[Congressional Record Volume 142, Number 131 (Friday, September 20, 1996)]
[Senate]
[Pages S11069-S11081]
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. LOTT. Mr. President, after a lot of good work by many Senators, I 
believe we have a unanimous consent agreement to allow us to go forward 
on the maritime bill and to schedule votes.
  Mr. President, I ask unanimous consent that the only amendments in 
order to H.R. 1350, the maritime security bill, be the six Grassley 
amendments that are now filed at the desk; further, that the amendment 
relative to rates be subject to a relevant second-degree amendment to 
be offered by Senator Harkin; further, those amendments must be called 
up and debated during today's session; further, following the 
disposition of all amendments, the bill be deemed read a third time.
  I further ask unanimous consent that any votes ordered with respect 
to these amendments be postponed to occur in stacked sequence beginning 
at 5 p.m. on Tuesday, September 24, with 2 minutes for debate equally 
divided before each vote, and at 4:30 p.m., there be 30 minutes equally 
divided on the rates issue.
  Mr. STEVENS. Mr. President, reserving the right to object, it is my 
understanding that there will be 15 minutes for Senator Harkin before 
the motion to table his second-degree amendment and 15 minutes for 
Senator Grassley before we move to table his first-degree amendment.
  Mr. LOTT. That is correct.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. LOTT. Mr. President, now that we have that agreement entered 
into, I will note also there is a clearly understood gentlemen's 
agreement about how the votes will occur in terms of what will be 
tabled and what will not be tabled. We have had very clear 
understanding and discussion on that. We will work very carefully with 
Senators to make sure that understanding is adhered to.
  With this unanimous-consent agreement, also I announce there will be 
no further recorded votes today. The next votes will occur on this 
issue at 5 o'clock on Tuesday. It is possible that other votes will 
occur during the day, Tuesday. We will come in session on Tuesday at 
9:30 a.m. We hope to be prepared to enter an agreement as to how we 
will proceed on Tuesday, with the likelihood, the possibility of votes 
during the day, but these stacked votes will not occur until 5 o'clock.
  I yield the floor, Mr. President.
  Mr. GRASSLEY addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Iowa.
  Mr. GRASSLEY. Mr. President, I am going to offer my first amendment. 
I am going to explain the amendment before I send it to the desk, Mr. 
President.
  Some people think that once we pay for the U.S.-flag companies, the 
$2 million of corporate welfare that we pay per year, per vessel, with 
this bill that we will not have to pay them again to carry actual war 
sustainment cargoes. I think the managers of the bill have, in speaking 
in opposition to some of

[[Page S11070]]

my amendments, have suggested that we got this $2.1 billion corporate 
welfare subsidy per ship, per vessel; that that is all we ever have to 
pay.
  But what we are paying for, if I can tell my colleagues, is the right 
and the obligation of those companies to have those ships available, or 
similar ships available, to do what the Department of Defense requires 
to meet our national security obligations.
  But once those ships are brought in to meet our national security 
obligations--that is presumably when we have to deliver things during 
war--then we have additional costs, because we will have to pay again 
to carry the actual war sustainment cargoes. So the fact that we just 
paid $2.1 million of corporate welfare subsidy per year, per vessel, 
that that is the end of it, is simply not the case.

  There are more charges. H.R. 1350 allows these carriers, even though 
they have already received this heavy corporate welfare subsidy, they 
will be able to charge to carry war sustainment materials at what is 
called ``fair and reasonable'' rates.
  My amendment deals with the subject of fair and reasonable rates. 
Unfortunately, these rates are anything but fair and reasonable to the 
taxpayers. That is what this Government is all about, getting the 
taxpayers the most for their money, at least that is what it is 
supposed to do.
  OK. Why is this way not fair and reasonable to the taxpayers? It is 
because Congress failed in its responsibilities to the taxpayers to 
define ``fair and reasonable'' and has left to the Maritime 
Administration the right to come up with its own definition of ``fair 
and reasonable.'' The problem with this is that the Maritime 
Administration views its primary responsibility, not to the American 
taxpayer, but instead to the welfare of U.S. maritime companies and 
seafarers.
  Therefore, under the guise of ``fair and reasonable,'' taxpayers are 
forced to pay an extra $450 million a year above world market rates to 
ship defense cargoes. When you include other agencies that can be 
involved in paying part of this bill, the taxpayers' bill runs up to 
$600 million a year.
  Price gouging is even worse when we need these U.S. flags for war. 
During the Persian Gulf effort, they charged taxpayers an extra $625 
million. Again, I want to quote other authorities. You might recall on 
September 10, 1990, in U.S. News & World Report, an article entitled 
``Unpatriotic Profits.''

       The Pentagon is miffed at what it feels is profiteering by 
     the operators of two U.S. cargo ships. Because the Navy is 
     required to use American bottoms before contracting with 
     foreign-owned ships, it paid the two U.S. carriers $70,000 to 
     send war materiel to the gulf. The comparable foreign bid was 
     $6,000.

  We paid $70,000, when a comparable bid could cost only $6,000. In 
other words, if our people had been on their toes, or if the Maritime 
Administration had been looking out for the taxpayers, we could have 
shipped that materiel for $64,000 less.
  Before somebody tells me that the GAO concluded that neither U.S. 
flags nor foreign flags gouged taxpayers during the Persian Gulf war, I 
want to remind anybody who might refer to that of two things: First, 
the GAO auditing uses the liberal measure, such as ``fair and 
reasonable,'' not anything close to what the rate would be in a 
competitive market.
  Second, the fact is, a U.S.-flag company did overcharge the Defense 
Department by $18 million for Persian Gulf war transport services. This 
matter is still pending before the Armed Services Board of Contract 
Appeal. So the Defense Department is concerned about being overcharged 
$18 million.
  The Defense Department has made no claims of overcharging by foreign-
flag vessels. In fact, foreign flags typically cost one-half to one-
third the cost of comparable U.S.-flag vessels during the gulf war. 
One-half to one-third less.
  My amendment embraces taxpayers' protection similar to Buy-America 
laws. For instance, under buy America, agencies are required to buy 
products from U.S. companies, but if the same product can be purchased 
from a foreign company at 6 percent less than what the U.S. company 
charges, the Government can buy from foreign sources.
  So you see, I am using definitions in law today. I am applying that 
definition in other sections of the code applying to other purchases of 
service to the maritime industry as it is used in our war efforts.
  My amendment uses the very same Buy-America market test of 6 percent. 
So if my amendment were in place, then U.S.-flag companies, if they 
would charge more than 6 percent above what can be secured from a 
foreign-flag vessel, the Government has a right to hire the foreign-
flag vessel. This amendment will also prohibit a new scheme that allows 
U.S.-flag carriers to charge the Defense Department what they would 
charge infrequent or spot customers.

  Mr. President, let me confer here just a minute.
  Mr. President, I am sorry. I was explaining my Buy-America amendment 
and saying we use the same 6 percent test. That would apply then to our 
maritime industry, like that 6 percent test applies to others. So we 
would prohibit, then, paying more than 6 percent above what competition 
would charge.
  My amendment also has a second portion by prohibiting a new scheme 
that allows U.S.-flag carriers to charge the Defense Department what 
they would charge infrequent or spot customers. My amendment makes 
certain that this bill will require that U.S.-flag vessels give 
taxpayers the same rate that they gave their volume customers like the 
JC Penneys of the world.
  This idea also comes from a lot of activity of other Members in this 
body to apply the same principle. For instance, in pharmaceuticals, you 
may remember a lot of debate we had in this body on the purchase of 
Medicare pharmaceuticals, that Medicare would not be charged any more 
than the largest volume price that the company would give to one of its 
other customers. We apply that principle here to this bill.
  This amendment is not only essential for protecting the taxpayers, as 
these other amendments have been--some of this is even law in other 
provisions of the code--but, also, I offer this amendment because I 
think it is necessary that we slowly and gradually nudge our U.S. 
merchant marine into the competitive world.
  We have done it with our railroads. We have done it with our 
airlines. We have done it with our truckers, my gosh, almost 20 years 
ago. It is about time we start doing it with the maritime.
  Our deficit-riddled Government can no longer afford to allow the 
maritime lobby to block efforts to negotiate worldwide maritime 
reforms. There is another bill in this Congress sitting around here 
right now that has something to do with that. It may not pass because 
of the opposition of some, not all, of the maritime industry to 
competing in the real world out there. Then they will argue, won't 
they, that they need subsidies because foreign competition is unfair. 
So I say they cannot have it both ways.
  Some time ago in a Journal of Commerce article entitled ``On the 
Evils of Maritime Subsidies,'' former Maritime Administrator, Adm. 
Harold E. Shear, stated--and I quote:

       Nearly 50 years of subsidies have not prevented the demise 
     of the U.S. merchant marine . . . Subsidies do nothing more 
     than cause inefficiency, mediocrity, lack of incentive, 
     and dependence upon Uncle Sam.

  That is the statement of a former maritime administrator. He has been 
there. He has seen the entire industry. He has watched it over a period 
of time. That is what he had to say.
  I feel that time is running out on the U.S.-flag merchant marine. 
They must become competitive and give up government welfare. This 
legislation deals with that.
  Once again, I want to speak about several grassroots organizations 
located here in town that speak for the American people on wasteful 
Government spending, who support my efforts on this amendment and on 
this bill. The Americans for Tax Reform ``strongly opposes the 
continuation of maritime subsidies in any form and strongly urges you 
to remove any such subsidies from the bill.''
  We also have a letter from the Council of Citizens Against Government 
Waste, cosigned as well by the National Taxpayers Union. We also have a 
letter from Citizens for a Sound Economy.
  I ask unanimous consent to have those printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:


[[Page S11071]]




                                     Americans for Tax Reform,

                               Washington, DC, September 18, 1996.
       Dear Senator: The ``Maritime Reform and Security Act of 
     1995'' is now pending in this Senate. Americans for Tax 
     Reform strongly opposes the continuation of commercial 
     maritime subsidies in any form and strongly urges you to 
     remove any such subsidies from the bill.
       Numerous independent studies have illustrated the needless 
     and excessive cost of commercial maritime subsidies to the 
     U.S. taxpayer. For example, a 1989 Department of 
     Transportation report done by MIT entitled ``Competitive 
     Manning of U.S.-flag Vessels'' exposed serious waste in this 
     program and determined that maritime subsidies could be 
     reduced by half if there was, in fact a military need for 
     these ships. Even Al Gore has concluded that these subsidies 
     should be abolished.
       Like many proponents of increased government intervention, 
     supporters of this legislation assert that it is necessary 
     for national security reasons. However, this legislation is 
     not likely to be at all effective in accomplishing that task. 
     In fact, the Department of Defense's Mobility Requirements 
     Study, Bottom Up Review Update concluded that even without 
     subsidies, the U.S. fleet would be adequate in the event it 
     was needed in time of conflict. If the United States military 
     can meets its requirements without these subsidies, why are 
     we asking the American taxpayer to foot the bill?
       The subsidies contained in the Maritime Reform and Security 
     Act of 1995 are particularly egregious examples of a bloated 
     federal government spending taxpayers' money on a project 
     that is wholly unnecessary. This Congress has shown its 
     willingness to eliminate ridiculous pork-barrel spending. Why 
     is the Senate even considering extending a program that costs 
     American taxpayers more than $100,000 per job subsidized 
     annually?
       Let's get rid of this wasteful and inefficient program once 
     and for all.
           Sincerely,
     Grover G. Norquist.
                                                                    ____

