[Congressional Record Volume 142, Number 130 (Thursday, September 19, 1996)]
[Senate]
[Pages S10955-S10965]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         MARITIME SECURITY ACT

  The Senate continued with the consideration of the bill.
  Mr. GRASSLEY. Mr. President, I rise to speak on the maritime bill 
that is before us. I, first of all, want to compliment the leadership 
of the Senate, plus the managers of this legislation, because we are 
bringing up maritime legislation in the daylight. The last time it was 
brought up it was the last item on an omnibus bill, a very big omnibus 
bill. It was at 9 o'clock at night. It was just before we were taking a 
week's recess. And it was to finance a subsidy for the maritime 
industry.
  For something that costly, for something that important, it seems to 
me it is not something that we should try to sneak through in the dark 
of night as the last piece of business because controversy that is 
connected with it might not be so welcomed to be answered. And, 
consequently, we just avoided all the necessary discussion we ought to 
have of very costly legislation.
  So here we are not doing it on a Friday. We are not doing it late in 
the evening. And I want to compliment the leadership for bringing up a 
very important new program, a very costly new program, at a time when 
it can be given some legitimate consideration.
  I also want to compliment our majority leader because he has been 
very forthright with me and very open with me in making sure that I had 
opportunities to present my point of view and to offer amendments. And 
it was not handled in the stealth manner that I have teased him about 
in the past as this bill was working its way out of committee. So I 
think again it is being done in an open and very forthright manner so 
we can have discussion on this.
  I see the leader has come in. And if he is here to do other business, 
I would be happy to yield to him for that sole purpose.
  Mr. LOTT. Mr. President, would the Senator yield just briefly?
  Mr. GRASSLEY. I will yield, not losing my right to the floor, yes.
  The PRESIDING OFFICER. The majority leader is recognized.
  Mr. LOTT. I want to thank the distinguished Senator from Iowa for his 
comments. I know that this is an issue that he has an interest in. We 
talked about it. And I had indicated to him earlier, even though we 
picked at each other for years on this subject, that this would 
certainly be something that he would be given notice on and that we 
would meet with him and talk to him about the substance, about what was 
within it and not within it, and to give him ample time to study it and 
prepare remarks and amendments.
  The only reason we are starting as late in the afternoon as we are is 
because I believe he had a conflict, and we wanted to try to 
accommodate him earlier. We are going to continue to proceed in that 
way. We want to make sure everybody has a chance to make their case and 
look at this legislation very carefully. I appreciate his attitude and 
his comments very much. I just wanted to thank him for that.
  Mr. GRASSLEY. While we are talking about accommodating me, from 8 to 
8:30 I have my monthly town meeting via television satellite with the 
people of Iowa. I would like to be able to keep that.
  Mr. LOTT. If the Senator would yield for me to respond to that, and 
for no other purposes, Mr. President, we certainly have other Senators 
that want to make statements and maybe debate on amendments. We will 
make sure that nothing happens during that time that would be a problem 
for him. I yield the floor.
  Mr. GRASSLEY. Mr. President, why are the taxpayers up in arms about 
Washington, DC? I think it is because they know how to spend their 
money better than Washington does. Americans are overtaxed. Ask any of 
them. Washington is also overweight. Today American workers work 
longer, they work harder, just so that Washington can spend more of 
their money. Taxpayers sacrifice more, I am sorry to say, so that 
Washington can spend more. That is just not right.
  I want to make it possible for taxpayers to keep more of their own 
money. Part of that is to get Congress then to stop spending so darn 
much of it in the first place. That is why whenever I see a grossly 
wasteful program, I feel obliged to squeeze the fat out of it. And I 
urge my colleagues to help in that effort.
  Maritime subsidies, the subject of this legislation, is one, one 
blatant example of how Washington wastes taxpayers' hard-earned money. 
It is a case study in how Washington turns common sense upside down. 
Instead of competition for lower costs, this program creates a monopoly 
that raises costs. Now we all expect competition to lower costs, and in 
most instances it does lower costs, but the program that is in this 
legislation creates a monopoly. And you know what happens most of the 
time when you have a monopoly? That ends up raising costs.
  Instead of supporting the national security, as this program purports 
to do, this program is becoming irrelevant to national security.
  This program delivers to the taxpayers higher costs and no national 
security benefit. Should that not be a clue that this program is 
wasteful? I know how the taxpayers would answer that question, Mr. 
President, but I am not sure yet how my 99 other colleagues will answer 
that question.
  There is an old way and a new way of doing business in Washington. 
The old way is to spend money to get reelected. Just tax the citizenry 
more to pay for that effort. The money goes to wealthy companies--we 
call that corporate welfare--and it goes to powerful unions. It becomes 
corporate and union welfare. They keep getting more money from the 
Treasury and then they have clout. They pay contributions to reelect 
friends; that way they do not have to be accountable for the taxpayers' 
money.
  A very ineffective program can exist and survive in Washington simply 
because it has so much clout. That is the political game in Washington. 
That is the political game that the grassroots of America, if people 
are candid with you, are sick and tired of. That is also how Washington 
wastes the taxpayers' money. To Washington, it is not waste. No, it is 
not waste. It is currency. It is the cost of getting reelected. That is 
the old way of doing business in Washington.
  The new way, beginning with this Congress, is to be frugal. The era 
of big Government is over. Even President Clinton said that in his 
State of the

[[Page S10956]]

Union Message. Of course, even big-spending liberals are saying that. 
We are a vote or two shy of the balanced budget constitutional 
amendment, and maybe then, eventually, of getting a balanced budget. 
The days of fiscal responsibility are nearly upon us.
  That is why, Mr. President, I view this vote on this bill, my 
amendments to this bill, as a test case for this Congress, a test 
between doing business the old way and doing business the new way. 
Taxpayers are tired of the burden we place on the taxpayers to feed the 
appetite of Washington bureaucracy. It is time for Washington to 
sacrifice for a change.
  Mr. President, I am pleased to have this opportunity to share my 
concerns about the bill before the Senate. That bill is H.R. 1350, the 
Maritime Security Act. I am pleased to have the opportunity to offer a 
few amendments to address these problems.
  Frankly, if these amendments pass, I intend to support the bill. When 
I talk about supporting and when I talk about amendments, because of my 
historical opposition to maritime legislation subsidies, the subsidies 
that are in the legislation, people might feel, well, I am gearing up 
to talk this bill to death and to not let it come to a vote. I have 
assured the leader that we are talking about minutes on amendments and 
some time for me to make opening statements. The legislative process in 
this body on this bill, even though maybe the outcome may not be to my 
liking, should work its will.
  Mr. President, my criticism of maritime subsidies has centered upon 
the fact that taxpayers and consumers have suffered under the burden of 
monopoly. Let me emphasize that monopoly, maritime rates, and also 
hidden back-door subsidies, all meant to materially and beneficially 
impact our national security, but all the time we have these monopoly 
rates and these hidden back-door subsidies, the sad commentary is that 
it only marginally assists. I want to emphasize, only marginally 
assists our national defense.
  This may be one reason that the Defense Department resisted so 
strongly having to pay for H.R. 1350, the Maritime Security Act. The 
Department of Defense resists paying for this cost, and yet it is being 
offered to us as necessary for our national security. Who is more 
concerned about the national security of the United States of America 
and our responsibilities in the world than, of course, the Department 
of Defense? Yet, let me say to you, this bill is being offered as 
necessary for our national security, yet the Department of Defense 
resists strongly having to pay for H.R. 1350.

  It seems these subsidies have far more to do with maritime union 
welfare and with corporate welfare and much less to do with the defense 
of our Nation. The maritime union welfare focus is clearly borne out by 
the 1993 maritime decision memo prepared by President Clinton's very 
own Cabinet officials. These Cabinet officials told President Clinton 
that the primary purpose of these maritime subsidies is to pay high-
priced wages and benefits of seafarers. This is not Republican Senator 
Chuck Grassley saying why we are having this bill before the Senate. 
This is the President's own Cabinet people saying that the primary 
purpose of these subsidies is to pay high-priced wages and benefits of 
seafarers.
  Mr. President, now, again, besides the President's own Cabinet, I am 
not alone in opposition to our current system of maritime subsidies. 
Prominent public interest in taxpayer organizations such as the 
Citizens Against Government Waste, the National Taxpayers Union, 
Citizens for a Sound Economy, and Americans for Tax Reform all oppose 
H.R. 1350, the Maritime Security Act. These are the people who issue 
report cards at election time. These are the people that your 
constituents--who expect you to be fiscally responsible--look at how 
they rate you, as fiscally responsible or fiscally irresponsible, who 
put out reports, and legitimately so, in the spirit of free speech and 
the process of representative government, to tell you or your 
constituents, are you pro-taxpayer or anti-taxpayer? These 
organizations oppose this legislation.
  I might add, however, that these groups do support the changes I 
seek, the amendments I offer. They support my amendments because this 
is clearly a taxpayer/good government issue. My amendments are also 
supported by a number of retired admirals.
  Now, for my colleagues on the floor who are so closely and 
legitimately associated with uniform military leadership of America, I 
want to remind you the very same admirals I am talking about are the 
ones who had previously been listed as supporters of this legislation 
but had been given some sparse information about it. Their comments are 
revealing.
  I refer, first of all, to a letter I received June 8, 1996, from Vice 
Adm. George P. Steele, U.S. Navy, retired. I will not read the entire 
letter, but he said in part:

       My signature is on a form submitted by the American 
     Security Council. I only signed that form to gain time for a 
     mature study of a then-pending bill which could have resulted 
     in subsidies for the VLCC's, and now that I see how my name 
     is being used, I much regret it. I was invited to help that 
     council formulate positions and I met with their 
     representative, and I have not heard from them since, but I 
     am not surprised that my opinions do not suit them.
       I do believe that this country needs and should pay for 
     only that part of the U.S. Merchant Marine that is configured 
     in type and numbers to support our authenticated defense 
     requirements. I am opposed to the continuation of Federal 
     programs mostly designed to line the pockets of unions, 
     owners, and shipbuilders unwilling to give up grossly 
     inefficient practices. We desperately need a fresh start, not 
     a continuing jobs program.

