[Congressional Record Volume 142, Number 128 (Tuesday, September 17, 1996)]
[Senate]
[Pages S10684-S10689]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mr. HARKIN:
  S. 2080. A bill to save taxpayer money by reducing the unnecessary 
increase in Pentagon spending in fiscal year 1997; to the Committee on 
Armed Services.


                  pentagon budget request legislation

 Mr. HARKIN. Mr. President, we must maintain a strong national 
defense. There can be no question about that. I believe part of that 
strength comes from wise use of taxpayer dollars. The $265.6 billion 
authorized by this Congress is $11.3 billion more than the Pentagon 
requested. I am offering this bill today to roll back this addon and 
restore the Pentagon's requested level. It directs the Secretary of 
Defense to

[[Page S10685]]

achieve this goal by making adjustments that do not jeopardize our 
military readiness or the quality of life of our military personnel.
  The Secretary of Defense should not have trouble finding areas to 
trim. This budget adds less than $1 billion for readiness and quality-
of-life issues. Too much of the rest is for gold-plated hardware and 
questionable weapons development.
  Some star wars items, like the space-based laser system at an 
additional $70 million, or the kinetic energy antisatellite program at 
an additional $75 million, are expensive, destabilizing, and probably 
won't work. Other items, like the Kiowa helicopter, at an additional 
$190 million have missions that can be filled by other weapons at less 
cost. In this era of tight budgets, when we are slashing other 
programs, I don't see how we can justify these unwise, unwanted, 
unnecessary and untimely expenditures.
  Mr. President, this simply defies common sense. The cold war is over.
  The proposed increase, by itself, is only slightly smaller than the 
combined defense budgets of North Korea, Iraq, Syria, Iran, and Cuba. I 
think the American taxpayers are owed an explanation of this excessive 
spending.
  I would like to know how my colleagues plan to pay for such 
extravagance in this time of constrained spending. This bill will 
either steal from parts of government that are already doing their part 
to reduce the deficit, or it will add billions of dollars to the 
deficit. We simply can't avoid one of these consequences.
  Mr. President, let me put the magnitude of this fiscal 
irresponsibility into perspective. The $11.3 billion bonus is almost 
equal to the budgets of the National Institutes of Health and the 
Transportation Department. It's about twice the budget of the Interior 
Department and the Environmental Protection Agency, and it's almost 
four times larger than the budget of the National Science Foundation. 
Furthermore, for this amount of money we could fund the Pell Grant 
Program for 2 years or we could fund the Head Start Program for over 
2\1/2\ years.
  To look at it in terms of my State of Iowa, this addon of $11.3 
billion is almost three times the budget for the entire State of Iowa. 
Iowans could fund their K-12 education system, some 500,000 pupils in 
about 380 school districts, for 5 years. At the current spending and 
enrollment levels, the $11.3 billion could fund Iowa State University 
for 94 years, the University of Iowa for 99 years, the University of 
Northern Iowa for 166 years, or all three together for 38 years.
  We simply can't justify this excessive spending, we shouldn't ask our 
constituents to fork over $11.3 billion for programs the Pentagon does 
not need or could safely delay.
  It's time for some fairness. It's time for some common sense. And 
fairness tells us that the Pentagon shouldn't be exempt from our 
efforts to balance the budget. Common sense dictates that we can't 
afford $11.3 billion in addons over what the Pentagon and the Joint 
Chiefs of Staff say we need to maintain a strong national defense. I 
urge my colleagues to join me in support of this commonsense bill to 
cut the deficit and put our priorities back in order.
                                 ______
                                 
      By Mr. HARKIN:
  S. 2081. A bill to limit Department of Defense payments to 
contractors for restructuring costs associated with business 
combinations; to the Committee on Armed Services.