         Council for Citizens Against Government Waste, National 
           Taxpayers Union,
                                               September 17, 1996.
       Dear Senator: Most members of the 104th Congress have 
     prided themselves on ending welfare as we know it. 
     Unfortunately, the Senate may soon consider H.R. 1350, the 
     ``Maritime Security Act,'' which is nothing more than 
     corporate and labor union welfare. The Council for Citizens 
     Against Government Waste will key vote these votes for our 
     1996 Congressional Ratings. And because they do not key vote 
     per se, the National Taxpayers Union will weigh heavily these 
     votes for their analysis of the 104th Congress.
       Taxpayer watchdog and public interest groups asked to 
     testify at public hearings to expose this welfare for 
     shipping companies, but were denied that opportunity. 
     Therefore, the undersigned organizations oppose this bill and 
     will key vote (or weigh heavily) final passage unless several 
     pro-taxpayer amendments to be offered by Sen. Grassley (R-
     Iowa) and others are adopted.
       According to an internal 1993 White House memo to President 
     Clinton from then-Assistant to the President for Economic 
     Policy Robert Rubin, the primary reason for this $1 billion 
     subsidy is to pay for the exorbitant salaries and benefits of 
     union seafarers.
       In addition, this internal White House memo cited the 
     Defense Department's (DoD) argument that it needed as few as 
     20 U.S.-flag vessels. DoD also proposed a deficit-neutral 
     plan to pay for new subsidies. The DoD plan was supported by 
     the heads of 15 executive branch agencies. Only one-
     Transportation Secretary Pena--opposed this deficit-neutral 
     plan because it ``provides less support than is sought by the 
     industry and its supporters.''
       This is one of my reasons why we join opposition to this 
     bill, and will key vote final passage if the Senate fails to 
     pass Sen. Grassley's pro-taxpayer amendments, especially 
     those that provide protections to taxpayers from maritime 
     rate price gouging and prohibit subsidies from being used for 
     campaign and lobbying purposes.
           Sincerely,
     Council for Citizens Against Government Waste.
     National Taxpayers Union.
                                                                    ____



                                 Citizens for a Sound Economy,

                               Washington, DC, September 16, 1996.
       Dear Senator: On behalf of our 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 the amendments to this bill offered by Senator 
     Charles Grassley (R-Iowa). The amendments would limit the 
     cost to taxpayers from this proposal without weakening our 
     national defense.
       The Act has less to do with maritime policy reform and 
     national security than with corporate welfare. Indeed, this 
     initiative would hand out a staggering $1 billion in 
     subsidies over the next decade to the private merchant marine 
     fleet, without any compelling national security interest or 
     other rationale. It would reward maritime special interests 
     that have been highly vocal on this issue--contributing some 
     $17 million to candidates for political office over the last 
     decade. For taxpayers and consumers, it is quite another 
     story. Assuming, conservatively, that the overall annual cost 
     of present maritime policies is $5 billion, the average cost 
     per seagoing job is no less than $375,000.
       Yet, as Harold E. Shear, a retired navy admiral, concluded: 
     ``Nearly 50 years of subsidies have not prevented the demise 
     of the U.S. merchant marine. . . . Subsidies to nothing more 
     than cause inefficiency, mediocrity, lack of incentive and 
     dependence on Uncle Sam.'' We believe that Mr. Shear, who has 
     overseen the administration of these subsidies as maritime 
     administrator, knows what he is talking about.
       Supporter of maritime subsidies--and H.R. 1350 in 
     particular--maintain that only a U.S.-owned, U.S.-flagged, 
     U.S.-manned commercial fleet can support the military in 
     emergencies. This argument is a red herring. First, as 
     Admiral Shear points out, the impact of subsidies on the U.S. 
     commercial fleet has been questionable at best. Moreover, 
     there is an enormous amount of capacity available on the open 
     market that can deliver more services more reliably at lower 
     cost. The Military Sealift Command made heavy use of foreign 
     ships staffed by non-U.S. citizens in the Gulf War. Only 17 
     ships out of the 500 that went into the war zone during the 
     Gulf War were from the active U.S. flag commercial fleet--
     only six of these had ever received the subsidies.
       In 1993, 15 out of 16 government agencies supported an 
     option presented to President Clinton to limit these 
     subsidies. This is how now-Secretary of the Treasury Robert 
     Rubin described this option in his June 30, 1993 ``Decision 
     Memorandum on Maritime Issues.'':
       ``Subsidies for the U.S. flag feet have always been 
     justified by their role in providing a sealift capacity for 
     use in military emergencies. With the end of the Cold War 
     DOD's sealift requirements have declined. Although DOD's 
     bottom-up review is not complete, the Secretary of Defense, 
     the Chairman of the Joint Chiefs of Staff, and the Commander 
     of the Transportation Command have already concluded that 
     future requirements will not exceed 20-30 liner vessels . . . 
     This opinion would meet DOD'S maximum military 
     requirements.'' [H.R. 1350 subsidizes 47 vessels.]
       We strongly support Seanator Grassley's attempt to address 
     many of the more egregious problems with this bill. Senator 
     Grassley's seven amendments would:
       Eliminate the provisions in H.R. 1350 that for the first 
     time would exempt U.S.-flag vessels from requisitioning, to 
     ensure that vessel operators who receive taxpayer funding 
     cannot escape their obligations in time of war;
       Require that all subsidized U.S. vessels are utilized 
     before foreign-flag vessels may be hired;
       Require subsidized seafarers to serve when needed or lose 
     their license to work on U.S.-flag vessels for five years;
       Prohibit recipients of the handouts provided in the bill 
     from using the money to make contributions to political 
     campaigns. This would make it harder for the maritime lobby 
     to use taxpayer dollars to press Washington for more taxpayer 
     dollars;
       Preclude subsidies from being used in so-called ``public 
     education'' efforts;
       Require that war bonuses paid to seafarers be harmonized 
     with the war bonuses the Pentagon pays regular military 
     personnel. According to Persian Gulf War data, taxpayers can 
     be forced to pay seafarers war bonuses that are 50 times 
     greater than the war bonuses paid to active military 
     personnel;
       Limit maximum vessel rates to no more than 6 percent above 
     world market rates. Currently, the Maritime Administration 
     appears to interpret ``fair and reasonable'' rates to mean 
     whatever rates cover the cost of operation plus a profit 
     margin of about 13 percent and keep as many seafarers in 
     business as possible.
       The American taxpayer--who on average makes less than 
     $29,000 per year--is unlikely in the long term to reward 
     those politicians who grant a government subsidy of over 
     $50,000 a year to a commercial sailor who works no more than 
     six months per year.
       We want to emphasize, that our endorsement of the Grassley 
     amendments should not, in any way, be construed as an 
     endorsement of the bill. We believe that, first, this bill 
     should be defeated. Should that prove impossible, we believe 
     the Grassley amendments must be passed in order to reduce 
     special interest subsidies and soften the blow to taxpayers.
           Sincerely,
                                                     Paul Beckner,
                                                        President.

  Mr. GRASSLEY. These letters speak to the issue of these votes and 
they are scoring these votes in their index of whether or not you are a 
fiscally responsible Member of Congress.
  Mr. STEVENS. Will the Senator yield?
  Mr. GRASSLEY. I am happy to yield.
  Mr. STEVENS. Has the Senator proposed the amendment?
  Mr. GRASSLEY. As a matter of efficiency, I would like to speak to the 
three amendments that I was going to put forth--I will not put six 
amendments forth--and then we would avoid the necessity of setting 
amendments aside. As a matter of efficiency, I wanted to do that.
  Mr. STEVENS. Mr. President, I wonder when we would be able to see the 
amendments that the Senator is offering?

[[Page S11072]]

  Mr. GRASSLEY. We will give you copies of the amendments now, before I 
send them to the desk.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Iowa to 
proceed.
  Mr. GRASSLEY. Mr. President, I am going to offer amendments as a 
combined amendment, amendments that would prohibit the use of money in 
these subsidies to the maritime companies from being used for lobbying 
or for campaign contributions. That will be one amendment.
  I was going to offer it as two separate amendments, but they are so 
closely related, I think they should be joined together. On behalf of 
the amendment I am speaking about now, it would say that these funds 
cannot be used for lobbying or public education.
  For years now, maritime subsidies, such as operating differential 
subsidies, have funneled money into pro-maritime lobbying 
organizations. The Maritime Administration has historically calculated 
a certain amount of the taxpayer subsidies to U.S.-flag carriers to 
cover funding for organizations such as the Transportation Institute 
and the Joint Maritime Congress.
  I want to make clear to my colleagues that I do not have anything 
against the Transportation Institute or the Joint Maritime Congress, 
but it should not be a cost of operation that the taxpayer subsidy is 
going to be used for. This should be funded by private money. It should 
not be a cost of doing business figured into the subsidy.
  My amendment makes certain that these funds cannot be misused for 
such lobbying or so-called public education purposes. There is not much 
that I need to add. The Senate has debated this issue and voted on it 
on other bills at other times, with the principle of my amendment 
applicable to the subject matter of that legislation, as my amendment 
is subject to the maritime legislation.
  On November 9, 1995, the Senate voted on a measure to restrict the 
use of public funds being used for lobbying. So every Senator is on 
record on this issue. Simply put, taxpayers should not be forced to pay 
for lobbying by special interest groups.
  Then the second part of this amendment would say that funds cannot be 
used for campaign contributions. Realizing how much maritime subsidies 
are really maritime union welfare, you can understand why I might argue 
if you are against taxpayer campaign finance, you should vote in favor 
of my amendment.
  Former Congressman McCloskey, a Republican in the House of 
Representatives when he served in the Congress, was involved in this 
issue very deeply because he was high ranking on the subcommittee 
dealing with maritime. He said that seafarers' per capita campaign 
contribution ran 500 times the average of the AFL-CIO member. You 
probably know why. First of all, there are much higher salaries there 
for it to be paid from. Also, the overburdened taxpayers have helped to 
some extent, because to the extent there are subsidies involved in the 
support of the industry, seafarers can afford to be generous with 
campaign contributions.
  My amendment would prohibit this bill, H.R. 1350, the subsidies 
therein, from being used for campaign contributions. Again, this is a 
simple proposition. Taxpayers should not be forced to fund the campaign 
contributions of special interest groups. Congress has already adopted 
similar campaign contribution restrictions on other funding bills. I 
hope my colleagues would support this measure, as well.