  Signed, ``George P. Steele, Vice Admiral, U.S. Navy, retired.''
  Then we have a Karl J. Bernstein. This is a handwritten note that I 
received in June 1996:

       Thank you for your letter of May 30, 1996. It was most 
     informative. Had I been aware of the facts, I certainly would 
     not have agreed to the Maritime Reform and Security Act of 
     1995, as recommended by the American Security Council. Their 
     pitch was the usual one: ``We need adequate sealift.'' Of 
     course, everyone will agree to that.

  Then I have a letter from Rear Adm. J. L. Abbott, retired, U.S. Navy, 
June 11, 1996:

       Of all the words, those quoted from a Defense Department 
     memo--

  That is the one that I said the Clinton Cabinet presented to the 
President to make a final choice on this legislation.
  I will start over:

       Of all the words, those quoted from a Defense Department 
     memo strike me as most compelling. The issue of two major 
     U.S.-flag container ship operators disposing of their U.S.-
     flag fleet is primarily an economic policy issue rather than 
     a national security issue and should be treated accordingly. 
     I certainly support additional hearings by both the Senate 
     Commerce Committee and the Senate Armed Services Committee to 
     probe exhaustively into the above-quoted statement in order 
     to find out where the truth lies.

  Mr. President, my staff has just advised me that when I was quoting 
from that last letter and I referred to the Defense Department memo, I 
said that was the very same memo the Cabinet people had given to the 
President for him to make his judgment on. I was in error. That memo 
referred to in Admiral Abbott's letter was the memo of former DOD 
Assistant Secretary Colin McMillen. That was Colin McMillen's quote I 
just gave.
  I could give a lot of letters. I want to finish with this one. These 
are Charles Minter's comments, a vice admiral, and this is penciled in 
at the top of a questionnaire that I sent to him asking him to fill 
out. He said:

       I greatly appreciate your bringing to my attention facts of 
     which I was previously unaware. I strongly support additional 
     hearings at which voices in opposition can be heard so that 
     legislation which best deals with our sealift capability to 
     be effected.

  I only bring these letters to my colleagues' attention because there 
is going to be a lot of weight put on by the proponents of this 
legislation in support of this legislation, saying that we have all 
these retired admirals who are saying this legislation is absolutely 
essential. I didn't know what sort of reaction I would get from these 
admirals. Obviously, all of them did not write back saying that they 
disagreed with their original position. But I would like to have my 
colleagues take with some caution this reference to their support, 
because we have a lot of these admirals who have questioned the use of 
their name.
  We also have Admirals Minter, Edward Martin, Victor Long, Theodore 
Almstedt, Robert Stroh, and I have already talked about Karl Bernstein.

[[Page S10957]]

 These folks particularly were on record that we needed further 
hearings on this bill. We worked very hard with the chairman of the 
Commerce Committee to get hearings, and he consented to have those 
hearings, and they never materialized because of legislative 
responsibilities. But the reason for further hearings was that, at the 
time this bill had a hearing on it, opponents asked for an opportunity 
to be heard and there was no opportunity for the opposition to be 
heard. So the committee record, obviously, is not complete, because you 
should have both a balance between those who support legislation and 
those against the legislation. But the leadership wanted to move this 
bill out of committee very rapidly. That caused me some concern a year 
ago. I wish it hadn't happened, but it does happen, and when those 
hurdles are crossed, we are where we are now. So, hopefully, some of 
these things could have been worked out in committee.
  Now, these admirals that I referred to also support my amendments to, 
first of all, restrict tax-supported seafarer war bonuses to those 
given regular military, so that there is a parity between our full-time 
military people who get war bonuses along with seafarers who get 
bonuses. I will show you where there is a terrible distortion and 
unfairness in that.
  Seafarers, unlike people in the military, reserve some right to serve 
when called on, and our full-time military people do not have that 
right. So I have an amendment dealing with that subject. The next one 
requires subsidized U.S. carriers to provide both U.S.-flag vessels and 
crews in meeting its military obligations and does not allow them to 
substitute foreign flags and foreign crews for any or all of their 
military sustainment voyage responsibilities.
  That amendment is a direct result of something Senator Lott said 
before he was floor leader, when this issue was up, as I referred to 
well over a year ago, when it was brought up late in the evening on a 
Friday before we were taking a recess. He said that we have to have 
this program because we have to make sure that American merchant 
mariners with American-flag ships are available to transport our 
materiel. This legislation does not require that. This legislation 
allows contracting for non-American-flag ships to do that.
  Fourth, we would provide for the Department of Defense, and other 
agencies, buy-America type laws that protect taxpayers from price 
gouging. Again, all of these admirals are listed by the American 
Security Council as supporters of this bill before us. Yet, when given 
some facts--and we mailed them the Rubin-Clinton maritime memo, which 
is a memo that I previously referred to that the Cabinet sent to the 
President to make his decision as to whether or not he should get 
behind this legislation. These admirals, particularly after reading the 
Rubin-Clinton maritime memo, agreed that my amendment should pass and 
that further hearings should have been held.
  I offer these as basic commonsense amendments. They are protaxpayer 
and prodefense amendments. If we continue to subsidize maritime in the 
name of national defense then the U.S.-flag carriers and seafarers must 
serve when called. It must not be optional. It is not optional for the 
people right now who are leaving the United States on their way to 
Kuwait because of problems in Iraq with Saddam Hussein, and the 
President defines those problems as needing another 5,000 troops on the 
ground in Kuwait. You saw those families on television last night with 
tears in their eyes but with an understanding that this is their job. 
And without question, they just pack up and go when called. The people 
operating our maritime fleets have an option.
  Of course, as with any taxpayer subsidies, taxpayer protections ought 
to be provided. So my amendments will do that.
  I want to highlight a few problems, and be more specific than I have 
with H.R. 1350.
  Problem No. 1: It is simple--maritime union and corporate welfare. If 
someone told you, Mr. President, that the Clinton administration was 
trying to mislead us, someone might respond, ``What's new?'' What would 
be new is after receiving clear evidence that this ploy involves a jobs 
program for the maritime union that the Republican-controlled Congress 
went along with it. And the Republican Congress, when I am done, is 
going to know that this is what this is. How people vote is their 
choice. But it is not the Clinton administration that is misleading us. 
We bear some responsibility on the majority side of the aisle for that. 
Earlier this year, Citizens Against Government Waste delivered to every 
Senate office such evidence. And it is this internal White House memo 
from Secretary of the Treasury, Robert Rubin, to President Clinton 
discussing maritime subsidies. This memo represents the deliberations 
and conclusions of the political heads of 16 different executive branch 
agencies--departments, and agencies. We have a memo from the 
President's own people to the President. I suggest that it was never 
intended that this would ever get into the public domain. This memo now 
shows that 15 of 16 agencies supported a deficit-neutral maritime 
subsidy option that--this is from the memo--``would meet the Department 
of Defense maximum military requirements.''
  There were three options in this memo. There was one of deficit 
neutral. That means, if you change your program, there is enough money 
someplace else in the budget to pay for it, or it is not going to cost 
any more than what is in the budget presently for that program. You 
have 15 out of 16 agencies. These are appointed by a Democratic 
President. They support a deficit-neutral option. Only the 
Transportation Secretary opposed this prodefense, taxpayer-friendly 
option because--again from the memo--``it provides less support than is 
sought by the industry and its supporters.'' Fifteen out of sixteen 
Democratic heads of agencies say we ought to take this option because 
it is deficit neutral, and it would still meet our military needs. You 
have 1 out of the 16, the Department of Transportation Secretary, who 
suggests that the other 15 ought to be ignored because their option 
provides less support than is sought by the industry and its 
supporters.
  Here is the President of the United States representing 269 million 
people, the only political office representing the entire Nation, who 
is given a memo by 15 of his advisers saying here is a revenue-neutral 
option that will meet our military needs. But he has one who says, 
``Well, forget about the military needs. Forget about being deficit 
neutral. The industry wants this, and its supporters want this.''

