[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
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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.
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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.
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