                     Amendments Nos. 5393 and 5394

  Mr. GRASSLEY. Mr. President, I send these two amendments to the desk 
and ask that they be read.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Iowa [Mr. Grassley] proposes amendments 
     numbered 5393 and 5394.

  The text of the amendments (Nos. 5393 and 5394) are as follows:


                           amendment no. 5393

       On page 23, after line 25, insert the following:
       ``(7) Fair and reasonable compensation.--The term `fair and 
     reasonable compensation' means that charges for 
     transportation provided by a vessel under section 653 do not 
     exceed by more than 6 percent the lowest charges for the 
     transportation of similar volumes of containerized or break 
     bulk cargoes for private persons.
       At the end of the bill, insert the following:

     SEC. 18. MERCHANT MARINE ACT, 1936.

       Section 901(b) of the Merchant Marine Act, 1936 (46 U.S.C. 
     App. 1241(b)) is amended by adding at the end the following 
     new paragraph:
       ``(3) For the purposes of this subsection, the Secretary of 
     Transportation shall consider the rates of privately owned 
     United States-flag commercial vessels that are available to 
     an agency to transport cargo pursuant to paragraph (1) not to 
     be fair and reasonable if, at the time the agency arranges 
     for the transportation of the cargo, the lowest acceptable 
     rate offered for the transportation by a privately owned 
     United States-flag commercial vessel exceeds the lowest 
     acceptable rate offered for the transportation by a foreign-
     flag commercial vessel by more than 6 percent.''.

     SEC. 19. MILITARY SUPPLIES.

       (a) In General.--Section 2631 of title 10, United States 
     Code, is amended--
       (1) in subsection (a)--
       (A) in the second sentence, by striking ``is excessive or 
     otherwise unreasonable'' and inserting ``is not fair and 
     reasonable''; and
       (B) in the third sentence, by striking ``by those vessels 
     may not be higher than the charges made for transporting like 
     goods for private persons'' and inserting ``by those vessels 
     as containerized or break bulk cargoes may not be higher than 
     the charges made for transporting similar volumes of 
     containerized or break bulk cargoes for private persons''.
       (2) in subsection (b)--
       (A) by redesignating paragraph (3) as paragraph (4); and
       (B) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3) For purposes of this section, the President shall 
     consider the rates charged by a vessel referred to in this 
     section not to be fair and reasonable if, at the time the 
     arrangement is made for the transportation by sea of supplies 
     referred to in subsection (a), the lowest acceptable freight 
     offered for the transportation by any such vessel exceeds by 
     more than 6 percent the lowest acceptable freight charged by 
     a foreign-flag commercial vessel for transporting similar 
     volumes of containerized or break bulk cargoes between the 
     same geographic trade areas of origin and destination.''.
       (b) Motor Vehicles for Member on Charge of Permanent 
     Station.--Section 2634 of title 10, United States Code, is 
     amended--
       (1) in subsection (a)(3), by inserting ``or if the freight 
     charged by a vessel referred to in clause (1) or (2) is not 
     fair and reasonable'' after ``available''; and
       (2) by adding at the end of subsection (b) the following 
     new clause:
       ``(3) The term `fair and reasonable' means with respect to 
     the transportation of a motor vehicle by a vessel referred to 
     in clause (1) or (2) of subsection (a) that the freight 
     charged for such transportation does not exceed, by more than 
     6 percent, the lowest freight charged for such transportation 
     by a vessel referred to in clause (3).''.
                                                                    ____



                           amendment no. 5394

(Purpose: To prohibit the use of funds received as a payment or subsidy 
                   for lobbying or public education)

       On page 16, between lines 23 and 24, insert the following:
       ``(q) Prohibition on the Use of Funds for Lobbying or 
     Public Education.--
       ``(1) In general.--An operating agreement under this 
     subtitle shall provide that no payment received by an owner 
     or operator under the operating agreement may be used for the 
     purpose of lobbying or public education.
       ``(c) Definitions.--For purposes of this subsection, the 
     terms `lobbying' and `public education' shall have the 
     meanings provided those terms by the Secretary of 
     Transportation.
       On page 18, between lines 21 and 22, insert the following:
       ``(4) Prohibition on the use of funds for lobbying or 
     public education.--
       ``(A) In general.--An Emergency Preparedness Agreement 
     under this section shall provide that no payment received by 
     a contractor under this section may be used for the purpose 
     of lobbying or public education.
       ``(B) Definitions.--For purposes of this paragraph, the 
     terms `lobbying' and `public education' shall have the 
     meaning provided those terms by the Secretary of 
     Transportation.
       On page 26, between lines 17 and 18, insert the following 
     new subsection:
       (c) Prohibition on the Use of Funds for Lobbying or Public 
     Education.--Section 603 of the Merchant Marine Act, 1936 (46 
     U.S.C. App. 1173) is amended by adding at the end the 
     following new subsection:
       ``(g) Prohibition of the Use of Funds for Lobbying 
     Education.--
       ``(1) In general.--No subsidy received by a contractor 
     under a contract under this section may be used for the 
     purpose of lobbying or public education.
       ``(2) Definitions.--For purposes of this subsection, the 
     terms `lobbying' and `public education' shall have the 
     meanings provided those terms by the Secretary of 
     Transportation.''.
       On page 16, between lines 23 and 24, insert the following:
       ``(q) Prohibition of the Use of Funds to Influence an 
     Election.--An operating agreement under this subtitle shall 
     provide

[[Page S11073]]

     that no payment received by an owner or operator under the 
     operating agreement may be used for the purpose of 
     influencing an election.
       On page 18, between lines 21 and 22, insert the following:
       ``(4) Prohibition on the use of funds to influence an 
     election.--An Emergency Preparedness Agreement under this 
     section shall provide that no payment received by a 
     contractor under this section may be used for the purpose of 
     influencing an election.
       On page 26, between lines 17 and 18, insert the following:
       (c) Prohibition on the Use of Funds To Influence an 
     Election.--Sectiion 603 of the Merchant Marine Act, 1936 (46 
     U.S.C. App. 1173) is amended by adding at the end the 
     following:
       ``(g) Prohibition on the Use of Funds To Influence an 
     Election.--No subsidy received by a contractor under a 
     contract under this section may be used for the purpose of 
     influencing an election.''

  Mr. GRASSLEY. Mr. President, the last amendment I am going to propose 
on this bill states that subsidized carriers must provide U.S. flag and 
U.S. crews for the entire defense sealift voyage. This amendment is 
responding to the desire, presumably, behind the bill, presumably 
behind cargo preference legislation for 50 years, a necessity of having 
American ships and U.S. crews delivering our products, our materiel, to 
the war zone. So it requires that we have U.S. flag and U.S. crews for 
the entire defense sealift voyage.
  Most believe that if we pay these U.S.-flag carriers this billion 
dollar corporate welfare subsidy over the next 10 years, they will 
carry out their obligation to deliver military sustainment cargo all 
the way into the war zone with their U.S.-flag commercial vessels with 
U.S. crews. Unfortunately, neither the VISA program, which is already 
in place, nor this bill, H.R. 1350, guarantees this. So the legislation 
purports that it is necessary, for our own national security, to have 
our own U.S. ships and our own U.S. crews to deliver to the war zone 
our war materiel. Yet, there is no guarantee from this legislation and 
no guarantee from VISA that this will be the situation.
  What typically is the practice is that U.S.-flag vessels will deliver 
war sustainment materiel to its commercial hub--that hub could be 
Rotterdam, as an example--and then unload it onto foreign-flag, 
foreign-crewed vessels, which will then carry the materiel into the war 
zone.
  But this bill does not correct this situation, the practice of using 
foreign vessels and foreign crews feeders. Now, as you have heard me 
say, that doesn't bother me so much because, as a practical matter, 
that is the way we get our goods there. But it seems to me that if we 
are going to have this subsidy of $2.1 million of corporate welfare for 
each ship and they get paid that just for the obligation they have to 
the United States to be available in case of war, or to provide equal 
service in the case of war, then they ought to be delivering the 
product to the war zone.
  So this practice of transferring to foreign ships and foreign-crewed 
vessels caused us a lot of confusion about the extent of U.S.-flag 
support during the Persian Gulf war. Some believe that these U.S.-flag 
commercial container vessels, which will be subsidized under H.R. 1350, 
delivered 79 percent of our military cargo into the war zone. This is 
just not accurate.
  We must not confuse the difference among the cargoes and the 
ownership of vessels. Although much of the Persian Gulf cargoes were 
carried by U.S. flags, many were Government-owned vessels, not the 
commercial-owned container vessels that seek these taxpayer subsidies. 
In reality, Government-owned and Government-chartered vessels deliver 
50 percent of these cargoes--primarily ammunition and military 
equipment. The remaining 29 percent of cargoes, which was primarily 
sustainment--that included food, clothing, and things like that--was 
transported by U.S.-flag container vessels to some hub port around the 
world. From there, most of the military sustainment cargoes were 
unloaded onto foreign-flag, foreign-crewed vessels, which made the 
deliveries into the war zone. In short, virtually all of the military 
sustainment cargoes carried by U.S.-flag container vessels were 
transferred to foreign flag/foreign crews to be delivered into the war 
zone. Foreign flag/foreign crews made about 500 voyages into the gulf 
war zone. About 300 were feeder vessels that picked up cargo from U.S.-
flag containers at a hub port. This practice will not change under this 
bill and VISA, as it is currently written.
  In fact, this legislation will allow U.S.-flag carriers to meet its 
stage three obligation by substituting its U.S. flag/U.S. crews with 
foreign flag/foreign crews for the entire voyage, not just to the hub.
  Now, what is even more incredible is the fact that these subsidized 
U.S.-flag carriers will be able to charge U.S.-flag premium rates, 
while providing the Department of Defense with foreign-flag/foreign-
crewed vessels.
  Although the inference in this legislation may be that we will have 
American crews with American-owned ships do the necessary job of 
transporting our war materiel, and that may be an intent of the bill, 
it is not a certainty with the bill. It seems to me that we ought to 
nail that down for that $2.1 million corporate welfare subsidy.
  Now, our distinguished majority leader, Senator Lott, on July 30, 
1996, stated this:

       Our military needs a U.S.-flag merchant marine to carry 
     supplies to our troops overseas. We cannot--in fact, we must 
     not--rely upon foreign ships and foreign crews to deliver 
     supplies into hostile areas.