                     corporate mergers legislation

 Mr. HARKIN Mr. President, I introduce a bill that will put a 
moratorium on taxpayer subsidies for mergers between defense 
contractors, and give the Government the tools to monitor these deals 
and recoup any overpayments.
  To quote Lawrence Korb, Assistant Secretary of Defense under 
President Reagan in a recent article in the Brookings Review, 
``Remember the $600 toilet seats and the $500 hammers that had 
taxpayers up in arms during the mid-1980s? Today's subsidized mergers 
are going to make them look like bargains.''
  Here is what some public interest groups say about the policy:
  The CATO Institute--``The costs associated with mergers should not be 
absorbed by federal taxpayers. This is a egregious example of 
unwarranted corporate welfare in our budget.''
  Taxpayers for Common Sense--``It's time for the Pentagon to drop this 
ridiculous `money for nothing' policy.''
  Project on Government Oversight--``The new policy is unneeded, 
establishes inappropriate government intervention in the economy, 
promotes layoffs of high-wage jobs, pays for excessive CEO salaries, 
and is likely to cost the government billions of dollars.''
  In 1993 then Undersecretary of Defense John Deutch made a major 
policy change with regard to Defense Department acquisition practices. 
His decision allowed the DOD to start subsidizing defense contractor 
mergers.
  The taxpayers have already paid $300 million to wealthy defense 
contractors and the GAO estimates that they will pay another $2 billion 
or more in the next few years.
  If Deutch's decision was a policy change, as I believe, then the 
proper procedures were not followed. The new policy was never printed 
in the Federal Register and there was no opportunity for public comment 
on it, so the contracts written under this policy may be invalid.
  If it was a clarification of policy, as the proponents claim, then 
the taxpayers may be liable for paying restructuring costs on mergers 
all the way back to the 1950's. The cost to American taxpayers could be 
staggering.
  In either case, the decision involves an interpretation of the 
Federal Acquisition Regulations [FAR] and may allow contractors for all 
Federal agencies and departments to collect such costs. Imagine 
Medicare paying restructuring costs for all Federal agencies and 
departments to collect such costs. Imagine Medicare paying 
restructuring costs for all major hospital mergers. This could add 
billions of taxpayers dollars to the total cost of this policy.
  Proponents claim the subsidies save taxpayers money, but the record 
on these savings is spotty at best. According GAO studies of two 
business combinations the measured savings are far less than the amount 
promised. In one case the GAO found that ``the net cost reduction 
certified by DOD represents less than 15 percent of the savings . . . 
projected to the DOD 2 years earlier when they sought support for the 
proposed partnership.''
  Moreover, the cost accounting is incomplete and there is no way for 
taxpayers to recoup the costs when the amount paid to contractors 
exceeds the actual benefit received. The current practice is to measure 
only costs to the Department of Defense when contractors merge and give 
thousands of hard-working Americans the boot. The costs associated with 
Government subsidized social services like worker retraining are not 
tallied. Neither are the costs associated with lost payroll tax 
revenue. My bill would fix these deficiencies.
  Although I believe this practice must stop, I realize that is too new 
for most to make an informed decision about. That is why I am offering 
this very moderate bill. It will merely put a 1-year moratorium on 
these payments so that the Comptroller General can give us the tools we 
need to take a close look at the policy and ensure that the taxpayers 
recoup any payments in excess of realized benefits. It will also allow 
us to have hearings on this far-reaching policy change.
  So, again Mr. President, this modest bill will give us the time and 
tools we need to thoroughly examine this policy. I urge my colleagues 
to support this common sense bill so that we can study this issue with 
all the care that it deserves.
                                 ______
                                 
      By Mr. DORGAN (for himself and Mr. Robb):
  S. 2082. A bill to amend title 18, United States Code, to eliminate 
good-time credits for prisoners serving a sentence for a crime of 
violence, and for other purposes; to the committee on the Judiciary.


                The 100 Percent Truth in Sentencing Act

 Mr. DORGAN. Mr. President, last Friday I spoke on the Senate 
floor about legislation that I am proposing to make Americans safer in 
their homes and communities. Today I am formally introducing that 
legislation, and I wanted to take a few moments to describe in further 
detail what my bill would do and why it is needed.
  All of us who are concerned about violent crime in this country know

[[Page S10686]]

that the causes of crime are complex and difficult. I certainly do not 
pretend to have all the answers. But there are some basic, commonsense 
steps we can take to reduce the amount of violent crime in this 
country--the first of which is to keep those people that we know are 
violent criminals off the streets.
  My bill, the 100 Percent Truth in Sentencing Act, will eliminate the 
award of good-time credits for violent offenders in the Federal prisons 
and require violent offenders to serve 100 percent of their sentences. 
This is not a punitive action against criminals; it is a preventive 
action against violent crime.
  Let me tell you why my bill will save lives and prevent violent 
crime. It does not take a genius to know who will commit the next 
crime--likely, it will be someone who already committed a crime. One-
third of all violent crime is committed by someone who is already know 
to the criminal justice system and is ``under supervision''--that is, 
out on the streets because of parole, probation, or pretrial release.
  This frightening statistic is not the result of actions by just a few 
hardened criminals. Rather, the majority of violent offenders will be 
rearrested for another crime within 3 years of their release. Fully 
one-third of all violent criminals released from prison will be 
rearrested for another violent crime within that timeframe.

