Clinton has publicly thumped the tub for a minimum-wage hike 
     47 times by Samuelson's count. The economics of the argument 
     hasn't changed, but the politics has. The American public 
     overwhelmingly believes that raising the minimum wage is a 
     good idea. So, for politicians, the issue is a no-brainer.
       What likely accounts for the strong public appeal for 
     raising the wage is that it seems like a decent thing to do. 
     Maybe some of us remember working for the minimum and think 
     back that it would have been nice to have a dollar more an 
     hour. Families can't live on $4.25 an hour these days, we 
     think. (But they'd get by even less easily without that job.)
       Samuelson cites two myths he says are responsible for the 
     public's support for boosting the wage. The fact that some of 
     us remember earning it is a clue to one: that there's a 
     permanent group of workers stuck at the minimum. Not so. The 
     vast majority of minimum-wage workers quickly move up.
       The other myth is that many minimum-wage workers are heads 
     of households. In fact, says Samuelson, the data show that 
     single parents make up only 3 percent of minimum-wage 
     workers. More often than not, the typical minimum-wage worker 
     is a teenager or young adult from a middle-class family or 
     the second part-time jobholder in a two-income family.
       Will raising the minimum cause great economic harm? Hardly. 
     The loss of 200,000 jobs would cause hardly a ripple. Over 
     time, they'd likely be replaced. But is it good policy? Not 
     if the intent is to help poor people, who stand to lose some 
     economic opportunities as a result.
       A better way to help the working poor would be to make tax 
     deductible the 6.2 percent of their wages they now are 
     required to pay in payroll taxes to fund Social Security. It 
     wouldn't add to the cost of labor, but would, according to 
     the tax reform commission chaired by former Congressman Jack 
     Kemp, give a boost to the incomes of 100 million U.S. workers 
     and boost the GDP by half a percentage point. It also would 
     end the unsavory practice of taxing a tax.
       But good sense, economic or otherwise, is not what's 
     driving the minimum-wage push. Political capital is what's at 
     stake, and so long as it involves spending or jeopardizing 
     other people's money it comes cheap.

  Mr. KYL. Mr. President, there are far too many people in Washington 
who like to play fast and loose with other people's money. They are not 
content just to tax away a large share of people's hard-earned incomes 
to spend on government-knows-best programs. They even want to tell 
people how they have to spend the money they have left over after 
taxes.
  They trust the American people so little that they feel they have to 
dictate what benefits they can receive and even what wages they can 
work for. Combined with high taxes, it is a prescription for the kind 
of anemic economic growth and stagnating wages that have been plaguing 
the Nation. It is like rearranging the deck chairs on the Titanic. The 
economy is still in peril.
  Mr. President, I contend that the way to get people off of minimum 
wage is to ensure that the economy is healthy and growing and providing 
people with the opportunity to earn a better living for themselves and 
their families.
  It is no coincidence that slow economic growth and stagnating wages 
have predominated since the low-tax policies of the 1980's were 
abandoned in favor of the high-tax policies of the 1990's. As noted in 
a recent report by the Institute for Policy Innovation, the economy has 
grown by about 2.2 percent on average so far this decade. By 
comparison, it grew at an average annual rate of 3.3 percent during the 
Reagan years.
  Had the economy done as well during the Bush and Clinton 
administrations as it did under President Reagan, the economy would be 
$2.6 trillion larger than it is today. That would have added $21,000 to 
the average family's income between 1990 and 1996. Annual revenues to 
the Treasury would have been $90 billion greater, an amount that would 
cut this year's budget deficit by more than half.
  So how do we promote the kind of growth that helped make everyone 
better off during the Reagan years? Cut taxes. As President John F. 
Kennedy once said, ``An economy hampered with high tax rates will never 
produce enough revenue to balance the budget, just as it will never 
produce enough output and enough jobs.''
  The tax relief provisions in this bill, H.R. 3448, are a modest first 
step in the right direction. For example, we extend the tax exclusion 
for employer-provided educational assistance, something that will help 
people improve themselves and get ahead.
  We extend the work opportunity credit and increase expensing for 
small businesses to encourage them to invest in new property and create 
new jobs. We extend the research and experimentation tax credit, and 
permit non-working spouses the same opportunity to save in individual 
retirement accounts.
  These and other changes in the law relating to S corporations and 
pension law are good steps toward making tax policy more conducive to 
economic growth and opportunity. I would add, however, that they are 
only modest first steps. They are no substitute for the across-the-
board income tax rate reduction that many of us think would do far more 
good for the economy.
  The tax changes we are considering here are good and sound. If we had 
the opportunity to vote on the merits, I would support them. However, 
these modest changes are not sufficient to justify the high cost of the 
minimum wage increase being proposed --a cost that will be borne by 
employees as much as employers.
  Mr. KOHL. Mr. President, I rise in support of the Kennedy amendment 
to raise the minimum wage and against the Bond amendment, which would 
retain the status quo and deny an increase for millions of low wage 
workers.
  Mr. President, we have just returned from the Independence Day 
recess. I always value the time spent in Wisconsin during breaks in the 
Senate schedule. Not only does it mean going home, it means spending 
time with people who work hard and work together by compromising in 
their daily lives.