  That was our own distinguished majority leader a little over a month 
ago, speaking of the importance of this. My amendment, then, to H.R. 
1350 is necessary if we hope to achieve the objective stated on July 
30, 1996, by Senator Lott.
  My amendment requires subsidized carriers to provide Uncle Sam with 
U.S.-flag vessels and U.S. crew members to carry the war materiel, and 
to carry it clearly into the war zone, not just to a commercially 
convenient drop-off point, such as Rotterdam. In other words, if we are 
paying a $2.1 million subsidy to have these ships available, with the 
responsibility to get the stuff to the war zone. If the philosophy 
behind this legislation is that we should have this stuff carried to 
the war zone on American ships with American crews, then obviously the 
bill ought to do that. Otherwise, it ought to be made very clear that 
what this bill is supposed to do, it really does not do that.
  So you want to remember that maritime unions and carriers are 
constantly arguing that we cannot trust foreign flag and foreign crews, 
and they say that is why we must subsidize American companies' ships 
with this corporate welfare program that is before us.
  So then it seems to me that, under this philosophy, taxpayers should 
be able to insist that U.S.-flag carriers that receive this billion-
dollar corporate subsidy over 10 years put their national defense 
responsibilities ahead of their commercial interests in times of war.


                           Amendment No. 5395

   (Purpose: To provide that United States-flag vessels be called up 
   before foreign flag vessels during any national emergency and to 
prohibit the delivery of military supplies to a combat zone by vessels 
                that are not United States flag vessels)

  Mr. GRASSLEY. I send this amendment to the desk and ask that it be 
read as I did the other two.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Iowa [Mr. Grassley] proposes an amendment 
     numbered 5395.

  Mr. GRASSLEY. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       At the appropriate place, insert the following new section:

     SEC.  . IMPLEMENTATION OF VOLUNTARY INTERMODAL SEALIFT 
                   AGREEMENT.

       (a) In General.--In any national emergency covered under 
     the Voluntary Intermodal Sealift Agreement described in the 
     notice issued by the Maritime Administration on October 19, 
     1995, at 60 Fed. Reg. 54144, the Secretary of Transportation 
     shall ensure that, to the maximum extent practicable, United 
     State-flag vessels are called into service to satisfy 
     Department of Defense contingency sealift requirements under 
     a State III activation of the Agreement (as described in the 
     notice) before foreign flag vessels are used to satisfy any 
     such requirements.
       (b) Level of Participation.--
       (1) In general.--Notwithstanding any other provision of 
     law, United States-flag vessels that are the subject to a 
     payment or subsidy under title VI the Merchant Marine Act, 
     1936, as amended by section 2 of this Act, shall be required 
     to participate under the Voluntary Intermodal Sealift 
     Agreement in accordance with this section.

[[Page S11074]]

       (2) Stage iii level of participants.--In a Stage III 
     activation of the Voluntary Intermodal Sealift Agreement, a 
     carrier shall make available for satisfying Department of 
     Defense contingency sealift requirements 100 percent of the 
     carrier's United States-flag vessels that are subject to a 
     payment or subsidy referred to in paragraph (1).
       (3) Stage i or ii level of participation.--In a Stage I or 
     II activation of the Voluntary Intermodal Sealift Agreement, 
     a carrier shall make available for satisfying Department of 
     Defense contingency sealift requirements the maximum 
     percentage practicable of the carrier's United States-flag 
     vessels that are subject to a payment or subsidy referred to 
     in paragraph (1).
       (c) Requirement for Certain Stage III Participants.--
       (1) Requirement.--Notwithstanding any other provision of 
     law, in the provision of sealift services in accordance with 
     a Stage III activation of the Voluntary Intermodal Sealift 
     Agreement, a United States-flag vessel referred to in 
     subsection (b) shall be operated by a crew composed entirely 
     of United States citizens--
       (A) whenever the vessel is in a combat zone; and
       (B) during any other activity under Stage III of such 
     agreement.
       (2) Prohibition.--A carrier may not use any vessel other 
     than a United States-flag vessel operated by a crew composed 
     entirely of citizens of the United States to provide any part 
     of sealift services that the carrier is obligated to provide 
     under a Stage III activation of the Voluntary Intermodal 
     Sealift Agreement.
       (d) Consultation.--The Administrator of the Maritime 
     Administration, in consultation with the Secretary of 
     Defense, shall establish procedures to ensure that the 
     requirements of this section are met.
       (e) Definition.--For purposes of this subsection, the 
     following definitions shall apply:
       (1) Combat zone.--The term ``combat zone'' shall have the 
     meaning provided that term in section 112(c)(2) of the 
     Internal Revenue Code of 1986.
       (2) National emergency.--The term ``national emergency'' 
     means a general declaration of emergency with respect to the 
     national defense made by the President or by the Congress.

  Mr. GRASSLEY. Mr. President, parliamentary inquiry. The other two 
amendments are officially before the body as well.
  The PRESIDING OFFICER. The Senator is correct.
  Mr. GRASSLEY. I inform the Senator from Alaska and the Senator from 
Hawaii that these are the amendments that I proposed. I can offer more. 
Obviously, if I am going to offer more, I have to do it before 2 
o'clock. Am I right, Mr. President? These amendments must be offered by 
2 o'clock?
  The PRESIDING OFFICER. Any amendments to this bill would have to be 
offered by 5 p.m. today.
  Mr. STEVENS. If the Senator will yield, that includes time for 
Senator Harkin to offer his amendment.
  Mr. GRASSLEY. I am going to give up the floor. I just wanted to speak 
to the fact that there might be some reason that I cannot think of 
right now to offer another amendment. I do not really anticipate doing 
it. So I yield the floor. I would be happy to respond to questions or 
engage in debate. I should give my opponents the courtesy of listening 
to their objections to my amendments. Whatever the floor managers at 
this point want to do, I yield the floor.
  Mr. STEVENS. Mr. President, we have not had a chance to study the 
amendments. I only have the first one in my hand now. We have two more. 
I can't debate these amendments until I have a chance to analyze them. 
So I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. INOUYE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                Amendment No. 5396 to Amendment No. 5393

(Purpose: To provide for payment by the Secretary of Transportation of 
  certain ocean freight charges for Federal food or export assistance)

  Mr. INOUYE. Mr. President, on behalf of the Senator from Iowa [Mr. 
Harkin], I send to the desk an amendment to the Grassley amendment No. 
5393, and this is offered in the second degree.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Hawaii (Mr. Inouye), for Mr. Harkin, 
     proposes an amendment numbered 5396 to amendment numbered 
     5393.

  Mr. INOUYE. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       In lieu of the matter proposed to be inserted, insert the 
     following:

     SEC.   . OCEAN FREIGHT CHARGES.

       (a) In General.--Notwithstanding any other provision of 
     law, the Secretary of Transportation shall finance any ocean 
     freight charges for food or export assistance provided by the 
     Federal Government for any fiscal year, to the extent that 
     such charges are greater than would otherwise be the case 
     because of the application of a requirement that agricultural 
     commodities be transported in United States-flag vessels.
       (b) Application of Other Acts.--Subsections (c), (d), and 
     (e) of section 901d of the Merchant Marine Act, 1936 (46 
     U.S.C. App. 1241h) shall apply to reimbursements required 
     under subsection (a).
       (c) Definitions.--As used in this section:
       (1) Agricultural commodity.--The term ``agricultural 
     commodity'' has the same meaning given to such term by 
     section 402 of the Agricultural Trade Development and 
     Assistance Act of 1954.
       (2) Food assistance.--The term ``food assistance'' means 
     any export activity described in section 901b(b) of the 
     Merchant Marine Act, 1936 (46 U.S.C. App. 1241f(b)).

  Mr. INOUYE. Mr. President, pursuant to the agreement, this amendment 
will be discussed on Tuesday at 4:30.
  Mr. President, if I may, during the time available, respond to the 
amendments as submitted by Senator Grassley, many critics of the U.S.-
flag merchant marine have suggested that the U.S. military rely on 
foreign-controlled and foreign-flag vessels for sealift because they 
maintain that to ship goods on foreign vessels would be less expensive. 
However, I would like to suggest that to do this would subject our 
Armed Forces to a highly unreliable source of sealift and supply. This 
would leave the United States at the mercy of price gouging by foreign-
flag vessels who would have a captive client.
  For example, in the recent war in the Persian Gulf, 80 percent of the 
cargo was carried on American flags. We had to pull out ships from all 
over the seven seas. But we cannot provide 100 percent coverage of all 
cargo. It was not possible. Our fleet was not large enough. Therefore, 
to carry the remaining 20 percent, we had to rely on foreign vessels.
  These statistics that I am about to present, Mr. President, have been 
confirmed by the GAO and confirmed by the Department of Defense. The 
average cost of Desert Shield-Desert Storm shipping by foreign flag was 
$174 per ton. The average cost for Desert Shield-Desert Storm shipping 
by U.S. flagships was $122 per ton. It was $52 per ton cheaper on 
American ships. When shipping was particularly essential, when the 
demand for shipping space became an urgent matter, foreign-flag vessels 
began to gouge the U.S. military. And I am going to read examples of 
this.
  During this period, the vessel Green Lake, which is an American 
vessel, was paid $31,500 per day to charter. The vessel capacity was 
400,416 square feet. For each dollar that we paid, we carried 12.71 
square feet. We were able to purchase 12.71 square feet for $1.
  In the case of the Italian vessel Jolly Smeraldi, we paid a $29,000 
per day charter cost. The vessel capacity is 97,427 square feet. And 
for each dollar that we provided this Italian ship, it provided us 3.35 
square feet as compared to the American at 12.71.
  The Saudi Riyada, we paid that company $25,000 per day. The Saudi 
Riyada evidently is owned by the Government of Saudi Arabia. The vessel 
capacity is 141,000. And for each dollar that we paid the Saudi Riyada, 
we were able to use 5.64 square feet.
  I could go on and read dozens of cases of this sort. But in each case 
we got a bargain from American steamship companies, whereas, on the 
other hand, these companies, these foreign vessels, were gouging us.
  For example, it might interest Americans to know that the Norwegian 
vessel Arcade Eagle was given $16,000 per day by charter, and they 
carried 55,000 square feet of cargo which comes down to 3.43 square 
feet per dollar. The usual charge of the Arcade Eagle would be $8,000 
per day for charter. But in this case, because they knew that the 
United States had no choice but to rely upon foreign vessels, they 
doubled their cost. And in each case, whenever we called upon foreign 
vessels to help us carry cargo to this war zone, they