  These statistics are well known and undisputed, yet more than 90 
percent of violent criminals are released early from prison. Back in 
1984, we acknowledged that early release leads to more violent crime 
and, as a result, we abolished parole in the Federal system. But our 
system continues to award ``good-time'' credits--essentially, time off 
for good behavior--to the most violent felons in the system. The reason 
is that good time credits are awarded automatically to almost every 
inmate. In the Federal prison system, every prisoner--regardless of how 
brutal their crime--receives 54 days of good time per year unless they 
violate significant prison rules.
  I could spend hours telling you about violent offenders who were 
released early from Federal prisons, but let me tell you about just one 
of them. Martin Link has a long history of brutal, violent crime. In 
1982, he grabbed a 15-year-old girl in an alley in south St. Louis, 
sodomized her, and tried to rape her. In 1983, he forced another young 
girl into his car, took her to East St. Louis, and raped her. Although 
he was sentenced to 20 years in Federal prison, he was released in 6 
years because of combined good time credits and parole. Soon afterward, 
he got a year's probation for soliciting sex from an undercover agent.
  The next year, in 1990, he stole a car, but was still on the streets 
in 1991 when he murdered 11-year-old Elissa Self-Braun while she was 
walking home from her schoolbus. The same month that he murdered 
Elissa, according to the St. Louis Post-Dispatch, Link robbed, 
sodomized, and tried to rape a woman he grabbed at a self-service 
laundry, snatched another woman's purse, tried to rape another woman at 
knifepoint, almost abducted an 8-year-old girl, and held up an ice 
cream shop. If Link had served his full sentence for an 
earlier abduction and rape, none of these crimes would have been 
committed and Elissa would be alive today.

  Link is now serving a sentence of life in prison without parole. But 
in my view, the death of little Elissa was completely preventable and 
inexcusable. We know that violent criminals often repeat their crimes. 
At a minimum, we must take steps to keep violent offenders behind bars 
for the full terms of their sentences.
  This bill is not my first attempt to end good time for violent 
offenders. In 1994, I offered an amendment to the Violent Crime Control 
and Law Enforcement Act of 1994 designed to eliminate good time for all 
violent offenders unless they exhibited ``exemplary'' behavior while in 
prison. My intent was that only those violent offenders who 
demonstrated that they were rehabilitated would be released from 
Federal prison before the end of their sentences.
  That amendment was accepted and is now law. Unfortunately, the 
Justice Department has interpreted that provision to mean that violent 
offenders will continue to receive automatic good time credits unless 
they break significant prison rules. This was not the intent of my 
amendment in 1994, and the bill I am now offering clarifies my 
position: violent offenders should remain in jail until they have 
completed their court-imposed sentences.
  Prison officials tell me that they rely on good time credits as a 
disciplinary tool. On a recent visit to a Federal prison, officials 
told my staff that Federal inmates are increasingly young, 
undisciplined, violent, and unpredictable. ``Without good time to use 
as an incentive to control inmates,'' one official confided, ``we would 
fear for the lives of our prison guards!''
  I am very sympathetic to the arguments they raise. It is the job of 
prison administrators to control inmate populations and ensure a safe, 
orderly prison atmosphere. I would not take unnecessary risks with that 
important goal. However, it is our job, as United States senators, to 
secure the safety of those who live outside the prison walls--law-
abiding citizens taking an evening stroll, or stopping at the ATM 
machine, or, like Elissa Self-Braun, walking to a school bus from our 
home. To argue that inmates are too dangerous to keep in jail is 
outrageous and unacceptable.