[[Page S7456]]

  Hard-working families struggling to make it to the next pay-check do 
not have the luxury to shirk responsibility or skip their work. They 
must go to work every day and get the job done. That's why it shouldn't 
be a surprise when the people of this country grow more and more 
pessimistic, even angry, because Congress has yet to get the job done 
and pass meaningful legislation.
  In the attempt to score political points and out-maneuver the other 
party, legislation that is critical to working families has languished 
or been killed.
  Instead of increasing investments in education and job training to 
provide the foundation for a stronger economy, these programs have been 
cut. The earned income tax credit, which helps working poor families 
stay afloat, has been targeted for huge reductions. A bipartisan health 
care reform bill that passed the Senate by a 100-0 vote has become 
stalled and may die because some want to poison the modest reforms with 
controversial provisions. Bipartisan campaign finance reform 
legislation has been killed. And balanced budget legislation, which 
everyone agrees is needed to end deficit spending and shore up the 
economy for our children's future, is now also on a partisan track to 
failure.
  Despite the odds that partisan politics may win the day, I remain 
hopeful that moderate proposals can still be enacted during this 
Congress. One of the most important bipartisan and moderate 
intitiatives is the minimum wage amendment offered by Senator Kennedy. 
This amendment closely resembles the wage increase passed by the House 
of Representatives and excludes controversial provisions rejected by a 
majority of House Members.
  The Kennedy amendment would allow some of the hardest working 
American's to make a better life for themselves and their families. It 
would increase the minimum wage from the current level of $4.25 to 
$5.15 over 2 years. Granting a 90-cent wage increase over 2 years will 
help these families keep up with inflation and stay at or above the 
poverty level. Over 200,000 workers and their families in my State of 
Wisconsin would benefit from the increase.

  This amendment would be coupled with a series of tax breaks for small 
businesses to help offset the potential effects of the wage increase. I 
remain concerned about the challenges facing small businesses even 
though many prominent economists argue that the modest increase 
proposed would not significantly jeopardize employment or business 
opportunities. So I am pleased that these tax breaks will help ensure 
that any impact is minimal.
  The Bond amendment is a stark contrast to this reasonable minimum 
wage proposal. Instead of starting the 2-year increase this year, the 
Bond amendment would delay for 6 months the much needed raise. Further, 
the Bond amendment holds down millions of American workers who are 
employed at small businesses or who work in the restaurant industry by 
carving out huge exclusions to the increase.
  Anyone who has been on the job for less than 6 months would get no 
increase. At least 4 million workers would be affected by this 
permanent submimimum wage. Under Senator Bond's proposal, another 2 
million workers would be denied any increase because they work for 
tips. The complete exemption provided for companies that earn less than 
$500,000 annually would result in workers at two-thirds of all small 
businesses being left behind.
  Supporters of these exclusions claim that the minimum wage increase 
would devast small businesses. Even though it is arguable that 
significant negative effects would result from a modest minimum wage 
increase, the proposal before us would provide 34 specific tax breaks 
for small businesses.
  History also argues against this claim. Since the last minimum wage 
increase, far from being devasted, small businesses have helped spur 
economic growth and bring our Nation out of recession. Under the Bond 
amendment, scores of small businesses would be rewarded with generous 
tax breaks even though they would be exempted from raising the wages of 
their lowest paid workers.
  Opponents of the minimum wage have also been quick to assert that 
minimum wage earners are mainly teenagers from middle class families. 
Again, the facts tell a different story. Two-thirds of those paid the 
minimum wage are adults and a third of those are the sole household 
wage earners for their families. If granted the minimum wage increase 
without exclusions, over 2.3 million children from poor and near poor 
families would benefit.
  Mr. President, recent reports on the economy continue to show healthy 
growth and provide optimistic prospects for business. But although 
unemployment is down and millions of jobs have been created over the 
past 3 years, the average American worker remains uneasy.
  With the strong economic growth, corporate CEO's have been rewarded 
with sky-high salaries and impressive benefits. In contrast, real wages 
have become stagnant for many Americans and their standard of living 
has decreased over the years. Perhaps more disturbing, working families 
have seen their health benefits eroded and opportunities for child care 
diminished.
  The Congress cannot create complete equity in the work force and 
resolve all of the challenges of working families. That is not 
realistic and ignores the fundamentals of our economy. But there are 
actions Congress can take that will make a real difference.
  We can help ensure health security by reforming the health insurance 
market; we can provide child care and education opportunities by 
balancing Federal investments in these programs; and I still believe we 
can balance the Federal budget in a fair manner. Today we can and must 
help the lowest wage workers by passing a long-over due minimum wage 
increase. The House of Represenatives has already done so, it is now 
time for the Senate to act.
  Mr. President, 5 years have elapsed since the minimum wage was 
increased and the real value of the wage has fallen by nearly 50 cents 
over that period. Furthermore, the real value of the minimum wage is 29 
percent lower than it was in 1979. Without action, the value of the 
minimum wage will plummet to a 40-year low by 1997. Do people really 
believe that working at $4.25 an hour, which amounts to $8,500 a year, 
is a fair and livable wage?
  To deny America's lowest paid workers a sustaining wage during a time 
of substantial budget cuts simply represents misguided priorities. This 
is precisely the time when we need to reward the people who work. If we 
are going to cut funding for education and training and reform welfare, 
we must provide individuals with the economic tools necessary to get 
ahead.
  The last minimum wage increase under President Bush enjoyed broad 
bipartisan support. I urge my colleagues in the Senate to undertake a 
similar bipartisan effort today and demonstrate their commitment to 
working families by restoring the fair value of the minimum wage.
  The Senate is faced with a critical choice that will determine 
whether or not the minimum wage increase becomes a reality this year. 
One amendment would provide a modest minimum wage increase to the 
working poor; the other would grant an increase to some workers, but 
leave millions of Americans with stagnant wages and result in a certain 
presidential veto. Let us do the right thing by passing the Kennedy 
amendment and rejecting the Bond amendment.
  Mr. PRESSLER. Mr. President, I rise in support of the amendment 
offered by the chairman and ranking member of the Finance Committee--
the so-called managers' amendment. I just want to take a moment to 
comment on a few of the provisions of the amendment that are very 
important to churches and ministers in my home State of South Dakota.
  Specifically, there are three provisions in the managers' amendment 
that are taken from S. 881, the Church Retirement Benefits 
Simplification Act, introduced by friends and colleagues from Iowa and 
Arkansas, Senators Grassley and Pryor. This bill already has 34 
cosponsors. One of the provisions in S. 881 was included in the House-
passed version of the underlying legislation we are considering today. 
This provision would respond to the Internal Revenue Service retreat 
from its four-decade-old policy of not taxing parsonage allowances paid 
to retired clergy. The provision would clarify