  So instead of listening to the people, instead of listening to 15 of 
your 16 department heads, you get a recommendation from one person who 
says it is based upon what the industry wants and what its supporters 
want.
  And that is what we have before us. What is truly remarkable about 
this memo is the admission that ``subsidies are needed principally to 
offset the higher wages of U.S. mariners.'' President Clinton ignored 
the plan supported by 15 of his agency heads including, let me say, the 
agency that is concerned and which administers our national security--
the Defense Department --and sent to Congress a far more expensive bill 
that 3 years later is basically included in H.R. 1350.
  In other words, for President Clinton, the era of expensive 
Government is not over. With regard to the maritime labor subsidies he 
still supports wasteful Washington spending, and the subsidies that 
that spending means.
  We all thought that this Congress was going to reform welfare as we 
know it. If we can eliminate welfare affecting the poor, you would 
think that we could eliminate welfare of the wealthy maritime companies 
such as Sealand and powerful maritime unions. But, of course, as we all 
know, welfare is great, if you can get it.
  I suppose that might be what MIT's Defense and Arms Control Studies 
Institute Director, Harvey Sapolsky, was driving at when he was quoted 
in the August 1991 Defense News. He said this, and I quote: ``Despite 
any accompanying rhetoric about national security, subsidies for the 
Merchant Marine fulfill the commonplace desire of obtaining a 
livelihood without the burden of having to compete to earn a living.''
  So I want to get it straight from the beginning of this debate. Both 
the Clinton administration officials and the Massachusetts Institute of 
Technology defense experts agree that maritime subsidies are little 
more than welfare.
  What I find really interesting in this whole approach is that Members 
of

[[Page S10958]]

Congress--particularly my friends on the other side of the aisle--
denounce corporate welfare. And you even have Republicans saying that 
because we had in our tax bill of a year ago $30 billion for 
elimination of corporate welfare. So you are on to something. Yet, I 
will bet most Democrats plan to vote in favor of H.R. 1350 which will 
give wealthy maritime corporations hard-earned taxpayer dollars that 
these companies hardly need; hardly need.
  For instance, after years of opposing subsidies, Sealand looks to 
gain the most from H.R. 1350. Why should taxpayers of this great 
country, people that work 40 hours or more a week, or families where 
two people work and can't pay their bills at the end of the week 
because so much of their income goes for taxes--why should these hard-
working American taxpayers subsidize one of the world's largest and 
most successful container vessel companies that in recent years has 
posted record-breaking profits? Are Democrats for corporate welfare? 
Are these the Democrats, who have awakened Republicans to the crime of 
corporate welfare so that we put $30 billion of reduction of corporate 
welfare in our tax bill--are they for corporate welfare now when they 
support this bill? It appears so. But now what is really up? It is 
that, while Republicans complained about the millions upon millions of 
dollars that the AFL-CIO is spending to return Congress to Democratic 
Party control, my Republican-controlled Congress is on the verge of 
approving $1 billion in subsidies for some of the most politically 
active labor unions in the country.

  How many Tuesdays and Wednesdays that Republicans meet--this is no 
clandestine meeting. These meetings are on everybody's schedule. How 
often do we meet as a Republican Party --I suppose the Democrats meet 
as the Democratic Party, and they may talk about the same things we 
talk about but from a different perspective--how many times do we meet 
and the subject is always coming up of the $35 million that the AFL-CIO 
is raising by taxing their members more--that $35 million is on top of 
what they are paying in labor union dues--this $35 million for the 
campaign for Democrats to regain control of the U.S. Senate?
  We are always talking about that. We are nervous about that. We think 
it is awful that 40 percent of the union members who vote Republican 
are taxed by their leadership to run these horrible ads, and let me say 
intellectually dishonest ads, scaring the old people of America against 
Republicans. Forty percent of those union members vote Republican. They 
are taxed to run these ads against the political philosophy that they 
agree with, and they do not even have anything to say about it because 
this administration rescinded a rule that the Supreme Court gave the 
minority of American union members the right to ask for their dues 
back, that portion of which goes for political education. That rule was 
rescinded by this administration, so that 40 percent of the union 
members this year pay these dues to perpetuate a lie on television.
  We are concerned about that in our Republican caucus, and yet here we 
have a Republican-controlled Congress on the verge of approving $1 
billion in subsidies for some of the most politically active labor 
unions in this country.
  Now, I want to give this some perspective because this is not just $1 
billion, and this is not just $35 million that is being spent for this 
advertising now; this is real money per seafarer.
  In an old report, in 1977, by the former House Merchant Marine 
Subcommittee ranking Republican, because the Republicans were in the 
minority then, Congressman McCloskey of California said all of the AFL-
CIO members each averaged about 11 cents towards campaign 
contributions.
  Obviously, that is way up now with the $35 million.
  But there is a contrast between the rest of the AFL-CIO and the 
Seafarers International Union that contributed $29.06 to political 
activity. The Marine Engineers Beneficial Association gave a whopping 
$56.81 per seafarer, which is over 500 times what the average AFL-CIO 
member gave.
  So here we Republicans stand today about to approve a 10-year $1 
billion subsidy to pay maritime labor which, at least back in the 
1970's, was about 500 times more politically active than the rest of 
the AFL-CIO unions.
  Remember, that is what the Clinton Cabinet told us these subsidies 
were for--to pay for high-cost maritime labor unions. And I want to 
read that quote again. Secretary Pena said that you could not go with 
that option that 15 out of 16 Democrat agency heads wanted because it 
provided ``less support than is sought by the industry and its 
supporters.''
  Now, that is problem No. 1 of this bill.
  Problem No. 2 is that the Department of Defense already has VISA. 
VISA is an acronym for Volunteer Intermodal Sealift Agreement--VISA, V-
I-S-A, Volunteer Intermodal Sealift Agreement. We are being told that 
this bill, H.R. 1350, will provide our national defense with a 
wonderful new intermodal transportation system that is crucial in time 
of national emergency. What is not commonly known is that VISA--again, 
the Volunteer Intermodal Sealift Agreement--is already in place and 
will be used to implement H.R. 1350.
  Most U.S.-flag carriers have already transferred from the Sealift 
Readiness Program to VISA. The key point is legal authority already 
exists for VISA, and that is the Defense Production Act of 1950, and 
therefore H.R. 1350 and S. 1139 are not needed--not needed unless, of 
course, you want to funnel welfare subsidies to maritime unions, as 
revealed in the Rubin-Clinton memo.

  So not only is this a high-cost program, but it adds little national 
security benefit. What kind of a deal is that for the already heavily 
burdened taxpayers of this great country, people who are spending for 
State, local, and Federal taxation 40 cents. A Washington bureaucracy 
is going to waste this money.
  Problem No. 3 is that in the process of consideration of this 
legislation and building grassroots support for it, the active and 
retired military was misinformed. So some would ask the question, is 
this merely labor and corporate welfare? And, if so, why does our 
military support H.R. 1350 and S. 1139? The answer is simple. The 
Rubin-Clinton memo is evidence of the real position of our defense 
officials--not this bill. They offered a deficit-neutral plan that 
would subsidize their true military requirements--as few as 20 U.S.-
flag vessels.
  But when the Commander in Chief--and that is President Clinton--
ignores his defense officials--he ignored the Department of Defense; he 
ignored 14 other agency heads--and he chooses a more expensive plan, 
the subsidies that are now included in this bill, then, of course, at 
that point you know he is the Commander in Chief. The military heads 
have no other choice but to publicly support their Commander in Chief's 
decision. Anybody participating in defense budget hearings has 
experienced firsthand this problem. Military leaders have to fall in 
line with the Commander in Chief.
  But what about all of those retired admirals who support the Maritime 
Security Act? You can legitimately ask, shouldn't their view be 
entertained with some degree of authority because of their lifetime 
commitment to the national security of our country?
  It has become clear to me that these retired admirals lent their name 
to an effort for which they had few reliable facts. Certainly, they did 
not know about the specific problems with the bill, nor did they know 
anything about the Defense Department's position, and they surely did 
not know about the Rubin-Clinton maritime memo.
  As I stated earlier, I wrote to a number of these retired admirals 
giving them a copy of the Rubin-Clinton maritime memo, and I also sent 
them other information.
  I received those very interesting responses that I have already 
quoted from. Some felt that they had not been fully informed and now 
support, at the very least, further hearings, and some support these 
amendments.
  Problem No. 4 is that we have adequate sealift capacity with or 
without these subsidies. Now, here you get to the nitty-gritty of this 
legislation. It has been the same nitty-gritty for 50 years that we 
have been trying to promote a strong maritime industry. The excuse is 
we need it for our national security. I say, and the Department of 
Defense says, in a deficit-neutral way, with one of the other three 
options,

[[Page S10959]]

their demands for the shipment of materiel in wartime can be met.
  U.S.-flag companies have made it clear that their vessels will be 
available for national defense sealift if they reflag. In fact, our 
Government makes certain that, if they reflag, they flag under a 
country that allows the United States to maintain control over the 
vessels. The Defense Department Joint Chiefs of Staff prepared a 
definitive analysis of the sealift capacity and availability. It is 
included in the MRS Mobility Review Study, Bottom-Up Review update.
  I ask unanimous consent to have printed in the Record an unclassified 
table from this study, which details the projected sealift capacity 
upon which our military can depend.
  There being no objection, the table was ordered to be printed in the 
Record, as follows:

                                   TABLE C-17.--(U) FISCAL YEAR 2001 PROJECTED SEALIFT ASSETS WITHOUT MARITIME REFORM                                   
                                                                     [Unclassified]                                                                     
--------------------------------------------------------------------------------------------------------------------------------------------------------
                    Fleet                                Ship type                  Number         SqFt capacity       TEU capacity      Cube capacity  
--------------------------------------------------------------------------------------------------------------------------------------------------------
RRF.........................................  Breakbulk.....................                 47            551,111                  0            842,074
                                              RO/RO.........................                 36          5,699,660                  0                  0
                                              Barge Trans...................                  7  .................              1,264            299,000
                                              CONT--RO/RO...................                  1             47,906                501  .................
                                              T--ACS........................                  9            359,816                667             48,170
                                              Passenger.....................                  2  .................                175             42,140
MSC.........................................  FSS...........................                  8          1,705,385                360  .................
                                              LMSR..........................                 11          3,955,276  .................  .................
                                              Breakbulk.....................                  3             44,361  .................             68,200
                                              RO/RO.........................                  3            525,464  .................  .................
                                              CONT--BB......................                  1  .................                726             34,600
MPS.........................................  RO/RO.........................                 13          2,044,835              6,053  .................
T-AVB.......................................  CONT--RO/RO...................                  2  .................                600  .................
APS.........................................  LMSR..........................                  8          2,721,388              2,400  .................
                                              RO/RO.........................                  3            274,663  .................             34,500
                                              CONT--NSS40...................                  2  .................              4,000  .................
                                              Barge Trans...................                  5  .................  .................            174,888
                                              Heavy Lift....................                  2             88,912                 --                 --
                                              T-ACS.........................                  1             53,642                 36              5,785
U.S. Flag \1\...............................  Breakbulk.....................                  1              4,054  .................              3,250
                                              RO/RO.........................                  2            284,902  .................  .................
                                              CONT--NSS20...................                  2  .................              2,140  .................
                                              CONT--NSS40...................                  6  .................             13,700  .................
EUSC........................................  Breakbulk.....................                 24            558,553  .................            309,195
                                              Car Transport.................                  7          1,235,000  .................  .................
                                              CONT--RO/RO...................                  3             36,450              5,580  .................
                                              CONT--NSS20...................                  2  .................                890  .................
                                              CONT--NSS40...................                 52  .................            175,368  .................
                                              CONT--SS40....................                  2  .................              1,136  .................
Allied......................................  Breakbulk.....................                 22            205,108  .................            135,000
                                              Car Transport.................                  3            733,482  .................  .................
                                              CONT--NSS20...................                  5  .................              9,583  .................
                                              CONT--NSS40...................                 10  .................             12,003  .................
                                              CONT--SS40....................                  1  .................                250  .................
                                              CONT--BB40....................                  2  .................                276             12,386
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ U.S. flag numbers are less economic withholds.                                                                                                      

  Mr. GRASSLEY. What is striking about this table is the extent of the 
vast array of sealift capacity that will be available to the United 
States in the event that H.R. 1350 subsidies are not passed.
  I want my colleagues to note in particular the large number of 
vessels available to us. These vessels are what we call ``effective 
U.S.-controlled vessels,'' and they include vessels that are owned by 
American companies. Foreign flags are reliable. First of all, keep in 
mind that many foreign-flag vessels are actually owned and controlled 
by American companies. They flag foreign, they flag under a foreign 
nation primarily to avoid the unbearable cost of the high salaries and 
benefits of U.S. seafarers. Foreign-flag vessels delivered about 50 
percent of all cargo in the Persian Gulf war. Nearly 200 foreign ships 
were chartered from 36 nations. Only one ship loaded under DOD contract 
did not complete its voyage. The handful of small foreign feeder 
problems were the result of contract disputes with U.S.-flag carriers, 
not foreign flags.
  But far more important is the fact that Congress has already funded 
the Department of Defense's wartime sealift requirements. Congress 
provided over $7 billion in the 1980's and will provide another $10 
billion in this decade to meet the Department of Defense's unique 
strategic sealift requirements. The Department of Defense has, over the 
last two decades, constructed and purchased a sealift force to 
unilaterally meet our prepositioning and surge sealift wartime 
requirements as specified by the Bottom-Up Review. The ships of the 
Department of Defense's strategic sealift force are of the unique 
military design required to transport heavy tanks and other outsized 
fighting equipment.
  Remember, most of the vessels subsidized by the Maritime Security Act 
are container vessels that will carry, primarily, sustainment supplies, 
such as clothing and food, and not sensitive military equipment. This 
brings all the more light to the significance of the conclusion of 
Massachusetts Institute of Technology's defense expert, Harvey 
Sapolsky, who stated:

       Most of the amount hauled in a crisis is done by 
     government-owned standby and reserve ships.
       Moreover, there is a ready charter market for commercial 
     cargo vessels when more ships are needed.
       The price required for these services in a crisis is 
     cheaper than the cost of maintaining a large subsidized 
     commercial fleet for a mobilization that may not happen again 
     for years.

  So, with problem No. 4, the Department of Defense has the capability 
of meeting our national security needs, getting our materiel from 
wherever it is now to wherever it must be to conduct war. They do not 
need this legislation. The Department of Defense said that when they 
recommended, along with 14 other department heads, to the President of 
the United States that there is a revenue-neutral, there is a budget-
neutral way of doing this that meets our national security needs. That 
is the Department of Defense. That is 14 other department heads that 
say that.
  Problem No. 5, this bill is not needed to maintain an adequate pool 
of American seafarers for defense sealift. This, again, refers to the 
Rubin-Clinton maritime memo. These subsidies will preserve about 2,500 
seafaring jobs. There are numerous other sealift manning options. Mr. 
President, $100 million a year to save 2,500 jobs is too steep a price 
for taxpayers, in view of all these other options; $100 million to save 
2,500 jobs.

  This is the high cost of maintaining a monopoly, as I said earlier. 
This high cost reflects the great success in playing the Washington 
power game.
  Modern, highly automated ships require fewer seafarers. The 
Government has carefully studied many measures to crew sealift. These 
include expanding the Naval and Merchant Marine Reserve programs.
  What would be particularly cost effective is the option of certifying 
the mariners employed in the Great Lakes and inland waterways. This 
option would provide a very large labor pool of over 60,000 mariners 
who could be used during a national emergency.
  Again, if you read the Rubin-Clinton memo, at the bottom of page 3--
and this will be made available; it has been made available for 
everybody this morning in their offices, so every staff

[[Page S10960]]

person has this. The Clinton administration argues this:

       Subsidizing carriers simply to preserve jobs would leave 
     the Administration hard pressed to explain why it should not 
     also subsidize every other industry that suffers job losses.

  It is too bad that part of the Rubin memo was not followed, because 
that lays it out as plain and simple as you can. If you spend $100 
million to save these 2,500 jobs, it is going to open it up so the 
President is letting down the floodgates for efforts for other new 
subsidies for other whole industries that suffer job losses.
  I might ask, just what kind of seafarers' salaries and benefits are 
we forcing taxpayers to support? Again, in the Massachusetts Institute 
of Technology Manning study--according to this study, a master or a 
captain billet costs about $34,000 per month to pay for salary, 
benefits, and overtime; $34,000 per month. The earlier draft report 
placed the monthly cost at $44,000, but was lowered in the final report 
when I made it public that the taxpayers are forced to subsidize about 
85 percent of these salary and benefit costs.
  This MIT study concluded that with adequate reforms, such as 
eliminating featherbedding, we can lower subsidies to a little over $1 
million per year. Unfortunately, H.R. 1350 provides well over twice 
that recommended by the Massachusetts Institute of Technology, which is 
$2 million per year.
  Again, the Rubin-Clinton memo says at the bottom of page 9:

       Subsidies are needed principally to offset the higher wages 
     of U.S. mariners.

  Let's face it, these high-priced wages and benefits taxpayers are 
forced to subsidize are at the heart of the demise of our merchant 
marine fleet. A dozen years ago, then military sealift commander, Vice 
Adm. Kent Carroll, warned our merchant marine was crumbling. Twelve 
years ago, we had a vice admiral warning us about the crumbling of our 
merchant marine:

       Why are we in such a mess? One of the reasons is that crew 
     costs continue to be the highest in the world. Monthly crew 
     costs of U.S.-flag ships are as much as three times higher 
     than those of countries with comparable standards of living, 
     such as Norway.