  I am also skeptical that good time is a necessary or effective 
disciplinary tool in most cases. Prison officials have a broad range of 
disciplinary tools at their disposal, including visitation and 
telephone privileges, recreation time, commissary privileges, and work 
opportunities. Most of these incentives provide an immediate reward, 
while the reward of good time credits is not realized for many months, 
and often years, after the desired behavior. I am not a psychologist, 
but it seems to me that young, impetuous criminals are more likely to 
appreciate an immediate, rather than a long delayed, reward.
  In fact, statistics compiled by the Office of Justice Statistics seem 
to support this theory. Over the last few years, the incidence of 
violent misconduct in federal prisons has declined by more than 30 
percent, even though prison officials no longer have parole as an 
incentive and the amount of allowable good time has decreased from as 
much as 120 days per year (prior to 1984) to 54 days.
  The bottom line is this: early release for violent offenders costs 
lives. Today, there are more than 100,000 inmates in nearly 90 federal 
prisons and in contract facilities across the country. About 20,000 of 
these inmates are serving time for a violent offense. If they are 
released early from prison, 7,200 will be re-arrested for a violent 
crime within 3 years of their release.
  My bill, the 100 Percent Truth In Sentencing Act, is the most 
straightforward, common sense approach that I have seen for putting 
violent criminals behind bars and keeping them there. Senator Robb 
already has agreed to join me in co-sponsoring this legislation, and I 
hope all my colleagues will do the same.
  Mr. President, I ask unanimous consent that the full text of the bill 
be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2082

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``100 Percent Truth in 
     Sentencing Act''.

     SEC. 2. ELIMINATION OF CREDIT TOWARD SERVICE OF SENTENCE FOR 
                   SATISFACTORY BEHAVIOR.

       Section 3624(b) of title 18, United States Code, is 
     amended--
       (1) by striking ``(1) A prisoner'' and inserting ``(1)(A) 
     Subject to subparagraph (B), a prisoner'';
       (2) by striking the second sentence; and
       (3) by adding at the end the following:
       ``(B) A prisoner who is serving a term of imprisonment of 
     more than 1 year for a crime of violence shall not be 
     eligible for credit toward the service of the prisoner's 
     sentence under subparagraph (A).''.
                                 ______
                                 
      By Mr. DeWINE:
  S. 2083. A bill to amend title 18, United States Code, to set forth 
the civil jurisdiction of the United States for crimes committed by 
persons accompanying the Armed Forces outside of the United States, and 
for other purposes; to the Committee on Armed Services.

[[Page S10687]]

             the military and civilian law coordination act

 Mr. DeWINE. Mr. President, I believe certain elements of the 
U.S. military justice system need to be reformed. For example, current 
conditions contain loopholes that allow military criminals to receive 
pay--even after conviction. They allow nonmilitary personnel residing 
on military bases who commit crimes to escape criminal prosecution. And 
they allow military personnel who have committed crimes to be 
discharged without their criminal records being included in the FBI's 
National Crime Information Center system.
  I believe we must close these loopholes.
  Mr. President, under current law, a soldier sentenced to and awaiting 
dishonorable discharge, remains on the taxpayer's payroll, unless 
otherwise ordered by the military court. While in military custody, 
that lawbreaker continues to collect a paycheck from the rest of tax-
paying America.
  Mr. President, this simply should not be the case, in the streets of 
Cleveland, Seattle, or Denver, when a criminal breaks the law, he is 
removed from those streets. When he is allowed to return to those 
streets, his time in jail will have cost him a few things. Of course, 
chief among these things is his loss of freedom for the period of 
confinement. But he will also not collect a paycheck while 
incarcerated. We do not pay and should not pay our prisoners for 
serving their time in jail.
  A Cincinnati man, convicted of rape, burglary, and assault by a 
military tribunal, later collected something on the order of $40,000, 
after taxes, for serving out his sentence. A Wright-Patterson Air Force 
Base airman, convicted of molesting a 4-year-old girl, has collected an 
average of $4,700 per month while serving out his sentence. Three years 
after his confession, he had received $148,616 from the U.S. taxpayers. 
He even received raises while behind bars.
  There are many such stories, Mr. President.
  This bill addresses that injustice to the taxpayer. This bill makes 
that law-breaker serve out the sentence he has earned--at his own 
expense. It is already enough of a burden that the taxpayer has to pay 
for the room and board of that prisoner during the sentence, after he 
or she already paid more than enough to train and keep that soldier.
  The loss of opportunity and earnings should be something the criminal 
pays for himself, the taxpayer should not pay for it. When that 
soldier breaks the law--and in doing so, breaks his agreement with the 
taxpayer--that should be the end of the taxpayer's responsibilities.