[[Page S7457]]

that all retirement benefits of clergy are not subject to self-
employment taxes.
  The three additional provisions of S. 881 that are included in the 
managers' amendment address the churches' concerns regarding the 
treatment of chaplains and foreign missionaries and the application of 
nondiscrimination rules designed for secular employers to church 
pension plans.
  First, the manager's amendment would clarify that chaplains may 
continue to participate in denominational pension plans. Under current 
law, chaplains who work outside the church, serving in hospitals, 
jails, and other secular organizations, are not expressly allowed to 
participate in their denomination's pension plan. Often, chaplains may 
leave their church to work in a secular organization for only a brief 
period of time, and it makes little sense for Congress to force those 
chaplains to participate in the secular pension plan instead of the 
denominational one. The managers' amendment simply would clarify that 
chaplains may participate in their denomination's plan without 
inadvertently violating pension coverage and related rules.
  Second, the managers' amendment would facilitate the ability of 
foreign missionaries to participate in their denominational pension 
plan. This amendment would promote sound retirement policy while also 
benefiting the foreign missionaries who are America's humanitarian 
emissaries abroad.
  Finally, the managers' amendment would authorize the Secretary to 
develop a safe harbor from the nondiscrimination rules for those church 
plans that were left out when Congress exempted most church plans from 
the same nondiscrimination rules. Although the IRS has issued a self-
imposed moratorium on enforcement of these nondiscrimination rules for 
church plans, that moratorium ends soon. This amendment would give the 
Secretary of the Treasury the authority to develop a safe harbor plan 
for the pension plans of the Catholic dioceses, the Episcopalian 
Church, and the Presbyterian Church. These churches simply do not have 
the infrastructure to prove compliance with the nondiscrimination rules 
which apply to secular employers.
  Again, I want to commend the two managers--Chairman Roth and Senator 
Moynihan--for their assistance in addressing the concerns of the 
churches in this legislation. Thanks to their leadership, we can 
correct and clarify the laws to ensure that they not unduly burden 
church retirement plans and the clergy and lay workers who participate 
in them.
  Mr. CRAIG. Mr. President, I rise in support of the amendment to H.R. 
3448 offered by the chairman of the Small Business Committee, Senator 
Bond. I also support the Finance Committee's amendment to the tax title 
of that bill, which already has been adopted.
  For once, with the inclusion of these amendments in H.R. 3448, 
Congress would be looking at an issue in context and taking in the big 
picture. Both amendments are necessary to make this an acceptable bill, 
on balance.
  This bill is supposed to be named the ``Small Business Job Protection 
Act of 1996.''
  Title I, the tax title, is consistent with that spirit. It would make 
the Tax Code a little fairer, improve economic and employment 
opportunities, and provide some necessary tax relief.
  However, unless the Senate adopts the Bond amendment as well, this 
bill will not be worthy of its name. It will not protect small 
business. And it will hurt the low-wage breadwinners it is supposed to 
help.
  I commend Senator Bond and Senator Roth for the work they have done 
on their amendments.
  All too often, past Congresses have taken a perceived problem; put it 
under a microscope; and tried to address it with a one-size-fits-all 
Federal mandate. The result often has been Government by anecdote. 
Unintended consequences and innocent bystanders have not always been 
taken into account in the rush to adopt a feel-good solution.
  That risk of unintended consequences is definitely present in the 
case of proposals to increase the Federal minimum wage.
  We feel for those Americans who are working hard at making ends meet. 