  Mr. President, the former military sealift commander hit it on the 
head. The taxpayer-supported crew costs are driving U.S. carriers to 
reflag. It makes a mess of the U.S.-flag merchant marine, and it makes 
a mess for the American taxpayers. It is time for real reform, but that 
has to be real commonsense reform.
  I yield the floor.
  Mrs. HUTCHISON addressed the Chair.
  The PRESIDING OFFICER (Mr. Abraham). The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, for more than 5 years, the Congress 
and two administrations have worked on a bipartisan basis to develop 
and enact into law a critical program to reform Federal support for the 
U.S. flag maritime industry and to revitalize our merchant marine as an 
element of our national defense sealift.
  As chairman of the Subcommittee on Surface Transportation and 
Merchant Marine of the Commerce Committee, I am proud to say that this 
job is nearly complete. On December 6 of last year, the legislation 
that embodies this program, H.R. 1350, the Maritime Security Act of 
1995, passed the House of Representatives with overwhelming support by 
voice vote, with full leadership support on both sides of the aisle. 
Here in the Senate, we have held full, open and public hearings in the 
Commerce Committee with all interested parties having the opportunity 
to present their views for and against this program. Significantly, all 
individuals or organizations affiliated or associated with national 
defense indicated support for this proposal.
  I think you can see from the bipartisan nature of this bill--my 
colleague on the other side of the aisle and I, working with Senator 
Stevens, who is the manager of this bill--that there is agreement on a 
very important reform that we must produce, and it improves the 
efficiency of the current program.
  Here is what the bill does:
  The Maritime Security Act will provide a fleet of militarily useful 
U.S.-flag commercial vessels and their American citizen crews for our 
Nation's defense airlift and sealift, as well as guaranteed access to 
modern intermodal transportation networks and management that can 
deliver cargo from Kansas to Kuwait and track it every step of the way.
  For DOD to duplicate this necessary capability, it would cost over 
$800 million per year, eight times the yearly cost of the Maritime 
Security Program. When you think about it, maintaining that kind of 
ship fleet would be something that the Department of Defense would say 
would certainly increase their budget. But here we can do it for half 
the amount than has been done in the past, and it will do the job.
  The Maritime Security Program Act, the bill we are discussing, will 
cut the cost of Federal support for these sealift vessels more than 50 
percent from the program now in existence. This will have a spending 
limit of $100 million a year, compared to the current level of roughly 
$210 million per year, and this funding is subject to appropriations, 
not an entitlement, which is currently the case. So you can see that we 
are cutting back on the subsidy while maintaining this fleet at a much 
more efficient rate than we could do if we had to maintain the fleets 
within the Department of Defense.
  The Maritime Security Act will eliminate outdated and unnecessary 
rules and regulations which impede the ability of U.S.-flag commercial 
vessels to compete, and that prevents, of course, the expansion and 
modernization of the U.S.-flag fleet. These changes will give our fleet 
more incentive to hold down costs.
  This act will encourage the construction of commercial vessels in 
U.S. shipyards, a vital program for our economy and for our defense 
industrial base.
  This act is essential to our defense. It is needed now, more than 
ever. Let me give you an example of how this works.
  During Operation Desert Shield and Desert Storm, more than 350 ships 
in more than 500 voyages supported the multinational coalition, 
delivering an average of 42,000 tons of cargo each day. Under this 
program, 350 ships participated. At the height of this activity, there 
was a ship every 50 miles, a steel bridge along an 8,000-mile sea lane 
between the United States and the Persian Gulf. Ninety-five percent of 
all equipment and supplies needed by American soldiers in the field was 
moved by sealift. One-third was shipped on privately owned U.S. flag 
vessels, just what we are talking about today.
  Using U.S.-flag vessels was more cost effective during Desert Storm. 
It cost about $174 per ton of cargo under non-U.S.-flag vessels, but 
with U.S. flags, it was $122, a 30-percent savings.
  But more important, we were able to put American cargo on American 
ships using American crews to deliver to our American troops. In a time 
of crisis, we cannot depend on foreign ships. We cannot depend on 
foreign crews for sealift and sustainment requirements. Without this 
legislation, our Armed Forces would have to trust foreign vessels for 
the supplies and support they need to fight and win.
  Mr. President, that is not right, and we are not going to let it 
happen. More recent events in the Persian Gulf area, where many of our 
closest allies have either refused to participate or refused to allow 
their soil to support American military operations, should make it very 
clear to everyone that we must have sealift fleets of vessels that we 
can count on under our flag and manned by Americans, and that is what 
this act does.
  This act has the strong endorsement of the Department of Defense. 
General Rutherford, the commander in chief of the U.S. Transportation 
Command, our Nation's top logistics commander, testified at our 
Commerce Committee hearing last July that his command wants assured 
access to this type of quality and quantity of sealift capacity and 
mariners necessary to meet Department of Defense contingency 
operations.
  This bill provides that. Without the enactment of this legislation 
this year, America's merchant marine on the sea lanes of the world 
could essentially disappear.
  I am told that our number of U.S.-flagged ships could drop to below 
100. Forty years ago, this country had the largest merchant marine 
fleet in the world and over 4,000 vessels flying the U.S. flag in 
international trade. Today, there are fewer than 400. Today, we are the 
world's largest trading nation, but 15 countries have bigger fleets 
than we

[[Page S10961]]

do. We send 96 percent of U.S. exports overseas on foreign-flagged 
ships. The United States must not become a second-class maritime power.
  Geography dictates that lesson today as much as it did 50 years ago. 
This Maritime Security Act is sound and vitally important. It is 
important legislation for our Nation's security, and it has been 
carefully developed by both Houses of Congress. It is essential to 
maintaining our maritime industry and defense readiness.
  Mr. President, this bill is a bill whose time has come. I urge all of 
my colleagues to support it. I yield the floor.
  Mr. BREAUX addressed the Chair.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. I thank the Chair and my colleagues.
  Mr. President, I would like to start off by saying how much we all 
appreciate the work that Senator Inouye and Senator Stevens and other 
members of the committee have done in bringing this legislation to the 
floor.
  It was interesting that one of our colleagues earlier said this is a 
new subsidy program. Well, it certainly is not a new subsidy program. 
We have had a maritime bill since 1936 which has done essentially what 
this bill does, and that is to support the American maritime industry. 
There is nothing new about this program. It certainly is not a new 
subsidy program.
  It is new only in the sense that it is a major reform plan. It is a 
major reform plan in a number of significant ways because we on the 
committee, and I think most Members of Congress, know that while the 
old program has been a great help to our American maritime industry, 
there were some ways it could be improved.
  I am not going to take a long time to hear myself talk on this 
proposition because I am not sure that there are right now any 
amendments even pending to the bill. I would like to think we ought to 
go ahead and pass it and move on to something else rather than spend 
time talking to each other about why we think it is a good bill.
  I have only heard one of our colleagues talk in opposition to the 
bill. I think we ought to go along and get it passed. If anybody has 
any amendments, bring them up, let us debate them and move on with 
them.
  I would like to point out that this is a major improvement. This is a 
major reform bill. No. 1, it greatly reduces the amount of money 
available to the American maritime industry to keep these private 
vessels available for the Department of Defense. It used to be running 
about $225 million a year. We have cut it by more than half. The 
assistance that is in this bill is less than half of what the 
assistance to the ships in the American fleet used to be. When there is 
a greater demand for more, we in this bill have come up with 
substantially less.
  So to those who say, well, we may have been spending more than we 
should have, this bill addresses it. Instead of $225 million a year 
being available to keep these ships afloat, this bill has $100 million 
a year.
  The second major improvement is that it is not an entitlement 
program. Throughout the history of the bill it has been an entitlement 
program. Whatever money was required was automatically available to the 
ship owners. This bill provides, for the first time--and this is a 
major, major change--that any of the assistance programs available to 
any of these ships has to be appropriated funds, appropriated by the 
Congress of the United States. It is no longer an entitlement program. 
That, obviously, is a major, major, and a very substantial improvement 
over the existing program.

  It is subject to annual appropriations. That simply means--we all 
understand this--that every Member of Congress will get to look at this 
piece of legislation and this program, see how it is working, see 
whether we can justify the money each year and, if so, appropriate 
those amounts of money. On the other hand, if they think it is not 
working, then we have the same ability to lessen those appropriations. 
I think this is an absolute minimum that cannot go down any further 
than this.
  As the distinguished Senator from Texas--and I was listening to her 
remarks--was talking about, this bill is important to the national 
security, the national defense of the United States. Simply put, we are 
spending a lot less money to have ships available in times of a 
national emergency than if we did not have this program, because if we 
did not have this program we would be spending up to $300 million per 
ship to have them just sit there and wait to be used in a time of 
national emergency.
  It is far better to say that we are going to help the operation of 
some American commercial vessels that are operating every day out 
there, that are crewed with U.S. men and women who have been trained 
and who are able-bodied seamen, who understand how to run these ships, 
do it every day, that we can call on those ships and say, yes, this is 
an emergency in a particular part of the world, and we need this ship 
right away to transport ammunition and equipment to some far part of 
the world to take care of a national emergency.
  If we had to spend defense dollars to have these ships sitting there 
when there is not an emergency, we would be spending a lot more money 
than a paltry $100 million. It would pale in comparison, if we had to 
build five or six $300 million vessels just to sit there in case 
someday we might need them and they will be there.
  Not only that, if we had the ships there, there is no guarantee the 
crew would be there. If the ships are just sitting somewhere in dry 
dock, what is the crew doing? The crew is not doing anything--it 
probably does not have a crew. So then you have to go out and find the 
crew members in the time of a national emergency. Guess what? They are 
not going to be there.
  So this legislation takes a very careful approach by helping to 
assist commercial vessels to operate with U.S.-trained crews, to have 
them available in times of a national emergency. They are ready to go 
from day one. And every private company that gets an assistance program 
under this legislation has to agree in advance that that ship will be 
available in times of a national emergency.
  That is what this program is all about. It has been there since 1936. 
I suggest that when everybody says, well, we should not have subsidy 
programs, let us start off by saying, well, let us eliminate subsidies 
all over the world. It would be a great world. But that is not the real 
world. We have agricultural programs which have subsidies. I have 
supported them. I think they are necessary. But we also ought to have 
programs that make sense from a national security standpoint, from a 
national defense standpoint. I suggest that this is that bill.