  Once that soldier decides he no longer wants to be a law-abiding 
citizen, he is on his own, financially and otherwise. Mr. President, 
again, we should not pay our criminals for serving out their sentences.
  My bill addresses another important gap in the law. Under current 
law, many illegal acts committed abroad by U.S. soldiers or 
accompanying civilians go unaddressed by the military courts. The 
prosecution of these crimes is left to the discretion of a military 
court, which often decides to do no more than hand down a dishonorable 
discharge, unleashing that criminal on civilian society. This should 
not be the case. Mr. President, there should be no geographical limits 
to the law.
  This bill guarantees that a soldier or accompanying civilian abroad, 
committing an illegal act punishable under the United States Code by 
more than a year's imprisonment, will be handed over to civilian 
authorities for prosecution under the United States Code. The military 
should not be able to rid itself of its criminals at the expense of law 
abiding civilians. These criminals belong behind bars, not just out of 
the service and back in our streets. This bill will keep them out of 
our streets.
  There is a final aspect of this bill intended to protect civilian 
Americans from the actions of enlisted criminals. This bill also 
mandates that when an enlisted criminal is discharged from the service, 
the military Secretary will turn over to the FBI all the criminal 
records of that soldier for inclusion in the FBI criminal records 
system. It also requires sex offenders who are discharged from the 
military to submit a DNA sample before discharge so that that sample 
can be included in the FBI's CODIS system.
  Again, Mr. President, this is another way to protect the tax-paying, 
law-abiding American from dishonorably discharged criminals. Under 
current law, the criminal histories of these military personnel do not 
become part of the National Crime Information Center database and the 
FBI's CODIS system. This bill will ensure that they do.
                                 ______
                                 
      By Mr. PRESSLER (for himself, Mr. Lott, Mr. Baucus, Mr. Hatch, 
        Mr. D'Amato, Mr. Nickles, Mr. Gorton, Mr. Hatfield, Mr. Burns 
        and Mrs. Murray):

  S. 2086. A bill to amend the Internal Revenue Code of 1986 to 
simplify certain rules relating to the taxation of U.S. business 
operating abroad, and for other purposes; to the Committee on Finance.


 The International Tax Simplification for American Competitiveness Act

 Mr. PRESSLER. Mr. President, I am pleased to introduce a bill 
today that would provide much-needed relief to American-owned companies 
that are struggling to compete in the world marketplace. This bill is 
an attempt to simplify the overly complex international tax rules. I 
wish to thank my fellow cosponsors for their support--Senators Lott, 
Baucus, Burns, D'Amato, Hatch, Hatfield, Gorton, Murray, and Nickles.
  America's economy is more and more linked to the success of our 
businesses in the international economy. That's not a surprise to any 
of us. As the economies of previously less-developed countries around 
the world begin to expand, and the economic boundaries between our 
countries become more blurred, it is increasingly important for our 
businesses to be able to operate abroad from their most competitive 
position. Restraining our own companies through redundant and 
unnecessary complexities in our own Tax Code dampens their ability to 
compete for foreign business. In the end, it only hurts our own 
economy.
  There are many factors that affect U.S. world competitiveness--
factors over which we have little control. I know our international 
trade negotiators labor hard to change those factors we can control, 
such as barriers to foreign markets and existing agreements designed to 
keep trade free and fair. This is an issue of importance to me. I have 
sought to open markets for many South Dakota products--wheat in Africa, 
beef in Asia, and pork products in the former Soviet Union.
  While we have had some successes in opening markets, barriers remain. 
And I intend to push for open and fair trade among all of our trading 
partners. However, we can do more than just open barriers. We can 
reform our tax code in a way that will ensure continued U.S. success in 
the world economy. If we miss this opportunity, we risk the erosion of 
U.S. international competitiveness as countries with simple, favorable 
tax treatment of businesses lure away American businesses.
  This is a risk that is very real. A recent report by the Financial 
Executives Research Foundation found some rather shocking declines in 
U.S. competitiveness. This report found that over the last three 
decades, the global economy has grown more rapidly than our own 
economy. This is due, in part, to the recovery of Japan and Europe from 
the aftermath of World War II, and as a consequence, the United States 
presence in global markets has become less prominent. Their findings 
comparing the first half of the 1990's with the 1960's found the U.S. 
share of world GDP has declined to 26 percent--from 40 percent; the 
U.S. share of cross-border investment has fallen to 25 percent--from 50 
percent; and the U.S. share of world exports has dropped to 12 
percent--from 17 percent. In 1960, 18 of the world's 20 largest 
corporations were headquartered in the U.S. Today, that number is a 
mere eight.
  There is a strong correlation between American corporate 
competitiveness overseas and the ability of those companies to continue 
to provide jobs at home. A 1991 Council of Economic Advisors Economic 
Report to the President explained:

       In most cases, if U.S. multinational corporations did not 
     establish affiliates abroad to produce for the local market, 
     they would be too distant to have an effective presence in 
     that market. In addition, companies from other countries 
     would either establish such

[[Page S10688]]

     facilities or increase exports to that market. In effect, it 
     is not really possible to sustain exports to such markets in 
     the long run. On a net basis, it is highly doubtful that U.S. 
     direct investment abroad reduces U.S. exports or displaces 
     U.S. jobs. Indeed, U.S. direct investment abroad stimulates 
     U.S. companies to be more competitive internationally, which 
     can generate U.S. exports and jobs. Equally important, 
     U.S. direct investment abroad allows U.S. firms to 
     allocate their resources more efficiently, thus creating 
     healthier domestic operations, which, in turn tend to 
     create jobs.