It is easy and it is tempting to look at a $4.25 an hour minimum wage 
and say, let's just mandate an increase in that wage. But that would be 
the wrong answer.
  Standing alone, an arbitrary increase in the minimum wage destroys 
jobs for the very persons it is meant to help--the working poor and 
entry-level employees.
  Common sense, the laws of economics, and experience all tell us this. 
There is no dispute over this fact, except from some inside the 
Washington, DC, beltway and from some academicians with a political 
agenda.
  We've all heard the numbers. The commonly accepted figure is that, an 
arbitrary, stand-alone increase in the minimum wage from $4.25 an hour 
to $5.15--a 21-percent increase--would result in the loss of 621,000 
jobs. In Idaho, it would destroy 3,200 jobs.
  Some have suggested that the economic impact of such an increase is 
negligible. But it's not negligible for each one of those 621,000 
Americans--or possibly more--who would lose their jobs as a result. In 
many cases, the job lost would be the most important one that person 
will ever have--his or her first job.
  The Bond Amendment takes a fair and balanced approach that would 
minimize the harm that would come from a one-size-fits-all, federally 
mandated increase in the minimum wage. It would treat small employers 
fairly and would be good for those entry-level workers most in need of 
making it to the first rung on the ladder of economic opportunity.
  Unlike the amendment defeated in the House, the small business 
exemption in the Bond Amendment would apply only to the minimum wage 
increase in this bill.
  Mr. President, most Senators were serving in Congress in 1989. We 
remember what happened when we finally voted for a compromise minimum 
wage bill then. Everyone--if you read the Record, you will see 
everyone--thought and said there was a small business exemption in that 
bill for every small business with gross receipts of less than 
$500,000. That bill would not have passed in 1989 without that $500,000 
exemption. Everyone understood that the 1989 compromise would increase 
the small business threshold from $362,500 to $500,000 and broaden the 
exemption from some service and retail employers to all enterprises.
  But then, a bureaucrat at the Department of Labor noticed an apparent 
drafting error. The bill's language was convoluted and was interpreted 
as applying the Fair Labor Standards Act to virtually every individual 
employee in the country, regardless of the employer's receipts. I say 
it was an apparent drafting error because everyone thought there was a 
universal, $500,000 threshold, and I do not want to accuse anyone of 
lying to the Congress or the President back in 1989.
  Correcting this apparent drafting error had been a bipartisan effort 
up until recent weeks. Democrat Members in both the Senate and the 
House previously introduced bills to restore this intended exemption, 
in bills that would have gone farther than the Bond Amendment.
  In recent years, small businesses have created every net new job in 
this country. They take the risks of hiring and training new workers. 
They do not have the economies of scale of large businesses and suffer 
a disproportionate impact from Government regulation. They tend to be 
labor intensive. If you drive up the costs of their labor, they will be 
forced to create fewer jobs.
  In fact, 77 percent of the economists who responded to a survey of 
the American Economics Association agreed that, by itself, a higher 
mandated minimum wage would have a negative impact on employment.
  Obviously, that negative impact is going to fall on workers at or 
near the minimum wage, and especially those who are the least-skilled 
and need an entry-level job the most. The Bond amendment would 
safeguard the most vulnerable employees, those of the smallest 
businesses, against that impact.
  The Bond amendment also includes a realistic opportunity wage, or 
training wage.
  Realistically, the Federal minimum wage today already is a training 
wage. The average minimum wage worker is earning $6.06 an hour after 1 
year.

[[Page S7458]]