[[Page S11075]]

jacked up the price because they knew we had no choice.
  What I am trying to say is that notwithstanding the criticism we 
might hear, we get a better deal from American vessels than from any 
foreign-flag vessel. In the case of the U.S. ship Green Lake, for 
example, for $1 we had more than 12 square feet of cargo space. For the 
Panamanian ship Takoradi, for each dollar we paid that company, we got 
2.85 square feet of cargo space.
  Second, one of the amendments would require that any cargo carried by 
American vessels must continue on into the war zone. This would take 
away the military flexibility that is so necessary to the military 
leaders for one reason. Not all harbors are deep enough. Most of the 
American ships are the larger ones, the tankers, the huge tankers that 
can carry a large amount of cargo, and they require deep harbors. These 
are deep draft ships. These are not small ships.
  For example, it would be impossible for the Green Lake to go to 
Somalia. That was one of the war zones. It would be impossible for the 
Green Lake to go into the harbor in Bosnia. Therefore, the Green Lake 
would carry the cargo to the nearest major port, in the case of the 
Bosnian war, in Italy and there place the cargo on smaller American or 
foreign vessels to finish up the journey. And so this amendment which 
would require military leaders to charter ships that will carry a cargo 
from point of departure to point of arrival without any stoppage would 
take away the flexibility that military leaders require.
  These amendments just make no sense, Mr. President. And finally, the 
amendment proposed relating to campaign contributions and educational 
programs. The amendment says that if any company receives subsidies, 
that company may not involve itself in providing campaign contributions 
or involving themselves in political campaigns.
  There are many subsidy programs in the United States. Farmers receive 
large amounts of subsidy. They join the Farm Bureau. Does this mean 
that the Farm Bureau can no longer participate in political campaigns? 
Does it mean that it cannot make political contributions? If this 
amendment were to be applied to all subsidy recipients, and many 
subsidies are for research grants--just about every university in the 
United States receives some sort of grant. Some are large; some are 
small. Does this mean that the professor who is conducting the research 
program is denied his constitutional right to make a campaign 
contribution?
  These amendments at first glance may appear to be reasonable, 
rational, and very American, but when one analyzes the amendments, they 
begin to bring up problems that I do not think the author intended.
  So I hope that when the time comes on Tuesday to determine whether to 
accept or to deny these amendments my colleagues will vote against 
them.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. Mr. President, on July 30, 1996, Senator Lott said, and 
I quote, ``We cannot, in fact, we must not, rely on foreign ships and 
foreign crews to deliver supplies into hostile areas.''
  This is the impetus for one of the three amendments that I have that 
require American crews and American bottoms subsidized by this bill, to 
carry war materiel, carry it the entire way to a war zone. And this 
legislation does not require this.
  I know it is the intent of the legislation that American bottoms and 
American crews be used most of the time, or maybe all the time. That 
may be the intent. But it is not required. And Senator Lott being one 
of the biggest proponents of this legislation stated this. Since this 
is his measure of the importance of our maritime industry, I felt we 
should bring that issue here in the way of my amendment.
  Now, I want to speak maybe just for 3 or 4 minutes in response to the 
amendment that has not been debated but has been offered by the Senator 
from Hawaii for my colleague from Iowa, Senator Harkin.
  I know there is going to be an opportunity for us to speak on this 
Tuesday under the unanimous consent, but I would like to express this 
thought about this idea of my colleague from my State.
  This happens to be the second time that my colleague from Iowa has 
tried to undercut my efforts to obtain sanity and control over the way 
we shovel union welfare and corporate welfare funds to the U.S. 
maritime industry and the merchant marines. The last time was 6 years 
ago exactly.
  The purpose of this amendment is to have the U.S. Department of 
Transportation pay the cargo preference costs rather than the 
Agriculture Department for the food programs of the Agriculture 
Department. I do not think we can find any fault with the 
Transportation Department paying it instead of the Agriculture 
Department, because it is a transportation cost and it is not the cost 
of food. But it does not accomplish anything and is just a bookkeeping 
issue.
  So I said then, 6 years ago, and I say again today, it does not make 
any difference which agency pays for cargo preference--either way 
taxpayers get ripped off. So this amendment by my colleague from Iowa 
would continue to allow the maritime labor unions to rip off taxpayers.
  I read in debate yesterday from this Rubin-Clinton memo. The Rubin-
Clinton memo had been sent to every Senator last year by Citizens 
Against Government Waste. I had it delivered again to each office 
yesterday.
  In short, Secretary Rubin, in his memo to President Clinton on this 
issue of subsidies for the maritime industry, President Clinton's own 
Cabinet people argue that maritime subsidies are simply aimed at paying 
high-priced seafarers. They argued that the maritime subsidies are 
little more than a jobs bill, and it would be unfair to give special 
treatment to seafarers unless President Clinton would be willing to 
give other workers facing job losses the same type of subsidies.
  The amendment I have on this bill is supported by taxpayers' 
organizations because it goes to the heart of wasteful maritime 
subsidies. My amendment requires Congress to define the legal term 
``fair and reasonable rates.''
  So, if Senator Harkin's amendment would be adopted, then that would 
undercut the pressure for Congress to define what is fair and 
reasonable, because we have left that definition to the maritime 
industry. The Maritime Administration has been more concerned about the 
maritime industry and the maritime unions, protecting them, than 
protecting the taxpayers. So they have a very liberal ``fair and 
reasonable rate'' definition.
  So, in my amendment, which Senator Harkin has offered to amend, we 
use the same type of definition for taxpayers' protection that are 
under Buy-America laws, which are already on the books. In short, such 
as with Buy America, agencies can buy products, or in maritime cases it 
would be services, if U.S. companies are charging taxpayers 6 percent 
more than foreign companies. My amendment might save the taxpayers $500 
million a year.
  Now, for $500 million a year I use as a source--I honestly can 
document $500 million. There is, in every budget since Darman was 
Director of the Office of Management and Budget, a figure on what cargo 
preference costs are. We never had it in previous budgets. At least we 
have a dollar figure on it now.
  So, Senator Harkin's amendment in the final analysis does not save 
the taxpayers one thin dime. It merely says this is going to be paid 
for out of transportation rather than out of the Agriculture 
Department. So I urge my colleagues to oppose this amendment.
  I do not think we should fool ourselves. This amendment will not help 
farmers who happen to be taxpayers as well. My amendment gets at saving 
taxpayers the money, not just saying who is going to pay for the cost 
of cargo preference.
  Our appropriating committees will simply take money out of funds 
allocated under agriculture to buy food for those starving overseas, 
which is the agriculture program involved, and they will take whatever 
the cargo preference cost is and give it to the Transportation 
Department. Farmers will

[[Page S11076]]

not sell more food under this amendment. It will not save the taxpayers 
any money. And this is the reason this amendment should be opposed.

  I yield the floor.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. STEVENS. Mr. President, I wish I had the luxury of the Senator 
from Iowa to make statements that he just made. The Senator from Hawaii 
and I have the duty to also manage the defense budget. We know what it 
costs to maintain ships and crew them 12 months a year, to pay for the 
construction of the ships in order to have them available to send food 
and supplies to our service men and women when they are at war. We can 
no longer afford that. We have had to abandon the program started by 
President Eisenhower. As I said on the floor right here last night, the 
build and lease programs where we built the ships and we leased them to 
other people during peacetime and we used them during war, it cost us a 
great deal more than the system does now.
  I am sad that these great organizations that support the concept of 
protecting the taxpayers have been misled again. But they have been 
misled. If we followed the advice of the Senator from Iowa, we would be 
spending billions more--billions. We did spend billions. We have cut it 
down now to where it is going to be less--I have said $150 million less 
than the program costs us today--if we pass this bill.
  This amendment of the Senator would require that U.S. ships carry 
Government cargo at rates no more than 6 percent higher than the lowest 
rate charged by any foreign-flagged vessel, regardless of the quality 
of the vessel or whether or not that vessel could even handle the 
cargo. These foreign-flagged vessels operate under flags of 
convenience. They do not meet our safety requirements, environmental 
standards, and they do not pay decent wages. Their seamen left the 
ships when we had them under contract to go to the Persian Gulf. They 
abandoned their ships. They would not go into harm's way.
  Cargo preference accounts for only 1\1/4\ percent of all commercial 
and Government agricultural exports. The Senator from Iowa is 
representing farmers very well. I understand that. We represent the 
taxpayers. I think the fact that these taxpayers' organizations have 
been misled by things like my friend from Iowa has said is what gets us 
into so much trouble with these organizations.
  The 1997 budget estimate for cargo preference is $70 million--$70 
million. The nationally recognized accounting firm of Nathan Associates 
estimated the U.S. Treasury receives back $1.26 for every $1 spent on 
cargo preference. The extra 26 cents comes from the fact that the U.S. 
taxes would not be paid if we do not have a U.S. fleet and U.S. crew. 
In other words, we are actually saving the taxpayers' money by using 
cargo vessels that pay to support our system. And we hire people who 
pay taxes.
  If you want to hire foreign ships and foreign crews, you do not get 
any taxes, you do not get compliance with Federal standards. We have 
all sorts of problems, including the fact that the crews abandon ship 
when they have to go into war zones. That has to be figured in, but the 
cost to the taxpayers, if we follow the approach that is outlined by 
the Senator from Iowa, would be to go back to building the ships, keep 
them standing in some port, paying people to sit on them, waiting until 
the time we have to go to war.

  We have worked out a better system. This system is being designed in 
the interest of the taxpayers. The GAO estimates without the cargo 
preference, the U.S. fleet would shrink dramatically. In other words, 
we would have no vessels available for sealift. None. We can predict 
how long it would be. We can actually tell you exactly when there would 
no longer be any ships, and we would be completely dependent upon 
foreign ships to maintain our military posture. Imagine that, the last 
superpower of the world would have to go begging around the world in 
time of crisis to find some way to send supplies to our people.
  The GAO found that we would lose 90 percent of the bulk cargo fleet, 
80 percent of the cargo vessels, 75 percent of the intermodal vessels 
and 35 percent of the tankers. That is a vast majority of our fleet if 
we followed the advice of the Senator from Iowa.
  I tell the Senate again, I don't know why we have to, as Members of 
the Senate, be threatened--threatened--by the taxpayers unions. That is 
what the Senator is doing. It is already on a sheet. Every one of us is 
going to be rated now by a group that is being misled. If they want to 
come to me, I will show them what it will cost to build a fleet, I will 
show them what it costs to maintain the fleet, because we know what it 
used to cost us. We did that in the period after World War II. Then we 
went into the Eisenhower build and lease program, and we know what that 
cost. But it was the best system available then.
  We have a system now, we have an agreement from our people that they 
will provide us, just like we provide airplanes now. Mr. President, we 
do not maintain a full air cargo fleet in our military any longer. We 
have a CRAFT program, the civil reserve air fleet. We use our planes 
that are cargo planes--the best in the world--manned by Americans, 
built by Americans, owned by Americans, and they are available to us.
  That is exactly what we are going to do now with the maritime cargo 
fleet. We are going to deal with U.S. vessels. We have this system, and 
it is going to cost the least amount in the history of the United 
States to provide it. The Senator from Iowa has the audacity to tell me 
that I am going against the taxpayers of the United States to put 
forward this bill to provide that system. I say this is the kind of 
thing that destroys the confidence in the Congress, to have people of 
this country told that we are wasting money when we devise a system 
that brings back $1.26 for every dollar we spend in order to keep this 
reserve military sealift capacity available.
  I am sorry to say, unfortunately, under the agreement, we don't have 
any time to answer the Senator on Tuesday. Both Senators from Iowa will 
have 15 minutes to explain their amendments, and we have the right to 
table them. So I hope we have the confidence of this Senate that the 
Senator from Hawaii and I normally enjoy, and that is, that we will not 
mislead the Congress, we will not mislead the people of the United 
States, and we are not going to mislead the taxpayers.
  The people misleading the taxpayers are these people who are coming 
forward with these fallacious arguments and presenting figures that 
cannot hold up. These have been studied by independent people, by the 
nationally recognized accounting firms, by the Government Accounting 
Office that we rely on as a branch of the Government, and they have 
told us this system is sound.
  What the Senator from Iowa is trying to do is kill this bill. Any one 
of the amendments, if they are adopted this late in the Congress, sends 
this bill back to the House, and it is dead. So I intend to oppose all 
of his amendments and oppose them for what they are: Killer amendments. 
That is what they are, killer amendments, and that is his design--to 
kill. He has tried several times to kill the cargo preference concept. 
We back it because it is the most efficient way to handle export of 
products produced by farmers from the farm belt of this country, great 
people. We buy their grain and we ship it abroad on a humanitarian 
concept.