  Overseas operations are frequently necessary to reduce costs of 
production and transportation, and locating facilities abroad increases 
brand familiarity. Within the United States, export related jobs pay on 
average a significantly higher wage than non-export related jobs. All 
of these factors combine to strengthen the U.S. parent company and 
bolster our economy here at home.
  The compliance costs associated with filing a tax return for overseas 
business operations of a U.S.-based company are staggering. My state of 
South Dakota is home to the credit card headquarters of Citibank. In 
its printed form, the Federal income tax return form for Citibank 
stands over 9 feet high--taking tens of thousands of hours to complete. 
The compliance cost burden associated with the foreign source income 
taxation rules is disproportionate to the amount of tax raised by these 
sections. For example, a 1989 study by the University of Michigan 
Office of Tax Policy Research, quoted in recent Financial Executives 
Research Foundation report, states that 39.2 percent of Federal income 
tax costs are attributable to foreign source income, while foreign 
operations represent only 21 percent of assets, 24 percent of sales, 
and 18 percent of employment. And a 1993 survey of 17 large 
multinationals indicates an even higher percentage of Federal income 
tax compliance costs are attributable to foreign source income (51 
percent)--indicating that compliance costs associated with foreign 
source income amount to 8.5 percent of the Federal income tax collected 
from this source. In comparison, a European Commission report found 
that among European multinational corporations, there is no evidence 
that compliance costs are higher for foreign than domestic source 
income.
  The bill I am introducing today seeks to simplify and correct various 
areas in the Code that are unnecessarily restraining U.S. businesses. 
Some changes are areas in need of repair, and some changes are to take 
into consideration international business operations that exist today, 
but which were domestic-only or nonexistent businesses when the 1986 
tax reform laws were implemented.
  One of the most substantive and important changes included in the 
bill would repeal the so-called 10/50 foreign tax credit basket rules 
that force U.S. corporations to calculate separate foreign tax credit 
limitations for each of its foreign joint venture businesses--foreign 
business operations in which it holds at least 10 percent but no more 
than 50 percent of the stock. Along with creating administrative 
nightmares for U.S. companies that may have hundreds of such foreign 
joint venture operations, these rules impede the ability of U.S. 
companies to compete in foreign markets.
  Today, United States businesses find it necessary to operate in joint 
ventures overseas, particularly in emerging markets such as the 
People's Republic of China and the former Soviet Union. Such joint 
ventures are necessary often times because U.S. investors face 
significant local country legal and political obstacles to taking a 
controlling interest in foreign companies. This is particularly the 
case for telecommunications companies and other regulated businesses. 
While such joint ventures are thus necessary for U.S. companies to 
enter and compete in foreign markets, our current tax law acts to 
discourage such operations.
  Our bill would eliminate the needless administrative hassles of 
current law and put U.S.-backed joint ventures on equal footing with 
competitors from other countries by replacing the 10-50 separate 
foreign tax credit limitation. The proposal would provide for so-called 
look-through treatment. That is, income from such entities would be 
computed for purposes of the foreign tax credit limitation based on the 
underlying character of the income earned by such corporations, as is 
the case for income earned through controlled foreign corporations.