  In most work places, at every level of compensation, it is common for 
a new employee to be paid more after a few months. That is because 
there is almost always a learning curve, during which the employer is 
investing time, energy, and money in training and acclimating the new 
employee. The opportunity wage in this amendment simply reflects that 
reality of labor economics.
  Some critics have said the training wage would allow churning of 
employees--the firing of employees when they become eligible for the 
new, higher, minimum wage, and replacing them with new hires at the 
training wage. The Bond amendment makes that practice specifically 
illegal.
  Finally, the Bond amendment would provide employers--especially small 
businesses with limited resources and profit margins that are slim or 
nonexistent--with a more realistic effective date for this bill.
  Unlike the Federal Government, employers make reasonable projections 
of their revenues and then budget their resources to live within those 
means. To impose an immediate increase in costs of thousands of dollars 
would be a cruel jolt to many small, vulnerable employers. To do so 
retroactively, as would happen under the Kennedy amendment or the 
House-passed bill, would be unconscionable.
  The Bond amendment would provide the necessary flexibility to protect 
the workers and small businesses that would be most vulnerable to a 
one-size-fits all mandate. It is an important part of a two-step 
process to improve this bill. The second step is the inclusion of the 
tax provisions that would provide essential relief for small 
businesses, help them create jobs, and make the Tax Code a little 
fairer.
  I particularly want to express my support and appreciation for 
several of the tax provisions in title I of this bill, including:
  Increasing the availability of spousal individual retirement 
accounts; revising and extending the work opportunity tax credit, which 
will help employers hire and retain disadvantaged employees; restoring 
and extending the tax exclusion for employer-provided educational 
assistance; making S-corporation rules more flexible; providing fairer 
treatment for dues paid to agricultural or horticultural organizations; 
extending the research and experimentation tax credit; and improving 
depreciation and expensing rules for small businesses.
  I have supported these provisions consistently in the past and 
commend the Finance Committee for including them in this bill.
  There is at least one provision in the House-passed version of this 
bill that I hope the Senate would accept in conference: Restoring and 
making permanent the exclusion from FUTA--the Federal unemployment 
tax--for labor performed by a temporary, legal, immigrant agricultural 
worker. Such employees are ineligible for FUTA benefits that are 
financed by this tax. Therefore, this tax is imposed on employers for 
no reason, except that the previous exclusion simply expired.
  The Finance Committee provisions are valuable and beneficial. And I 
commend the chairman of the Small Business Committee for the thoughtful 
approach he has taken on his amendment. For me to vote for this bill, 
it would also be necessary for us to adopt the Bond amendment, which 
includes essential safeguards for employees and small businesses alike, 
and make this package complete.


                      higher education savings act

  Mr. McCONNELL. Mr. President, I am pleased that the Finance Committee 
has included my proposal to clarify both the tax treatment of the 
State-sponsored education savings plans and taxation of the 
beneficiary's investment. This measure will put an end to the tax 
uncertainty that has hampered the effectiveness of these State-
sponsored programs and help families who are trying to save for their 
children's higher education needs.
  I have been working on this proposal since I first introduced S. 1787 
in 1994. This Congress I have introduced S. 386 to provide families 
with an incentive to save for college and put an end to the tax 
uncertainty regarding the State-sponsored programs. This legislation 
will offer families an opportunity to save in order to keep pace with 
the spiraling cost of education. S. 386 has been endorsed by the 
National Association of State Treasurers, the National Association of 
State Scholarships and Grant Programs and the Kentucky Advocates for 
Higher Education.
  Mr. President, the facts are clear. Education costs are outpacing 
average wages, creating a barrier to attending college. Throughout the 
1980's education costs have risen by roughly double the rate of 
inflation. In 1983, tuition at the University of Kentucky and 
University of Louisville rocketed 16.7 percent followed by an 11.2-
percent increase in 1994. Since 1986, the cumulative percentage 
increase in tuition at Kentucky's two largest public universities rose 
an astounding 82.3 percent.
  Unfortunately, Kentucky's numbers are not extraordinary when compared 
to average tuition increases nationwide. Over the past 10 years, 
tuition rose by 81.7 percent for public universities and 95 percent for 
private schools compared to 46.6 percent increase in the median income 
for the same period. Which brings us to the real problem: education 
costs are quickly out-pacing income growth.
  As tuition costs continue to increase, so does the need for 
assistance. In 1990, over 56 percent of all students accepted some form 
of financial assistance and the statistic was even higher for minority 
students. It is increasingly common for students to study now and pay 
later. In fact, more students than ever are forced to bear additional 
loan costs in order to receive an education. In 1994, Federal education 
loan volume rose by 57 percent from the previous year. On top of that, 
students have increased the size of their loan burden by an average of 
28 percent. So not only are more students taking out loans, but they 
are taking out bigger loans as well.
  Over the past decade, many States have tried to respond to the 
concerns parents have raised regarding the affordability of a college 
education. Today, 11 States, including Kentucky, have responded by 
developing programs that will provide families with incentives to save 
over the long term to make college more affordable. Sixteen other 
States are quickly moving to put into place their own education savings 
plans.
  Currently, there are 500,000 participants investing over $2 billion 
in State-sponsored savings programs. In Kentucky, there are 2,700 
participants with $4 million invested in their children's future. Under 
this plan, participants don't have to be rich to benefit. In fact, the 
average monthly contribution in Kentucky is just $47.22. This proposal 
rewards those who are serious about their future and are committed to 
the education of their children.
  The language included in this bill is a variation of my original 
legislation. It provides tax-exempt status to qualified State tuition 
programs. In November 1994, the U.S. Appeals Court ruled that the 
Michigan Education Trust is not subject to Federal income tax. Although 
the circuit court was quite clear on this issue, it is my understanding 
that the IRS continued to look for a different avenue to tap this 
growing investment pool. This proposal clarifies legislatively the tax 
status of these programs and puts and end to the uncertainty and 
constant threat posed by the IRS. I am told by Kentucky's program 
administrators that this tax clarification is their No. 1 priority and 
vital to the continued existence of the program.
  This legislation will also clarify the tax treatment of the 
investment itself. As proposed in the recent Treasury regulations, the 
child would be taxed on the earnings buildup at the time of 
distribution. While my original legislation proposed the inside buildup 
be fully tax exempt, I believe that this clarification is a significant 
reform and consistent with the limits of this bill. I want to assure 
every one of my colleagues that I will reintroduce legislation and 
continue my efforts to make the inside buildup in this investment tax 
free. Nonetheless, this proposal will be a tax cut for Kentucky 
participants since they have been forced to pay taxes annually to avoid 
possible penalties, while the IRS has been considering the tax 
treatment of this investment.
  This legislation is not a funding cure but is a serious effort to 
encourage long-term savings, by eliminating the tax disincentive to do 
so. Aside from