  The Senator objects to the fact we are using American ships, American 
crews, American management to do that. The reason we use the American 
fleet is that we must have it in the event of war. Without our program, 
we would not have it. We would not have any, and I, in my capacity as a 
member of the Commerce Committee, support the cargo preference concept 
because I know, in my capacity as chairman of the Defense 
Appropriations Committee, if we do not, we have to put much more of our 
money that could be used to maintain our Army, our Air Force, our Navy, 
our Marine Corps, into maintaining a ready fleet to carry our goods to 
support our people if we ever have to deploy them.
  My staff points out if this bill is killed, it will leave intact the 
more expensive system we are trying to replace. That is the point I am 
trying to make, too. The bill before us has been the one we have been 
working on, the Senator and I, now for two decades trying to put 
forward a concept like this.

[[Page S11077]]

 We finally got a bill out of the House. I want to see it go to the 
President and signed before this Congress is over.
  I will come back at a later time and address the other amendments of 
the Senator from Iowa. Unfortunately, Mr. President, I must leave the 
floor, as the Senator from Iowa did last night several times. I must 
leave for an hour. I will be back at 1:30.
  Mr. INOUYE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Hawaii.
  Mr. INOUYE. Mr. President, if I may comment upon the very eloquent 
statement made by my colleague from Alaska on cargo preference. Cargo 
preference is not new. In fact, every nation on this globe that has a 
maritime fleet has cargo preference. The United States was the last 
nation to adopt cargo preference as part of its economic policy.
  How does cargo preference operate? Whenever we buy oil from Saudi 
Arabia, the requirement is if you are going to buy Saudi oil, it will 
be shipped on Saudi ships, and the only time an American ship may carry 
that Saudi oil is when there are no Saudi ships available. We have no 
say as to how much they are going to charge for the shipment of that 
crude oil.
  Whenever we buy automobiles from Toyota, Mitsubishi, and God knows 
what else, they come in on Japanese ships, not on American vessels, 
because that is part of the cargo preference agreement.
  Our cargo preference laws are very limited. It applies only to 
humanitarian goods, agricultural products. For example, when starvation 
was rampant in Ethiopia, the United States, like most other nations, 
responded by sending food. Under our laws, it says that 50 percent of 
those products must be shipped on American vessels; the other 50 
percent on foreign vessels. We are not like other countries that would 
say every pound of grain must be shipped on American vessels. We say 50 
percent. There are those who are suggesting either to wipe this out or 
bring it down to 25 percent.
  What are the consequences? Imagine American grain on a Russian vessel 
shipped to Ethiopia--and this is not a hypothetical, Mr. President, it 
is done--with the red flag. And you can just hear the stevedores 
unloading American grain, an American gift and saying, ``Thank you, 
Soviet Union.'' ``Thank you, Russia.'' That is how it appears. By cargo 
preference, we are keeping our fleet alive.

  Mr. President, I think we should remind ourselves that at the end of 
World War II we were the superpower when it came to shipping. No other 
nation came close to us. The British fleet was at the bottom of the 
Atlantic and the Pacific Oceans. The Russian fleet was nonexistent. The 
German fleet was nonexistent. The Japanese fleet was nonexistent. We 
were the shipping nation of the world.
  Today, Mr. President, we have less than 350 ships. We are No. 15. The 
Chinese have more ships, the Greeks have more ships, the Italians have 
more ships, the British have more ships. In order to bring down the 
cost of running this Government and taking off the burden from our 
taxpayers, we have strange laws.
  This might interest you, Mr. President. The mail that is now being 
carried from our shores to our NATO allies, that is, in Europe, one 
would assume would be carried on American vessels. Russian mail from 
Russia comes in on Russian ships. British mail from England would come 
in on British ships. Japanese mail would come in on Japanese ships.
  So you would think that American letters from here to Europe and from 
Europe to America would be on American ships. No, it is not so. We open 
it up to bid. The lowest bidder will carry the cargo and the ships and 
the mail. The shipping company that carries our mail is the Polish 
Steamship Company. It is owned by Poland. It is not a private steamship 
company. It is owned by the Government of Poland, fully subsidized. How 
can you expect any American vessel to bid against the Polish Steamship 
Company? At one time it was the Russian Steamship Company.
  These steamship companies are either fully subsidized or partially 
subsidized by their nation. The United States has to compete in that 
playing field. So the small amount that we set aside for cargo 
preference is not only wise, it is not only prudent, it is absolutely 
necessary because without that you will find that many of our ships 
would decide to go out of business.
  I think we should also keep in mind that our ships, unlike those 
ships of other countries, pay good wages. I do not suppose Americans 
would expect our merchant seamen to work for minimum wage. I do not 
suppose that we American taxpayers want our merchant seamen to have no 
health benefits, no pension programs. I think they are entitled to 
pension programs like other workers. They are entitled to at least a 
minimum wage like other workers.
  Most of the sailors on foreign vessels do not match our minimum wage. 
And we expect, under this amendment, to have our ships pay a rate that 
would require the companies to pay our merchant fleet seamen less than 
minimum wage? It is outrageous. It is demeaning.
  Mr. President, I hope that we will join our chairman from Alaska to 
oppose all of these amendments. Cargo preference is not bad. It makes 
good sense. I yield the floor.
  Mr. GRASSLEY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. I know that my colleague from Alaska had to leave the 
floor for an hour, and legitimately so, because he has important duties 
elsewhere. But I want to take time to respond to the sadness he 
expressed that organizations like the National Taxpayers Union would be 
concerned about the waste in this bill, as they see it and as I see it, 
the fact that we should not have corporate welfare subsidies, and that 
they are reflecting their membership at the grassroots level, that he 
is sad for that, or at least for what he considers to be a negative 
impact that that process has on the legislative process.

  He should not be saddened in any way because basically what we are 
talking about here is a constitutional right that is in the first 
amendment. It is in the first amendment and about which you do not hear 
much. You always hear about freedom of speech, freedom of religion, 
freedom of press, but you do not read much about the right to petition 
your Government for redress of grievances.
  All these organizations are doing, in opposing this legislation, is 
speaking for their grassroots membership who feel that Washington is 
wasting money on a corporate welfare subsidy. We ought to encourage 
that process. We should not be saddened by that process. It is what has 
made America great for the 209-year history of our constitutional 
Government. I want to encourage it.
  If I had letters from the National Taxpayers Union in opposition to 
this legislation, that is not any more illegitimate than the Senator 
from Alaska or the Senator from Hawaii having letters from the maritime 
industry, the individual corporations, or from the maritime unions in 
support of the legislation.
  Everybody has a right to voice their opinion on legislation. We ought 
to spend our time listening and encouraging that process. We should not 
be discouraging that process. The more open Government can be, the 
stronger our Government will be. And there is so much cynicism at the 
grassroots that we do not listen to our people that it is weakening the 
very foundation of our system of representative government. Each one of 
us has a responsibility to encourage that process of representative 
government and to listen.
  It is better to listen to a Taxpayers Union member in my State of 
Iowa than their national organization. It is better to listen to the 
individual who does not belong to any organization than it is to listen 
to organizations in town. But the right of association guarantees those 
same people at the grassroots who feel that they do not have time to 
work the governmental process to work through organizations. That is 
just as true of the members of the National Taxpayers Union as it is 
the employees of John Deere in Waterloo, IA, working through their UAW 
people in Washington, DC; albeit, it is better if each of us listened 
to the individual and not have it filtered through the organization.
  The issue was brought up by the Senator from Alaska of how this saves 
money. If you compared the cost of existing programs, this bill will 
cost less.

[[Page S11078]]

 I do not dispute that. I have never disputed that. But can we spend 
even less and get the job done? I feel we can. And if we can, we 
should.

  It was disputed that I had the authority to use numbers for savings. 
We know what cargo preference costs. We know that because after my 
railing about it for several years, the Office of Management and Budget 
started ferreting out the information where it is hidden in the 
appropriations of different departments, and bringing it together in 
one figure. It is in the President's budget document. So that $600 
million figure I did not make up. It is a study figure from the 
President's budget.
  Now, whether or not these good-Government groups like the National 
Taxpayers Union should be sending these letters, I suggest to the 
leadership of this bill that it would not have been necessary for that 
point of view to be considered this late in the legislative process. 
They and other organizations in opposition to this legislation, a year 
ago, asked to be part of a public hearing where only the proponents of 
this legislation were allowed to appear--only the proponents of the 
legislation. The opposition was not heard.
  If the committee process had worked the way it should have worked--
without having both pro and con in a hearing, to have a fair hearing. 
They tried to get a second hearing since then, and for a long period of 
time was promised such a hearing, but it did not come off. So these 
problems would not have existed in getting their point of view out if 
they had been heard in the first place.
  So that it is plain, very plain that these organizations did ask to 
appear. From the director of government relations of Citizens for a 
Sound Economy, I will read part of this letter:

       To date, the subcommittee on Surface Transportation of the 
     Merchant Marine has held one hearing on the act, failing to 
     invite any of the many individuals and organization opposed 
     to the bill. We believe that consideration of the act without 
     the benefit of open debate will prevent the Senate from 
     making an informed decision in this matter.

  Americans for Tax Reform say:

       I strongly urge you to hold hearings on this entire bill 
     before the full committee in which those opposed to continued 
     maritime subsidies are allowed to state their views.

  We also have Citizens Against Government Waste. To the chairman of 
the committee:

       Therefore, we urge that no Senate consideration of either 
     H.R. 1350 or S. 1139 be allowed until the first Senate 
     commerce committee holds open hearings allowing independent 
     experts and critics to testify.

  Then a letter from my colleagues:

       We therefore request that before either H.R. 1350 or S. 
     1139 be considered by the Senate that you hold a series of 
     full committee hearings to explore the work devoted to the 
     Rubin memo and the MIT study, and to hear the concerns and 
     successes.