  Another important correction to current rules relates to Foreign 
Sales Corporation [FSC] treatment for software. Ten years ago we did 
not have the level of software exports that we do today, and because 
the tax laws have not kept up with the changes in the high-technology 
business world, software exports are currently discriminated against by 
our own Tax Code. This bill would provide a legislative modification to 
the FSC statute to provide the same tax benefits for licenses of 
computer software as are currently available for films, records, and 
tapes. The United States is currently the world leader in software 
development, employing approximately 400,000 people in high-paying 
software development and servicing jobs. Much of the growth experienced 
by this industry is due to increased exports. The denial of the 
benefits of the FSC rules to software sold overseas ultimately harms 
the U.S. economy by constructing an impediment to the competitiveness 
of U.S. manufactured software. If theses exports are not given FSC 
benefits, many of these jobs could eventually move to other countries. 
The potential loss of these jobs would hurt our economy. My bill 
corrects this inequity.
  The goal of the international tax simplification for American 
competitiveness bill is to give fair tax treatment to American 
companies who operate abroad. This bill is truly a technical correction 
and simplification bill designed to correct inequities in our Code and 
to help place U.S. companies on a level playing field with their 
foreign competitors. Without these corrections, American companies will 
lose ground vis-a-vis their foreign counterparts, which will weaken 
their ability to operate successfully at home and harm our Nation's 
economic potential. Americans are the most creative and competitive 
workers in the world, and releasing them from unnecessary constraints 
at home will help us maintain our economic lead in the world 
marketplace--guaranteeing quality, high-paying jobs at home and a 
stronger national economy.
 Mr. D'AMATO. Mr. President, today I am pleased to join my 
friend and colleague, Senator Pressler, as an original cosponsor of the 
International Tax Simplification for American Competitiveness Act. This 
important bill will begin the process of dismantling tax barriers that 
hinder American businesses who find themselves in an increasingly 
competitive global marketplace. Although American firms have succeeded 
to date in spite of the current complexity and unfairness of our 
international tax regime, the added costs imposed by our tax rules take 
their toll. We must move to identify and eliminate those harmful and 
unnecessary provisions that stand in the way of a continuing leadership 
role for American business in world markets.
  New York is home to many industries that are driven by global 
competition. Industries like the securities and banking industries, 
computer and other high technology firms, and countless other 
businesses in my State must have fair treatment at home in order to 
compete effectively abroad. For example, during the last decade the 
securities industry has been transformed from a largely domestic-
oriented industry to an industry in which U.S. and international 
financial institutions compete against each other in the principal 
capital markets around the world. U.S.-based securities firms are 
recognized leaders in their industry worldwide. Maintaining this 
position is important not only for these firms, but also for their U.S. 
employees and for their U.S. customers who benefit from the innovative 
products and services offered by U.S.-based securities firms.
  Unfortunately, Mr. President, U.S. tax law has failed to keep pace 
with the rapid changes in the world economy. The international 
provisions of the Internal Revenue Code were last substantially debated 
and revised in 1986. And in many cases, our foreign competitors operate 
under simpler, fairer, and more logical tax regimes. This mismatch 
between commercial reality and the U.S. Tax Code creates a structural 
bias against the international activities of U.S. companies. This 
cannot and should not be allowed to continue.

[[Page S10689]]

  The International Tax Simplification for American Competitiveness Act 
acknowledges and addresses a number of problems our tax laws create for 
American businesses facing increasing global competition. This bill 
represents an important step toward correcting complexities of the 
antideferral rules under subpart F, including their inappropriate 
application to active financing income of bona fide financial 
institutions and the current definition of investment in U.S. property, 
and excessive limitations on the use of foreign tax credits.
  Mr. President, the U.S. business community has had significant input 
in the development of this bill. This proposed legislation now will be 
evaluated and studied, and I welcome suggestions for its further 
improvement. It is my intention, as our analysis progresses, that we 
include other important issues not currently addressed in the bill, 
such as the appropriate allocation of interest expenses for foreign tax 
credit purposes, particularly for highly leveraged entities such as 
securities firms.
  I look forward to working with Senator Pressler on this important 
bill, and urge my colleagues on both sides to become 
cosponsors.
      Mr. BAUCUS. Mr. President, I am pleased to be a co-
     sponsor of the bipartisan ``International Tax Simplification 
     for American Competitiveness Act.''
  In 1997, Congress will take up tax reform. Discussions will range 
from replacing the current system to fixing what we have. Many 
Montanans ask me: How should we make taxes fairer for parents who are 
raising and educating their children, encourage our entrepreneurs to 
create and expand their businesses, and encourage all citizens to save?
  Our international tax provisions also need reform. The bill we 
introduce today is a placeholder to keep international tax reform on 
the legislative radar screen.
  As you can tell from the list of cosponsors, Mr. President, a number 
of Members have made contributions to the bill before us. Am I 
comfortable with every provision in the bill as written? No, I'm not. 
But I am comfortable every provision in the bill merits our 
consideration.
  The Finance Committee will take up tax reform next year. We will 
consider simplification of the international tax provisions in that 
context. I hope that the bill we introduce today will establish the 
parameters from which the Finance Committee addresses the need to 
simplify our international tax provisions. We will hear from a number 
of witnesses ranging from the business community to the Department of 
Treasury and, no doubt, the language before us will undergo change.
  We live in a global economy, Mr. President. Many businesses in 
Montana sell products directly or indirectly into that global economy. 
The international tax provisions should be simplified to make American 
companies competitive in the global economy while fairly taxing their 
profits.
  I look forward to working with the cosponsors of this bill and with 
the members of the Finance Committee and ultimately with all of my 
colleagues in restructuring and simplifying the Tax Code to benefit all 
of our citizens.
                                 ______
                                 