[[Page S7459]]

limited assistance through bond programs, nothing has been done to 
encourage savings or decrease borrowing. I believe it is widely agreed 
that it is in our best interest as a nation to maintain a quality 
education system for everyone. We need to make a decision, however, on 
how we will spend our limited resources to ensure that both access and 
quality are maintained.
  Before I close, I would like to take a moment and commend Senators 
Roth, Graham, Shelby, and Breaux for their hard work and support of 
this legislation. I appreciate their interest and look forward to 
working with them in the future to make these investments tax exempt.


                         Small Fishing Vessels

  Mr. KERRY. Mr. President, for almost 8 years hard-working owners of 
fishing vessels in New Bedford, MA have been subject to an Internal 
Revenue Service ruling that would result in approximately $11 million 
in penalties. This situation arises from an IRS misinterpretation of 
Tax Code provisions as they applied to crew members on small fishing 
vessels. The IRS's interpretation and assessment is potentially 
devastating to the fishing families in southeastern Massachusetts--a 
region already struggling with the departure of the textile industry 
and the demise of the fishing industry. I am pleased that the managers 
amendment to H.R. 3448 includes a section clarifying the application of 
this disputed provision and making the original intention of the 
Congress clear with respect to it.
  I have worked on this issue for many years along with the senior 
Senator from Massachusetts as well as colleagues in the other body, 
especially Congressman Barney Frank, Congressman Gerry Studds and 
Congressman Richard Neal.
  Mr. President, today the Senate is providing relief for four fishing 
vessels in New Bedford--F/V Edgartown, F/V Nordic Pride, F/V Lady J, F/
V Seel--by rendering moot a court action against them. Central to the 
case is the question of whether crewmembers on small fishing vessels 
are considered self-employed or employees for tax purposes. The pay of 
employees is subject to withholding of Federal income tax while payment 
to persons who are self-employed is not subject to withholding.
  Life on the seas requires fishermen to be ruggedly independent 
individuals. Fishing boat operations reflect this independence in that 
they are fundamentally small business operations with crews that 
typically vary from trip to trip, with each crewmember acting as a free 
agent. Recognizing this unique arrangement on fishing vessels, Congress 
amended the Tax Code in 1976 to clarify the employment status of 
crewmembers as self-employed and required the self-employed crewmembers 
to be compensated solely with a share of the catch.
  It is common practice in fishing communities around the country to 
provide a small cash payment called a ``pers'' to the cook, first mate 
and engineer in recognition of additional duties they perform at sea. 
These pers represent only 1 to 5 percent of the total compensation and 
amount to approximately $500 annually based on a $30,000 income.
  In 1977, the IRS issued Ruling 77-102 which stated that a pers 
payment would subject the entire salary of the pers recipient to 
withholding. In response, the industry initiated a sliding scale per 
that ranged from $24.50 to $25.50 depending on the catch. The IRS did 
not question this practice until 1988 when the Service suddenly issued 
an unexpected interpretation of the pers payment and ruled 
retroactively that the entire salaries of crewmembers receiving pers 
were subject to withholding. The IRS ruling means that much of the New 
Bedford fleet does not qualify for the small fishing vessel treatment 
on withholding and therefore each boat owner owed the IRS large amounts 
in back withholding for the fishermen who worked on them. As a result, 
IRS placed liens on property and is poised to begin enforced 
collections from the boat owners which will be devastating to the New 
Bedford fishing industry as it struggles to survive until the 
groundfish stocks recover.
  This bill will permit the pers payments--which are essentially 
calculated as a share of the catch--without jeopardizing the self-
employment status of crewmembers. Let me emphasize, Mr. President, that 