  This is not a new bill. This is not a new subsidy bill. It is a major 
reform bill subject to annual appropriations every year, and we have 
reduced the amount available by over 50 percent, from $225 to $100 
million a year. That is a substantial and major, major change.
  The other good news is, it has always been bipartisan. This has never 
been a Democrat-versus-Republican piece of legislation. It has the 
support that we have today. The majority leader, Trent Lott, from 
Mississippi, strongly supports it. Senator Inouye from Hawaii strongly 
supports it. Senator Stevens strongly supports it. Senator Hutchison, 
from Texas, myself, from Louisiana, we all recognize that this is 
important for the national security of this country. It has always been 
bipartisan.
  The first proposal which, in fact, really moved toward reforming this 
program was by President Bush, who really, for the first time in a long 
time, got involved in this and really had a Secretary of 
Transportation, Andy Card, who really said, ``Yes, I'm going to put 
this deal together.'' And we worked on it in a bipartisan fashion. And, 
lo and behold, we now have this bill that President Clinton supports, 
that Secretary Pena has worked on for so long and so hard. It has been 
bipartisan. It was very similar before under President Bush and is very 
similar now under President Clinton and the Secretary of 
Transportation.
  So this is truly a bipartisan piece of legislation. It has national 
defense implications. It is not a runaway program. We have drastically 
curtailed it. We have made it subject to annual appropriations.
  I suggest, let us get on with the voting. I mean, if we have 
amendments, let us offer them and let us debate

[[Page S10962]]

them. Let us finish this. We are wasting time by just, I think, looking 
at it and talking about it and talking about it and talking about it 
and talking about it. I yield the floor.
  Mrs. HUTCHISON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I want to say that I agree totally 
with the Senator from Louisiana. This is a bill that has been worked on 
for a long time, and if there are going to be amendments--and that is 
fine--let us bring them up. Let us talk about them.
  I think it is time to move this bill. It is a good bill. It is 
reform. It is going to save the taxpayers of this country $100 million 
while preserving the right of our Department of Defense to take those 
ships when we need them, as we did in Desert Storm. It worked. It 
worked. And it is going to be better.
  I think it is time for us to come together. Let us talk about the 
amendments. Let them have their fair shot, and let us get on with it. I 
appreciate his remarks. I yield the floor.
  Mr. GRASSLEY. Mr. President, I had the opportunity to hear the 
Republican manager of the bill, the Senator from Texas, speak about her 
support of this legislation, and for part of my remarks, she was 
absent. I wanted to remind her of some concerns I have about this 
legislation.
  That concern is the oddity we have here of the Democratic Members of 
this body campaigning to end corporate welfare, to such an extent that 
they even have us Republicans proposing tax legislation to eliminate 
$30 billion of corporate welfare in our tax bill last year, and now the 
party that encourages doing away with corporate welfare, the Democratic 
Party, is very much for this legislation. Then you have the oddity of 
Republicans who considering the upcoming election are very, very 
concerned about the labor unions spending $35 million for the 
Democratic Party, to help the Democratic Party regain control of the 
Congress, and Republicans abhorring that situation. Then here we have a 
bill that is corporate welfare. It is also maritime union welfare.
  So we have the oddity of Democrats who condemn corporate welfare 
voting for a bill that is going to establish more corporate welfare, 
and you have Republicans who say how awful it is that men and women who 
belong to unions do not have any choice about the assessment for $35 
million more so that the unions can run ads against Republicans when 40 
percent of the union Members vote Republican. Then here we are as 
Republicans, promoting legislation that is going to feed the treasury 
of the maritime unions.
  This follows on that memo to the President where Secretary Pena was 
advising the President to ignore the recommendations of 15 out of 16 
Cabinet agencies who said an option that was budget neutral and would 
still meet the national security demands of our country should be 
ignored because the industry--meaning the maritime industry; and its 
supporters, meaning the maritime unions--wanted this legislation that 
had this subsidy in it.
  So I hear the Senator from Texas suggesting support for this 
legislation, contrary to a lot of concerns we have on this side of the 
aisle. And when we have meetings of our party--and she is one of the 
leader's of our party--very concerned about what is being done through 
the use of mandatory checkoff of union dues. In our councils, we are 
concerned about this. Then I see the leaders of our party supporting, 
almost, the buying of the rope to hang ourselves.
  I remind the Senator from Texas that we have letters here from four 
organizations who I think she would agree with 95 percent of the time, 
who we would agree with 95 percent of the time, who oppose this 
legislation. From Americans for Tax Reform, I have a letter that says:

       This legislation, the Maritime Reform and Security Act of 
     1995 now pending in the Senate, Americans for Tax Reform 
     strongly oppose the continuation of commercial maritime 
     subsidies in any form, and strongly urges you to remove any 
     such subsidies from this bill.

  I have a letter from the National Taxpayer Union, also cosigned by 
the Council for Citizens Against Government Waste that says:

       Most Members of the 104th Congress have prided themselves 
     in ending welfare as we know it. Unfortunately, the Senate 
     may soon consider H.R. 1350, the Maritime Security Act, which 
     is nothing more than a corporate and labor union welfare. The 
     Council for Citizens Against Government Waste will key vote 
     these votes for 1996 congressional ratings,

and then it says that they are very much against this legislation.
  Then I will read from Citizens for a Sound Economy:

       On behalf of the 250,000 members across America, I want to 
     express our strong opposition to H.R. 1350, the so-called 
     Maritime Security Act and our strong support for 
     amendments to this bill offered by Senator Charles 
     Grassley. The amendments would limit the cost to the 
     taxpayer from this proposal without weakening our national 
     defense.

  I encourage leaders of our party, particularly those who are leaders 
of the group of us that have the most fiscally sound voting records, 
people who are always abhorring in our party meetings the waste of the 
taxpayers' money, and particularly when we have respected organizations 
like I just quoted from, those which we agree with about 90 percent of 
the time, why are we off the beaten path on this issue? Why are we 
Republicans, who pride ourselves for fiscal conservatism, subsidizing 
an industry, some of the same companies in the industry, that have the 
very highest of profits in recent months?
  I yield the floor.
  Mr. NICKLES addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oklahoma is recognized.
  Mr. NICKLES. Mr. President, before the Senator from Iowa leaves, let 
me tell him I compliment him for his courage in taking on this issue. I 
agree with him. I think the subsidies that the Senator outlined are 
outlandish, they are not sustainable, they are not necessary, and they 
should be eliminated.
  I look forward to working with the Senator in the near future to have 
an amendment to do that. I compliment him for his statement, for his 
work, and for the work of the organizations trying to save taxpayers' 
dollars and to ensure that Government act responsibly.
  Mr. HOLLINGS. Mr. President, I rise in support of H.R. 1350, 
legislation to revitalize and stabilize our maritime industry. It is 
long past time for legislation to stop the flight away from the U.S. 
flag. The United States has a long and honorable maritime heritage and 
tradition, but we are facing the prospect that our maritime industry 
might not be part of our future.
  The U.S. Government has imposed regulatory demands on the U.S. 
shipping industry, demands that are similar to those we impose on other 
industries. These demands reflect our national interest in protecting 
the safety of our workers and our environment and include tax 
liabilities, safety regulations, and operating requirements. While our 
maritime industry carries these regulatory responsibilities, other 
advanced nations have given special treatment to their maritime 
industries in efforts to maintain core shipping capacity. But even such 
special treatment has often been insufficient to help shipping 
companies to resist the temptation to shift their operations to 
unregulated, untaxed flags of convenience offered by certain less 
developed countries. Currently, over two-thirds of the world ocean-
going fleet is operated under flags of convenience.
  The Maritime Security Program is designed to offset the costs of 
operating under the application of U.S. law, and to stem the flight of 
U.S. vessels from U.S.-flag to flags of convenience. H.R. 1350 
completely overhauls the existing maritime subsidy program, and 
ultimately will reduce Government expenditures on maritime policies by 
over one-half. The program will help our vessels compete globally by 
reducing some of the regulatory burdens that have restricted the 
commercial operations of U.S.-flag operators.
  In exchange for receiving payments under this program, U.S.-flag 
operators will be required to sign agreements to make their vessels and 
related intermodal assets available to the Department of Defense [DOD] 
to sustain U.S. defense operations. Additionally, the operation of U.S. 
vessels generates a surplus of U.S. mariners. U.S. vessels operate 7 
days a week, all year round, thus necessitating more than one mariner 
for each particular position. This