  Suggestions from a growing number of critics of maritime subsidies--a 
letter on March 12 of this year was sent to the chairman of the 
committee and signed by Bob Dole, John Ashcroft, Don Nickles, Nancy 
Kassebaum, Hank Brown, myself, Jon Kyl, Jesse Helms, and Rod Grams, the 
distinguished Presiding Officer right now. We did not get into the 
hearing room, obviously.
  I ask unanimous consent these letters be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                     Americans for Tax Reform,

                                     Washington, DC, May 10, 1996.
     Hon. Lary Pressler,
     U.S. Senate,
     Washington, DC.
       Dear Senator Pressler: The so-called ``Maritime Reform and 
     Security Act of 1995'' (H.R. 1350 and S. 1139) is now pending 
     in the Senate--without a single opportunity for those who 
     oppose the continued corporate maritime subsidies in the bill 
     to testify before the Subcommittee on Surface Transportation 
     and Merchant Marine. Americans for Tax Reform strongly 
     opposes the continuation of commercial maritime subsidies in 
     any form and strongly urges you to hold hearings before the 
     full Commerce Committee on all of the provisions of this 
     bill.
       Numerous independent studies have illustrated the needless 
     and excessive cost of commercial maritime subsidies to the 
     U.S. taxpayer. For example, a 1989 Department of 
     Transportation report done by MIT entitled ``Competitive 
     Manning on U.S.-flag Vessels'' exposed serious waste in this 
     program and determined that maritime subsidies could be 
     reduced by half if there was, in fact a military need for 
     these ships. Even Al Gore has concluded that these subsidies 
     should be abolished.
       Like many proponents of increased government intervention, 
     supporters of this legislation assert that it is necessary 
     for national security reasons. However, S. 1139 is not likely 
     to be at all effective in accomplishing that task. In fact, 
     the Department of Defense's Mobility Requirements Study, 
     Bottom UP Review Update concluded that even without 
     subsidies, the US shipping fleet would be adequate in the 
     event it was needed in time of conflict. If the United States 
     military can meet its requirements without these subsidies, 
     why are we asking the American taxpayer to foot the bill?
       The subsidies contained in the Maritime Reform and Security 
     Act of 1995 are particularly egregious examples of bloated 
     federal government spending taxpayers' money on a project 
     that is wholly unnecessary. This Congress has shown its 
     willingness to eliminate ridiculous pork-barrel spending. Why 
     are you even considering extending a program that costs 
     American taxpayers more than $100,000 per job subsidized 
     annually?
       I strongly urge you to hold hearings on this entire bill 
     before the full committee, in which those opposed to 
     continued maritime subsidies are allowed to state their case.
           Sincerely,
                                                 Scott P. Hoffman,
     Director of Operations.
                                                                    ____



                                                  U.S. Senate,

                                   Washington, DC, March 12, 1996.
     Hon. Larry Pressler,
     Chairman, Senate Commerce Committee.
       Dear Chairman Pressler: Last year, you joined us in a 
     letter to Budget Chairman Domenici calling for the 
     ``elimination of wasteful maritime programs.'' As you can see 
     from the enclosed materials, public interest groups also 
     oppose maritime subsidies, including:
     (1) Citizens Against Government Waste
     (2) National Taxpayers Union
     (3) Citizens for a Sound Economy
     (4) Heritage Foundation
     (5) Competitive Enterprise Institute
     (6) Cato Institute
     (7) Progressive Policy Institute of the Democratic Leadership 
         Conference, and
     (8) Ralph Nader's Essential Information Group
       Unfortunately, these and other critics of maritime 
     subsidies were not called to testify at the single hearing by 
     the Subcommittee on Surface Transportation and Merchant 
     Marine. Now H.R. 1350 and S. 1139, the Maritime Reform and 
     Security Act of 1995, are pending on the Senate Calendar.
       The committee was denied the benefit of important 
     independent analyses of maritime subsidies, including the MIT 
     report entitled ``Competitive Manning on U.S.-flag Vessels'' 
     which exposed serious waste and determined maritime subsidies 
     could be cut in half.
       The committee also was denied the benefit of extensive work 
     by 16 executive branch agencies summarized in the 1993 
     ``Decision Memorandum on Maritime Issues'' from Robert Rubin 
     to President Clinton. Fifteen of 16 executive branch agencies 
     concluded that as few as 20 vessels--not 50--should be 
     subsidized. The memo states that the ``Secretary of Defense, 
     the Chairman of the Joint Chiefs of Staff, and the Commander 
     of the Transportation Command have already concluded that 
     future requirements will not exceed 20-30 liner vessels. DOD 
     will have no need for bulk vessels.''
       It was also concluded that ``subsidies are needed primarily 
     to offset the higher wages of U.S. mariners'' and that 
     ``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.''
       We therefore request that before either H.R. 1350 or S. 
     1139 be considered by the Senate, that you hold a series of 
     full committee hearings to explore the work devoted to the 
     Rubin memo and the MIT study, and to hear the concerns and 
     suggestions from the growing number of critics of maritime 
     subsidies.
           Sincerely,
         Bob Dole, John Ashcroft, Don Nickles, Nancy Landon 
           Kassebaum, Hank Brown, Chuck Grassley, Jon Kyl, Rod 
           Grams, Jesse Helms.
                                                                    ____

                                              Council for Citizens


                                     Against Government Waste,

                                                    March 7, 1996.
     Hon. Larry Pressler,
     Chairman, Senate Commerce Committee, Washington, DC.
       Dear Mr. Chairman: The 600,000 members of the Council for 
     Citizens Against Government Waste (CCAGW) strongly oppose 
     H.R. 1350 and S. 1139, the Maritime Reform and Security Act 
     of 1995. These bills neither reform nor sustains security for 
     America's hard working taxpayers. This legislation is another 
     example of entrenched corporate political pork.
       Because only maritime supporters were invited to attend the 
     single hearing held by the Subcommittee on Surface 
     Transportation and Merchant Marine, and critics of the 
     programs were barred from testifying, your full committee was 
     denied the benefit of independent analyses which would expose 
     the enormous waste involved in federal maritime programs. 
     There are far less costly and more effective means of 
     protecting America's national security interests.
       Therefore, we urge that no Senate consideration of either 
     H.R. 1350 and S. 1139 be allowed until the full Senate 
     Commerce Committee holds open hearings that allow independent 
     experts and critics to testify.
       This legislation actually undermines our national defense 
     because it:

[[Page S11079]]

       1. allows vessel operators to be exempt from 
     requisitioning;
       2. permits operators to withhold their U.S.-flag vessels 
     from war duty by subcontracting far less costly foreign-flag 
     vessels, an still receive U.S.-flag vessels, and still 
     receive U.S.-flag premium rates;
       3. provides the least militarily useful ships (i.e., large 
     non-self-sustaining container);
       4. allows the transfer of U.S.-flag vessels to foreign 
     flags without approval, and,
       5. reduces the capacity of the U.S. merchant marine fleet 
     by allowing operators to double-dip taxpayers through 
     multiple subsidies (direct--lump sum; indirect-cargo 
     preference premium rates and subsidized service in the 
     domestic trade and leasing subsidized ships without 
     restrictions to foreign citizens).
       This legislation will discourage new investment and 
     innovation by erecting artificial, anti-competitive barriers 
     that give the upper hand to operators servicing domestic 
     trades in 1995, and barring subsidies to any newcomers even 
     if they are more efficient and can provide more militarily 
     useful vessels.
       Your full committee should review the MARAD-sponsored MIT 
     report, ``Competitive Manning on U.S.-flag Vessels.'' This 
     report exposed wasteful maritime practices and found that 
     subsidies could be cut down to as little as $1.1 million per 
     vessel.
       We also request that your committee study the work of 16 
     executive branch agencies summarized in the ``Decision 
     Memorandum on Maritime Issues'' from Robert Rubin to 
     President Clinton. Fifteen agencies sided with the Defense 
     Department's conclusion that as few as 20 vessels--not the 50 
     required by S. 1139--are needed for national security and 
     should be subsidized. And they concluded ``DOD will have no 
     need for bulk vessels,'' which means cargo preference 
     subsidies should be eliminated.
       Just as telling is the fact that these agencies concluded 
     that ``subsidies are needed primarily to offset the higher 
     wages of U.S. mariners'' and that ``subsidizing carriers 
     simply to preserve jobs would leave the Administration hard 
     pressed to explain why it should not subsidize every other 
     industry that suffers job losses.''
       Your committee should also hear from the Department of 
     Transportation's Inspector General, who concluded that the 
     entire Maritime Administration and all of its U.S.-flag 
     subsidies should be terminated, a conclusion similar to that 
     reached by Vice President Al Gore's National Performance 
     Review Transportation Task Force.
       Strengthening our national defense is a goal CCAGW strongly 
     supports, but forcing taxpayers to subsidize high-priced 
     seafarers and militarily useless vessels during a time we are 
     eliminating the jobs of our men and women serving in the Navy 
     makes no sense at all. There is not one of these sealift 
     billets that our Navy personnel, with little or no training, 
     could handle.
       S. 1139 and H.R. 1350 is corporate welfare that must be 
     stopped. We stand ready to assist you in these hearings and 
     in making the necessary changes to these bills.
           Sincerely,
                                                 Thomas A. Schatz,
     President.
                                                                    ____