the boat owners believed they complied with the new tax laws and 
regulations, and in fact they did comply with the law as Congress 
intended it to be applied to small fishing vessels. The vessel owners 
paid the crew the amounts the IRS now claims should have been withheld, 
and the crewmembers, as contractors, were individually responsible for 
paying taxes due on those payments. To assess these boat owners now 
would be grossly unfair and will have the effect of sinking the New 
Bedford fleet.
  Those of us trying to remedy this situation have been working for a 
solution for 7 years. We have appealed to the Treasury Department and 
the Internal Revenue Service, and introduced legislation that was 
vetoed twice by President Bush. Today, we are working against the clock 
as the Court of Appeals will soon hear the vessel owners appeal if this 
provision of H.R. 3448 is not enacted into law.
  Mr. President, this has been a long and difficult struggle to provide 
relief for the fishing families of New Bedford. I am pleased we are on 
the cusp of victory. Until the bill is signed by President Clinton, I 
will continue to fight for these hard-working families in southeastern 
Massachusetts.
  Mr. SPECTER. Mr. President, I am voting in favor of increasing the 
minimum wage because there has been no increase since 1989 while cost 
of living adjustments have been provided to others.
  I am pleased to note that this bill, the Small Business Job 
Protection Act of 1996 provides benefits to small business which will 
offset their higher wage payments. Among important provisions to help 
small business, the bill as amended includes over $11 billion in tax 
incentives, such as tax incentives for employer-provided tuition aid, 
increased expensing limits for small business equipment purchases, 
pension simplification rules, and extension of expired tax credits for 
research and development, employment of certain targeted individuals, 
and the orphan-drug tax credit.
  With respect to the minimum wage provisions of this bill, while I 
have given serious consideration to the provision to exclude businesses 
with less than $500,000 in annual revenues, I have decided to vote 
against the Bond amendment because of the provision that delays the 
increased minimum wage for 6 months regardless of the age of the 
employee. That would allow too much opportunity for circumventing the 
law by discharging employees just short of the 6-month period and 
employing new people.
  I am voting against the Kennedy amendment because I believe the 
provisions of the underlying House bill provide a better balance with 
the longer waiting period of 90 days before the new minimum wage must 
be paid compared to only 30 days in the Kennedy amendment and because 
the House bill provides more equitable treatment for restaurant owners 
on the tip issue.
  In this statement, I am including, at the manager's request, an 
explanation for my amendment which will help small businesses in their 
efforts to operate defined benefit pension plans. This amendment will 
help small businesses in their efforts to comply with new stricter 
funding rules enacted as a part of the Uruguay Round Agreements Act 
[GATT]. It gives the Internal Revenue Service [IRS] the authority, 
under very limited circumstances, to waive the excise tax that is 
imposed on a company that fails to meet a liquidity requirement 
mandated under the new law.
  By way of background, at least two small Pennsylvania companies, 
Freedom Forge Corp. of Burnham and Erie Forge Corp. of Erie were not 
aware of the new liquidity requirements when they became effective less 
than 1 month after the GATT enabling bill was enacted. The bill had no 
transition rules that applied to the new liquidity requirements. I am 
advised that the Pension Benefit Guaranty Corporation, the Federal 
agency with jurisdiction, called companies proactively to inform them 
of the new liquidity requirements, but that these two Pennsylvania 
companies are among the only companies not to receive such counseling. 
Consequently, these companies were unable to prepare for their new 
obligations in a timely manner and, I am informed, had to increase 
their pension plan funding by approximately 1,500 percent.

  Once the companies became aware of the new law and the resulting 
dramatic

[[Page S7460]]