[[Page S10963]]

surplus of mariners is instrumental in the crewing and operation of our 
reserve fleet of vessels. In the Persian Gulf war, the ability to crew 
our reserve fleet was seriously questioned, and the United States was 
forced to rely on 60- and 70-year-old merchant marine pensioners. 
Without the Maritime Security Program, we will not be able to crew the 
reserve fleet.
  The United States relies on ocean transportation for international 
trade purposes and almost 99 percent of our international trade arrives 
on board a ship. Without a U.S.-flag merchant marine, we will be held 
hostage to the trade policies of foreign nations who would transport 
our goods abroad. The United States also relies on ocean transportation 
to protect our national security interests. U.S. shipping companies are 
required to sustain U.S. troops in foreign conflicts, and U.S. seamen 
not presently serving aboard ships are capable of being utilized to 
activate our reserve fleet of vessels in order to transport military 
equipment and other military surge cargoes. The continued presence of 
an active maritime industry ensures that the United States will not 
have to rely on the kindness of other nations to achieve important 
national economic and national security objectives.
  The United States is the world's only remaining superpower, but we 
could be put in the position of sending U.S. troops into war with only 
the promise that we would supply them, and then only if DOD can charter 
vessels willing to deliver cargo into the war zone. This position would 
be simply unacceptable. Ironically, DOD has spent billions of dollars 
in the construction of surge sealift vessels, and billions of dollars 
in maintaining a Reserve Fleet of vessels. However, DOD has neglected 
the most important component in marine transportation: who will 
navigate those ships and deliver the cargo. The commercial U.S.-flag 
industry provides a labor pool of experienced personnel capable of 
contributing to any defense logistical support need. If we do not pass 
this legislation, DOD will be forced to implement a new, and I will 
guarantee, costly program to train mariners for use in reserve 
situations.
  Attempts to formulate a maritime reform bill over the years have had 
bipartisan support, and I look forward to continued efforts with my 
colleagues to revitalize our maritime industry. However, today we 
should take the necessary steps forward to ensure that the United 
States continues to have a maritime industrial base--it is simply too 
important to our national and economic interests to allow to vanish 
into the mist.
  Mr. BAUCUS. Mr. President, the U.S. merchant marine is facing an 
uncertain future. The U.S. commercial fleet is falling behind which 
diminishes its power to protect the United States' interests abroad and 
at home.
  This is why I strongly support the Maritime Security Act of 1995, 
H.R. 1350. This bill would be the beginning of the rebuilding of the 
U.S. merchant marine fleet. It will establish a fleet of privately 
owned, active and military capable ships to help maintain the defense 
of the United States' interests. This will help maintain peace and 
protect cargo during times of crisis in the world. The fleet would also 
be updated because of the bylines in the bill which in itself would 
make the merchant marine stronger and allow it to continue being 
competitive in the world market.
  This bill through the building of the fleet will create jobs in many 
sectors of the economy. The increase in the economy will range from the 
workers on the ship all the way to those manufacturing the parts. The 
bill will also change the way that the costs of running a ship in the 
United States are offset. This will encourage more owners to register 
their ships under the U.S. flag. From the changes, old outdated 
regulations will be cut, such as the way to replace older vessels. This 
in itself will help keep costs down and help generate profits and 
revenues for all.
  This legislation is very much in our national interest. And I, 
therefore urge its passage.
  Mr. McCAIN. Mr. President, I would like to take this opportunity to 
address a very serious concern about the pending legislation.
  The bill authorizes the payment of $1 billion to American shipping 
companies over the next 10 years to subsidize a 47-vessel, commercially 
owned Maritime Security Fleet.
  Operators of American-owned, flagged and manned merchant marine ships 
participating in the MSF will receive a yearly $2.1-million retainer to 
remain on call to provide sealift services in the time of national 
emergency.
  I appreciate that this new approach replaces the current, more costly 
program, which pays American shipowners an ``operating differential 
subsidy'' to remain available in the event of conflict. Under the ODS 
program, the Federal Treasury pays carriers the added cost of operating 
a ship under the American flag rather than foreign flag--a yearly 
figure that has hovered around $4 million.
  So, I agree this program improves on the current situation. But, Mr. 
President, I believe we can do much better. I hope all Senators would 
agree we have an obligation to fully meet our military needs as cost-
effectively as possible. The fact that the new program is more cost-
effective than the existing scheme does not relieve us of our 
obligation to ensure that we continue to pursue the most cost-effective 
approach to meet our needs.
  Let me emphasize: I profoundly appreciate that sealift is essential 
to effectively meet our security obligations across the globe, and that 
we must assure access to dependable vessels and qualified crews who 
will remain loyal to our cause.
  Nevertheless, I am concerned that we are embarking on a program that 
may be excessively expensive. One that is not based on reasonable 
contingency scenarios and one that does not take into account our 
access to vessels and manpower other than the domestic carriers 
qualified to participate in the MSF.
  When I asked the Joint Chiefs of Staff the number of American 
commercial ships which are necessary to meet our readiness needs, I was 
informed that they do not have a definitive answer to that question. I 
am very dubious about authorizing a $1-billion program without such 
basic information.
  It is important to point out that the 47-ship level is based on 
assumptions that the United States must fight two major wars 
simultaneously with no allied assistance.
  Sealift planning, like all readiness programs, should be based on 
realistic scenarios. Failing to plan realistically wastes money and 
skews priorities.
  For instance, I don't believe it is realistic to expect that, in a 
scenario in which the United States is fighting two major wars, we will 
not have access to any allied ships.
  Second, according to the Bottom-Up Review, the United States has 
access to nearly 90 ships which are operated under a foreign flag but 
are owned by United States citizens or companies and can be called upon 
in time of war. Our planning scenarios do not take into consideration 
our access to those vessels, many of which might be militarily useful.
  My overwhelming desire is that we have strong and prosperous domestic 
merchant marine. I would hope, however, that we could accomplish that 
goal without having to resort to expensive subsidy programs. I would 
prefer that we address the core problems that make it much more 
expensive and difficult to operate under the American flag and 
eliminate incentives for carriers to operate under foreign flag.
  I have discussed this matter with the distinguished majority leader. 
He understands my concerns, and we have agreed to jointly request from 
the Pentagon an analysis to determine the number of ships needed for 
the MSF, taking into account reasonable planning scenarios and our 
needs, factoring in: our access to allied ships; the availability of 
U.S.-owned vessels operated under a foreign flag; the impact of the 
ongoing equipment prepositioning program; and the Pentagon's own 
sealift shipbuilding program. We should only subsidize those ships to 
provide services which far less costly alternatives cannot provide. We 
will request the Pentagon to report its findings no later than May 1, 
1997.
  Mr. LOTT. I first want to thank my colleague for his careful 
attention to this very important matter of national security and 
economic security. The Senator from Arizona has given our Nation's 
future maritime policy very thorough scrutiny, and he should be 
applauded for his efforts. Our colleague, Senator Pressler, has also

[[Page S10964]]

been in close consultation with me regarding maritime policy, and I 
wish to acknowledge his concern and his constructive efforts as well.
  Let me begin by saying to the Senator from Arizona that I understand 
his concern and will join with him to request a report from the 
Department of Defense which describes under various reasonable and 
realistic scenarios the number of ships that should be included in the 
Maritime Security Fleet Program. I am firmly convinced that American-
flag ships, crewed with loyal, American-citizen mariners, provide the 
most reliable, effective, and efficient means of meeting our Nation's 
sustainment sealift requirements and for providing the dedicated 
manpower to crew the Defense Department's organic surge vessels. At the 
same time, I agree it will be helpful for the Defense Department's 
report to also include information relating to DOD's reasonable 
expectations for access to allied ships; the availability of vessels 
operated under foreign flag but owned by U.S. interests; the impact of 
prepositioning programs; the need to crew the Ready Reserve Fleet; and 
the Pentagon's own shipbuilding program.

  But I also want to emphasize that the Maritime Security Act is first 
and foremost about security. It is about protecting our national 
security, by ensuring that we will continue to have at our disposal a 
fleet of militarily useful U.S.-flag commercial vessels, and a trained, 
loyal American-citizen maritime workforce, to provide our military with 
reliable, global sustainment sealift capabilities. And it is about 
economic security, because only through maintaining a viable U.S.-flag 
merchant fleet in international commerce can we ensure fair ocean 
transportation rates for American businesses and consumers.
  I want to assure the Senator that I understand his concerns with our 
Government's past maritime policies. That is why it is so important for 
me to make it clear that the Maritime Security Act is not business as 
usual. First, it will replace the existing Operating Differential 
Subsidy Program--at less than half the cost. Second, it is not an 
entitlement program. Only militarily useful vessels will be accepted 
into the Maritime Security Program; the vessel owners must apply to the 
Maritime Administration for admittance into the program. And third, for 
the first time ever, the military will have guaranteed access to the 
state-of-the-art land and sea intermodal logistical apparatus of the 
U.S.-flag commercial fleet. The people whose business it is to move 
cargo around the world will be actively assisting the Pentagon's 
transportation commanders, providing logistical know-how, intermodal 
equipment, and port facilities around the world.
  The Maritime Security Program is the product of years of consultation 
among the military, the U.S. maritime community, and Congress. It is a 
well-designed, bipartisan solution to meeting our Nation's military 
sealift requirements for the next 10 years.
  That said, I would like to briefly address some of my colleague's 
concerns with this legislation.
  It is most significant that we are engaged in this debate at a time 
when the United States is deeply involved in military operations in 
different parts of the world--specifically, Bosnia and the Middle 
East--which demonstrates the wisdom of our top military planners who 
have sought to prepare contingency plans should the United States 
become involved in two major regional conflicts simultaneously. And 
this discussion also comes at a time when we have seen several of our 
closest friends in the Middle East and elsewhere refuse to cooperate 
with the United States in opposing Saddam Hussein's aggression.

