[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
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\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
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Obligations Outlays Obligations Outlays Obligations Outlays
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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
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Total....................... 608 595 574 602 567 571
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\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.
____________________