increase in pension obligations, I understand that they acted as 
quickly as possible to come into full compliance with the law and 
remain in compliance today. However, because they did not receive the 
same warning from the Pension Benefit Guaranty Corporation as other 
companies did, they are subject to a penalty excise tax for the first 
quarter in which they were not in compliance with the new law.
  Currently, the Internal Revenue Service has no statutory authority to 
waive the penalty excise taxes that apply in these instances, even 
where the contribution due the plan was due to reasonable cause and 
reasonable steps have been taken to remedy the liquidity shortfall. In 
the absence of a legislative remedy, these companies will be forced to 
pay penalties to the IRS because they did not immediately comply with a 
law they had no knowledge of, in spite of their proven best efforts to 
fund their pension plans once made aware of their new responsibilities 
under the law. While ignorance of the law generally is not an excuse, I 
believe, Mr. President, that where the Government actually notified and 
counseled companies, but not these, it is appropriate that the tax 
penalty be waived.
  Accordingly, my amendment that the distinguished managers of the bill 
included in their package of amendments would provide authority to the 
IRS to waive the excise tax in those cases where the shortfall was due 
to reasonable cause and reasonable steps were taken to remedy the 
liquidity shortfall. In consulting with the Pension Benefit Guaranty 
Corporation about this problem and a possible legislative solution, I 
am advised that the agency said that their primary interest is ensuring 
that pension plans have adequate funds to pay their benefits. The 
agency recognizes that some companies had difficulties complying with 
the new liquidity requirements due to a lack of transition rule. 
Therefore, I am advised that the agency has no objections to my 
amendment so long as it requires that reasonable steps have been taken 
to remedy the shortfall as a condition of the waiver, which my 
amendment provides.
  This change in law will enable Freedom Forge Corp., Erie Forge Corp. 
and any other company that may find itself in a similar circumstance to 
be treated with fairness. Without fair pension laws, small companies 
will be unlikely to undertake this substantial responsibility. As 
legislators, we should be encouraging small employers to provide a 
pension plan for their employees, not discouraging them. Therefore, I 
commend Chairman Roth for his understanding of pension policy and for 
including this important amendment in the managers' amendments package.
  I thank the Chair and yield the floor.
  Mr. HELMS. Mr. President, the Small Business Job Protection Act of 
1996 includes two essential and much-needed provisions that I've 
supported for years. Together, these provisions will extend for 3 years 
the tax credit for employer provided educational assistance to workers, 
and it will allow spouses to invest fully in tax-deferred individual 
retirement accounts even though they are not employed outside of their 
homes.
  Reauthorization of the employer provided education tax credit, 
codified at section 127 of the IRS Code, will enable American workers 
to provide for their families in a more substantial way. First 
authorized in 1978, this provision has helped more than 7 million 
working Americans to further their education and to acquire additional 
skills.
  Mr. President, earlier this year I introduced Senate Concurrent 
Resolution 57 to extend this critically needed tax provision. I was 
gratified and encouraged when this resolution was adopted. Now, it's 
time for the Senate to act on the commitment expressed in Senate 
Concurrent Resolution 57 and extend the credit through December 31, 
1997.
  Mr. President, this Congress approved a reauthorization of this tax 
credit in the Balanced Budget Act of 1995. Notwithstanding his rhetoric 
in support of education, the President vetoed the bill, and prevented 
the extension of this urgently needed education tax credit, while 
sowing uncertainty among the workers and employers who were 
understandably relying upon these tax-free benefits.
  This uncertainty is particularly acute among workers and employers in 
areas undergoing sweeping economic changes. In my State of North 
Carolina, thousands of textile workers have lost their jobs in recent 
years, while other industries have experienced phenomenal growth. 
Extension of this credit will help all workers by encouraging employers 
to provide tax-free education benefits to their employees, thereby 
benefiting employers by improving worker skills while benefiting their 
workers by reducing concerns about job security.
  Mr. President, perhaps the case for extending this credit was made 
most eloquently by two distinguished North Carolinians. Representative 
of employer concerns, Nan Keohane, president of Duke University in 
Durham, NC, wrote to me saying that:

       We at Duke believe it is important for our employees to 
     achieve their educational goals and to acquire the skills 
     they need to succeed in an increasingly complex society. The 
     ability to exclude education benefits from personal income 
     tax is obviously important to our own employees, and 
     particularly to those who otherwise could not afford the 
     educational costs that the tax on these benefits would 
     require.

  Typical of letters from workers who have written to me is one by Jeff 
Stanley, a fine young man who works for Motorola in Research Triangle 
Park. Jeff has been working toward a Bachelors Degree in Business 
Administration at North Carolina Wesleyan College; he is close to 
completing it. However, his employer-provided education benefits are, 
he says, ``taxed at approximately 40 percent'' and that ``[t]his extra 
expense is causing a financial hardship. I would very much like to 
complete my degree within the next year, but due to the extra expense 
of the taxation, I may have to delay the completion.''

  Passage of the Small Business Job Protection Act will ensure that 
Jeff Stanley can complete his education without those benefits being 
made subject to a 40-percent tax rate, the effect of which is to 
discourage pursuit of a life-long education goal. This time, I hope the 
President will permit this important provision to become law.
  Another provision of the bill proposes that spouses may invest fully 
in an individual retirement account. Current law prohibits these 
working spouses from investing more than $250 in an IRA. Yet, if the 
same spouse works outside the home, he or she is able to participate 
fully in IRA tax-deferred investments--to the tune of $2,000 per year.
  The Small Business Job Protection Act eliminates this double-standard 
and recognizes the value of those who labor in the home. In the 
process, it will benefit the estimated 18.6 million households with 
married couples. Many of those households include a parent who chooses 
to work at home, frequently sacrificing more lucrative careers for the 
more rewarding job of raising children. It's common sense that the tax 
code shouldn't discourage these parents from working in the home.
  Mr. President, the IRS Code is a testament to the big-spending 
leviathan known as the Federal Government. In addition to over-taxing 
American citizens, the Code contains countless irrational provisions 
which ought to be scrapped. It's too bad that politics caused this bill 
to be burdened with an unwise increase in the minimum wage; rammed down 
the throats of countless thousands of small businesses who will have to 
eliminate untold numbers of entry-level jobs that are so meaningful to 
young workers today.

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