                                 Citizens for a Sound Economy,

                                   Washington, DC, March 15, 1996.
     Hon. Larry Pressler,
     Chairman, Committee on Commerce, Science, and Transportation, 
         U.S. Senate, Washington, DC.
       Dear Mr. Chairman: On behalf of Citizens for a Sound 
     Economy's 250,000 members across America, I urge you to give 
     the opponents of H.R. 1350 and S. 1139, the Maritime Reform 
     and Security Act of 1995, a fair chance to voice their 
     concerns. To date, the Subcommittee on Surface Transportation 
     and Merchant Marine has only held one hearing on the Act, 
     failing to invite any of the many individuals and 
     organizations opposed to the bill. We believe that 
     consideration of the Act without the benefit of an open 
     debate will prevent the Senate from making an informed 
     decision in this important matter. Especially at a time when 
     Congress is attempting to come to grips with excessive 
     spending, pro-spending legislation should not be immune from 
     criticism.
       Citizens for a Sound Economy strongly opposes the Maritime 
     Reform and Security Act of 1995. We believe that Congress 
     should put the era of costly Cold-War level maritime 
     subsidies behind it. The primary beneficiary would be current 
     and future generations of American taxpayers, who would not 
     have to pay the price of billions of dollars in new, unneeded 
     subsidies. We believe that America needs to rely on more 
     competitive, least-cost solutions to national security issues 
     and concerns. Among other needed reforms, this entails ending 
     spending on excessive salaries and benefits for U.S.-flag 
     seafarers and other unwarranted expenses associated with 
     often unwarranted vessels.
       We would like to emphasize that a wide spectrum of policy 
     analysts and public officials seriously question and oppose 
     the continuation of the maritime subsidies and intervention 
     of all sorts. For one, Vice President Gore's National 
     Performance Review recommended that all maritime subsidies be 
     ended, saving Americans $23 billion over ten years. A study 
     by the Massachusetts Institute of Technology, ``Competitive 
     Manning on U.S.-flag Vessels,'' pointed to the extensive 
     waste and abuse in the maritime programs and suggested ways 
     to get more value for less taxpayer dollars. This study was 
     commissioned by none other than the Maritime Administration. 
     The Defense Department notes that only 8 percent of the 
     supplies delivered to the Persian Gulf during the Gulf War 
     came on U.S. commercial vessels. The U.S. Transportation 
     Inspector General recently recommended that the Maritime 
     Administration and all maritime subsidy programs be 
     eliminated.
       Harold E. Shear, former U.S. Navy Admiral and Maritime 
     Administrator, has concluded that ``Nearly 50 years of 
     subsidies have not prevented the demise of the U.S. merchant 
     marine . . . Subsidies do nothing more than cause 
     inefficiency, mediocrity, lack of incentive and dependence on 
     Uncle Sam.'' In 1993, 15 out of 16 government agencies sided 
     with now-Secretary of the Treasury Robert Rubin's option to 
     President Clinton to drastically revamp the Maritime 
     subsidies. The rationale for Mr. Rubin's option, as reported 
     to the President, was as follows:
       ``Subsidies for the U.S. flag fleet have always been 
     justified by their role in providing a sealift capacity for 
     use in military emergencies. With the end of the Cold War, 
     DOD's sealift requirements have declined. Although DOD's 
     bottom-up review is not complete, the Secretary of Defense, 
     the Chairman of the Joint Chiefs of Staff, and the Commander 
     of the Transportation Command have already concluded that 
     future requirements will not exceed 20-30 liner vessels. DOD 
     will have no need for bulk vessels. All agencies therefore 
     oppose renewal of direct subsidies for bulkers. This option 
     would meet DOD's maximum military requirements. [S. 1139 
     requires 50 vessels].''
       The Wall Street Journal's Review and Outlook section noted 
     on June 6, 1995:
       ``Rob Quartel, a former FMC [Federal Maritime Commission] 
     member, figures that all maritime subsidies together cost at 
     least $375,000 per seagoing worker. It would be a lot cheaper 
     to pay the sailors not to work. Eliminating these subsidies 
     would not only force the maritime industry to become 
     competitive, but also would contribute to the balanced budget 
     effort. Mr. Quartel figures, based on dynamic scoring, that 
     eliminating subsidies would save $7 billion between 1996 and 
     2002, and generate new economic activity that would raise an 
     extra $28 billion in tax revenue. Even in Washington terms, 
     $35 billion is real money.''
       Mr. Chairman, the list of dissenting voices to this legacy 
     of subsidies from World War II and the Cold War goes on and 
     on. We ask that you carefully weigh the costs and the 
     benefits associated with the Maritime Reform and Security Act 
     of 1995, and all other maritime subsidies. The American 
     people deserve fair hearings on this issue where both points 
     of view are represented.
           Sincerely,
                                                  Shane Schriefer,
     Director of Government Relations.
                                                                    ____



                                                Baltimore, MD,

                                                     June 8, 1996.
     Senator Charles E. Grassley,
     Senate Office Building,
     Washington, DC.
       Dear Senator Grassley, Thank you for your letter of May 
     30th asking me to check off certain items that I support on 
     an enclosed form.
       You note that my signature is on a form submitted by the 
     American Security Council. I only signed that form to gain 
     time for mature study of a then pending bill which could have 
     resulted in subsidies for VLCCs! 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. I enclose a copy of a letter 
     [please forgive bottom margins] that I sent to him that 
     indicates where I stand. My qualification to comment is shown 
     in my biology in Who's Who in America. I have not heard from 
     them since. But I am not surprised that my opinions do not 
     suit them.
       So I prefer NOT to use your form. My views require a more 
     complex presentation--more than in the ``tip of the iceberg'' 
     letter enclosed.
       I do believe that this country needs and should pay for 
     only that part of a 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.
           Sincerely,
                                                 George P. Steele.
                                           Vice Admiral (Retired).

  Mr. GRASSLEY. Also, in rebuttal to the Senator from Alaska on another 
point he was making about foreign flags not doing the jobs, foreign 
crews not doing the job, as a studied response to that, I want to have 
printed in the Record a chart that tells a number of trips to the 
Persian Gulf. This shows that, in fact, only 17 U.S.-flag commercial 
vessels actually delivered goods in the war zone. This chart was 
provided by the military sealift command. I did not put these figures 
together; I got them from the military sealift command.
  Only five APL vessels--these are U.S. flags--went into the war zone; 
only three sea-land U.S.-flag vessels went into the war zone; only four 
watermen,

[[Page S11080]]

and their U.S.-flag vessels went into the war zone; only five Lykes 
U.S.-flag vessels went into the war zone; total--total, only 17 U.S.-
flag vessels delivered goods into the war zone. That is 17 compared to 
500 trips into the war zone, so that means overwhelmingly--I hope you 
understand, overwhelmingly--17 trips versus 500 trips, U.S. The 
remaining were foreign flag, foreign crew.
  I am sure the Senator from Alaska did not mean his remarks to be in 
support of my amendment to make sure American-flag ships deliver all 
the way. But his statement that he was making is a statement in support 
of that amendment. I am sure it was not intended to be that way, but he 
gives a rational argument for that amendment, a strong statement for 
that amendment.
  I ask unanimous consent to have this printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

          U.S. CARRIER OWNED/CONTROLLED VESSELS USED FOR SMESA          
------------------------------------------------------------------------
                                                    Number of           
                                                     vessels            
                                Total    U.S.-flag   actually  U.S.-flag
                               vessels   component    going    component
                                 used                into the           
                                                       gulf             
------------------------------------------------------------------------
APL.........................         30         23         12          5
Farrell.....................          4          4          0          0
Lykes.......................         12         12          5          5
Sea-Land....................         36         19         13          3
Waterman....................          4          4          4          4
                             -------------------------------------------
      Total.................         86         62         34         17
------------------------------------------------------------------------

  Mr. GRASSLEY. This chart makes it crystal clear the overwhelming 
number of these ships were foreign flag and foreign crew. Out of the 
defense control we only had one instance where the material did not get 
there--only one instance.
  I think the statement by the Senator from Alaska was questioning the 
reliability of foreign-owned flag ships and foreign crews, but they 
delivered. Only one did not deliver. U.S.-flag components, total, 17. 
The rest out of the 500 that made it into the zone were foreign.
  I have heard my colleague state U.S. flags charged less than foreign 
flags during the Persian Gulf war.
  I want to provide my colleagues with what the Department of the Navy 
reported to me on the cost of charter vessels:

       The cost of foreign voyage chartered ships is approximately 
     60 percent of U.S.-flag voyage charters.

  The Navy said:

       Only 41 of 283 vessels were U.S. flag.

  My amendment does not prohibit transfers of smaller feeder vessels to 
deliver war materiel in the war zone. My amendment simply says that 
these smaller feeders must be U.S. flag and U.S. crewed, not foreign 
flag. This is what we are led to believe this bill is all about. We are 
led to believe that if this bill passes, only U.S. flags and crews will 
deliver our goods into the war zone. Without my amendment, this will 
not be guaranteed. My amendment says U.S. flag and U.S. crews will 
deliver our goods into the war zone. This is what Senator Lott--and I 
quoted him twice--said 2 months ago that we need to assure.
  I think it is appropriate at this point to repeat a section of a 
letter that I got from Vice Adm. George P. Steele, U.S. Navy, retired. 
He was one of those who had his name on the original National Security 
Council memo in support of this legislation. Then when I sent him a lot 
of material to study, he sent me back a very nice letter.
  The last paragraph reads:

       I do believe that this country needs and should pay for 
     only that part of a 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.

  Mr. President, I ask unanimous consent to submit for the Record two 
pages detailing the cost of cargo preference as determined by the 
Office of Management and Budget.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                         CARGO PREFERENCE PROGRAM COSTS                                         
                                              [Millions of dollars]                                             
----------------------------------------------------------------------------------------------------------------
                                              1994                      1995                      1996          
                                   -----------------------------------------------------------------------------
                                    Obligations    Outlays    Obligations    Outlays    Obligations    Outlays  
----------------------------------------------------------------------------------------------------------------
Agency:                                                                                                         
    Department of Agriculture.....          113          132           74           74           79           79
    Department of Transportation--                                                                              
     Maritime Administration......           50           50           61           61           43           43
    Department of Defense.........          450          450          436          436          462          462
    Agency for International                                                                                    
     Development..................           11           11            4            4            4            4
    Export--Import Bank of the                                                                                  
     U.S..........................            4            3            5            3            8            4
    Department of State \1\.......  ...........  ...........  ...........  ...........  ...........  ...........
                                   -----------------------------------------------------------------------------
      Total.......................          628          646          580          578          596          592
----------------------------------------------------------------------------------------------------------------
\1\ Estimate for costs related to transportation of preference cargo is less than $2 million.                   


                                         CARGO PREFERENCE PROGRAM COSTS                                         
                                              [Millions of dollars]                                             
----------------------------------------------------------------------------------------------------------------
                                              1995                      1996                      1997          
                                   -----------------------------------------------------------------------------
                                    Obligations    Outlays    Obligations    Outlays    Obligations    Outlays  
----------------------------------------------------------------------------------------------------------------
Agency:                                                                                                         
    Department of Agriculture.....           62           49           50           78           41           45
    Department of Transportation--                                                                              
     Maritime Administration......           63           63           43           43           25           25
    Department of Defense \1\.....          438          438          414          414          424          424
    Agency for International                                                                                    
     Development..................            4            4            5            5            5            5
    Export--Import Bank of the                                                                                  
     U.S..........................           40           40           61           61           71           71
    Department of State...........            1            1            1            1            1            1
                                   -----------------------------------------------------------------------------
      Total.......................          608          595          574          602          567          571
----------------------------------------------------------------------------------------------------------------
\1\ DOD estimate are preliminary.                                                                               

  Mr. GRASSLEY. Mr. President, this information is included in the 
President's budget each year, thanks to my request a few years ago. 
Cargo preferences does cost taxpayers $600 million per year. One is 
from the fiscal year 1997 budget and the other is from the fiscal year 
1996 budget.
  Mr. President, the Federal Government relies only upon numbers from 
OMB or CBO. We cannot use numbers from our budgeting process that come 
from any other source.
  The Senator from Alaska quoted cargo preference cost estimates that 
differ from the OMB numbers I quoted.
  He knows, and we all know, that these non-OMB or CBO numbers cannot 
be used here.
  I yield the floor.
  Mr. INOUYE. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.

[[Page S11081]]

  The bill clerk proceeded to call the roll.
  Mr. SANTORUM. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SANTORUM. Mr. President, I ask unanimous consent to speak as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________