  The events of the past few weeks in Iraq demonstrate most clearly 
that the United States cannot, and should not, rely on other countries 
to support our military operations. If some of our closest allies 
cannot be counted upon to allow the U.S. military to overfly their 
airspace, or to use our own American military bases located on their 
soil to carry out our Commander-in-Chief's instructions, then how can 
we put the safety and well-being of our troops in the hands of foreign-
flag ships and foreign crews?
  Furthermore, in recent years many of the vessels once in our allies' 
fleets have flagged out to flags of convenience, or joined second 
registers, and most of their crews come from Third World nations. The 
report that the Senator from Arizona is proposing may reinforce the 
need for the Maritime Security Program, because the fleets of our 
allies are no longer what they once were.
  Some of our Nation's most distinguished current and former military 
leaders have said, time and again, that we must have U.S.-flag 
commercial ships and American-citizen crews to effectively and reliably 
meet our sustainment sealift requirements. I agree with their 
assessment. We must make sure that our soldiers, sailors, marines, and 
airmen will not have to count on foreign-flag ships to bring their 
supplies and ammunition to a hostile shore. They have also urged us to 
support the U.S.-flag merchant marine, because they know that the 
Government-owned Ready Reserve Force--the Pentagon's rapid deployment 
fleet--relies absolutely on the availability of American-citizen 
merchant mariners to crew its ships. If there is no maritime 
employment, there will be no merchant mariners, and we will be forced 
to turn elsewhere.
  Foreign-flag ships and foreign crews have proved unreliable in the 
past, they have turned around and fled in the face of danger. The U.S.-
flag merchant marine, on the other hand, has served with distinction 
and honor since the Revolutionary War.
  Additionally, if we put our trust in foreign-flag vessel operators to 
provide our sustainment sealift, we can count on them to do one thing--
gouge us on shipping rates. During operations Desert Shield and Desert 
Storm, our Government paid $122 per ton for U.S.-flag ships to carry 
our military cargo. We had to pay foreign ships $172 per ton. If there 
is no U.S.-flag alternative to carry that cargo, I cannot imagine how 
that price could go anywhere but up.
  It is true that there are foreign-flag ships under the effective 
control of U.S. citizens. But I would point out to my colleagues that 
some of these are vessels that are not useful to the military, and some 
of them have foreign crews upon which we cannot rely in a crisis or 
conflict. I would also point out that the Maritime Security Act would 
create a partnership between U.S.-flag vessel operators and military 
logistics planners--a partnership that is already underway, and that 
promotes joint planning and shared logistics capabilities. That, to me, 
is a much more preferable alternative to requisitioning a foreign-flag 
ship that happens to be owned by an American citizen, and then facing 
the task of refitting it, or forcing its owners to bring it to a U.S. 
port. The latter solution gets America a vessel at best, if all goes 
well. The MSP gets America an entire intermodal network that can carry 
a container from Kansas to Kuwait--under any circumstances, with 
complete reliability, and tracked every single step of the way.

  Once again, I would like to thank my colleague for his input on this 
issue. I respect his recommendations and I welcome his assistance in 
this matter.
  Mr. McCAIN. The majority leader agrees then that before any contracts 
are renewed for the second year of the program, the fleet will be 
adjusted to the number of ships identified by the Pentagon as truly 
necessary?
  Mr. LOTT. As I noted earlier, the legislation we are considering 
subjects the Maritime Security Fleet Program to the annual 
appropriations process. Consequently, my colleague is correct in that 
we have guaranteed Congress the right to review each year the size and 
scope of the Maritime Security Fleet.
  Mr. McCAIN. I might add the quadrennial defense review provides an 
excellent opportunity to examine and update our needs in the area of 
commercial sealift.
  The majority leader is aware of a second concern I have about the 
pending legislation regarding $2.1 million per vessel subsidy.
  While the $2.1 million figure is roughly half of the per ships ODS 
subsidy, the figure is still somewhat an arbitrary amount.
  I believe that in acquiring necessary sealift services, we should 
apply the same mechanisms of competition that we employ in other areas 
of Federal procurement and acquisition.

[[Page S10965]]

  I'm disappointed that the bill contains no competitive bid process. 
It may be that the number of available vessels to fully meet MSF 
requirements will exceed the number of MSP slots.
  In that case, we should have some mechanism to test the market and 
acquire the needed services at the lowest cost to the taxpayer through 
some appropriate bidding procedure. Again, the majority leader and I 
have discussed this issue. We have agreed to request the Pentagon, the 
Department of Transportation, and the General Accounting Office to work 
together to craft an appropriate competitive bidding procedure. The 
Agencies will report their recommendation no later than April 1, 1997, 
so that the procedure can be employed prior to the renewal of any 
contracts in fiscal year 1998. Implementing the procedure will require 
statutory changes and the majority leader has pledged to assist in 
effecting this modification.

  Mr. LOTT. My colleague is correct in that I am pleased to join with 
him to request the appropriate Federal agencies to determine whether a 
competitive bidding process is appropriate to the Maritime Security 
Program and, if so, to recommend procedures for Congress to consider. 
Such a determination and any recommendations should be submitted to us 
so that we can proceed accordingly for fiscal year 1998 appropriations.
  In finally deciding on a competitive bidding process, however, we 
must not undermine the program in the interest of competition. If 
operators do not have some assurance of stability if they are doing a 
good job, they will not participate in the program and upgrade their 
vessels. In that event, we will be throwing our money away.
  Mr. McCAIN. Mr. President, I would like to raise with the majority 
leader an additional question. Section 16(e) of the bill requires the 
Secretary of Defense to select nine ships in the DOD's Ready Reserve 
Fleet to receive regular maintenance and the bill directs the Secretary 
to geographically distribute the maintenance contracts. As we learned 
in the Gulf war, properly maintaining RRF vessels is critical to 
ensuring timely and efficient sealift capabilities.
  Two issues are raised. First, we must make it absolutely clear that 
in selecting which Ready Reserve ships will be maintained, our national 
defense needs take priority over any secondary goal of geographically 
distributing the contracts.
  Those ships best able to meet our sealift needs under the most likely 
contingency scenarios should be selected without any extraneous 
considerations.
  Second, the goal of geographically spreading out the maintenance work 
must not take precedence over the Secretary's responsibility to obtain 
the highest quality services at the lowest price to the taxpayers. 
Quality and price must remain the primary consideration of where we 
choose to have maintenance work conducted. Would the majority leader 
comment on that?
  Mr. LOTT. I appreciate the Senator's concerns. It is certainly our 
intent that the Secretary choose those ships that are most militarily 
useful no matter where they are ported. Furthermore, it is not our 
intention that efforts to geographically distribute RRF maintenance 
contracts take precedence over quality and cost considerations.
  Mr. McCAIN. So the intent of the legislation is that the Government 
acquire the highest quality services at the lowest prices, irrespective 
of where the shipyard is located, and that the ships are selected for 
maintenance based on their military utility first and foremost.
  Mr. LOTT. The Senator is correct. I appreciate the opportunity to 
make the clarification.
  Mr. McCAIN. Finally, Mr. President, I would like to express my 
concern about a perhaps unintended impact of a provision of this 
legislation regarding Maritime Security Fleet carriers who also 
contract with the Federal Government to carry non-military cargo and 
are paid the U.S.-flag vessel contract price.
  Such carriers will now be allowed to subcontract non-contingency 
related Government work to foreign-flag carriers as a replacement for 
U.S. vessels called up under the Maritime Security Fleet Program to 
serve in a time of conflict.
  We must be sure that when such subcontracts are entered into, the 
U.S. carrier receives from the Federal Government only the amount it 
pays for the subcontracted services, not the amount the carrier would 
otherwise receive for providing the services directly. I think this is 
a very important point.
  Mr. LOTT. I thank the Senator. It is certainly our intention that 
carriers do not automatically receive the U.S.-flag vessel contract 
price if an MSP carrier subcontracts its work to a foreign-flag vessel. 
It is our intent that the Federal Government be able to renegotiate 
such contracts, based on the cost of the replacement vessel. Again, I 
thank the Senator for making this clarification.
  Mr. McCAIN. One final point: When the Pentagon analyzes our sea lift 
need they should work with the DOT to determine what the availability 
of American-flagged ships would be without the subsidy program. This is 
important information we must have before any contracts are renewed.
  Mr. BURNS. I understand the benefits that the Maritime Security 
Program will bring to the United States. However, I am concerned that, 
because this program will be funded through yearly appropriations, 
folks will come looking for offsets every year, which might result in 
new tax proposals, user fee proposals, new duties, or other revenue 
raising mechanisms to be imposed upon the maritime industry at some 
point down the road.
  This would be devastating to the export/import trade in my home State 
of Montana, as well as in other States, because a tonnage tax is 
particularly harmful to bulk commodities. Bulk commodities, as we all 
know, are highly price sensitive in the extremely competitive world 
market--an increase of a few cents a ton, caused by new taxes or fees, 
can make the difference between whether a foreign purchaser buys U.S. 
grain or grain from some other country.
  I do not believe that exporters and importers should bear the burden 
of funding--through tonnage taxes or user fees--this program. On the 
contrary, because the program is designed to benefit the country as a 
whole, it should be funded from general receipts from the treasury, 
and, as I understand it, that is what this act does, is that correct?
  Mr. STEVENS. That is correct. It is an annual appropriation.
  Mr. BURNS. So this act does not, in any way, contemplate funding this 
program by imposing new taxes, user fees, or other revenue raising 
devices that would adversely affect the maritime industry customers 
like the good farmers in Montana.
  Mr. STEVENS. That is correct.
  Mr. NICKLES. I ask unanimous consent to speak as in morning business 
for not to exceed 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________