      By Mr. KERRY:
  S. 2087. A bill to direct the Secretary of the department in which 
the Coast Guard is operating to provide rescue diver training under the 
Coast Guard helicopter rescue swimming training program; to the 
Committee on Commerce, Science, and Transportation.


                 the rescue diver training act of 1996

  Mr. KERRY. Mr. President, today I am introducing the Rescue Diver 
Training Act of 1996. This bill would provide required Congressional 
authorization for the Coast Guard to expand its current use of Coast 
Guard divers to form a broader search and rescue mission application.
  I want to acknowledge my distinguished colleague from Massachusetts, 
Congressman Gerry Studds, who is the author of the Coast Guard Rescue 
Swimmer Training Program which this legislation amends and with whom I 
have worked in developing this legislation which he will introduce in 
the House.
  The Coast Guard has used its divers, trained at the Naval Diving 
School in Panama City, FL, only for salvage operations associated with 
Coast Guard aids to navigation and ice-breaking missions. This bill 
would authorize the Coast Guard to develop and implement a program to 
extend the use of these highly trained divers to search and rescue 
efforts.
  Under current search and rescue procedures, the Coast Guard will 
dispatch a helicopter when a ship is reported to be in distress or a 
marine accident is reported. When it is anticipated that a diver may be 
needed to assist in a rescue, the Coast Guard uses contract personnel 
who usually are volunteer policemen, firemen, or local State marine 
policemen who have had specialized diver training. A call will be made 
to secure the services of a diver, and the helicopter will wait to 
depart until the diver reaches its station, or it will fly to another 
location to pick up the diver--all before it flies to the rescue scene. 
This often results in the helicopter being delayed--even if only a few 
minutes--in reaching the rescue scene. Sometimes no diver is available 
within a reasonable period of time, in which case the helicopter 
proceeds to the scene with no diver on board.
  The program that this legislation will establish is designed both to 
speed this process in the realization that, in rescue situations, 
minutes and even seconds can mean life or death--especially in the 
waters off our northern coasts, and to provide a pool of divers within 
the Coast Guard. Where a qualified diver is available at a Coast Guard 
station, a rescue helicopter can load that diver and immediately depart 
for the rescue situation without any delay.
  A recent episode in the North Atlantic off Massachusetts amply 
illustrates how the program this legislation would establish could make 
a vital contribution. In the early hours of September 5, the fishing 
vessel Heather Lynne II carrying a crew of three capsized. The rescue 
helicopter was unable to bring a diver with it because none was 
available when the emergency call was received. After reaching the site 
of the capsized vessel, and determining that a diver was needed, the 
helicopter had to return to the mainland to pick up a diver. A 
considerable amount of time was lost in this process.
  The Coast Guard is charged with maintaining constant vigilance--to 
protect lives and property on our waterways and to enforce our 
maritime, immigration, antidrug, and other laws. In my judgment, it has 
performed capably and honorably throughout its history, and Americans 
should take both considerable pride and comfort in that knowledge.
  It is the Congress' responsibility to provide the Coast Guard with 
the resources it needs to perform its missions. This legislation will 
enhance the service's resources for its search and rescue mission, and 
increase its ability to save lives and property. All who use our 
waterways and oceans will be safer as a result.
  Mr. President, this legislation should be approved by the Congress as 
soon as possible--I hope it will be this year.
  I ask unanimous consent that the full text of the legislation be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2087

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Rescue Diver Training Act of 
     1996.''.

     SEC. 2. RESCUE DIVER TRAINING FOR SELECTED COAST GUARD 
                   PERSONNEL.

       The Secretary of the department in which the Coast Guard is 
     operating may provide rescue diver training to selected Coast 
     Guard personnel, under the helicopter rescue swimming program 
     conducted under section 9 of the Coast Guard Authorization 
     Act of 1984 (14 U.S.C. 88 note).

                          ____________________